Roku continues to post strong business metrics, beating many estimates for its second-quarter reporting period -- including 42% year-over-year growth in revenue and a 41% gain in monthly active accounts.
Revenue climbed to $356.1 million and Roku added 3.2 million monthly active users, now totaling 43 million. There has been a 7% gain in users versus the first three months of this year.
Roku's “platform” revenues -- stemming from software deals of its platform on smart TV sets, and advertising sales -- improved 46% to a total $244.8 million. Set-top-box player revenues added 35% to $111.3 million.
At the same time, Roku widened its net losses -- now at $43.1 million from $9.3 million a year ago. Operating expenses grew to $189.0 million from $124.6 million. Still, Roku bettered earnings-per-share analysts' estimates.
Roku did not offer specific quarterly advertising revenue but said “monetized video ad impressions grew roughly 50%. Also, Roku advertising clients “were up 40%”. Roku recognizes advertising through revenue deal-point shares it makes with app/publishers it carries on it service.
Roku says the “retention rate” among advertisers that spent $1 million or more in first half 2019 was at 92%. Roku also begin selling to direct-response advertisers under a “performance advertising” effort, which it said grew 346% year-over-year.
While near-term growth is strong, Jeffrey Wlodarczak, principal and entertainment/interactive subscription services analyst for Pivotal Research Group, sees increased competition from big media companies as a possible sign of trouble.
“We continue to see signs of all areas of the ecosystem beginning to squeeze Roku,” he writes.
This includes traditional media companies like Comcast’s NBCUniversal offering a “free” option to consumers of its Peacock service, getting 10 million subscribers, all without Roku distribution. In addition, new individual premium streaming platforms in the future will be looking to make more deals with traditional pay TV services -- as Netflix has done -- leaving out newer digital video distributors.
Wlodarczak also says companies like Google, with Google Chromecast, will become more aggressive in deals with TV set manufacturers, as “TV manufacturers generate little to no profit from their relationship with Roku and we expect them to inevitably push back.”
He also believes that new and/or growing distributors including Google, Amazon Fire TV and others will offer better advertising and other revenue-share deals with premium video streaming publishers.