Roku Beats Wall Street Revenue Expectations
With improvements in its advertising business.
Roku experienced a significant surge in its shares, with a 12% increase, during after-hours trading on Wednesday (Nov 1st, 2023), following a robust performance that exceeded Wall Street’s revenue expectations and showcased improvements in its advertising business.
The company reported a total net revenue of $912 million, representing a substantial 20% year-over-year increase. Roku’s platform revenue, primarily from advertising, demonstrated remarkable growth, reaching $787 million, marking an 18% year-over-year increase. The company attributed this success to a “diversifying demand from advertisers” on its platform and expanding partnerships with major companies like Spotify and Walmart.
Despite a challenging macro environment that saw a 12% year-over-year decline in ad spend on traditional linear TV and a 27% year-over-year decrease in conventional TV ad scatter, Roku outperformed, experiencing growth in video advertising on its platform that surpassed both the overall ad market and the linear TV ad market in the U.S.
However, Roku reported a net loss of $349.8 million, a wider loss compared to $147 million a year ago and $126 million in the previous quarter. The company had also announced staff layoffs amounting to 10% of its workforce, along with charges related to restructuring moves. Additionally, a significant impairment charge between $55 million and $65 million was attributed to removing licensed and produced content from its streaming platform.
Roku’s active accounts reached 75.8 million in the third quarter, a notable increase of 2.3 million accounts from the previous quarter. Streaming hours also rose substantially to 26.7 billion hours, surpassing the 25.1 billion streaming hours recorded in the last two quarters. Viewing hours on the Roku Channel experienced a remarkable 50% year-over-year increase.
Charlie Collier, Roku’s President of Media, credited this surge in viewing hours to the “curation” of content on the Roku Channel. He emphasized that the core of the company’s content investment lies in third-party content, focusing on providing the right blend of content that customers love and watch.
One of the highlights in the third quarter was the Roku Original NFL Draw: “The Pick Is In,” created in partnership with NFL Films and “Skydance Sports,” which became the #1 documentary film on The Roku Channel in reach and engagement.
Furthermore, in the third quarter, the Roku Channel expanded its offerings by introducing new sports FAST channels, including FIFA+, DraftKings Network, and CBS Sports HQ. It also added local news channels from Fox and CBS and incorporated channels from NBCUniversal for shows like “Saved By the Bell” and “Murder, She Wrote.” YouTube sensation “MrBeast” launched his first FAST channel as well.
Despite the solid rebound in video ads during the third quarter, Roku remains cautious due to an uncertain macro environment and an uneven ad market recovery. For the fourth quarter, Roku expects total net revenue of approximately $955 million, total gross profit of roughly $405 million, and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $10 million. The company aims to achieve positive adjusted EBITDA for the full year 2024.
Source: The Hollywood Reporter
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With improvements in its advertising business.
Roku experienced a significant surge in its shares, with a 12% increase, during after-hours trading on Wednesday (Nov 1st, 2023), following a robust performance that exceeded Wall Street’s revenue expectations and showcased improvements in its advertising business.
The company reported a total net revenue of $912 million, representing a substantial 20% year-over-year increase. Roku’s platform revenue, primarily from advertising, demonstrated remarkable growth, reaching $787 million, marking an 18% year-over-year increase. The company attributed this success to a “diversifying demand from advertisers” on its platform and expanding partnerships with major companies like Spotify and Walmart.
Despite a challenging macro environment that saw a 12% year-over-year decline in ad spend on traditional linear TV and a 27% year-over-year decrease in conventional TV ad scatter, Roku outperformed, experiencing growth in video advertising on its platform that surpassed both the overall ad market and the linear TV ad market in the U.S.
However, Roku reported a net loss of $349.8 million, a wider loss compared to $147 million a year ago and $126 million in the previous quarter. The company had also announced staff layoffs amounting to 10% of its workforce, along with charges related to restructuring moves. Additionally, a significant impairment charge between $55 million and $65 million was attributed to removing licensed and produced content from its streaming platform.
Roku’s active accounts reached 75.8 million in the third quarter, a notable increase of 2.3 million accounts from the previous quarter. Streaming hours also rose substantially to 26.7 billion hours, surpassing the 25.1 billion streaming hours recorded in the last two quarters. Viewing hours on the Roku Channel experienced a remarkable 50% year-over-year increase.
Charlie Collier, Roku’s President of Media, credited this surge in viewing hours to the “curation” of content on the Roku Channel. He emphasized that the core of the company’s content investment lies in third-party content, focusing on providing the right blend of content that customers love and watch.
One of the highlights in the third quarter was the Roku Original NFL Draw: “The Pick Is In,” created in partnership with NFL Films and “Skydance Sports,” which became the #1 documentary film on The Roku Channel in reach and engagement.
Furthermore, in the third quarter, the Roku Channel expanded its offerings by introducing new sports FAST channels, including FIFA+, DraftKings Network, and CBS Sports HQ. It also added local news channels from Fox and CBS and incorporated channels from NBCUniversal for shows like “Saved By the Bell” and “Murder, She Wrote.” YouTube sensation “MrBeast” launched his first FAST channel as well.
Despite the solid rebound in video ads during the third quarter, Roku remains cautious due to an uncertain macro environment and an uneven ad market recovery. For the fourth quarter, Roku expects total net revenue of approximately $955 million, total gross profit of roughly $405 million, and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $10 million. The company aims to achieve positive adjusted EBITDA for the full year 2024.
Source: The Hollywood Reporter
Share:
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