Roku 2Q22 preview: 2Q growth may face risk from ad recession

Active-account gains at Roku may be well below 1Q's 1.1 million because of supply chain issues. Consensus Calls for 0.85 Million Gain. Though management had spoken about a 2H pickup on easier comparisons and core underlying strength, Bloomberg thinks that headwinds may increase with macroeconomic pressures and recession fears. However, Roku recently announced a partnership with Walmart for shoppable ads, which could turn into a meaningful midterm revenue opportunity.

The company is boosting investment for long-term growth, with 2022 operating expenses expected to rise 90% and lead to break-even adjusted Ebitda in 2Q. Roku reiterated its 35% sales growth outlook for 2022. The company is dominant in the US but is in the early stage of overseas expansion, which will be a slow build. The Roku Channel, the company's largest ad driver, is the Top 5 app on the platform.

JP Morgan is lowering the Roku growth estimate to 30% Y/Y in 2022, which still implies 2H acceleration but is below mgmt's 35% guide due to macro headwinds that it expects to impact Roku ad revenue. JP Morgan thinks a modest, which still implies 2H acceleration but is below mgmt's 35% guide. And guide down is largely expected & priced into shares.

Bloomberg's consensus estimates for Roku's 2Q22 results are revenue of $804.115 million, up 24.6% YoY; adjusted net income of -$93.177 million, -11.6% YoY; and adjusted earnings per share of -$0.719.