Shares of Roku Inc. (ROKU) rocketed 26%, or $16.84 on the day after crushing earnings.
The company posted first quarter 2019 revenue of $207 million, which was far better than estimates of $190 million. Better, it saw losses of $0.09, which far exceeded expectations for a loss of 26 cents a share. Active user accounts were up 40% year over year, as total streaming hours exploded 74% to 8.9 million hours in the quarter.
According to the company’s earnings release:
- Total net revenue grew 51% YoY to $206.7 million;
- Platform revenue increased 79% YoY to $134.2 million;
- Gross profit rose 60% YoY to $100.9 million;
- Active accounts were up 2.0 million incrementally vs. Q4 2018 to 29.1 million;
- Roku monetized video ad impressions again more than doubled YoY in the quarter
Even better, as the shift to streaming television increases, the company could benefit even more.
“As leading content companies continue to shift their focus to streaming, Roku’s purpose-built TV streaming OS is uniquely positioned to help them build, engage, retain and monetize OTT audiences. Our large and rapidly growing audience, rich proprietary data and powerful OS allow us to deliver more effective, targeted and measurable viewing and advertising along with unduplicated incremental reach.”
Roku Future Looks Even Brighter
For full-year 2019, the company is confident it can achieve revenue of $1 billion.The company also raised its full-year 2019 gross profit outlook to $470 million from $453 million. Its second quarter outlook calls for 42% year over year revenue growth to $223 million at midpoint, and an adjusted EBITDA loss of about $7.5 million.
Analysts are just as bullish.
RBC analysts, for example, raised their price target from $70 to $90 a share.
“Long term, we view ROKU as one of the best plays on ad-supported OTT. Roku is attacking a very large $70B TV Ad spend opportunity and as this spend migrates to over-the-top, we believe Roku can sustain robust growth in both Active Accounts and Total Hours Streamed, while improving monetization to drive material ARPU and, of course, Revenue growth. Near-term, 2019 and 2020 should be the years of new OTT launches (Disney, Apple, AT&T, etc…), and ROKU should be very well positioned against these launches. Both Disney and Apple have called out ROKU as a launch partner.”