This article presents some key performance metrics of Roku, Inc., (NASDAQ:ROKU).
These key performance or operating metrics are active accounts, streaming hours, and average revenue per user (ARPU).
For your information, Roku Inc. uses these key performance metrics to evaluate its businesses, measure its performance, develop financial forecasts, and make strategic decisions.
Therefore, investors who are keen on buying Roku’s stocks may want to check out these statistics to get a sense of the company’s business prospects.
Without further wait, let’s start with the following topics.
Roku defines its active accounts as the number of distinct user accounts that have streamed content on its platform within the last 30 days of the period.
However, users who stream content on non-Roku platforms are not included in the measurement, according to Roku’s definition.
In addition, users who register accounts for the use of one of Roku’s smart home products also are not included in this measurement, according to the same definition.
There can be more than one unique individual or more than one device that streams content on Roku’s platform under the same user account.
However, multiple users or devices who stream under the same user account are counted only as a single active account.
Roku defines streaming hours as the aggregate amount of time streaming devices stream content on its platform in a given period.
However, hours streamed on non-Roku platforms and smart home products do not contribute to streaming hours.
Also, content that has been continuously streaming on a channel for an extended period of time may not contribute to streaming hours under a new feature implemented in the first quarter of 2020.
To verify hours that have been streamed for an extended period of time, Roku has included a Roku OS feature that is designed to identify user interaction.
This feature, which Roku refer to as “Are you still watching,” periodically prompts the user to confirm that they are still watching the selected channel and closes the channel if the user does not respond accordingly.
Average Revenue Per User (ARPU)
Roku defines its average revenue per user or ARPU as platform revenue for the trailing four quarters divided by the average of the number of active accounts at the end of the current period and the end of the corresponding period in the prior year.
The ARPU is probably the most important measure that you can find about the health of Roku’s business.
Specifically, the ARPU measures how well Roku monetizes its active accounts and the progress of the platform business.
Therefore, a growing ARPU should bode well for Roku’s stock whereas a decreasing ARPU may indicate trouble for its monetizing strategy.
Active Accounts By Year
The plot above shows that Roku’s number of active accounts has been on the rise.
As of fiscal 2022, Roku had 70 million active accounts, a record figure in the past 8 years, and represents a rise of 10 million or 17% over 2021.
Since 2015, Roku’s number of active accounts has grown by more than 8-fold.
Active Accounts Year-On-Year Growth Rates
Roku recorded mostly high double-digit growth rates for the number of active accounts.
However, the growth rates had significantly declined in recent years.
For example, Roku’s number of active accounts grew only 17.4% in fiscal 2021 and 16.5% in fiscal 2022 on a year-over-year basis, the lowest growth rates that had ever been recorded over the past 8 years.
Active Accounts By Quarter
On a quarterly basis, Roku’s number of active accounts also has been on a smooth ride as shown in the plot above.
As of 2Q 2023, Roku had 73.5 million active accounts, a rise of 10 million more or 16.5% from a year ago.
In short, Roku had decent growth in the number of active accounts all these years.
Active Accounts By Quarter Growth Rates
Roku used to record a minimum of 40% year-on-year growth rate for its active accounts.
However, these numbers had sharply declined over the years as shown in the plot above.
As of 2Q 2023, Roku’s year-on-year growth rate for its quarterly active accounts clocked only 16.5%, which was slightly higher compared to the number a year ago but was cut in half compared to historical highs.
Streaming Hours By Year
Roku recorded 87.4 billion streaming hours as of fiscal 2022, up 14 billion hours or 19% from a year ago.
Since 2015, Roku’s number of streaming hours has increased by nearly 15X.
Roku’s rising streaming hours indicate growing user engagement and success in addressing the growing user demand for TV streaming.
Streaming Hours Year-On-Year Growth Rates
Similar to the number of active accounts, Roku’s year-over-year growth rates for streaming hours also have been on the decline.
As of fiscal 2022, Roku recorded only a growth rate of 19.4% for streaming hours, a record low since 2016.
Despite the lower growth rates, the growth in streaming hours in fiscal 2021 and 2022 was still pretty decent at 24.7% and 19.4%, respectively.
Streaming Hours By Quarter
The quarterly plot shows the significant rise in Roku’s number of streaming hours over the years.
As of 2Q 2023, Roku’s number of streaming hours hit 25.1 billion, up 4 billion hours or 21% over 2Q 2022.
Streaming Hours By TTM
On a TTM basis, Roku’s number of streaming hours hit 96 billion, a record figure, and was up by a massive 17 billion hours or 21% from a year ago.
Streaming Hours By TTM Growth Rates
Roku’s year-on-year growth rates for streaming hours also have been on a steady decline over the years.
As of fiscal 2Q 2023, Roku’s year-on-year growth rate for streaming hours clocked only 21.4% compared to 17.2% recorded in the same quarter a year ago.
Although growth rates were lower in recent years, Roku still recorded pretty decent growth in streaming hours at 20% on average since 2022.
ARPU By Year
Roku reported an ARPU of $41.68 USD in fiscal 2022, only slightly higher than the ARPU of $40.67 USD reported in fiscal 2021.
While Roku had enjoyed an incredible rise in ARPU in earlier years, the latest figure had considerably slowed, indicating that the company’s monetizing strategy may have already hit a plateau.
ARPU Year-On-Year Growth Rates
The growth rate plot above shows that Roku’s average revenue per user grew by only 2.5% in fiscal 2022 compared to 43.7% reported in fiscal 2021.
Over the years, Roku had enjoyed high double-digit ARPU growth.
However, in fiscal 2022, Roku recorded the slowest ARPU growth since fiscal 2016.
ARPU By Quarter
The quarterly plot above shows that Roku’s ARPU has started to come down in fiscal 2023.
As of 2Q 2023, Roku’s ARPU came in at only $40.67 compared to the $43.81 reported in the same quarter a year ago.
Therefore, Roku’s ARPU is in decline instead of in growth.
ARPU By Quarter Growth Rates
Compared to a year ago, Roku’s ARPU reported in 2Q 2023 has declined by 7.2%.
Roku still reported a growth rate of 20.2% in ARPU in the same quarter a year ago.
Also, Roku’s ARPU growth has started coming down since 3Q21 when it hit a record figure of 50% growth rate.
The worst thing is that the decline in growth rate had not been steady but a sharp fall which had occurred in just 2 years.
Roku recorded incredible growth in all key performance metrics, namely the active accounts, streaming hours, and average revenue per user, in the earlier years.
However, things have changed.
Since fiscal 2022, Roku has recorded significantly slower growth in most metrics, the active accounts and streaming hours in particular.
For the average revenue per user or ARPU, Roku’s ARPU has even declined.
As of 2Q 2023, Roku’s year-on-year growth for ARPU was -7.2%, the first such massive decline over the past 8 years.
While Roku’s performance still looks pretty decent, it has definitely declined, probably from an A to a B now.
At least, Roku’s key performance is still a pass.
Credits and References
1. All financial figures presented in this article were obtained and referenced from Roku, Inc.’s SEC filings, earnings reports, financial statements, news releases, shareholder letters, etc, which are available in Roku Financial Results.
2. Featured images in this article are obtained free and are used without any attribution from Pixabay.
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