Shares in Roku jumped in after-hours trading on Monday after the streaming device maker predicted first-quarter revenue above analysts’ estimates as Americans stay home for their entertainment amid coronavirus lockdowns.
Roku said that in late Q1, it “started to see the effects of large numbers of people ‘sheltering at home.’” As a result, it is now expecting total net revenue in the range of $307 million to $317 million, ahead of Wall Street estimates of $299.8 million and Roku’s own earlier forecast of $305 million as the midpoint of total revenue.
Roku shares rose 11.2% to $107.40 in the extended session as the company also reported preliminarily that, as of March 31, it had added nearly 3 million active accounts since the end of last year, bringing the total to 39.8 million.
It expects to report first-quarter streaming hours of 13.2 billion, up 49% year-over-year. Users spent 11.7 billion hours streaming on Roku devices in the fourth quarter of 2019.
“Consumers are turning to Roku now more than ever,” CEO Anthony Wood said in a news release.
Roku generates revenue from device sales, video ad sales and taking a fee when users subscribe to apps on its devices. It said it had expected slower user growth in the first quarter after it completed rolling out a feature that exits video playback after user inactivity but as people have stayed home, “this has resulted in an acceleration in new account growth and an increase in viewing.”
Wood said the company has been “working closely with advertisers to help update their plans to reflect new viewing patterns and adjust their overall marketing mix which has been affected by social distancing.”
Roku on Monday also withdrew its full-year 2020 financial outlook due to economic uncertainties arising from the coronavirus pandemic.
“While we believe that our offerings to consumers, content providers and advertisers will enable our company to deliver value in these uncertain times, the wider business and consumer impacts, as well as the duration of the pandemic, are unclear,” CFO Steve Louden said.