Roku Posts More Than $1 Billion in Revenue in Q3 for First Time, Shaves Net Loss to $9 Million

Roku posted its first-ever quarter of more than $1 billion in net revenue — boosted by a 15% year over year increase in platform revenue — and continued to narrow its net losses during the third quarter of 2024.

The streamer and hardware maker also revealed that it will no longer report the total number of streaming households or average revenue per user metrics starting in the first quarter of 2025 as it shifts focus to growing platform revenue and profitability.

“Our various markets are in different stages of monetization and have different
economics. While a large portion of our Streaming Household growth is in our international markets, the majority of our Platform revenue is currently generated in the U.S.,” the company wrote in its shareholder letter. “Therefore, as we continue to grow internationally, Streaming Household growth is not representative of Platform revenue growth.”

In addition to platform revenue, the company will continue to break out streaming hours, adjusted EBITDA and free cash flow. Roku expects to continue to grow its total streaming households and will provide updates on certain milestones. It anticipates it will reach 100 million streaming households in the next 12 to 18 months.

Here are the top-line results:

• Net loss: $9.03 million, compared to $330.1 million a year ago.
• Earnings per share: A loss of 6 cents per share compared to an estimated loss of 35 cents per share by analysts surveyed by Zacks Investment Research.
• Revenue: $1.06 billion, up 16% year over year, compared to an estimated $1.02 billion by analysts surveyed by Zacks Investment Research.
• Streaming Households: 85.5 million, an increase of 2 million from the previous quarter.
• Streaming Hours: 32 billion, a year over year increase of 5.3 billion, or 20.3%. Average streaming hours per household per day was 4.1 hours, compared to 3.9 hours a year ago.

Roku shares fell over 10% in after-hours trading on Wednesday following the release of the quarterly results.

Platform revenue for the quarter, which is largely based on advertising sales and subscription revenues split with partners, was $908.2 million. The 15% year over year growth reflected an increasing share of Streaming Households in international markets. Meanwhile, devices revenue grew 23% year over year to $154 million.

Average revenue per user was flat year over year at $41.10 on a trailing 12-month basis. Total gross profit rose 30% year over year to $480 million, or 10% when excluding $18.5 million in restructuring charges during the quarter. Total operating expenses fell 28% to $515.8 million. The company achieved its fifth straight quarter of positive adjusted EBITDA and free cash flow, which came in at $98.2 million and $157.3 million, respectively.

Streaming service distribution activities during the quarter grew faster than platform revenue, primarily due to price increases for the services on its platform. It continues to focus on growing its share of subscriptions billed through Roku Pay and innovating its home screen to expand monetization. The company also said that year over year growth of its advertising activities outperformed the overall U.S. ad and streaming ad markets – excluding the media & entertainment vertical.

“Due to our many growth initiatives and focused efforts to diversify ad demand,
M&E is a significantly smaller percentage of our overall Platform business now versus the last several years,” Roku noted.

During the quarter, The Roku Channel grew its streaming hours by 80% year over year and hit an all-time high in Nielsen’s Gauge report for August, representing 4.1% of all TV streaming time in the U.S. During the June 27 presidential debate, The Roku Channel’s FAST offering reported its highest day for reach and engagement. Meanwhile, during the Sept. 10 debate, more than half of The Roku Channel’s U.S. viewers watched on one of the live channels.

Looking ahead, Roku expects that its monetization efforts, including an expanded partnership with The Trade Desk, and tailwinds from political ad spend will continue in the fourth quarter of 2024.

Roku CEO Anthony Wood also told analysts during the third quarter conference call that the company is looking at how it can integrate generative AI to drive platform revenue and that its recently launched Roku Ad Manager platform for small and medium sized businesses will be a “huge opportunity” to do so.

It is currently forecasting total Q4 net revenue of $1.14 billion, or year over year growth of 16%, with platform and devices revenue expected to climb 14% and 25% year over year, respectively. It also anticipates total gross profit of $465 million, a net loss of $65 million, adjusted EBITDA of $30 million and operating expenses growth of 9% year over year due to sales and marketing seasonality. It noted that operating expense growth will be slightly down for the full year, reflecting ongoing operational discipline.

“We remain confident in our ability to grow Platform revenue in 2025 and beyond as we grow ad demand, lean into our Home Screen as the lead-in for TV, and grow Roku-billed subscriptions,” the shareholder letter concluded.

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