Roku reported income for his first quarter of 2020 after Thursday’s bell which respected the estimates of its loss per share and beat its income. The report provided insight into the impact of the coronavirus pandemic on its business, as advertisers cut spending in a climate of economic uncertainty.
The stock fell 10% after hours of the report’s publication, after the company said it had seen a higher number of ad cancellations than usual.
Here’s what Roku reported:
- Loss per share: 45 cents
- Returned: $ 321 million
Wall Street forecast a loss of 45 cents a share on revenue of $ 307 million, according to consensus estimates from Refinitiv. However, it is difficult to compare the reported profits to analysts’ estimates for the first quarter of Roku, as the pandemic continues to hit global economies and makes the impact of profits difficult to assess.
As more people stayed indoors during the pandemic, Roku said it gained 2.9 million additional active accounts during the quarter, reaching 39.8 million in total, a 37% increase from a year ago. on the other. It also saw an increase of 1.6 billion hours of streaming, bringing the record to 13.2 billion hours, an increase of 49% year over year.
The company recorded $ 232.56 million in platform revenue, which included advertising and license fees for its software, and $ 88.21 million in its player segment, which included device sales. .
Roku said that its advertising activity had recorded higher than normal cancellations, but that it had been offset by other advertisements that had moved from traditional television to its platforms. Despite the decline in media advertising due to the coronavirus pandemic, Roku said he still expects his advertising business to grow, but at a slower pace.
“In summary, while our advertising activity faces short-term challenges, our content distribution activity, as well as overall consumer engagement, have benefited from a sharp increase in the use of OTTs,” said indicated the company in its letter to shareholders. “There can be no assurance that these trends will continue for the remainder of the second quarter or throughout 2020; however, we believe they may represent an acceleration of longer-term industry reshaping trends that were already well established before COVID – 19. “
When calling the company’s results, CEO Anthony Wood compared the shift from advertising dollars from linear to OTT to the shift from print to digital during the last recession.
“The expenses will come back, but it is likely that, in our opinion, they will not come back as they were,” said Wood. “Even in the case of sports, we believe that this disruption will force a re-evaluation largely by marketers.”
Roku CFO Steve Louden declined to provide guidance for the year 2020 after the company previously pulled out of its previous outlook. He said the company is expected to record an adjusted EBITDA loss for the year.
Some companies, such as Google and Facebook, reported signs of recovery in their advertising activities in April, while others, such as Twitter, offered less comfort.
Although ad spending was affected, consumers spent more time on streaming services in general. Services like Netflix and Disney + reported huge spikes in subscribers during the crisis, as home stay orders forced more people to stay indoors.
Netflix added about 15.8 million global subscribers in the first quarter, a 64% increase from the same quarter last year. Subscribers to Disney’s new streaming service also accelerated to 54.5 million paying subscribers on May 4, from 33.5 million at the end of its first quarter on March 28.
But Netflix executives have warned that growth will not last forever as people break out of the lockdown. And social distancing rules have forced television and film executives to delay production, which will likely cause a shortage of new content later in the year.
Roku said demand for its equipment, including televisions, has remained strong despite supply chain issues such as factory closings in China. As factories have reopened and Roku is trying to restock to keep up with demand, the company has said it has to spend more on air cargo and expects ever higher air freight costs in the short term.
Roku said he was working with retail partners and TV brands because he expected changes in buying behavior later in the year, including a move to e-commerce platforms.
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