Roku Q4 2022 Earnings: Projected $1.73 Loss Per Share Amid Ad Spend Decline, User Base Hits 70M

Industry analysts anticipate Roku Inc. (ROKU) will report its largest-ever quarterly loss in Q4 2022, driven by a 7.7% revenue decline to $798.4 million amid a difficult advertising environment.

Highlights

• Expected loss per share of $1.73 compared to $0.17 EPS a year ago.
• Revenue forecasted to drop to $798.4 million, down from previous periods.
• Advertising budgets pressured by inflation, impacting key revenue streams.
• User base growth remains robust with over 70 million active accounts, a 16% increase year-over-year.

Roku, a leading entertainment platform in the U.S. ranked among the top nine by app downloads, faces significant headwinds as ad spending slows due to inflationary pressures and the macroeconomic climate. Despite this, Roku's expanding active user base offers promise for future monetization.

Analysts from Visible Alpha estimate Roku's net losses attributable to shareholders could reach $241.5 million, a stark contrast to $23.7 million net income in Q4 2021. The loss per share is predicted at $1.73, underscoring the impact of reduced ad sales and advertising demand.

Roku is set to release its full Q4 and fiscal year 2022 earnings after market close on February 15.

Inflation has notably slowed advertising expenditures and smart TV sales, both critical to Roku’s revenue model. Moreover, the transition from traditional linear TV advertising to digital platforms faces delays, despite streaming services such as Netflix and Disney+ introducing ad-supported subscription tiers.

Wedbush analysts Alicia Reese and Michael Pachter commented, "Current macroeconomic trends have likely delayed Roku's growth path by approximately one year." However, they remain optimistic about Roku’s ability to capture a growing share of digital ad spending as market conditions improve.

While Roku's stock has rebounded somewhat early in 2023, it still trails 66% over the past year, underperforming the S&P 500 Communication Services Index, which declined 24% in the same period.

Data sources include Visible Alpha estimates and Roku’s Q4 account metrics from 2020 through 2022.

Active Accounts: Roku’s Key Growth Indicator

Central to Roku’s advertising revenue is the number of active accounts, defined as distinct user accounts streaming content within the past 30 days. Although multiple viewers may share a single account, active account count closely correlates with total viewership, indicating potential advertising reach.

Despite economic challenges, Roku’s active accounts increased substantially, with expectations exceeding 70 million for Q4 2022, marking at least a 16% rise compared to 60.1 million in the same quarter the previous year. This growth highlights Roku’s expanding footprint in the streaming ecosystem, positioning it well for future ad revenue gains as market conditions stabilize.

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