Roku quarterly net loss widens, shares plunge

(Reuters) - U.S. video streaming service Roku Inc ROKU.O reported a wider net loss in the third quarter on Wednesday, as it spent more to attract subscribers to its video streaming platform.

FILE PHOTO A video sign displays the logo for Roku Inc, a Fox-backed video streaming firm, in Times Square after the company's IPO at the Nasdaq Market in New York, U.S., September 28, 2017. REUTERS/Brendan McDermid/File Photo

Its shares plunged 15% in extended trading.

The San Jose, California, company’s net loss widened to $25.2 million, or 22 cents per share, in the third quarter ending Sept. 30, from $9.5 million, or 9 cents per share, a year earlier.

The loss was not as bad as the Street had expected, however. Analysts had forecast a loss of 28 cents per share, according to Refinitiv estimates.

Total operating expenses for the quarter rose about 60% to $145 million from a year ago.

“Roku had strong earnings, but they are spending aggressively and not letting much profit flow through,” said Chaim Siegel, an analyst with Elazar Advisors.

Total net revenue rose to $260.9 million, also slightly better than forecast, from $173.4 million a year ago.

Roku, which sells devices that allow users to stream video from services like Netflix NFLX.O and Apple Inc's AAPL.O Apple TV+, said Disney+, the forthcoming streaming service from Walt Disney Co DIS.N, would soon launch on its platform.

“Overall, we are excited about the launch of all of the new services coming to the industry and to our platform,” said Roku Chief Executive Officer Anthony Wood. “We have customers that want to watch premium services. We have customers that want to watch free content. We have customers that want to watch both. And so we think all those business models are supported on our platform.”

In September, Roku introduced a new line of streaming players for North America, Latin America and some European markets, with an entry price point of $29.99 for the Roku Express device.

As the streaming video market has become more crowded, Roku has shifted its focus from device sales to advertising, which is now the company’s fastest-growing revenue stream.

Roku takes a cut of some advertising from media companies that stream programming on the free, ad-supported Roku channel. It also makes money from the resale of premium streaming subscriptions, and takes a cut of revenue generated from ads that marketers serve up to Roku’s users.

In October, Roku announced it had spent $150 million to acquire Dataxu, which lets marketers plan and buy video ad campaigns. The deal is expected to be finalized during the fourth quarter.

Reporting by Helen Coster in New York and Ayanti Bera in Bengaluru; Editing by Rosalba O’Brien, Diane Craft and Leslie Adler