Roku Delivers Solid Quarter, Expands Services Offerings

Posted on August 9, 2018 by Paul Thurrott in Music + Videos with 10 Comments

Roku on Wednesday reported strong earnings growth, dramatically outpacing expectations. Of more interest to actual users, perhaps, the firm also announced it is expanding its video streaming service beyond its own set-top boxes and TVs.

Roku generated a gross profit of $77.8 million—up 107 percent year-over-year—on revenues of $156.8 million—up 57 percent YOY—in the quarter ending June 30. But the firm displayed other forms of strength in an increasingly competitive market, with active account up 46 percent, to 22 million, and streaming hours up 57 percent, to 5.5 billion hours.

“Roku delivered particularly strong Q2 2018 financial results,” the firm noted in its earnings announcement. “Robust active account growth expanded the reach and scale of our TV streaming platform, while at the same time Roku captured a bigger share of TV advertising budgets and continued progress on monetization. We believe Roku is well-positioned to seize the significant opportunities being created by the transition to streaming.”

Roku’s traditional “platform” business, which consists of its living room set-top boxes and other hardware, saw strong growth in the quarter, thanks largely to the Roku TV. But Roku’s solid footing is also helping the firm expand the reach of its free, ad-supported streaming video service, called The Roku Channel, beyond its own ecosystem.

The Roku Channel launched last fall on Roku’s devices, offering free, ad-supported movies and TV shows. But it is now available on the web and via select Samsung smart TVs in the United States too. And it will expand to other devices, platforms, and locales in the coming weeks. Roku has said that it will support Android, iOS, and Windows specifically.

Tied to this expansion, Roku is also updating the user interface on its hardware devices to provide a new Feature Free top-level menu item that provides free content from The Roku Channel and other apps, including those from broadcast TV networks, Sony Crackle, Tubi, and more.

“By expanding The Roku Channel to the Web, we’re broadening the access points to high-quality, free streaming entertainment,” Roku VP Rob Holmes said in a prepared statement. “With Featured Free, we’re making it easy for our customers to see the great, free content already available on the Roku platform in one place, while creating value for our content providers by connecting them with Roku’s growing audience.”


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Comments (11)

11 responses to “Roku Delivers Solid Quarter, Expands Services Offerings”

  1. SRLRacing

    $77.8M profit on $156.8M revenue... I had to pull up their filing because I thought Paul might have had a few too many Swedish meatballs. But Roku actually had a gross margin of near as makes no difference 50%. That's insane! Good for them as a relatively small, independent, and highly profitable tech company.

  2. Chris_Kez

    I dropped my Optimum cable in favor of Sling TV + Roku two weeks ago. I'm saving money, enjoying TV on any device, and not missing the clunky cable interface or their ancient boxes.

    • eric_rasmussen

      In reply to Chris_Kez:

      My wife and I did the same a while back. We also do HBO Go seasonally for Game of Thrones, and I subscribe to the Sports Pack mostly just for BeIN Sports (I like watching MotoGP and World Superbike). The freedom to pick and choose is not quite a-la-carte, but it's a lot better than cable! Roku is perfectly positioned to be the platform upon which these services can offer their content.

      • Chris_Kez

        In reply to Eric_Rasmussen:

        Yep, we have Showtime for the next month or two. We'll start up HBO when Game of Thrones returns. We'll pocket part of the savings and use some to pay for Spotify and some to pay for a cycling package so I can see all the grand tours and spring classics. We were really overdue to adjust our services based on real world usage since having kids a few years ago.

  3. eric_rasmussen

    Remember Windows Media Center PCs? I always thought that Microsoft should make a small box with a lightweight variant of WMC on it. I didn't foresee Internet streaming, but they already had music streaming via their Zune Music Pass. Microsoft could have owned this market a decade before Roku even existed.

    I was sad to see Media Center die with Vista. Oh well, it opened the market for small companies like Roku to come in and succeed. Good for them! We have a Roku attached to every TV in our house, and I dabbled in programming a homework app for the Roku a while back. I'm not a fan of the script language they chose, but it's not terribly difficult to pick up. I'd love to see a C# to Roku transpiler to make writing Roku apps workable in Visual Studio. Hmmmm. Maybe that's a good next project. :)

  4. CompUser

    TCL smart TVs have Roku built in, and come with only a Rocu remote. I have a 42" set in my living room and am about to get the 65" version for the family room. They're very nice TVs, although you will need to buy a universal remote if watching over the air TV.

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