Wow…disregarding the Google scuffle for a moment, the more I dig into the call and earnings release, the more I see ROKU absolutely knocked the cover off the ball this quarter…
Revenue Growth: 79% Y/Y quarterly (101% platform revenue growth! and up significantly increased from the prior 10 quarters…they have been trending in the 40-50% growth range, but skipped the 60% range altogether and went straight to 79% this quarter!? That is incredible growth at scale!
ARPU: $32.14 up 32% Y/Y
Gross Margins: 67%
Customer Growth: Grew 2.4 million new accounts to 53.4m total active accounts
Increased their quarterly and annual guidance
Very positive, upbeat earnings call.
And to have this type of growth with a $2.3B+ annual run rate in revenue is even more inpressive?? YOWZA!! What am missing here? Feeling like I ought to increase my recently acquired 5% position here?! Would feel a lot better about it if they would kiss and make up with Google first, though!
They certainly don’t deserve to be down 5% yesterday, and more since the announcement, but neither do many of our portfolio companies. ROKU is clearly RE-accelerating, has set itself up to continue that acceleration at least a couple quarters, and I am very excited to see them doing it at scale. Cheers!
I have been invested in $ROKU for a long time and I’ve been following it closely.
The biggest risk I hear people mention is their competition, namely Amazon Fire TV, Google Chromecast/YouTube TV, and Apple TV.
You got three of the heaviest heavyweights in the space and people fear this.
To me, it reminds me of $SHOP when Amazon web stores were their competition; but instead times 3!
$ROKU is clearly dominating the market at the moment and has the highest market share in the USA. They are also investing heavily in multiple areas from The Roku Channel, to the CTV AD market/platform, to the original content, and novel ways to advertise for both large brands and local markets.
The big catalyst (for me) will come when a few of these heavyweights bow out of the market. They aren’t focused like ROKU is and this is a small side business for all of them. The fast ROKU pulls away, the less they will want to throw good money after bad.
Another thing I’m watching is the International expansion.
They have expanded to Canada, Mexico, the UK and Brazil. They are currently #1 in Canada, they are #2 in Mexico after Samsung (People buy a lot of Samsung TV and they come with a terrible onboard OS).
International markets can’t afford subscription services as Americans can so this is where The Roku Channel has a massive advantage… it’s free and makes money from ADs so the end-user gets something for nothing. $ROKU currently has ~54M Active accounts and I see no reason why they can’t get this up to 200-300M active accounts globally, and that is probably being conservative. Then, it’s just a matter of driving ARPU.
I certainly agree. I thought this was a tremendous quarter. Out of all the companies I own which have reported in the last week - ROKU, NET, DDOG, PTON, SQ, MELI & TTD - I thought ROKU’s was by far the most impressive. I was happy to add to my position slightly this morning below $300. I wanted to expand on the fourth item you listed - Gross Margins of 67%.
This quarter we really got the see the efficiencies unfold as Roku begins to scale. The reason margins were so much higher is because the story is starting to become clear to anyone paying attention - this business is all about the platform. Platform as a % of revenue was a record high this quarter at 81%. This is a trend that will continue to play out.
I was beginning to get frustrated with this business last year due to its lack of improving their bottom line but the tide is clearly beginning to turn. Add this with what you wrote above, “ROKU is clearly RE-accelerating” and I think we have a lot to look forward to.
I have been in ROKU since day one, 500 shares at 16.75 sold 200, the remaining 300 shares (in Roth) are free. I have always thought that Apple or Amazon would buy them. Amazon Prime is not a very good product even though it is free with Prime. Apple TV never really caught on as much as I would have expected. Each would have anti trust issues, so maybe Mr. Softie, MSFT will step up to the plate.