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The news:Roku delivered stronger Q3 revenues despite a wider net loss. Key results included the following:
Total net revenues: $912 million (up 20% year over year); $787 million of that was platform revenues, up 18% YoY. Roku attributed the bump to strong performance in content distribution, video advertising, and sales of Roku-branded TVs, which launched in March 2023.
Gross profit: $369 million (up 3% YoY; up 22% YoY excluding restructuring charges).
Streaming hours: 26.7 billion—up 4.9 billion hours for 22.5% YoY growth. For context, traditional TV viewing hours in the US, per Nielsen, decreased by 15% YoY.
The company also said that streaming hours surpassed 100 billion on a trailing 12-month basis for the first time.
Yes, but: Average revenue per user (ARPU) was $41.03, down 7% YoY—although it was up 1% from last quarter’s total.
Loss per share was $2.33, which was actually worse than analysts' $1.97 loss per share estimate.
Looking ahead:Roku believes it can maintain and grow ad share in Q4 and expects a solid rebound in the video ad market—but it remains cautious due to the uncertain macro environment.
Our take:Free ad-supported TV viewership in the US has eclipsed 50% in recent years, and Roku is well-positioned to capitalize on the trend—especially in a moment where inflation has made many households more sensitive to cost.
Roku faces dual challenges: maintaining pace in the rapidly evolving streaming sector and managing the complexities of a hardware business, which may divert its focus from pure streaming competitors.
This dual-business model, although innovative, might be more of a challenge than an advantage, as evidenced by mounting losses—something the company said it plans to reverse in Q4.
This could make Roku a compelling acquisition target for a player like Walmart. If acquired, Roku might benefit from an influx of capital and brand recognition, allowing it to create content that resonates more and scales higher in the market.
For now, though, Roku appears to be balancing the tightrope of being both a hardware provider and a streaming leader—something very few companies can claim.