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Entertainment

Roku’s Big Q4

Roku had a strong holiday sales season, its fourth quarter results showed on Thursday, underpinning robust growth in the more profitable ad-based platform part of its business. The question remains how long can this last.

Roku’s revenue rose 46% in the quarter, as sales of the Roku devices jumped 21%, spurred by lower prices. But those lower prices also slashed Roku’s gross margin in hardware to just 2.4%, down from 9.5% a year earlier. Still, the increase in the number of Roku players lifted active accounts to 27.1 million, up 40% on a year earlier. Growth in users is what Roku is pinning its future growth on. More Roku users means more of an audience for Roku’s ads, particularly on its own Roku Channel. The company forecast another year of solid growth in 2019.

The uncertainty is the growing competition for viewers’ attention in the streaming market. Some big new services launching this year, such as entries from Disney and WarnerMedia. Roku’s place in the streaming ecosystem seems assured, just not the size of its spot.

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