Exhibit 99.1

 

February 21, 2018

Fellow Shareholders,

Roku capped off a milestone year with a fantastic fourth quarter in 2017, and we are very excited about our plans for 2018. Our focus on providing the best TV streaming experience for consumers, a leading streaming advertising platform for brands and ad agencies, and a highly efficient streaming content distribution platform for our partners is propelling our growth. Full year 2017 revenues of $513 million, grew 29% year-over-year (‘YoY’) driven by accelerating platform revenue growth of 115% YoY to $225 million with advertising as a key component. We also generated positive full-year operating cash flow for the first time. We continued to see a shift in account growth to our Roku TV licensing program with more than half of new accounts coming from licensed sources in the fourth quarter.  One of our Roku TV partners, TCL, achieved the #3 spot for U.S. smart TV sales in 2017, up from #19 in 2014. In 2018 we plan to continue to enhance the TV streaming experience and to expand our presence in the home.  

A few Q4 2017 summary highlights:

 

Total net revenue grew 28% YoY to $188.3 million driven by platform growth of 129% YoY to $85.4 million;

 

Gross profit grew 64% YoY to $73.5 million;

 

Active Accounts increased 44% YoY to 19.3 million at quarter end;

 

Streaming Hours grew 55% YoY to 4.3 billion hours;

 

Average Revenue Per User (ARPU) grew 48% YoY to $13.78 (trailing twelve-month basis).

 

Key Operating Metrics

 

Q4 16

 

 

Q1 17

 

 

Q2 17

 

 

Q3 17

 

 

Q4 17

 

 

YoY $

 

 

YoY %

 

Active Accounts (millions)

 

 

13.4

 

 

 

14.2

 

 

 

15.1

 

 

 

16.7

 

 

 

19.3

 

 

 

5.9

 

 

 

44

%

Streaming Hours (billions)

 

 

2.8

 

 

 

3.3

 

 

 

3.5

 

 

 

3.8

 

 

 

4.3

 

 

 

1.5

 

 

 

55

%

ARPU ($)

 

$

9.28

 

 

$

10.04

 

 

$

11.22

 

 

$

12.68

 

 

$

13.78

 

 

$

4.50

 

 

 

48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Financials ($ in thousands)

 

Q4 16

 

 

Q1 17

 

 

Q2 17

 

 

Q3 17

 

 

Q4 17

 

 

YoY $

 

 

YoY %

 

Player

 

$

110,024

 

 

$

63,678

 

 

$

53,651

 

 

$

67,254

 

 

$

102,824

 

 

$

(7,200

)

 

 

-7

%

Platform

 

 

37,316

 

 

 

36,415

 

 

 

45,976

 

 

 

57,528

 

 

 

85,437

 

 

 

48,121

 

 

 

129

%

Total net revenue

 

 

147,340

 

 

 

100,093

 

 

 

99,627

 

 

 

124,782

 

 

 

188,261

 

 

 

40,921

 

 

 

28

%

Player cost of revenue

 

 

94,290

 

 

 

52,910

 

 

 

50,212

 

 

 

61,925

 

 

 

93,057

 

 

 

(1,233

)

 

 

-1

%

Platform cost of revenue

 

 

8,387

 

 

 

8,343

 

 

 

11,778

 

 

 

12,962

 

 

 

21,743

 

 

 

13,356

 

 

 

159

%

Total cost of revenue

 

 

102,677

 

 

 

61,253

 

 

 

61,990

 

 

 

74,887

 

 

 

114,800

 

 

 

12,123

 

 

 

12

%

Player gross profit

 

 

15,734

 

 

 

10,768

 

 

 

3,439

 

 

 

5,329

 

 

 

9,767

 

 

 

(5,967

)

 

 

-38

%

Platform gross profit

 

 

28,929

 

 

 

28,072

 

 

 

34,198

 

 

 

44,566

 

 

 

63,694

 

 

 

34,765

 

 

 

120

%

Total gross profit

 

 

44,663

 

 

 

38,840

 

 

 

37,637

 

 

 

49,895

 

 

 

73,461

 

 

 

28,798

 

 

 

64

%

Player gross margin %

 

 

14.3

%

 

 

16.9

%

 

 

6.4

%

 

 

7.9

%

 

 

9.5

%

 

 

 

 

 

 

-480

bps

Platform gross margin %

 

 

77.5

%

 

 

77.1

%

 

 

74.4

%

 

 

77.5

%

 

 

74.6

%

 

 

 

 

 

 

-297

bps

Total gross margin %

 

 

30

%

 

 

39

%

 

 

38

%

 

 

40

%

 

 

39

%

 

 

 

 

 

 

871

bps

R&D

 

 

19,477

 

 

 

22,342

 

 

 

25,776

 

 

 

28,532

 

 

 

31,295

 

 

 

11,818

 

 

 

61

%

Sales and marketing

 

 

13,799

 

 

 

14,055

 

 

 

14,667

 

 

 

16,216

 

 

 

19,131

 

 

 

5,332

 

 

 

39

%

G&A

 

 

8,008

 

 

 

10,278

 

 

 

10,577

 

 

 

13,039

 

 

 

13,541

 

 

 

5,533

 

 

 

69

%

Total operating expenses

 

 

41,284

 

 

 

46,675

 

 

 

51,020

 

 

 

57,787

 

 

 

63,967

 

 

 

22,683

 

 

 

55

%

Income (loss) from operations

 

$

3,379

 

 

$

(7,835

)

 

$

(13,383

)

 

$

(7,892

)

 

$

9,494

 

 

$

6,115

 

 

 

181

%

Adjusted EBITDA 1

 

$

6,670

 

 

$

(4,413

)

 

$

(9,632

)

 

$

(3,665

)

 

$

14,383

 

 

$

7,713

 

 

 

116

%

Adjusted EBITDA margin %

 

 

4.5

%

 

 

-4.4

%

 

 

-9.7

%

 

 

-2.9

%

 

 

7.6

%

 

 

 

 

 

 

311

bps

1  Refer to the reconciliation of net income (loss) to adjusted EBITDA in the non-gaap information.

 

 

Roku Q4 2017 Shareholder Letter

1

 


The following information was filed by Roku, Inc (ROKU) on Wednesday, February 21, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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