Stock Story -
Streaming TV platform Roku (NASDAQ: NASDAQ:ROKU) reported Q2 CY2024 results topping analysts' expectations, with revenue up 14.3% year on year to $968.2 million. The company expects next quarter's revenue to be around $1.01 billion, in line with analysts' estimates. It made a GAAP loss of $0.24 per share, improving from its loss of $0.76 per share in the same quarter last year.
Is now the time to buy Roku? Find out by reading the original article on StockStory, it's free.
Roku (ROKU) Q2 CY2024 Highlights:
- Revenue: $968.2 million vs analyst estimates of $937.9 million (3.2% beat)
- EPS: -$0.24 vs analyst estimates of -$0.42 (43.2% beat)
- Revenue Guidance for Q3 CY2024 is $1.01 billion at the midpoint, roughly in line with what analysts were expecting
- Gross Margin (GAAP): 43.9%, down from 44.7% in the same quarter last year
- Free Cash Flow of $320.5 million, up from $46.01 million in the previous quarter
- Active Accounts: 83.6 million, up 10.1 million year on year
- Market Capitalization: $8.39 billion
Consumer SubscriptionConsumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
Sales GrowthRoku's revenue growth over the last three years has been solid, averaging 18.4% annually. This quarter, Roku beat analysts' estimates but reported mediocre 14.3% year-on-year revenue growth.
Guidance for the next quarter indicates Roku is expecting revenue to grow 10.7% year on year to $1.01 billion, slowing from the 19.8% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 11% over the next 12 months.
Usage Growth As a subscription-based app, Roku generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Roku's monthly active users, a key performance metric for the company, grew 15.5% annually to 83.6 million. This is solid growth for a consumer internet company.
In Q2, Roku added 10.1 million monthly active users, translating into 13.7% year-on-year growth.
Revenue Per UserAverage revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Roku because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Roku's ARPU has declined over the last two years, averaging 1.3%. Although the company's users have continued to grow, it's lost its pricing power and will have to make improvements soon. This quarter, ARPU grew 0% year on year to $40.68 per user.
Key Takeaways from Roku's Q2 Results It was great to see Roku beat analysts' revenue expectations this quarter. We were also glad it expanded its number of users. Next quarter's revenue guidance was in line with expectations, showing that the company is on track. Zooming out, we think this was a solid quarter. The stock traded up 6.7% to $59 immediately after reporting.
![Roku's (NASDAQ:ROKU) Q2 Sales Beat Estimates, Stock Soars](https://d68-invdn-com.investing.com/content/pic67fdc51058750f78b03f3c550b79c658.jpeg)