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ROKU's Q3 Loss Narrower Than Expected, Revenues Increase Y/Y
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Roku (ROKU - Free Report) reported third-quarter 2022 loss of 88 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.37. The company had reported earnings of 48 cents per share in the year-ago quarter.
Revenues increased 12% from the year-ago quarter’s level to $761.4 million and beat the consensus mark by 8.93%.
Growth of the Roku Channel’s reach and engagement drove third-quarter performance.
In third-quarter 2022, the company added 2.3 million incremental active accounts to reach 65.4 million. This growth was driven primarily by TV sales in both U.S. and international markets, along with improved active account retention.
Streaming hours were 21.9 billion hours, up 1.1 billion hours from the second quarter.
The average revenue per user rose 10% from the prior-year quarter’s levels to $44.25 (on a trailing 12-month basis).
For the third 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 also ranked first in reach among AVOD/FAST services in the United States and Canada, according to TiVo’s most recent quarterly Video Trends Report.
Platform revenues (88.1% of revenues) increased 15.1% year over year to $670.4 million. This growth was lower than historical growth rates as many marketers abruptly curtailed or paused advertising spend in the ad scatter market.
Player revenues (11.9% of revenues) declined 6.6% from the year-ago quarter’s level to $91 million.
Operating Details
Gross margin, as a percentage of total revenues, contracted 670 basis points (bps) from the year-ago quarter’s level to 46.9%.
Operating expenses increased 70.7% year over year to $503.8 million. As a percentage of total revenues, the metric expanded to 66.2% from 43.4% in the year-ago quarter.
As a percentage of total revenues, research & development expenses expanded 960 bps year over year, while sales & marketing and general & administrative expenses expanded 1140 bps and 180 bps, respectively, on a year-over-year basis.
In the third quarter, negative adjusted EBITDA was $34.4 million compared with $130.1 million in the year-ago quarter.
Operating income was $27.9 million in the reported quarter against operating income of $0.5 million in the year-ago quarter.
Balance Sheet
As of Sep 30, 2022, cash and cash equivalents were $2.01 billion compared with $2.05 billion as of Jun 30, 2022.
As of Sep 30, 2022, Roku had total debt of $82.4 million compared with $84.9 million on Jun 30, 2022.
Guidance
For fourth-quarter 2022, Roku expects total net revenues of $800 million, total gross profit of roughly $325 million and adjusted EBITDA of negative $135 million.
Zacks Rank & Other Stocks to Consider
Roku currently has a Zacks Rank #2 (Buy).
Roku shares are down 76.2% in the year-to-date period compared with the Zacks Consumer Discretionary sector’s decline of 36.4%.
AMC Entertainment, Reservoir Media and American Public Education are each scheduled to report their quarterly results on Nov 8.
The Zacks Consensus Estimate for AMC Entertainment’s third-quarter 2022 loss is pegged at 27 cents per share, having widened from a loss of 25 cents over the past 30 days.
The Zacks Consensus Estimate for Reservoir Media’s third-quarter 2022 earnings is pegged at 5 cents per share, unchanged over the past 30 days.
The consensus mark for American Public Education’s third-quarter 2022 earnings is pegged at 25 cents per share, unchanged in the past 30 days.
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ROKU's Q3 Loss Narrower Than Expected, Revenues Increase Y/Y
Roku (ROKU - Free Report) reported third-quarter 2022 loss of 88 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.37. The company had reported earnings of 48 cents per share in the year-ago quarter.
Revenues increased 12% from the year-ago quarter’s level to $761.4 million and beat the consensus mark by 8.93%.
Growth of the Roku Channel’s reach and engagement drove third-quarter performance.
In third-quarter 2022, the company added 2.3 million incremental active accounts to reach 65.4 million. This growth was driven primarily by TV sales in both U.S. and international markets, along with improved active account retention.
Streaming hours were 21.9 billion hours, up 1.1 billion hours from the second quarter.
The average revenue per user rose 10% from the prior-year quarter’s levels to $44.25 (on a trailing 12-month basis).
For the third 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 also ranked first in reach among AVOD/FAST services in the United States and Canada, according to TiVo’s most recent quarterly Video Trends Report.
Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (88.1% of revenues) increased 15.1% year over year to $670.4 million. This growth was lower than historical growth rates as many marketers abruptly curtailed or paused advertising spend in the ad scatter market.
Player revenues (11.9% of revenues) declined 6.6% from the year-ago quarter’s level to $91 million.
Operating Details
Gross margin, as a percentage of total revenues, contracted 670 basis points (bps) from the year-ago quarter’s level to 46.9%.
Operating expenses increased 70.7% year over year to $503.8 million. As a percentage of total revenues, the metric expanded to 66.2% from 43.4% in the year-ago quarter.
As a percentage of total revenues, research & development expenses expanded 960 bps year over year, while sales & marketing and general & administrative expenses expanded 1140 bps and 180 bps, respectively, on a year-over-year basis.
In the third quarter, negative adjusted EBITDA was $34.4 million compared with $130.1 million in the year-ago quarter.
Operating income was $27.9 million in the reported quarter against operating income of $0.5 million in the year-ago quarter.
Balance Sheet
As of Sep 30, 2022, cash and cash equivalents were $2.01 billion compared with $2.05 billion as of Jun 30, 2022.
As of Sep 30, 2022, Roku had total debt of $82.4 million compared with $84.9 million on Jun 30, 2022.
Guidance
For fourth-quarter 2022, Roku expects total net revenues of $800 million, total gross profit of roughly $325 million and adjusted EBITDA of negative $135 million.
Zacks Rank & Other Stocks to Consider
Roku currently has a Zacks Rank #2 (Buy).
Roku shares are down 76.2% in the year-to-date period compared with the Zacks Consumer Discretionary sector’s decline of 36.4%.
Some other top-ranked stocks in the Consumer Discretionary sector include AMC Entertainment (AMC - Free Report) , Reservoir Media (RSVR - Free Report) and American Public Education (APEI - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMC Entertainment, Reservoir Media and American Public Education are each scheduled to report their quarterly results on Nov 8.
The Zacks Consensus Estimate for AMC Entertainment’s third-quarter 2022 loss is pegged at 27 cents per share, having widened from a loss of 25 cents over the past 30 days.
The Zacks Consensus Estimate for Reservoir Media’s third-quarter 2022 earnings is pegged at 5 cents per share, unchanged over the past 30 days.
The consensus mark for American Public Education’s third-quarter 2022 earnings is pegged at 25 cents per share, unchanged in the past 30 days.