Roku Inc. shares rose in after-hours trading Thursday after the streaming company reported better-than-expected revenue and delivered an upbeat forecast about the year ahead.
The company posted revenue of $275.7 million for the December quarter, up from $188.3 million a year earlier and ahead of the $262.1 million FactSet consensus expectation. The company saw strong growth in its platform business, which brought in $151.4 million in revenue. Roku’s ROKU, -4.03% platform segment consists of advertising, licensing and other non-hardware revenue sources.
Roku reported net income of $6.8 million for the fourth quarter, or 5 cent a share. A year ago, it generated $6.9 million in net income and 6 cents in EPS.
Shares ran up as much as 6.2% in Thursday’s after-hours session before paring some gains.
Chief Financial Officer Steve Louden said that advertising is one of the biggest drivers of platform revenue, and Roku saw the number of monetized ad impressions on its platform double during 2018. Louden called the company’s ad-supported Roku Channel “a powerful financial model for us” as Roku continues to see engagement with the content hub, which curates free programming from across the company’s network. The next step is monetizing the Roku Channel beyond ads, through premium subscriptions to services like Starz, an option that the company is just beginning to offer its users.
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Roku has seen growth in its web-based viewing platform, according to Louden, and recently enhanced its mobile app so that users can watch their premium subscriptions when they’re away from their TVs. Louden said international growth “is definitely a focus area” that’s garnering more internal resources, even though it’s “more a story for 2020.”
Management’s revenue forecast for the current quarter came in roughly in line with expectations: The company expects revenue of $185 million to $190 million, whereas the FactSet consensus calls for $188.3 million. Roku anticipates that it will crack $1 billion in annual revenue for the first time this year, with management providing a forecast of $1 billion to $1.025 billion for 2019. Analysts were modeling $985.2 million for the full year.
The company projects that platform revenue will account for nearly two-thirds of overall revenue in the current year, up from 56% in 2018.
Roku’s stock has gained 28% over the past three months, as the S&P 500 SPX, -0.35% has risen 4.7%.
