×
You will be redirected back to your article in seconds

Roku Earnings Beat Expectations as Ads, Services Surpass Hardware Revenue

Meet the new Roku: The company best known for its streaming devices made more money with ads and licensing fees than with hardware sales for the first time in its corporate history this past quarter. Roku generated $61.5 million with the sale of streaming pucks and sticks during the first quarter of this year, and $75.1 million with advertising and licensing fees.

“That shows clearly that our business model is working,” said Roku CEO Anthony Wood in an interview with Variety Wednesday. The company has long had the strategy to use its hardware as a way to grow its audience, and monetize that audience through advertising. “Our scale is growing,” Wood said.

Roku generated a total revenue of $136.6 million during the first quarter, compared to $100.1 million during the same quarter last year. The company had net losses of $6.9 million, compared to $7.8 million a year ago. This translates to adjusted losses of $0.07 per share, compared to $1.79 a year ago.

Analysts had expected revenue of $128 million for the quarter, and losses of $0.15 per share. Roku’s stock price was up around 5 percent in after-hours trading.

The company ended the quarter with 20.8 million active accounts, with consumers streaming a collective 5.1 billion hours of audio and video via Roku’s platform in Q1. That’s up from 14.2 million active accounts, and 3.3 million streaming hours a year ago.

Half of Roku’s new users came from Roku smart TVs built by companies like TCL, with Wood telling Variety that 1 in 4 TVs sold in the U.S. during the quarter were Roku TVs.

The company also revealed in its letter to investors that almost half of Roku’s active users have cut the cord, or never had a pay TV subscription to begin with. It went on to argue that media companies would increasingly target those consumers by licensing their content to players like Roku instead of trying to build out their own streaming services.

“It’s hard to build a direct-to-consumer service,” said Wood. “A typical media company really doesn’t have those skills.”

Roku’s stock price came under pressure last month after Amazon announced a partnership with Best Buy to sell Insignia TVs powered by Amazon’s Fire TV operating system. Insignia, Best Buy’s house brand, had previously made a number of TVs powered by Roku’s software.

But on Wednesday, Wood seemed confident that the partnership between Best Buy and Amazon wouldn’t have too much of an impact on Roku, arguing that consumers would still be able to buy Roku TVs from a number of other manufacturers at Best Buy. “We are confident that (..)  the number of models of Roku TVs at Best Buy will go up this year,” he said.

More Digital

  • Vaccination

    YouTube Yanks Ads From Anti-Vaccination Conspiracy Channels

    YouTube, under fire for facilitating the spread of conspiracy theories and other misinformation, said it will no longer serve ads on channels that espouse anti-vaccination rhetoric. The Google-owned video giant cited its advertising policy that bans “dangerous and harmful” content from eligibility in its monetization program. “We have strict policies that govern what videos we [...]

  • Evan Williams, Twitter founder (R) and

    Twitter Co-Founder Evan Williams Steps Down From Company’s Board

    Twitter co-founder Evan “Ev” Williams is stepping down from the company’s board, Twitter announced in a SEC filing Friday afternoon. Williams will depart from the board at the end of this month, according to the filing. “It’s been an incredible 13 years, and I’m proud of what Twitter has accomplished during my time with the [...]

  • Facebook Logo

    Facebook Shuts Down Controversial Ovano VPN App

    Responding to a continued backlash over its data collection practices, Facebook pulled the plug on its Ovano VPN app Friday. Ovano, which promised users an added level of privacy while using public Wifi hotspots, was used by Facebook for market research purposes. Facebook removed the app from the Google Play store Friday, and the company [...]

  • Smosh

    Smosh Acquired by Rhett & Link's Mythical Entertainment

    UPDATED: Smosh, the long-running YouTube comedy brand, has been acquired by Mythical Entertainment, the company formed by Rhett & Link, hosts of comedy show “Good Mythical Morning.” As first reported by Variety last week, Mythical emerged as the leading candidate to buy Smosh, which was left stranded after parent company Defy Media shut down without [...]

  • China Video Streaming Giant iQIYI Loses

    Chinese Video Giant iQIYI Loses $1.3 Billion in 2018

    Chinese video streaming firm iQIYI lost over $1.3 billion in 2018, as revenues and subscriber numbers ballooned. The deepening losses reflected ever higher spending on original content production. Announcing its first full-year financials since a March IPO that launched it onto the NASDAQ, iQIYI said that it lost $1.3 billion (RMB9.1 billion) last compared with [...]

  • Roku headquarters

    Roku Aims to Top $1 Billion in Revenue in 2019, Beats Holiday Quarter Earnings Expectations

    Roku wants to become a billion-dollar company in 2019, and invest more in its ongoing international expansion. The streaming-device maker told investors on Thursday that it expects to generate between $1 billion and $1.025 billion this year, and that international growth was one of its key investment areas for 2019. Roku made these announcements as [...]

More From Our Brands

Access exclusive content