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ROKU's Q3 Loss Wider Than Expected, Revenues Increase Y/Y
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Roku (ROKU - Free Report) reported third-quarter 2023 loss of $2.33 per share, wider than the Zacks Consensus Estimate of a loss of $2.16. The company had incurred a loss of 88 cents per share in the year-ago quarter.
Revenues increased 19.8% from the year-ago quarter’s level to $912.02 million and beat the consensus mark by 6.37%. Growth of The Roku Channel’s active accounts and streaming hours drove third-quarter performance.
Active account net adds were 2.3 million in the third quarter, taking the total active accounts to 75.8 million globally, reflecting greater engagement and more monetization opportunities.
Roku has become the No. 1 TV streaming platform by hours streamed in the United States, Canada and Mexico. Globally, users streamed a record of 26.7 billion hours in the third quarter, up 1.6 billion hours from the prior quarter.
The average revenue per user declined 7% from the prior-year quarter’s levels to $41.03 (on a trailing 12-month basis).
For the seventh consecutive quarter, The Roku Channel was among the top five channels by both active account reach and streaming hour engagement on the Roku platform in the United States. The Roku Channel’s active accounts are approaching half of all broadband households in the United States.
Platform revenues (86.3% of revenues) increased 17.9% year over year to $786.8 million through strong contributions from content distribution and video advertising. Devices revenues (13.7% of revenues) rose 32.9% from the year-ago quarter’s level to $125.2 million.
Roku operating system (OS) was the #1 selling smart TV OS in Mexico for the fourth consecutive quarter. Roku TV program expanded in Germany with its third OEM partner, Coocaa. The program keeps expanding with 20 licensed Roku TV partners globally.
The company was recognized as the Most Innovative Company for 2023 by Fast Company for its work in both hardware and software. This includes content partnership for The Roku Channel and Roku Voice Remote Pro.
The company recently announced a partnership with NBCUniversal. It will boost the quality of content offered by Roku.
Operating Details
Gross margin, as a percentage of total revenues, expanded 80 basis points from the year-ago quarter’s level to 47.7%.
Operating expenses increased 42.6% year over year to $718.6 million. As a percentage of total revenues, the metric expanded to 78.8% from 66.2% in the year-ago quarter.
Research & development increased by 35.9% to $282.2 million, sales & marketing and general & administrative expenses grew 46.9% and 48.3% on a year-over-year basis to $307.7 million and $209.4 million, respectively.
In the third quarter, adjusted EBITDA was $43.4 million compared with negative adjusted EBITDA of $34.4 million in the year-ago quarter.
Operating loss was $349.8 million in the reported quarter compared with an operating loss of $147 million in the year-ago quarter.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $2 billion compared with $1.75 billion as of Jun 30, 2023. As of Sep 30, 2023, Roku had no long-term debt.
Guidance
For fourth-quarter 2023, Roku expects total net revenues of $955 million, total gross profit of roughly $405 million and adjusted EBITDA of $10 million.
Image: Bigstock
ROKU's Q3 Loss Wider Than Expected, Revenues Increase Y/Y
Roku (ROKU - Free Report) reported third-quarter 2023 loss of $2.33 per share, wider than the Zacks Consensus Estimate of a loss of $2.16. The company had incurred a loss of 88 cents per share in the year-ago quarter.
Revenues increased 19.8% from the year-ago quarter’s level to $912.02 million and beat the consensus mark by 6.37%. Growth of The Roku Channel’s active accounts and streaming hours drove third-quarter performance.
Active account net adds were 2.3 million in the third quarter, taking the total active accounts to 75.8 million globally, reflecting greater engagement and more monetization opportunities.
Roku has become the No. 1 TV streaming platform by hours streamed in the United States, Canada and Mexico. Globally, users streamed a record of 26.7 billion hours in the third quarter, up 1.6 billion hours from the prior quarter.
The average revenue per user declined 7% from the prior-year quarter’s levels to $41.03 (on a trailing 12-month basis).
For the seventh consecutive quarter, The Roku Channel was among the top five channels by both active account reach and streaming hour engagement on the Roku platform in the United States. The Roku Channel’s active accounts are approaching half of all broadband households in the United States.
Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (86.3% of revenues) increased 17.9% year over year to $786.8 million through strong contributions from content distribution and video advertising.
Devices revenues (13.7% of revenues) rose 32.9% from the year-ago quarter’s level to $125.2 million.
Roku operating system (OS) was the #1 selling smart TV OS in Mexico for the fourth consecutive quarter. Roku TV program expanded in Germany with its third OEM partner, Coocaa. The program keeps expanding with 20 licensed Roku TV partners globally.
The company was recognized as the Most Innovative Company for 2023 by Fast Company for its work in both hardware and software. This includes content partnership for The Roku Channel and Roku Voice Remote Pro.
The company recently announced a partnership with NBCUniversal. It will boost the quality of content offered by Roku.
Operating Details
Gross margin, as a percentage of total revenues, expanded 80 basis points from the year-ago quarter’s level to 47.7%.
Operating expenses increased 42.6% year over year to $718.6 million. As a percentage of total revenues, the metric expanded to 78.8% from 66.2% in the year-ago quarter.
Research & development increased by 35.9% to $282.2 million, sales & marketing and general & administrative expenses grew 46.9% and 48.3% on a year-over-year basis to $307.7 million and $209.4 million, respectively.
In the third quarter, adjusted EBITDA was $43.4 million compared with negative adjusted EBITDA of $34.4 million in the year-ago quarter.
Operating loss was $349.8 million in the reported quarter compared with an operating loss of $147 million in the year-ago quarter.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $2 billion compared with $1.75 billion as of Jun 30, 2023. As of Sep 30, 2023, Roku had no long-term debt.
Guidance
For fourth-quarter 2023, Roku expects total net revenues of $955 million, total gross profit of roughly $405 million and adjusted EBITDA of $10 million.
Zacks Rank & Stocks to Consider
Roku currently has a Zacks Rank #3 (Hold).
The Gap (GPS - Free Report) , Groupon (GRPN - Free Report) and Walmart (WMT - Free Report) are some better-ranked stocks that investors can consider in the broader sector. While The Gap sports a Zacks Rank #1 (Strong Buy), Groupon and Walmart carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of The Gap have gained 14.6% in the year-to-date period. The company is set to report third-quarter 2023 results on Nov 16.
Shares of Groupon have rallied 51.5% year to date. The company is slated to report third-quarter 2023 results on Nov 9.
Shares of Walmart have gained 16.3% year to date. The company is scheduled to report third-quarter fiscal 2024 results on Nov 16.