Earnings Per Share
Source: Predictions based on analysts’ consensus from Visible Alpha
Roku (ROKU) Financial Results: Analysis
Roku, Inc. (ROKU) reported mixed Q4 FY 2021 earnings results on Feb. 17. Earnings per share (EPS) crushed consensus estimates but were down 65.3% compared to the year-ago quarter. Revenue, however, came in below analyst forecasts, up 33.2% year over year (YOY). The total number of Roku’s active accounts came in at 60.1 million for the quarter, just missing analysts’ expectations. The company’s shares fell as much as 11% in extended trading. Over the past year, Roku’s shares have provided a total return of -68.3%, well below the S&P 500’s total return of 11.4%.
ROKU Active Accounts
Roku’s active accounts rose 17.4% YOY, the slowest pace of growth out of any quarter in at least the past four years. Growth in the company’s user base, as measured by active accounts, has been slowing the larger it becomes. Growth in active accounts for each quarter in FY 2018 ranged between 40% and 46% YOY. By FY 2020, that range had fallen to 37% to 42% YOY. Growth has continued to decelerate in FY 2021.
Roku defines active accounts as the number of distinct user accounts that have streamed content on its platform sometime within the past 30 days of the period. Streamed content from the Roku Channel only on non-Roku platforms does not count as streamed content for the purpose of measuring active accounts. Also, the metric does not distinguish between unique individuals streaming content on the same account. For example, an account with family members all streaming content on that same account only counts as one active account. Nevertheless, the number of active accounts will be closely correlated with the number of viewers, or targets for advertisers. The greater the number of active accounts using Roku’s platform, the more attractive the platform will be to advertisers, which will attract more ad spending.
Roku highlighted that its total U.S. active account user base is now greater than the U.S. video subscribers of all cable companies combined. The company added that it believes the slowdown in growth in the quarter was largely due to global supply chain disruptions affecting the U.S. TV market. Roku’s average revenue per user (ARPU) rose 42.7% YOY to $41.03.
Roku expects to generate total net revenue of $720 million in Q1 FY 2022, reflecting an increase of 25% YOY. It also estimates that gross profit for the first quarter will be roughly $360 million. The company said that it expects the supply chain disruptions to continue to have an impact on the global economy throughout 2022, thus affecting the TV industry. Roku said that TV unit sales will likely remain below pre-pandemic levels, which could adversely affect its active account growth.
Roku’s next earnings report (for Q1 FY 2022) is expected to be released on May 11, 2022.