Like most know-how corporations on the market within the chilly proper now, Roku’s Q2 earnings are fairly a combined bag in contrast with earlier this year.

Income from content material and advert monetization (the “platform” enterprise versus the {hardware} facet of the biz) was up 26%, however the firm missed Wall Road’s expectations and the inventory plunged by greater than 26% in afterhours buying and selling.

Roku’s complete Q2 income was $764 million, up 18% year-over-year, however was comparatively flat in contrast with final quarter, when income clocked in at $734 million.

CFO Steve Louden was most likely referring to that plateau when he warned of a TV advert spend hiatus. US advertisers are pulling again in response to inflation and provide chain shortages.

“Proper now, we’re seeing a major slowdown in TV promoting spend because of a tough macroenvironment, which is pressuring our platform enterprise development charge within the quick time period,” he informed traders on Thursday throughout Roku’s Q2 earnings name.

Louden cited a current Advertiser Perceptions examine which discovered that 47% of advertisers say they made in-quarter pauses on streaming advert spend. Forty-two p.c of advertisers have paused their linear spend and 44% pulled again on digital.

“It’s a broad, macroeconomics-driven market development,” Louden mentioned, noting that “advertisers are inclined to hit the brakes when there’s a excessive stage of financial uncertainty – they did the identical factor through the pandemic.”

For the sake of comparability, Netflix and NBCUniversal’s Peacock didn’t get by means of their Q2 earnings with flying colours both – their subscriber counts declined and stagnated, respectively.

“The severity of the pullback in advert spend wasn’t anticipated,” Louden mentioned.


However there may be cause to be optimistic.

Macroeconomic elements – inflation, recession, what have you ever – are momentary, and Roku is specializing in longer-term development.

“The patron shift to streaming is constant en masse – CTV streaming contains over half of all TV viewing hours, however solely 22% of TV advert spend,” Louden mentioned. “That’s an enormous alternative for streamers, particularly Roku.”

To be honest, Roku did add 1.8 million energetic accounts in Q2, up from 1.1 million final quarter. However total streaming hours on the platform, which clocked in at 20.7 billion, was down by 0.2 billion hours within the quarter.

The extra promising information was tied to this yr’s TV upfronts.

Roku reported a file $1 billion in upfront commitments, which included all seven main company holdcos, Louden mentioned.

However there have been additionally a bunch of newbies: 25% of all advertisers who made commitments to Roku this yr hadn’t accomplished so final yr.

Roku sees this as encouraging information and a superb cause to remain centered on its original content slate.

“Content material spend is an space of development and funding for Roku,” Louden mentioned. “We’re ensuring we’re spending the correct amount on content material commensurate with the size and development charge of The Roku Channel.”

And there may be cause to see the glass as half full. Roku did see a rise in its variety of energetic accounts this quarter, which may assist appeal to extra advertisers who’re keen to spend.