01—Abstract
Summary
Summary of the 10-K filed February 16, 2023. Cited figures are marked; the original filing is the authoritative source.
Roku, Inc. reported full-year 2022 net revenue of $3.13 billiona, up 13% from $2.76 billion in 2021, driven by platform revenue growth of 20% to $2.71 billion.
Devices revenue fell 17% to $415.1 millionb as streaming player volume declined 14% and average selling prices fell 5%. Total gross profit rose 2% to $1.44 billion, but the company reported a net loss of $498.0 million for 2022 versus net income of $242.4 million in 2021, as operating expenses rose 68% to $1.97 billion, led by research and development (up 71%) and sales and marketing (up 84%). Management attributes much of the cost growth to headcount, content amortization and marketing, and says it expects operating expense growth to significantly decline over 2023 following a November 2022 workforce reduction.
Key operating metrics improved: active accounts reached 70.0 million (up 16% from 60.1 million), streaming hours rose 19% to 87.4 billion, and ARPU increased 2% to $41.68c. Cash and cash equivalents were $1.96 billion at year-end, with operating cash flow of $11.8 million for the year.
The company's $80.0 milliond Term Loan A matures in February 2023, and management expects to repay it, while the company states it believes existing cash and operating cash flow will be sufficient for the next twelve months. The filing also discloses a planned launch of Roku-branded TVs designed and sold by the company in 2023, and that Amazon and Walmart together accounted for 59% of devices revenue in 2022.
02—Key points
Key Highlights
- Total net revenue of $3,126.5 million for 2022, up 13% from $2,764.6 million in 2021; platform revenue grew 20% to $2,711.4 million while devices revenue fell 17% to $415.1 million.
- Net loss of $498.0 million for 2022 compared with net income of $242.4 million in 2021; loss from operations was $530.9 million.
- Total operating expenses rose 68% to $1,972.0 million, with research and development up 71% and sales and marketing up 84%; a November 2022 restructuring plan recorded $38.1 million in charges.
- Active accounts grew 16% to 70.0 million and streaming hours grew 19% to 87.4 billion; ARPU rose 2% to $41.68.
- Devices gross loss widened to $90.6 million from $37.8 million, and the company expects negative devices gross margin in the near future as it funds promotions for new product launches.
- Cash and cash equivalents of $1,962.0 million at December 31, 2022; the $80.0 million Term Loan A is due February 2023 and management expects to repay it.
- Founder and CEO Anthony Wood controls a majority of combined voting power through Class B shares despite owning 12.4% of outstanding Class A and Class B common stock.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Roku lost $0.16.
- Revenue$3.13B100.0%
- Cost of revenue−$1.69B53.9%
- Gross profit$1.44B46.1%
- Operating costs−$1.97B63.1%
- Operating income−$530.9M17.0%
- Interest, other & tax$32.9M1.1%
- Net income−$498.0M15.9%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 16, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $3.13B$2.76B | +13.1% |
| Cost of Revenue | $1.69B$1.36B | +24.3% |
| Gross Profit | $1.44B$1.41B | +2.3% |
| R&D Expenses | $788.91M$461.60M | +70.9% |
| Operating Expenses | $1.97B$1.17B | +68.0% |
| Operating Income | -$530.89M$235.10M | −325.8% |
| Net Income | -$498.00M$242.38M | −305.5% |
| EPS (Basic) | $-3.62$1.83 | −297.8% |
| EPS (Diluted) | $-3.62$1.71 | −311.7% |
| Shares Outstanding (Basic) | 137.67M132.71M | +3.7% |
| Shares Outstanding (Diluted) | 137.67M141.67M | −2.8% |
05—Questions
Frequently Asked Questions
Why did Roku swing from a profit in 2021 to a net loss in 2022?
Operating expenses rose 68% to $1,972.0 million, outpacing gross profit growth of 2%. Research and development increased $327.3 million, sales and marketing increased $382.8 million, and general and administrative increased $88.4 million, mainly from higher personnel costs, stock-based compensation, and marketing and retail spending. Devices gross loss also widened, and income tax expense was $5.7 million compared with a benefit of $5.8 million in 2021.
How is the platform business performing compared with devices?
Platform revenue grew 20% to $2,711.4 million, driven mainly by advertising, including the demand-side ad platform, and higher content distribution services. Platform gross profit rose 6% to $1,531.8 million. Devices revenue fell 17% to $415.1 million, as streaming player volume decreased 14% and average selling price decreased 5%, and devices gross loss increased to $90.6 million.
What does the company say about its outlook for operating expenses and cash?
The company expects operating expense year-over-year growth to significantly decline over the course of 2023 and approved a workforce reduction in November 2022. It states that its existing cash and cash equivalents and cash flow from operations will be sufficient to meet working capital, capital expenditures and known contractual obligations for at least the next twelve months, though it notes that the Credit Agreement matures in February 2023 with no other committed financing sources.
How concentrated are Roku's revenue and content sources?
Amazon and Walmart together accounted for 59% of devices revenue in 2022, compared with 57% in 2021. The top three streaming services represented over 50% of all hours streamed in 2022. The company reported no single customer above 10% of total net revenue in 2022 and 2021.
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