A Step Back
Aside from the themes, it is user growth, user engagement growth (“hours streamed”), and average revenue per user (ARPU).

With 36% user growth, 68% engagement growth, and 29% average revenue per user growth, we have a three headed monster platform that has turned into a runaway train. Better yet, Roku has touched less than 10% of the worldwide market for users and ARPU is at a fraction of its potential as well.

That’s the investment thesis, the rest is just conversation.

Highlights for Full Year 2019
First, full year 2019 high level numbers:

• Total net revenue grew to $1.129 billion up 52% year over year (yoy);

• Platform revenue increased to $740.8 million up 78% yoy;

• Active Accounts added 9.8 million incremental active accounts in 2019 to reach 36.9 million at year end up 36% yoy;

• Streaming hours increased by 16.3 billion hours yoy to a record 40.3 billion up 68% yoy;

• Average Revenue Per User (ARPU) increased $5.19 yoy to $23.14 (trailing 12-month basis) and up 29% yoy;

• Gross profit was to $495.2 million up 49% yoy;

• For the full year, nearly one in three smart TVs sold in the U.S. were Roku TVs.

Roku has established itself, in our eyes, as a platform. It sits in the enviable position of a commanding market position where other businesses depend on it to perform.

Platform Please
With stunning new data, we learned that in 2019, The Roku Channel reached active accounts with an estimated 56 million viewers. Those are Roku users driving the ARPU higher and it’s a channel that was launched just a year ago.

Parks Associates reports that The Roku Channel is one of the top three ad-based OTT services among U.S. broadband households (Q3 2019).

That is the power of a platform.

Further yet, a sign of true platform status, the United States’ largest retailer, WalMart, with Roku announced in the fall a signature and exclusive smart TV (‘onn’) was sold exclusively in Walmart U.S. stores over the Black Friday weekend.

With even more models in stores and online now, this is an exciting addition to Walmart’s exclusive brand offerings in the U.S., demonstrating the value Roku brings to retail partners and consumers.

And now in the context of Wall Street estimates.

Earnings

* Revenue: $411 million versus analyst expectations of $391.47 million.
This was a beat

* Adjusted EPS: -$0.13 versus analyst expectations of -$0.14.
This was a beat

* Full Year Revenue: $1.13 billion versus analyst expectations of $1.11 billion.
This was a beat

* Full Year Revenue Guidance for 2020: $1.6 billion versus analyst expectations of $1.56 billion.
This was a beat

* Next Quarter Revenue Guidance: $305 million versus analyst expectations of $299.8 million.
This was a beat

Active Accounts: Added 4.6 million to 36.9 million in the quarter versus analyst expectations of 35.9 million, and 36% year over year growth.
This was a beat

EBITDA Guidance for Q1: -$21 million versus analyst expectations of positive $4.2 million.
This was a beat

But, in this case, one could argue that investors would rather Roku spend money to grow with its considerable cash balances of over $500 million.

A $21 million EBITDA deficit is rounding error.

Note that platform makes up 65% of Roku’s revenue and that segment is growing at 78% year-over-year.

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