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Thursday, December 2, 2021

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What to Look For From ROKU

Key Takeaways

  • Analysts estimate EPS of $0.08 vs. $0.09 in Q3 FY 2020.
  • Lively accounts are anticipated to rise YOY, however at a slower progress price.
  • Income is anticipated to rise, however at a slower tempo after the previous 12 months’s speedy enlargement.


Roku Inc. (ROKU) has seen its revenue and income progress speed up dramatically over the previous 12 months amid the COVID-19 pandemic and the continued shift from conventional TV to streaming TV. However Roku, nonetheless a comparatively small firm, has not too long ago been in a extremely publicized enterprise dispute with tech behemoth Google because the streaming wars warmth up. Roku says that the tech large sought preferential remedy on its platform for Google’s YouTube unit, which Google has denied. In the long run, Google introduced on Oct. 22 that Roku clients may now not obtain the YouTube or YouTube TV apps to their gadgets beginning Dec. 9.

Traders will probably be centered on how these and different developments will have an effect on the speedy tempo of Roku’s progress when the corporate stories earnings on Nov. 3, 2021 for Q3 FY 2021. The forecast from analysts is blended. Analysts count on earnings per share (EPS) to say no regardless of strong income progress.

Traders will even intently watch one other key metric: Roku’s complete variety of energetic accounts, which gauges the dimensions of the corporate’s consumer base. Extra subscribers means extra individuals that can see adverts, making the platform extra enticing to advertisers, a significant income. Analysts count on energetic accounts to rise, however on the slowest tempo of any quarter in not less than the previous 4 years.

Shares of Roku have carried out on par with the remainder of the market over the previous 12 months. Nonetheless, the inventory, whose actions have been extraordinarily risky, spent a lot of the final 12 months outperforming. After reaching a latest peak in late July, the inventory has staged a pointy decline. Roku’s shares have supplied a complete return of 39.9% over the previous 12 months, solely barely above the S&P 500’s complete return of 39.1%.

Supply: TradingView.

Roku Earnings Historical past

Roku reported Q2 FY 2021 earnings and income that beat analysts’ expectations. EPS rose at a document tempo, up 246.9% in comparison with the year-ago quarter. Income grew 81.2% 12 months over 12 months (YOY), its quickest tempo out of any quarter in not less than the previous 4 years. Roku highlighted in its earnings press launch the acceleration of the continued shift by advertisers from conventional TV to streaming TV. It additionally stated that it greater than doubled its monetized video advert impressions on a YOY foundation.

In Q1 FY 2021, Roku posted earnings and income that got here in above consensus estimates. EPS elevated 219.7% in comparison with the year-ago quarter, which is powerful progress however slower than the earlier quarter’s tempo of 466.2%. Income expanded 79.0% YOY, accelerating from the prior quarter’s tempo and in addition the quickest quarterly progress in additional than three years. Roku stated it generated document income and gross revenue throughout the quarter. It additionally stated that streaming hours elevated by 1.4 billion hours from the earlier quarter to 18.3 billion.

Analysts count on blended leads to Q3 FY 2021. EPS is forecast to fall 18.9% YOY after 4 consecutive quarters of speedy progress. Income is anticipated to extend 51.4% YOY. Whereas that might be a speedy progress price, it nonetheless could be the slowest tempo for the reason that second quarter of FY 2020. For full-year FY 2021, analysts count on Roku to publish optimistic EPS for the primary time in not less than the previous 5 years. Annual income is forecast to rise 59.8%, which might be the quickest tempo of progress in not less than the previous 5 years.

Roku Key Stats
  Estimate for Q3 FY 2021 Q3 FY 2020 Q3 FY 2019
Earnings Per Share ($)  0.08 0.09 -0.22
Income ($M) 683.8 451.7 260.9
Lively Accounts (M) 56.7 46.0 32.3


Supply: Visible Alpha

The Key Metric

As talked about above, traders will even be awaiting progress within the dimension of Roku’s consumer base as measured by the variety of energetic accounts. Roku defines energetic accounts because the variety of distinct consumer accounts which have streamed content material on its platform someday throughout the previous 30 days of the interval. Streamed content material from the Roku Channel solely on non-Roku platforms doesn’t rely as streamed content material for the aim of measuring energetic accounts. Additionally, the metric doesn’t distinguish between distinctive people streaming content material on the identical account. For instance, members of the family streaming content material on the identical account solely counts as one energetic account. However the variety of energetic accounts will probably be intently correlated with the variety of viewers, or targets for advertisers. The larger the variety of energetic accounts utilizing Roku’s platform, the extra enticing the platform will probably be to advertisers, which can appeal to extra advert spending from them.

The variety of energetic accounts has grown quickly over the previous a number of years. On the finish of FY 2017, Roku had 19.3 million energetic accounts. That quantity grew to 51.2 million by the tip of FY 2020. Progress has slowed modestly over these years, nevertheless. The expansion in energetic accounts for every quarter in FY 2018 ranged between 40%-46% YOY. By FY 2020, that vary had fallen to 37%-42% YOY. Progress in energetic accounts has continued to decelerate in FY 2021, slowing to a tempo of 34.7% YOY in Q1 and once more to twenty-eight.1% in Q2. Analysts count on Roku’s energetic accounts to develop 23.3% in Q3 FY 2021, the slowest tempo out of any quarter in not less than the previous 4 years.

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