Last month, I wrote that Roku Inc (NASDAQ:ROKU) looked poised for short-term gains. During this period, ROKU stock jumped 79%.
The main reason: a rock-solid earnings report. In the quarter, revenues shot up by 40% to $124.8 million and the net loss came to 10-cents-a-share (this was the first report since the company launched its IPO in late September). The Street consensus, on the other hand, was looking for revenues of $110.5 million and a loss of $1.37-per-share.
The strong engagement with the ROKU platform is what drove revenue growth. There was a 48% spike in active accounts to 16.7 million and a 58% increase in streaming hours to a whopping 3.8 billion.
All this is certainly impressive as ROKU has some of the world’s toughest rivals. They include operators like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).
Then again, it helps that ROKU founder and CEO, Anthony Wood, has put together a great strategy. Keep in mind that he has learned some harsh lessons over the years. For example, while he invented the DVR back in the 1990s, his company would ultimately fail because of the competition.
So when Wood created ROKU, he wanted to instead create an OS for television. Think of it as being something like Microsoft Corporation’s (NASDAQ:MSFT) Windows or Google’s Android. In other words, ROKU would be a platform allowing for many partners to stream content – making it more and more attractive to consumers.
As a result, ROKU has seen substantial growth from advertising, audience development and content distribution services, which are known as platform revenues. Interestingly enough, the hardware is sold at cheap levels in order to expand the user base. This has also led various TV manufactures to integrate the technology.