(Reuters) -Roku forecasts annual revenue above Wall Street estimates and topped fourth-quarter revenue expectations on Thursday, signaling strong advertising sales as more customers switch to streaming platforms, sending its shares up 14% in extended trading.
The surge in political ad spending and the launch of streaming channels like Peacock, Disney+ and HBO Max have boosted Roku’s subscriber base, ad revenue and overall growth.
“We continue to make progress growing ad demand through deeper third-party platform integrations, improving the Roku Experience (which starts at our Home Screen) to expand monetization, and growing Roku-billed subscriptions,” the company said in a letter to shareholders.
Roku has expanded its advertising offerings to small- and medium-sized businesses, leveraging its home screen to diversify revenue streams across sectors.
Brands from retail, automotive and telecom now feature their ads in the platform, enhancing visibility and boosting user engagement. This move allows businesses to tap into Roku’s extensive user base.
The company’s platform segment, which derives revenue from ad sales and subscriptions, grew 25% to $1.04 billion due to advertising activities, particularly from the political vertical.
Ahead of the results, Barton Crockett from Rosenblatt said: “Political advertising on connected TV (CTV) stepped up meaningfully this cycle versus the last cycle, in part because of a big push into the medium by Kamala Harris.”
The company reported revenue of $1.20 billion in the fourth quarter, compared to the analysts’ average estimate of $1.15 billion, according to data compiled by LSEG.
For the full year, Roku expects net revenue of $4.61 billion, compared to analysts’ consensus estimate of $4.59 billion.
It expects revenue of $1.01 billion for the first quarter, which is in line with estimates.
(Reporting by Priyanka.G in Bengaluru; Editing by Alan Barona)
