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Roku's plan to take on Amazon and Netflix seems to be working — and the stock just hit a record high (NFLX, AMZN, ROKU)

Graham Rapier
Roku CEO Anthony Wood

Marcio Jose Sanchez/AP

  • Roku topped Wall Street's earnings expectations on Wednesday, posting a financially neutral quarter where analysts had anticipated a 14 cent loss per share. 
  • The streaming company's ad business helped fuel the beat — an area Netflix and Amazon ignore. 
  • Shares surged more than 14% when markets opened Thursday and set a new record high. 
  • Follow Roku's stock price here. 

Shares of Roku opened up more than 14% Thursday morning, hitting an all-time high of $54.37, after the company reported second-quarter earnings on Wednesday that blew Wall Street’s expectations out of the water.

Here are the important numbers:

  • Revenue: $156.8 million. Analysts were expecting $141.5 million.
  • EPS: 0 cents a share. Wall Street was looking for a loss of 14.6 cents a share.
  • Revenue forecast (Q3): $164 million to $172 million. Analysts had previously predicted it would post $166.5 million in sales in the third quarter.
  • Net loss (Q3 forecast, non-GAAP): $3 million to $8 million. Wall Street's prior estimate was an adjusted net loss of 11.6 million for the period.
  • Subscribers: 22 million. That’s up from 20.8 million in the first quarter and 15.1 million in the same quarter of 2017.

Thursday's surge easily topped its previous record high of $52.70, set back in February.

The earnings report also solidifies Roku’s clear delineation from its streaming competitors like Netflix and Amazon: advertising. The two elephants in the room don't advertise, and instead, the giants rely on subscriber numbers to fuel nearly all of their revenue. 

"It's a mainstream ad business," CEO Anthony Wood told analysts on a conference call. More than half of the top 200 advertisers listed by Ad Age now advertise via Roku, he said.

That bump in advertising helped Roku’s revenue climb to $16.60 per user on a 12-month trailing basis, up from $11.22 a year ago.

"The shift to streaming is really happening," Wood said. "It's a big opportunity for us."

Wall Street analysts have ratcheted up their estimates for Roku following the earnings report, and now have an average price target of $53, according to Bloomberg, up from $45 before the report. Shares were flat since the beginning of the year before Thursday’s pre-market surge.

Troy Wolverton contributed to this report. 

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