Investing.com – Shares of streaming television company Roku shot higher Thursday after earnings and guidance beat expectations as a surge in advertising revenues bolstered performance.
Roku (NASDAQ:ROKU) guided revenue in the range of $250 to $255 million for the third quarter, above expectations of $246 million. For the full year, revenue is expected in the range of $1.075 billion to $1.095 billion, also above expectations of $1.05 billion.
Roku soared 20%, taking its year-to-date gains to about 297%.
The rosier outlook comes as earnings and revenue topped estimates.
Roku reported a second-quarter loss of 8 cents a share on revenue of $250.1 million, beating consensus estimates from Investing.com for a loss of 23 cents a share on revenue of $224 million.
The streaming-TV platform specialist’s revenue was driven by a 51% increase in platform revenue, which accounts for about 67% of total revenue, in the second quarter from a year earlier thanks to increasing users and higher spending per user.
Active accounts during the quarter grew 39% year-on-year to 30.5 million with users streaming 9.4 billion hours during the period, up 72% from the year ago quarter. Average revenue per user grew 27% to $21.06, surpassing $20 for the first time.
"Total revenue growth accelerated to 59% [year over year], primarily driven by growth in advertising as Roku-monetized video ad impressions once again more than doubled [year over year]," Roku said.
The solid quarter and upbeat guidance did not go unnoticed on Wall Street.
Oppenheimer raised its target on Roku shares to $120 from $79, Stephens to $120 from $84, while Rosenblatt upgraded its rating on the company to buy from neutral and raised its price target to $134 from $77. The consensus 12-month price target of analysts surveyed by Investing.com has been $85.20.
“We believe Roku can leverage its advantages in pricing and merchandising to remain the market leader in consumer-facing connected television solutions,”Oppenheimer said in a note to clients. “Roku should benefit from the secular trend of advertising dollars leaving linear TV in favor of OTT (over-the-top) platforms.”