Yahoo News Roku Beats Wall Street Revenue Expectations, Sees Improvement in Ad Business
Shares of Roku soared 12 percent in after hours trading Wednesday after the company beat Wall Street revenue expectations and saw improvements in its advertising business.
The company reported total net revenue of $912 million, up 20 percent year-over-year. Platform revenue at Roku, which is primarily generated from ads, has also been increasing, reaching $787 million, up 18% year-over-year, the company says, thanks to “diversifying demand sources of advertisers” on the platform, as well as expanding the number of partnerships with companies such as Spotify and Walmart.
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“In Q3, the macro environment continued to pressure the overall U.S. advertising market, with ad spend on traditional linear TV down 12% YoY, and traditional TV ad scatter down 27% YoY (according to SMI). Conversely, we saw continued signs of rebound: In Q3, the YoY growth of video advertising on the Roku platform outperformed both the overall ad market and the linear TV ad market in the U.S,” the company said in its shareholder letter.
Roku reported a net loss of $349.8 million, wider than its net loss of $147 million a year ago and $126 million last quarter.
In September, the company announced it was laying off another 10 percent of its staff and taking charges for additional restructuring moves. At the same time, the company said it would take an impairment charge in the range of $55 million to $65 million related to removing some of its licensed and produced content from its streaming platform.
Total number of active accounts in the third quarter reached 75.8 million, up 2.3 million accounts from the prior quarter, and total streaming hours were 26.7 billion compared to the past two quarters which recorded 25.1 billion streaming hours. Viewing hours on the Roku Channel were up 50 percent year over year.
Charlie Collier, Roku’s president of media, attributed the rise in viewing hours to a “curation” of content on the Roku Channel, while noting that the “foundation” of the company’s content spend is third-party content.
“Our focus is on bringing the right mix of content to the Roku Channel, content that our customers love and watch across what is really that curated mix of licensed content, the FAST channels and original content,” Collier said.
He also pointed to the Roku Original NFL Draw: The Pick Is In, created in partnership with NFL Films and Skydance Sports. This was the #1 documentary film on The Roku Channel in both reach and engagement.
In the third quarter, the Roku Channel also added new sports FAST channels including FIFA+, DraftKings Network, and CBS Sports HQ, local news channels from Fox and CBS, and channels from NBCUniversal for Saved By the Bell, Murder, She Wrote and more. YouTube MrBeast also launched his first FAST channel.
While Roku said it had a “solid rebound in video ads in Q3,” and that it expects a similar growth rate of video ads in Q4, the company says it remains “cautious amid an uncertain macro environment and an uneven ad market recovery. “
For Q4, Roku expects total net revenue of roughly $955 million, total gross profit of roughly $405 million, and Adjusted EBITDA of $10 million, with the goal of reaching positive adjusted EBITDA for full year 2024.
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