Roku’s Q3 Revenues & Q4 Outlook Disappoint


Roku (ROKU) has posted disappointing third-quarter 2021 revenues and lower-than-expected fourth-quarter revenue guidance, largely due to the persisting global supply chain disruptions. Following the news, shares of the television streaming platform declined 8.5% in the extended trading session on Wednesday.

The company reported Q3 revenues of $680 million, missing analysts’ expectations of $683.68 million. Meanwhile, revenues rose 51% on a year-over-year basis, reflecting average revenue per user (ARPU) growth of 49%.

Segment-wise, Platform revenue surged 82% year-over-year to $582.5 million, driven by both content distribution and advertising activities. However, Player revenue dropped 26% to $97.4 million.

In more positive news, the company recorded a 600 basis points year-on-year rise in gross margin, which came in at 53.5%. Additionally, adjusted EBITDA more than doubled to $130.1 million. (See Roku stock charts on TipRanks)

What’s more, the total number of active accounts reached 56.4 million, up 23% year-over-year, on the back of sales of streaming players and Roku TV models. Streaming hours also jumped 21% to 18 billion.

Guidance

Looking ahead, the company said, “Our business fundamentals remain strong but we are mindful that the challenges created by the global supply chain disruptions will likely continue into 2022. These headwinds may have a broad impact on the holiday season in terms of consumer confidence, product pricing and availability, and advertising spend levels.”

For the fourth quarter of 2021, the company forecasts revenues to be between $885 million and $900 million, against the consensus estimate of $944.4 million.

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Wall Street’s Take

Consensus among analysts is a Strong Buy, based on 13 Buys, 2 Holds, and 1 Sell. The average Roku price target of $458.33 implies 46.12% upside potential from current levels. Shares have gained 45.4% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Roku’s performance this quarter.

According to the tool, the Roku website recorded a 5.42% monthly decline, year-over-year, in global visits in September. In contrast, year-to-date website growth, compared to year-to-date website growth in the previous year, came in at 12.52%.

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