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Streaming Services Fuel Strong Quarter at Roku

By John Ballard - Feb 14, 2020 at 10:08AM

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The migration of viewers to streaming is expected to fuel more robust growth in 2020.

Shares of the streaming platform provider jumped about 7% following better-than-expected revenue and earnings on Thursday. CEO Anthony Wood and CFO Steve Louden called 2019 "a tremendous year for TV streaming," which gave a huge boost to Roku's (ROKU -2.76%) platform. 

For the fourth quarter, revenue soared 49% year over year to $411 million, beating the consensus analyst estimate of $392 million. The holiday quarter is closely watched by analysts, since it generates about 35% of annual revenue. 

While Roku didn't report a profit, the net loss of $0.13 came in slightly ahead of estimates of $0.14. Management plans to continue reinvesting its gross profit to differentiate the platform to drive growth. 

Two pairs of feet with colorful socks snuggled together, with a large TV in the background.

Image source: Getty Images.

Robust performance across the board

Roku ended the year with 36.9 million active accounts, which trails Amazon Fire TV's 40 million, but with growth of 36%, it doesn't seem Roku has anything to worry about.

Users spent 11.7 billion hours watching content last quarter, representing growth of 60% year over year. 

Roku is also seeing its ad-supported content take off, as traditional TV advertising shifts to streaming. This drove a 29% year-over-year increase in average revenue per user to $23.14. Disney+ contributed to that by sponsoring the Roku home screen and running banners to promote the launch of the service in November. 

More growth expected

Roku expects another year of strong growth, as the cord-cutting trend continues. This should benefit video ad impressions, which was Roku's fastest-growing business in 2019. 

For 2020, management is calling for revenue to reach $1.6 billion in 2020, an increase of 42%, while the business should breakeven on an adjusted EBITDA basis. 

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