Key Takeaways

  • Active accounts climbed by 28.1% YOY to 55.1 million, below analyst predictions.
  • Roku's user base is a key measure of the company's ability to generate advertising revenue.
  • EPS and revenue solidly beat analyst predictions.
Roku Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Earnings Per Share Beat $0.52 $0.11
Revenue (millions) Beat $645.1 $619.0
Active Accounts (millions) Miss 55.1 55.8

Source: Predictions based on analysts' consensus from Visible Alpha

Roku (ROKU) Financial Results: Analysis

Roku, Inc. (ROKU), major manufacturer of streaming-devices, reported strong earnings and revenue for Q2 FY 2021. Earnings per share (EPS) came in ahead of analyst predictions by a substantial margin, as the company posted its second-largest quarterly EPS in at least 14 quarters. Roku's Q2 FY 2021 diluted EPS was $0.52, far ahead of the $0.11 analysts expected. Revenue also beat consensus estimates, though by a smaller margin. The company attributed record revenue growth for the quarter to exceptional performance in platform monetization.

Roku's Active Accounts

Less stellar was Roku's active accounts growth. The company underperformed analyst predictions in this area, as active accounts grew by 28.1% YOY to 55.1 million. Although this still represents substantial growth, it is nonetheless a slower pace than predicted. Active accounts growth was supported by significant growth in average revenue per user of about 46% YOY. The company noted that Q2 FY 2021 active accounts added were higher than pre-COVID levels in Q2 FY 2019, but still lower than the pandemic-related surge of Q2 FY 2020.

Roku's active accounts are an important measure of the company's ability to generate advertising revenue. As more users engage with Roku's services, there are more potential eyes on digital advertisements appearing on the company's platform. Additionally, a greater number of active accounts means more subscription revenue and more users who will potentially buy new Roku products as they age out or break over time.

Roku's Outlook and Stock Performance

Roku projects "robust growth" for Q3 FY 2021, including net revenue of $680 million at the midpoint. At the same time, the company expects that global supply chain issues related to the pandemic and component cost increases will hinder its Player segment.

Roku shares dropped significantly in after hours trading on the day of the earnings release, falling by about 9.0%. They have since recovered by about 0.7% in the period immediately following the release. Overall, Roku stock has vastly outpaced the broader market in the past year, providing 1-year trailing total returns of 152.5% as compared with 33.2% for the S&P 500.

Roku (ROKU) Earnings Call Recap

Roku's chief financial officer Steve Louden elaborated on the company's challenges through the remainder of the year in an interview with Yahoo! Finance. He said that Roku "will definitely face difficult YOY comparisons in the back half of the year in terms of active accounts and streaming hours." As customers feel more optimistic about resuming in-person activities while COVID vaccination rates rise, streaming hours may sag. Still, Roku is optimistic about the long-term trends, with Louden adding that "streaming video is a secular trend, not just a pandemic trend.” He added that advertising dollars have been moving from linear TV to streaming.

Next Earnings Report

Roku's next earnings report is estimated to be released on Nov. 10, 2021.