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ROKU's Q3 Earnings Beat Estimates, Revenues Increase Y/Y

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Roku ROKU reported third-quarter 2021 earnings of 48 cents per share, outpacing the Zacks Consensus Estimate of 6 cents. The company reported earnings of 9 cents per share in the year-ago quarter.

Revenues increased 51% from the year-ago level to $680 million but missed the consensus mark by 0.4%.

Growth of the Roku Channel in both reach and engagement drove third-quarter performance.

Active accounts jumped 23% year over year to 56.4 million, driven by the popularity of Roku streaming players and Roku TV models. Streaming hours also jumped 21% year over year to 18 billion.

Also, average revenue per user grew 49% from the prior-year quarter to $40.1 (on a trailing 12-month basis).

For the third quarter, Roku’s monetized video ad impressions nearly doubled on a year-over-year basis owing to strong client acquisition and retention.

Roku, Inc. Price, Consensus and EPS Surprise

Roku, Inc. Price, Consensus and EPS Surprise
Roku, Inc. Price, Consensus and EPS Surprise

Roku, Inc. price-consensus-eps-surprise-chart | Roku, Inc. Quote

Quarter Details

Platform revenues (86% of revenues) surged 82% year over year to $582.5 million, driven by significant increases in both content distribution activities and advertising.

Player revenues (14% of revenues), however, decreased 26% from the year-ago level to $97.4 million.

In the third quarter, the company launched the all-new Roku Streaming Stick 4K and Roku Streaming Stick 4K+, which comprises the Roku Voice Remote Pro, Dolby Vision, and HDR10+.

It also introduced a new tool in the reported quarter that permits Shopify SHOP merchants to seamlessly build, buy and measure TV streaming advertising campaigns on the Roku platform.

Operating Details

Gross margin, as a percentage of total revenues, expanded 600 basis points (bps) from the year-ago quarter to 53.5%.

Operating expenses increased 45% year over year to 295.1 million. As a percentage of total revenues, the metric contracted 152 bps.

As a percentage of total revenues, research & development, and general & administrative expenses contracted 188 bps and 6 bps, respectively, while sales & marketing expenses expanded 42 bps on a year-over-year basis.

For the third quarter, adjusted EBITDA margin — as a percentage of total revenues — expanded 670 bps year over year to 19.1%.

Operating income was $68.8 million for the reported quarter compared with $12 million in the year-ago period.

Balance Sheet

As of Sep 30, 2021, cash and cash equivalents were $2.18 billion compared with $2.08 billion as of Jun 30, 2021.

As of Sep 30, 2021, the company reported total debt of $91.1 million compared with $92.3 million on Jun 30, 2021.

Guidance

For fourth-quarter 2021, Roku expects total net revenues between $885 million and $900 million. The Zacks Consensus Estimate is currently pegged at $948.7 million.

Gross profit is anticipated between $380 million and $390 million. The company expects adjusted EBITDA in the $65-$75 million band.

Zacks Rank & Stocks to Consider

Currently, Roku has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the consumer discretionary sector include PVH PVH and Vitru Ltd. VTRU. While PVH sports a Zacks Rank #1 (Strong Buy), Vitru carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for PVH and Vitru are currently projected at 59.1% and 29.6%, respectively.


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PVH Corp. (PVH) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

Roku, Inc. (ROKU) : Free Stock Analysis Report

Vitru Limited (VTRU) : Free Stock Analysis Report

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