Roku Posts Better Than Expected Q4 Earnings as Company Stock Rises in Pre-Market Trading

By Thomas Price Friday, February 19, 2021

Digital media and streaming company Roku released its Q4 earnings report and surprised most analysts posting strong numbers and a profit despite most expectations for the business. The company saw strong growth in advertising and impressions, fueling a rise in new business and users. Furthermore, the company has seen a strong boost in pre-market trading of its stock as a result, pushing further growth as streaming apps have gained significant popularity over the course of 2020.

A close-up of a Roku box.

Roku’s Q4 Earnings Report Against Analyst Expectations

In Roku’s Q4 earnings report, the company shocked many analysts by posting an impressive $649.9 million in revenue. This figure comfortably beat out expert projections as most had predicted the company to only bring in $619 million. The major source of business growth for the company came from its ability to monetize video-advertising impressions, as advertising and platform-related revenues alone grew to $471.2 million. Another major point of success for the company came from its increase in active users, adding 5.2 million to reach an impressive 51.2 million active users.

What caused a significant jump for the company’s business was the ability to monetize those users. At the beginning of 2020, Roku was generating an average revenue per user of $5.62. This number has skyrocketed in the months since, reaching an incredible $28.76 per user. So, the business has increased not only users, but its ability to earn revenue off of these users, pushing the company into larger profit margins. In fact, gross profit is up 68% year-over-year (YOY) in 2020, as the company pulled in a collective $808 million worth it. $305.5 million of gross profit was earned in Q4 alone.

The jump in user base and the ability to earn money from those users created a shockingly strong Q4 for Roku and piqued the interest of many investors in pre-market trading.

Roku’s Future Outlooks and Stock Boost

In pre-market trading, Roku shares are up by just about 2% as the business has risen past over $460 per share. Despite the strong numbers, the business remained cautious when providing guidance for Q1, reiterating that the quarter is usually the softest for revenue and that it would be tough to fully replicate the success from 2020 due to the extreme pandemic circumstances, which led to several points in the rise. However, optimism still remains as business looks to remain steady, at the very least, moving into 2021.

In a statement jointly released with the Q4 report, Founder and CEO, Anthony Wood, and CFO, Steve Louden said, “2020 was a pivotal year to start the streaming decade as pandemic related disruptions served as a catalyst in the fundamental shift to TV streaming and demonstrated the power of our strategy, technology, and execution. Our strategy and execution are working well, and we are seeing the results in our financial performance, our continued position as America’s No. 1 TV streaming platform by streaming hours, and our early international successes.”

About the Author

Headshot of Thomas Price

Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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