Roku, a key enabler of the streaming revolution, reported strong first-quarter results that sent its stock surging in after-hours trading. Revenue of $206.7 million handily beat Wall Street forecasts of $192 million. On an adjusted basis, EBITDA swung to $10 million from a loss of $800,000 in the year-ago quarter. Shares in the independent company soared after hours on the results, gaining nearly 9% to $70. They finished the regular trading day at $64.92, up almost 1%. The company has gradually been moving away from its initial hardware focus to growing advertising and licensing revenue streams. It has struck partnerships not only with content providers for carriage on Roku Channels or advertising placements on the platform, but also with smart-TV manufacturers to integrate the company’s acclaimed user interface into those sets. “We estimate that Roku TVs sold by our OEM partners accounted for more than one-in-three smart TVs sold in the U.S. in Q1, as we gained significant market share,” CEO and founder Anthony Wood and CFO Steve Louden wrote in a letter to shareholders. Average revenue per user climbed 27% to $19.06 in the period. While ARPU doesn’t correlate directly with how much time viewers spend watching programming via Roku, the shareholder letter took note of the quarterly growth in consumption as a tailwind for the company. “Roku platform engagement continues to strengthen, as more content shifts to streaming and more consumers cut the cord. Per household streaming grew to an average of roughly 3.5 hours a day per active account, representing nearly half of average U.S. per-household daily viewing,” the letter said. “Increased user engagement reflects our popularity and brand affinity and should drive higher monetization over the long run.”<doc-sep>Bloomberg (Bloomberg) -- Credit Suisse Group AG executives ignored warnings from colleagues about troubled steel tycoon Sanjeev Gupta as they channeled $1.2 billion of client funds to his businesses, according to people familiar with the matter.Bankers in Credit Suisse’s commodity trade-finance unit blacklisted Gupta’s Liberty Commodities Ltd. in 2016 because they suspected some of its deals weren’t legitimate, the people said. When they learned about two years later that the bank was lending to his companies through a suite of investment funds, which eventually grew to $10 billion, they flagged their worries to leaders in compliance and the division that housed the loans, one of the people said.The disclosure that Credit Suisse may have put clients at risk despite internal concerns over Gupta’s businesses adds a new twist to the debacle stemming from the March implosion of Greensill Capital, the finance firm at the center of the three-way relationship.Investigations, LawsuitsThe U.K. Serious Fraud Office is now investigating Gupta’s group of companies for suspected fraud, including in its financing deals with Greensill, according to a May 14 statement. Credit Suisse has sued to force Gupta’s Liberty Commodities into insolvency and has since shut the funds that made the loans and launched an internal investigation. Investors are staring at losses as the bank confronts embarrassing lawsuits.“We are currently focusing our efforts on recovering our investors’ money,” Will Bowen, a spokesman for Credit Suisse in London, said in an emailed statement, adding that the bank’s internal probe will focus on “all of the issues” linked to the funds. “We are committed to learning the lessons and will share the relevant lessons learnt at the appropriate time.”Andrew Mitchell, a spokesman for the Gupta Family Group Alliance, or GFG Alliance, a collective of businesses linked to Gupta including Liberty Commodities, denied any wrongdoing.The Greensill saga represents just one of the two disasters that rocked Credit Suisse in the first half of 2021. Since Greensill began unraveling, the bank has announced a $5.5 billion hit from the blowup at Archegos Capital Management.ApologiesFormer Chairman Urs Rohner apologized to shareholders and his successor, Antonio Horta-Osorio, who arrived at the end of April, has promised a sweeping strategy review.Chief Executive Officer Thomas Gottstein, who was head of the division that oversaw trade finance, wasn’t aware of the internal concerns about Gupta that had prompted the bank to cut him off, according to a person familiar with the matter.Employees at the trade-finance unit, which lends money for the buying and selling of commodities, cut ties with Gupta in 2016 after becoming skeptical toward his Liberty Commodities, the people said. They distrusted the documents the company provided, triggering doubts about its transactions, they said. In one example reported by Bloomberg, the company had presented another bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.Banking TiesLiberty Commodities pledged assets to Credit Suisse as security for borrowings in 2013 but by early 2016, all such commitments had been extinguished, indicating that the financing relationship had ceased, U.K. Companies House filings show. And while Gupta’s company listed the Swiss bank as one of its lenders in its 2014 annual report, it didn’t in the following year’s report, which is dated May 2016, according to the filings.Their counterparts at other banks, including Macquarie Group Ltd. and Sberbank PJSC, halted trading with Liberty Commodities around the same time because of similar concerns; Goldman Sachs Group Inc. also stopped in 2016, Bloomberg has reported.Nevertheless, executives at Credit Suisse’s asset-management division -- which creates investment products for clients and charges a fee for overseeing them -- began arranging a suite of funds focused on supply-chain finance in 2017. The entities bought securitized loans packaged by Greensill, a firm created by Australian businessman Lex Greensill. Much of the debts were linked to Gupta’s businesses.WarningsOfficials at the commodity trade-finance unit were concerned when they found out about the funds’ links to Gupta and took their fears to Thomas Grotzer, general counsel for the bank’s Swiss division. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee the trades at the asset-management unit.Grotzer was promoted last month to interim global head of compliance at Credit Suisse. He didn’t respond to requests for comment. Mathys, head of fixed-income at the asset-management division, and Haas, a portfolio manager, were put on temporary leave in March. Neither responded to requests for comment.The bank pushed ahead with the funds and marketed them to investors as being made up of short-term debt secured on invoices, assets considered so safe that Credit Suisse gave the largest vehicle its lowest rating for risk. Yet part of the loans were linked to mere possible future revenues.Other parts of the bank continued working with Gupta as well. Credit Suisse’s investment bankers were due to lead an initial public offering for Liberty’s U.S. steel arm, which was ultimately pulled, according to a statement from the company. Gupta also announced that the Swiss bank would finance his planned acquisition of Thyssenkrupp AG’s steel unit, which fell apart earlier this year.Credit Suisse has so far recouped about $5.9 billion of the $10 billion in these supply-chain funds, but it remains unclear how much will be returned ultimately to investors. Loans to Gupta’s businesses are among a batch of debts that are the “principal sources of valuation uncertainty,” the bank said earlier this month.Liberty Commodities’s external legal advisors investigated “alleged rumors concerning the paperwork” it used in 2019, according to Mitchell, the spokesman for GFG Alliance. They found no evidence to substantiate the rumors, nor was the company “ever subject to further complaints or proceedings,” he said.“LCL has ongoing banking relationships with separate financial institutions,” Mitchell said, referring to Liberty Commodities. “The trade-finance market has been hugely challenging for all but the very largest commodities traders in recent years. Nevertheless, no financial institution has been left out of pocket as a result of lending money to LCL. On the contrary, they have received substantial commercial returns.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>Logo of jester cap with thought bubble. Image source: The Motley Fool. Roku, Inc (NASDAQ: ROKU) Q1 2019 Earnings Call May. 08, 2019, 5:00 p.m. ET Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Good day, ladies and gentlemen, and welcome to the Roku first-quarter 2019 earnings conference call. [Operator instructions] As a reminder, this conference may be recorded. I would now like to turn the conference over to James Samford, head of investor relations. You may begin. James Samford -- Head of Investor Relations Thank you. And good afternoon, and welcome to Roku's financial results conference call for the first quarter ended March 31, 2019. I'm pleased to be joined on the call today with Anthony Wood, Roku's founder and CEO; Steve Louden, our CFO; and Scott Rosenberg, the GM of our platform business, who will be available for Q&A. Please be sure to review our shareholder letter, which contains much more detail than we will cover in the introductory remarks. The following discussion, including responses to your questions, reflects management's views as of today, May 8, 2019, only. And we do not undertake any obligation to update or revise this information. Some of the statements made on today's call are forward-looking and