Roku once again reported huge quarterly gains in its platform business, expanding sales for the ad-driven side of its business by 117% in the second quarter to $523.3 million, and overall revenue by 81% to $645.1 million.

But as the company warned earlier this year, margins on Roku devices went under water due to global supply issues, dipping to a negative 5.9%.

"Within the Player segment, we expect global supply chain constraints and component cost increases to worsen in the second half of 2021, leading to increasing negative player gross margin," Roku said in a letter to shareholders published Tuesday. "We believe these industry supply chain constraints and cost increases for streaming players and TV OEM partners will continue into 2022."

And perhaps more foreboding to Roku's longterm core streaming business goals, subscriber growth has decelerated, and engagement shrunk in Q2.

Also Read: Roku Finishes Upfront With Double Last Year’s Volume

Roku finished Q2 with 55 million active users, up 1.5 million from the first quarter. That's less than half of the 3.2 million active accounts Roku added between Q1 - Q2 last year, a metric that has steadily declined in the year since. 

Meanwhile, the number of hours Roku users spent watching video on the Roku platform declined sequentially by nearly 6% to 17.4 billion hours in Q2. 

Still, Roku's advertising business is growing too fast to get too hung up on the fault lines. 

Average revenue per customer rose by 46% to $36.46, while gross profit was up 130% year over year to $338 million. 

"We continue to make good progress in our international markets," Roku added in its shareholder letter. "In the UK, we enhanced our product offering with the launch of TCL Roku TV models, which we expect will drive further platform adoption. And, we are excited to bring Roku to Germany, starting with players, later this year. We believe our business model will serve us well as we seek to grow in international markets by building scale with our affordable hardware and the Roku OS (the only OS purpose-built for TV), driving user engagement with a best-in-class user experience, and monetizing activities on the platform over time."

As expected, Netflix announced dramatically slowed global subscriber growth in the second quarter, with the leading streaming service adding only 1.54 million members to finish the three-month period with 209.18 million paid customers. 

The sign-ups number beat Netflix's own guidance of 1 million but missed analysts' consensus forecasts of around 1.9 million. 

In the quarantined second quarter of 2020, Netflix added more than 10 million paid memberships worldwide. 

Netflix said that the Asia-Pacific region accounted for about two-thirds of its subscriber growth in the most recent Q2. The streaming company actually lost around 400,000 customers in the United States and Canada over the three-month period. 

The slowed subscriber growth is in line with global Q2 expansion figures leaked earlier in July by Netflix's next closes rival, Disney, which also indicate a slowing post-pandemic (er, post-vax?) performance. 

The reality is, Netflix could see growth quarters like this for the next five years, and even Disney Plus--which has just over 100 million paid users--still might not catch up. 

Netflix is forecasting customer additions of 3.5 million for the third quarter, which would be a significant uptick over the 2.2 million added in Q3 2020. 

The Los Gatos, Calif.-based streaming giant also reported a 19% uptick in quarterly revenue to $7.3 billion. 

"COVID has created some lumpiness in our membership growth (higher growth in 2020, slower growth this year), which is working its way through," Netflix said in its letter to shareholders Tuesday. 

The company attributed the revenue increase to an 11% year-over-year growth in paid memberships worldwide, and a 4% increase in average revenue per member (ARM), driven by subscription streaming price increases, including one in the U.S. back in October. 

Netflix, meanwhile, highlighted its increasing operating margins, which it said will hit a target goal of 20% later this year. The company said that when it started its aggressive international expansion initiative back in 2016, operating margins only stood at around 4.3%. 

As it usually does, Netflix also gave shoutouts in its shareholders letter to strong-performing original programs. Notably, Shadow and Bone, an eight-episode series based on Leigh Bardugo‘s bestselling Grishaverse novels, and premiering at No. 1 on Netflix in the U.S. back in April, was seen by 55 million subscribers in its first 28 days on the platform. 

Netflix has renewed Shadow and Bone for a second season. 

The DC Comics adapted Sweet Tooth, which premiered in May, was at least sampled by 60 million members, the company added. 

Through the first half of 2021, Netflix said it has already spent $8 billion on content, an increasing amount the non-English language variety for the international market. 

"COVID and its variants make predicting the future hard, but with productions largely running smoothly so far, we're optimistic in our ability to deliver a strong second half slate."

More to come...

Programs aimed at keeping residential customers connected online during the nationwide pandemic helped fuel growth at Charter Communications in Q2.

Charter said it added 102,000 video subscribers in Q2, a reversal of the 150,000 video customers it lost in the prior year but entirely the result of programs like the Federal Communications Commission Keep America Connected pledge and others, where providers agreed not to disconnect customers for non-payment.

Charter said that 149,000 video customers signed up in Q2 as part of the FCC Keep America Connected pledge and 12,000 joined through its Remote Education Offer. The company said nearly 50% of REO customers chose to subscribe to other services like video, voice and mobile and were billed for those products.The REO program expired on June 30, and Charter said 90% of cumulative connects through that program have retained service through July 27.

On a conference call with analysts, Charter chairman and CEO Tom Rutledge said regardless of how those customers came to the company, they are acting like any other subscriber that joined via a traditional promotion.

“From a profile perspective they look just like our regular customer base and they are just like our regular customer base,” Rutledge said. “They very much are behaving like all customers we create. We look at that offer in many ways as a conventional offer with a broadband benefit, but it brought in real customers that subscribe and act like existing customers.”

However, he didn’t expect to see continued video growth, adding that it was a combination of the pandemic which kept people stuck in their homes and in front of their TV sets, and the programs.

“The secular trends for video haven’t changed,” Rutledge said.

