If Roku (ROKU -2.69%) investors were looking for some reprieve from the stock's brutal beating over the past year, they finally got it on Thursday. Not only did the stock rise more than 8% during market hours amid a broader market attempt to recover some of this-year's losses, but the company also released an impressive quarterly update after market close yesterday
While the tech company's headline top-line figure was certainly impressive, considering the uncertain environment Roku is operating in, the most exciting takeaways in the first-quarter update are two other numbers: platform revenue growth and full-year revenue guidance.
Here's a closer look at these two metrics -- and why they should get Roku bulls excited.
Rapid platform revenue growth
Roku's total revenue increased 28% year over year during Q1 to $734 million. This beat analysts' average forecast for revenue of $718 million -- an impressive feat, considering that some of the analysts' forecasts may have been pegged before the war in Russia and Ukraine began.
But Roku's total revenue growth only tells one side of the story as it combines its hardware revenue and its platform revenue. Platform revenue, which primarily consists of Roku's share of fees from subscriptions, ads, and transactions on its streaming-TV platform, increased 39% year over year.
The segment, which accounts for 88% of total revenue, benefited "from higher content distribution and advertising revenue," management said in Roku's first-quarter shareholder letter. The company's ad business, in particular, is firing on all cylinders.
Capturing a glimpse of some of the momentum Roku is seeing from advertisers as they increase their bets on connected TV, management noted that, "the top 10 broadcast TV advertisers increased spend on Roku nearly 80% year-over-year while spending 7% less on legacy pay TV."
Looking ahead, there's reason to believe that Roku will continue capturing a significant portion of the ad budgets migrating to streaming TV. Management said that of the advertisers that spent more than $1 million in ads on its platform in the trailing-12-month period ending one year ago, 96% of them have been retained. Of those it retained, the spend has increased an average of over 50% year over year.
Management's optimistic full-year outlook
Perhaps even more encouraging was Roku's bullish view for the full year. The company maintained its guidance for full-year revenue to increase 35%, compared to revenue in 2021, despite reporting just 28% growth in Q1 and management guiding for only 25% growth in Q2. This means management expects a significant acceleration in the second half of the year.
Forecasting 35% growth during a year in which some advertisers' ad budgets are negatively impacted by uncertainties surrounding supply-chain disruptions and geopolitical tensions shows both how strong the secular tailwinds are for the company and how well-positioned it is within them.