Roku Inc. is scheduled to report its third-quarter results Monday after the market closes, with investors focused on whether continued advertising growth can offset a projected decline in per-share earnings.
Analysts expect revenue to reach $1.41 billion, up 16.5% from a year earlier. Earnings are forecast at 53 cents per share, compared with $1.08 in the second quarter, when Roku exceeded expectations by 80% and posted revenue of $1.35 billion. The combination of higher expected revenue and lower earnings has raised questions about cost pressures and investment spending.
Analysts have a hold rating on the stock and an average price target of $162.45, suggesting 4.7% upside from its current price of $155.12. Earnings estimates have been unchanged over the past week but have edged lower over two months, while revenue forecasts have remained broadly stable with a slight increase over the past 60 days.
Roku shares are trading near their 52-week high of $160.22. The company has a market capitalization of $23 billion and a forward price-to-earnings ratio of 50.58.
Advertising momentum will be a central focus of the report. In the second quarter, advertising revenue increased 25% to $673 million, while video ad impressions rose 40%. Roku said video advertising growth on its platform outpaced both the U.S. over-the-top streaming and digital advertising markets.
Investors will assess whether that outperformance continued through September. Political advertising is another variable, after spending on Roku during the second quarter exceeded the comparable period in the 2024 presidential election cycle. With the November midterm elections approaching, the third-quarter results may indicate whether the platform attracted additional political advertising.
The company’s redesigned home screen is also expected to draw attention. The updated interface completed its rollout in the United States early in the third quarter and is intended to improve content discovery and engagement, potentially supporting additional advertising placements.
Margins will be particularly important given the earnings outlook. Roku’s advertising gross margin rose to 62.4% in the second quarter from 60.5% in the first, helped by a shift toward higher-margin advertising products. A reversal in that trend could help explain the expected weakness in per-share earnings.
The results will provide another indication of whether Roku can maintain the double-digit platform revenue growth that has supported its shift from a device maker toward an advertising and subscription-focused business. Streaming hours increased 7% year over year in the previous quarter, while programmatic advertising continued to gain share.
Sources: Investing.com News.