Roku Revenue Jumps 73% on Higher Player Sales, Ad Revenue Growth
Roku revenue soared 73% in Q3 to $452 million on demand for TV streaming products, growth in advertising and expansion of content distribution partnerships, said the company in a Thursday shareholder letter. Advertisers “reassessed their TV upfront advertising commitments and…
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
moved significant portions of their investments to connected TV platforms like Roku,” said CEO Anthony Wood on a Thursday investor call. Advertising with Roku gave marketers additional reach over linear TV and capability to target advertising and measure effectiveness, said Wood. Some 97% of TV advertisers that spent $1 million or more with Roku in Q3 last year returned in the 2020 quarter; the company closed 2021 upfront deals with the six major agency holding companies at increased levels of commitment. Unit sales of Roku players jumped 57% year on year, the highest growth in seven years, while average selling price slipped 1%, said Chief Financial Officer Steve Louden on the call. Pivotal Research Group analyst Jeffrey Wlodarczak said in a Friday investor note that the “significant revenue beat” was due to a “favorable backdrop” of cord cutting, COVID-19 stay-at-home orders, “relatively few competitors in" direct-to-consumer aggregation and an election-driven advertising rebound. Q3's 2.9 million net new active subscriber accounts topped PRG’s forecast of 2.7 million. Wlodarczak maintained his view that Roku will be squeezed by Comcast, Cox and other traditional distributors “attacking the [over-the-top] aggregation opportunity.” Wedbush analyst Michael Pachter called Roku’s growth “sustainable” because most advertising remains on linear TV and “will continue to shift in Roku’s direction” as content moves to OTT platforms. Roku users streamed 14.8 billion hours in the quarter, up 54% year over year; streaming hours per active account grew 9%, after easing of pandemic-related restrictions in summer, said the company. The number of active accounts rose 43% to 46 million on strong player and Roku TV sales in U.S. and international markets. Average revenue per user rose 20% to $27. Roku again didn't provide quarterly guidance due to global COVID-19 resurgences and uncertainties about the holiday season and consumer spending levels. Louden said Q4 year-over-year revenue growth will be in line with the last few holiday seasons, in the mid-40% range. The company expects platform receipts to be about two-thirds of total Q4 revenue. Shares closed 12.6% higher Friday at $253.36.