As earnings season continued this week, three reports were particularly interesting.
- Square (NYSE:SQ) reported another quarter of accelerating growth.
- Roku's (NASDAQ:ROKU) revenue surged, but at a significantly slower rate than in its previous quarter.
- GoDaddy (NYSE:GDDY) added over a million new customers while increasing average revenue per user.
Here's a look at each of these stories.
By essentially every measure, financial-technology company Square had an excellent third quarter. Revenue surged 51%, an acceleration from 48% growth in the company's second quarter. Even more notably, the company's bottom line swung from a loss per share of $16 million in the year-ago quarter to $20 million. Further, when excluding the impact of new revenue from Square's acquisitions of Weebly and Zesty, revenue growth still accelerated compared to the prior quarter.
One highlight from the quarter was Square's subscription and services-based revenue, which surged 155% year over year. Excluding revenue from Weebly and Zesty, this segment still saw revenue rise 117%. The steep increase was helped by strong growth from Instant Deposit, Cash Card, Caviar, and Square Capital, management said.
Even though the results were solid, shares fell about 10% on the trading day after the earnings release, because management forecast fourth-quarter adjusted earnings per share between $0.12 and $0.13, below a consensus analyst estimate for $0.15.
On the surface, streaming-TV platform company Roku seemed to have a stellar quarter as well. Revenue increased 39% year over year to $173 million, driven by a 74% year-over-year increase in platform revenue, a 43% increase in active accounts, and a 37% boost to average revenue per user.
But Roku's $100.1 million of platform revenue, arguably the company's most important catalyst, was slightly below a consensus analyst estimate for $103.2 million. That was a stark difference from Roku's second quarter, when higher-than-expected platform revenue growth helped the company's revenue soar past estimates, rising 57% year over year.
Roku stock fell about 20% on the day following the earnings release.
For its third quarter, domain-name registrar and cloud-computing company GoDaddy reported strong year-over-year revenue and earnings-per-share growth. Indeed, the company's top line of $680 million, which was up 17% year over year, handily beat a consensus analyst estimate for revenue of $674 million. This performance was driven by the 1.14 million new customers GoDaddy added since the year-ago quarter and an 8.6% year-over-year increase in average revenue per user.
But where GoDaddy disappointed was its earnings per share. On average, analysts were expecting earnings per share of $0.17, well above the $0.08 GoDaddy reported. Shares of GoDaddy fell about 8% on the day after its earnings release.
Daniel Sparks owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool has the following options: short January 2019 $80 calls on Square. The Motley Fool recommends GoDaddy. The Motley Fool has a disclosure policy.