ROKU Gears Up to Report Q2 Earnings: What's in the Cards?
Roku ROKU is set to report second-quarter 2023 results on Jul 27.
For second-quarter 2023, Roku expects total net revenues of $770 million, total gross profit of roughly $335 million and adjusted EBITDA of negative $75 million.
The consensus mark for revenues is pegged at $769.81 million, indicating 0.71% growth from the year-ago quarter’s reported figure.
For the quarter to be reported, the Zacks Consensus Estimate for loss is constant at $1.28 per share in the past 30 days. The figure suggests a 56.1% decline from the year-ago quarter’s reported figure.
The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing once, the average earnings surprise being 9.41%.
Let’s see how things have shaped up for this announcement.
Roku, Inc. Price and EPS Surprise
Roku, Inc. price-eps-surprise | Roku, Inc. Quote
Factors to Consider
Roku’s second-quarter performance is expected to have benefited from the growing popularity of The Roku Channel, expanding TV brands & retailer partner base and third-party streaming channels.
In the to-be-reported quarter, ViX’s premium tier became part of Roku’s lineup of premium subscriptions.
On Apr 6, Roku announced documentaries on WWE: Recruits, which revolves around a group of young men and women competing for the title of WWE Superstar.
Active account net adds were 1.6 million in the first quarter, making a total of 71.6 million active accounts globally, driven by the unmatched scale in foundation of the business model led to greater engagement and more monetization opportunities.
Our model estimate for active accounts is pegged at 65 million, indicating growth of 2.9% from the figure reported in the year-ago quarter.
In first-quarter 2023, Roku users streamed 25.1 billion hours, up 4.2% year over year. Our model estimate for streaming hours is pegged at 22.3 billion, indicating growth of 7.8% from the figure reported in the year-ago quarter.
At the end of the first quarter, ROKU launched its new in-house branded televisions as well as platform-wide updates to its operating system that bring in new channel partners and features. The company's new Roku Select and Plus Series TVs are available exclusively at Best Buy BBY in stores and online. These TVs come in 11 models ranging from 24-75 inches screens.
There are 11 Roku TVs in total, spanning two different lineups, with prices ranging from about $150 to $1,200, which is expected to have aided TV sales, thereby boosting top-line growth in the to-be-reported quarter.
However, the company has been facing challenges from the macroeconomic environment, such as inflation and recessionary fear. The supply chain issues are causing disruptions in its player unit sales in terms of shipping delays, product availability issues and product price increases.
Both consumers and advertisers have significantly curtailed spending, which is expected to have impacted the company’s earnings for the quarter.
In the first quarter, the average revenue per user (ARPU) declined 5% from the prior-year quarter’s levels to $40.67 (on a trailing 12-month basis). Our model estimate for ARPU, for the to-be reported quarter, is pegged at $41.17, indicating a decline of 6% from the figure reported in the year-ago quarter.
What Our Model Indicates
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Roku has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these too have the right combination of elements to beat on earnings in their upcoming releases:
Autohome ATHM has an Earnings ESP of +7.61% and sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Autohome shares have declined 4.4% year to date. ATHM is set to report its second-quarter 2023 results on Jul 27.
Meta Platforms META has an Earnings ESP of +5.89% and a Zacks Rank #2
Meta shares have gained 151.3% year to date. META is set to report its second-quarter 2023 results on Jul 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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