Bulletins

Roku execs warn company will lose money on hardware as chip shortage continues

The entire industry had been dealing with supply chain shortages for more than a year.

A person partially obscured by the Roku-brand 39" TV box they are carrying toward the checkout area of a big box store
Photo: Luke Sharrett/Getty Images

The global chipset shortage is starting to have an impact on the consumer electronics industry: Roku executives warned in a letter to investors Thursday that the company may lose money on its hardware going forward due to continued supply chain constraints, and Roku CFO Steve Louden told Protocol that the issues were possibly getting worse.

Louden expressed optimism that the company would be able to grow its business despite these shortages, but admitted that gross margins from hardware sales would turn negative in the coming months. "It will have some impact on the business," Louden said.

The entire industry had been dealing with supply chain shortages for more than a year, Louden said, adding that there was no end in sight. "The problems are persisting maybe longer than some people hoped," he said.

Roku has long sold its hardware near cost to grow its user base, which it then monetizes through advertising. The company's Q1 2021 results showed revenue of $574.2 million, compared to $320.8 million during the same quarter a year ago. The company's advertising and services business brought in $466.5 million during the quarter. Earnings per share for the quarter were $0.53; analysts had expected losses of $0.13 per share.

Janko Roettgers

Janko Roettgers (Twitter, Mastodon) used to be a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

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