Roku (NASDAQ:ROKU) has been one of the biggest winners among growth stocks over the past year. Its share price has increased a staggering 311% since the beginning of 2019. Despite these impressive gains, Roku is still trading 35% below its all-time high.

Roku is expected to release its fourth-quarter earnings on Feb. 13, and just like most other companies, its momentum going forward will depend on those results and management's guidance.

The analyst consensus for the company's fourth-quarter revenue is $392.7 million, with a net loss expected to come in at $0.13 per share. In the prior-year quarter, Roku reported sales of $275.7 million and earnings of $0.05 per share.

Here's what will drive the company's growth in the upcoming report and beyond.

Subscriber growth

At the end of the September quarter, Roku's active user accounts stood at 32.3 million, up 36% year over year. In that quarter, Roku experienced strong unit sales for its Roku TVs and players.

The company continues to lead the smart TV space and is the top licensed TV operating system (OS) in North America. The company claimed Roku TV accounted for about one-third of smart TVs sold in the U.S. for the first three quarters of 2019.

In September, Roku introduced a new lineup of streaming players for markets in North America, Latin America, and Europe. With products priced at $29.99, the company aims to make streaming affordable for the average consumer in order to increase the scale and reach of its products. And the growing consumer preference for online streaming has helped Roku grow its business at impressive rates.

Hand with remote and TV screen full of streaming service choices

Image source: Getty Images.

In the third quarter, streaming hours reached 10.3 billion, representing growth of 68% year over year and indicating a significant increase in user engagement. The average revenue per user also rose 30% year over year to $22.58.

The upcoming report will include results from the busy holiday shopping season, and strong growth of Roku player sales will be good news for investors. In the third quarter, player sales were up 11% over the prior year at $81.6 million and accounted for 31% of the top line.

Consolidation of streaming services

The cord-cutting phenomenon continues to accelerate. In the third quarter of 2019, around two million consumers left traditional pay-TV providers. In 2018, that figure stood at 1.2 million. This trend has powered the expansion of streaming competitors such as Netflix, Hulu, and Amazon, not to mention major new services from Apple and Walt Disney (and upcoming launches from HBO and NBCUniversal).

As competition in the streaming space heats up, these platforms will want to partner with Roku and sign marketing deals to widen their audience base. Additionally, Roku claims a percentage of the transaction revenue every time a user subscribers to a service or makes a purchase through its platform.

Roku's platform revenue grew 79% to $179.3 million in the third quarter. The platform business is critical for Roku, and an increase in the streaming market overall will help ensure sustainable growth. 

International expansion

In 2018, Roku generated 100% of its sales from the United States. It has a strong domestic presence and is now looking to expand to international markets. This will boost the company's top line significantly over the coming years.

On Jan. 22, for example, the company started selling Roku-powered AOC TVs in Brazil. These televisions are equipped with the standard Roku OS that allows users to download applications from the Roku Channel Store.

During the third quarter, Roku's shareholder letter stated, "As we continue to lay the foundation for further international expansion, the key advantages that set us apart in the U.S. are expected to play an important role in new markets. Our purpose-built OS, engineering expertise, OEM partnerships, and free TV capabilities are among the many factors that we expect to contribute to our ability to attract content providers and consumers, and quickly build scale in new markets."

In late 2019, Roku partnered with Hisense to ship the first Roku TV models to the United Kingdom. In the United Kingdom, Roku TVs will include a strong portfolio of local content providers as well as global brands. Roku will now be able to expand its reach to other European markets.

The verdict

Roku stock has lost some ground since Sept. 2019 as investors become concerned with the company's rich valuation. The stock is still reporting losses on the bottom line and sports a price-to-sales multiple of 15. But as is the case with other high-growth tech companies, Roku remains focused on expanding its business.

The launch of new products, coupled with its international efforts, will help drive sales higher in 2020. Roku will set the tone for 2020 with the guidance it offers in a few weeks, but analysts estimate revenue growth this year will top 40%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.