Stay-at-home edicts during the coronavirus pandemic drove up Roku’s streaming hours and active user accounts for the first three months of 2020 — but the economic uncertainty caused by the crisis led the streaming platform company to withdraw its previous guidance for the full year.
Roku, citing “broader business and economic uncertainties arising from the COVID-19 pandemic,” provided an update to investors Monday forecasting Q1 results. The company is scheduled to report first quarter 2020 results on May 7 after market close.
Roku estimated that it ended March 2020 with 39.8 million active accounts, a net increase of about 2.9 million from the prior quarter (when it added a record 4.6 million accounts).
The company expects Q1 streaming hours will total 13.2 billion, a 49% year-over-year increase. That’s a smaller year-to-year increase than Roku reported in Q4 and a sequential decline from 16.3 billion hours for the last three months of 2019.
But Roku noted that in the first quarter of 2020 it rolled out its “Are you still watching?” feature — which exits video playback after long periods of user inactivity and thus was expected to reduce overall streaming time. At the same time, Roku said, when COVID-19 quarantines took effect in March, that resulted in an “acceleration in new account growth and an increase in viewing.”
Roku CEO Anthony Wood, in commenting on the initial Q1 results, said the company has been working “closely with advertisers to help update their plans to reflect new viewing patterns and adjust their overall marketing mix which has been affected by social distancing.”
“While we expect some marketers to pause or reduce ad investments in the near term, we believe that the targeted and measurable TV ads and unique sponsorship capabilities that Roku offers are highly beneficial to brands today,” Wood said in a statement.
For Q1, Roku expects revenue to be slightly higher than previously expected, with other metrics generally in-line with prior outlook. It’s forecasting net revenue of $307 million-$317 million and a net loss of $55 million-$60 million. That’s compared with revenue of $206.7 million and a net loss of $10.7 million for Q1 2019.
Roku had previously issued a bullish outlook for full-year 2020, targeting 42% year-over-year revenue growth, a net loss of $160 million-$180 million and EBITDA of “roughly break-even.”
“While we believe that our offerings to consumers, content providers and advertisers will enable our company to deliver value in these uncertain times, the wider business and consumer impacts, as well as the duration of the pandemic, are unclear and thus we are withdrawing our prior 2020 outlook,” Roku CFO Steve Louden said in a statement.
On Monday, Roku also provided an update on its cash position. The company ended Q1 with $587 million of cash, cash equivalents, restricted cash and short-term investments, which includes $70 million drawn from its line of credit.