Roku Reports Robust Growth in Q4, Predicts Future Success

Roku, which posted 52 percent growth and generated $1.13 billion last year, predicted that revenue will increase 42 percent to $1.6 billion in 2020. The growth is, in part, a reflection of the explosion of streaming video services with the recent additions of Disney+, Apple TV+ and upcoming Peacock and HBO Max. Strategy Analytics reported that Roku is the U.S. market leader in connected TV devices. At the end of Q4, Roku stated it had 36.9 million active accounts, a 36 percent increase from the previous year.

The Wall Street Journal reports that, also for Q4, the company “swung to a loss of $15.7 million, or 13 cents a share, from a profit of $6.8 million, or 5 cents a share, a year earlier, because of a rise in marketing and research expenses.” Average “revenue per user” was $23.14, a 29 percent increase from the previous year. Analysts surveyed by FactSet “were looking for a loss of 13 cents a share on revenue of $392 million.”

“I think it was a good quarter,” said Cannonball Research analyst Vasily Karasyov. “Bears are disappointed. People were waiting for the blood in the water. I don’t think they gave it to them.”

The company’s fastest growing unit — skyrocketing 78 percent to $740.8 million for the year — is its platform business, “which includes licensing fees for its smart-TV operating system as well as its advertising, metrics and subscription businesses.” Roku also reported that, “its monetized video ad impressions more than doubled in 2019 and predicted the figure would double again in 2020.”

In October, Roku acquired ad-buying platform Dataxu for about $150 million. It also stated that, “time spent by consumers watching programs on its platform grew by 60 percent in the quarter from a year earlier.” Its future predictions “didn’t include material impacts tied to the novel coronavirus outbreak in China, where the company does manufacturing.” Roku chief financial officer Steve Louden admitted that, “there is potential for more significant manufacturing and supply-chain disruptions if the outbreak becomes more severe.”

The Verge reports that Roku chief executive Anthony Wood, in a letter to investors, enthused that, “we believe consumers around the world will choose streaming as their primary way of viewing TV.” The company has predicted that, by 2024, “half of all U.S. households with a TV will have either cut the cord or never had cable to begin with.”

Wood also emphasized advertising, saying that, “throughout 2019, our growth in monetizable video ad impressions significantly outpaced streaming hour growth,” adding that the company aims to “shape the future of OTT advertising.”

Roku’s ad strategy is multi-faceted, including large ads on the home screen (which Disney used to promote the debut of Disney+), and its free Roku Channel. Roku also sells adds for third-party streaming apps as well as “some of the ad space on other companies’ apps.” Some of the bigger players are pushing back, but Roku still describes itself as “a neutral partner at the center of the streaming ecosystem.”