It's fair to say that Roku's (NASDAQ:ROKU) first quarterly report as a public company was a hit. The shares shot higher after the set-top streaming-video player pioneer posted financial results after Wednesday's market close. 

Roku's been a hot debutante since going public at $14 just six weeks ago. Like many highly anticipated IPOs Roku had cooled off after storming out of the gate, more than doubling by its second day of trading before shedding more than a third of its peak value. However, Roku's blowout third quarter shows why the market's initial euphoric instinct was the right approach. Let's go over why the market's going gaga for Roku.

Roku TV displayed on a TCL television screen.

Image source: Roku.  

1. Accelerating growth is a wonderful thing

Roku's revenue rose 23% through the first half of this year, following a 25% uptick in 2016. No one was expecting a 40% year-over-year surge to $124.8 million this time around. Analysts were only holding out for 24% top-line growth, and even the most bullish of the four Wall Street pros was targeting just $112.9 million in revenue. 

Beating analyst expectations in your debut quarter is an excellent way to make a great first impression, and the monster report also suggests that Roku wasn't just going the IPO route as an exit strategy. Roku's guidance for the fourth quarter is now $175 million to $190 million in revenue, representing just a 24% gain in the current quarter at the midpoint of that range. This might lead some to conclude that the third quarter was an outlier, but it's no fluke. The fourth quarter's growth is held back by the greater weight placed on slowing hardware sales given the seasonal spike in Roku systems that are sold over the holidays. 

2. The platform's the thing

Sizing up Roku ahead of Wednesday afternoon's report was a matter of separating the hardware side of its business from the platform itself. Hardware sales grew just 9% in 2016 and actually declined through the first half of the year. It's a refreshing surprise to see hardware revenue climb at all during the third quarter, but the 4% gain on that front takes a backseat to the 137% pop in platform revenue. 

Roku generates money from users signing up and sticking with many premium video services, and over the past year we've seen that go from 27% of its total revenue to 46%. Momentum suggests that platform revenue will overtake hardware revenue soon, something that's important because that's where the chunky profit margins like to party. Hardware revenue may have made up a little more than half of Roku's revenue for the quarter, but it accounted for just 11% of the gross profit. Platform revenue is making the other 89% possible. 

3. Engagement is rocking

More and more people are making Roku TV the hub of their video-consuming experience. There are now 16.7 million active accounts, 48% more than there were a year earlier. Consumption is also on the rise, as the 3.8 billion of hours streamed during the quarter was 58% ahead of where usage was a year ago. 

Average revenue per user is $12.68 over the past 12 months, 37% higher than it was a year earlier. The revenue per account may be an annual and not monthly figure, but it adds up in a major way when you consider that the base itself is expanding quickly.