Roku Inc. (ROKU) offers a TV streaming platform and streaming devices. The platform acts as a TV streaming ecosystem: it enables consumers to seamlessly view thousands of channels on a wide range of streaming services, and enables content providers and advertisers to reach consumer audiences in markets around the globe. Roku generates revenue primarily through the sale of digital advertising, tools for audience development, and content distribution. It also sells its own Roku-branded TV and various streaming devices, such as players, streaming sticks, and smart sound bars.

Roku operates within the highly competitive TV streaming industry. Competitors include: legacy pay TV service operators, such as Comcast Corp. (CMCSA) and AT&T Inc. (T); companies that offer TV streaming devices, such as Inc. (AMZN), Apple Inc. (AAPL), and Alphabet Inc.'s (GOOGL) Google; TV brands offering their own TV streaming solutions; makers of video game consoles; mobile streaming platforms, such as Twitter Inc.'s (TWTR) Periscope; and companies offering other types of advertising platforms, like Facebook Inc. (FB) and Snap Inc. (SNAP).

Key Takeaways

  • Roku provides a platform for TV streaming and sells streaming devices.
  • The fast-growing Platform segment generates the most revenue and profits.
  • Roku has launched several new streaming services on its platform over the past year, including Discovery+, HBO Max, and Peacock.

Roku's Financials

Roku announced in mid-February financial results for Q4 of its 2020 fiscal year (FY), which ended Dec. 31, 2020. The company posted quarterly net income of $67.3 million, a significant improvement from the net loss of $15.7 million in the year-ago quarter. Net revenue for the fourth quarter rose 58.0% to a record $649.9 million. Gross profit also rose to a record $305.5 million, up 89.0% from the year-ago quarter.

Roku said that its advertising business remained resilient despite an advertising slowdown in the U.S. related to the COVID-19 pandemic. The company's monetized video advertising impressions in the fourth quarter more than doubled compared to the same three-month period a year ago. The gain was driven by advertisers following users from traditional TV to streaming platforms, a trend that was accelerated by the pandemic.

Roku's Business Segments

Roku operates two main business segments: the Platform segment and the Player segment. It provides a breakdown of net revenue and gross profits for each of these two segments.


The Platform segment generates revenue through the following sources: the sale of digital advertising and related services, content distribution, subscription and transaction revenue shares, premium subscriptions for customers wanting ad-free content, and licensing arrangements with service operators and TV brands.

The segment's gross profit rose 85.3% to $300.8 million in Q4 2020. Net revenue was $471.2 million, up 81.5% compared to the same three-month period a year ago. The Platform segment generates 98% of the company's gross profit and 73% of net revenue.


The Player segment generates revenue from the sale of streaming players, audio products, and related accessories. It includes sales of hardware, embedded software, and upgrades. Roku sells the majority of its players and audio products to retail distributors in the U.S., including brick-and-mortar and online retailers, as well as through its own website.

The segment generated gross profit of $4.6 million in Q4 2020, a significant improvement from the gross loss of $736,000 in the year-ago quarter. The Player segment contributes less than 2% of Roku's total gross profit. Net revenue for the segment rose 17.9% to $178.7 million in the fourth quarter, comprising about 27% of the company's total net revenue.

Roku's Recent Developments

Roku said in its Q4 2020 letter to shareholders that Discovery Inc.'s (DISCA) Discovery+ recently launched on Roku's platform starting in early 2021. In 2020, both NBCUniversal's Peacock and WarnerMedia's HBO Max streaming services were launched on Roku's streaming platform.

In September 2020, Roku announced the launch of the Roku operating system (OS) 9.4. The new OS brought the company's live TV channel guide for streaming channels to Roku TV models, provided surround level control for multi-channel audio, and enabled Apple Airplay2 and Homekit for seamless integration with Apple products.