Roku finished 2020 strong with record streaming growth including impressive revenue, gross profit and adjusted EBITDA results in the fourth quarter, following an industry trend favoring streaming entertainment over linear TV. For the fourth quarter, Roku reported total net revenue of $649.9 million, including $471.2 million from the platform and $178.7 million from devices, representing combined year-over-year growth of 58%. Roku reported gross profit of $305.5 million, an 89% increase year-over-year, and adjusted EBITDA of $113.5 million, a 650% increase year-over-year.

In addition, at the end of the fourth quarter, Roku had 51.2 million active accounts, a 39% increase year-over-year and 17 billion streaming hours, a 55% increase year-over-year. Active accounts streamed an average of 3.8 hours a day in the fourth quarter. Average revenue per user (ARPU) increased from $23.14 in the fourth quarter of 2019 to $28.76 in the fourth quarter of 2020, a 24% increase year-over-year. Roku attributed its record streaming growth to increased per-user engagement and continued investments in channel distribution, content promotion, billing and advertising capabilities.

CEO comments

“As the leading streaming platform in the U.S., Roku is more important than ever to the TV ecosystem. We connect viewers, content owners, and advertisers at scale in a virtuous cycle that creates value for all participants,” said Anthony Wood, Roku founder and CEO, in a February 28, 2021 earnings call.

“Fully a third of all American homes are now non-pay TV households. Leading media companies are reorienting around streaming and launching new streaming services. The traditional TV upfronts are beginning to crumble as advertisers demand more flexibility, better measurement, and a broader audience. We are pleased with the progress we made in 2020 and excited about the large opportunities that lie ahead in the streaming decade,” Wood added.

Full year highlights for Roku include the following:

• Total revenue was $1.78 billion, a 58% increase year-over-year.
• Platform revenue was $1.27 billion, a 71% increase year-over-year.
• Gross profit was $808 million, a 63% increase year-over-year.
• The company added 14.3 million incremental active accounts during the year.
• Streaming hours for the year grew by 20.9 billion to 58.7 billion.
• In 2020, 38% of all smart TVs in the U.S. were Roku TV models.

Growth 2016 to 2020

Roku provided the following comparison of its growth from 2016 to 2020.

With more viewers at home during the pandemic, new accounts and viewership were particularly strong in the second and third quarters of 2020. Roku said its active accounts in the U.S. are now more than double the number of video subscribers of the largest cable company.

First quarter 2021 guidance

In its shareholder letter, Roku said the uncertainty of the pandemic makes predicting 2021 performance more challenging.

“…the level of uncertainty compounds when trying to assess the net impact of a variety of factors such as the timing of the vaccine rollouts, emergence of new COVID-19 variants as well as the lasting economic impacts of the pandemic. Consequently, instead of providing a formal outlook for the full year, we will provide some directional perspective,” Roku said.

For example, the first quarter of the year is the company’s softest quarter in terms of revenue when revenue is typically 25% less than Q4 of the prior year. The first half of the year, Roku expects similar results to the first half of last year before the pandemic had a significant impact. The second half of the year and full-year results will fall short of 2020.

Roku offered the following guidance:

• Total net revenue ranging between $478 million and $493 million
• Total gross profit ranging between $234 million and $241 million
• Net income (loss) ranging between ($23) million and ($16) million
• Adjusted EBITDA ranging between $27 million and $34 million

“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,” said Wood. “Our purpose-built platform for TV streaming offers superior outcomes for the entire ecosystem – including users, content publishers and advertisers. We will continue to invest in innovation and growth, and are looking forward to a successful 2021.”

Also in 2021, we can expect to see Quibi content on the Roku platform. After a failed launch last spring, short-form video platform Quibi shut down in December and Roku acquired its content, including 75 shows and documentaries.

Insider Take

2020 was a big year for all streaming companies, including Roku who has multiple revenue streams including Roku players, their streaming service, advertising, content distribution, Roku Pay and more. As the pandemic heads into year 2, Roku is well positioned to support more users, subscribers, advertisers and brands who want to make their content accessible via Roku. While 2021 will not look like last year and may not bring the same level of record streaming growth, Roku will still have a solid year in its own right.