Roku, Inc. (ROKU) is scheduled to announce its third-quarter 2023 results on November 1st. As investors and traders eagerly await these earnings, let’s take a closer look at what we can expect from Roku’s upcoming report.
Financial Expectations
Roku has projected total net revenues of $815 million, total gross profit of $355 million, and an adjusted EBITDA of negative $50 million for the third quarter of 2023. The consensus estimate for revenues stands at $855.35 million, indicating a 12.34% growth from the same period last year.
However, there has been a significant increase in the Zacks Consensus Estimate for loss per share, which now stands at $1.91, representing a 117.05% decline from the year-ago quarter. Despite this, Roku has a track record of beating earnings estimates, with an average surprise of 20.58% over the last four quarters.
Factors to Consider
Roku’s performance in the third quarter is expected to benefit from several factors. The growing popularity of The Roku Channel, expanding partnerships with TV brands and retailers, and the addition of third-party streaming channels are anticipated to contribute to revenue growth.
Roku’s recent strategic TV streaming advertising partnership with TV Azteca in Mexico is expected to drive advertising revenues for the quarter. Additionally, the company’s Roku TV licensing program has seen strong growth, with 1.9 million active account net adds in the second quarter, bringing the total to 73.5 million active accounts globally.
Roku users also streamed 25.1 billion hours in the second quarter, up 21.2% year over year. With the addition of popular apps like Disney+ and Hulu to the Continue Watching feature, subscriber growth is likely to have a positive impact on the company’s top line in Q3.
However, supply chain disruptions, inflation, recessionary fears, and decreased consumer and advertiser spending present challenges for Roku. Shipping delays, product availability issues, and price increases have affected the company’s player unit sales. The average revenue per user (ARPU) also declined by 7% in the second quarter.
What Our Model Indicates
Although Roku has a positive track record of beating earnings estimates, our model does not predict an earnings beat this time around. With an Earnings ESP of -69.74% and a Zacks Rank #3, the odds of an earnings beat are low. However, it’s important to stay updated on the latest developments and announcements.
Stocks to Consider
If you’re looking for stocks with potential earnings beats, here are a couple to consider:
GoDaddy Inc. (GDDY)
GoDaddy has an Earnings ESP of +14.09% and currently holds a Zacks Rank #1. The company is set to release its third-quarter 2023 results on November 2nd, with the Zacks Consensus Estimate pegged at 71 cents per share, indicating a growth of 12.7% from the prior-year period’s reported figure.
BILL Holdings, Inc. (BILL)
BILL Holdings has an Earnings ESP of +4.42% and a Zacks Rank #3. The company will report its first-quarter fiscal 2024 results on November 2nd, with the Zacks Consensus Estimate at 50 cents per share, signaling an increase from the previous year’s figure of 14 cents.
Conclusion
As Roku prepares to report its Q3 earnings, there are several factors to consider in assessing the company’s performance. While challenges exist, such as supply chain disruptions and reduced spending, Roku’s expanding channel partnerships and growing user base indicate potential revenue growth. Stay informed on the latest updates and announcements to make well-informed investment decisions.
