Roku Q1 Results Show Benefits Of Streaming Price Hikes

Roku posted solid first-quarter financials, with positive results in several key metrics illustrating the benefits of ongoing price inflation in the streaming sector.

Net losses totaled 35 cents a share, far better that Wall Street analysts’ consensus estimate of 62 cents and much narrower than the $1.38 recorded in the year-ago quarter. Revenue of $754.9 million fell significantly short of the Street’s expectation for $848.6 million, but the company notched its third straight quarter of positive Adjusted EBITDA and free cash flow.

Streaming households reached 81.6 million, up 14% from a year ago, while streaming hours increased 23% to 30.8 billion.

Platform revenue came in at $755 million, up 19%, which Roku said reflected contributions from streaming services distribution and advertising activities. Platform gross margin was flat at 52%, and average revenue per used (ARPU) was also essentially flat at $40.65 on a trailing 12-month basis. The sideways movement was due to a growing percentage of overall households being in international markets, an increasing strategic focus for the company.

Proceeds from streaming services distribution grew faster than overall Platform revenue, which the company chalked up in part to price increases for subscription-based apps. “Live sports are still accelerating the shift of viewers from traditional TV to streaming,” executives noted in their quarterly letter to shareholders, with that demand helping drive sign-ups via Roku. The letter noted Roku’s role in driving sign-ups for Paramount+ ahead of last February’s Super Bowl, which wound up the most-watched in history across all platforms.

Most of the major services have seen step-ups in price over the past year as overall viewership continues to migrate from linear to streaming. Streaming providers are also grappling with the financial challenges of the space, with Wall Street insisting on profitability and pricing an important lever to pull.

“Roku Pay, our payments and billing service, makes it easy for both our viewers and content partners to transact subscriptions,” the letter noted. “We are focused on the large opportunity to grow the share of subscriptions on our platform that are billed through Roku Pay.”