Despite subscriber gains, Charter said video revenue was down 0.4% for the period to $4.4 billion, which the company said was due to a higher mix of lower-priced video packages and the waiver overdue customer balances.

The FCC program also was a big factor in broadband gains. Charter said it added about 825,000 residential and business broadband subscribers in the quarter, but added that about 600,000 residences and 100,000 businesses applied for the FCC program, and at its peak, 208,000 residences and 14,000 businesses would have been disconnected for non-payment. About 30% of those Keep America Connected customers’ bills were current and more than 60% were making partial or full payments. Charter said that to help those customers with overdue balances, it waived $76 million residential, $6 million business and $3 million of mobile receivables in the quarter.

Charter also said it added 325,000 wireless customers in the period, ending the quarter with 1.7 million Spectrum Mobile subscribers.

The subscriber growth helped fuel a 3.1% lift in total revenue to $11.7 billion. Adjusted EBITDA rose 7.3% to $4.5 billion.

Altice USA added more broadband customers in the second quarter than ever, spurred by stay at home orders throughout its service territory as the pandemic rages on, and prompting the company to reinstate guidance for the rest of the year.

Altice USA said it added 70,000 broadband customers in the period, more than five times the 13,000 it added in the prior year. Including complimentary Altice Advantage Internet customer net additions, residential broadband customers rose by 79,000 in the quarter. That growth fell to 53,000 additions when adjusted for customers receiving broadband via programs like the FCC Keep America Connected Pledge and a New Jersey order prohibiting companies from disconnecting broadband service for non-payment. But even with the lower number, Altice had its best broadband quarter ever.

At the same time, video subscribers fell by about 35,000 in the period, up from a loss of 21,000 customers in the same period last year.

Like its other cable peers, Altice USA attributed the broadband gains to the pandemic. The company added that internet usage in its service territories rose by 59% in the quarter, while video streaming was up 46% year-over-year. 

Total revenue was up 1% to $2.47 billion and EBITDA grew 2.5% to $1.1 billion.

“Our core cable business performed extremely well, and we remain committed to serving our broader community with the connectivity and news they need during this unprecedented time,” Altice USA CEO Dexter Goei said in a press release. “For the second consecutive quarter, we delivered best-ever customer net additions, driven by organic broadband growth, and increased revenue, net income and Adjusted EBITDA year-over-year. We saw resilience in our Business Services segment, where we grew revenue more than two percent, and began to see a recovery in our News and Advertising business as we exited the quarter. While the pandemic continues to pose some uncertainty in the back half of the year, we are encouraged by the strength and resilience of our business, and by the opportunity set presented.”

As a result, Altice USA has decided to reinstate guidance for the full year -- it withdrew guidance in Q1 because of the pandemic. Now the company said it projects revenue and EBITDA growth for the full year, capital expenditures of $1.3 billion and $1.7 billion in share repurchases. The company has set a year-end leverage target of 4.5 times to 5 times net debt/adjusted EBITDA.

Comcast lost a total of 477,000 pay TV customers in the second quarter across its residential and business channels, the cable company disclosed Thursday. 

Residential losses totaled 427,000 customers in Q2, while another 50,000 business customers shed their video services, with restaurants, bars and other public establishments shuttered amid the pandemic.

The losses represented a doubling of the 424,000 Xfinity TV subscribers that quit Comcast video services in the second quarter of 2019. 

Comcast has now lost 815,000 Xfinity TV customers in the first six months of 2020. Comcast, which once called its vaunted X1 video platform a “churn buster,” has lost nearly 1.6 million pay TV customers in the last 12 months. 

Earlier this month, equity research company Cowen released data suggesting that as much as 42% of the Comcast video subscriber base is on promotional pricing. With many of those customers facing steep price increases in the next 12 months, Comcast is likely looking at the attrition getting worse, not better. 

Comcast remains the No. 1 supplier of traditional linear pay TV service in the U.S. Its residential video subscriber base hovered at just more than 19,400.

The losses came despite Comcast/NBCUniversal’s soft launch of new SVOD service Peacock in mid-April—the $4.99 premium version of the service was available for free to Xfinity TV subscribers. 

Comcast did post its second-best broadband subscriber growth in the last 13 years, adding more than 340,000 subscribers during a lockdown period during which most people needed internet to get by. 

Also read: NBCU Announces 10M Signups for Peacock

Growing high-speed internet has been the expressed priority for Comcast over the last several years. The company now gives away a free shiny-bundle streaming TV service, Xfinity Flex, to its broadband-only users.

While disclosing the downer pay TV numbers, Comcast did say that it had signed up 10 million Peacock users since its April 15 soft launch.  

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Netflix beat its earnings-per-share forecasts and posted much better than expected subscriber numbers in the second quarter, but turned in another quarter of negative cash flow as it continues to ramp up its international operations and spend heavily on new programming.

Netflix reported earnings of about 6 cents a share for Q2, better than the consensus of analysts, who were expecting about 4 cents per share (or 30 to 31 cents a share before the seven-for-one stock split that took effect July 15). Management had forecast around 26 cents prior to the stock split.

Overall, paid members grew to 42.51 million in the U.S. and hit 66.61 million worldwide.

Revenue for the quarter totaled $1.6 billion, higher than the $1.47 billion management had predicted but less than the $1.65 billion analysts had been forecasting.

Netflix management had predicted it would gain about 2.5 million net additional subs in Q2 and handily beat that forecast with 3.55 million net additional subscribers.

The subscriber growth result was notable because the second quarter is typically a slow one for Netflix; for example, in Q2 2014 the OTT service had only 1.7 million adds.

Read more at broadcastingcable.com.