Actions of Year jumped 8% on Friday after the video streaming company job fourth-quarter results that beat analysts’ expectations and delivered strong guidance.
Here’s how the company performed based on analyst estimates compiled by LSEG:
Earnings per share: 53 cents versus 28 centsIncome: $1.39 billion versus $1.35 billion”The biggest driver of our subscriptions business is just the secular trend of more and more services moving to a service like premium subscriptions instead of just building their own app,” Roku CEO Anthony Wood told CNBC’s Julia Boorstin on Friday. “That’s really, I think, the main driver.”
Roku executives said in their letter to shareholders that the fourth quarter was “the largest quarter on record” in terms of net additions to premium subscriptions. The program allows users to subscribe to different streaming services, like HBO Max and Paramount+, using a single login on the Roku platform.
The company said it plans to roll out premium subscription plans this year.
Revenue increased 18% from $1.03 billion a year ago. Net income totaled $80.5 million, or 53 cents per share, compared with a loss of $35.5 million, or 24 cents per share, a year earlier.
For the current period, Roku said it expects revenue of $1.2 billion, which is higher than the $1.16 billion expected by analysts, according to StreetAccount. It also projects annual revenue of $5.5 billion, beating analyst estimates of $5.34 billion, according to StreetAccount.
Last May, Roku acquired Frndly, a live subscription TV streaming service, for $185 million. The company also recently launched an ad-free streaming service, called Hiit costs $2.99 per month.
Wood told investors during the company’s earnings conference call that Howdy had the potential to become a “very large service” over time. Roku also said it was on track to surpass 100 million streaming households this year.
Analysts at Rosenblatt Securities upgraded Roku’s stock from neutral to buy on Friday, citing strong fourth-quarter results and several potential growth levers for the company in the near term.
“Big picture: Roku has built a formidable gatekeeper presence for streaming in the US – half of all US streaming on TVs comes through their devices,” the analysts wrote.
Rosenblatt highlighted the enhanced ability to monetize streaming through its partnership with Amazona new advertising tool for small and medium-sized businesses and changes to the front page for advanced ads.
Read more CNBC tech newsCorrection: Roku reported fourth-quarter earnings of 53 cents per share. An earlier version misinterpreted the figure.