Roku shares surge after beating Q2 Estimates

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Roku Inc. (NASDAQ: ROKU)reported its second quarter financial results and topped estimates after hours on Wednesday. Roku’s stronger than expected quarter sent shares surging 19.2% shortly after the opening bell on Thursday.

For the second quarter, Roku reported revenue of USD 156.8 Million, increasing 57% year over year and topping analysts’ estimates by USD 15.32 Million. The Company reported an EPS of USD 0.00, beating analysts’ estimates of an EPS loss of USD 15 cents.

Roku’s platform revenue increased by 96% year over year to USD 90.3 Million, driven by active accounts growth. Active accounts grew by 46% year over year to 22 Million, as streaming hours also increased by 57% to 5.5 Billion hours. The strong growth in users and hours spent on the platform increased average revenue per user (ARPU) by 48% to USD 16.60.

Second quarter operating expenses were USD 77.9 Million, increasing 53% year over year, as Roku continued to invest in “top talent.” Roku’s investment into advertising and marketing drove higher user count.

“We are investing our increasing gross profit back into key growth areas, as we aggressively pursue the huge opportunities we see in streaming,” said Roku in its earnings transcript. “Our goal continues to be to manage the business to roughly break-even during this period of market expansion. However, given the strength of our first half and factoring in the IP licensing accrual release benefit, we are increasing our revenue and profitability outlook for the full year 2018 to reflect more rapid growth and a modest EBITDA profit.”

Roku’s devices connect users to a variety of media platforms such as Hulu, Netflix (NASDAQ: NFLX) and Amazon.com (NASDAQ: AMZN), but the Company began to incorporate more services onto its platform as competition increased in the streaming industry.

For the full year, Roku expects revenue between USD 710 Million and USD 730 Million on an adjusted EBITDA between USD 11.00 and USD 23.00. Gross profits are expected to be in the range of USD 315 Million and USD 327 Million. Thomson Reuters analysts forecast revenue of USD 698 Million.

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