Roku Q4 Ad Revenue Soars, But Company Says Buyers' Linear Habit Remains Obstacle

Roku reported another exceptional quarter as it ended 2020, including an 81% leap in platform revenue, to $471.2 million.  

For the full year, platform revenue — which is largely driven by ad sales for the Roku Channel — rose 71%, to $1.27 billion.

Roku reported that the channel grew nearly twice as fast as the overall Roku platform during Q4, and now reaches 63 million viewers in the U.S., Canada and U.K.

“Despite a pandemic-related advertising slowdown in the U.S., our advertising business proved resilient with Q4 Roku monetized video advertising impressions more than doubling year-over-year, as advertisers increasingly followed users from traditional pay TV to streaming,” the company said in a statement. “2020 also saw prominent content publishers reorient toward TV streaming, further expanding the content selection for our users.”

However, Roku founder/CEO Anthony Wood told investors during the year-end earnings call that the channel’s primary impediment to growth, at this point, “is the behavior of TV [advertising] buyers.”

Advertisers invested $65 billion in linear TV advertising last year, even as its viewership dipped by another 21%, Roku pointed out — adding that half of 18-to-34-year olds’ TV viewing is now via streaming, while the median age of viewers for the top three broadcast networks is over 60.

Roku is reportedly staffing up to begin producing its own original content for the fast-growing streaming channel, although there was no mention of this during the earnings report.  Executives did report that Roku will make the Quibi content library that it acquired last year accessible sometime during 2021.

The company’s device/technology segment, including players, streaming sticks and smart speakers, also thrived in Q4, with sales up 18% year-over-year, to $178.7 million.

Roku added 14.3 million active accounts during 2020, for a total of 51.2 million — more than double the roughly 20 million now claimed by Comcast, the largest pay-TV operator, Roku pointed out.

Average revenue per user (ARPU) increased $5.62 year-over-year, to $28.76, on a trailing 12-month basis.

It also reported that 38% of all smart TV units sold in the U.S. are now powered by its operating system.

In total, Roku reported 58% jumps in revenue for both Q4 and the full year, to $649.9 million and $1.78 billion, respectively, exceeding guidance. Full-year gross profit of $808 million was up 63%.

Its Q4 EPS of $0.49 beat consensus estimates by $0.54.

“For both periods, we achieved record revenue, gross profit and adjusted EBITDA, as consumers and the TV industry continued to shift to streaming,” Roku stated.

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