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Why is it performing better than Roku shares?




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Streaming media player maker Roku (NASDAQ: ROKU) has risen 280 percent since September 2017. Although Roku is best known for its streaming hardware (Player), it is a profitable platform business that generates revenue through subscription, transaction revenue and licenses for the Roku OS TV brand. In this analysis we look at the key drivers of the Roku business, revenue, costs, and potential business interruptions in Trefis.

View interactive dashboard analytics Why is it performing better than Roku shares? By modifying the major drivers, you can reach your own assessment of the company and the breakeven period. You can also see everything. Trefis Technology company data can be found here..

1. How is Roku's revenues trending and what are the prospects for major business segments?

  • Roku's total revenue grew from approximately $ 320 million in 2015 to approximately $ 740 million in 2018, primarily driven by the platform division.
  • The three-year average annual growth rate of platform sales was 102%, and the Players division grew 6%.
  • Total turnover is expected to increase by 41% in 2019 and by 34% in 2020.
Trekis

1.1 Roku's platform business is the biggest driver of growth

  • Roku's platform segment accounted for 55% of total revenue in 2018 and increased 15% in 2015.
  • Key drivers for Roku's platform revenue are Active Accounts and Average Revenues Per User.
  • The number of active Roku accounts has increased from 9 million in 2015 to approximately 27 million at the end of 2018. The installation base of Smart TVs with Roku player and Roku OS has increased.
  • At Q1, the company estimated that the ideal of three smart TVs sold in the US is powered by Roku.
  • ARPU has risen from about $ 9 in 2016 to about $ 18 in 2018, driven by ad sales, subscriptions, and daily purchases on our platforms.
    Companies can reduce purchases on their platforms by 20% and bring ad inventory up to 30% on ad-supported channels.

1.2 Roku's player revenues could rise to lower price points, a new launch

Player revenue represents revenue from the sale of Roku streaming players, accessories, and audio products.

Sales were sluggish between 2015 and 2017, but in 2018, prices fell and sales increased.

We expect this strategy to continue to drive growth in 2019 and 2020.

2. Roku's gross margins and OpEx are trend & amp; When can it break?

2.1 A higher mix of platform revenue facilitates gross margins

  • Roku's gross margins have been on the rise due to higher revenues from high-margin platforms (platform gross margin is 71% in 2018, 11% of players)
  • Although overall margins are anticipated to expand, we expect the platform margins to be lower due to the introduction of a premium subscription system, in which the mix ratio of video ads with low margins is high and total sales account for a large portion.

2.2 How did Roku's operating costs rise? What is Outlook?

  • R & D costs grew to about $ 107 million in 2018, with a CAGR of 50% per year over the three year period.
  • R & D expenditures are expected to increase to approximately $ 366 million by 2020 as companies continue to invest in platform and product development.
  • Sales, marketing and G & A expenses grew at a CAGR of 3% and a growth rate of about 31%. However, these costs are expected to grow more slowly in the future.

2.3 Estimated Operating Profit & amp; Potential equal rest

  • Locke's operating profit is estimated as total profit-operating cost.
  • We think Roku is likely to reach downtime by 2020 because the cost is growing faster than revenue.

3. Estimate the fair value of Roku

3.1 Earnings per share

3.2 Arrival of Roku's Price Estimate Using Multiple Revenues

  • Roku shares are 11 times the 2019 estimated earnings per share.

What is the background of Trefis? Learn how to leverage new collaboration and What-If.

For CFO and Finance Team | Products, R & D and Marketing Team

More Trefis data

Like our chart? quest Interactive Dashboard Example You can make your own.

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Streaming media player maker Roku (NASDAQ: ROKU) has risen 280 percent since September 2017. Although Roku is best known for its streaming hardware (Player), it is a profitable platform business that generates revenue through subscription, transaction revenue and licenses for the Roku OS TV brand. In this analysis we look at the key drivers of the Roku business, revenue, costs, and potential business interruptions in Trefis.

View interactive dashboard analytics Why is it performing better than Roku shares? By modifying the major drivers, you can reach your own assessment of the company and the breakeven period. You can also view all Trefis technology company data here.

1. How is Roku's revenues trending and what are the prospects for major business segments?

  • Roku's total revenue grew from approximately $ 320 million in 2015 to approximately $ 740 million in 2018, primarily driven by the platform division.
  • The three-year average annual growth rate of platform sales was 102%, and the Players division grew 6%.
  • Total turnover is expected to increase by 41% in 2019 and by 34% in 2020.

1.1 Roku's platform business is the biggest driver of growth

  • Roku's platform segment accounted for 55% of total revenue in 2018 and increased 15% in 2015.
  • Key drivers for Roku's platform revenue are Active Accounts and Average Revenues Per User.
  • The number of active Roku accounts has increased from 9 million in 2015 to approximately 27 million at the end of 2018. The installation base of Smart TVs with Roku player and Roku OS has increased.
  • At Q1, the company estimated that the ideal of three smart TVs sold in the US is powered by Roku.
  • ARPU has risen from about $ 9 in 2016 to about $ 18 in 2018, driven by ad sales, subscriptions, and daily purchases on our platforms.
    Companies can reduce purchases on their platforms by 20% and bring ad inventory up to 30% on ad-supported channels.

1.2 Roku's player revenues could rise to lower price points, a new launch

Player revenue represents revenue from the sale of Roku streaming players, accessories, and audio products.

Sales were sluggish between 2015 and 2017, but in 2018, prices fell and sales increased.

We expect this strategy to continue to drive growth in 2019 and 2020.

2. How will Roku's total margin and OpEx change?

2.1 A higher mix of platform revenue facilitates gross margins

  • Roku's gross margins have been on the rise due to higher revenues from high-margin platforms (platform gross margin is 71% in 2018, 11% of players)
  • Although overall margins are anticipated to expand, we expect the platform margins to be lower due to the introduction of a premium subscription system, in which the mix ratio of video ads with low margins is high and total sales account for a large portion.

2.2 What are the operating costs trends and forecasts for Roku?

  • R & D costs grew to about $ 107 million in 2018, with a CAGR of 50% per year over the three year period.
  • The company expects R & D spending to increase to approximately $ 366 million by 2020 by continuing to invest in platform and product development.
  • Sales, marketing and G & A expenses grew at a CAGR of 3%, an increase of about 31%. However, these costs are expected to grow more slowly in the future.

2.3 Tentative Estimation of Operating Profit and Potential Income

  • Locke's operating profit is estimated as total profit-operating cost.
  • We think Roku is likely to reach downtime by 2020 because the cost is growing faster than revenue.

3. Estimate the fair value of Roku

3.1 Earnings per share

3.2 Arrival of Roku's Price Estimate Using Multiple Revenues

  • Roku shares are 11 times the 2019 estimated earnings per share.

What is the background of Trefis? Learn how to leverage new collaboration and What-If.

For CFO and Finance Team | Products, R & D and Marketing Team

More Trefis data

Like our chart? For example, you can explore an interactive dashboard and create your own dashboard.


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