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ROKU Q3 Earnings to Gain on Active Accounts & Ad Growth

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Roku (ROKU - Free Report) is set to report third-quarter 2018 results on Nov 7. In the trailing four quarters, the company’s earnings beat the Zacks Consensus Estimate on three occasions, delivering average positive surprise of 53.7%.

In the last reported quarter, Roku reported break-even earnings compared with the Zacks Consensus Estimate of a loss of 15 cents. Revenues of $157 million beat the Zacks Consensus Estimate of $141 million and jumped 57% year over year.

The Zacks Consensus Estimate for third-quarter earnings has remained steady at a loss of 14 cents over the past seven days. The consensus mark for revenues currently stands at $170.9 million, reflecting year-over-year growth of almost 37%.

Let’s see how things are shaping up for this announcement.

Key Factors to Watch Out

Roku is expected to benefit from an increasing number of active accounts that jumped 46% to hit 22 million in the last reported quarter. Active accounts are rapidly growing due to increasing streaming hours that surged 57% year over year to 5.5 billion hours.

Roku, Inc. Price and EPS Surprise


Roku, Inc. Price and EPS Surprise | Roku, Inc. Quote


We expect the momentum to continue in the to-be-reported quarter due to Roku’s superior platform supported by strong demand for streaming players, expanding content portfolio and international expansion. Further, continuing strong advertising growth is likely to drive results.

In the last reported quarter, the company added news to Roku channel and also released Roku Channel app on select Samsung smart TVs. The availability of Roku channel in the web and smart TVs is a key catalyst. Roku is also now available in Canada.

Roku is rapidly growing in the smart TV space. Last quarter, the company launched its new wireless speakers that enhance the sound quality on a Roku TV, making it more attractive to the customers.

However, growth in player revenues is expected to be flat, primarily due to tough year-over-year comparison. Platform revenues are also expected to decline. These factors are expected to negatively impact top-line growth in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Roku has a Zacks Rank #3 and an Earnings ESP of +18.52%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks with a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Himax Technologies (HIMX - Free Report) has an Earnings ESP of +66.67% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NetApp (NTAP - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank #1.

The Trade Desk (TTD - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank #1.

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NetApp, Inc. (NTAP) - free report >>

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Himax Technologies, Inc. (HIMX) - free report >>

Roku, Inc. (ROKU) - free report >>

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