Shares of Roku traded higher after hours on Wednesday after the company reported a smaller-than-expected loss for its first quarter on 2023 and beat Wall Street expectations on revenue.
The streamer reported revenue of $741 million on Wednesday, up 1% from the same period a year earlier, following a warning by company leaders that sales would peak in 2023. Platform revenue for the quarter, which is largely based on ad sales and subscription revenue with partners, was $635 million, down 1% year-over-year, while device revenue was $106 million, down 1% year-over-year. was 18% higher.
Roku posted a net loss of $193.6 million during the quarter, or a loss of $1.38 in earnings per share. Gross profit was $338 million, down 7% year-over-year.
The company previously forecast net revenue of roughly $700 million, net gross profit of roughly $310 million, a net loss of $205 million and an adjusted EBITDA loss of $110 million for the first quarter of 2023. Analysts were expecting a loss of $1.37 per share. Revenue of $708.5 million.
Roku added 1.6 million active accounts during the quarter, for a total of 71.6 million globally.
“In the US, our active accounts are reaching half of all broadband homes,” the company wrote in its quarterly letter to shareholders. “This unmatched scale is the foundation of our business model, which leads to significant engagement and increased monetization opportunities.”
Average revenue per user for the quarter came in at $40.67, down 5% year over year. Total streaming hours were 25.1 billion, up 4.2 billion hours year-over-year and representing a record high of 3.9 streaming hours per active account per day.
Roku emphasized that the macroeconomic environment remains challenged during the quarter, with the total US advertising market down 7.4% year over year and traditional TV down 12.7% year over year.
While advertising spending on the Roku platform remained under pressure in verticals including financial services and M&E, verticals such as travel and health and wellness improved. The company noted that smart TV unit sales in the US were resilient in Q1, driven by lower TV panel and consumer spending on freight costs and income tax refunds.
Looking ahead, Roku expects macroeconomic uncertainties to persist through 2023, similar to previous guidance.
“Consumers remain under pressure from inflation and recession fears, and thus discretionary spending is likely to remain muted,” the company said. “Accordingly, we expect the advertising market in Q2 to look similar to that in Q1, with ad spend improving from some verticals (travel and health & wellness), while others remain under pressure (M& e and financial services).
For the second quarter, the Company anticipates total net revenue of approximately $770 million, total gross profit of approximately $335 million and adjusted EBITDA of negative $75 million.
“We are executing against our plan to focus investments on high-priority projects while slowing YoY operating expense growth,” Roku said. “Given our ongoing work to reignite revenue growth and improve operating efficiencies, we remain committed to delivering positive adjusted EBITDA for the full year 2024.”
