Roku beats estimates for third quarter, rises to 65 million streaming accounts

Roku beats estimates for third quarter, rises to 65 million streaming accounts

Roku conveniently topped Wall Street estimates for the third quarter of 2022, as the streaming platform and media company added 2.3 million streaming accounts to reach 65.4 million.

However, Roku warned of a weak Q4 — telling investors it expects total net income of about $800 million, which would represent a 7.5% year-over-year decline, and total gross profit of about $325 million and adjusted EBITDA of negative 135 million dollars.

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Shares of Roku fell as much as 19% in after-hours trading Wednesday on its Q4 guidance.

“As we enter the holiday season, we expect the macro environment to further pressure consumer discretionary spending and erode advertising budgets, particularly in the broadcast TV market,” the company said in its third-quarter earnings letter to shareholders. “We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or return. We therefore expect fourth quarter player revenue and platform revenue to be lower year over year.”

For Q3, Roku reported total revenue of $761.4 million, up 12% year over year, and a net loss of $122.2 million (or 88 cents per share). On average, Wall Street analysts expected revenue of $694 million and a net loss of $1.28 per share, according to Refinitiv data.

Meanwhile, the company also returned to growth in total streaming hours, which totaled 21.9 billion in Q3, up 1.1 billion from the previous quarter, following a slight sequential decline in Q2. Account growth in the quarter was above both 2019 and 2021 levels. In addition, Roku Channel’s streaming hours in Q3 increased more than 90% year-over-year, although the company doesn’t disclose those numbers.

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Roku has increased spending on original and exclusive content, and in September hired TV veteran Charlie Collier, most recently CEO of Fox Entertainment, to the newly created position of head of Roku Media. The company’s fake biopic “Weird: The Al Yankovic Story,” starring Daniel Radcliffe, premieres Friday, April 4. November on the free, ad-supported Roku Channel. Roku had previously picked up a large selection of short-form originals from the short-lived Quibi, including Kevin Hart’s “Die Hart” (renewed for a second season) and Chrissy Teigen’s “Chrissy’s Court” (now in its third season).

In recent weeks, Roku has also launched the Roku Channel in Mexico; launched a new line of smart home products developed with Wyze and set up an exclusive Walmart sales agreement; and expanded its partnership with Nielsen to track viewership across traditional and connected TVs, desktops and mobile devices.

In announcing its third-quarter results, Roku said CFO Steve Louden plans to leave the company sometime in 2023 after he helps recruit a successor. He joined Roku in 2015 and led the company’s IPO in 2017. He had previously planned to leave his position at the end of 2019, but he later decided to remain with Roku.

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