Advertising Lifts Roku’s Q4 Results as Total Active Accounts Grow to 70 Million

The streaming device manufacturer reported a net loss of $237.2 million, or $1.70 per share, on revenue of $867.1 million, beating Wall Street expectations

Roku Earnings
Photo illustration by TheWrap

Roku beat Wall Street expectations for its fourth quarter of 2022 after the streaming device manufacturer reported a smaller than expected loss Wednesday of $237.2 million, or $1.70 per share.

Total revenue for the quarter came in at $867.1 million, compared to $865.3 million during the same period a year ago. Platform revenue for the quarter, which is largely based on advertising sales and a subscription revenues split with partners, jumped 5% year over year to $731 million.

Analysts surveyed by Zacks Investment Research were expecting a loss of $1.74 per share on revenue of $803.17 million.

The company added 10 million net new active accounts during the quarter for a total of 70 million globally. Roku’s average revenue per user for the quarter climbed to $41.68, up 2% year over year. Despite concerns about pressures on the advertising market from an uncertain economy, an increase in ad sales helped lift results. “Despite tightening advertising budgets in [the fourth quarter], ad spend on the Roku platform outperformed the overall ad and traditional TV markets in the U.S.,” the company said in a letter to shareholders.

Total streaming hours reached 23.9 billion during the quarter, up 23% year over year. In comparison, hours on traditional TV in the U.S. fell 5% year over year.

The Roku channel grew engagement over 85% year over year in the fourth quarter, reaching U.S. households with an estimated 100 people.

The latest results come after Roku laid off 200 employees, or about 5% of its staff, in the United States in November, attributing the move to “economic conditions.” Roku noted that inflation and macro-economic uncertainty continued to pressure consumers and advertisers during the quarter.

Looking ahead at the first quarter of 2023, Roku is forecasting total net revenue of roughly $700 million, total gross profit of roughly $310 million, a net loss of $205 million and an adjusted EBITDA loss of $110 million.

“We plan to continue to improve our operating expense profile to better manage through the challenging macro environment, while building on our platform’s monetization and engagement tools and partnerships,” the company wrote in its quarterly shareholder letter. “Through a combination of operating expense control and revenue growth, we are committed to a path that delivers positive adjusted EBITDA for full year 2024.”

Roku’s year-over-year growth in operating expenses is expected to significantly decline over the course of the year from approximately 40% in the first quarter of 2023 to a single-digit year-over-year increase by the fourth quarter of 2023, the company said.

“While cyclical economic pressures are affecting our business, two things remain true: the secular trend supporting our business remains intact, and the combination of our scale, engagement, and innovation position Roku exceptionally well to benefit when the market rebounds,” the shareholder letter concluded.

Roku shares surged approximately 11% in after-hours trading on Wednesday.