Roku See Pop In Q2 Ad Sales Despite Weak Market; Stock Rises

Roku blew past estimates, albeit with an operating loss of $126 million last quarter, but on revenue that jumped 11% to $847 million. Advertising-driven Platform sales beat forecasts, up 11% at $744 million despite a difficult market.

A few ad categories are picking up, but spending in the media and entertainment category, already challenged industry-wide, is expected to be further pressured by limited fall release schedules, the company said in its letter to shareholders, in a nod to the ongoing writers and actors strikes.

Device revenue rose to $103 million from $95 million. The company is now selling its own line of branded smart TVs at Best Buy.

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Active accounts stood at 73.5 million, a net increase of 1.9 million from the first quarter. Streaming hours of 25.1 billion, were up 4.4 billion hours year-on-year. And average revenue per user (ARPU) was $40.67 (trailing 12-month basis), down 7% year on one.

For the first time, The Roku Channel was 1.1% of total U.S. TV viewing in May, as per Nielsen.

“We delivered solid results in Q2, growing scale, engagement, and monetization. The operating environment remains largely unchanged from Q1, with strong consumer demand for Roku TV models while TV advertising remains muted industry-wide. We have begun to see some ad verticals improve, which resulted in modest YoY Platform revenue growth in Q2, and we are well positionned to re-accelerate growth as the ad market recovers. We continue to moderate the YoY growth rate of operating expenses and remain committed to our plan to deliver positive adjusted EBITDA for the full year 2024,” the company said.

Roku shares jumped 8% after hours on the numbers after closing lower for the session. They’ve had a big runup – some 70% year to date — as the stock has fallen back in favor with Wall Street.  

NewFront presentations in May made a bit of a splash. Roku discussed its primetime reach guarantee, promising advertisers more unique US households than the average top five cable networks, as well as new ad inventory made available on its Roku City homescreen, noted analyst Tim Nollen of Macquarie Equity Research.

Disney+ with ads joined the Roku platform in April, and Netflix announced last week its ad tier had doubled in Q2. The Roku Channel is also finally available on Google TV and Android devices.

The company extended its shoppable ads program with Shopify.

Recent news includes Roku inking its first ever sports deal with Formula E. It announced a broad slate of shows in May, and has seen a flurry of appointments and promotions on the content side — as well as layoffs earlier in the year like most tech and media companies.

Execs are hosting a conference call at 5 pm ET to go over the numbers and outlook.

More to come…

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