Roku eyes further TV app tie-ups to build on Samsung deal as Q1 revenues top $136m

Platform revenue accounted for 55% of the TV streaming company's revenue during the quarter with advertising a strong driver / Roku

Roku posted revenues of $136.6m for the opening quarter of the year, representing a 47% increase year-over-year, with the company telling financial analysts it is seeking additional distribution tie-ups for its Roku Channel app.

The TV streaming service yesterday (May 9) made its third quarterly earnings call since listing as a public company with its average revenue per user (ARPU) standing at $15.07, generating viewing time of over 5.1 billion minutes during the period.

At the close of the quarter, Roku recorded 20.8m accounts, up 47% year-over-year, with the company raising its full-year revenue forecast, adding that it expects Q4 revenues to be worth 37% of its annual haul.

In its subsequent earnings call, company leadership proudly boasted that one-in-four smart TVs sold in the US during the quarter were Roku TVs, but the period was notable for the fact that its platform business exceeded “player revenue” for the first time, accounting for 55% of total revenue during the period.

Roku leadership also reported that the majority of its new viewership consumed its ad-supported offering as it continued to make further in-roads into traditional TV advertising budgets.

In a note to shareholders penned by Roku chief executive Anthony Wood and Steve Louden, chief financial officer, noted that platform revenue grew 106% year-over-year during the period with ad spend the largest driver of this increase.

“We believe there is a long runway for upside to ARPU from content distribution, audience development, and advertising growth, as consumers spend time streaming more ad-supported content, and as Roku gains access to a greater share of overall ad impressions,” reads the letter.

In March this year, Roku announced a tie-up with Samsung that would see the American company’s Roku Channel app embedded on the Korean vendor's smart TVs across the US with Wood noting on the company’s subsequent earnings call that it would seek to expand such partnerships.

He went on to cite statistics showing that the Roku Channel is now a top 15 channel on its network just eight months after its launch, adding that it was now “we’re looking strongly at other channels to expand our reach” following the announcement of the Samsung deal.

“The Roku Channel is now contributing strongly to our inventory mix, and because of its growth is proving to be a significant traffic driver and audience driver for content providers,” said Louden. “And it’s becoming a channel where content partners can monetize their OTT audience.”

Roku’s note to investors reads: “Building an OTT service is a major challenge for many content owners. It requires the ability to aggregate a very large audience, build critical mass of content, develop advanced software and user interfaces, to monetize – for example “with billing and advanced TV advertising – and manage churn and engagement.

“All of this requires sophisticated Roku Q1 2018 Shareholder Letter 4 software, big data, and machine learning, and navigating complex regulatory frameworks. We believe content owners will increasingly choose to distribute their content directly on Roku’s platform via The Roku Channel versus creating their own D2C service.”

Earlier this year, Roku announced it was to launch an advertising measurement suite dubbed Ad Insights which it claimed will help brands better target the ever evasive ‘cord cutter’ audience segment.

Search The Drum Jobs

Explore the best jobs in Marketing and Media industries
View all open jobs