Are Roku Q1 Results Really That Disappointing?

When Roku Inc. (NASDAQ: ROKU) released first-quarter financial results after markets closed Thursday, the company said that it had a net loss of $0.45 per share and $321 million in revenue. That compared with consensus estimates calling for a net loss of $0.45 per share and $306.72 million in revenue, as well as the $0.09 in earnings per share and revenue of $206.66 million posted in the same period of last year.

During the latest quarter, active accounts increased 2.9 million sequentially to 39.8 million, while streaming hours increased by 1.5 billion to 13.2 billion. Average revenue per user came to $24.35 on a trailing 12-month basis, up 28% year over year.

Platform revenues increased 73% year over year to $232.6 million, and Player revenues increased by about 22% to $88.2 million.

The company did not issue guidance for the second quarter, like many other companies, citing the uncertainty surrounding the coronavirus crisis. Consensus estimates call for a net loss of $0.43 per share and $313.32 million in revenue.

Anthony Wood, founder and CEO, commented:

Since mid-March, platform monetization has seen a mixture of impacts. For example, subscription video on demand (SVOD) trials and subscriptions, and transactional video on demand (TVOD) purchases are up. While our advertising business has seen higher than normal cancellations as overall advertising budgets have declined, this has been partially offset by ad-spend that has moved to Roku from traditional TV budgets. Despite the likelihood that total U.S. advertising expenditures will decline in 2020, we believe Roku is relatively well positioned based on the effectiveness of our ad products and the trend towards streaming. As a result, we anticipate that our ad business will deliver substantial revenue growth on a year-over-year basis, albeit at a slower pace and lower gross profit than we originally expected for the year.

Shares of Roku traded down over 7% at $127.41, in a 52-week range of $58.22 to $176.55. The consensus price target is $128.28.