01—Abstract
Summary
Summary of the 10-K filed March 2, 2020. Cited figures are marked; the original filing is the authoritative source.
Roku, Inc. reported total net revenue of $1,128.9 milliona for 2019, up 52% from $742.5 million in 2018, with platform revenue of $740.8 million (up 78%) and player revenue of $388.1 million (up 19%).
Gross profit rose 49% to $495.2 millionb, driven by platform gross profit of $478.1 million, while player gross profit fell to $17.1 million from $35.8 million. Active accounts grew to 36.9 million at December 31, 2019 from 27.1 million, and streaming hours rose to 40.3 billion from 24.0 billion. ARPU increased 29% to $23.14 from $17.95.
The company remained unprofitable: it posted a net loss of $59.9 millionc for 2019 (compared with $8.9 million in 2018), an operating loss of $65.1 million, and an accumulated deficit of $313.8 million. Operating expenses rose 62% to $560.3 million, led by research and development ($265.0 million) and sales and marketing ($178.9 million). Operating cash flow was $13.7 million, while financing activities provided $458.3 million, mainly from at-the-market equity sales of $330.5 million and a $100.0 million Term Loan A drawn in November 2019.
Cash and cash equivalents ended the year at $515.5 milliond. The filing also discloses the November 2019 acquisition of dataxu, Inc. for $148.4 million ($78.7 million cash and 571,459 shares), which added $72.7 million of goodwill and $70.2 million of identifiable intangible assets.
Management states that year-over-year growth in streaming hours in 2020 is likely to be lower than in 2019. Anthony Wood, the founder and CEO, controls a majority of combined voting power through Class B shares despite owning 15.8% of outstanding Class A and Class B stock.
02—Key points
Key Highlights
- Total net revenue grew 52% to $1,128.9 million in 2019, with platform revenue up 78% to $740.8 million and player revenue up 19% to $388.1 million.
- Platform gross profit reached $478.1 million (up 61%), while player gross profit declined 52% to $17.1 million due to royalty accruals, lower average selling prices and higher manufacturing and logistics costs.
- Active accounts increased 36% to 36.9 million, and streaming hours increased 68% to 40.3 billion; ARPU rose 29% to $23.14.
- Net loss widened to $59.9 million from $8.9 million in 2018, and the accumulated deficit stood at $313.8 million.
- Operating expenses rose 62% to $560.3 million, reflecting higher personnel costs, new headquarters facilities and increased legal and consulting fees.
- Financing raised $458.3 million in 2019, including $330.5 million from at-the-market equity sales and a $100.0 million Term Loan A; cash and cash equivalents were $515.5 million at year-end.
- Acquired dataxu, Inc. in November 2019 for $148.4 million; CEO Anthony Wood controls a majority of combined voting power via Class B shares despite owning 15.8% of the common stock.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2019, Roku lost $0.05.
- Revenue$1.13B100.0%
- Cost of revenue−$633.7M56.1%
- Gross profit$495.2M43.9%
- Operating costs−$560.3M49.6%
- Operating income−$65.1M5.8%
- Interest, other & tax$5.1M0.5%
- Net income−$59.9M5.3%
04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 2, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $1.13B$742.51M | +52.0% |
| Cost of Revenue | $633.70M$410.36M | +54.4% |
| Gross Profit | $495.22M$332.15M | +49.1% |
| R&D Expenses | $265.01M$170.69M | +55.3% |
| Operating Expenses | $560.28M$345.44M | +62.2% |
| Operating Income | -$65.06M-$13.30M | −389.3% |
| Interest Expense | $431K— | — |
| Net Income | -$59.94M-$8.86M | −576.7% |
| EPS (Basic) | $-0.52$-0.08 | −550.0% |
| EPS (Diluted) | $-0.52— | — |
| Shares Outstanding (Basic) | 115.22M104.62M | +10.1% |
| Shares Outstanding (Diluted) | 115.22M— | — |
05—Questions
Frequently Asked Questions
How did Roku's revenue and gross profit change in 2019?
Total net revenue was $1,128.9 million, up 52% from $742.5 million in 2018. Gross profit was $495.2 million, up 49% from $332.1 million. Platform gross profit grew 61% to $478.1 million, while player gross profit fell 52% to $17.1 million.
Is Roku profitable, and what drove the 2019 net loss?
No. Roku reported a net loss of $59.9 million in 2019, compared with $8.9 million in 2018, and an operating loss of $65.1 million. Operating expenses rose 62% to $560.3 million, mainly due to higher research and development, sales and marketing, and general and administrative costs.
What does the filing say about future streaming hour growth?
Management expects continued robust growth in aggregate streaming hours but believes year-over-year growth rates reported in 2020 are likely to be lower than the 68% growth reported in 2019. The 'Are you still watching' feature, which was fully rolled out in early 2020, is not expected to have a material impact on future financial performance.
What were the key 2019 financing and acquisition transactions?
Roku raised $330.5 million net through at-the-market equity offerings and borrowed $100.0 million under a Term Loan A facility in November 2019. It also acquired dataxu, Inc. for $148.4 million, consisting of $78.7 million in cash and 571,459 Class A shares. The company ended the year with $515.5 million in cash and cash equivalents.
How is control of Roku distributed among shareholders?
Class B common stock carries 10 votes per share and Class A carries one. As of December 31, 2019, CEO Anthony Wood controls a majority of the combined voting power while owning 15.8% of outstanding Class A and Class B common stock. Holders of Class B stock can continue to control matters submitted to stockholders even when they hold as little as 10% of outstanding shares.
06—Continue