are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include but are not limited to statements regarding the future performance of Roku, including expected financial results for the second quarter and the full year of 2019 and the future growth of our business. Our actual results may differ materially from those discussed in this call for a variety of reasons. Please refer to today's shareholder letter and the company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements. You'll find reconciliations of non-GAAP measures to the most comparable measures discussed today in our shareholder letter, which is posted on the company's investor relations website at ir.roku.com. And I encourage you to visit our IR website periodically for important content. Finally, unless otherwise stated, all comparisons of this call will be against results of the comparable period of 2018. Now I'd like to turn it over to Anthony. Story continues More From The Motley Fool Anthony Wood -- Founder and Chief Executive Officer Thank you, James, and thanks, everyone, for joining today's call. Roku is off to a great start to the year. Q1 results beat our outlook across the board, and we are raising our outlook for the full year. Our growth continues to be driven by our singular focus. As consumers, content publishers, and advertisers embrace streaming, Roku is winning. We have an exceptional platform, an unmatched team, and we deliver compelling value for viewers and partners alike. In recent weeks, some of the world's largest media publishers have announced massive new investments in streaming. New services and customer acquisition campaigns from Disney, Apple, and others will help fuel Roku's growth for years to come. One of the themes of this quarter's shareholder letter is the scope and scale of our platform business, which connects the entire streaming ecosystem. Our large and growing platform business supports content distribution, audience development, and advertising. The Roku OS is uniquely purpose-built for TV streaming and is a key enabler of our platform business. Before handing the call over to Steve Louden, I'd like to highlight a milestone that I'm particularly proud of. In less than five years, Roku TV has gone from a disruptive idea to the market leader. We estimate that more than one in three smart TVs sold in the U.S. in the first quarter were Roku TVs. We have taken the lead from Samsung and are now the No. 1 smart TV OS in the country. I'll now turn it over to Steve. Steve Louden -- Chief Financial Officer Thanks, Anthony. We executed well on the first quarter and delivered particularly strong results. Before taking your questions, I'll walk through operational and financial highlights and address our outlook. Strong Roku TV demand and continued strength in player sales delivered an incremental 2 million active accounts in the first quarter to 29.1 million active accounts. Our scale and per-user engagement drove 1.6 billion incremental streaming hours sequentially to 8.9 billion hours in the quarter. Roku users streamed more content on our platform in the last six months than they did in all of 2017. ARPU increased another $1.11 sequentially to $19.06 driven by broad-based growth in content distribution, monetized video ad impression, and audience development spend by our content partners. Total Q1 revenue increased 51% year over year to $206.7 million, with platform revenue up 79% to $134.2 million to a record 65% of total revenue. Player revenue growth of 18% year over year again came in ahead of expectations driven by strong core-retail channel sales growth. Player units were up 21% year over year, and ASPs were down 4% as we continued to see strong demand for sub-$50 players. Our key financial performance metric is gross profit, which was up 60% year over year this quarter to $100.9 million, marking our second consecutive quarter above $100 million despite this being our seasonally lowest quarter. Gross margin was 48.8%, up 260 basis points year over year, with continued mix shift to the higher-margin platform business partially offset by declining player margin that helped drive rapid unit and active-account growth. Opex in the quarter grew 59% to $111.6 million, driven by 33% growth in headcount and higher stock-based compensation. Excluding stock-based comp, opex was up 43% year over year, which was below our revenue and gross profit growth. Opex came in below expectations primarily due to the timing of new hires coming in later than planned, which, when combined with gross profit upside, delivered positive adjusted EBITDA of $10 million in Q1. With that, let's turn over to our outlook for the full year. Based on strong Q1 results and momentum into Q2, we are raising our 2019 outlook to $1.04 billion