Roku wants to become a billion-dollar company in 2019. The streaming device maker told investors Thursday that it projects to generate between $1 billion and $1.025 billion this year.
Roku made this announcement as part of its Q4 earnings release, which showed that it exceeded the market’s expectations for the holiday quarter. The company reported revenue of $275.7 million for Q4, compared to $188.3 million during the same quarter in 2017. Earnings came in at $5.5 million, compared to $9.5 million in Q4 of 2017. This translates to earnings of $0.06 per share.
Analysts had expected revenue of $262.11 million, and $0.03 earnings per share. Investors sent Roku’s share price up around 5% in after-hours trading, following a 4% decline earlier during the day.
“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,” said CEO Anthony Wood in the company’s letter to investors. “We believe we are well positioned to deliver another excellent year.”
Roku added close to 8 million active accounts in 2018, and now has devices in over 27 million households. “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,” Wood said in the investor letter.
A closer look at Roku’s numbers showed that the company grew both its hardware as well as its ads and services business in Q4. On the hardware side, Roku brought in $124.3 million in revenue, compared to 102.8 million a year ago.
21% growth for this segment will please investors, who in the past have been concerned with slowing hardware revenues as usage shifts from dedicate streaming devices to smart TVs. The company’s hardware gross profit fell by 77%, suggesting a move towards cheaper hardware as the company emphasizes account growth.
Even more important for the company’s bottom line is what Roku calls its platform revenue — advertising and licensing fees, with ads making up the majority of that revenue stream. Platform revenue grew 77% year-over-year, totaling $151.4 million in Q4. Roku managed to more than double its monetized ad impressions in 2018, the company said Thursday.
Roku told investors Thursday that one area of focus for 2019 would be international expansion: “While we continue to see a lot of headroom to grow active accounts in the U.S., we are increasing our investment internationally,” Wood said in Roku’s letter to investors.
However, he also cautioned that international investments likely wouldn’t be a major driver of account growth this year. Roku currently sells its hardware in North America, France, the U.K. and a number of Latin American countries, but has traditionally seen more traction from striking deals with overseas operators.
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