February 17, 2022
Wall Street’s love/hate relationship with streaming video pioneer Roku continues. The SVOD market co-founder (with Netflix) Feb. 17 said it added more than 8.9 million active users in the fourth quarter (ended Dec. 31, 2021), finishing the period with 60.1 million, compared with 51.2 million in the previous-year period.
Streaming hours increased 15% (14.4 billion) to 19.5 billion, compared with 17 billion a year earlier. For the fiscal year, streaming hours increased by 14.4 billion to 73.2 billion, from 58.8 billion in 2020.
At the same time, Roku said streaming device sales revenue dropped 9% to $161.7 million, from $178.7 million in the previous-year period. For the year, player revenue dipped 6% to $479.6 million, from $510.6 million in 2020.
The decline in player sales and projected-first quarter (ended March 31) loss of $30 million, after posting net income of $23.6 million in Q4, was enough to send Roku shares falling almost 10% in post-market trading. The company generated a $242 million profit in 2021 on revenue of $2.28 billion. That compared with a loss of $17.5 million on revenue of $1.26 billion in 2020.
Writing in the shareholder letter, founder/CEO Anthony Wood and CFO Steve Louden remained upbeat on Roku’s ongoing role in the market transformation toward streaming video.
“Almost every major media company is reorienting its business around streaming and has launched a flagship service, spending billions on content and marketing to attract and retain subscribers,” Wood and Louden wrote. “At the same time, with the significant gap that exists between viewership and ad budgets, we are still in the early days of the secular shift to streaming.”
The executive said they expect ongoing supply chain disruptions will continue to impact the global economy in the macro level, and Roku on the micro.
“This will affect the broader consumer electronics space, and the TV industry in particular,” they wrote. “Overall TV unit sales are likely to remain below pre-COVID levels, which could affect our active account growth.”
Indeed, media reports suggest Roku may try manufacturing branded televisions in-house rather than through third-party Chinese manufacturers.
Meanwhile, on the heels of its first original feature film (produced by Lionsgate), Zoey’s Extraordinary Christmas, which Roku said was the No. 1 on-demand title on The Roku Channel in Q4, spurred ongoing investment in “original” content. In fact, half of the Top 10 on-demand titles streamed on The Roku Channel last year were designated “Roku Originals.”
“Our robust content offering and our unique ability to efficiently and effectively promote content to our users creates significant value for advertisers,” Woods and Louden wrote.