Roku once again reported huge quarterly gains in its platform business, expanding sales for the ad-driven side of its business by 117% in the second quarter to $523.3 million, and overall revenue by 81% to $645.1 million.
But as the company warned earlier this year, margins on Roku devices went under water due to global supply issues, dipping to a negative 5.9%.
"Within the Player segment, we expect global supply chain constraints and component cost increases to worsen in the second half of 2021, leading to increasing negative player gross margin," Roku said in a letter to shareholders published Tuesday. "We believe these industry supply chain constraints and cost increases for streaming players and TV OEM partners will continue into 2022."
And perhaps more foreboding to Roku's longterm core streaming business goals, subscriber growth has decelerated, and engagement shrunk in Q2.
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Roku finished Q2 with 55 million active users, up 1.5 million from the first quarter. That's less than half of the 3.2 million active accounts Roku added between Q1 - Q2 last year, a metric that has steadily declined in the year since.
Meanwhile, the number of hours Roku users spent watching video on the Roku platform declined sequentially by nearly 6% to 17.4 billion hours in Q2.
Still, Roku's advertising business is growing too fast to get too hung up on the fault lines.
Average revenue per customer rose by 46% to $36.46, while gross profit was up 130% year over year to $338 million.
"We continue to make good progress in our international markets," Roku added in its shareholder letter. "In the UK, we enhanced our product offering with the launch of TCL Roku TV models, which we expect will drive further platform adoption. And, we are excited to bring Roku to Germany, starting with players, later this year. We believe our business model will serve us well as we seek to grow in international markets by building scale with our affordable hardware and the Roku OS (the only OS purpose-built for TV), driving user engagement with a best-in-class user experience, and monetizing activities on the platform over time."
