February 13, 2020
It was a banner fiscal 2019 for Roku, co-creator (with Netflix) of the subscription streaming video market. The company continues to make strides in ad-supported VOD through The Roku Channel, which ended 2019 with more than 56 million active viewers.
In the Feb. 13 shareholder letter, founder/CEO Anthony Wood and CFO Steve Louden attributed the viewer growth to expansion of the “quality and scope” of the ad-supported content, launching new subscription channels and increased investment in product and capabilities.
“We have added more than 40 premium subscription channels, launched the ‘kids & family experience,’ and now offer more than 55 live linear channels,” Wood and Louden wrote. “We also continued to expand access to studio and network movie and TV content.”
For the full fiscal year (ended Dec. 31, 2019), Roku exceeded $1.1 billion in revenue and reinforced its position as America’s No. 1 TV streaming platform by hours streamed. The company added a record 4.6 million incremental active accounts in Q4 and ended 2019 with 36.9 million active accounts. Thanks in part to strong holiday sales (and average discount pricing of 10%), player units were up 33% year-over-year.
Platform revenue increased 78% to $740.8 million. Roku added 9.8 million incremental active accounts in 2019 to reach 36.9 million at year-end. Streaming hours increased by 16.3 billion hours to a record 40.3 billion. Average revenue per user (ARPU) increased $5.19 to $23.14 (trailing 12-month basis).
Roku monetized video ad impressions more than doubled again in 2019, and nearly one in three smart TVs sold in the U.S. were Roku TVs.
“In the midst of this ongoing shift in the industry, we continue to execute well against our strategic plans by launching innovative products, being a neutral partner at the center of the streaming ecosystem, building capabilities to aggregate content and engage viewers, and further strengthening our unique advertising platform which offers superior capabilities for brands,” Wood and Louden wrote.
The executives said user engagement with the Roku platform grew as users streamed 11.7 billion hours in the quarter, an increase of 60% year-over-year. This contributed to a record 40.3 billion streaming hours during 2019, a 68% year-over-year increase.
The year-over-year growth rate in streaming hours moderated somewhat in Q4 2019 versus Q4 2018 due in part to the timing of Black Friday falling a week later in 2019 and the partial rollout of the “Are you still watching” feature, which prompts users to confirm they are watching after a period of inactivity.
Finally, platform monetization continued to increase with ARPU up to $23.14 (on a trailing twelve months basis), up 29% year-over-year, as we continued to grow video advertising impressions across the platform, including on The Roku Channel. For Q4 and full year 2019, Roku monetized video advertising impressions more than doubled year-over-year.
Regardless, with growth come additional costs. Roku generated a $17.4 million loss in Q4, compared to net income of $5.5 million during the previous-year period. The loss it expected to increase to $55 million to $60 million in the current fiscal period (ending March 31).