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  • Brett Schafer

No Sign of Slowing Down for Roku

As most shareholders know by now, Roku reported 4th quarter and fiscal year 2018 earnings after the market closed on Thursday, and they did so in impressive fashion. Roku absolutely crushed earnings, and completely beat estimates. Here are the main highlights from the press release:

4th Quarter:

  1. Revenue of $275.7 million, up 46% YoY

  2. Platform revenue was $151.4 million, up 77%. Now accounts for 55% of total revenue

  3. Total active accounts is up to 27 million, up 40% YoY

  4. Average revenue per user is up to $17.95, up 30% YoY

  5. Net Income $5.5 million, down 42% YoY

  6. $51 million spent on Research and Development, up 63% YoY

Full Year 2018:

  1. Net Revenue $742.5 million, up 45%

  2. Platform Revenue $416.9 million, up 85%

  3. Gross Profit of $332.1 million, up 66%

  4. 2018 Net Loss $8.86 million

  5. 2017 Net Loss $63.51 million

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According to the shareholder letter, 20% of US households use Roku as a streaming service. Roku has added roughly 9,000 free movies and TV episodes to the Roku Channel. Roku is guiding for more than $1 billion in revenue for fiscal year 2019, and expect platform revenue to account for at two-thirds of total revenue. They are also guiding for a net loss between $80-90 million.

In the earnings call, the executive team stated that they intend to invest more and more of their profits back into the business to benefit the shareholders in the long run. For that reason they are expecting to see a larger net loss in 2019 compared to 2018.

As a shareholder I am not very concerned about profitability for the next 2 or 3 years, especially with the increase in spending for research and development. I like where the company is heading and expect Roku to continue strong growth.

Disclosure: The author is not a financial adviser, and may have an interest in the companies talked about.

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