Roku ( ROKU Quick Quote ROKU - Free Report) reported second-quarter 2020 loss of 35 cents per share that was narrower than the Zacks Consensus Estimate of a loss of 55 cents. The company had reported loss of 8 cents per share in the year-ago quarter. Revenues soared 42.4% from the year-ago quarter’s level to $356.1 million and beat the consensus mark by 17.9%. Active accounts jumped 41% year over year to 43 million. Streaming hours increased 65% year over year to 14.6 billion. Moreover, average revenue per user (ARPU) grew 18% to $24.92 (on a trailing 12-month basis). Top-Line Details
Platform revenues (68.7% of revenues) surged 46% year over year to $244.8 million. Premium subscriptions in The Roku Channel witnessed a surge in signups, as consumers took advantage of more than 25 extended free trials amid lockdown in the second quarter.
Roku, Inc. Price, Consensus and EPS Surprise
Gross margin contracted 440 basis points (bps) on a year-over-year basis to 41.2%.
Operating expenses, as a percentage of revenues, increased 330 bps from the year-ago quarter’s figure to 53.1%. Growth in headcount and sales & marketing (S&M) expenses led to higher operating expenses. S&M and general & administrative (G&A) expenses increased 340 bps and100 bps, respectively while research & development (R&D) expenses contracted 110 bps. In the second quarter, adjusted EBITDA declined 130.4% year over year to negative $3.4 million. Operating loss was $42.2 million in the reported quarter. The company had reported an operating loss of $10.4 million in the year-ago quarter. Balance Sheet & Cash Flow
As of Jun 30, 2020, cash and cash equivalents including short-term investments were $887 million compared with $588.3 million, as of Mar 31, 2020.
Guidance Withdrawal for 2020
Roku withdrew its 2020 guidance due to the economic uncertainty stemming from the coronavirus outbreak.
Management expects overall advertising expenditure in the United States to decline in 2020. Nonetheless, ad revenues were expected to grow substantially year over year. Notably, for 2020, the company projected revenues between $1.58 billion and $1.62 billion. At midpoint, revenues were expected to increase 42% year over year. Moreover, gross profit was estimated between $720 million and $740 million, up 47% year over year at midpoint. Adjusted EBITDA was assumed between ($10 million) and $10 million. Zacks Rank and Stocks to Consider
Roku currently has a Zacks Rank #3 (Hold).
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