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Author Message   Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3224 Registered: 05-2011 Rating: N/A Votes: 0 Posted on Friday, February 19, 2021 - 6:54 pm:    Roku (ROKU -1%) is streaming modestly lower today despite a strong Q4 earnings report last night. Expectations were certainly running high after the company's huge beat in Q3, although we had some concerns there was some pull forward to Q2-Q3 at the expense of Q4 due to the boom in streaming behavior during the pandemic. However, that turned out to be a non-issue. The quarter's numbers were pretty amazing. Analysts had been expecting a slight loss in Q4, but Roku posted sizable profit at $0.49/sh. Similarly, Roku achieved good Q4 revenue upside, and its Q1 revenue guidance was well ahead of analysts' expectations. Despite our concerns of a pull forward, Roku accelerated its new account growth by +5.2 mln in Q4 vs +2.9 mln in Q3. Granted, the holiday period tends to be seasonally strong, but the pull-forward dynamic hit Netflix (NFLX) in late 2020, so we thought Roku might follow suit. We tip our caps to Roku. Roku's scale has expanded considerably over the last several years. To put it in perspective, Roku's US active account base is more than twice the size of the video subscribers of the largest cable company in the US. Also, a third of all American homes are now non-pay TV households. In addition to increasing its subscribers count, Roku is also seeing growing engagement with its platform, with 2020 streaming hours up 20.9 bln yr/yr and up 55% yr/yr in Q4. Also, monetized video ad impressions were up over 100% in Q4, rebounding to pre-COVID growth levels. This deeper engagement also shows in Roku's ARPU, which rose 24% yr/yr to $28.76. Looking ahead, Roku sounds bullish on 2021. However, some variability is expected. In 1H21, yr/yr growth should be huge when Roku laps the early impacts from COVID-19 and the resulting economic lockdown. However, Roku will be lapping much tougher comparison in 2H21 due to its record performance in 2H20. Finally, as we said in our preview, Roku is not as clean-cut a streaming story as Netflix or Disney+. Unlike NFLX and Disney+, which stream ad-free and have high recurring revenues, Roku's Platform segment gets a big chunk of its revenue from digital advertising, which tends to be volatile. Relative to streamers that have less need to navigate advertisers' budgets, Roku is impacted more directly when macro conditions lead to reduced advertising spending, as occurred across verticals like retail and travel during 2020. The good news is that digital ad spending is robust right now. Another indication of this was the huge report from The Trade Desk (TTD) last night. In terms of why Roku is not trading higher, the stock has doubled in four months following the HBO Max and Peacock deals. The stock looks like it needs a bit of a breather.