Roku Q2 FY2022 Earnings Preview: Revenue and Active Accounts Growth Slows in 2022

Focus on Roku's Active Accounts and Revenue Trends

Key Highlights to Watch

• Analysts forecast an EPS of -$0.71, down from $0.52 in Q2 FY2021.
• Active accounts are projected to increase year-over-year (YOY) but at the slowest pace in over five years.
• Revenue growth is anticipated to slow to its lowest rate in more than four years.

Roku Inc. (ROKU) experienced impressive revenue growth exceeding 50% annually over the past three years, fueled by the surge in streaming during the COVID-19 pandemic. However, recent quarters indicate a deceleration in growth, with the company reporting losses in the latest period. This has led analysts to adopt a more cautious outlook on Roku's ability to expand within the fiercely competitive streaming industry.

Investors eagerly await the Q2 FY2022 earnings release on July 28, 2022, to see if Roku can reverse the slowdown. Expectations point to widening per-share losses and a notable deceleration in revenue growth.

A critical metric to monitor is Roku’s total active accounts, representing the size of its user base. A larger subscriber count means more ad impressions, enhancing platform appeal to advertisers—a key revenue driver. While total active accounts are expected to reach an all-time high, the YOY growth rate is forecasted to be significantly slower than the previous year.

Over the past year, Roku's stock performance has lagged behind the broader market. After briefly outperforming in July 2021, the shares have declined sharply, impacted by disappointing earnings reports throughout FY2021. Although the decline slowed early in 2022, Roku’s stock remains down approximately 81.6% over the past year compared to the S&P 500’s -10.9% as of July 27, 2022.

Roku’s Earnings and Revenue History

Before the pandemic, Roku faced challenges posting positive quarterly earnings, with six consecutive quarters of losses from Q1 FY2019 through Q2 FY2020. This trend reversed temporarily with six straight quarters of positive EPS, though earnings began to weaken again by late 2021. Roku reported losses in Q1 FY2022 and is expected to report its largest losses in over four and a half years for Q2 FY2022.

Revenue growth was strong pre-pandemic, ranging from 36.5% to 59.5% YOY in 2018 and 2019, and peaked during the pandemic with growth exceeding 80% YOY in Q2 FY2021. However, growth has slowed significantly since, with analysts projecting a 24.9% increase in revenue for Q2 FY2022.

Source: Visible Alpha

Why Active Accounts Matter

Active accounts represent unique user accounts that streamed content on Roku’s platform within the past 30 days. This metric excludes streams from the Roku Channel on non-Roku devices and does not count multiple users on the same account separately. The number of active accounts correlates closely with advertising reach—more active accounts mean more ad impressions and higher advertising revenue potential.

Roku’s active accounts grew rapidly from 2017 through 2020, more than tripling in size. However, growth rates have slowed steadily since Q4 FY2020, dropping from 42.4% YOY in Q3 FY2020 to an expected 12.7% YOY in Q2 FY2022—the slowest growth in at least 21 quarters.

Investors should watch these trends closely to assess Roku's ability to sustain its market position amid increasing competition.

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