Roku (NASDAQ:ROKU) Q1: Beats On Revenue But Quarterly Guidance Underwhelms

Radek Strnad /
2022/04/28 4:42 pm EDT
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Streaming TV platform Roku (NASDAQ: ROKU) beat analyst expectations in Q1 FY2022 quarter, with revenue up 27.7% year on year to $733.6 million. However, guidance for the next quarter was less impressive, coming in at $805 million at the midpoint, being 2.2% below analyst estimates. Roku made a GAAP loss of $26.3 million, down on its profit of $76.2 million, in the same quarter last year.

Is now the time to buy Roku? Access our full analysis of the earnings results here, it's free.

Roku (ROKU) Q1 FY2022 Highlights:

  • Revenue: $733.6 million vs analyst estimates of $718.5 million (2.1% beat)
  • EPS (GAAP): -$0.19
  • Revenue guidance for Q2 2022 is $805 million at the midpoint, below analyst estimates of $823.1 million
  • Free cash flow of $87 million, up from negative free cash flow of $37.4 million in previous quarter
  • Gross Margin (GAAP): 49.7%, down from 56.9% same quarter last year
  • Active Accounts: 61.3 million, up 7.7 million year on year

Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.

Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to or what movie they watch, or finding a date, online consumer businesses today are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have increased usage and stickiness of many online consumer services.

Sales Growth

Roku's revenue growth over the last three years has been exceptional, averaging 54.9% annually. Roku may have benefited slightly from the initial impact of the pandemic bringing forward some sales, but growth rates have normalized since then.

Roku Total Revenue

This quarter, Roku beat analyst estimates and reported solid 27.7% year on year revenue growth.

Guidance for the next quarter indicates Roku is expecting revenue to grow 24.7% year on year to $805 million, slowing down from the 81.1% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 34.4% over the next twelve months.

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Usage Growth

As a subscription app, Roku generates revenue growth by growing both the subscriber numbers, and the total lifetime value of the average subscriber.

Over the last two years the number of Roku's monthly active users, a key usage metric for the company, grew 20.6% annually to 61.3 million users. This is a strong growth for a consumer internet company.

Roku Active Accounts

In Q1 the company added 7.7 million monthly active users, translating to a 14.3% growth year on year.

Key Takeaways from Roku's Q1 Results

With a market capitalization of $11.5 billion, more than $2.23 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

It was great to see that Roku’s user base is growing. And we were also glad to see good revenue growth. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results were mixed, although there were positives for Roku. The company is up 4.86% on the results and currently trades at $96 per share.

Should you invest in Roku right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.