The company increased its bottom line and minimized its losses.
Earnings season continues, and last week, Roku released its second-quarter earnings report. Roku regularly beats Wall Street expectations, and this latest earnings report was no exception. The company’s revenue increased by 59% year over year, and it lost less money than expected.
Roku’s shares jumped more than 20% after it released the earnings report. Roku’s stock has been a top performer all year, with shares up 334% from a year earlier.
3 Main Takeaways From the Earnings Report
During the second quarter, Roku earned $250 million in revenue instead of the $224 million expected by analysts. The company did lose money, but total losses came to 8 cents per share instead of the forecasted 23 cents per share.
This marks the second straight quarter that Roku increased its revenue. Here are three main takeaways from the company’s earnings report…
More Consumers Are Switching to Streaming
In Roku’s shareholder letter, the company credited its growth to the huge consumer shift to streaming. Roku now has 30.5 million active accounts, which is up 1.4 million from the previous quarter.
Not only are more consumers choosing to switch to streaming, but they’re spending more time on streaming services. Roku’s streaming hours increased by 0.5 billion hours to reach 9.4 billion hours in total. This is an increase of 72% year over year.
The Company’s Advertising Revenue Increased
Roku’s revenue growth can largely be credited to its strong advertising platform. The company’s monetized video ad impressions more than doubled from a year earlier. And Roku’s average revenue per user increased $2 to reach $21.06.
The Company Raised Its Full-Year Forecast
Of course, analysts aren’t just looking for signs that things are going well today. They want evidence that a company’s growth will continue, and Roku provided just that.
The company raised its full-year guidance to between $1.075 billion to $1.095 billion, up from $1.03 billion to $1.05 billion. And the company also increased its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to between $30 million and $40 million.
Roku Continues to Exceed Expectations
Analysts responded favorably to the news, and an analyst from Rosenblatt upgraded the company’s shares from neutral to buy. A Needham analyst raised Roku’s price target from $120 to $150, calling the company, “the dominant internet aggregator for streamed TV and movie content.”
Roku has been dogged by concerns about how possible new tariffs could affect the company. In a recent interview, Roku CEO Anthony Wood said that any new tariffs aren’t likely to have a lasting effect on the company. Short-term challenges shouldn’t affect the long-term potential of this company.
