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Roku (ROKU) Up 33.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Roku (ROKU - Free Report) . Shares have added about 33.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Roku due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ROKU's Q3 Loss Wider Than Expected, Revenues Increase Y/Y
Roku 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 49.58% due to these changes.
VGM Scores
At this time, Roku has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Roku has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Roku belongs to the Zacks Broadcast Radio and Television industry. Another stock from the same industry, Sirius XM (SIRI - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Sirius XM reported revenues of $2.27 billion in the last reported quarter, representing a year-over-year change of -0.4%. EPS of $0.09 for the same period compares with $0.07 a year ago.
For the current quarter, Sirius XM is expected to post earnings of $0.08 per share, indicating a change of -11.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -4% over the last 30 days.
Sirius XM has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Roku (ROKU) Up 33.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Roku (ROKU - Free Report) . Shares have added about 33.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Roku due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ROKU's Q3 Loss Wider Than Expected, Revenues Increase Y/Y
Roku 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 49.58% due to these changes.
VGM Scores
At this time, Roku has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Roku has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Roku belongs to the Zacks Broadcast Radio and Television industry. Another stock from the same industry, Sirius XM (SIRI - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Sirius XM reported revenues of $2.27 billion in the last reported quarter, representing a year-over-year change of -0.4%. EPS of $0.09 for the same period compares with $0.07 a year ago.
For the current quarter, Sirius XM is expected to post earnings of $0.08 per share, indicating a change of -11.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -4% over the last 30 days.
Sirius XM has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.