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Aug. 6, 2020, 9:57 a.m. EDT

Roku Delivered But Is Not Immune to Hampered Ad Spending

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Aug 06, 2020 (IAM Newswire via COMTEX) -- Despite reporting strong second quarter results, Roku's /zigman2/quotes/205087179/composite ROKU -2.43% shares were down 4.8% in after-hours trading on Wednesday, reaching $157.49. Although the streaming provider did achieve a 42% revenue growth and 65% streaming hours growth, management warned that the broader TV ad spending outlook remains uncertain for the next two quarters. This means that total TV ad spend is not expected to recover to pre-pandemic levels until next year. It is quite a big deal considering that ads are deeply embodied throughout Roku's business model.

Second quarter revenue amounted to $356.1 million, but it resulted in negative GAAP EPS of $0.35. The results managed to top both FactSet consensus estimates of $316 million and negative earnings per share of $0.52. But while earnings were negative, free cash flow was positive as it amounted to $15 million. Roku now counts 43 million streaming accounts. It added 3.2 million incremental active accounts during the second quarter to reach this figure which is up 41% year over year. Streaming hours increased by 2.3 billion hours over the last quarter as they amounted to 14.6 billion.

However, spending has continued to grow as well. On a GAAP basis, operating expenses rose 52% on an annual basis as they reached $189 million. R&D spend rose 36% to $84.4 million. Sales and marketing spend rose 75% to $64.2 million. G&A spend rose 56% to $40.5 million.

Roku's greatest strength is that it can turn its competitors into its allies. It is best described with the example of Walt Disney Corporation's /zigman2/quotes/203410047/composite DIS -1.15% Disney Plus. Many feared that the entry of new players, especially such legendary ones, will hamper Roku's growth. The reality turned out to be entirely opposite. During the week following the release of "Hamilton", Comscore reported that that Roku topped the list of Disney Plus' connected devices based on hours streamed. In its own earnings report, Disney just revealed that streaming was its bright spot as Disney Plus exceeded 100 million direct-to-consumer accounts worldwide. Simply put, Roku forms partnerships that benefit all parties. Moreover, once things get better, Roku has an appealing model for advertisers who want to maximize each dollar spent. Roku can provide them audience targeting that will help them replace lost or limited TV reach. Its Smart TV's can also offer interactive ads as users can click to get more information. Once corporate budgets improve, so will Roku's top lines.

Just like in April, Roku declined to give formal guidance due to COVID-related uncertainty. But, on a year-over-year basis, management does expect Roku's revenue to continue growing significantly during the second half of the year and mark another full year of considerable growth. Moreover, although Amazon.com /zigman2/quotes/210331248/composite AMZN -0.74% has a larger international presence with its Fire TV, Roku has the most popular platform in the US while also showing clear sings of international expansions. However, its growth will not be as strong as previously anticipated in the pre-COVID-19 era.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post Roku Delivered But Is Not Immune to Hampered Ad Spending appeared first on IAM Newswire .

COMTEX_368977698/2618/2020-08-06T09:56:37

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/zigman2/quotes/205087179/composite
US : U.S.: Nasdaq
$ 408.30
-10.16 -2.43%
Volume: 3.36M
Jan. 15, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$53.12 billion
Rev. per Employee
$684,195
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/zigman2/quotes/203410047/composite
US : U.S.: NYSE
$ 171.44
-1.99 -1.15%
Volume: 12.23M
Jan. 15, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$313.99 billion
Rev. per Employee
$320,813
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,104.25
-23.22 -0.74%
Volume: 4.24M
Jan. 15, 2021 4:00p
P/E Ratio
90.91
Dividend Yield
N/A
Market Cap
$1569.21 billion
Rev. per Employee
$351,531
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