In the current situation, Roku needs a win. Although the company Report total net revenue grew 18 percent year-over-year to $764 million — a good increase from $737.7 million in the previous quarter — the company missed Wall Street expectations. Analysts expected revenue of $805 million, which would reflect 25% year-over-year growth.
If you miss the mark, what’s to blame? Roku said in the letter to shareholders“There has been a significant decline in TV ad spend due to the macroeconomic environment, which has weighed on our platform revenue growth. Consumers have begun to curtail discretionary spending, and advertisers have significantly cut back on spending in the distributed advertising market (TV ads purchased during the quarter). We expect these challenges to continue in the near-term as economic concerns weigh on markets around the world.”
On a conference call with reporters, Chief Financial Officer Steve Loudon said, “The severity of the drop in the ad-distributed market is not expected… This is a significant pullback across the board. widespread”.
The company predicts third-quarter revenue will grow 3% from 2021 to $700 million, well below analyst expectations of $898.3 million.
Roku stock plummeted 25% to $63.80 in after-hours trading on Thursday. To date, the stock is down nearly 63% in 2022.
Transparent Q1 2022, the company added just 1.1 million incremental active accounts. During this time period, Roku touted user growth this quarter, with 1.8 million accounts added, bringing the total to 61.3 million.
“While our revenue and gross profit growth has slowed, we continue to gain ad market share and grow active accounts,” the company added. “We remain confident in our industry leadership in TV streaming, the scale of opportunity ahead, and our unique assets, including Roku TV OS, Roku Channels, etc. and our advertising platform.”
Streamed hours fell slightly by 0.2 billion quarter-on-quarter, with 20.7 billion hours in Q2 2022, up 19% year-over-year.
Roku believes there is a lot of room for increased engagement and reminds investors that the Roku operating system continues to be the number one selling smart TV system in the United States and remains a “leader” in Free, ad-supported TV streaming with Roku Channels.
And while the advertising environment continues to be challenging, Roku is proud that it has passed the $1 billion milestone in total commitments this year and that deals have closed for the 2022–2023 TV season with all seven major holding companies. The company says 25% of these advertiser engagements are new.
When it comes to free streaming hub Roku Channel, the company reported 26% year-over-year platform revenue growth to $673 million, lower than expected, the company admitted.
On June 28, Roku partners with NBCUniversal Local to bring some of NBC’s local news channels to the Roku Channel. The partnership marks the first time local news programming will be available to users on an ad-supported service.
On June 16, Roku participated in a deal with Walmarta first-of-its-kind partnership, to make streaming TV the next e-commerce shopping destination.
In the May, Discovery+ becomes the first paid subscription of the Roku Channel. That same month, Roku Launches Apple’s Premium Music Subscription Service, Apple Musicon Roku Platforms worldwide.
The company also announced a multi-year extension with Amazon for their distribution agreement.
During NewFronts, the company announced two new co-production agreements with Marquee Brands and Milk Street Studiosprovides the Roku Channel with more than 3,000 episodes of library content as well as seven new original series starring food and lifestyle characters Martha Stewart, Emeril Lagasse, and Chris Kimball.
