Roku beats Q4 expectations, shares rise


Anthony Wood

David Orrell | CNBC

Roku reported earnings for its fourth quarter of 2019 Thursday that beat analyst estimates for quarterly revenue and included a lower loss per share than analysts expected.

Shares of Roku rose as much as 9% after hours on the report but later settled around 5%.

Here are the key numbers the company reported:

  • Loss per share: 13 cents reported, vs. 14 cents expected, according to Refinitiv consensus estimate
  • Revenue: $411 million reported, vs. $392 million expected, according to Refinitiv consensus estimate

Roku reported full year 2019 revenue of $1.13 billion, beating analyst estimates of $1.11 billion. The company said in its letter to shareholders that monetized video ad impressions more than doubled over the year and “all top 10 technology and telecom advertisers, as well as all top 10 consumer packaged goods companies, spent with Roku,” according to its shareholder letter.

Roku reported average revenue per user (ARPU) of $23.14 on a trailing 12-month basis, an increase of $5.19 or 29% year-over-year. It said streaming hours increased by 16.3 billion hours year-over-year to 40.3 billion.

The company provided 2020 revenue guidance of $1.6 billion, consisting of a third platform segment revenue. Analysts expected 2020 revenue to come in at $1.58 billion, according to a Refinitiv survey. Roku said in its shareholder letter that it hopes to become “roughly break-even on a full year adjusted EBITDA basis” in 2020. Roku anticipates about $905 million in GAAP operating expenses, with the increase mostly due to its headcount increase in 2019 as well as higher facilities costs at its new headquarters and operating expenses from its acquisition of Dataxu.

On a call with analysts, CFO Steve Louden said the company would not break out Dataxu metrics moving forward and it would be included in its platform segment.

For Q1, Roku expects the midpoint of its revenue range to be $305 million, noting the quarter historically tends to be quieter than others. Analysts anticipated Q1 revenue of $297.5 million, according to Refinitiv.

Roku skirted past a big potential headwind earlier this month after a dispute with Fox over carriage fees that led it to announce it would pull Fox’s apps from its service right before it presented the Super Bowl, which would have cut off Roku users from streaming the game on its apps for free. Roku users would still have been able to watch through other apps like Hulu + Live TV and YouTubeTV, but the companies ended up reaching an agreement in time for the game.

CEO Anthony Wood began the call with analysts Thursday saying he was happy to have streamed the Super Bowl in 4K on Fox’s app through Roku. Asked about the tiff with Fox later on the call, Wood said, “we have a long-term relationship with Fox” and said the deal was good for both companies.

Roku, which creates TVs and other devices to stream various services, is hoping to see a boon from the avalanche of new streaming services that have popped up or been announced within the last year, including services from Disney, AT&T and Comcast‘s NBCUniversal.

“We predict that by 2024 roughly half of all U.S. TV households will have cut the cord or never had traditional pay TV,” executives wrote in their letter to shareholders. “While 2019 was a tipping point in commitments to streaming, the full force of change is still to come.”

Roku has ridden the wave of excitement around those services, quadrupling in value in 2019 to become the best-performing tech stock of the year among U.S. companies with more than $5 billion in market value. Still analysts have raised concerns about Roku’s profitability and competition from other devices like Google’s Chromecast and Amazon Fire TV.

In its last earnings report, Roku said it expected its recent $150 million acquisition of ad tech company Dataxu to drive revenue throughout the fourth quarter. The company helps marketers buy video ad campaigns, which is important for Roku’s ad-driven business.

“I think it’s shaping up to be one of our best investments yet,” CEO Anthony Wood said on the call, discussing its recent integration.

Louden also addressed the impact of the novel coronavirus that has affected many companies that rely on manufacturing in China. He said that so far, Roku has “only experienced minor impacts” but warned of the possibility that more could be affected if the situation worsens.

Disclosure: NBCUniversal is the parent company of CNBC.

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