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Entertainment Media/Telecom

Roku’s Revenue Rises While Margins Shrink

Roku once again showed strong revenue growth, as the company’s business continues its successful migration away from one based on sales of its streaming players to one based on advertising.

The company’s quarterly advertising “platform” revenue rose 86% from last year. It now makes up two-thirds of Roku’s business. Interestingly, this quarter also saw a dip in the gross margin for its platform segment. The company chalks this up partly to the launch of its Premium Subscription business, where people can sign up for services like HBO and Starz and play them through the Roku Channel. Roku splits that revenue with the companies which eats into the margin somewhat.

Roku raised its end-of-year targets, and investors liked the news, sending its stock up 8% in aftermarket trading. While it’s still unclear how long the Roku train is going to keep moving ahead, its success has gone hand-in-hand with the growth of the streaming era.

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