Please ensure Javascript is enabled for purposes of website accessibility

Streaming Services Fuel Strong Quarter at Roku

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Roku Stock Quote
$94.20 (-2.76%) $-2.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.