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Roku is not worried about Amazon or anyone else about his cash cow.
The electronics manufacturer has been transformed over the last few years into an advertising company, including through Roku Channel, a free advertising-funded streaming service available on Roku devices and the Web. However, last month, Amazon launched a competing service, Freedive, from its IMDb unit, which threatens to steal viewers and advertising dollars from Roku's offer.
But that's not how Steve Louden, Roku's CFO, sees it. The entry of Amazon – with similar services from YouTube, Vudu and others – serves simply as "validation" for the Roku channel and for the advertising-funded streaming activity in general.
"We are strong supporters of ad-supported content," Louden told Business Insider during an interview Thursday, just after the company released its fourth quarter results.
Read it:Amazon is staring at another market – and a high-flying newbie should be concerned
Roku exceeded analysts' expectations as revenue from its platform business, which includes ad sales, jumped 77% from the 2017 holiday period.
Roku is "in a strong position"
The video streaming company is better positioned than many of its rivals to take advantage of the ad-supported video market, Louden said. His mastery of not only a streaming channel, but also a streaming media platform – via its Roku streaming boxes and its smart TVs with its own system. – provides him with important data on user viewing habits that competitors do not have, he said. Through its platform, Roku also has the ability to direct viewers to the Roku channel and other venues for its video ads.
"It puts us in a strong position," he said.
Amazon also has its own platform, in the form of its Amazon Fire TV devices, and has a lot of data on viewing habits through it, its Amazon Fire tablets and its Prime Video service. But Louden seemed indifferent, suggesting that Amazon and many other Roku's competitors may not be up to the task. Roku can offer advertisers both the data they need to target their ads and a wide audience.
"It is there that many people have shortcomings," he said.
This is what Roku reported and how he compares to Wall Street's expectations:
- Fourth quarter (Q4) sales figure: $ 275.7 million. Analysts had forecast $ 262.4 million.
- Earnings per share in the fourth quarter: 5 cents. Wall Street was expecting 3 cents per share.
- First quarter (Q1) business revenue (company forecasts): 185 to 190 million dollars. Analysts had projected $ 188.8 million.
- Q1 EPS (orientation): Roku expects a loss of $ 28 million to $ 32 million per share, a loss per share of 23 to 26 cents, assuming that the number of its shares remains stable. Wall Street predicted a loss of 12 cents per share.
- 2019 turnover (orientation): $ 1 billion to $ 1.025 billion. Analysts had anticipated $ 985.4 million.
- 2019 EPS (orientation): The company was forecasting a loss of between $ 80 and $ 90 million, which is about 65 to 73 cents a share, assuming the number of its shares remains the same. Analysts had predicted an annual loss of 23 cents per share.
Roku's shares jumped $ 2.72, or 5%, to $ 54.20 in after-hours trading. His shares closed on a regular trade of $ 2.16, or 4%, at $ 51.48.
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