In this current climate, Roku needed a win. Despite company reporting Total net sales rose 18% year over year to $764 million — a nice increase from $737.7 million last quarter — the company missed Wall Street expectations. Analysts were expecting revenue of $805 million, which would reflect year-over-year growth of 25%.
What is to blame for missing the target? Roku said in its letter to shareholders, “Due to the macroeconomic environment, there has been a significant slowdown in TV advertising spending, which has put pressure on our platform’s revenue growth. Consumers began to moderate their voluntary spending and advertisers significantly reduced their spend in the diffuse advertising market (TV advertising purchased during the quarter). We expect these challenges to continue in the near term as economic concerns weigh on markets globally.”
During a conference call with reporters, CFO Steve Loudon said, “The severity of the pullback in the scatter ad market was unexpected… This is a broad-based, significant pullback.”
The company expects revenue to increase 3% to $700 million in the third quarter of 2021, well below analysts’ expectations of $898.3 million.
Roku shares plunged 25% to $63.80 in after-hours trading on Thursday. The stock is down nearly 63% so far in 2022.
While Q1 2022, the company added just 1.1 million additional active accounts. This time, Roku announced user growth this quarter, with 1.8 million accounts added, bringing the total to 61.3 million.
“Although our revenue and gross profit growth has slowed, we continue to gain advertising shares and grow active accounts,” the company added. “We remain confident in our industry leadership in TV streaming, the magnitude of the opportunity ahead, and our unique assets, including the Roku TV operating system, the Roku Channel, and our advertising platform.”
Streaming hours were down slightly by 0.2 billion from last quarter, with 20.7 billion hours in Q2 2022, up 19% year over year.
Roku believes there’s room for more engagement, and reminds investors that the Roku OS continues to be the best-selling smart TV system in the US and, with the Roku Channel, “leads” in free, ad-supported TV streaming remains.
And while the advertising environment remains challenging, Roku boasted that during this year’s Upfront it surpassed a milestone of $1 billion in total commitments and secured deals for the 2022-2023 TV season with all seven major agency holding companies. According to the company, 25 percent of these advertising commitments are new.
Regarding free streaming hub Roku Channel, the company reported platform revenue growth of 26% year over year to $673 million, which was lower than expected, the company admitted.
On June 28th Roku has partnered with NBCUniversal Local bringing several local NBC news stations to the Roku channel. The partnership marks the first time that local news programming will be available to users of an ad-supported service.
On June 16, Roku entered Agreement with Walmarta unique partnership to make TV streaming the next e-commerce shopping destination.
In May, Discovery+ became Roku Channel’s first premium subscription offering. in the same month, Roku launched Apple’s premium music subscription service, Apple Musicon the Roku platform worldwide.
The company also announced a multi-year extension with Amazon for their distribution agreement.
During NewFronts, the company announced two new co-production deals Marquee Brands and Milk Street Studiosbringing over 3,000 episodes of library content to the Roku Channel, plus seven new original series starring food and lifestyle personalities Martha Stewart, Emeril Lagasse and Chris Kimball.
Roku points finger at advertising slowdown for missing the mark on quarterly results – TechCrunch Source link Roku points finger at advertising slowdown for missing the mark on quarterly results – TechCrunch