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Shareholder Letter: Roku Ended 2018 With 27M Active Accounts, Eyes $1B in 2019 Revenues

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2/21/2019
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LOS GATOS, CALIF. -- Fellow Shareholders,

2018 was an excellent year for Roku, with record results and solid progress towards our long-term vision of powering every TV in the world. As more than 3 million U.S. households cut the cord, Roku added nearly 8 million active accounts in 2018, increasing our total active accounts to more than 27 million at year end. We estimate that nearly 1 in 5 U.S. TV households now use the Roku platform to stream at least a portion of their TV viewing.

While our growth has been impressive, we believe we are still only beginning to capitalize on the large opportunity streaming presents. We expect to reach $1 billion in revenue in 2019, by focusing on these key areas: increasing monetization per user and scaling the number of households using the Roku platform. With our fundamental strategic advantages and continued strong execution, we believe we are well positioned to deliver another excellent year. A few 2018 highlights for the full year:

  • Total net revenue grew 45% YoY to $742.5 million; • Platform revenue increased 85% YoY to $416.9 million;

  • Gross profit was up 66% YoY to $332.1 million;

  • Roku added 7.8 million incremental active accounts in 2018 to reach 27.1 million at year end; • Streaming hours increased by 9.2 billion hours to 24.0 billion;

  • Average Revenue Per User (ARPU) increased $4.17 to $17.95 (trailing 12-month basis);

  • Roku monetized video ad impressions more than doubled in 2018; • More than one in four smart TVs sold in the U.S. were Roku TVs.

    Q4 highlights
    Q4 results exceeded our outlook for revenue, gross profit and adjusted EBITDA driven by strong operational execution and robust active account growth. We added 3.3 million incremental active accounts in the fourth quarter and ended 2018 with 27.1 million active accounts, thanks to great retail execution and strong holiday sales for both players and TVs.

    Player units were up 30% year-over-year with the highest growth coming from the sub-$50 category which drove an 8% decrease in average sales price (ASP). Our U.S. smart TV market share also continued to grow as “home grown” TV operating systems continue to become increasingly uncompetitive. We ended the year with Roku TV holding a significant lead among licensed TV OS solutions in the U.S.

    Engagement on our platform continued to grow as Roku users streamed 7.3 billion hours in the quarter, up 69% year-over-year. In just the last 18 months Roku users streamed more than they did in the prior nine years of the company’s history. Finally, platform monetization was particularly strong as we continued to grow video advertising impressions across the platform, including on The Roku Channel. For the full year of 2018, Roku monetized video advertising impressions across the platform more than doubled year-over-year.

    Read Roku's Q4 2018 letter to shareholders here.

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