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ROKU Q2 Loss Narrower Than Expected, Revenues Increase Y/Y
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Roku (ROKU - Free Report) reported second-quarter 2024 loss of 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 45 cents. The company had incurred a loss of 76 cents per share in the year-ago quarter.
Revenues increased 14.3% from the year-ago quarter’s level to $968.2 million and beat the consensus mark by 3.52%. Growth of The Roku Channel’s streaming households and streaming hours drove second-quarter performance. Roku’s streaming households and streaming hours grew 14% and 20%, respectively, year over year.
Streaming Households were 83.6 million, representing a net increase of 2 million from the first quarter of 2024. The Roku Home Screen, which is the beginning of viewers’ streaming experience, reaches the U.S. households with more than 120 million people every day, reflecting greater engagement and more monetization opportunities.
The Roku operating system (OS) was again the #1 selling TV OS in the United States, with TV unit sales greater than the next two TV operating systems combined. The Roku OS was also the #1 selling TV OS in Mexico and Canada.
Globally, users streamed a record of 30.1 billion hours in the second quarter, up 5 billion hours from the prior quarter.
The average revenue per user remained flat year over year at $40.68 (on a trailing 12-month basis).
The Roku Channel remained the #3 app on Roku’s platform in the second quarter by both reach and engagement, with Streaming Hours up nearly 75% year over year. This ongoing growth is largely due to the company’s position as the lead-in to TV and Home Screen’s power to drive viewership. More than 70% of The Roku Channel’s Streaming Hours in the second quarter originated not from The Roku Channel app tile, but from Home Screen features, such as the Content Row, Live TV and What to Watch.
Platform revenues (85.1% of revenues) increased 10.8% year over year to $824.3 million, driven by contributions from streaming services distribution and advertising activities, despite continued softness within the media and entertainment vertical.
Devices revenues (14.9% of revenues) rose 39.2% from the year-ago quarter’s level to $143.8 million.
Operating Details
Gross margin, as a percentage of total revenues, contracted 80 basis points from the year-ago quarter’s level to 43.9%.
Operating expenses decreased 1.6% year over year to $495.9 million. As a percentage of total revenues, the metric contracted to 51.2% from 59.5% reported in the year-ago quarter.
Research & development and sales & marketing expenses decreased 8.8% and 2.4% on a year-over-year basis to $175.5 million and $221.7 million, respectively. General & administrative expenses increased 16.7% to $98.8 million.
In the second quarter, adjusted EBITDA was $43.6 million against negative adjusted EBITDA of $17.8 million in the year-ago quarter. Roku reported the fourth consecutive quarter of positive adjusted EBITDA and trailing 12-month free cash flow.
Operating loss was $71.2 million in the reported quarter compared with an operating loss of $126 million in the year-ago quarter.
Balance Sheet
As of Jun 30, 2024, cash and cash equivalents were $2.05 billion compared with $2.02 billion as of Mar 31, 2024. As of Jun 30, 2024, Roku had no long-term debt.
Guidance
For third-quarter 2024, ROKU expects total net revenues of $1.01 billion, total gross profit of roughly $440 million and adjusted EBITDA of $45 million.
Warner Music Group is scheduled to report second-quarter 2024 results on Aug 7. The Zacks Consensus Estimate for WMG’s first-quarter EPS has increased 2 cents to 25 cents over the past 30 days.
Choice Hotels International is set to report second-quarter 2024 results on Aug 8. The Zacks Consensus Estimate for CHH’s EPS is pegged at $1.87, which has increased a cent over the past 30 days.
YETI is slated to report second-quarter 2024 results on Aug 8. The Zacks Consensus Estimate for YETI’s EPS is pegged at 63 cents, which has remained unchanged over the past 30 days.
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ROKU Q2 Loss Narrower Than Expected, Revenues Increase Y/Y
Roku (ROKU - Free Report) reported second-quarter 2024 loss of 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 45 cents. The company had incurred a loss of 76 cents per share in the year-ago quarter.
Revenues increased 14.3% from the year-ago quarter’s level to $968.2 million and beat the consensus mark by 3.52%. Growth of The Roku Channel’s streaming households and streaming hours drove second-quarter performance. Roku’s streaming households and streaming hours grew 14% and 20%, respectively, year over year.
Streaming Households were 83.6 million, representing a net increase of 2 million from the first quarter of 2024. The Roku Home Screen, which is the beginning of viewers’ streaming experience, reaches the U.S. households with more than 120 million people every day, reflecting greater engagement and more monetization opportunities.
The Roku operating system (OS) was again the #1 selling TV OS in the United States, with TV unit sales greater than the next two TV operating systems combined. The Roku OS was also the #1 selling TV OS in Mexico and Canada.
Globally, users streamed a record of 30.1 billion hours in the second quarter, up 5 billion hours from the prior quarter.
The average revenue per user remained flat year over year at $40.68 (on a trailing 12-month basis).
The Roku Channel remained the #3 app on Roku’s platform in the second quarter by both reach and engagement, with Streaming Hours up nearly 75% year over year. This ongoing growth is largely due to the company’s position as the lead-in to TV and Home Screen’s power to drive viewership. More than 70% of The Roku Channel’s Streaming Hours in the second quarter originated not from The Roku Channel app tile, but from Home Screen features, such as the Content Row, Live TV and What to Watch.
Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (85.1% of revenues) increased 10.8% year over year to $824.3 million, driven by contributions from streaming services distribution and advertising activities, despite continued softness within the media and entertainment vertical.
Devices revenues (14.9% of revenues) rose 39.2% from the year-ago quarter’s level to $143.8 million.
Operating Details
Gross margin, as a percentage of total revenues, contracted 80 basis points from the year-ago quarter’s level to 43.9%.
Operating expenses decreased 1.6% year over year to $495.9 million. As a percentage of total revenues, the metric contracted to 51.2% from 59.5% reported in the year-ago quarter.
Research & development and sales & marketing expenses decreased 8.8% and 2.4% on a year-over-year basis to $175.5 million and $221.7 million, respectively. General & administrative expenses increased 16.7% to $98.8 million.
In the second quarter, adjusted EBITDA was $43.6 million against negative adjusted EBITDA of $17.8 million in the year-ago quarter. Roku reported the fourth consecutive quarter of positive adjusted EBITDA and trailing 12-month free cash flow.
Operating loss was $71.2 million in the reported quarter compared with an operating loss of $126 million in the year-ago quarter.
Balance Sheet
As of Jun 30, 2024, cash and cash equivalents were $2.05 billion compared with $2.02 billion as of Mar 31, 2024. As of Jun 30, 2024, Roku had no long-term debt.
Guidance
For third-quarter 2024, ROKU expects total net revenues of $1.01 billion, total gross profit of roughly $440 million and adjusted EBITDA of $45 million.
Zacks Rank & Stocks to Consider
Roku currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Warner Music Group (WMG - Free Report) , Choice Hotels International (CHH - Free Report) and YETI (YETI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Warner Music Group is scheduled to report second-quarter 2024 results on Aug 7. The Zacks Consensus Estimate for WMG’s first-quarter EPS has increased 2 cents to 25 cents over the past 30 days.
Choice Hotels International is set to report second-quarter 2024 results on Aug 8. The Zacks Consensus Estimate for CHH’s EPS is pegged at $1.87, which has increased a cent over the past 30 days.
YETI is slated to report second-quarter 2024 results on Aug 8. The Zacks Consensus Estimate for YETI’s EPS is pegged at 63 cents, which has remained unchanged over the past 30 days.