What happened to the Roku Rocketship?

Author

Michael Beach
May 05, 2022

Key numbers from Roku’s earnings:
1) 1.2M active accounts added in Q1
2) 61.3M total active accounts
3) 39% YoY increase in advertising revenue
4) 14% YoY increase in streaming hours

Roku active accounts (YoY growth):
1) 2017-Q1 – 14.2M
2) 2018-Q1 – 20.8M (↑ 46%)
3) 2019-Q1 – 29.1M (↑ 40%)
4) 2020-Q1 – 39.8M (↑ 37%)
5) 2021-Q1 – 53.6M (↑ 35%)
6) 2022-Q1 – 61.3M (↑ 14%)

Roku advertising revenue (YoY growth):
1) 2017-Q1 – $36M
2) 2018-Q1 – $75M (↑ 106%)
3) 2019-Q1 – $134M (↑ 79%)
4) 2020-Q1 – $233M (↑ 73%)
5) 2021-Q1 – $467M (↑ 101%)
6) 2022-Q1 – $647M (↑ 39%)

8A6E.1-2022Q1B

Roku advertising revenue per account (YoY growth):
1) 2017-Q1 – $2.56
2) 2018-Q1 – $3.61 (↑ 41%)
3) 2019-Q1 – $4.61 (↑ 28%)
4) 2020-Q1 – $5.84 (↑ 27%)
5) 2021-Q1 – $8.70 (↑ 49%)
6) 2022-Q2 – $10.55 (↑ 21%)

Roku total streaming hours (YoY growth):
1) 2017-Q1 – 3.3B
2) 2018-Q1 – 5.5B (↑ 67%)
3) 2019-Q1 – 8.9B (↑ 62%)
4) 2020-Q1 – 13.2B (↑ 48%)
5) 2021-Q1 – 18.3B (↑ 49%)
6) 2022-Q1 – 20.9B (↑ 14%)

Roku advertising revenue per streaming hour (YoY growth):
1) 2017-Q1 – $0.011
2) 2018-Q1 – $0.014 (↑ 24%)
3) 2019-Q1 – $0.015 (↑ 10%)
4) 2020-Q1 – $0.018 (↑ 17%)
5) 2021-Q1 – $0.025 (↑ 45%)
6) 2022-Q1 – $0.031 (↑ 21%)

Bull case for Roku #1: International growth. 94% of their active accounts are in North America, with 88% in the U.S. alone.

Bull case for Roku #2: Growth in advertising revenue per hour.  Roku is building a full advertising stack that offers buying, measurement, and audience targeting.

Bear case for Roku: With Samsung, LG, Vizio, etc., the native OS/remote/experience has improved so much that consumers do not notice much difference.

Mr. Screens’ Crystal Ball: Advertising revenue per streaming hour will grow faster than subscriptions and/or streaming hours.  As long as they can keep users on their platform, they will build a monster advertising business.

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