Streaming Service Roku's Stock Surges to a New High

May 9, 2019

By Rebecca Heilweil

As networks and tech companies continue to dive into streaming and over-the-top content, stock in the streaming device company Roku surged to an all time high, just a day after the company released its quarterly earnings report.

Now one of every three smart televisions sold in the U.S. runs on a Roku ($ROKU) operating system. The company services more than 29 million active accounts, two million of which were added in the last three months. It's not operating at a profit, but Roku has raised its expected annual revenue from $1.025 billion to a range of $1.03 to 1.05 billion.

"We have a broad-based, robust growth both on our platform business and our player business," Roku CFO Steve Louden told Cheddar. He says the company's platform business grew by 79 percent, and that it more than doubled its monetized video ad impressions.

Roku is known for its smart television players ー purchased for a flat price ー that stream content over the internet. Through Roku accounts, consumers can watch free, subscription-based, and rent-or-buy content from a variety of sources, including Netflix, YouTube, and traditional channels.

More than half of American adults use at least one OTT service, according to the adtech firm OpenX. Meanwhile, Magna Global reports that last year, OTT ad revenue hit more than $2.7 billion. The company predicts that number could reach $5 billion by 2020.

That growth has inspired strong interest in streaming from major media players, including Disney ($DIS) and Apple ($AAPL), which are both expected to debut streaming platforms later this year. In March, NBC announced that it too would be launching its own free news streaming service.

For Roku, that acceleration is an opportunity. "We're an essential partner, especially for new services, because we're the best place to grow audience. Not only do we have the biggest platform in the U.S., but we also have the most robust tool services to help them build viewership for their new services," said Louden. "They need to find a home on a place like Roku, and we have the most content out there right now."

Louden says the company doesn't plan to focus on original content production or licensing.

Roku isn't feeling threatened by mobile phones either. "For a lot of that long-term content, people like the big screen. They like to be in the living room," said Louden, though the company does offer a companion mobile app. "There's a lot of opportunities ahead in smart TVs."

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