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Roku Says It Surpassed Samsung in U.S. Smart TV Sales, Shares Up on Better-Than-Expected Q1 Results

Roku executives told investors on Wednesday that the company was now leading the U.S. smart TV market.

“We have taken the lead from Samsung and are now the number one smart TV OS in the country,” Roku CEO Anthony Wood said during the company’s Q1 earnings call. TVs from TCL and other consumer electronics manufacturers that are powered by Roku’s operating system accounted for one in three smart TVs sold in the U.S. during the first quarter, the company estimated.

Roku announced this milestone as it released better-than-expected earnings results with a year-over-year revenue growth of 51%, which resulted in share prices shooting up more than 8% in after-hours trading.

Roku generated revenue of $206.7 million during the first three months of the year, compared to $136.6 million during the same quarter a year ago. The company’s net loss for the quarter was $10.7 million, compared to $6.9 million in Q1 of 2018. This translates to a net loss of $0.09 per share. Analysts had expected revenue of $189 million for the quarter, and a net loss of $0.24 per share.

“Roku had an outstanding first quarter,” the company said in its letter to shareholders. “The strength of our brand, the scale of our active account base, the advantages of our purpose-built streaming OS and the engagement of our users make Roku an increasingly important partner for content publishers, advertisers and TV manufacturers. The shift to streaming and away from linear TV and legacy distribution platforms has enormous momentum.”

The company’s hardware revenue grew from $61.5 million in Q1 of 2018 to $72.5 million. At the same time, advertising and services revenue increased from $75.1 million in Q1 of 2018 to $134 million this past quarter — a testament to the strength of Roku’s advertising business. Roku ended the quarter with 29.1 million active accounts, who collectively streamed 8.9 billion hours of audio and video.

Roku executives told investors during Wednesday’s call that they have seen some momentum for virtual pay TV operators, a notion that chief financial officer Steve Louden reiterated during an interview with Variety. “The virtual MVPD market has been doing well on the platform,” he said.

“Overall, the category is a great one for us,” Louden said. “It helps to hasten cord cutting.”

Virtual pay TV operators like DirecTV Now have been under pressure to raise prices in recent months, which has led to some customer defections. Louden acknowledged that the current skinny TV bundles may not necessarily represent the end stage of paid TV distribution online, which could include further unbundling. “We are big believers in the fragmentation of the traditional cable bundle,” he said.

As a response to its Q1 results, Roku raised its full-year 2019 guidance on  Wednesday. The company continues to expect that it will surpass $1 billion in revenue this year, and now forecasts 40% year-over-year growth, up from 36%.

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