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Riding a big wave of home streaming use, Roku increased fourth-quarter revenue by 58%, to a record $ 649.9 million – and posted a net profit of $ 65.2 million for quarter, when Wall Street expected a loss.
The company already announced last month that it ended 2020 with 51.2 million active accounts, up 39% year-over-year after adding 14.3 million net accounts. The ad-supported Roku channel grew even faster, doubling its audience to reach U.S. households of around 61.8 million people in the fourth quarter.
Analysts on average expected Roku to post revenue of $ 617.7 million and a loss of 5 cents per share for the fourth quarter, according to research firm Refinitiv. Roku stock, which has risen more than 42% since the start of the year, rose 3.9% on Thursday after hours.
Its platform business was the driving force behind Roku’s revenue growth, which increased revenue 81% in the quarter to $ 471.2 million. The platforms segment encompasses the company’s advertising and subscription / transactional business, and Roku said monetized video ad impressions more than doubled in the fourth quarter year-over-year with the continuous shift of audiences from pay-TV to streaming.
Roku’s deals – after months of wrangling – for NBCUniversal’s Peacock (launched September 21) and HBO Max (launched December 17) helped drive uptake in the fourth quarter.
“All aspects of the company have hit at the same time,” said Scott Rosenberg, senior vice president and general manager of platform operations at Roku, of the better-than-expected fourth quarter results in an interview with journalists.
Roku’s low-margin player segment, which includes its media streaming devices, had revenue of $ 178.7 million. That was an 18% increase, but a lower growth rate than in the period a year earlier, which the company attributed to COVID restrictions that reduced holiday shopping. Roku maintains low (near zero) margins for its gaming business, which it uses to grow active accounts and fuel sales in the platform business.
For the entire year, streaming hours on Roku hit a record 58.7 billion, up 55%. In the fourth quarter, Roku users’ streaming hours hit an all-time high of 17 billion hours (also up 55%).
Last month, as part of strengthening its free and ad-supported Roku Channel lineup, the company signed an agreement to acquire the global rights to more than 75 of Quibi’s original shows. It came after the startup led by Jeffrey Katzenberg and Meg Whitman folded six months after launching. Roku says he plans to add Quibi shows, representing several hundred hours of content, to the Roku channel in 2021. The company paid “significantly” less than $ 100 million under the deal with Quibi, said a source close to the deal.
In discussing fourth quarter results, executives at Roku did not provide an update on when Quibi content would be released. As part of the Quibi deal, Roku has the option to order additional seasons of the shows from their producers.
“We think Quibi content will work well,” Rosenberg said. But he also said the company had added “a significant amount of content” to the Roku Channel of other partners in recent months, Rosenberg said, including from Disney, NBCUniversal, A + E Networks and Discovery.
For the current quarter, Roku expects continued revenue growth, forecasting revenue of $ 478 million to $ 493 million for the first quarter of 2021 (up 49% to 54%). He expects a net loss of $ 16 million to $ 23 million for the first quarter.
Given the boom in streaming business that Roku experienced in the second half of 2020, Roku warned that growth for the full year 2021 would fall below levels it expects to see in the first and in the second quarters of 2021. The company said it expects an overall gross margin for 2021 to be in the 40% average range; Roku posted a gross margin of 45.4% for the year 2020.
Other measures touted by Roku: Average revenue per user in the fourth quarter increased 24% year-over-year to $ 28.76 (on a 12-month basis), and 38% of all smart TVs sold in the United States in 2020 were models of Roku TVs. The company also said that in the fourth quarter, the six largest advertising agency holding companies more than doubled their spending year-over-year with Roku and pledged “significantly larger actions in 2021 with Roku. “.
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