The company posted its highest quarterly revenue growth rate since going public with a 79% gain to $ 574 million in the quarter. Revenue from the platform in particular, which includes advertising, was $ 466.5 million, up 101% year-over-year. Meanwhile, active accounts increased by 2.4 million from the fourth quarter of 2020 to reach 53.6 million.
Roku has taken a number of strategic steps in the advertising space, including the acquisition of Nielsen’s advanced video advertising business. This included technology to do “dynamic ad insertion,” allowing Roku to deliver ads that can be exchanged in real time depending on the viewer. It also acquired “This Old House” and content from former streaming provider Quibi to make itself more attractive to advertisers.
“We have always said that the biggest obstacle or factor determining the growth of our advertising business is the buying habits of television buyers, that they traditionally tend to prefer traditional linear television over new things like television. streaming, ”Founder and CEO Anthony Wood said on the earnings call.
“And there’s a gap there as viewers switch to streaming versus ad dollars,” he said. “What we’ve seen, I think, in the pandemic is that this gap has started to narrow. But there is still a big gap and a lot of leeway. But the advertising momentum in general is very strong. ”
The company’s senior vice president and general manager of its platform business, Scott Rosenberg, also mentioned Roku’s growing appeal to different types of advertisers. This means those who might be more interested in broader branding initiatives, as well as those who are more focused on driving specific and direct sales goals.
“This is truly a unique attribute of streaming that can both compete at the top of the funnel – as the top brand medium of the funnel, as well as the performance medium of the funnel. middle and lower funnel, ”he said. “I think the reallocation of TV budgets, as well as digital and social budgets, to streaming is here to stay. ”
Analysts at Loop Capital, who upgraded Roku’s stock to “buy” this week, noted that Roku’s platform growth of 101% outperforms some of its ad-supported tech peers in the first quarter. Pinterest grew 78%, Amazon 77%, and Snap grew 66% in the quarter.
But the competition is looming, analysts at MoffettNathanson noted on Friday.
“If it was a less competitive market, we would all be in the Roku opportunity,” they wrote. “The problem is, in the longer term, we’re not convinced that Roku has built a large enough gap to prevent its competitors from going into business – and that’s certainly more true outside of the United States.”
They wrote that while focusing solely on streaming, Roku faces competition from OEM players like Vizio and Samsung, tech players like Amazon, Apple and Alphabet, and broadband players like Comcast and T-Mobile. .
“So when everyone’s looking for gold, it’s good to be in the excavator business until everyone else gets into the business,” they wrote.
CNBC Michael Bloom contributed to this report.