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Earnings Results: Roku’s stock pops in ‘relief rally’ on rise in usage

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Roku Inc. is holding its own in user numbers — and its stock is getting a pop.

Shares of the maker of digital media players
ROKU,
+8.11%

surged in after-hours trading after it reported fiscal first-quarter revenue Thursday that exceeded Wall Street analysts’ forecasts and earnings largely in line with projections. More important, Roku held its own in active accounts, which increased 14% to 61.3 million, and in streaming hours, which also jumped 14% to 20.9 billion hours.

“Our first-quarter performance was solid, with Platform revenue up 39% year-over-year, benefiting from higher content distribution and advertising revenue,” Roku executives said in a letter to shareholders on Thursday.

The numbers were greeted with an audible sigh of relief from investors, who initially boosted Roku’s stock as much as 9% in after-hours trading Thursday.

The so-called “relief rally” came more than a week after Netflix Inc.
NFLX,
+5.82%

reported its first decline in net paid subscribers in a decade, sparking a massive selloff that shaved more than $50 billion in market value and widespread panic that streaming services face a precipitous drop in viewership. Many investors now nervously await Walt Disney Co.’s
DIS,
+0.07%

second-quarter results on May 11, and the fate of Disney+ subscription numbers.

“We are seeing the same subscriber fatigue that cable TV went through,” Tricia Biggio, chief executive of entertainment-technology company Invisible Universe, told MarketWatch. “There are so many subscriber services, and cost-conscious consumers are being forced to make choices.”

Roku posted a net loss of $23.5 million, or 19 cents a share.

Revenue improved 28% to $733.7 million from $574.2 million a year ago.

Analysts polled by FactSet had forecast a net loss of 19 cents a share on revenue of $718 million.

Second-quarter guidance, however, came in at $805 million, slightly below FactSet estimates of $816 million.

In their letter to shareholders, Roku said ongoing supply-chain disruptions contributed to increased U.S. TV prices in the first quarter, leading to industry-wide TV unit sales that were below 2019 (pre-COVID) levels.

Roku’s stock has been eviscerated, nose-diving 60% this year, while the broader S&P 500
SPX,
+2.47%

index is down 10% in 2022.

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