Yahoo Finance ROKU's Q4 Loss Narrower Than Expected, Revenues Increase Y/Y
Roku ROKU reported fourth-quarter 2022 loss of $1.71 per share, narrower than the Zacks Consensus Estimate of a loss of $1.73. The company had reported earnings of 17 cents per share in the year-ago quarter.
Revenues increased 0.2% from the year-ago quarter’s level to $866.9 million and beat the consensus mark by 7.61%. Growth of the Roku Channel’s reach and engagement drove fourth-quarter performance.
Active Account net adds were 4.6 million in fourth-quarter and 9.9 million in 2022, ending the year with 70 million active accounts globally, driven primarily by the Roku TV program in the United States and international markets.
Roku has become the No. 1 TV streaming platform by hours streamed in the United States, Canada and Mexico. Globally, users streamed a record of 23.9 billion hours in the fourth quarter, up 23% from the prior-year quarter.
The average revenue per user rose 2% from the prior-year quarter’s levels to $41.68 (on a trailing 12-month basis).
For the fourth consecutive quarter, the Roku Channel was among the top five channels by both active account reach and streaming hour engagement on the Roku platform in the United States. The Roku Channel grew engagement by over 85% year over year and it reached U.S. households with an estimated 100 million people.
Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (84.3% of revenues) increased 4.6% year over year to $731.2 million through increased advertising sales, the distribution of streaming services, the distribution of FAST channels, Roku Pay and Media & Entertainment promotional capabilities.
Inflation and macro-economic uncertainty continued to pressure consumers and advertisers in fourth-quarter. The total U.S. ad market weakened throughout the quarter, declining 12% year over year in December, after decreases of 2% and 6% in October and November, respectively (according to SMI).
Player revenues (15.7% of revenues) declined 18.4% from the year-ago quarter’s level to $135.7 million.
In the fourth quarter, Roku TV gained market share and the company extended leadership in the United States, Canada and Mexico. According to NPD, the Roku operating system (OS) was the No. 1 selling smart TV OS in the United States and our 38% share of units sold in fourth-quarter was more than the next two largest TV operating systems combined. The Roku OS was also the No. 1 selling smart TV OS in Canada and No. 1 in Mexico, where it grew to 30% of units sold.
The company continued to expand Roku TV licensing program. In the United States, the new TCL Roku TV 6-Series won the CNET Editor’s Choice award in 2022 and was described as the “best TV for the money” for the fifth year in a row.
In Canada, the company extended Walmart partnership with onn Roku TV models. In Mexico, Roku added three new Roku TV licenses for a total of 12 partners that now offer a broad lineup of Roku TV models. In Brazil, AOC launched a new lineup of 4K Roku TV models and Semp TCL launched six new Roku TV models.
In the UK, RCA entered the market with new Roku TV models and TCL launched the UK’s first-ever QLED Roku TV model. The company expanded Roku TV program with TCL and Metz in Germany and with TCL in Australia.
Operating Details
Gross margin, as a percentage of total revenues, contracted 190 basis points from the year-ago quarter’s level to 42%.
Operating expenses increased 71.5% year over year to $614.2 million. As a percentage of total revenues, the metric expanded to 70.9% from 41.4% in the year-ago quarter.
Research & development, sales & marketing and general & administrative expenses grew 74.5%, 82.2% and 40.4% on a year-over-year basis to $220.6 million, $297.5 million and $96 million, respectively.
In the fourth quarter, negative adjusted EBITDA was $95.2 million compared with $86.7 million in the year-ago quarter.
Operating loss was $249.8 million in the reported quarter against operating income of $21.3 million in the year-ago quarter.
Balance Sheet
As of Dec 31, 2022, cash and cash equivalents were $1.96 billion compared with $2.01 billion as of Sep 30, 2022.
As of Dec 31, 2022, Roku had total debt of $79.9 million compared with $82.4 million on Sep 30, 2022.
Guidance
For first-quarter 2023, Roku expects total net revenues of $700 million, total gross profit of roughly $310 million and adjusted EBITDA of negative $110 million.
Zacks Rank & Stocks to Consider
Roku currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Six Flags Entertainment SIX, Liberty Global LBTYA and Warner Bros. Discovery WBD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Six Flags Entertainment, Liberty Global and Warner Bros. Discovery are scheduled to report their quarterly results on Feb 22, Feb 23 and Mar 2, respectively.
The Zacks Consensus Estimate for SIX’s fourth-quarter 2022 earnings is pegged at 23 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for LBTYA’s fourth-quarter 2022 earnings is pegged at 49 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for WBD’s fourth-quarter 2022 earnings is pegged at 8 cents per share, down 42.9% over the past 30 days.
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