Roku beat Wall Street estimates for the fourth quarter, hitting new highs in active accounts and revenue per user, though an acquisition in the period created a loss of 13 cents per share.
Total revenue hit $411.2 million, well ahead of the consensus estimate of $391.6 million and up 49% over the same quarter in 2018. The per-share loss compared with earnings of 5 cents a share a year earlier but it was a penny better than Wall Street expectations.
Roku acquired ad-tech firm Dataxu for $150 million last fall, so analysts had been bracing for higher overhead costs to hit the company’s results. Over the long haul, management sees the deal as a key revenue driver given the company’s increasing focus on advertising.
Active accounts also came in ahead of estimates, with 4.6 million added in the quarter giving Roku 36.9 million as of the end of 2019.
Average revenue per user (ARPU) reached $23.14, a shade below analysts’ forecast but still up 29% over the prior-year quarter.
The company has been seen by investors as something of a proxy for the boom in streaming. Unlike partisans in the so-called “streaming wars,” which have heated up thanks to new offerings by Disney, Apple and soon NBCUniversal and WarnerMedia, Roku has benefited from the overall migration of viewing. Its interface, for example, is now in more than one-third of all smart TVs in the U.S. via licensing deals. It also is an efficient wholesaler of streaming apps, occupying a position in the marketplace comparable with that of Apple or Amazon in third-party enabling of streaming. Platform revenue, which reflects the influx from these new players, will represent three-quarters of total revenue in 2020, the company estimates.
Roku shares gained a fraction on Thursday to close at $139.05. In 2020 to date, the stock has gained nearly 4%, lagging the broader market and finding a lower gear after a blazing performance in 2019, when it quadrupled in value and was one of the top issues on the Nasdaq.
“While streaming became mainstream in the last decade, it is still a minority of TV viewing,” the company wrote in its quarterly letter to shareholders. “We have now entered the streaming decade when we believe consumers around the world will choose streaming as their primary way of viewing TV. We believe that we are well positioned to thrive in this new decade based on our increasing brand strength, the scale of our growing active account base, our purpose-built TV streaming operating system (OS) and first party customer relationships with growing engagement.”
By 2024, the letter predicted, roughly half of all U.S. TV households will have cut the cord or will never have had traditional pay-TV packages via cable, satellite or telecom providers.