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Roku (NASDAQ:ROKU) Surprises With Q1 Sales But Quarterly Revenue Guidance Significantly Misses Expectations
Streaming TV platform Roku (NASDAQ: ROKU) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 15.8% year on year to $1.02 billion. On the other hand, next quarter’s revenue guidance of $1.07 billion was less impressive, coming in 1.6% below analysts’ estimates. Its GAAP loss of $0.19 per share was 27.4% above analysts’ consensus estimates.
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Roku (ROKU) Q1 CY2025 Highlights:
- Revenue: $1.02 billion vs analyst estimates of $1.01 billion (15.8% year-on-year growth, 1.5% beat)
- EPS (GAAP): -$0.19 vs analyst estimates of -$0.26 (27.4% beat)
- Adjusted EBITDA: $56.02 million vs analyst estimates of $60.43 million (5.5% margin, 7.3% miss)
- Revenue Guidance for Q2 CY2025 is $1.07 billion at the midpoint, below analyst estimates of $1.09 billion
- EBITDA guidance for the full year is $350 million at the midpoint, above analyst estimates of $337.7 million
- Operating Margin: -5.7%, up from -8.2% in the same quarter last year
- Free Cash Flow Margin: 29.2%, up from 6.4% in the previous quarter
- Active Accounts: 35.8 billion, up 35.72 billion year on year
- Market Capitalization: $10 billion
Company Overview
Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Roku’s 13.3% annualized revenue growth over the last three years was decent. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Roku reported year-on-year revenue growth of 15.8%, and its $1.02 billion of revenue exceeded Wall Street’s estimates by 1.5%. Company management is currently guiding for a 10.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 10.6% over the next 12 months, a slight deceleration versus the last three years. Despite the slowdown, this projection is above average for the sector and suggests the market sees some success for its newer products and services.
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Key Takeaways from Roku’s Q1 Results
We were impressed by how significantly Roku blew past analysts’ EPS expectations this quarter. On the other hand, its revenue outlook for next quarter missed significantly, and it pulled its full-year guidance for advertising revenue. Overall, this was a softer quarter. The stock traded down 4.5% to $64.25 immediately following the results.
Is Roku an attractive investment opportunity at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
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