Roku recently reported a revenue growth during the second quarter of the year. The platform, however, struggled with keeping their viewing time up. The streaming outlet reported $645 million in quarterly sales, which topped Wall Street estimates of $618 million in revenue. Most of the sales derived from Roku’s platform revenue, which is driven mostly by ad sales, increasing 117% year-over-year to $532 million.
Roku also reported earnings of 52 cents per share, easily lapping analyst projections of 12 cents per share. Total net revenue grew 81% year-over-year to $645 million, and Roku reported a net income of $73.5 million, or 52 cents per diluted share. On average, Wall Street analysts projected Roku to post Q2 revenue of $618.5 million and EPS of 12 cents.
Besides the slowing account growth and drop in streaming hours from Q1, Roku reported a negative gross margin for its hardware business of -5.9%. The company blamed higher component and shipping costs and Roku’s decision to eat those escalating expenses by “insulat[ing] consumers from increased costs for Roku players.”
The company's shares dropped 8.5% in after-hours trading. For Q3, Roku estimated net revenue of $675 million $685 million, which equates to 51% year-over-year growth. Roku said it “anticipate[s] quarterly sequential increases in operating expenses in the second half of 2021 from our investments in headcount, product development, and sales & marketing.” As a result, it expects profits to take a hit in Q3: Roku forecast adjusted EBITDA of $60 million $70 million, compared with $56.2 million in Q3 2019 and $122.4 million in Q2 2021.