Categories Analysis, Technology

Roku (ROKU): Here are a few points to keep in mind if you have an eye on this stock

For the full year of 2022, Roku expects revenue growth of 35%

Shares of Roku Inc. (NASDAQ: ROKU) were up over 11% on Tuesday. The stock has dropped over 45% year to date and 71% over the past 12 months. Last week the company delivered mixed results for the fourth quarter and full year of 2021. While growth in active accounts and streaming hours were positives, supply chain issues and a decline in gross margin played spoilsport. There seems to be a mixed sentiment around the stock so here are a few points to consider if you have an eye on it.

User growth and engagement

In Q4 2021, active accounts increased 17% year-over-year while streaming hours were up 15%. At quarter-end, active accounts stood at 60.1 million while streaming hours totaled 19.5 billion. Average revenue per user rose 43% YoY to $41.03.

Platform revenue increased 49% YoY while player revenue dropped 9%. Total revenue rose 33% to $865.3 million which did not meet market expectations. EPS fell 65% YoY to $0.17 but exceeded analysts’ projections.

There is an increased shift to TV streaming due to factors such as convenience and a wide range of content options. In the US, Roku’s active account base surpassed the video subscribers of all the cable companies combined during 2021. Roku was the number one streaming platform by hours streamed in the US, Canada and Mexico.

The pandemic-fueled streaming boom is expected to decline going forward. Nevertheless, Roku grew engagement per user globally, with streaming hours per active account per day of 3.6 hours. The company sees significant room for growth in engagement.

Roku Q4 2021 earnings infographic

For the full year of 2022, Roku expects revenue growth of 35%. For the first quarter of 2022, revenue is expected to grow 25% YoY to $720 million.

Margins

The US TV market was hit by global supply chain disruptions during 2021. Roku felt the impact of these disruptions as its overall TV unit sales in Q4 fell below pre-pandemic levels. Some of its TV OEM partners faced inventory headwinds which took a toll on their unit sales and market share during the quarter. The company believes this was one of the key reasons that caused a slowdown in its active account growth rates during the year.

Roku chose not to pass on the rising material and shipping costs in its player business to its customers through increased prices in order to drive account acquisition. This led to player gross margin of negative 28.4% in Q4.

The ongoing supply chain disruptions are expected to continue in 2022 which in turn will affect the consumer electronics space and the TV industry in particular. Roku’s TV unit sales are expected to remain below pre-pandemic levels, which could affect its active account growth. The company will continue to give preference to account acquisition thereby not increasing prices to absorb the costs which in turn will continue to impact player gross margins. There is a mixed sentiment around Roku. While some experts believe it could be a good choice for long-term investors, there are others who prefer taking a cautious approach to this stock.

Click here to read the full transcript of Roku’s Q4 2021 earnings conference call

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

Most Popular

Trxade (MEDS) is increasing the breadth of product offerings: CEO Suren Ajjarapu

Trxade Health Inc. (NASDAQ: MEDS) is an online pharmaceutical marketplace that provides a platform for independent pharmacies to operate more effectively. The company’s digital platform helps optimize drug procurement and

AMAT Stock: Is now the right time to invest in Applied Materials?

It is estimated that the size of the global chip manufacturing equipment market would nearly double from the current levels to about $142 billion in the next eight years. Applied

Here’s a look at Take-Two Interactive Software’s (TTWO) expectations for the coming year

Shares of Take-Two Interactive Software (NASDAQ: TTWO) were down over 2% on Friday. The stock has dropped 32% year-to-date and 35% over the past 12 months. Earlier this week, the

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top