Roku reported earnings today, August 5, 2020, beating earnings estimates for the second quarter of 2020.
In a letter to shareholders CEO Anthony Wood and CFO Steve Louden wrote:
Roku, helped again by stay-at-home streaming during the coronavirus pandemic, topped Wall Street earnings estimates for the second quarter of 2020 and saw streaming hours skyrocket a whopping 65% year over year.
Roku added 3.2 million incremental active accounts in Q2 to reach 43 million (up 41% year over year), while streaming hours increased by 2.3 billion hours over last quarter to 14.6 billion. Streaming hours peaked in mid-Q2 but has remained higher than pre-pandemic levels, according to the company.
In Q2 Roku delivered strong results highlighted by exceptional account growth. The company generated the largest net increase in active accounts in our history outside of a Q4 holiday period. Roku and our partners also saw a surge in growth for AVOD, SVOD and TVOD services during the quarter. As economic pressures caused advertisers to further re-evaluate 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
The re-platforming of TV to streaming has accelerated. We believe that Roku’s products and services are more relevant than ever, that we are an essential partner to content owners who want to reach large streaming audiences, and that our modern tools and incremental reach over linear TV drive great results for brands.Q2 2020 Highlights
- Total net revenue grew 42% YoY to $356.1 million;
- Platform revenue increased 46% YoY to $244.8 million;
- Gross profit was up 29% YoY to $146.8 million;
- Roku added 3.2 million incremental active accounts in Q2 2020 to reach 43 million;
- Streaming hours* increased by 2.3 billion hours over last quarter to 14.6 billion;
- Average Revenue Per User (ARPU) of $24.92 (trailing 12-month basis), up 18% YoY;
- The Roku Channel reached U.S. households with an estimated 43 million people.
Forward Looking Statements from the company:
We believe the pandemic has accelerated the long-term trend towards all TV being streamed, but because the short-term outlook is both variable and uncertain, we are not issuing a formal outlook at this time. The increasing prevalence of COVID-19 infections around the world and the potential for disruptions and changes to historical consumer behavior and spending patterns during the back-to-school and holiday seasons greatly inhibit our ability to forecast. Q4 is the seasonally largest quarter for Roku and there is a wide range of potential outcomes given increased consumer interest in streaming on one hand, and the possibility of retailer, supply chain and advertising constraints at critical times on the other.
The ad industry outlook remains uncertain for Q3 and Q4, and we believe that total TV ad spend will not recover to pre-COVID-19 levels until well into 2021. Advertisers in industries like Casual Dining, Travel and Tourism have significantly slowed their spending. However, we remain confident in our ability to grow our ad business, albeit not as much as we would have expected prior to the pandemic, as marketers re-allocate spend and follow consumers in the shift to streaming. As a result, despite the potential reasons for variability listed above, we believe that our overall revenue will grow substantially on a year-over-year basis in the second half and for the full-year 2020, albeit not as strongly as we had anticipated prior to the pandemic.
Given the size of the streaming opportunity, we remain committed to our strategic investment areas and are continuing to hire, albeit at a slower pace than pre-COVID-19 levels. We plan to continue to monitor the trajectory of the business, and prudently manage expenses and capital expenditures. This approach of investing to enhance our competitive advantages and future growth while managing through external headwinds will likely mean that we run at an adjusted EBITDA loss for the year.
Since our last earnings call in May, we raised approximately $350 million in incremental equity capital to provide more flexibility and augment our cash and liquidity position. We ended Q2 with $887 million of cash, cash equivalents, restricted cash and short-term investments and have approximately $70 million of available liquidity under our credit facility.
View the financial data and listen to the earnings call here: https://ir.roku.com