Roku Inc. (ROKU) - Get Report shares opened at an all-time high Thursday after the media streaming platform posted a narrower-than-expected second quarter loss as its user based topped 30 million and pricing improved.
Roku posed a second quarter loss of 8 cents per share for the three months ending in June, compared to a 1 penny per share profit for the same period last year, but that figure topped Street forecasts as revenues rose 59% to a record $250.1 million. Platform users grew by 1.4 million to 30.5 million, the company said, while the average revenue per user rose $2 from last year to $21.06.
Looking into 2019, Roku said it sees current quarter revenues of between $250 million and $255 million, with full year sales forecast at just over $1 billion. The group is sill likely to post a loss for the third quarter, but sees adjusted full year earnings in the region of $30 million to $40 million.
"The Roku Channel is doing great. It's working well. Our strategy with The Roku Channel is in place, and The Roku Channel usage is playing out the way we expected," CEO Anthony Wood told investors on a conference call late Wednesday. "It's a great experience for our customers. It's a great way for content publishers to increase distribution or content or more effectively distribute their content. And it's a great advertiser experience as well."
"The Roku TV program is doing well. It's continues to be very successful for us. One in three smart TVs sold in the U.S.," he added. "We have what we believe is the best software in the industry. We provide a lot of content relationships. We actually help market the products. We help retail and there's lots of other ways we help them as well."
Roku shares were marked 20.7% higher Thursday to change hands at $121.84 each, the highest since the group went public in 2017 and a move that nearly triple's the stock's year-to-date gain.
"Roku is positioned well as the TV ecosystem evolves to streaming. The Roku operating system continues to gain share of connected TV and its ad share dramatically lags its viewership. We believe Roku will continue to beat quarterly estimates and we have again raised our long-term active accounts and revenue projections," said Loop Capital analyst Alan Gould, who lifted his price target to $80 from $45 following last night's results.
"However we maintain our Sell rating as we find it difficult to justify the $13 billion enterprise value, over 10x next year's platform revenue," he cautioned. " While the company has executed well, it still faces substantial potential competition, there continues to be a large amount of insider selling, and tariffs could create a short-term problem."