Roku now has 43 million accounts as it added 3.2 million new subscribers in Q2. Revenue for Q2 hit $356.0 million which beat estimates by 14.0% and increased 42.4% year-over-year.
The takeaways:
- “As economic pressures caused advertisers to further reevaluate how much and where to invest media dollars, Roku delivered strong growth in our ad business, particularly relative to the overall TV ad market that was down.” CEO Anthony Wood and CFO Steve Louden wrote in a shareholder letter.
- Streaming hours increased by 2.3 billion hours over the last quarter to 14.6 billion up 65% YOY.
- Roku reported an Average Revenue Per User of $24.92, up 18% YOY. Total gross profit was $146.8 million up 29% to Q2 2019.
Streaming wars: A missing update from the earnings reports was a progress report on negotiations with Warner Media and NBCUniversal. Both the HBO Max and Peacock platforms are currently unavailable on Roku.
- “It’s important to us that we establish win-win-win economic relationships… It’s what allows us to invest in innovation and bring low-cost devices to consumers,” said Roku CEO when quizzed on the matter.
Roku, however, does have a partnership with Disney+ which has been proving fruitful. Since the release of Hamilton, Roku has been the number 1 connected device for streaming hours for Disney+.
Looking ahead: Roku is still optimistic for a strong year. The company stated that they “remain confident in [their] ability to grow [their] ad business, albeit not as much as [they] would have expected prior to the pandemic.”
- In February the company set goals to hit 42% YOY revenue growth, a breakeven EBITDA and a net loss of $160 million to $180 million.
The roll-up: The pandemic has certainly accelerated connected TV adoption in the U.S. In a recent survey by eMarketer, an estimated 160 million Americans stream on connected TV every month. Currently, CTV advertising only accounts for 1% of television advertising dollars showing potential growth opportunities.
