Roku’s Q2 2023 earnings report beat analyst estimates for earnings and users, pushing up the stock in afterhours trading, despite what the company called a “muted” TV advertising climate.
In afterhours trading the stock was up from its close of $68.19 to 74.40 at 5.53 p.m. ET, on July 27.
Roku reported that active accounts on its streaming platforms increased by 16% YoY to 73.5 million and by 1.9 million in Q2 alone.
Meanwhile, total streaming hours were up 21% YoY in Q2 2023 to 25.1 billion hours even though streaming hours did not increase during Q2. The total streaming hours translates into about 3.8 hours per day in active accounts, Roku reported.
Total net revenue was $847 million, up 11% year over year (YoY), while platform revenue was $744 million, up 11% YoY and gross profit was $378 million, up 7% YoY.
“We have begun to see some ad verticals improve, which resulted in modest YoY Platform revenue growth in Q2, and we are well positioned to re-accelerate growth as the ad market recovers. We continue to moderate the YoY growth rate of operating expenses and remain committed to our plan to deliver positive Adjusted EBITDA for the full year 2024,” the company said in a letter to shareholders.
Even so, the company remained cautious on the overall ad market.
The shareholder letter noted that: “While Q2 Platform revenue exceeded our expectations, the macro environment continued to create uncertainty with the total U.S. advertising market flat YoY in Q2. ad spend on traditional TV declined 9.4% YoY, and traditional TV ad scatter was down 17.2% YoY (according to SMI). Consistent with Q2 industry trends, brand advertising on the Roku platform remained pressured YoY in verticals like technology and M&E (media and entertainment), which was offset by increasing spend from important categories like CPG (consumer packaged goods) and health and wellness. Also, the macro uncertainty has impacted the timing of Upfront negotiations, with commitments proceeding at a slower pace across the industry.”
