Roku’s (ROKU - Free Report) third-quarter 2019 results, set to be released on Nov 6, are expected to have benefited from a thriving ad business.
The company witnessed robust growth in monetized video ad impressions in the second quarter, a trend which most likely continued in the to-be-reported quarter on increasing popularity of The Roku Channel.
Roku’s proprietary consumer data and increased usage of ML technology helps advertisers reach their coveted clients more accurately. This is expected to have fortified the company’s advertiser base in the third quarter.
Moreover, Sponsorships, Roku’s unique ad format that enables brands to help streamers discover and try new content, grew significantly faster than video advertising in the June-end quarter. This trend too most likely continued in the third quarter as well.
The third-quarter ad revenues are expected to reflect these trends.
Click here to know how Roku’s overall performance is likely to be.
Player Unit Sales Likely to Grow
Player unit sales witnessed a 36% year-over-year jump in the second quarter, a trend which most likely continued in the third quarter, primarily backed by the company’s plan to keep Player ASP down.
The Zacks Consensus Estimate for the third-quarter Player revenues is pegged at $83 million, indicating growth of 13.7% from the year-ago quarter’s reported figure.
However, a lowered ASP is expected to have hurt gross margin in the third quarter.
Meanwhile, the company unveiled a new streaming player line-up, in addition to upgrades made in Roku Express and Roku Ultra during the quarter. It also unveiled Express+ priced at $39.99 and Ultra LT priced at $79.99. These streaming devices are retailer-exclusive versions for Walmart (WMT - Free Report) .
Moreover, Roku’s expanding international footprint is expected to have aided its top-line growth in the quarter to be reported.
Competition Intensifies in smartTV Market
Roku is a leading player in the smartTV market, courtesy of its partnerships with the likes of TCL, JVC, Sharp and other leading TV-makers. The company’s smartTV market dominance is anticipated to have bolstered Platform revenues in the September-end quarter.
Notably, the Zacks Consensus Estimate for the third-quarter Platform revenues is pegged at $173 million, indicating a jump of 73% from the year-ago quarter’s reported figure.
Nonetheless, entrance of Amazon (AMZN - Free Report) , Alphabet (GOOGL - Free Report) division Google and Samsung is heating up the smartTV market.
In order to counter the growing challenges, particularly from Amazon, Roku announced the expansion of its Roku TV licensing program in Europe during the quarter under review.
Roku’s European expansion plan follows Amazon’s announcement to launch more than 15 new Fire TV Edition products across North America and Europe in partnership with Grundig, JVC and Toshiba.
Roku currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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