Roku exceeds Q1 revenue expectations despite only 1.1 million new subscribers

Streaming platform Roku exceeded Wall Street expectations for revenue, but showed slower sequential growth in new active accounts, according to its first-quarter earnings report Thursday.

The company posted overall revenue of $734 million for Q1, up 28% year over year, which beat Wall Street expectations that had its growth at around $730 million. Investors seem thrilled by the report as shares surged during after-hours trading right after the quarterly results were released, rising 4.2% above the regular session close of $91.63.

That investor excitement apparently wasn’t dampened by slower sequential growth in active accounts. The addition of 1.1 million active accounts in Q1 brings the company to a total 61.3 million. Slower active account growth in recent quarters contributed to analysts making lower expectations for the company this quarter. Q1’s growth represents a 14% increase year over year compared to 35% growth in Q1 2021, with an increase of 2.4 million accounts.

Streaming hours increased by 1.4 billion hours over last quarter to 20.9 billion, a 14% rise. That’s also down compared to 49% last year.

“We have delivered solid performance in a challenging operating environment and expect that we will continue to navigate through macro headwinds, including inflationary pressures, geopolitical conflict, and supply chain disruptions,” Roku’s Anthony Wood, founder and CEO, and Steve Louden, CFO, said in a letter to shareholders.

That statement reflects Roku placing slower growth on factors out of its control, or as they put it “macro headwinds,” including COVID, with people having less discretionary spending due to the end of stimulus payments and inventory problems that created slower growth due to supply shortages and higher prices that hurt the U.S. market for televisions. Roku reports a 12% year over year decrease in streaming unit player sales.

Roku has been focusing on increasing its partnerships and content offerings on its Roku Channel, which have included a licensing deal with A&E and an output deal with Lionsgate for theatrical releases through 2024. It also recently added Discovery+ via premium subscription with its catalog of 70,000 episodes of past and current series.

They also lauded the viewer and advertiser values of its growing Roku Originals offerings, including home renovation series “Honest Renovations” with Jessica Alba and Lizzy Mathis, “To Paris for Love: Rom Com” with Reese Witherspoon’s Hello Sunshine and Zoë Saldaña’s Cinestar Pictures, as well as “Weird: The ‘Weird Al’ Yankovic Story,” starring “Harry Potter” star Daniel Radcliffe as the titular comedian. Yahoo