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Here’s What Drove Roku’s Revenue in the First Quarter

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Platform revenue increases 79% for Roku

Roku (ROKU) stock rose over 28% yesterday, which meant that the stock gained over $2 billion in market capitalization overnight. Roku is now valued at $9.44 billion, which is almost 9x its 2019 sales.

Roku is a streaming platform for television. Its business segments consist of the Platform and Player verticals. Roku’s Platform segment consists of fees from advertisers and content publishers, and from licensing its technology and proprietary operating system. Player segment sales consist of revenue from streaming media players and accessories through retailers and distributors.

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Roku’s Platform revenue rose 79% YoY to $134.2 million in the first quarter and accounted for 65% of total sales. Roku confirmed that it is now the US’s best-selling smart TV platform and accounts for 33% of smart TV sales in the country.

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Strong platform engagement

Roku’s platform engagement continues to gain strength driven by the cord cutting phenomenon and the shift to streaming. The average household consumes 3.5 hours of online content per day per active account. Roku’s active accounts have risen by 40% YoY from 20.8 million to 29.1 million. In comparison, streaming hours have risen 74% from 5.1 billion to 8.9 billion.

User engagement has also driven up average revenue per user (or APRU) by 27%. Roku’s user engagement has risen from $15.07 in the first quarter of 2018 to $19.06 in Q1 2019.

Roku attributed Platform revenue growth to strong demand from the SVOD (subscription video on demand) and TVOD (transactional video on demand) verticals. The company also experienced robust sales from video advertising in the first quarter.

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