Roku posted strong first-quarter results paced by a 27% rise in advertising revenue.
Starting in the quarter, the streaming provider began breaking out ad revenue as a category within overall platform revenue. Ad revenue totaled $612.7 million.
Revenue hit $1.25 billion, up 22% and a bit better than Wall Street analysts’ consensus estimate. Earnings per share of 57 cents easily beat the Street outlook for 35 cents.
Revenue from subscriptions, which has also been on the upswing of late thanks to price increases and new distribution agreements, jumped 30% over the prior-year period to come in at $518.5 million. Roku’s premium subscriptions hub, a channels-style offering, had the most signups in its history during the quarter. It integrates several dozen subscription services into its overall streaming offering, aiming to reduce friction with content discovery and payments. While the subscription business is thus far weighted toward the U.S., the company is ramping it up internationally. Earlier this year, Roku announced it had passed 100 million global households.
In their quarterly letter to shareholders, executives said the quarterly numbers “affirm our path to sustaining double-digit platform revenue growth, expanding margins, and growing our north star metric of free cash flow per share. Free cash flow set a record in the quarter, the letter noted.
Execs also said third-party buying was a major factor in the upswing in ad revenue. “As we grow advertising demand and expand our programmatic capabilities, we are increasing fill rate and the share of Roku video impressions purchased through programmatic channels,” they wrote in the letter. “Ad spend through third-party programmatic partners increased more than 40% [year-over-year], fueled by deepening integrations with major demand-side platforms,” or DSPs.
The company has set deals with Google, Amazon, Yahoo and FreeWheel, giving ad buyers access to Roku inventory via most ad platforms.