Roku Misses Q2 2022 Estimates, Falls 22% (So People Are Checking On Cathie Wood)

Roku Inc (Nasdaq: ROKU) reported its Q2 2022 financial results on Thursday post-closing bell. The firm earned a quarterly revenue of US$764.4 million, up from Q1 2022’s US$733.7 million and Q2 2021’s US$645.1 million.

However, this missed the consensus estimate of US$805.7 million for the quarter. Following the release, the firm saw its shares fall as much as 27% when the opening bell rang today.

The revenue figure represents a record-breaking 18% year-on-year increase, its lowest so far. But this could still be broken next quarter with the firm’s revenue guidance for Q3 2022 eyed at US$700 million, a measly 2.9% increase over Q3 2021’s US$680 million. This guidance also misses the consensus of US$904.1 million in revenue next quarter or 33.0% in year-on-year growth.

“In Q2, there was a significant slowdown in TV advertising spend due to the macro-economic environment, which pressured our platform revenue growth. Consumers began to moderate discretionary spend, and advertisers significantly curtailed spend in the ad scatter market,” the company said in its statement.

The gross margin declined to 46.5% from last quarter’s 49.7% and last year’s 52.4%. The figure also missed the estimate set at 49.1%.

With increased operating expenses amounting to US$465.7 million–mostly driven by almost doubling sales and marketing expenses year-on-year–the firm recorded a wider operating loss of US$110.5 million for the quarter. This compares to last quarter’s operating loss of US$23.5 million and last year’s operating income US$69.1 million.

This led the company to record a wider net loss for the quarter at US$112.3 million compared to last quarter’s net loss of US$23.1 million and last year’s net income of US$67.3 million. The quarterly net loss translates to US$0.82 per share–missing the estimate of US$0.70 loss per share.

Adjusted EBITDA also ended at a loss, amounting to US$12.1 million, down from a gain of US$57.6 million last quarter and US$122.4 million last year. This also missed the estimate projecting a positive figure amounting to US$4.3 million.

The firm is expecting a further net loss of US$190 million next quarter and a negative adjusted EBITDA of US$75 million, with the latter also missing the estimate of a projected gain of US$25.4 million.

“Given the uncertainties and volatility in the macro environment, we are withdrawing our full-year revenue growth rate estimate. We will remain focused on growing our market leadership by further advancing our technology and brand, and continuing to execute our strategy,” the company added.

In contrast, the firm beat the estimate for active accounts, holding 63.1 million accounts at the end of the quarter versus the estimated 62.1 million. This is also an increase from last quarter’s 61.3 million and last year’s 55.1 million, making an argument that the lackluster performance in its financials might not be due to engaging users but because of less revenue sources.

What Would Wood Do?

With its third largest holdings placed in Roku, ARK Innovation ETF (NYSE: ARKK) is expected to take a hit from the declining financials of the media firm. Naturally, Twitter users are “checking” on its controversial fund manager ARK Invest CEO Cathie Wood.

Roku last traded at US$85.17 on the Nasdaq.

Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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