To The Moon

Roku$Roku Inc(ROKU)$ 's(ROKU-10.46%)stock has been hit hard over the past year, but there was some good news in its most recent earnings report. We examine the company's impressive growth in key areas.

First we can just see Roku has definitely taken quite a hit from its year. Today it's down about 72%. But if we turn and take a closer look at some of the fundamentals of the company, we can see that they have plenty of cash and short-term investments about $2.2 billion. They are positive in cash flow from operations and they have very low-term debt.

This is a company also growing at impressive levels. In their most recent quarter, they grew about 28%. This is after a strong year of comparison last year. We could see in the past year there was a quarter where they were growing over 75%. In some quarters they were growing around 40%, 30%.

Roku, for those that are not familiar, this is a company that makes money in two different ways. First is their platform revenue. This is their operating system. They do have a lot of great tools here, for example, advertisement and analytics for streaming companies. We can see this is their biggest revenue segment that was $646 million up 39% year over year.

Then they have their player revenue, a smaller portion. But this is their hardware stuff. Unfortunately, that was down 90% for numerous reasons. One thing is just supply constraints and supply chain issues happening at the moment. Then just the overall macroeconomics, as well as probably less people right now, are focusing on maybe purchasing TVs or they did a big TV purchase maybe same time last year that they don't have to purchase a new one right now.

But like I mentioned, total net revenue grew about 28%. Some pretty cool statistics about Roku is first active accounts. That grew 14% year over year to now 61.3 million, and it actually grew quarter over quarter. Streaming hours are also increasing. Streaming hours this most recent quarter was roughly 21 billion hours up 14% again, year over year and it was also up quarter over quarter.

We can see the streaming world is definitely growing still. Average revenue per user is also increasing about 34%, and now they make up roughly $42.91 per user, which I think is an insane number. Roku is one that I like a lot because this is a company that hey, doesn't matter who the true streaming winner is going to be, it's going to most likely be here.

Here is a perfect example of how their operating system works. Disney$Walt Disney(DIS)$ (DIS-3.77%)for example, pay for some advertisement space where they recently announced the movie, Turning Red. Obviously, Disney pays Roku to put this in their homepage. Now, this is going to drive even more sign-ups for the streaming platform.

Roku is also building their own original content and working with other partners to increase that content to the Roku channel. Again, I do believe in the past week we've seen a lot of negative news about the advertisement market. I know Snap$Snap Inc(SNAP)$ (SNAP-5.82%)released that, I believe last Monday, released that SEC filing that they would not meet the low-end guidance of their most recent revenue, which I think they presented about a month ago. This cost a lot of kind of these AdTech companies to drop.

I think Roku is one that like I mentioned, the streaming market continues to grow, doesn't really matter who the winner is. As right now we have huge competition in this space, obviously, these companies are going to be focusing on advertising and make sure they grab a lot of viewers right now. Pretty much Roku, I think, is looking pretty impressive right now and their earnings were pretty strong as well.

Correct me if I'm wrong here, but a part of the bullish case for Roku is that they could just be a reseller, of Disney+. I think that's been an interesting dynamic change that I have taken time to wrap my head around is that like Netflix$Netflix(NFLX)$ (NFLX-5.10%), for example, always wanted to take 100% of the revenue or as close to 100% as possible of whatever the monthly fee was.

A company like Disney and HBO[a part of Warner Bros. Discovery$Warner Bros. Discovery(WBD)$ (WBD-4.93%)] are much more used to the bundling model where they're fine with being part of a Roku bundle, as long as Disney+ or HBO Max is part of that bundle, that main bundle. We may be seeing differing models where maybe you buy all your content from Roku and I buy all my stuff fromApple$Apple(AAPL)$ (AAPL-3.86%), and we're both accessing Disney+.

I just think that's worth pointing out. The valuation at one point was really high when you think that they're going to be a streaming giant and an advertising giant. But if you think about them as just a distributor, I think that's a really compelling piece of their business model because that's, I mean, they've got the business for that. They're on every TV. Like you can't get away from them.