• by Wayne Friedman , July 28, 2022

In its Q2 2022 earnings shareholder letter, Roku struck an alarming note for investors and the advertising market: “There was a significant slowdown in TV advertising spend due to the macro-economic environment, which pressured our platform revenue growth.”

Roku estimates its third-quarter revenues will only reach $700 million -- while analysts were expecting $902 million. Going forward, Roku could not offer any full-year guidance.

All this rattled investors, and sent Roku’s stock down a massive 22% in after-market trading to $67.29.

Anthony Wood, chief executive officer of Roku, speaking on its earnings phone call with analysts, said: "Even though in the scatter market we're seeing softness, we had a robust upfront recently where we closed over $1 billion in commitments for the first time."

Roku reported overall second-quarter advertising revenue of $764.4 million (up 18%) -- compared to the estimate of $805 million that analysts were expecting for the quarter.

Roku’s “platform” revenue -- where much of its advertising revenues reside -- was up 26% to $673.2 million versus a year ago. Its set-top-box player sales were down 19% to $91.2 million.

On top of this was a $110.5 million net loss from operations -- versus a $69.1 million net profit a year ago.

“Consumers began to moderate discretionary spend, and advertisers significantly curtailed spend in the ad scatter market (TV ads bought during the quarter),” adds Roku in the shareholder newsletter.

It says: “We expect these challenges to continue in the near term as economic concerns pressure markets worldwide. In response, we took steps in the second quarter to significantly slow both operating expense and headcount growth.”

Roku says it added 1.8 million incremental active accounts, to now total 63.1 million.

This story has been updated