Roku became the latest company to withdraw its 2020 financial guidance due to economic uncertainty but affirmed its first quarter numbers and gave a sneak peek at some fast-growing metrics ahead of its earnings call scheduled for May.
The company estimates it had 39.8 million active accounts as of March 31, a net increase of nearly 3 million since the end of 2019. It expects to report first-quarter streaming hours of 13.2 billion, up 49% year-over-year.
The company noted that early in the first quarter it completed the rollout of its “Are you still watching” feature – which exits video playback after long periods of user inactivity. That was expected to moderate streaming-hour growth, but, starting late in the first quarter, Roku began to see the effects of large numbers of people sheltering in place, which accelerated new account growth and viewing.
For the three months ended March 31, 2020, Roku expects revenue to be slightly higher and other metrics generally in-line with prior outlook. That is: total net revenue of between $307 million-$317 million; gross profit between $139 million-$144 million; adjusted ebtida (earnings before interest, taxes, depreciation and amortization) from negative $18 million to negative $23 million; and a net loss of between $55 million-$60 million.
Roku CEO Anthony Wood 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.”
Roku said it ended the first quarter with an estimated $587 million of cash, cash equivalents, restricted cash and short-term investments. This includes a $70 million draw-down from its revolving credit facility. “We decided it was prudent to draw down our credit facility in light of current financial market conditions,” said CFO Steve Louden. Many other companies have done the same to have a cash cushion.
Roku will release first quarter 2020 financial results and key operating metrics on Thursday, May 7.