Roku Trounces Wall Street’s Revenue Estimates With Unexpected Q3 Profit

Sean Burch
·2-min read

Roku’s stock price jumped higher on Thursday afternoon after the streaming device maker and content aggregator reported an unexpected Q3 profit and sales that ran well above Wall Street’s expectations.

For the third quarter, Roku reported that revenue increased 73% year-over-year to $452 million, compared to analyst projections of $367.5 million. While Roku is best known for its streaming devices, advertising revenue continued to account for most of its sales, with $319.2 million coming from on-platform advertising.

The Los Gatos, California-based company’s gross profit also spiked 81% year-over-year to $215 million, translating to earnings of 9 cents per share — a surprise considering analysts expected Roku to lose 42 cents per share.

Also Read: Peacock Heads to Roku as NBCU and Streaming Platform Strike a Deal

Roku added 2.9 million active accounts during the third quarter, reaching 46 million overall, as viewers continued to stay inside and watch content due to the COVID-19 pandemic.

As the ongoing COVID-19 pandemic continued to accelerate the shift of viewing away from traditional linear and pay TV, we continued to invest in competitive differentiation and execute well against our strategic plan,” Roku said in its letter to shareholders. “During the quarter, we achieved a 43% year-over-year active account growth rate and doubled the active account reach of The Roku Channel.”

Viewers watched 200 million more hours of content than they did last quarter, totaling 14.8 billion hours spent streaming on Roku in Q3. Per account, that comes out to 3.57 hours spent streaming each day. That’s a lot of streaming, but falls short of previous quarters, like Q1, when Roku accounts averaged 3.75 hours of streaming per day.

Soon after the earnings were announced, the company’s share price jumped about 5% to $236 in early after-hours trading.

Also Read: Battle of the Streaming Devices: Can Google's Revamped Chromecast Catch Up to Roku and Amazon Fire?

The Roku Channel, Roku’s linchpin ad-supported channel featuring movies and shows, reached 54 million Americans across both Roku and other streaming devices, the company said. Perhaps most notably during Q3, Roku struck a deal that brought Peacock, NBCU’s recently-launched streaming service, to the platform.

Heading into the quarter, Roku held 31% of the U.S. streaming device market, tied with Amazon Fire TV for the biggest cut of market share. Google, which recently revamped its Chromecast streaming device, is the next closest with 18% of the domestic market.

Roku will hold a call at 2 p.m. PST to discuss its third quarter performance.

Read original story Roku Trounces Wall Street’s Revenue Estimates With Unexpected Q3 Profit At TheWrap