Roku on Thursday reported revenue and subscriber growth for its streaming TV platform in Q2, adding 1.9 million net active accounts in the period.
That’s more than the 1.6 million Roku added in Q1, with a total now at 73.5 million. Roku said the active account growth, which was slightly above what the streamer added a year ago, was primarily driven by its TV licensing program in the U.S. and international markets. Roku in a letter to shareholders, noted that internationally it deepened presence, with the Roku OS as the top selling smart TVOS in Mexico for the third quarter straight. It also expanded the Roku TV licensing program to Central America, launching RCA Roku models in five countries.
While active accounts on Roku increased, global streaming hours were steady at 25.1 billion compared to Q1 but grew 21% year over year. Global streaming hours reflect 3.8 streaming hours per active account per day. The company also saw streaming hours on The Roku Channel free ad-supported streaming TV (FAST) service grow more than 50% year over year. The Roku Channel offers three types of content including AVOD, Premium Subscriptions and Live TV with access to more than 350 linear FAST channels. In Q2 the Live TV offering was the No. 1 FAST service by active account reach on Roku’s platform. Also in the quarter The Roku Channel passed the 1% threshold of total TV time in the U.S., landing a standalone position on Nielsen’s The Gauge report.
And Roku marked year over year growth for both platform revenue (up 11% to $744 million) and device revenue (up 9% to $103.4 million) for total net revenue of $847 million. The company saw Q2 operating losses of $126 million tick up year over year, as did adjusted EBITDA of negative $17.8 million, though both financial results saw sequential improvements.
Roku generates platform revenue from digital advertising along with content distribution services, such as sales of its premium subscription partners. While platform revenue was higher than Roku’s expectations, the streamer cautioned that the macro environment still created uncertainty with a flat U.S. advertising market. That resulted in pressure on brand advertising on the Roku platform year over year, particularly around technology and media and entertainment verticals, offset by more spending from key categories like consumer packaged goods (CPG), and health and wellness.
Roku also cited macro impacts to the timing of Upfront negotiations, saying advertising commitments are moving at a slower pace across the industry.
And although platform revenue and active accounts grew, average revenue per user (ARPU) was down 7% year over year to $40.67. The ARPU drop was attributed to strong global active account growth outpacing that of platform revenue.
Roku is guiding for Q3 net revenue of roughly $815 million, gross profit around $355 million and Adjusted EBITDA of negative $50 million.