in revenue and $470 million in gross profit at the midpoint, up 40% and 41% year over year, respectively, compared to roughly 36% year over year in our prior outlook. Included in our outlook, platform revenue mix is expected to be roughly two-thirds of total revenue, up from 56% in 2018. For modeling purposes, you should continue to model full-year platform gross margin in the low 60s as a percent of revenue driven by continued mix shift to video advertising and the introduction of premium subscriptions. For players, we expect player gross margin to be in the low single digits in 2019. We remind you that we are not optimizing for player gross profit as our strategy of trading player margin for account growth and platform revenue growth continues to work well. We plan to manage the business to roughly EBITDA breakeven in 2019, so some of the Q1 upside is expected to flow through to the full year. Stock comp of roughly $75 million and depreciation and amortization and net other income of $10 million are reflected in our outlook for roughly $70 million of net income/loss in 2019. For Q2, our outlook is for year-over-year revenue growth of 42% at the midpoint, with platform revenue representing roughly two-thirds of total revenue. Continued mix shift to video advertising is expected to remain a drag on platform gross margin. And when combined with mid-single-digit player gross margin, our combined outlook for Q2 is for roughly 45% gross margins. As a reminder, in Q2 of 2018, player gross profit benefited from a release of accruals of $8.9 million related to potential IP licensing liabilities that did not materialize and are not expected to be realized. Excluding these accrual releases in Q2 of 2018, gross margin would have been 44% versus 50% as reported. Q2 opex is expected to be roughly 15% higher than in Q1 as we recognize the full-quarter impact of the hiring that took place in Q1 and new hires in Q2.<doc-sep>
Roku shares traded sharply higher Thursday after the video streaming device maker posted a narrower-than-expected first quarter loss and boosted its full-year profit outlook as smart TV market share continues to grow. Roku Inc. (ROKU) - Get Report shares traded sharply higher Thursday after the video streaming device maker posted a narrower-than-expected first quarter loss and boosted its full-year profit outlook as smart TV market share continues to grow. Roku said it lost 9 cents per share over the three months ending in March, well ahead of the Street consensus forecast of 26 cents per share, as net revenue increased by a forecast-busting 51% to $206.7 million as its so-called smart TVs continue to take U.S. market share from rivals such as Samsung Electronics (SSNLF) . Looking into 2019, Roku said it sees platform revenues rising to around two-thirds of total sales, which it hopes to steer past $1 billion over the full year. The group is still likely to post a net loss, however, of between $65 million and $75 million. "Based on strong Q1 results and momentum into Q2, we are raising our 2019 outlook to $1.04 billion in revenue and $470 million in gross profit at the midpoint up 40% and 41% year-over-year respectively compared to roughly 36% year-over-year in our prior outlook," CFO Steve Louden told investors on a conference call late Wednesday. "We plan to manage the business to roughly EBITDA breakeven in 2019, so some of the Q1 upside is expected to flow through to the full year," he added. "For Q2, our outlook is for year-over-year revenue growth up 42% at the midpoint with Platform revenue representing roughly two-thirds of total revenue." Roku shares were marked 9.6% higher at the opening bell price and changing hands at $71.68 each, the highest since September 28 and a move that extends the stock's year-to-date advance past 134%. Roku is guiding for Q2 revenue of $220 million to $225 million; that's above a $218 million consensus and implies 42% annual growth at the range's midpoint. The full-year guidance range has been hiked to $1.03 billion to $1.05 billion (implies 40% growth at the midpoint) from $1 billion to $1.025 billion. "The company is positioned well as the TV ecosystem evolves to streaming (and its) operating system continues to gain share of connected TV and its ad share dramatically lags its viewership. On the other hand the company faces substantial potential competition and there continues to be a large amount of insider selling," said Loop Capital analyst Alan Gould, who lifted his price target on the stock to $50 but maintained a 'sell' rating. "It is difficult to justify the valuation on traditional metrics, but we believe Roku will continue to beat quarterly estimates and we have raised our long-term active accounts and revenue projections," he added.