Roku Smashes its First Earnings Report after Going Public in $250M IPO

Roku Smashes its First Earnings Report after Going Public in $250M IPO

True to the ethos of Silicon Valley, Roku did not book a profit in the quarter.

AmazonEven as Roku's net losses deepened to $46 million, the company said it was making progress in key growth areas.

The advertising business has "more than doubled in size year-to-date", and represented roughly two-thirds of platform revenue. Adjusted EBITDA likewise gets the raise treatment from this analyst who is cautiously optimistic, boosting his estimate for this year up $16 million and for next year up $5 million, anticipating higher gross profit. The increase in active users caused a 37 percent in average revenue per user year over year reaching $12.68 for the third quarter, driven by the 58 percent increase in streaming hours. Roku reported an EPS of $-0.10, increasing from the same quarter previous year of $-0.17, and beating Thomson Reuters analysts' estimates of $1.37. FNY Managed Accounts LLC purchased a new position in shares of Roku in the third quarter valued at $599,000. Hardware companies don't usually command premium valuations, but platform companies that offer software and services often do, since those businesses are fundamentally more scalable and profitable. While this isn't much, it's much better than Roku's 2% year-over-year decline in player revenue in the first six months of 2017.

"Unlike a hardware company that would normally try to maintain higher ASPs and hardware gross margin, we strategically pass along player cost savings to consumers by actively driving down prices to grow active accounts", Roku said in its letter to shareholders on Wednesday. The growth is also notable since Roku openly states that it doesn't focus on maximizing hardware revenue, instead opting to optimize its business around increasing unit sales and active accounts. Roku sells ads that show up on its customers' TV screens. Roku did this by selling lower-priced units like its $29.99 Roku Express, which management said "has seen tremendous success". Citadel Advisors LLC acquired a new position in shares of Roku in the third quarter valued at approximately $1,122,000.

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The company sells 15 and 30-second advertising spots through its platform, so more users means more revenue.

Roku just sent another clear signal the streaming revolution is here to stay.

The Los Gatos, CA. -based company said it could break even in Q4.

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