Roku(ROKU) - 2024 Q4 - Annual Results

Shareholder Letter & Performance Highlights Roku delivered strong Q4 and full-year 2024 results, with Platform revenue exceeding $1 billion and total net revenue reaching $4.1 billion, driven by user growth and increased streaming hours Q4 & Full Year 2024 Performance Summary Roku achieved strong Q4 and full-year 2024 results, with Platform revenue exceeding $1 billion and total net revenue reaching $4.1 billion, alongside significant user and streaming hour growth - Q4 2024 was the first quarter with over $1 billion in Platform revenue, a 25% YoY increase[2] - The company's penetration in the U.S. has surpassed half of all broadband households[2] Full Year 2024 Key Results | Metric | Full Year 2024 | YoY Change | | :--- | :--- | :--- | | Total Net Revenue | $4.1 billion | +18% | | Platform Revenue | $3.5 billion | +18% | | Gross Profit | $1.8 billion | +19% | | Streaming Households | 89.8 million | +9.8 million | | Streaming Hours | 127.1 billion hours | +21.1 billion hours | | ARPU (TTM) | $41.49 | +4% | Q4 2024 Financial Highlights (YoY) | Metric | Q4 2024 | YoY Change | | :--- | :--- | :--- | | Total Net Revenue | $1,201.0 million | +22% | | Platform Revenue | $1,035.3 million | +25% | | Devices Revenue | $165.7 million | +7% | | Total Gross Profit | $512.6 million | +17% | | Adjusted EBITDA | $77.5 million | +62% | Segment Performance Roku's Devices segment maintained market leadership despite negative margins, while the Platform segment achieved strong revenue growth driven by advertising and user engagement initiatives Devices Segment The Devices segment maintained its 1 TV OS market leadership in North America, with full-year revenue growth, despite negative Q4 gross margins due to seasonal discounts - Maintained 1 selling TV OS position in the U.S. for the sixth consecutive year, as well as in Canada and Mexico[5][7] - Sold more than 1 million Roku-branded TVs in 2024, the first full year of sales, and expanded retail distribution to Target, Amazon, and Walmart[5][7] Devices Segment Financials | Period | Revenue | YoY Change | Gross Margin | | :--- | :--- | :--- | :--- | | Full Year 2024 | $590.1 million | +20% | (14)% | | Q4 2024 | $165.7 million | +7% | (29)% | Platform Segment The Platform segment achieved strong growth, with Q4 revenue exceeding $1 billion, driven by advertising and strategic initiatives to enhance user experience and content monetization Platform Segment Financials | Period | Revenue | YoY Change | Gross Margin | | :--- | :--- | :--- | :--- | | Full Year 2024 | $3.5 billion | +18% | 53.5% | | Q4 2024 | >$1 billion | +25% | 54.1% | - Excluding political ad spend, full-year 2024 Platform revenue grew 15% YoY[9] - Political ad spend represented approximately 6% of Platform revenue in Q4 2024[9] The Roku Experience Roku is enhancing its user experience through AI-powered content discovery and dedicated sports zones to boost engagement, premium subscriptions, and ad reach - Debuted an AI-powered content row on the Home Screen, which has helped drive growth in Premium Subscription sign-ups and video ad reach in The Roku Channel[11] - The Roku Sports Zone, which organizes sports programming, contributed to significant growth in viewers and Streaming Hours for sports content in 2024[11][12] The Roku Channel The Roku Channel achieved 82% YoY growth in Q4 Streaming Hours, driven by enhanced content discovery and expanded live sports offerings, maintaining its position as a top app - Q4 Streaming Hours on The Roku Channel grew 82% YoY[13] - In December, over 80% of Streaming Hours on The Roku Channel originated from the Roku Experience, a 15-point increase from the previous year[13] - Expanded live sports offerings with partnerships for NBA G League games and the X Games[14] Streaming Services Distribution Streaming service distribution outpaced Platform revenue growth in 2024, achieving record Premium Subscription net adds in Q4 due to expanded offerings and improved integration - Q4 2024 was the highest quarter of Premium Subscription net adds since