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ROKU's Q1 Earnings Miss Estimates, Revenues Increase Y/Y

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Roku (ROKU - Free Report) reported first-quarter 2022 loss of 19 cents per share, wider than the Zacks Consensus Estimate of a loss of 17 cents. The company reported earnings of 54 cents per share in the year-ago quarter.

Revenues increased 27.8% from the year-ago quarter’s level to $733.7 million, beating the consensus mark by 2.1%.

Growth of the Roku Channel in reach and engagement drove first-quarter performance.

Active accounts rose 14% year over year to 61.3 million, driven by the popularity of Roku streaming players and Roku TV models. Streaming hours also rose 14% year over year to 20.9 billion.

The average revenue per user rose 34% from the prior-year quarter’s levels to $42.91 (on a trailing 12-month basis).

In the first quarter, The Roku Channel was a top 5 channel on the Roku platform in the United States based on reach and engagement.

Roku, Inc. Price, Consensus and EPS Surprise

 

Roku, Inc. Price, Consensus and EPS Surprise

Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote

 

Quarter Details

Platform revenues (88.2% of revenues) surged 38.7% year over year to $646.9 million, driven by higher content distribution and advertising revenue.

However, Player revenues (11.8% of revenues) declined 19.4% from the year-ago quarter’s level to $86.8 million.

In the first quarter, Roku announced the launch of Nielsen’s (NLSN - Free Report) Digital Ad Ratings (DAR) audience guarantees on OneView.

The integration of Nielsen’s DAR makes OneView the first ad-buying platform to enable Nielsen guarantees across TV streaming.

In partnership with Lionsgate Television, Roku announced its highly-anticipated scripted drama series, Swimming Sharks, based on the dark side of the Hollywood studio system, would make its debut on The Roku Channel in April 2022.

Operating Details

Gross margin, as a percentage of total revenues, contracted 720 basis points (bps) from the year-ago quarter’s level to 49.7%.

Operating expenses increased 54.7% year over year to 388.3 million. As a percentage of total revenues, the metric expanded 920 bps.

As a percentage of total revenues, research & development expenses expanded 470 bps year over year, while sales & marketing and general & administrative expenses expanded 450 bps and 10 bps, respectively, on a year-over-year basis.

In the first quarter, adjusted EBITDA was $58 million compared with $125.9 million in the year-ago quarter.

Operating loss was $23.5 million in the reported quarter compared with the operating income of $75.8 million in the year-ago quarter.

Balance Sheet

As of Mar 31, 2022, cash and cash equivalents were $2.24 billion compared with $2.15 billion as of Dec 31, 2021.

As of Mar 31, 2022, the companyRoku reported total debt of $89 million compared with $89.9 million on Dec 31, 2021.

Guidance

For second-quarter 2022, Roku expects total net revenues of $805 million. The Zacks Consensus Estimate is currently pegged at $810.58 million, indicating 25.65% growth from the figure reported in the year-ago quarter..

Gross profit is anticipated to be $395 million.

Zacks Rank & Stocks to Consider

Roku currently carries a Zacks Rank #3 (Hold).

Roku’s shares have plunged 59.9% in the year-to-date period compared with the Zacks Consumer Discretionary sector’s decline of 23.3%.

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Funko (FNKO - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Vitru Limited (VTRU - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Funko shares have fallen 11.3% in the year-to-date period. Funko is set to announce first-quarter 2022 results on May 5.

Vitru shares have moved up 9.8% in the year-to-date period. Vitru Limited is set to announce first-quarter 2022 results on May 16.


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