Roku shares were up 9.7% to $246.33 on Friday morning. The company's CFO talked to TheStreet about Roku's strong hardware and video ad sales growth that helped drive the strong performance in the quarter.
Here's what Wall Street was saying about the results:
SIG Susquehanna (Positive rating reaffirmed, PT raised to $275 from $185)
ROKU continues to benefit from the secular cord-cutting trend and the pandemic-related increase in engagement, putting up a huge quarter, though there was a major tailwind from content distribution revenue recognition, which tends to be very lumpy. This dynamic is also leading the company to expect a meaningful decel in 4Q. We remain Positive on ROKU as we view the company as one of the few ways to play the secular linear TV-to-digital engagement and ad budget shift, which is accelerating during the pandemic.
- Shyam Patil
Deutsche Bank (Buy rating reiterated, PT raised to $260 from $235)
While Platform revenue makes up ~70% of the company revenue, and a higher portion of gross profit, we were impressed to see Roku grow its Player revenue by 62% y/y in 3Q, indicating strong demand for Roku products, crucial for growth of its active user base. Roku is also making good progress in its Platform business and adoption of The Roku Channel appeared to accelerate in the quarter. Post earnings, we have increased conviction that the pandemic is accelerating the streaming secular growth opportunity and that Roku will remain a leader in this market.
- Jeffrey Rand
Oppenheimer (Outperform rating maintained, PR raised to $260 from $185)
Active accounts accelerated to +42% y/y, with strong Canada/UK growth, and no indication of COVID pull-forward. Platform revenues +78% y/y (or ~60% ex. DX); monetized video ad impression+90% y/y, roughly similar to pre-COVID levels, improving gross margins q/q. Meanwhile, new ad clients 2x y/y, with 97% advertiser retention from 2019. We are also more confident in ROKU's new performance ad platform (DSP), OneView, which should become a material revenue driver in FY21/22.
- Jason Helfstein
DA Davidson (Buy rating reaffirmed, PT raised to $300 from $190)
Consistent with our proprietary AVOD data Roku posted a strong quarter, with a limited contribution from political ads. While the AVOD market has made significant strides, we see significant opportunities for future growth as linear TV advertising follows the audience to OTT. We look for Roku to remain one of the leaders in this transition.
- Tom Forte