its launch in 2019[17] - Recently added Max, Crunchyroll, and the BET+ ad-tier to its Premium Subscriptions offerings[17] Advertising Activities Q4 advertising activities outpaced the broader ad market, driven by strong growth in key verticals and new product launches like Roku Ads Manager and strategic partnerships - Launched Roku Ads Manager, a self-service platform for SMBs, and announced Roku Exchange and Roku Data Cloud to drive new ad demand[19] - Expanded programmatic partnerships, making Roku ad inventory available to more demand partners, including a partnership with Yahoo DSP[19] - Deepened partnership with Instacart to make TV ads shoppable, demonstrating ROI and creating personalized shopping experiences[20] Outlook Roku forecasts continued revenue growth for Q1 and full-year 2025, maintaining operational discipline with a clear path to achieving positive operating income by 2026 Q1 2025 and Full Year 2025 Guidance Roku forecasts 14% YoY revenue growth for Q1 2025 and expects $4.61 billion in total net revenue for FY2025, with a clear path to positive operating income by 2026 Q1 2025 Outlook | Metric | Q1 2025 Estimate | YoY Change | | :--- | :--- | :--- | | Total Net Revenue | $1.005 billion | +14% | | Total Gross Profit | $450 million | - | | Adjusted EBITDA | $55 million | - | Full Year 2025 Outlook | Metric | FY 2025 Estimate | YoY Change | | :--- | :--- | :--- | | Total Net Revenue | $4.610 billion | - | | Platform Revenue | $3.950 billion | +12% | | Devices Revenue | $660 million | +12% | | Total Gross Profit | $2.005 billion | - | | Adjusted EBITDA | $350 million | - | - The company anticipates a path to being operating income positive for the full year 2026[23] Financial Statements and Reconciliations Roku's financial statements reflect significant improvements in profitability, with reduced net losses and increased cash and equity, alongside strong Adjusted EBITDA and Free Cash Flow Consolidated Statements of Operations For FY2024, Roku reported $4.11 billion in total net revenue, significantly reducing its loss from operations to $(218.2) million and net loss to $(129.4) million Annual Statement of Operations (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total net revenue | $4,112,898 | $3,484,619 | | Total gross profit | $1,805,645 | $1,522,615 | | Loss from Operations | $(218,167) | $(792,377) | | Net Loss | $(129,386) | $(709,561) | | Net loss per share | $(0.89) | $(5.01) | Consolidated Balance Sheets As of December 31, 2024, Roku's balance sheet reflects an improved financial position with total assets of $4.30 billion, decreased liabilities, and increased stockholders' equity Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,160,236 | $2,025,891 | | Total Assets | $4,303,933 | $4,261,792 | | Total Liabilities | $1,811,196 | $1,935,459 | | Total stockholders' equity | $2,492,737 | $2,326,333 | Consolidated Statements of Cash Flows For FY2024, Roku generated $218.0 million in net cash from operating activities, significantly reduced cash used in investing, and ended the year with $2.16 billion in cash and equivalents Annual Cash Flow Statement (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $218,045 | $255,856 | | Net cash used in investing activities | $(25,061) | $(92,619) | | Net cash used in financing activities | $(89,203) | $(61,243) | | Net increase in cash | $103,781 | $101,994 | | Cash and cash equivalents — End of period | $2,160,236 | $2,025,891 | Non-GAAP Reconciliations Roku's non-GAAP metrics demonstrate a significant turnaround, with Adjusted EBITDA reaching $260.2 million for FY2024 and TTM Free Cash Flow at $203.2 million Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Period | Net Loss | Adjusted EBITDA | | :--- | :--- | :--- | | Q4 2024 | $(35,548) | $77,498 | | Q4 2023 | $(78,291) | $47,737 | | FY 2024 | $(129,386) | $260,208 | | FY 2023 | $(709,561) | $4,294 | Free Cash Flow (TTM, in thousands) | Period | Cash flow from operations | Free cash flow (TTM) | | :--- | :--- | :--- | | Q4 2024 | $218,045 | $203,238 | | Q4 2023 | $255,856 | $175,891 |