Roku (ROKU.US) closed up nearly 7%! Cleveland Research: Q3 performance may exceed expectations.

Cleveland Research said on Wednesday that Roku's performance in the third quarter may exceed market expectations, thanks to linear growth, favorable TTD, CPM (cost per thousand impressions) investment, and execution. "Cleveland Research said:" Roku's momentum in the third quarter looks strong, benefiting from Roku TV sales linear growth, programmatic efforts, and the company's strong execution on new products/plans - Roku leverages supply growth to win on price." Cleveland Research stated that the prospects for this streaming device company "look more constructive," judging by its new products, new advertiser revenue, lower CPM, and better agency relationships. Cleveland Research expects that most growth will be achieved through DSP (Demand-Side Platform). Cleveland Research also pointed out that M&E spending is improving, and expects further increases in sports/content releases in the fourth quarter. Cleveland Research said: "Roku seems to be attracting widespread interest and increasing its appeal to other vertical markets in the main screen and new formats." Roku closed up 6.84% on Wednesday at $70.15. However, the stock has fallen nearly 24% year-to-date, while the S&P 500 index has risen 15% over the same period. Roku's second-quarter earnings report announced in early August exceeded market expectations, driven by strong advertising sales and continued transition to streaming platforms. The financial report showed that Roku's Q2 total revenue increased by 14% year-on-year to $968 million, surpassing analysts' average expectation of $938 million. By segment, platform revenue (including digital advertising and ad-free subscriptions) was $824 million, up 11% year-on-year; device revenue was $144 million, up 39% year-on-year. Gross profit was $425 million, up 12% year-on-year. Adjusted EBITDA was $43.6 million. Net loss was $33.953 million, compared to a net loss of $108 million in the same period last year. Diluted loss per share was $0.24, lower than the analysts' average expectation of a loss of $0.34 per share. Operating expenses decreased by 2% year-on-year to $496 million. Roku had 83.6 million streaming active users at the end of the second quarter, with a net increase of 2 million from the end of the first quarter. Average revenue per user was $40.68, flat year-on-year. Roku stated that revenue growth generated from distributing and promoting streaming services on the Roku platform is faster than the overall platform revenue growth, mainly due to price increases for subscription-based applications. Looking ahead, Roku expects revenue for the third quarter to be $1.01 billion, in line with expectations; a net loss of $50 million is expected, with adjusted EBITDA of $45 million.