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Roku (NASDAQ:ROKU) stock slumped despite second-quarter financial results that surpassed Wall Street expectations and stock buybacks, amid reduced margins.
Shares were -5.73% Friday pre-market to $88.76.
The TV streaming platform posted Q2 GAAP EPS of $0.07, which beats by $0.23, and revenue of $1.11B (+14.6% Y/Y), which beats by $40M.
For Q3, ROKU estimates net revenue of ~$1.2B (+13% Y/Y) against the consensus of $1.17B. For the full year, the company expects $4.65B in revenue, vs. $4.56B consensus.
Platform revenue was the Trump card this quarter, rising 18% year-over-year to $975.5M. Devices revenue, meanwhile, fell 6% to $135.6M.
The platform revenue growth was attributed to strong performance in video advertising and the successful acquisition of Frndly.
However, Roku posted a 0.9% year-over-year decrease in gross margins to 44.8% on the back of a 2.3 points decline in platform gross margins to 51.0%.
“We are raising our full-year 2025 outlook for platform revenue to $4.075 billion and adjusted EBITDA to $375M. With improving adjusted EBITDA and strong free cash flow, we are announcing a stock repurchase program authorizing the purchase of up to $400M of our class A common stock,” said the company in its letter to shareholders.
“This initiative, along with our net share settlement program, is intended to help offset dilution from employee equity-based compensation and reflects our continued commitment to delivering long-term shareholder value by growing free cash flow per share,” added the letter.