Earnings preview: What to look for when Roku reports Q2 results

Roku Inc. (NASDAQ: ROKU) is scheduled to report second quarter 2019 earnings results on Wednesday, August 7, after market close. Analysts expect the company to report a loss of $0.22 per share on revenue of $224 million.

The quarterly results are likely to benefit from an expansion in subscriber base and user engagement. Active accounts and user hours are likely to see growth which in turn could benefit per-user revenue. The Roku Channel is increasingly becoming popular and updates on its performance will be something to watch.

Analysts are bullish on Roku’s huge expansion opportunities outside the US market as well as the growth in its advertising segment, known as the platform unit. Roku launched analytical tools for advertisers during the quarter and updates on this area will be worth watching. Roku is holding its ground amid competition from the likes of Netflix (NYSE: NFLX), Amazon (NYSE: AMZN) and Walt Disney (NYSE: DIS).

In the first quarter of 2019, Roku reported better-than-expected results with a 51% growth in revenue to $207 million and a narrower loss of $0.09 per share. Active accounts grew 40% while streaming hours grew 74%. Per-user revenue increased 27% to $19.06.

For the second quarter, Roku has guided for a net loss of $30 million to $25 million on revenues of $220-225 million. The forecast for the whole of 2019 is a net loss of $75-65 million on revenues between $1.03 billion and $1.05 billion.

Roku’s shares have climbed 230% so far this year and 53% in the past three months. In the short term, the stock may experience a correction, following the long bull run. It has a 12-month price target of $89, which is a 10% downside from the current stock price of $99.

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