Roku found itself with more viewers than ever in its second quarter but still no profits, thanks to increases in its own expenses and the coronavirus pandemic bruising the advertising business for everyone.
The San Jose, California firm reported a net loss of $43.1 million, 35 cents per share, compared to $9.3 million in Q2 2019. Net revenue grew 42% year-over-year to $356.1 million, but higher operational and marketing costs ate up that increase.
Roku emphasized that the quarter’s operating metrics show the company keeping a commanding position as TV tips into a streaming-first business.
The company hit 43 million active accounts by adding another 3.2 million in the quarter, while total streaming hours jumped by 2.3 billion hours to reach 14.6 million. It also saw average revenue per user increase by 18% to $24.92.
“Streaming is the most powerful force shaping television today,” said CEO Anthony Wood as he opened the earnings call Wednesday evening. “We are also seeing that the ongoing COVID-19 pandemic is accelerating the macro trends that will define the streaming decade.”
But with the picture for the coming months fuzzier than for the coming years, Roku declined to provide a formal financial outlook.
“We expect strong consumer interest and the shift to TV streaming to continue, but we are mindful of the potential for both retail and supply chain disruptions,” said CFO Steve Louden on the call. “The ad industry outlook remains uncertain in the second half, and we believe that total TV ad spend will not recover to pre-COVID-19 levels until well into 2021.”
Wood said Roku made the best of an overall decline in advertising, touting two developments since its first quarter: the OneView ad platform introduced in May and a data partnership signed in June with the grocery chain Kroger.
“For CPG advertisers, it's a big win,” said Scott Rosenberg, senior vice president and general manager for platform business, citing the early participation of Campbell’s in the Kroger program. “It's the opportunity to ultimately optimize the media that they buy from Roku, the media that they run through OneView, to the thing they care about, which is product sales.”
Weighing against that progress, the three Roku executives noted such cost pressures as the need to air-freight players (sales of which increased by 28% year-over-year) and unspecified “legal costs” of intellectual-property litigation and such recent international ventures as its expansion of the Roku TV program to Europe.
They shied away from specifics when discussing the absence of NBCUniversal’s Peacock and AT&T’s HBO Max from Roku’s platform. Said Rosenberg: “We look for that win, win, win relationship.”
But while Wood also stayed generic in addressing a query about Roku’s take from Disney’s upcoming release of Mulan as a premium streaming title, he did note that “generally, for TVOD transactions anywhere on our platform, we get a rev share.”
The CEO left much less doubt about where he sees the market headed.
“When we started, the only partner we had was Netflix,” Wood said. ”The world is all-in on streaming now.”