Roku saw its customer base grow to 80 million monthly active users during 2023, helping to push the company’s total net revenue beyond $3.5 billion, executives revealed on Thursday.
The net revenue figure cited in Roku’s fourth quarter (Q4) and full-year earnings report for 2023 represented an 11 percent increase compared to the $3.1 billion the company disclosed at the end of 2022.
Platform revenue from Roku devices soared to $3.0 billion during the year, or 10 percent higher when compared to 2022. Gross profit increased 6 percent to $1.5 billion.
Roku’s average revenue per user (ARPU), a key metric weighed by Wall Street investors, dropped 4 percent on a year-over-year basis to $39.92, erasing all gains made during the previous quarter when Roku saw its ARPU increase to just over $41.
Like other streaming hardware companies, Roku has increasingly focused on building out its connected TV platform and associated advertising business amid lower sales of its sticks, dongles and TV sets. Roku has also started to ship more of its devices overseas, entering markets like Mexico, Germany, the United Kingdom and Central America over the past few years.
Executives say those plans will accelerate over time, with Roku launching a new super-high definition (SHD/8K) television set manufactured by Philips in Mexico. Roku has also inked manufacturing partnerships with companies like Philips, Sharp and RCA, which will license Roku’s operating system for their own line of smart TV sets.
“As we celebrate 10 years of our successful Roku TV program, we now have more than 30 TV partners globally, with a wide range of models in a variety of sizes,” Roku executives said on Thursday.
Of course $ROKU beats and guides ahead for Q1 and the stock is down 15%…
But sure… it wasn't a "blowout"…
4Q23
Revs $984M vs my $982M street $967
EBITDA $48M vs my $51M street $18M
Net Adds 4.2M vs my 3.7M street 3.0M1Q24
Revs $850M vs my $858M street $829— Andrew Freedman, CFA ???? (@HedgeyeComm) February 15, 2024
Last year, Roku announced it would start building and shipping its own line of smart TV sets as part of a broader strategy to understand the marriage between television hardware and software. The plan raised eyebrows by some industry experts and investors, who wondered why Roku would compete against manufacturers who are willing to license its operating system.
Executives affirmed Roku’s decision to build its own TV sets would ultimately help its third party manufacturing partners in the future, by allowing the company to impart best practices and other strategies that would benefit its licensees as much as the company itself.
Roku first line-up of Roku-branded TVs were marketed to budget-conscious consumers. Last month, Roku said it would develop and launch a premium line of smart TVs under the Roku Pro Series brand, which would incorporate advanced features like AI-powered picture enhancements and superior sound quality for consumers who were willing to pay a little bit more.
Executives this week didn’t reveal how many of its Roku-branded TV sets have shipped, though they’re widely available at retailers like Best Buy and Amazon. But high LCD panel prices affecting Roku’s own TVs and those sold by other manufacturers resulted in lower discounts during the key retail holiday shopping season, which saw fewer Roku-powered TVs ship to customers compared to the 2022 holiday shopping season.
Still, officials affirmed Roku was the number one smart TV platform in the United States in 2023, a title the company has held for five straight years. Consumers with Roku devices and TV sets are streaming more content than ever, with over 106 billion hours of TV shows, movies and live programming watched on Roku devices in 2023, an increase of 18.6 billion hours compared to the prior year.
That number is likely to be very attractive to prospective advertisers, who are increasingly shifting their marketing budgets away from traditional television in favor of addressable and biddable inventory offered through connected TV platforms.
Roku generates cash from advertisements sold within its free, ad-supported streaming service called the Roku Channel, as well as inventory on the home screen of its devices. Roku also earns commissions from the sales of certain streaming subscriptions sold through the Roku Channel and within apps that incorporate Roku’s native payment processing feature, Roku Pay.
On Thursday, Roku executives said they feel confident that its advertising and subscription-based businesses will continue to grow as consumers seek out more low-cost and free television content in order to offset rising prices at some premium streaming services.
“As subscription prices increase, we believe consumers will seek savings via ad-supported subscriptions that have been launched by the major streaming services in the U.S.,” Roku officials said. “We believe these launches, along with growing consumer adoption, will be a catalyst within the industry for the shift of ad dollars from traditional TV to streaming. Roku is well-positioned to benefit from this shift due to our significant scale of 80 million active accounts and the tools to help streaming service partners not only attract subscribers but also grow engagement, which is critical in an ad-supported environment.”
