Friday's Market Minute: Roku's Staggering 4Q Growth

Roku Inc. ROKU beat Wall Street’s revenue targets and posted a smaller-than-expected loss Thursday after the bell. Altogether, Roku beat on total active account expectations, quarterly revenue guidance, full-year revenue guidance, and full-year EPS guidance. The streaming video company’s shares spiked higher following the upbeat report.

For the current quarter, Roku expects to lose $57.5 million on sales of $305 million, based on the midpoint of its guidance. The company did not give a target for earnings per share in first quarter of 2020. Wall Street analysts had predicted Roku would lose 16 cents per share on sales of $297 million in the first quarter. In the same quarter of last year, Roku lost 9 cents a share on sales of $206.7 million. Roku has shifted their focus away from generating a hefty profit and is now investing in international expansion and its advertising-based business model.

But the growth story continues for the streaming platform. Roku shares were up nearly 300 percent in 2019. In the latest quarter, the company reported revenue growth of roughly 52%, platform growth of 78%, streaming hours up 68%, active accounts up 36%, ARPU up 29%, and gross profit growth of about 49%. Not to mention the brightest spot of their fourth quarter earnings, which was the company’s 4.6 million new accounts.

Roku finished the fourth quarter with 36.9 million active accounts, up roughly 5 million from the third quarter. Those users watched about 12 billion hours worth of streaming video in the fourth quarter, up 60% year over year. The company said in a letter to its shareholders, “Given the size of the opportunity, we believe that investing incremental gross profit in 2020 to extend our strategic advantages best positions us for the decade ahead.”

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