Shares of streaming-TV platform specialist Roku (ROKU 10.78%) have surged over the past 12 months, rising more than 140%. This crushed the S&P 500's 13% gain over the same timeframe. The tech stock's rise has been driven by Roku's strong underlying business growth, with its quarterly results consistently coming in above expectations.
This week, investors will get to see if Roku has been able to keep up its wild growth. The company reports its third-quarter results on Wednesday.
Ahead of the streaming-TV company's third-quarter update, here's a preview of some of the key areas investors may want to check on.
Helping explain the Street's excitement for Roku's recent performance, the company's revenue growth rates have been accelerated recently. Total revenue rose 59% year over year in Q2. That's up from 52% growth in Q1 and 45% growth in the fourth quarter of 2018.
Fueling Roku's impressive momentum is strength in its platform business, where the company makes money from advertisements and subscriptions on its platform. Roku's platform revenue rose 86% year over year to $167.7 million, or 67% of total revenue, in Q2.
Did Roku's platform business drive more strong growth in Q3? Management guided for third-quarter revenue to be between $250 million and $255 million. But analysts, on average, expect revenue during the period to come in ahead of this range at $256.1 million, implying 48% year-over-year growth.
Adjusted earnings per share
While Roku is growing rapidly, the company is not consistently profitable yet. It lost $9.3 million in Q2. But its loss per share of $0.08 was notably narrower than analysts' average forecast for a loss of $0.22. This difference was likely mainly because of Roku's better-than-expected platform revenue. Roku's platform business has a higher gross profit margin than its hardware business. Strong growth in its platform segment, therefore has a positive impact on Roku's bottom line.
For Roku's third quarter, analysts expect a loss per share of $0.28. This is in line with management's guidance for a net loss during the period between $40 million and $34 million. This expected loss is the result of management's forecast for a sequential increase in operating expenses as the company invests aggressively in hiring, product development, and facility costs.
Investors will also want to check on any updates to Roku's full-year outlook. The company regularly updates the figure, as its quarterly results typically exceed management's guidance. In Q2, management increased the midpoint of its guidance range for full-year revenue by $45 million. In addition, it said it expected full-year earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $30 million and $40 million -- up from a previous forecast for $10 million to $20 million.
Will Roku revise its guidance upward again?
Roku reports its third-quarter results after the market closes on Wednesday, Nov. 6.