The central theses
- Active accounts were up 28.1% year-over-year to 55.1 million, below analyst forecasts.
- Roku’s user base is an important measure of the company’s ability to generate advertising revenue.
- EPS and sales significantly exceeded analyst forecasts.
|Roku Winning Results|
|Metric||Beat / Miss / Match||Reported value||Analysts’ forecasts|
|Earnings per share||Beat||$ 0.52||$ 0.11|
|Sales (millions)||Beat||$ 645.1||$ 619.0|
|Active Accounts (Millions)||Fail||55.1||55.8|
Source: Predictions based on analyst consensus from Visible alpha
Roku (ROKU) Financial Results: Analysis
Roku, Inc. (ROKU), a major streaming device maker, had strong profits and sales for Q2 FY 2021. Earnings per share (EPS) significantly outperformed analyst forecasts as the company posted its second-largest quarterly EPS in at least 14 quarters. Rokus Diluted earnings per share for the second quarter of FY 2021 were $ 0.52, well above what analysts had expected to be $ 0.11. Sales also exceeded consensus estimates, albeit to a lesser extent. The company attributed record revenue growth for the quarter to exceptional performance in platform monetization.
Roku’s active accounts
Less notable was the growth in Roku’s active accounts. The company fell short of analyst forecasts in this area as active accounts grew 28.1% year over year to 55.1 million. While this is still significant growth, it is still slower than forecast. The growth in active accounts was aided by significant growth in average revenue per user of approximately 46% year over year. The company found that active accounts added in the second quarter of fiscal 2021 were higher than pre-COVID levels in the second quarter of fiscal 2019, but still lower than the pandemic-induced surge in the second quarter of fiscal 2020.
Roku’s active accounts are an important measure of the company’s ability to generate advertising revenue. The more users engage with Roku’s services, the more potential eyes will be on digital advertising that appears on the company’s platform. Additionally, a greater number of active accounts means more subscription income and more users who may purchase new Roku products as they age or break down over time.
Roku’s outlook and stock performance
Roku forecasts “robust growth” for the third quarter of fiscal 2021, including net sales of $ 680 million by mid-year. At the same time, the company expects global supply chain issues related to the pandemic and cost increases for components to hamper its player segment.
Roku shares fell significantly in after-hours trading on the day the results were released, falling about 9.0%. Since then, they have rallied about 0.7% in the immediate post-release period. Overall, Roku stock far outpaced the broader market in the past year, posting total returns of 152.5% after 1 year compared to 33.2% for the S&P 500.
Roku (ROKU) Summary of revenue calls
Roku CFO Steve Louden explained in an interview with Yahoo! Finances. He said that Roku “will definitely face difficult YOY comparisons in terms of active accounts and streaming hours” in the second half of the year. As customers are more optimistic about resuming their personal activities while COVID vaccination rates rise, the hours of streaming may wear off. Still, Roku is optimistic about the long-term trends, with Louden adding that “video streaming is a secular trend, not just a pandemic trend”. He added that advertising money has shifted from linear television to streaming.
Next results report
Roku’s next earnings report is expected to be released on November 10, 2021.