Streaming and digital advertising platform Roku (ROKU) roared 14% ahead on Friday after rocking fourth-quarter results that trounced Wall Street’s expectations.
Yet because much of the gains were driven by political advertising, some might be worried the performance might not be repeatable. Roku also cautioned that profitability won’t return until 2026.
Roku showed strength across the board and delivered its first quarter ever with $1 billion in platform revenue. It now has penetrated into more than half of all U.S. homes with broadband.
The number of streaming hours on The Roku Channel jumped 82% to 127.1 billion from the year ago period, reaching 145 million people. That helped average revenue per user (ARPU) rise 4% to $41.49.
Yet it’s been three years since Roku operated at a profit and while the situation is improving, the platform doesn’t expect to achieve it until next year.
However, Roku’s business is growing. The platform business grew 25% in the fourth quarter, and political advertising accounted for a full six percentage points of that increase. But it also means that other segments, including auto and retail, still delivered 19 percentage points of growth.
Roku also believes that its ability to deliver political ads showcases its strengths to other advertisers. Due to the nature of political advertising, its has a very finite timetable and it is targeting a very specific audience.
The platform’s ability to successfully deliver results for those advertisers underscores how it can be a high-performance platform for everyone else. So Roku sees growth coming long-term because of the continual shift to connected TVs and its platforms ability to improve the return on investments for advertisers.
Roku is bouncing back from earlier stumbles over the past few years, but seems to have found its stride. While the stock was up 14%, when the markets reopen on Tuesday following the holiday, We just might see ROKU stock continue markching higher.
