With a huge wave of home consumption for streaming, Roku increased revenue by 58% in the fourth quarter, to a record $ 649.9 million – and a net profit of $ 65.2 million for the quarter, while Wall Street expected a loss.
The company already announced last month that it ended 2020 with 51.2 million active accounts, which is 39% higher than a year ago after adding a net 14.3 million accounts. The ad-backed Roku Channel grew even faster, more than doubling its audience to reach U.S. households with an estimated 61.8 million people in the fourth quarter.
According to research firm Refinitiv, Roku expected Roku’s average revenue of $ 617.7 million and a loss of 5 cents per share for the fourth quarter. Roku’s share, which has risen more than 42% so far, rose to 3.9% on Thursday.
The growth of Roku’s top line was its platform industry, which rose 81% to $ 471.2 million in the quarter. The platform segment includes the company’s advertising and subscription / transaction businesses, and Roku said video advertising impressions more than doubled year-on-year in the fourth quarter, with the constant shift of pay-TV audiences. and streaming.
This helped increase usage in Q4, while the deals Roku closed – after months of wrestling – for NBCUniversal’s Peacock (launched on September 21) and HBO Max (which launched on December 17).
“That was all that affected the company at the same time,” said Scott Rosenberg, SVP and GM of Roku’s platform business, about the better-than-expected Q4 results in an interview with reporters.
Roku’s low – margin player segment, which includes its streaming media devices, had revenue of $ 178.7 million. It increased by 18% but was a lower growth rate than the previous year, which the company attributed to COVID restrictions that suppressed holiday shopping. Roku maintains low margins (almost zero) for its player business, which it uses to grow active accounts and grow fuel sales in the platform industry.
For the full year, the current hours at Roku reached a record 58.7 billion, up 55%. In the fourth quarter, the power hours of Roku users peaked at 17 billion hours (also 55% higher).
Last month, the company entered into an agreement to acquire worldwide rights to more than 75 of Quibi’s original shows, as part of the free, ad-supported Roku Channel series. This comes after the startup led by Jeffrey Katzenberg and Meg Whitman folded six months after launch. According to Roku, he plans to add the Quibi shows, which contain several hundred hours of content, to the Roku Channel in 2021. The company paid ‘significantly’ less than $ 100 million from the agreement with Quibi, a source familiar with the agreement.
In discussing the Q4 earnings, Roku executives did not give an update on when the Quibi content would be released. According to the Quibi agreement, Roku has the option to order additional seasons of the shows from their producers.
“We think the Quibi content will perform well,” Rosenberg said. But he also said that the company has added a significant amount of content from other partners to the Roku Channel over the past few months, Rosenberg said, including from Disney, NBCUniversal, A + E Networks and Discovery.
For the current quarter, Roku expects continued revenue growth, with revenue of $ 478 million to $ 493 million for the first quarter of 2021 (a 49% -54% increase). It expects a net loss of $ 16 million to $ 23 million for the first quarter.
Given the eruption in the stream activity that Roku saw in the second half of 2020, Roku warned that growth for the full year 2021 will fall below the levels it expects in the first and second quarters of 2021. The company said it expects the total gross margin of 2021 to be in the mid-40% range; Roku achieved a gross margin of 45.4% for the full year 2020.
Other benchmarks set by Roku: average revenue per user in the fourth quarter increased by 24% year-on-year to $ 28.76 (12 months behind), and 38% of all smart TVs featured in 2020 sold in the US were Roku TV models. The company also said that the six largest advertising agency companies more than doubled their spending on Roku in the fourth quarter, committing to ‘significantly larger 2021 before R21’.