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.
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).