Roku's platform sales officially passed device sales in Q1

Roku Channel
Roku said the largest driver of growth for its platform business is advertising. (Roku)

Roku’s strategy of putting its platform at the forefront of its business appears to be working as platform revenues officially passed device sales during the first quarter.

Roku reported $75 million in platform revenues, up 106% year over year. While the growth is impressive, another contributing factor to Roku’s shifting balance sheet is declining device revenue. For the quarter, Roku totaled up $61.5 million in device revenue, down 3% year over year.

Roku said the largest driver of growth for its platform business is advertising.

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In all, Roku’s first-quarter revenue totaled $136.6 million, up 36% from one year ago.

Perhaps more notable than differing revenues is the gross profit of $53.4 million derived from platform sales, up 90% year over year and significantly higher than the $9.7 million in gross profits from device sales.

Despite the promising growth in platform sales, Roku still posted a $6.9 million loss during the quarter as operating expenses swelled 50% year over year. Roku said its R&D budget grew 53% year over year and its sales and marketing budget grew 45% amid the focus on growing advertising, Roku TV, The Roku Channel and other new business opportunities.

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Roku ended the first quarter with 20.8 million active accounts, up 47% year over year. The company said that half of the new accounts came from licensed sources, primarily Roku TVs.

Although Roku’s shares took a beating last month when Amazon and Best Buy announced a new smart TV partnership, the company sounded optimist about growing the distribution of Roku TV models in 2018.

“We believe virtually every TV OEM will eventually need to license a TV OS, as consumers shift to smart TVs with 4K displays, and as OEMs focus on both cutting costs and boosting customer satisfaction. A case in point: TCL, now the #3 U.S. television brand, is getting high-praise reviews for a new line of Roku TVs now on shelves in Walmart, Best Buy and other major retailers,” Roku CEO Anthony Wood wrote in a letter to shareholders (PDF).