CFA research media and entertainment analyst Tuna Amobie discusses how streaming competition affects consumer costs.
Roku CEO Anthony Wood calls his purchase of Quibi short-form video content ‘cost-effective’, indicating in a quarterly earnings call on Thursday that Roku will consider other reasonable prices.
In January, Roku agreed to acquire perennial exclusive content rights from Quibi Holdings, a closed subscription-supported short-form programming streaming service, for less than $ 100 million.
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Roku will integrate the 75 Quibi series he acquired into The Roku Channel, its app for ad-supported movies and TV shows, says Mr. Wood. “We will continue to take a closer look at all the different types of content we can obtain, and we will be disciplined to ensure that the purchase price of the content fits in – whether it is licensed or purchased or whatever the financial details are – fit in our AVOD [ad-supported video on demand] business model, ‘adds Mr. Wood by.
Woods’ comments come when Roku increased profits in the December quarter and predicted better than expected for the first quarter, driven by the momentum flowing during the coronavirus pandemic. Here’s what you need to know:
PROFIT: Roku increased to a profit of $ 67.3 million, compared to a loss of $ 15.7 million a year earlier. On a stock share, earnings were 49 cents per share. Analysts surveyed by FactSet expected a loss of 5 cents per share.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| ROKU | ROKU INC | 452.99 | -3.98 | -0.87% |
INCOME: Net income for the quarter increased to $ 649.9 million from $ 411.2 million, compared to the projected $ 61 million.
YEAR: Roku ended the year with a loss of $ 17.5 million and $ 1.78 billion in revenue, compared to a loss of $ 59.9 million and $ 1.13 billion in revenue a year earlier.
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BILLS: Roku ended the year with 51.2 million active accounts.
OUTLOOK: This quarter, Roku forecast a loss of $ 16 million to $ 23 million and $ 478 million to $ 493 million in revenue, compared to analysts’ expected loss of approximately $ 52 million and $ 463.2 million in revenue.
For the year, the company said that year-on-year revenue growth would fall below the levels it would expect in the first and second quarters of 2021, and said that the gross margin of 2021 is likely to be in the mid-40% range would be margins remain fairly stable and operate the Player segment at a gross margin close to zero to continue device sales and growing active accounts. He is expected to return to a “solid OPEX year” [opeating expenses] organic growth rates similar to 2019 (compared to most of 2020 where we limited the number of people). ‘
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PANDEMY: Roku saw higher bill activation and stream hours during the pandemic. It added more than 14 million active accounts in 2020. A strong demand for TV streaming products, company officials said, as well as strong growth in advertising and extensive content distribution partnerships, are helping the company.