Exhibit 99.1

 

August 7, 2019

Fellow Shareholders,

Continued strong execution against our strategic plan led to a great quarter.  We achieved two significant milestones:  active accounts passed 30 million and ARPU surpassed $20. We beat our outlook for revenue, gross profit and adjusted EBITDA.  The industry-wide shift to streaming is accelerating.  Our business momentum and ongoing investment in areas of competitive differentiation continue to drive growth and attract users, advertisers and content publishers. This resulted in a robust increase in Active Accounts, healthy growth of Streaming Hours and continued progress in monetization.

Q2 highlights

 

Total net revenue of $250.1 million, up 59% YoY;

 

Platform revenue of $167.7 million, up 86% YoY;

 

Active Accounts of 30.5 million, a net addition of 1.4 million from last quarter;

 

Streaming Hours increased 0.5 billion hours vs. Q1 to 9.4 billion, up 72% YoY;

 

Average Revenue Per User (ARPU) of $21.06 (TTM), up $2.00 vs. Q1 2019;

 

Gross Profit of $114.2 million, up 47% YoY (and up 66% YoY excluding an $8.9M benefit to Player COGS in Q2 2018, from releasing accruals related to potential IP licensing liabilities that did not materialize);

 

Roku monetized video ad impressions again more than doubled YoY.

 

Key Operating Metrics

Q2 18

 

 

Q3 18

 

 

Q4 18

 

 

Q1 19

 

 

Q2 19

 

 

YoY %

 

Active Accounts (millions)

 

22.0

 

 

 

23.8

 

 

 

27.1

 

 

 

29.1

 

 

 

30.5

 

 

 

39

%

Streaming Hours (billions)

 

5.5

 

 

 

6.2

 

 

 

7.3

 

 

 

8.9

 

 

 

9.4

 

 

 

72

%

ARPU ($)

$

16.60

 

 

$

17.34

 

 

$

17.95

 

 

$

19.06

 

 

$

21.06

 

 

 

27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Financials ($ in millions)

Q2 18

 

 

Q3 18

 

 

Q4 18

 

 

Q1 19

 

 

Q2 19

 

 

YoY %

 

Platform revenue

$

90.3

 

 

$

100.1

 

 

$

151.4

 

 

$

134.2

 

 

$

167.7

 

 

 

86

%

Player revenue

 

66.5

 

 

 

73.3

 

 

 

124.3

 

 

 

72.5

 

 

 

82.4

 

 

 

24

%

Total net revenue

 

156.8

 

 

 

173.4

 

 

 

275.7

 

 

 

206.7

 

 

 

250.1

 

 

 

59

%

Platform gross profit

 

63.0

 

 

 

70.5

 

 

 

109.4

 

 

 

93.8

 

 

 

109.7

 

 

 

74

%

Player gross profit

 

14.7

 

 

 

8.4

 

 

 

2.9

 

 

 

7.1

 

 

 

4.5

 

 

 

-69

%

Total gross profit

 

77.8

 

 

 

79.0

 

 

 

112.3

 

 

 

100.9

 

 

 

114.2

 

 

 

47

%

Platform gross margin %

 

69.8

%

 

 

70.5

%

 

 

72.2

%

 

 

69.9

%

 

 

65.4

%

 

 

-430

bps

Player gross margin %

 

22.2

%

 

 

11.5

%

 

 

2.4

%

 

 

9.8

%

 

 

5.5

%

 

 

-1670

bps

Total gross margin %

 

49.6

%

 

 

45.6

%

 

 

40.7

%

 

 

48.8

%

 

 

45.7

%

 

 

-390

bps

R&D

 

40.2

 

 

 

45.4

 

 

 

51.0

 

 

 

55.7

 

 

 

62.0

 

 

 

54

%

Sales and marketing

 

22.3

 

 

 

25.6

 

 

 

34.6

 

 

 

33.8

 

 

 

36.6

 

 

 

64

%

G&A

 

15.4

 

 

 

19.8

 

 

 

21.2

 

 

 

22.1

 

 

 

26.0

 

 

 

69

%

Total operating expenses

 

77.9

 

 

 

90.7

 

 

 

106.8

 

 

 

111.6

 

 

 

124.6

 

 

 

60

%

Income (loss) from operations

 

(0.1

)

 

 

(11.7

)

 

 

5.5

 

 

 

(10.7

)

 

 

(10.4

)

 

nm

 

Adjusted EBITDA 1

 

7.1

 

 

 

2.0

 

 

 

24.5

 

 

 

10.0

 

 

 

11.1

 

 

 

56

%

Adjusted EBITDA margin %

 

4.5

%

 

 

1.1

%

 

 

8.9

%

 

 

4.8

%

 

 

4.4

%

 

 

-10

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outlook ($ in millions)

Q3 2019E

 

 

Full Year 2019E

 

Total net revenue

$250 - $255

 

 

$1,075 - $1,095

 

Total gross profit

$114 - $119

 

 

$480 - $490

 

Net income (loss)

($40) - ($34)

 

 

($71) - ($61)

 

Adjusted EBITDA 2, 3

($11) - ($5)

 

 

$30 - $40

 

1 Refer to the reconciliation of net loss to adjusted EBITDA in the non-GAAP information in the tables accompanying this letter.

 

2 Full Year 2019E reconciling items between net loss and non-GAAP adjusted EBITDA consist of stock-based compensation of $90 million, and depreciation and amortization and other income of $10 million.

 

3 Q3 2019E reconciling items between net loss and non-GAAP adjusted EBITDA consist of stock-based compensation of approximately $26 million, and depreciation and amortization and other income of $3 million.

 

Roku Q2 2019 Shareholder Letter

1

 


The following information was filed by Roku, Inc (ROKU) on Wednesday, August 7, 2019 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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