In the streaming world, imitation is the sincerest form of flattery—in more ways than one.
Roku is following in the footsteps of Netflix and will, starting in 2025, no longer break out streaming households and average revenue per user (ARPU) each quarter, Roku announced as part of its Q3 earnings Wednesday. In a letter to shareholders, the CTV company noted that it will continue to report major milestones—such as reaching 100 million streaming households, which Roku projects it will hit in the next 12–18 months.
Other than changing how it shares growth figures moving forward, it was mostly business as usual for the CTV giant. Streaming households grew by 2 million quarter over quarter, totaling 85.5 million, according to Roku’s shareholder letter, and streaming hours for its free streaming platform The Roku Channel also jumped 80% year over year to 32 billion total hours, and the US presidential debate on June 27 delivered The Roku Channel’s FAST offering its “highest day ever for reach and engagement,” the company said.
ARPU hit $41.10, up from $40.68 last quarter. Overall, total net revenue came in at $1.062 billion, a 16% YoY increase.
“Q3 performance was primarily driven by our platform segment in both revenue and gross profits,” CFO Dan Jedda said. “Platform revenue…was driven by both streaming services distribution and advertising.”
The company’s fourth-quarter guidance, though, fell below analyst expectations, and its stock price fell by around 17% on Thursday, Yahoo Finance reported.
Growing pains: On the advertising side, Roku’s political, retail, and CPG ad verticals grew YoY, while its media and entertainment and health and wellness ad verticals were “pressured,” according to the shareholder letter. Roku’s integration with DSPs including The Trade Desk has grown advertising opportunities overall.
“We’re really just getting started with programmatic expansion,” Anthony J. Wood, Roku’s founder and CEO, said on the company’s earnings call.
Sportstar: Roku has also leaned into sports through Roku Sports Zone, areas on Roku’s home screen where users can find sports content, according to its shareholder letter. The number of households that streamed from one of its Sports Zone features increased 68% quarter over quarter, and the number of streaming hours attributed to Sports Zone features doubled in the same timeframe. Its NBC Olympic Zone also “helped to drive Peacock sign-ups, and a significant portion were first-time subscribers,” according to the shareholder letter.
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Something for everyone: Roku has also been focused on increasing its content partnerships, according to the shareholder letter. In addition to distributing Disney and Paramount FAST channels, it’s leaned into branded content partnerships to support its own programming. Roku worked with Ally Financial for the second season of its original series Side Hustlers, featuring supermodel Ashley Graham. The program “drove a significant lift in brand favorability and program viewership increased the likelihood a viewer would open an Ally account,” the shareholder letter read.
With that said, “original content isn’t a significant investment for us in terms of cost,” Jedda said. “While we will absolutely continue to invest in this content because our streamers love it, it’s not a material portion of our overall cost structure within The Roku Channel.”
What’s next: Looking ahead, Roku is looking for cost-effective ways to integrate generative AI throughout the company, Wood told investors. It’s already leaned into AI with Roku Ads Manager, a self-service ad platform that includes an AI-powered video upscaling tool and debuted back in September. The company also recently received a Notice of Allowance from the US Patent and Trademark Office on a patent application it filed for ad tech that can detect when content is paused and play ads, although the issuance of a patent doesn’t necessarily mean the tech will be used in its products.
On the advertising side, the streamer is planning a third iteration of its “Joyfully, Roku” ad campaign ahead of the holiday season.
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