At the beginning of 2019, Roku (ROKU 1.00%) said it expected to hit $1 billion in revenue for the year. The company had continued to boost its outlook throughout the year, particularly after acquiring ad tech platform DataXu, which would contribute to the top line. Not that there was much doubt, but Roku has officially delivered on that promise with its fourth-quarter earnings release.

Here's how the TV streaming specialist finished out the year.

Roku OS interface

Image source: Roku.

Record accounts added

Revenue in the fourth quarter soared 49% to $411.2 million, which brought full-year sales to $1.13 billion. Even though Roku is already the No. 1 TV streaming platform in the U.S., it's seeing active account growth accelerate. The company added a record 4.6 million active accounts in the fourth quarter, thanks to a growing stable of manufacturers that integrate Roku OS and strong demand over the holiday shopping season.

Chart showing active accounts added per quarter

Data source: SEC filings. Chart by author.

That brings total active accounts to 36.8 million, which collectively streamed 11.7 billion hours of content during the quarter. Average revenue per user (ARPU) also continues to climb, hitting a new high of $23.14. Roku discloses its ARPU on a trailing-12-month basis.

The launch of new streaming services also helped the business. Disney recently announced that Disney+ had already garnered 28.6 million subscribers since its Nov. 12 debut. Roku declined to provide specific details around any particular service but did acknowledge that it helped contribute to Disney+'s blockbuster launch. On the conference call with analysts, CEO Anthony Wood said, "One of the things Disney did is they really lean into the tools that we have available on our platform."

CFO Steve Louden also noted that Roku's distribution agreements include "multiple element arrangements." Beyond the standard revenue-sharing structure, those agreements can also include things like minimum guarantees or promotions. Those moving parts impact how Roku recognizes revenue and also contribute to volatility in deferred revenue on the balance sheet, according to Louden:

As a result, these -- the material agreements under [new revenue recognition standards] come under the multiple element arrangement accounting, so it really just depends in terms of the different elements, the value that we ascribe for these elements and then the performance obligations that are basically put against these revenue streams. And so that can lead to some lumpiness within the life of the deal where we're valuing the entire agreement and placing value on that.

And so it's not necessarily immediately and 100% correlated with the underlying cash or business stream to your point. So it can be lumpy over time, and certainly, with some of these new services, that can lead to a bit of a disconnect between the underlying driver and how it shows up on the P&L or the balance sheet.

The current portion of deferred revenue increased 11% on a sequential basis to approximately $40 million.

What to expect in 2020

Roku also issued a strong forecast for 2020. Full-year revenue is expected to jump 42% to approximately $1.6 billion, which is slightly ahead of the Street's current thinking. Operating leverage will help gross profit grow faster than the top line to $730 million.

The company will continue investing heavily in key strategic opportunities like video ads and international expansion, while growing head count at a rate comparable to 2019. Roku is targeting breakeven for adjusted EBITDA in 2020.