Roku Q3 Earnings Preview: Can Platform Revenue Growth Exceed Expectations?

As Roku Inc (NASDAQ:ROKU) approaches its third-quarter earnings release Wednesday, expectations are high on Wall Street, especially given the company’s better-than-expected results in the second quarter.

What To Know: In the previous quarter, Roku reported a narrower-than-anticipated loss of 24 cents per share, beating analyst estimates by a significant margin and exceeding revenue expectations with a 14.3% year-over-year increase to $968.18 million.

Platform revenue, a key performance metric, reached $824 million, up 11% from the prior year. With its third-quarter results slated for release after the market closes on Oct. 30, investors will be looking for confirmation of Roku's continued platform revenue growth trajectory and an update on the company’s strategic initiatives that could impact long-term revenue potential.

Roku is also projecting third-quarter revenue of $1.01 billion and gross profit of $440 million, marking a critical juncture for the company’s platform-driven growth strategy.

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Analyst Color: In a recent note, Bank of America analysts cite that Roku is entering a period of accelerated growth in platform revenue, with multiple revenue streams poised to contribute.

The firm has maintained its "Buy" rating and a price target of $90, supported by Roku’s expansion of partnerships with third-party demand-side platforms (DSPs) and growing engagement through the Roku Home Screen.

Bank of America analysts project Roku's third-quarter platform revenue to grow by approximately 9% year-over-year, aligning with the company's guidance, but suggest this estimate could be conservative.

They believe ...