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Roku Is More than Just a Hardware Company Now

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Roku beat estimates as revenue surged

Streaming device maker Roku (ROKU) reported very interesting earnings on May 9. Not only did the company beat earnings and revenue estimates, it also generated more revenue from advertising and licensing than its core hardware business.

Roku generated revenue of $136.6 million in 1Q18, a 36.6% rise over the same quarter last year, beating analysts’ consensus expectation of $128.0 million. Roku generated $75.1 million from its ads and licensing business, a rise of 106.0% compared to the same quarter last year.

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Roku generated more revenue from its ads and licensing business

Roku is in a transitional period as it’s focusing on ads and the licensing of its platform to hardware makers. Tie-ups with TV manufacturers have allowed Roku to gain an advantage over competitors such as Amazon, as consumers don’t have to buy an additional device for streaming. However, Roku stock took a hit last month as Amazon (AMZN) announced a partnership with Best Buy (BBY) to sell Insignia televisions, which are powered by Fire TV.

The company posted a net loss of $6.9 million in 1Q18 compared to its net loss of $7.8 million in the previous year’s quarter. On an adjusted basis, the company posted EPS (earnings per share) of -$0.07 compared to -$1.79 in 1Q17, while analysts were expecting adjusted EPS of -$0.15 in 1Q18.

The company’s stock has risen 50.9% since going public in September 2017, but it’s fallen 36.5% since hitting its high in December.

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