Roku (ROKU -0.75%) has been doing its best to deal with the uncertain economic environment, and the latest financial results demonstrate that. The business posted revenue of $741 million in the first quarter of 2023, which exceeded internal estimates laid out just three months prior. And the first quarter's net loss of $194 million was an improvement from the fourth quarter last year. 

As of this writing, Roku shares are up 29% in 2023, indicating the market's optimism. However, they are still down a jaw-dropping 89% from their July 2021 peak. What should investors do? Let's take a closer look at this popular streaming stock. 

Looking at Roku's most recent quarter

Roku counted 71.6 million active accounts as of March 31, up 17% year over year. This figure was also up sequentially, a very encouraging sign. Hours streamed during the three-month period totaled an incredible 25.1 billion, a 20% rise compared to the first quarter of 2022. But unsurprisingly, the key takeaway for the quarter was that the ad market is still struggling as companies look to cut back marketing spending. This directly affected Roku. Its average revenue per user declined 5%, while revenue for the Platform segment dropped 1%. 

Looking ahead, management forecasts net revenue of $770 million in the current quarter, a slight uptick from Q2 2022. The objective is to continue optimizing expenses to better match the current environment. With inflationary pressures still hurting consumers, discretionary spending will likely remain under pressure. And the advertising market will see strength from some industries, like travel and wellness, while seeing weakness in others, like financial services and entertainment.

Zooming out can provide better perspective

A generally positive quarter can excite investors, but zooming out can give even more insights into the company's favorable situation. Roku is riding the momentum of the powerful secular trend that is streaming entertainment. The leadership team estimates that there are more households in the U.S. that don't have traditional cable-TV subscriptions than those that do. And internationally, the numbers most likely trail what's going on domestically. This means active account numbers for Roku are set to continue marching higher over time.

Another attractive characteristic about Roku's business model is that at its core, it's simply just a platform and ecosystem that connects viewers, content companies, and advertisers. So while the competition is fierce right now among media companies when it comes to growing their user bases and vying for more viewing time from consumers, Roku should benefit regardless. After all, it has top market share in the U.S. among smart-TV operating systems.

"I've said it before, and I'd say it with pride, Roku is not in the streaming wars," President of Media Charlie Collier said on the Q1 2023 earnings call. "The streaming wars are being played out on our platform." 

Investors should appreciate this perspective because it highlights how Roku aims to be an agnostic platform where all streaming services are offered. And it means the business avoids having to spend the tens of billions of dollars in cash annually that the likes of Netflix or Walt Disney have to in order to drive more subscribers.

Furthermore, it's strikingly clear that the ad market is taking a hit. "The macro environment remained challenged in Q1 with the total U.S. advertising market down 7.4% [year over year]," Roku's management team wrote in the Q1 2023 shareholder letter. The positive way to view things is that every company with exposure to digital ads has been negatively impacted, even dominant enterprises like Alphabet and Meta Platforms. Investors who can take the time to understand that this is a cyclical industry can better handle the headwinds. Once the economy starts to improve and worries about a recession abate, the digital ad market more broadly, and Roku more specifically, will certainly receive a boost.

To be clear, Roku's struggles don't appear to be ending anytime soon. But the business is well positioned to be a winner as streaming becomes more popular over time. The stock currently trades at a price-to-sales multiple of 2.3, which is significantly below its trailing three-, five-, and 10-year average valuations. This means now might be as good a time as ever to consider buying shares.