General
May 9, 2021
7 minutes read

Earnings: Video Streaming Company Roku On A Tear

This is the period where many public technology companies are reporting their earnings results for the first quarter of this…

This is the period where many public technology companies are reporting their earnings results for the first quarter of this year 2021. Over here, we’ve taken time to break down the earnings reports of a handful of such companies, and they include electric carmakers Tesla and Nio, Amazon, Uber, Lyft, Zynga, Moderna, Peloton, and DraftKings.

After all these earnings breakdowns, we’re adding yet another one to the list, that of video streaming company Roku, whose latest earnings results show that of a company on a tear financially. Sales for the company grew largely year-over-year as more people tuned into their screens during a pandemic.

Roku makes and sells video streaming hardware to consumers, while also having a strong video streaming content and advertising business bringing in the bulk of its revenue.

Roku’s business model is ‘freemium, whereby hardware owners get access to free ad-supported content and have the option to pay monthly fees for enhanced features including higher-quality videos and more content.

By the numbers:

Roku’s revenue grew 79% year-over-year to $574mn, a record for the company. The bulk of that revenue as usual came from its Platform business, $467mn in this case, while the remaining $107mn came from hardware sales.

Roku is fast-growing and also largely profitable, reporting a net profit of $76mn in Q1. Such stats indicate a very strong business usually attractive to investors on the public markets.

In the quarter, Roku added 2.4 million Active Accounts on its platform bringing its total count now to 53.6 million accounts.

Highlights:

In the quarter, Roku made major moves to strengthen its business, particularly its content business. They include buying ownership of the content owned by failed streaming app Quibi to rebrand as “Roku Originals” and also paying nearly $100mn for a home-improvement media company called This Old House Ventures.

It’s apparent that Roku has singled out its content business for growth and is spending big in that area to prove itself, with positive results. As you know, you can only sell so much video streaming hardware.

This March, Roku raised $1bn from an equity offering on the public markets, with the cash earmarked to fund its growth. The company saw it good to raise money while its shares were trading at record-high prices on the markets.

With all the positive news, Roku has a current thorn in the flesh which is a feud with Google-owned YouTube that led to YouTube TV’s dedicated app getting removed from Roku’s channel store recently. The feud originates from a contractual dispute in which Roku accused Google of making anticompetitive demands in order for it to continue distributing the YouTube TV app.