Roku reported a 79% surge in first quarter revenue to $574.2 million, with sales for the "platform" side of its business more than doubling year over year.
The streaming company said that the money it makes off its OTT device platform, which is primarily advertising, was up 101% in the quarter, reaching $466.5 million. Gadget sales were up 22% to $107.7 million in Q1.
Roku said its base of "active users" swelled to 53.6 million in the quarter, up 35% year over year. Roku said its users streamed 18.3 billion hours in the first three months of 2021, an increase of 49% year over year.
The increases are in line with guidance. Roku's Nasdaq price, which had cratered to under $280 per share earlier Thursday, as surged nearly 7% in after-hours trading.
Roku said second-half 2021 profitability to be impacted by the ongoing global chip shortage, which it says is hurting its hardware business.
Roku said the "entertainment" sector of its ad sales portfolio is the hottest portion of its business right now, with direct-to-consumer streaming platforms spending heavily on Roku platform promotion to grow their respective subscriber bases.
"The biggest governor of our advertising sales growth is that TV buyers ad buyers tend to prefer linear," Roku CEO Anthony Wood told investors. "There's still a big gap between linear and streaming, but what we saw in the pandemic is that gap started to close.
Roku said Taco Bell found a 5x increase in ROI from a recent campaign on The Roku Channel, thanks to the ability to target viewers and control frequency.
Recalling as an example how difficult it was just a few years ago to convince the erstwhile Time Warner Inc. to promote TV Everywhere app with a digital ad campaign, Wood highlighted what he called a "huge transition" among advertisers, who are moving from a linear to a "streaming first" focus.
For his part, Scott Rosenberg, general manager of Roku's platform business, said the company has a "unique mix" of scale, data, technology, the number of TVs in the field, and the depth of relationships with programmers, to become the leader in the migration direct ad insertion (DAI).
One analyst noted that the one area of Roku's business that missed forecast was active users. Might the last non-pandemic year, 2019, be a better benchmark for future active user growth guidance?
Roku CFO Steven Louden agreed. "We'll probably continue to grow nicely, but probably close to pre-COVID levels," he said.
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