Earnings Results: Roku stock rallies on earnings after upbeat forecast

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Roku Inc. shares look poised to continue their strong rally, judging by Thursday’s after-hours stock surge.

The shares were up around 5% in aftermarket trading following a better-than-expected earnings report and an upbeat forecast for both the quarter and year ahead.

The streaming company posted a net loss of $15.7 million, or 13 cents a share, compared to positive net income of $6.8 million, or 5 cents a share, in the year-prior quarter. Analysts surveyed by FactSet were modeling a loss per share of 13 cents on a GAAP basis.

Roku ROKU, +0.55%   reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $15.1 million, down from $24.5 million a year earlier, but ahead of the FactSet consensus, which modeled $12 million.

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Roku’s revenue for the quarter jumped to $411.2 million from $276 million, whereas analysts were expecting $392 million. Revenue consisted of $151.6 million in player revenue and $259.6 million in platform revenue, which includes advertising benefits and cuts of streaming subscription fees.

While the platform revenue was roughly in line with the consensus forecast, player sales drove Roku’s outperformance on the top line.

“We had an aggressive promotional strategy that worked really well,” Chief Financial Officer Steve Louden told MarketWatch. He said the company was focused on adding active accounts through any means, whether it be through player devices like streaming sticks or TV licensing arrangements, which “gives us a foundation to monetize.”

The company had 36.9 million active accounts, up 4.6 million from last quarter. Streaming hours grew to 11.7 billion, up 60% from a year earlier. On the year, the company saw more than 40 billion hours streamed.

“In general, new [streaming] services are great for Roku and great for the TV ecosystem,” Louden said. Roku is coming off a quarter when two big new streaming services launched, from Apple Inc. AAPL, -0.71%  and Walt Disney Co. DIS, -0.67%  .

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Louden said that Roku strikes “complex deals” with media players that can encompass things like revenue-sharing arrangements and marketing commitments with Roku’s audience-development platform. “We tend to sign shorter deals, and as our scale grows and we become an even more essential partner to these content players as they lean into streaming, we seek to get a fair value exchange from the value we create for them on the platform.”

For the first quarter, Roku expects revenue of $300 million to $310 million, whereas the FactSet consensus calls for $300 million. Looking at the full year, Roku calls for $1.58 billion to $1.62 billion in revenue. Analysts surveyed by FactSet were modeling $1.56 billion.

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Shares gained about 12% this week heading into Roku’s report, while the S&P 500 SPX, -0.16%  was up 1.5%. The stock has been a big winner over the past year, rising more than 170%, compared with a 23% gain for the S&P in that span.

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