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Roku cuts profitability outlook for 2019

·Technology Editor
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Roku (ROKU) reported its Q3 2019 earnings after the bell on Wednesday, beating analysts’ expectations on the top and bottom line, but reducing its outlook for profitability in 2019. Here are the most important numbers from the report, as well as pre-earnings consensus estimates from Bloomberg.

  • Revenue: $260 million versus $257 million expected

  • Losses per share: $0.22 versus $0.24 expected

Management also reduced its outlook for profitability.

“We have updated our 2019 adjusted EBITDA outlook midpoint to $30 million from $35 million previously reflecting continued investment in the business as well as an approximately $5 million headwind to adjusted EBITDA in Q4 related to dataxu operations and dataxu acquisition related expenses,” the company said in its earnings release.

The stock was down 13% immediately following the announcement.

Roku announced that it saw a 36% year-over-year increase in active accounts, bringing the total number to 32.2 million users, versus 23.8 million in the year ago quarter.

The company’s advertising platform, which has overtaken the company's hardware sales as the main breadwinner for the firm, saw a 79% increase from $100 million to $179.3 million. Those advertisements run on Roku's free streaming channels, as well as its main Roku home page.

Founder and CEO of Roku, Anthony Wood, participates in a panel discussion at the Consumer Electronics Show Thursday, Jan. 6, 2011, in Las Vegas. (AP Photo/Isaac Brekken)
Roku founder and CEO Anthony Wood. (AP Photo/Isaac Brekken)

The company’s hardware division saw a year-over-year increase of 11% from $73.3 million to $81.6 million.

With Apple (AAPL) launching its Apple TV+ on Roku’s devices, and more streaming services on the way from Disney (DIS), HBO (T), and others, Roku looks to gain as more consumers opt for a solution that aggregates their disparate viewing options. More people using Roku players means more eyes on those ads.

The company has also begun diving into the audio space with its new Roku Wireless Speakers and Roku Smart Soundbar. The move is meant to bolster the firm's hardware sales, as well as ensure that users are locked into its growing ecosystem, since those speakers only work with Roku devices.

Roku is also looking to further expand its presence outside of the U.S. market. The company said it will begin launching Roku TVs in the U.K. before the end of 2019, with additional launches across Europe coming in 2020.

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