Roku concluded on a high note, reporting its first full-year profit and exceeding Wall Street expectations for the fourth quarter. The streaming platform company is now focused on expanding its subscription offerings and bundling strategies to navigate a competitive landscape marked by rising prices for consumers.
Financial Performance and Key Metrics
For , Roku posted revenue of $1.395 billion, a 16% increase year-over-year. Net income reached $80.5 million, a significant turnaround from the $35.5 million loss reported in the same period last year. This translates to earnings per diluted share of $0.53. Platform revenue, encompassing advertising and revenue-sharing from subscription video partners, climbed 18% to $1.224 billion, with a gross margin of 52.8%. Full-year revenue totaled $4.737 billion.
Roku also highlighted impressive user engagement, with viewers streaming a collective 145.6 billion hours of video throughout , a 15% increase from . The company is approaching 100 million streaming households, though it has indicated it will report this metric less frequently going forward.
Strategic Shift: Bundles and Subscriptions
A key element of Roku’s strategy for and beyond is the introduction of streaming bundles. This move is designed to appeal to increasingly cost-conscious consumers facing subscription fatigue and price increases from individual streaming services. The company believes bundling offers an attractive value proposition in the current market.
Roku is also actively expanding its premium subscription partnerships, building on the success of adding HBO Max. This strategy aims to drive growth by attracting more subscribers to top-tier streaming services through the Roku platform. The company reported its biggest-ever quarter for premium subscription net additions, fueled by holiday promotions and improvements to the Roku user experience.
Howdy: Expanding Beyond the Roku Platform
Roku’s ad-free subscription service, Howdy, launched in , is also poised for expansion. Initially available exclusively on Roku devices, the company intends to distribute Howdy more widely. According to Roku CEO Anthony Wood, the goal is to make Howdy available “everywhere.” While specific details regarding platform availability remain undisclosed, this expansion represents a significant step in Roku’s efforts to diversify its revenue streams and offer a compelling alternative to ad-supported streaming.
Financial Outlook and Operational Efficiency
Looking ahead, Roku projects total net revenue of $5.5 billion and gross profit of $2.4 billion for . The company anticipates 18% platform revenue growth for the full year and over 21% growth in . Adjusted EBITDA is expected to reach $635 million, representing over 50% year-over-year growth and margin expansion to 11.6%.
Roku’s financial turnaround is attributed, in part, to a focus on cost optimization. CEO Anthony Wood emphasized that the company prioritized “rightsizing our cost structure and reach[ing] adjusted EBITDA breakeven in ,” a goal achieved a year ahead of schedule. The company also repurchased $150 million of stock during , maintaining near zero dilution in the fourth quarter.
Manufacturing and Distribution
Roku is also making strategic adjustments to its manufacturing and distribution processes. The company is shifting first-party TV production to Mexico, aiming to reduce costs and boost sales. Roku has secured expanded distribution agreements with major TV manufacturers TCL and Hisense, strengthening its position in the Roku TV market.
“Looking ahead to and beyond, we are confident in our ability to sustain double-digit platform revenue growth while continuing to grow profitability,” Wood told investors during the earnings call. This outlook suggests Roku is well-positioned to capitalize on the evolving dynamics of the streaming landscape.
