By Dhirendra Tripathi
Investing.com – Roku stock (NASDAQ:ROKU) plunged 9% in Thursday’s premarket trading as the total number of streaming hours on its platform fell in the June quarter and higher cost of raw material dented its margins.
Even as Roku grew its active accounts by 1.5 million to close the quarter with 55.1 million, the platform had to take a hit on the number of hours users streamed programming. After a year of the pandemic when most stayed home and binge watched, online consumption came off with malls and theatres opening and people choosing to step outside.
Users streamed 17.4 billion hours in the second quarter compared to 18.3 billion in the March quarter.
Average revenue per user rose on both sequential and year-on-year basis. It was $36.46, up 46% year-on-year.
The company, which also sells streaming players and its own smart TV, suffered because of tight supply of components and higher shipping costs. It chose to absorb the costs, taking a hit on its margins in the process. Margins ended in the negative, at minus 5.9% from 7.5% in June quarter of 2020.
Total net revenue grew 81% year-over-year to $645 million as the company was able to monetize more than double last time’s video ad impressions and more media companies used its tools to grow their direct-to-consumer services. Revenue topped the analysts’ expectation of $618.82 million.
Adjusted earnings per share of 52 cents was higher than the estimated 12 cents.
Roku expects third-quarter total net revenue of $680 million and adjusted EBITDa at $65 million at their respective midpoint.