Roku surprises in the third quarter but disappoints with forecasts

The streaming service provider Roku was able to deliver surprisingly positive figures in the third quarter of this year. The company reported a lower loss per share of only $0.06, significantly below the analyst estimate of $0.32. Roku also exceeded revenue expectations with $1.06 billion, compared to the forecasted $1.02 billion, representing a year-over-year growth of 16%. Roku's platform business particularly stood out with a revenue increase of 15%, driven by the ongoing trend away from cable networks and an increase in political advertising. For the fifth consecutive year, the company achieved a positive adjusted earnings before interest, taxes, depreciation, and amortization, as well as a positive free cash flow in the past 12-month period. Nevertheless, Morgan Stanley analysts downgraded their outlook on advertising revenue growth in the increasingly competitive connected TV industry. These services allow users to browse and stream videos over an internet connection. The analysts also warned of challenges posed by future streaming service distribution revenues as they increasingly seek to bypass app store fees. Roku's forecast for operating profit in the fourth quarter fell short of market expectations, with $30 million compared to the anticipated $35.7 million, partly due to increased operating costs. Additionally, the company announced that like Netflix, it will no longer provide specific data on streaming households. This metric offers insights into the average revenue per user. Despite a disappointing operating profit forecast, the revenue forecast for the current quarter remains above consensus expectations at $1.14 billion, compared to $1.11 billion, representing an increase of 16%.