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ROKU to Report Q4 Earnings: Factors Influencing Results

Zacks Equity Research

Roku, Inc. ROKU is set to report fourth-quarter 2019 results on Feb 13.

For the quarter, the company expects revenues between $380 million and $396 million. The Zacks Consensus Estimate for revenues is currently pegged at $392.4 million, which indicates growth of 42.3% from the figure reported in the year-ago quarter.

Further, the consensus mark for fourth-quarter loss has been steady at 14 cents per share over the past 30 days.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 74.4%.
 

Roku, Inc. Price and EPS Surprise

 

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Investors would watch for active accounts growth, which is an important metric for Roku. The popularity of The Roku Channel is expected to have aided active accounts growth in the fourth quarter of 2019. The ability to access free and premium content on the same platform has been a huge attraction for subscribers.

In the last reported quarter, active accounts surged 36% year over year to 32.3 million. Streaming hours jumped 68% year over year to 10.3 billion. Moreover, ARPU increased 30% to $22.58 (on a trailing 12-month basis).

Notably, the Zacks Consensus Estimate for fourth-quarter active accounts and ARPU is pegged at 35.99 million and $23.39, respectively. Active accounts and ARPU are estimated to increase 32.8% and 30.3%, respectively, from the reported figures in the year-ago quarter.

Moreover, the consensus mark for streaming hours stands at 11.7 billion, up 60.3% from the year-ago quarter’s reported figure.

Further, the launch of streaming services — Apple TV+ and Disney+ — from Apple AAPL and Disney DIS, respectively, during the quarter on Roku’s platform, is expected to have aided Platform revenues, which accounted for 68.7% of revenues in the third quarter.

The consensus mark for Platform revenues is pegged at $261 million, indicating growth of 72.8% from the figure reported in the year-ago quarter and 45.8% from that in the previous quarter.

Moreover, the growing popularity of The Roku Channel is expected to have attracted advertisers. Notably, Roku’s monetized video ad impressions more than doubled on a year-over-year basis in the previous quarter, driven by The Roku Channel.

Management had stated that ad impressions within the channel grew faster than ad impressions in the overall platform in the previous quarter. This trend is expected to have continued in the to-be-reported quarter.

The addition of Dataxu is also expected to have benefited the top line, as Roku expects roughly a $13-million contribution in revenues.

However, the bottom-line performance is expected to reflect the impact of increased headcount-related costs and facility costs, and the inclusion of Dataxu in the fourth quarter.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive earnings surprise. But that’s not the case here.

Roku has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock to Consider

Here is a company, which, per our model, has the right combination of elements to post an earnings beat this quarter:

TEGNA TGNA has an Earnings ESP of +9.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Click to get this free report Apple Inc. (AAPL) : Free Stock Analysis Report The Walt Disney Company (DIS) : Free Stock Analysis Report TEGNA Inc. (TGNA) : Free Stock Analysis Report Roku, Inc. (ROKU) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research