Roku Shares Jump 7% as Streamer Narrows Q1 Net Loss to $50.8 Million

Roku shares jumped 7% in after-hours trading before reversing their gains on Thursday after the streamer and hardware marker beat Wall Street expectations for the first quarter of 2024.

Here are the top-line results:

• Net loss: $50.85 million, compared to $193.6 million in the year-ago period.
• Earnings per share: a loss of 35 cents per share compared to an estimated loss of 64 cents per share by analysts surveyed by Zacks Investment Research.
• Revenue: $882 million, up 19% year over year, compared to an estimated $850.97 million by analysts surveyed by Zacks Investment Research.
• Streaming Households: 81.6 million, an increase of 14% year over year, with 1.6 million added during the first quarter

Platform revenue for the quarter, which is largely based on advertising sales and a subscription revenues split with partners, grew 19% year over year to $755 million. Meanwhile, devices revenue increased 19% year over year to $126.5 million. Average revenue per user was flat year over year at $40.65 on a trailing 12-month basis.

Total gross profit grew 15% year over year to $388.3 million and total operating expenses fell 16% to $460.3 million. Roku reported its third consecutive quarter of positive adjusted EBITDA and free cash flow, which came in at $40.9 million and $426.8 million, respectively.

During the quarter, streaming service distribution activities grew faster than platform revenue overall, benefiting in part from price increases for subscription-based apps on Roku’s platform and a higher mix shift toward ad-supported offerings. Live sports are accelerating the shift of viewers from traditional TV to streaming and were a key driver for SVOD sign-ups on its platforms.

Viewers streamed 30.8 billion hours during the quarter, an increase of 5.7 billion from the year ago period. Streaming hours per household came in at 4.2 hours during the quarter, compared to 3.9 hours a year ago. Home Screen and video ads on the Roku platform reached U.S. households with nearly 120 million people on a daily basis during the quarter.

Looking ahead, Roku expects total net revenue of $935 million, total gross profit of $410 million, a net loss of $65 million and adjusted EBITDA of $30 million in the second quarter of 2024.

The company anticipates “normal seasonal spend” in sales and marketing for its devices segment, which will cause adjusted EBITDA to slightly moderate relative to the first half of the year.

“We remain confident in our ability to accelerate the growth of Platform revenue and continue to grow Adjusted EBITDA, and Free Cash Flow in 2025 and beyond. We are focused on expanding monetization of the Roku Home Screen, bolstering programmatic ad capabilities, and growing Roku-billed subscriptions,” Roku CEO Anthony Wood Jr. wrote in the company’s quarterly letter to shareholders. “Our business remains well positioned to capture the billions of dollars in traditional TV ad budgets that will shift to streaming.”

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