Updated Aug 18 at 11:03am ET.
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The company earned $1.08 per share, which was significantly higher than the $0.61 analysts expected. Total revenue reached $1.35 billion, driven by 25 percent growth in the platform business. This part of the company includes advertising and a cut of subscription sign-ups, which are much more profitable than selling streaming sticks and TVs.
This result is important because it shows the company is successfully turning its large user base into real cash. It generated record net income of $164 million and $704 million in cash over the last year. As long as people keep spending more time streaming on the platform, the company has a clear path to keep growing its profits even if hardware sales stay flat.
Source: 8-K filing
Wells Fargo downgraded the stock to equal weight, which is their way of saying they expect it to perform about the same as the rest of the market. They set a price target of $165, which is close to where the stock is currently trading.
This change suggests that while the business is performing well, the recent rise in the stock price might have already captured much of that value. It is a shift in sentiment from one of the major banks, though it does not change the underlying facts of the company's recent earnings growth.
Source: Wells Fargo
Roku reports its latest quarterly results today after the market closes. Analysts are looking for revenue of about 1.3 billion dollars and a profit of about 61 cents per share. The company has a long streak of beating these estimates, having topped expectations in each of the last eight quarters.
The focus for long-term owners remains on the platform business, which earns money from ads and subscription fees rather than just selling streaming sticks. We are watching to see if the company continues to add new households and if it can keep growing its profit margins as more ad dollars move from traditional TV to streaming.
Fox Corporation has reached a deal to acquire Roku. Because of this pending sale, Roku will not hold a conference call to discuss its latest results and will stop giving financial forecasts to the public.
This is a major shift for the company. Instead of continuing as an independent platform that acts as a neutral gateway for all streaming services, Roku will now be part of a larger media giant. For current owners, the focus shifts from the company's standalone growth to the details of the buyout and whether regulators will allow the deal to close.
Source: Business Wire
Senator Elizabeth Warren and other Democratic lawmakers have warned that the proposed merger between Fox and Roku could violate antitrust laws. These laws are designed to prevent one company from gaining too much power and hurting competition.
The concern is that if a major content creator like Fox owns the leading streaming platform, it could favor its own shows and movies over rivals. This political pushback adds a layer of risk to the deal, as it could lead to a longer review by government regulators or even a legal challenge to block the sale.
Analysts have recently downgraded the stock following its latest earnings report. Out of 45 analysts, 22 rate it a buy, while the average price target of $161 is roughly equal to the current price.
The company has beaten analyst profit estimates for eight straight quarters. Management has a clear habit of under-promising and then outrunning even the more bullish forecasts.
| Expectation | |
|---|---|
| EPS | $0.53 |
| Revenue | $1.41B |
