Key Takeaways

  • Active accounts climbed by 34.7% to 53.6 million, below analyst predictions.
  • Roku's user base is a key measure of the company's ability to generate advertising revenue.
  • Streaming hours increased by 48.8% year over year, an indication of the overall secular shift to streaming.
Roku Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Predictions
Earnings Per Share Beat $0.59 -$0.13
Revenue Beat $574.2M $492.9M
Active Accounts Miss 53.6M 54.0M

Roku (ROKU) Financial Results: Analysis

Roku, Inc. (ROKU), the nation's leading streaming-device maker, reported strong earnings and revenue for Q1 FY 2021. Both of these metrics beat analyst predictions by a wide margin, solidifying Roku's dominance in the rapidly growing world of streaming services. The company reported earnings per share (EPS) of $0.59, dramatically better than predicted losses per share of $0.13. Revenue also outperformed consensus estimates. Roku posted record revenue of $574.2 million for Q1 FY 2021. The company attributed the strong performance to growth in advertising and the expansion of its content distribution partnerships.

Roku's Active Accounts

One less bright spot in Roku's Q1 earnings report was the key metric of active accounts. The company reported 53.6 million active accounts for the quarter, below the 54.0 million that analysts predicted. This figure represents solid growth of 34.7% year over year (YOY), but that is nonetheless the slowest pace of growth in this area in more than four years.

Roku's active accounts are an important measure of the company's ability to generate advertising revenue. As more users engage with Roku's services, there are more potential eyes on digital advertisements appearing on the company's platform. Additionally, a greater number of active accounts means more subscription revenue and more users who will potentially buy new Roku products as they age out or break over time.

Roku's Outlook and Stock Performance

In its letter to shareholders, Roku predicted robust growth into Q2, with total net revenue predictions of $615 million at the midpoint, up 73% YOY. The company expects that Q2 FY 2021 comparisons with Q2 FY 2020 will be highly favorable but that YOY quarterly comparisons will be more difficult in the second half of the year as a result of supply chain constraints and shifts in digital advertising trends in 2020 due to the COVID-19 pandemic.

Roku shares climbed by about 1.8% in the period immediately following the earnings release. The company has significantly outperformed the broader market in the past year, providing one-year trailing total returns of 122.9% as compared with 47.5% for the S&P 500.

Next Earnings Report

Roku's next earnings report is estimated to be released on Aug. 11, 2021.