Roku stock plunged nearly 20% in after hours trading Wednesday after the struggling streaming company reported another quarter-over-quarter decline in revenue.
Specifically “platform revenue,” which is comprised mainly of Roku’s advanced advertising sales, dropped to $670.4 million in the third quarter from $673.2 million in Q2. Platform revenue is still growing for Roku at a year-over-year rate of 15%.
Roku had warned equity analysts about what it projected as a weak second half of 2022. And it actually beat forecasts in a number of areas.
Declines for “player revenue” — which is mainly sales of Roku connected-TV devices — decelerated by just $200,000 in Q3 from Q2, coming in at $91 million. That business, severely affected by the global supply chain crisis and the scarcity of certain silicon components, is down 7% year over year and had declined by a whopping 46% sequentially at one point earlier this year.
Overall revenue was off by about $3 million sequentially to $761.4 million, but is still expanding at 12% on an annualized basis. Consensus analysts' forecasts had expected revenue to come in at only around $694 million. The net loss of $122 million for the quarter also beat forecasts.
Growth in active users also sped up, with 2.3 million new regulars joining the party in Q3 vs. just 1.8 million in Q2.
Engagement was up, too. Total time spent on the Roku platform, which had narrowly declined in the second quarter, was up nearly 6% to 21.9 billion hours.
And average revenue per customer increased by 15 cents to $44.25, and was up 10% year over year.
Certainly, Roku isn't the only streaming company reporting slow ad sales. YouTube just announced its first quarterly drop in ad revenue last week.
Perhaps investors were reacting to Roku's sustained bearish outlook on its business.
“As we enter the holiday season, we expect the macro environment to further pressure consumer discretionary spend and degrade advertising budgets, especially in the TV scatter market,” the company said in its Q3 earnings letter to shareholders. “We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or rebound. We therefore anticipate Q4 Player revenue and Platform revenue to be lower year over year.”
Roku also revealed that chief financial officer Steve Louden will step down in 2023 after a replacement is hired and trained. Louden, a former Washington Mutual and Disney financial executive, joined Roku in 2015 and helped guide the company’s IPO.
It was also announced back in 2019 that he'd step down, but Louden reversed course on that decision. ■
