Roku’s Record Growth Continues in 2021 Ahead of Original Content Rollout

After wrapping a record year in 2020, Roku has continued its momentum into the first part of 2021—though there are signs that last year's Covid-fueled massive user spikes are starting to tail off. The platform more than doubled its monetized video ad impressions year over year in Q1 and increased streaming hours by 1.4 billion over the last quarter to reach 18.3 billion hours streamed, a 49% year-over-year increase. Roku climbed past 53 million accounts, adding 2.4 million in the quarter to hit 53.6 million. However, that’s less than half the 5.2 million the company added in Q4 2020 and also below its 3.2 million a year earlier. An expected slowdown The company isn’t surprised by the slowdown in growth, noting that stay-at-home orders in the spring and summer of 2020 produced a spike in streaming hours per account in the second quarter and also resulted in elevated growth for Roku’s active account base during much of the year. Roku expects year-over-year growth rates of both metrics to be lower than those in 2020 for the rest of the year but still anticipates net adds of both active accounts and streaming hours to be above pre-Covid-19 levels. “If you looked back into the year, Q4 is the highest net ads because of the holiday season each year. And so Q1 is usually significantly slower in terms of net ads than Q4,” Steve Louden, the company's CFO, told reporters ahead of the company’s earnings call. “In terms of the pace of growth before we started lapping the difficult comps on the active accounts and streaming hours side from mid-March, the pace of growth for active accounts and streaming hours were running ahead of the Q4 year-over-year growth rate," he said. “This is a good example of as we start to lap these COVID impacts, some of them can be positive, some can be negative, and that impact can change over the quarters that year over year are constantly very volatile,” said Louden. Roku pointed to a high demand for consumer electronics and IT product categories causing supply chain delays for Roku players and TV models, but the company said it still gained market share in the U.S. Last year, the company said it represented a 38% share of all smart TVs sold, but there's no updated number for 2021 yet. The company anticipates that supply chain issues might cause problems later in the year. “I think a lot of people are seeing that the problems are persisting maybe longer than people hoped,” said Louden. “We do think that those issues could lead to our player margins going slightly negative in Q2 and potentially, going more negative in the back half. So we'll continue to monitor that, we're doing everything we can to mitigate that, but it will have some impact on the business.” The Roku operating system was once again No. 1 in the country for smart TVs. In April, the company released the latest version of its proprietary operating system, Roku 10, which enabled users to more quickly access content. The Google standoff remains unresolved There's no update for investors on the company’s standoff with Google, which led to Roku pulling the YouTube TV app from its channel store last week. “We are not seeking additional money or value," said Scott Rosenberg, svp and gm of platform business. "We do, however, want Google to not to agree not to manipulate search results on Roku to access data that we don't make available to others or to make asks that could ultimately increase the cost of our products.” Revenue grew 79% year over year, hitting $574.2 million, blowing past Wall Street expectations of $490.6 million. And with monetized video ad impressions more than doubling year over year, Roku pointed to the power of OneView and the recent acquisition of Nielsen’s ACR and DAI team and technologies. OneView played a prominent role in Roku’s NewFronts presentation earlier this week. Roku said this quarter that total TV streaming ad impressions delivered through OneView nearly tripled year over year, while total impressions on the Roku platform (sold by Roku or its publishers) more than tripled. Roku Originals are on the way The Roku Channel is growing at more than twice the rate of the overall Roku platform. The company’s in-house AVOD offering is now reaching an estimated 70 million people, up from 63 million last quarter. The company is preparing to launch Roku Originals, which includes rebranded content from short-lived streamer Quibi and This Old House. While there’s no official launch date (Roku will be providing more details later this month), it wouldn’t be surprising to see the content land on the platform before the end of May, making it eligible for Emmy consideration in the short-form categories. “As we've gotten bigger, our ability to invest in content has grown," said Rosenberg. "We will continue to be creative and expansive in our thinking about how we source content for The Roku Channel, but it has also been consistent with our scale.” Roku is touting The Roku Channel as a benefit to advertisers, noting that in the first quarter, more than 85% of the adults 18-49 audience reach delivered on the AVOD service was unduplicated with traditional TV. The Roku Channel now offers 50 premium SVOD services, and Roku said premium subscriptions more than doubled year over year, with viewership of SVOD services in The Roku Channel growing more than twice as fast as the corresponding DTC apps on the Roku platform.