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Jun 30, 2020
Roku Q2 2020 Earnings Report
Roku delivered strong results, marked by exceptional account growth and a surge in growth for AVOD, SVOD, and TVOD services, along with strong advertising growth relative to the overall TV ad market.
Key Takeaways
Roku's Q2 2020 was strong, with a 42% YoY increase in total net revenue to $356.1 million, driven by a significant increase in active accounts and streaming hours. The company saw substantial growth in its ad business and platform revenue, despite the pandemic's impact on the broader advertising market.
Total net revenue grew 42% year-over-year to $356.1 million.
Platform revenue increased 46% year-over-year to $244.8 million.
Roku added 3.2 million incremental active accounts in Q2 2020, reaching a total of 43 million.
Streaming hours increased by 2.3 billion hours over last quarter to 14.6 billion.
Roku
Roku
Roku Revenue by Segment
Revenue by Segment
Platform Revenue
CapyFin.comDevices Revenue
CapyFin.com Forward Guidance
Due to the uncertainty of the pandemic, Roku is not issuing formal outlook. However, they anticipate that overall revenue will grow substantially year-over-year in the second half and for the full-year 2020, though not as strongly as expected pre-pandemic. They also anticipate running at an adjusted EBITDA loss for the year.
Positive Outlook
- Roku believes the pandemic has accelerated the long-term trend towards all TV being streamed.
- Roku remains confident in their ability to grow their ad business as marketers re-allocate spend and follow consumers in the shift to streaming.
- Roku is committed to their strategic investment areas and are continuing to hire, albeit at a slower pace than pre-COVID-19 levels.
- Roku raised approximately $350 million in incremental equity capital to provide more flexibility and augment their cash and liquidity position.
- Roku ended Q2 with $887 million of cash, cash equivalents, restricted cash and short-term investments and have approximately $70 million of available liquidity under their credit facility.
Challenges Ahead
- The short-term outlook is both variable and uncertain due to the pandemic.
- The increasing prevalence of COVID-19 infections around the world and the potential for disruptions and changes to historical consumer behavior and spending patterns during the back-to-school and holiday seasons greatly inhibit their ability to forecast.
- Q4 is the seasonally largest quarter for Roku, and there is a wide range of potential outcomes given increased consumer interest in streaming on one hand, and the possibility of retailer, supply chain and advertising constraints at critical times on the other.
- The ad industry outlook remains uncertain for Q3 and Q4, and Roku believes that total TV ad spend will not recover to pre-COVID-19 levels until well into 2021.
- Advertisers in industries like Casual Dining, Travel and Tourism have significantly slowed their spending.
Revenue & Expenses
Visualization of income flow from segment revenue to net income