Roku shares traded higher after-hours on Wednesday after the company posted a smaller-than-expected loss for its first quarter on 2023 and beat Wall Street expectations on revenue.
The streamer reported revenue of $741 million Wednesday, up 1% from the same period a year ago, following a warning by company leaders that sales would be wobbly heading into 2023. Platform revenue for the quarter, which is largely based on advertising sales and a subscription revenues split with partners, was $635 million, down 1% year-over-year, while device revenue was $106 million, up 18% year over year.
Roku posted a net loss of $193.6 million during the quarter, or an earnings per share loss of $1.38. Gross profit was $338 million, down 7% year-over-year.
The company previously forecast 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 for the first quarter of 2023. Analysts were expecting a loss per share of $1.37 on revenue of $708.5 million.
Roku added 1.6 million active accounts during the quarter for a total of 71.6 million globally.
“In the U.S., our Active Accounts are approaching half of all broadband households,” the company wrote in its quarterly letter to shareholders. “This unmatched scale is the foundation of our business model, leading to significant engagement and growing monetization opportunities.”
Average revenue per user for the quarter came in at $40.67, down 5% year over year. Total streaming hours were 25.1 billion, up 4.2 billion hours year over year and representing a record high of 3.9 streaming hours per active account per day.
Roku emphasized that the macroeconomic environment remains challenged during the quarter, with the total U.S. advertising market down 7.4% year over year and ad spend on traditional TV declining 12.7% year over year.
While ad spend on the Roku platform in verticals including financial services and M&E remained pressured, verticals such as travel and health and wellness improved. The company noted that smart TV unit sales in the U.S. were resilient in Q1, driven in part by lower TV panel and freight costs and consumer spend of income tax refunds.
Looking ahead, Roku expects macroeconomic uncertainties to persist throughout 2023, similar to previous guidance.
“Consumers remain pressured by inflation and recessionary fears, and thus discretionary spend is likely to remain muted,” the company said. “Accordingly, we expect the advertising market in Q2 to look much the same as it did in Q1, with ad spend from certain verticals improving (travel and health and wellness), while others remain pressured (M&E and financial services).”
For the second quarter, the company anticipates total net revenue of roughly $770 million, total gross profit of roughly $335 million and adjusted EBITDA of negative $75 million.
“We are executing against our plan to focus investments on high-priority projects while slowing YoY operating expense growth,” Roku added. “Given our ongoing work to reaccelerate revenue growth and improve operational efficiencies, we are committed to delivering positive Adjusted EBITDA for full year 2024.”