ROKU To Report Q3 Earnings: What's In Store For ROKU Stock?

Roku ROKU is slated to report its third-quarter 2024 results on Oct. 30.
For the third quarter of 2024, ROKU expects total net revenues of $1.01 billion, total gross profit of roughly $440 million and adjusted EBITDA of $45 million.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.02 billion, indicating growth of 11.52% from the figure reported in the year-ago quarter.
The consensus mark for fiscal third-quarter loss is pegged at 35 cents per share compared with the loss of $2.33 per share in the year-ago reported figure. The earnings estimate has remained unchanged over the past 30 days.
The company's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average earnings surprise being 24.87%.

Roku, Inc. Price And EPS Surprise

Let's see how things have shaped up for the upcoming announcement:

Factors To Consider Ahead Of Q3 Results

ROKU's third-quarter 2024 top line is expected to have benefited from increasing Streaming Households and growing viewer engagement in TVs. In the second quarter of 2024, Streaming Households increased to 83.6 million, an increase of 14% year over year. This trend is expected to have continued in the to-be-reported quarter.
In the to-be-reported quarter, the company announced various notable partnerships, such as PEOPLE & Entertainment Weekly, to stream the 76th Emmy Awards. ROKU also announced a collaboration with Sony for a streaming deal that will add NFL's series, GMFB: Overtime, to the Good Morning Football series. This is expected to have boosted ROKU's top line in the second quarter of 2024.
ROKU's diversifying revenue streams, including Roku-billed subscriptions and premium subscriptions, and advertising activities, including traditional video streaming and unique ad products and sponsorships, are expected to have driven the top line by offsetting market-driven pricing changes.
ROKU's efforts to increase, create and develop monetization products are expected to have driven the top line. ROKU's strategy of effectively utilizing its home screen to generate better ad revenues is expected to have been reflected in the third quarter of 2024. Platform revenues were $824 million in the second quarter of 2024, up 11% year over year. The trend is expected to have continued in the to-be-reported quarter.
Roku's inventory supply to advertisers and increase in the number of ad units and categories are expected to have driven the top line by expanding clientele and enabling better churn for partners.
ROKU's UID2 integration is expected to have enhanced third-party relationships and data collaboration and driven platform revenues by increasing efficiency in the third quarter of 2024.  

Stiff Competition Headwinds For ROKU's Prospects

Intense competition from Netflix NFLX, Disney DIS owned Disney+ and EchoStar's SATS Sling Media is expected to have remained a constant headwind.
Netflix and Disney's enhanced ad-supported tiers in streaming platforms and SATS' Sling Medias' new channel offering of a 4K viewing experience are expected to have hurt ROKU's active user growth in the to-be-reported quarter.
ROKU's weak Media and Entertainment vertical and device business is expected to negatively impact third-quarter 2024 results. Lower spending from certain advertising verticals is expected to hurt the top line in the near term.

To read this article on Zacks.com click here.