Economy

Roku's First Earnings Report Comes in Stronger Than Expected

Roku's First Earnings Report Comes in Stronger Than Expected”

Roku shares popped more than 20 percent after hours on Wednesday after the company posted a narrower loss than Wall Street estimated, thanks to better-than-expected sales in its first earnings report as a public company.

The company quickly surged over 26% in initial after-hours trading.

Roku reported $124.8 million in net revenue for its third quarter, compared to $110.5 million in analyst estimates. Analysts were calling for losses of $12.7 million.

The Los Gatos, California, company expects to reach $500 million in revenue for the full year, up from $400 million last year. Loss from operations was $7.9 million. The advertising business has more than doubled in size year-to-date, the company said, and Roku makes about $12.68 per user, up 37 percent from a year ago on a trailing 12-month basis.

Nevertheless, the growth in advertising and licensing goes to show that the company is doing a good job of monetizing its streaming business through a hardware that competes with the likes of Google Chromecast, Apple TV and Amazon Fire.

Roku says that its active accounts for the quarter totaled 16.7 million, up 48% year-over-year, with "the largest and fastest-growing portion coming from Roku TVs", according to the release.

Need cord cutting tech support?

Roku, known for its devices that connect to televisions and allow people to stream video from Netflix, YouTube and other apps, for a long time was primarily in the product business. TV manufacturers also have started to offer their own built-in streaming options.

Here's how the company has traded since its September IPO. In an interview with Barron's this afternoon, Roku's chief financial officer Steve Louden noted that the company sold 35% more streaming players at an average selling price 23% lower than a year ago.

Investors responded favorably to the earnings report, boosting Roku's stock by over 26 percent to almost $24. The stock closed Wednesday at $18.84, with a market cap of $1.83 billion.



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