Roku now has more than 71.6 million monthly active accounts using its budget line of streaming TV hardware and smart TV sets, the company revealed on Wednesday.
The figure represented a 17 percent year-over-year increase compared to the 61.3 million monthly active users on Roku devices reported in the first quarter of 2022, and helped generate more than $741 million in total net revenue for the company.
The majority of Roku’s revenue came from its platform, which includes subscription sales and connected TV advertisements, reported at $634.6 million. The figure was a 1 percent decline compared to the $643.7 million Roku brought in during the same quarter in 2022, and a dip of 13.2 percent compared to its prior financial quarter. Gross profit was reported at $338 million, a decrease of 7 percent compared to last year.
“Roku continues to delight viewers and partner with some of the biggest brands and global entertainment companies,” a Roku executive wrote in a letter to shareholders on Wednesday. “With unmatched scale and engagement, we are creating new monetization opportunities to re-accelerate revenue growth as the ad market recovers.”
The first step in introducing streaming TV viewers to Roku’s streaming ecosystem is to convince them to purchase a Roku streaming devices or Roku-powered smart TV over competitors like Amazon Fire TV, Google TV and Apple TV. Sales of Roku hardware brought in $106.4 million during the three-month period that ended March 31, down 21 percent compared to sales during the holiday shopping period ($135.8 million) but still up 18 percent compared to the previous year.
Once Roku customers install and set up their streaming device or smart TV, they’re exposed to the Roku streaming platform, which includes access to popular apps like Netflix, Amazon’s Prime Video, Disney’s Hulu and Disney Plus, Paramount Plus, Peacock, HBO Max, YouTube and others. They also get native access to the Roku Channel, which offers third party subscriptions to streaming services and free, ad-supported streaming content from within a single app.
Roku said its operating system currently has 43 percent of the domestic streaming TV market, pulling ahead of Amazon Fire TV, which is reported to have around 40 percent of the domestic market share.
Those users streamed more than 25.1 billion hours during the first financial quarter, or around 3.9 hours of content per account, per day. Roku said the upward trend in streaming content is partially attributed to a growing trend of cord-cutting, where consumers drop expensive cable and satellite TV packages for cheaper streaming options.
Citing data from Nielsen, Roku said traditional TV viewing hours fell 10 percent during the first quarter of the year. Meanwhile, Roku’s own internal data showed the number of hours streamed by those using Roku’s operating system grew 20 percent during the same time period.
Roku said its own free, ad-supported streaming offerings through the Roku Channel helped increase the amount of time consumers spend on the platform. Data showed consumers streamed 65 percent more hours of content on the Roku Channel in the United States, the United Kingdom, Canada and Mexico compared to last year.
Still, macroeconomic factors — including a downturn in the advertising industry — are impacting Roku, and executives say that will likely continue to be the case for a little while longer. As concerns over a global recession continue, consumers aren’t spending as much on Roku hardware and streaming subscriptions; likewise, marketers have tightened advertising budgets, which partially accounted for a drop in Roku’s platform revenue over the last three months.
“Consumers remain pressured by inflation and recessionary fears, and thus discretionary spend is likely to remain muted,” Roku executives confirmed in their letter to shareholders on Wednesday. “Accordingly, we expect the advertising market in Q2 to look much the same as it did in Q1, with ad spend from certain verticals improving [like travel, health and wellness] while others remain pressured [including media, entertainment and financial services].”