Streaming player maker Roku Inc (ROKU) is scheduled to post its fourth-quarter 2018 earnings on Feb. 21. With the rise of cord-cutters and the massive shift to over-the-top services, the company’s free offering The Roku Channel is expected to drive sales of its streaming hardware.
For a week in the fourth quarter, Roku provided free premium content from providers such as Discovery’s (DISCA) TLC, HGTV, Comcast (CMCSA) owned NBC Universal and so on. This is expected to drive up the hours streamed.
The $0 price tag of Roku’s own channel also pushes about 43% of new users to pick a Roku device, according to the company.
And higher the user base, higher the ad dollars — the major revenue generator for Roku.
Back in early January, Roku shares spiked after the streaming service posted bullish estimate for the fourth quarter, along with a 40% growth in the number of active accounts.
Preliminary results indicated that the number of streaming hours surged 68% to 7.3 billion hours during the to-be-reported period, much above the Street consensus.
In the previously reported third quarter, Roku posted a narrower net loss and higher revenues beating analyst forecasts. The company that rivals both Amazon (AMZN) for its Fire Stick and Prime Video, and Netflix (NFLX), ramped up its revenue guidance for fiscal 2018.
During the three months, net revenues jumped 39% year-over-year, helped mainly by 74% growth in the platform segment. Player revenue grew 9% with robust retail demand for streaming players.
At September-end, Roku had 23.8 million active accounts, up 43%. Average revenue per user (ARPU) soared 37% to $17.34 and the number of streaming hours surged 63% to 6.2 billion in the period.
Along with the strong results, Roku then raised its FY18 revenue growth forecast to 42% from the earlier 40% estimate. The outlook for gross profit growth was lifted to 63% year-over-year from the previous guidance of $61%.