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ROKU's Q2 Earnings Miss Estimates, Revenues Increase Y/Y
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Roku (ROKU - Free Report) reported second-quarter 2022 loss of 82 cents per share, wider than the Zacks Consensus Estimate of a loss of 78 cents. The company had reported earnings of 52 cents per share in the year-ago quarter.
Revenues increased 18.5% from the year-ago quarter’s level to $764.4 million but missed the consensus mark by 4.98%.
Growth of the Roku Channel in reach and engagement drove second-quarter performance.
In second-quarter 2022, the company added 1.8 million incremental active accounts to reach 63.1 million. Streaming hours per active account per day was 3.7 hours globally compared with 7.5 hours of legacy pay TV per day consumed by the average U.S. household.
The average revenue per user rose 21% from the prior-year quarter’s levels to $44.10 (on a trailing 12-month basis).
In the second quarter, The Roku Channel was a top 5 channel on the Roku platform in the United States based on reach and engagement.
Platform revenues (88.1% of revenues) increased 26.5% year over year to $673.2 million. This growth was lower than expected as many marketers abruptly curtailed or paused advertising spend in the ad scatter market.
According to a survey by Advertiser Perceptions, 47% of advertisers in the United States say they made in-quarter pauses on ad spending on TV streaming, 44% on digital video, and 42% on legacy pay TV.
Player revenues (11.9% of revenues) declined 19.1% from the year-ago quarter’s level to $91.2 million.
Operating Details
Gross margin, as a percentage of total revenues, contracted 600 basis points (bps) from the year-ago quarter’s level to 46.5%.
Operating expenses increased 73% year over year to $465.7 million. As a percentage of total revenues, the metric expanded to 60.9% as a percentage of total revenues from 41.7% in the year-ago quarter.
As a percentage of total revenues, research & development expenses expanded 820 bps year over year, while sales & marketing and general & administrative expenses expanded 970 bps and 140 bps, respectively, on a year-over-year basis.
In the second quarter, negative adjusted EBITDA was $12.1 million compared with $122.4 million in the year-ago quarter.
Operating loss was $110.5 million in the reported quarter against operating income of $69.1 million in the year-ago quarter.
Balance Sheet
As of Jun 30, 2022, cash and cash equivalents were $2.05 billion compared with $2.24 billion as of Mar 31, 2022.
As of Jun 30, 2022, Roku had total debt of $84.9 million compared with $89 million on Mar 31, 2022.
Guidance
For third-quarter 2022, Roku expects total net revenues of $700 million, up 3% year over year. Gross profit is anticipated to be $325 million.
Zacks Rank & Stocks to Consider
Roku currently has a Zacks Rank #3 (Hold).
Roku shares are down 2.4% in the year-to-date period, outperforming the Zacks Consumer Discretionary sector’s decline of 37.1%.
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ROKU's Q2 Earnings Miss Estimates, Revenues Increase Y/Y
Roku (ROKU - Free Report) reported second-quarter 2022 loss of 82 cents per share, wider than the Zacks Consensus Estimate of a loss of 78 cents. The company had reported earnings of 52 cents per share in the year-ago quarter.
Revenues increased 18.5% from the year-ago quarter’s level to $764.4 million but missed the consensus mark by 4.98%.
Growth of the Roku Channel in reach and engagement drove second-quarter performance.
In second-quarter 2022, the company added 1.8 million incremental active accounts to reach 63.1 million. Streaming hours per active account per day was 3.7 hours globally compared with 7.5 hours of legacy pay TV per day consumed by the average U.S. household.
The average revenue per user rose 21% from the prior-year quarter’s levels to $44.10 (on a trailing 12-month basis).
In the second 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-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (88.1% of revenues) increased 26.5% year over year to $673.2 million. This growth was lower than expected as many marketers abruptly curtailed or paused advertising spend in the ad scatter market.
According to a survey by Advertiser Perceptions, 47% of advertisers in the United States say they made in-quarter pauses on ad spending on TV streaming, 44% on digital video, and 42% on legacy pay TV.
Player revenues (11.9% of revenues) declined 19.1% from the year-ago quarter’s level to $91.2 million.
Operating Details
Gross margin, as a percentage of total revenues, contracted 600 basis points (bps) from the year-ago quarter’s level to 46.5%.
Operating expenses increased 73% year over year to $465.7 million. As a percentage of total revenues, the metric expanded to 60.9% as a percentage of total revenues from 41.7% in the year-ago quarter.
As a percentage of total revenues, research & development expenses expanded 820 bps year over year, while sales & marketing and general & administrative expenses expanded 970 bps and 140 bps, respectively, on a year-over-year basis.
In the second quarter, negative adjusted EBITDA was $12.1 million compared with $122.4 million in the year-ago quarter.
Operating loss was $110.5 million in the reported quarter against operating income of $69.1 million in the year-ago quarter.
Balance Sheet
As of Jun 30, 2022, cash and cash equivalents were $2.05 billion compared with $2.24 billion as of Mar 31, 2022.
As of Jun 30, 2022, Roku had total debt of $84.9 million compared with $89 million on Mar 31, 2022.
Guidance
For third-quarter 2022, Roku expects total net revenues of $700 million, up 3% year over year. Gross profit is anticipated to be $325 million.
Zacks Rank & Stocks to Consider
Roku currently has a Zacks Rank #3 (Hold).
Roku shares are down 2.4% in the year-to-date period, outperforming the Zacks Consumer Discretionary sector’s decline of 37.1%.
Some better-ranked stocks in the Consumer Discretionary sector include Sinclair Broadcast Group (SBGI - Free Report) , Nexstar Media Group (NXST - Free Report) and Gray Television (GTN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sinclair Broadcast, Nexstar Media Group and Gray Television are scheduled to report their quarterly results on Aug 3, Aug 4, and Aug 5, respectively.
The Zacks Consensus Estimate for Sinclair Broadcast Group’s second-quarter 2022 loss is pegged at $3.35 per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for Nexstar Media Group’s second-quarter 2022 earnings is pegged at $5.46 per share, unchanged over the past 30 days.
The consensus mark for Gray Television’s second-quarter 2022 earnings is pegged at 97 cents per share, unchanged in the past 30 days.