Roku Q1 2023 Financials: Revenue Up 1%, Expenses Spiked 42%

Roku Inc (Nasdaq: ROKU) reported its Q1 2023 financial results on Wednesday. The firm earned a quarterly revenue of $741.0 million, down from Q4 2022’s $867.1 million but marginally up from Q1 2022’s $733.7 million.

The 1% year-on-year increase in net revenue is heavily tied to the annual bump of 18% in devices revenue, posting $106.4 million in the quarter versus $90.0 million last year. This compares to the 1% decline in platform revenue that came in at $634.6 million from last year’s $643.7 million.

The topline figure came in above analyst estimates at $708.49 million but warned that inflation and recession fears will continue to weigh on discretionary spending this year.

“The macro environment remained challenged in Q1,” the company said in its shareholder letter. “Similar to our viewpoint during our last earnings call, we expect macro uncertainties to persist throughout 2023. Consumers remain pressured by inflation and recessionary fears, and thus discretionary spend is likely to remain muted.” 

One of the biggest year-on-year spikes came from operating expenses, posting $550.1 million for the quarter, a sequential decline from last quarter’s $614.3 million but a 42% increase from last year’s $388.3 million. Sales and marketing expenses contributed the biggest jump from a year ago at 60%.

“With unmatched scale and engagement, we are creating new monetization opportunities to reaccelerate revenue growth as the ad market recovers. At the same time, we are managing investments and costs and executing on our plan to deliver positive Adjusted EBITDA for full year 2024,” the company added.

The firm still ended with a net loss of $193.6 million, an improvement from last quarter’s net loss of $249.9 million but a whopping 804% decline from last year’s net loss of $26.3 million. The bottomline translates to $1.38 loss per share, which barely missed street estimate of $1.37 loss per share.

Adjusted EBITDA came in at a loss at $69.1 million from a positive figure at $57.6 million last year.

As the end of first quarter, Roku had 71.6 million active streaming accounts, up from 70 million at the end of 2022. The net growth of 1.6 million accounts exceeded market expectations that Roku would attract 1.14 million new accounts in Q1.

Total hours streamed on Roku’s platforms reached 25.1 billion in the first three months of 2023, a 20% increase over the previous year (and up from 23.9 billion in Q4). According to the firm, this translates to 3.9 streaming hours per active account every day, a record high.

Roku anticipates Q2 revenue of around $770 million (up from $764.4 million in the prior year), total gross profit of approximately $335 million, and adjusted EBITDA of approximately $75 million.

Stream in grocery?

Roku launched a new relationship with online shopping service Instacart on Wednesday, under which they would assist consumer-packaged goods (CPG) advertisers in determining if customers purchase products on Instacart after seeing an ad on the Roku platform.

“The partnership brings together viewership data from Roku, the #1 TV streaming platform in the U.S., Canada, and Mexico, and insights from Instacart, the leading grocery technology company in North America, for marketers to measure whether streamers are purchasing products on Instacart after seeing an ad on the Roku platform,” the company said in its press release.

The streaming company said that marketers would be able to evaluate the impact of TV streaming advertising on product sales by comparing this data with Roku’s first-party data – all while keeping consumer data from Instacart and Roku secure.

In a trial with a personal care brand, 60% of consumers who purchased the goods after seeing its Roku campaign were unfamiliar with it. Furthermore, those that were exposed to a beverage brand’s Roku campaign and were new buyers of the brand had a 70% higher repeat rate on Instacart than the average new-to-the-beverage-brand customer.

Roku last traded at $58.42 on the Nasdaq.

Information for this briefing was found via Edgar, Variety, 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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