2 Notable Large Caps Deliver 3rd-Quarter Numbers

Square Inc., Roku Inc. beat analysts expectations on earnings and revenue Continue reading... Read More...

After market close on Wednesday, Square, Inc. (NYSE:SQ) and Roku, Inc. (NASDAQ:ROKU) issued their third-quarter results.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Square Inc.” data-reactid=”12″>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%.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Moreover, Square reported the following year over year changes: the gross profit grew 42% 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.” data-reactid=”20″>Moreover, Square reported the following year over year changes: the gross profit grew 42% 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.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Roku Inc.” data-reactid=”37″>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.