Roku (ROKU) stock soared as much as 30% in midday trading on Thursday after the company reported strong fourth quarter guidance and pointed to further signs of recovery in its ad revenue.
Roku guided to adjusted EBITDA of $10 million in the fourth quarter, compared to an expected loss of $57.6 million, according to consensus estimates compiled by Bloomberg. It also expects fourth quarter revenue of roughly $955 million, above Wall Street estimates, while total gross profit is expected to total about $405 million.
The company, which has enacted a slew of cost-cutting measures including layoffs in an effort to bring down operating expenses, said it remains committed to positive adjusted EBITDA for full-year 2024, “with continued improvements after that.”
Roku reported third-quarter net revenue of $912 million, up 20% year-over-year, on a net loss of $330.1 million, or $2.33 a share. That net loss was wider than the prior-year period’s $122.2 million loss.
Platform revenue, which includes ad sales, revenue from distribution deals, and the over-the-top streaming service The Roku Channel, came in at $744 million — up 18% on the year after declining 1.5% in the first quarter and growing 11% in Q2.
The boom was driven by strength in both content distribution and a solid rebound in video advertising.
“In Q3, the year-over-year growth of video advertising on the Roku platform outperformed both the overall ad market and the linear TV ad market in the US,” Roku said, adding the the company “saw continued signs of a rebound” despite the weak macro environment.
Roku said overall US ad spend on traditional linear TV was down 12% year-over-year, while traditional TV ad scatter, or the ad inventory not purchased at the Upfronts, sank 27% compared to 2022, citing data from the Standard Media Index (SMI).
Setting up ‘an acceleration’
FILE – This Aug. 13, 2020 file photo shows a logo for Roku on a remote control in Portland, Ore. Roku is cutting about 10% of its employees, or 360 people, as the streaming company looks to lower expenses. Roku Inc. said in a regulatory filing,…
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