Roku’s second-quarter earnings report indicates that despite a 42% year-over-year increase in revenue, the platform’s advertising date of recovery remains uncertain, but will most likely “As economic pressures caused advertisers to further re-evaluate how much and where to invest media dollars, Roku delivered strong growth in our ad business, particularly relative to the overall TV ad market that was down,” the company wrote in a shareholder letter earlier this week.
Roku reported revenue of USD 356 million for the quarter, a 42% year-over-year increase, as opposed to analyst expectations of USD 315 million. It reported a loss per share of 35 cents, versus previous predictions that stated a 50 cent per share loss. Wall Street earnings estimates for the second quarter of 2020 and saw streaming hours skyrocket a whopping 65% year over year.
The letter specifically highlighted the severity of the impact the pandemic has had on advertising and TV advertising and assures that Roku’s performance and advertising strategies have been effective. The company said that the business experienced a 346% year-over-year increase, partially due to social media spending reevaluation. The company saw increases in revenue in both its platform business and its player business. Platform revenues were up 46% to $244.8 million and player revenue was up 35% to $111.3 million. Demand for players greatly increased following the start of shelter-at-home orders in mid-March. Despite the pandemic’s adverse impact on global supply chains, we have largely managed to keep our products in stock, albeit with greater use of air freight than originally planned.
As a result of increasing demand and inventory levels with no breathing space, the platform was obligated to run fewer promotions than usual, which usually benefits the cause. Despite the setback, the platform added 3.2 million incremental active accounts in Q2 to reach 43 million (a 41% year over year increase), while streaming hours increased by 2.3 billion hours over the last quarter to 14.6 billion. Streaming hours peaked in mid-Q2 but have remained higher than figures before COVID.
In the future, the company projects an overall revenue will grow “substantially” in the second half and for the full-year 2020, but not in full force, as they planned before COVID. “We plan to continue to monitor the trajectory of the business, and prudently manage expenses and capital expenditures,” the company said. “This approach of investing to enhance our competitive advantages and future growth while managing through external headwinds will likely mean that we run at an adjusted EBITDA loss for the year.”
As economic pressures caused advertisers to further re-evaluate how much and where to invest media dollars, Roku delivered strong growth in our ad business, particularly relative to the overall TV ad market that was down.” Roku