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Roku warns of difficult comparisons to latter half of the year

Roku's CEO warned this year contains a lot of uncertainty, and difficult comparisons in the latter half of the year.
Written by Tiernan Ray, Senior Contributing Writer

Streaming set-top box and advertising programmer Roku this afternoon reported Q4 revenue that topped expecations and a surprise profit where analysts were expecting a loss, and an outlook for revenue that topped expecations. 

The report sent Roku shares rose modestly in late trading

CEO and founder Anthony Wood remarked that the company had a "strong Q4 and 2020," with "record revenue, gross profit and adjusted EBITDA, as consumers and the TV industry continued to shift to streaming."

However, Wood noted uncertainty this year: 

We are pleased with our 2020 results and the resilience of our business, and are optimistic about the year ahead. We believe we have sufficient visibility in the short-term to provide formal outlook for Q1. However, as we look farther ahead, the level of uncertainty compounds when trying to assess the net impact of a variety of factors such as the timing of the vaccine rollouts, emergence of new COVID-19 variants as well as the lasting economic impacts of the pandemic. Consequently, instead of providing a formal outlook for the full year, we will provide some directional perspective.

Wood also noted a difficult comparison to last year's results:

We are mindful that in 2021 year-over-year comparisons will be quite volatile. In the first half of the year, we expect strong financial comparisons as compared to the first half of 2020 which includes early impacts from COVID-19 and the resulting economic lockdown. While in the second half of the year, we anticipate much tougher comparisons thanks to our exceptional performance in 2H20, and Q3 in particular, as consumer interest in streaming surged and our monetization efforts rebounded from slower Q2 growth levels. 

Roku's number of active accounts jumped by 39% to 51.2 million in the quarter, it said.

Revenue in the three months ended in December rose to $649.9 million, yielding a profitt of 49 cents a share.

Analysts had been modeling $619 million and a 5-cent loss per share.

For the current quarter, the company sees revenue of $478 million to $493 million. That compares to consensus for $463 million and a 34-cent loss per share. The company expects adjusted Ebitda of $27 million to $34 million.

Update: On a phone call follwoing the report, Roku CFO Steve Louden told ZDnet that the quarter's upside was a result of a "strong confluence of positive trends from Q3." Louden, noting that Q4 is typically the company's strongest quarter of the year, said that nevertheless it was noteworthy that the company had "continued strong platform growth driven by accelerating advertising trends." 

Louden noted that a "key metric," the number of Roku-monetized ad impressions, more than doubled in the quarter, which he said "basically showed a return to pre-COVID levels when it was doubling on a year over year basis."

Operating expense managment was again helped las quarter by the pandemic's reduction of expenses overall, he noted. 

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