Why It Happened
Roku’s first quarter earnings report was an absolute killer.
Usage was strong. Roku added 2.4 million accounts in the quarter, grew the number of accounts on the platform by 35% year-over-year, and got those folks to collectively watch 18.3 billion hours of content through Roku in the quarter (up 49% year-over-year).
Roku monetized that increased usage better than it ever has, thanks to rebounding ad spend, new ad targeting products, and big growth from The Roku Channel.
ARPU rose 32% year-over-year. Revenues surged 79%.
All of this growth happened at the same time that the company’s profitability profile improved.
Platform gross margins expanded 1,070 basis points. Player gross margins expanded 190 basis points. Total gross margins rose 1,290 basis points.
Meanwhile, big revenue growth is driving positive operating leverage. While revenues rose 79% in the quarter, opex dollars rose just 28%, leading to 1,750 basis points of positive opex leverage.
Adjusted EBITDA margins clocked in at a record-high 21.9%.
All of these favorable trends are expected to persist next quarter.
No wonder ROKU stock is surging.
Does It Matter
This blockbuster earnings report absolutely matters to ROKU stock.
Shares have been stuck in a downtrend for a few months, mostly driven by fear among investors that Roku would follow in Netflix‘s (NASDAQ:NFLX) footsteps and report a slowdown in user growth in early 2021 as consumers left their homes more.
But Roku reported no such slowdown. User growth remains as robust as ever. The only difference? Roku is monetizing those users better than ever through a series of new ad products and solutions.
Slowing growth concerns should be calmed over the next few weeks.
They will be replaced by optimism surrounding Roku’s continued usage dominance in the secular growth streaming TV market, as well as Roku’s ever-increasing ability to monetize its users.
ROKU stock has great potential from here.
Roku’s first quarter earnings report was an absolute killer.
Usage was strong. Roku added 2.4 million accounts in the quarter, grew the number of accounts on the platform by 35% year-over-year, and got those folks to collectively watch 18.3 billion hours of content through Roku in the quarter (up 49% year-over-year).
Roku monetized that increased usage better than it ever has, thanks to rebounding ad spend, new ad targeting products, and big growth from The Roku Channel.
ARPU rose 32% year-over-year. Revenues surged 79%.
All of this growth happened at the same time that the company’s profitability profile improved.
Platform gross margins expanded 1,070 basis points. Player gross margins expanded 190 basis points. Total gross margins rose 1,290 basis points.
Meanwhile, big revenue growth is driving positive operating leverage. While revenues rose 79% in the quarter, opex dollars rose just 28%, leading to 1,750 basis points of positive opex leverage.
Adjusted EBITDA margins clocked in at a record-high 21.9%.
All of these favorable trends are expected to persist next quarter.
No wonder ROKU stock is surging.
Does It Matter
This blockbuster earnings report absolutely matters to ROKU stock.
Shares have been stuck in a downtrend for a few months, mostly driven by fear among investors that Roku would follow in Netflix‘s (NASDAQ:NFLX) footsteps and report a slowdown in user growth in early 2021 as consumers left their homes more.
But Roku reported no such slowdown. User growth remains as robust as ever. The only difference? Roku is monetizing those users better than ever through a series of new ad products and solutions.
Slowing growth concerns should be calmed over the next few weeks.
They will be replaced by optimism surrounding Roku’s continued usage dominance in the secular growth streaming TV market, as well as Roku’s ever-increasing ability to monetize its users.
ROKU stock has great potential from here.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.