Roku ROKU reported third-quarter 2024 loss of 6 cents per share, narrower than the Zacks Consensus Estimate of a loss of 35 cents. The company had incurred a loss of $2.33 per share in the year-ago quarter.
Revenues increased 16.47% from the year-ago quarter’s level to $1.062 billion and beat the consensus mark by 4.37%. Growth of The Roku Channel’s streaming households and streaming hours drove third-quarter performance. Roku’s streaming households and streaming hours grew 13% and 20%, respectively, year over year.
Streaming Households were 85.5 million, representing a net increase of 2 million from the second quarter of 2024. The Roku Home Screen, which is the beginning of viewers’ streaming experience, reaches 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 32 billion hours in the third quarter, up 20% hours from the prior quarter.
The average revenue per user remained flat year over year at $41.1 (on a trailing 12-month basis).
The Roku Channel remained the #3 app on Roku’s platform in the third quarter by both reach and engagement, with Streaming Hours up nearly 80% 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. The Roku Channel’s Nielsens’ The Gauge hit an all-time high ranking for August 2024, representing 4.1% of total TV streaming time in the United States. Roku launched Roku Sports Channel in August providing viewers with free sports content. Good Morning Football: Overtime, a new extension series of NFL Network’s long-running Good Morning Football was also added to the Roku Channel.
Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote
Quarter Details
Platform revenues (85.5% of revenues) increased 15.43% year over year to $908.2 million, driven by contributions from streaming services distribution and advertising activities, despite continued softness within the media and entertainment vertical.
Devices revenues (14.5% of revenues) rose 23% from the year-ago quarter’s level to $154 million.
Operating Details
Gross margin, as a percentage of total revenues, expanded 476 basis points from the year-ago quarter’s level to 45.2%.
Operating expenses decreased 28.22% year over year to $515.83 million. As a percentage of total revenues, the metric contracted to 48.56% from 78.79% reported in the year-ago quarter.
Research & development and sales & marketing expenses decreased 36.64% and 22.96% on a year-over-year basis to $178.79 million and $237.04 million, respectively. General & administrative expenses increased 22.3% to $99.9 million.
In the third quarter, adjusted EBITDA was $98.2 million against adjusted EBITDA of $43.4 million in the year-ago quarter. Roku reported the fifth consecutive quarter of positive adjusted EBITDA and trailing 12-month free cash flow.
Operating loss was $35.8 million in the reported quarter compared with an operating loss of $349.8 million in the year-ago quarter.
Balance Sheet
As of Sept. 30, 2024, cash and cash equivalents were $2.12 billion compared with $2.05 billion as of June 30, 2024. As of Sept 30, 2024, Roku had no long-term debt.
Guidance
For fourth-quarter 2024, ROKU expects total net revenues of $1.14 billion, total gross profit of roughly $465 million and adjusted EBITDA of $30 million.
Zacks Rank & Other Stocks to Consider
Roku currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Consumer Discretionary sector are Liberty Media Corporation - Liberty Formula One Series A FWONA, Funko FNKO and Sonos SONO. FWONA and FNKA sport a Zacks Rank #1 (Strong Buy) each, while SONO carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
FWONA and FNKO are set to report their quarterly result on Nov. 7. SONO is set to report its quarterly results on Nov. 13.
The Zacks Consensus Estimate for FWONA’s third-quarter 2024 earnings per share is pegged at 31 cents, up 29.1% over the past 30 days.
The Zacks Consensus Estimate for FNKO’s third-quarter 2024 earnings is pegged at 4 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for SONO’s fourth-quarter 2024 loss per share is pegged at 22 cents, unchanged over the past 30 days.
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