After market close on Wednesday, Square, Inc. (SQ, Financial) and Roku, Inc. (ROKU, Financial) issued their third-quarter results.
Square Inc.
Shares of the San Francisco-based payment and point-of-sale solutions provider in the U.S. and internationally rose by 1.3% to a price of $62.14 in after-hours trading. The company posted GAAP earnings of 6 cents per share on $602.22 million in adjusted revenue. Third-quarter adjusted revenue topped projections by $5.37 million. GAAP earnings per share increased 50% year over year and adjusted revenue grew by nearly 40%.
Moreover, Square reported the following year over year changes: the gross profit grew 42%Â to $500 million, the net income rose 45% to $29 million, the Gross Payment Volume climbed 25% to $28.2 billion and the adjusted Earnings Before Interest, Taxes, Depreciation and Amortization increased 85% to $131 million.
Square’s Seller ecosystem, which provides sellers with several software and hardware solutions to get payments wherever they do business, reached such a strong profitability that it encouraged the company to increase investments in growth-oriented strategies.
Additionally, Square’s Cash App ecosystem, which offers customers a comprehensive range of products to easily send payments, spend, save money and invest cash in shares of stocks, reached $307 million in total net revenue in the third quarter of 2019. Excluding bitcoin, revenue from the Cash App ecosystem rose 115% year over year to $159 million.
For the final quarter of 2019, Square targets adjusted earnings per share in the 19 cents to 21 cents range on adjusted revenue of $585 million to $595 million versus analyst estimates of 25 cents for adjusted earnings on projected adjusted revenue of $621.24 million.
For the full year of 2019, Square expects that adjusted earnings per share will fall in the 76 cents – 78 cents range on adjusted revenue of $2.24 billion to $2.25 billion, which is slightly below the previous guidance range of $2.25 billion to $2.28 billion. Forecasters see Square Inc. closing full year 2019 with an adjusted revenue of $2.27 billion.
Year to date, the share price has risen 9% to $61.34 at close on Wednesday for a market capitalization of $26.2 billion.
The share price is below the 120-, 70- and 30-day simple moving average lines.
The 52-week range is $49.82 to $83.2.
Square Inc does not pay a dividend.
Wall Street issued an overweight recommendation rating and has established an average target price of $74.03, a 20.7% upside from Wednesday’s closing price.
Roku Inc.
Shares of the Los Gatos, California-based TV streaming platform operator tumbled by 14.99% to a price of $119.90 in after-hours. Although Roku beat analyst expectations on revenue by $3.31 million and on GAAP earnings by 4 cents, the company reported a loss of 22 cents per share.
The top line of the income statement for the third quarter of 2019 grew 50.5% year over year to $260.9 million. In contrast, the bottom line got worse from the year-ago third-quarter loss of 9 cents per share, which may have created the pressure causing the sharp drop during extended trading.
By segment, revenue from Platform was $179.3 million (up 79% year over year) and revenue from Player was $81.6 million (up 11% year over year).
Roku recorded the following year over year changes in key operating metrics and other financial measures: the number of active accounts rose 36% to 32.3 million and the number of Streaming hours increased 68% to 10.3 billion. The trailing 12-month revenue per user averaged $22.58 in the third quarter of 2019 compared to $17.34 in the third quarter of 2019, while the gross profit was $118.5 million compared to $79 million.
For the final quarter of 2019, Roku expects that revenue will be between $380 million and $396 million and that total gross profit will range between $156 million and $161 million. The company also forecasts that net income will again result in a loss of $22 million to $17 million and adjusted Earnings Before Interest, Taxes, Depreciation and Amortization will fluctuate in the $7 million - $12 million range.
For the full year of 2019, Roku sees revenue growing by 48%-50% to $1.098 billion to $1.113 billion versus analyst projects of $1.1 billion. Total revenue was $742.51 million in full-year 2018. The company also anticipates total gross profit in the $489 million – $494 million range, net loss of $66 million to $61 million, and an adjusted EBITDA of $28 million to $33 million.
The stock price climbed 360% so far this year to above the 120-, 70- and 30-day simple moving average lines, closing at $141.05 per share on Wednesday for a market capitalization of $16.39 billion.
The 52-week range is $26.3 to $176.55.
Roku does not pay a dividend.
Wall Street issued an overweight recommendation rating and has set an average target price of $137.80, a 2.3% downside from Wednesday’s closing price.
Disclosure: I have no positions in any security mentioned.
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