'Streaming distributor Roku witnessed 11% growth in its platform revenue -- which includes advertising and subscription revenue -- to $824.3 million.

Going forward, there are expectations that advertising revenues -- which have stagnated to an extent over the past few quarterly periods -- will “reaccelerate,” which Daniel Kurnos, media analyst at The Benchmark Company, says is “perhaps the biggest surprise.”  

Michael Nathanson, co-founder/media analyst at MoffettNathanson Research adds: “In the short term, Roku should benefit from increased advertising revenues resulting from the 2024 elections and Olympics, from the increased accessibility of its inventory due to its integration with Trade Desk” in terms of new advertising clients.

Ad results in the second quarter benefited from rising streaming households -- growing more than two million from the previous quarter to 83.6 million. Year-over-year total streaming hours rose more than 20% to 30.1 billion.

At the same time, Nathanson says, there are longer-term issues of concern.

“The AVOD [advertising video-on-demand platforms] success of rivals/partners like Pluto and Tubi has amped up the pressure for the Roku Channel to play the same game,” he writes. 

“In addition, two of Roku’s biggest streaming destinations are also owners of competing DSPs [demand side advertising platforms] and operating systems, which limits Roku’s ability to monetize their engagement.”

Walt Disney has also voiced its concern about finding ways to lower the high price -- revenue sharing of monthly subscription fees --  it is paying streaming distributor/app stores for carrying its platforms Disney+, Hulu and ESPN+.

Another competitive concern is that while bigger companies such as Google, Amazon, and Walmart are in the connected TV space, Nathanson says, they don’t necessarily need to turn a near-term profit for these businesses in the near future. 

Overall Roku revenue grew 14% in the second quarter to $968 million, while device revenue soared 39% to $143.9 million. Roku narrowed its loss to $32.4 million from $105.9 million in the second quarter a year ago.

Roku's stock was down 3% in early-morning Friday trading to $53.67.