Last year was a good year for Roku.
The company reported $4.1 billion in revenue for 2024, an 18% jump year over year. Its platform business in particular, which includes ad sales and streaming distribution, reached $3.5 billion last year, also an 18% jump compared to 2023 (or 15% excluding political ad revenue).
But last quarter, advertising outpaced other revenue streams within Roku’s platform business. The uptick was thanks to stronger relationships with programmatic platforms and more ad supply on Roku home screens, said CEO Anthony Wood during the company’s Q4 earnings call on Thursday.
Roku also gained 9.8 million streaming accounts last year, including more than 4 million in the fourth quarter alone. And now that Roku has its line of proprietary smart TVs, its streaming household footprint is growing even faster, said Mustafa Ozgen, president of devices, products and technology. Paired with subscriber growth, the jump in ad revenue also helped raise Roku’s average revenue per user to $41.49, a 12% spike since this time last year.
Roku’s programmatic prowess
Roku is specifically touting closer relationships with demand- and supply-side platforms that should help get its supply in front of more buyers. “We now have integrations with every major demand- and supply-side platform,” said Charlie Collier, president of Roku’s media business. “And we’re building deeper integrations with all of them, [which] will drive more demand.”
Demand diversification is an especially important part of Roku’s revenue growth strategy lately. “We’re growing the number and types of advertisers we serve,” Collier said. For example, Roku rolled out its self-serve ad platform in September, joining a growing trend among streaming platforms to appeal to small and midsize businesses.
Roku’s goal, Collier said, is to “ensure our inventory is available to advertisers on whichever platforms are easiest and most efficient for them to activate.”
Roku’s home screen strategy
Roku’s home screen also plays a central role in the company’s quest to diversify its demand sources.
Until recently, Roku’s home screen inventory was limited to media and entertainment advertisers showcasing trailers to new films and TV shows. But over the past couple of years, Roku has been rolling out home screen ad inventory meant for all brand verticals, including “marquee” ads that play video when clicked and full-screen interactive ad units called “showrooms.”
“We are making better use of our home screen to drive more engagement and to drive more ad revenue,” Wood told investors, noting the home screen is a “key point” of Roku’s platform revenue growth. But this strategy can only work by being mindful and respectful of the user experience, he said. “We are very careful about putting ads on our home screen” so as to not sacrifice customer satisfaction in pursuit of more ad revenue. In other words, users get to decide whether they want to engage with a clickable ad, rather than being interrupted from scrolling through shows.
Pepsi and Neutrogena are two examples of brands that have recently run ad campaigns on Roku’s home screen.
Opening up the home screen to all advertisers means “we’re not reliant on M&E for business results like we used to be,” Collier said.
