Exhibit 99.1

 

November 6, 2019

Fellow Shareholders,

We continue to execute well against our long-term strategic plan as the TV market shifts to streaming. In Q3, we beat our outlook for revenue, gross profit, and adjusted EBITDA. Our business momentum and competitive differentiation make Roku an essential partner for content publishers and advertisers. This is evident in the launch of major new streaming services on our platform and by the growth in the number of advertisers who work with Roku. We believe the dataxu acquisition will accelerate our platform’s advertising technology roadmap, strengthen our already industry-leading TV streaming platform and give us the opportunity to create an even more appealing offering for advertisers.  

Q3 Highlights

 

Total net revenue of $260.9 million, up 50% Year-over-Year (YoY);

 

Platform revenue of $179.3 million, up 79% YoY;

 

Active Accounts of 32.3 million, a net addition of 1.7 million over last quarter;

 

Streaming Hours increased 0.9 billion hours over last quarter, to 10.3 billion;

 

Average Revenue Per User (ARPU) of $22.58 (Trailing Twelve Months), up 30% YoY;

 

Gross Profit of $118.5 million, up 50% YoY; and

 

Roku monetized video ad impressions again more than doubled YoY.

Key Operating Metrics

Q3 18

 

 

Q4 18

 

 

Q1 19

 

 

Q2 19

 

 

Q3 19

 

 

YoY %

 

Active Accounts (millions)

 

23.8

 

 

 

27.1

 

 

 

29.1

 

 

 

30.5

 

 

 

32.3

 

 

 

36

%

Streaming Hours (billions)

 

6.2

 

 

 

7.3

 

 

 

8.9

 

 

 

9.4

 

 

 

10.3

 

 

 

68

%

ARPU ($)

$

17.34

 

 

$

17.95

 

 

$

19.06

 

 

$

21.06

 

 

$

22.58

 

 

 

30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Financials ($ in millions)

Q3 18

 

 

Q4 18

 

 

Q1 19

 

 

Q2 19

 

 

Q3 19

 

 

YoY %

 

Platform revenue

$

100.1

 

 

$

151.4

 

 

$

134.2

 

 

$

167.7

 

 

$

179.3

 

 

 

79

%

Player revenue

 

73.3

 

 

 

124.3

 

 

 

72.5

 

 

 

82.4

 

 

 

81.6

 

 

 

11

%

Total net revenue

 

173.4

 

 

 

275.7

 

 

 

206.7

 

 

 

250.1

 

 

 

260.9

 

 

 

50

%

Platform gross profit

 

70.5

 

 

 

109.4

 

 

 

93.8

 

 

 

109.7

 

 

 

112.2

 

 

 

59

%

Player gross profit

 

8.4

 

 

 

2.9

 

 

 

7.1

 

 

 

4.5

 

 

 

6.2

 

 

 

-26

%

Total gross profit

 

79.0

 

 

 

112.3

 

 

 

100.9

 

 

 

114.2

 

 

 

118.5

 

 

 

50

%

Platform gross margin %

 

70.5

%

 

 

72.2

%

 

 

69.9

%

 

 

65.4

%

 

 

62.6

%

 

 

-791

bps

Player gross margin %

 

11.5

%

 

 

2.4

%

 

 

9.8

%

 

 

5.5

%

 

 

7.6

%

 

 

-388

bps

Total gross margin %

 

45.6

%

 

 

40.7

%

 

 

48.8

%

 

 

45.7

%

 

 

45.4

%

 

 

-15

bps

R&D

 

45.4

 

 

 

51.0

 

 

 

55.7

 

 

 

62.0

 

 

 

68.5

 

 

 

51

%

Sales and marketing

 

25.6

 

 

 

34.6

 

 

 

33.8

 

 

 

36.6

 

 

 

46.7

 

 

 

82

%

G&A

 

19.8

 

 

 

21.2

 

 

 

22.1

 

 

 

26.0

 

 

 

29.9

 

 

 

51

%

Total operating expenses

 

90.7

 

 

 

106.8

 

 

 

111.6

 

 

 

124.6

 

 

 

145.0

 

 

 

60

%

Income (loss) from operations

 

(11.7

)

 

 

5.5

 

 

 

(10.7

)

 

 

(10.4

)

 

 

(26.5

)

 

nm

 

Adjusted EBITDA 1

 

2.0

 

 

 

24.5

 

 

 

10.0

 

 

 

11.1

 

 

 

(0.4

)

 

nm

 

Adjusted EBITDA margin %

 

1.1

%

 

 

8.9

%

 

 

4.8

%

 

 

4.4

%

 

 

-0.2

%

 

 

-130

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outlook ($ in millions)

Q4 2019E

 

 

Full Year 2019E

 

Total net revenue

$380 - $396

 

 

$1,098 - $1,113

 

Total gross profit

$156 - $161

 

 

$489 - $494

 

Net income (loss)

($22)-($17)

 

 

($66) - ($61)

 

Adjusted EBITDA 2, 3

$7 - $12

 

 

$28 - $33

 

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 $84 million, and depreciation and amortization and other income of $10 million.

 

3 Q4 2019E reconciling items between net loss and non-GAAP adjusted EBITDA consist of stock-based compensation of approximately $25 million, and depreciation and amortization and other income of $4 million.

 

 


The following information was filed by Roku, Inc (ROKU) on Wednesday, November 6, 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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