What happened

Shares of Roku (NASDAQ:ROKU) have skyrocketed today, up by 46% as of 12:01 p.m. EST, after the company reported its first earnings release as a public company. The results crushed expectations.

So what

Revenue in the third quarter soared 40% to $124.8 million, making short work of the consensus estimate of $110.5 million in sales. That translated into a non-GAAP net loss of $0.10 per share, while the Street was expecting Roku to lose $1.37 per share on an adjusted basis. The growth was driven by the platform business, which saw revenue skyrocket by 137% to $57.5 million.

The Roku Channel on a TV

Image source: Roku.

Platform revenue is much more profitable than player revenue. Active accounts grew to 16.7 million, and Roku streamed 3.8 billion hours during the quarter. Average revenue per user (ARPU) grew to $12.68.

Now what

Roku's future is really all about its platform business, which in turn is all about advertising. The company is making strong progress with growing its ad business, saying it has "more than doubled" year to date. Platform revenue growth was driven by adoption of advertising, audience development, and content distribution services. Advertising comprised about two-thirds of platform sales in the third quarter.

In terms of guidance, revenue in the fourth quarter is expected in the range of $175 million to $190 million, which should yield a gross profit of $58 million to $64 million. Roku expects to lose $8 million to $14 million, with adjusted EBITDA of negative $6 million to breakeven.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.