As earnings season starts to taper off, there are some stragglers in tech still reporting earnings. Design software company Autodesk (NASDAQ:ADSK) was one notable company to report quarterly results last week.
But another must-see story this week came from outside of earnings-season news when short-seller Citron Research warmed up to Roku (NASDAQ:ROKU) and went from shorting the stock to going long. Here's what investors should know.
Autodesk's first-quarter results
Autodesk reported first-quarter revenue and non-GAAP earnings per share of $559.9 million and $0.06, respectively. These results were up from revenue of $485.7 million and a non-GAAP loss per share of $0.16 in the year-ago quarter. Autodesk's annualized recurring revenue growth (ARR) was particularly strong, coming in at $2.13 billion, up 22% compared to ARR this time last year.
"Our first-quarter results are a good start to the new fiscal year and demonstrate Autodesk is firmly in the growth phase of our business model transition," said Autodesk CEO Andrew Anagnost.
But Autodesk's weaker-than-expected earnings guidance may have spooked some investors. Management said it expected non-GAAP earnings per share (EPS) between $0.13 and $0.16 in Q2. This compares to a consensus analyst estimate for non-GAAP earnings per share of $0.18 for the period.
In an interview with CNBC after the earnings report was released, Anagnost said changes in accounting standards may be the reason for the difference in the consensus analyst estimate for Autodesk's second-quarter non-GAAP profitability and management's outlook for the key metric. "The accounting standards change the way we recognize our expense over time and people are adjusting to that," he said.
Looking forward to the company's growth trajectory, Anagnost is optimistic, noting that he expects accelerating ARR growth throughout the year.
From bear to bull
Meanwhile, Citron Research backtracked on its short thesis for streaming TV platform company Roku, sending shares up 7% on Friday. "The [over-the-top (OTT)] movement has become a megatrend that cannot be ignored and the numbers around ROKU have completely changed since our November 29 tweet that has made us cover our short and actually go LONG ROKU," said Citron in a report published Friday.
One noteworthy reason for Citron's sudden bullishness on Roku is the surging interest in programmatic OTT advertising. "Considering U.S. advertisers spend about $70 billion a year on traditional TV ads vs. ROKU platform revenue (i.e., ad revenue) was only $225 million in 2017, the [total addressable market] and validation is too large to ignore," explained Citron.
The rapid growth of programmatic digital TV advertising was seen firsthand earlier this month when The Trade Desk (NASDAQ:TTD) reported a more than 2,000% year-over-year increase in the spending on connected TV digital ads on its programmatic ad-buying platform. The surging growth in connected TV spending on its platform helped send the stock soaring over 40% in a single trading day.
Trade Desk CEO Jeff Green has been vocal about his bullishness on connected TV ad spending, noting during the company's fiscal 2017 fourth-quarter earnings call that all of its ad-spending channels beyond connected TV are simply "a dress rehearsal for the migration from traditional TV to Connected TV and online video."
And while I'm very positive about our prospects in mobile, perhaps the only thing that I am more passionate and more bullish about than mobile is Connected TV. A change of this magnitude is rare. I don't think we will see a transition like this again in any of our lifetimes, the convergence of the Internet and television.
To this end, Roku's platform revenue has been surging, rising 106% year over year in the company's most recent quarter. Advertising revenue has been the largest driver of this growth, management said in its first-quarter shareholder letter. As OTT connected TV programmatic ad spending continues to rise sharply, Roku is poised to benefit.