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Roku Just Proved Why It's the Future of Streaming

By Danny Vena - Feb 25, 2021 at 12:00PM

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The streaming pioneer's growth rate just accelerated. Again.

Expectations were already high going into Roku's (ROKU 4.42%) fourth-quarter results last week but it still had something unexpected in store for investors. Revenue grew 58% year over year and the company delivered a surprise profit. Perhaps more importantly, its platform revenue grew at the highest rate since mid-2019, accelerating to 81% growth year over year and jumping to new all-time highs.

On this clip from Motley Fool Live, recorded on Feb. 18, "The Wrap" host Jason Hall and contributor Danny Vena pick out a couple of the highlights from Roku's blowout earnings report.

Danny Vena: We've got one here from Jason. [laughs] The other Jason who says, "Roku, Roku, let's get those earnings." Now, I had not done a deep dive yet on Roku's earnings, but I have taken a quick look here. I'll just share my screen so we can look at the numbers. They really are fabulous actually.

Active accounts, they had already announced, grew 39% year over year to 51.2 million, streaming hours are up 55%, the average revenue per user is up 24%, but here's the important part to me.

Platform revenue, which is what Roku gets from The Roku Channel, from the licensing of its connected TV operating system (OS) and from its digital advertising, grew 81% year over year. That is as high as I've seen that number in a very long time. That means that the advertising revenue that Roku gets from the folks whose streaming services exist on its platform is accelerating. I think that's a real good sign of what you can expect from Roku.

What is even more surprising to me is if you look at the response in the after-hours market, the stock is actually up. Every stock that I have seen report earnings here in the last several days has been down, even after reporting a fabulous quarter. Not the case with Roku. Roku's stock was just when I just checked just up around...

Jason Hall: A couple percent.

Vena: Yes, a couple percent. Just a quick look here, but it looks like Roku did everything it needed to and more. Yeah, I'll try to do a little bit deeper dive into that early next week.

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