Roku's stock pops as company whizzes past earnings expectations

By Emily Bary

Company calls out 'solid rebound in video ads in Q3'

Roku Inc.

Shares of Roku Inc. were gaining more than 8% in Wednesday's extended session after the company easily cleared Wall Street's hurdle with its third-quarter revenue and gave an upbeat earnings outlook for the holiday quarter.

The company logged a net loss of $330 million, or $2.33 a share, compared with a loss of $122 million, or 88 cents a share, in the year-prior quarter. Analysts tracked by FactSet were modeling a $2.04 loss per share.

Roku (ROKU) logged surprise positive adjusted earnings before interest, taxes, depreciation and amortization, which clocked in at $43 million. Analysts had been projecting a $29 million loss on the metric.

Revenue rose to $912 million from $761 million, while analysts had been looking for $857 million. The company generated $787 million in revenue from its platform businesses, which include licensing and advertising.

Active accounts amounted to 75.8 million, up by 2.3 million relative to the second quarter. Analysts were expecting 75.3 million. Streaming hours totaled 26.7 billion, up by 4.9 billion hours relative to a year before.

For the fourth quarter, Roku anticipates about $955 million in revenue, whereas the FactSet consensus was for $952 million. The company also calls for $10 million in adjusted earnings before interest, taxes, depreciation and amortization, whereas the FactSet consensus was for a $52 million loss on the metric.

"We had a solid rebound in video ads in Q3 and we expect the [year-over-year] growth rate of video ads in Q4 to be similar," Roku said in its shareholder letter. "However, we remain cautious amid an uncertain macro environment and an uneven ad market recovery. Additionally, we will face difficult YoY growth rate comparisons in content distribution and [media and entertainment ads] which will challenge the YoY growth rate of platform revenue in Q4."

-Emily Bary

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11-01-23 1631ET

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