I simply caught a convention presentation by Roku (ROKU -0.88%) founder and CEO Anthony Wooden. In a half-hour fireplace chat with an analyst at this week’s Morgan Stanley tech and media trade convention, Wooden highlighted some essential elements of Roku’s long-term progress technique.

Now, I do know what you are considering — “Company jargon? Enterprise communicate? Exhausting go!” However belief me: This speak was something however boring. Wooden dug deep into the video-streaming market and the way it’s shaking up the best way we eat media. I am right here to share a few of the juiciest takeaways with you so we will all keep forward of the curve.

Roku’s spectacular progress

Roku has been on fairly a journey during the last 20 years. Within the a long time since Wooden’s firm dreamed up the primary video-streaming set-top field to assist Netflix (NFLX -1.69%) and its newfangled digital content material thought, Roku has grown right into a family identify with thousands and thousands of customers throughout the globe.

However what actually caught my consideration was the staggering progress Roku has seen up to now yr. Regardless of the worldwide inflation disaster throwing a wrench into everybody’s plans and tightening each company and private funds belts, Roku managed so as to add 9.9 million lively accounts in 2022, bringing its complete to a whopping 70 million. Anthony credited this progress to a number of elements, together with elevated streaming demand and Roku’s increasing share of the media-player market.

Time to show the revenue spigot

It is not simply the variety of accounts that is spectacular — it is the extent of engagement. Benjamin dropped a mind-boggling statistic on us: Roku customers streamed a mean of virtually 4 hours of content material per day within the fourth quarter, a 5% enhance from the year-ago interval. That is an enormous period of time spent on the platform and a testomony to the standard and worth customers see in Roku’s merchandise.

Anthony identified that the corporate stands at a crossroads proper now, and the time is ripe to make an vital change.

“We felt that, within the earlier days, it was higher to reinvest as a lot as we may into buying market share in one thing that is going to be an enormous enterprise,” Wooden mentioned. “Now we have 70 million lively accounts and sufficient scale that simply looks as if the suitable time to transition to, OK, we’ll begin specializing in profitability and never simply market share.”

So Roku’s focus is shifting from pure-play consumer progress to a extra worthwhile marketing strategy. Step 1 was to construct a protracted checklist of lively customers, adopted by elevated engagement and viewing time per consumer. These two elements are nonetheless lively, however Roku additionally desires to generate extra top-line income and bottom-line revenue per consumer as of late. Unsurprisingly, this adjustment jogs my memory of how longtime associate Netflix is executing an analogous technique shift proper now.

In fact, Roku treats every particular market as a novel alternative. The monetization effort is essentially restricted to extra mature segments, just like the U.S. and Canada, thus far, however Wooden is raring to maneuver forward:

In lots of worldwide markets, we’re nonetheless within the grow-active-account part, however we’re beginning to transfer into the monetization part in some international locations. I feel Mexico is an effective instance. In Mexico, we used to have one TV OEM associate. Now we have now [around] 19 OEM TV companions. We have grown our market share to being the #1 TV OS in Mexico. We have launched the Roku Channel in Mexico. We have began constructing out an advert crew in Mexico. So we’re beginning to give attention to monetization. (edited for readability)

ROKU information by YCharts. TTM = trailing 12 months.

Large progress, no respect

I’m satisfied Roku will likely be a narrative of huge long-term progress because the digital video-streaming trade expands into each nook of the world. The only-minded distribution of streaming {hardware} and software program platforms has been joined by advert gross sales and authentic content material creation. And I am certain the market growth concepts will not cease there.

Roku’s gross sales have elevated by 509% during the last 5 years, however the inventory value solely rose 10% in the identical interval. Now, Roku shares commerce on the modest valuation of two.7 occasions gross sales, whereas the highest line is hovering at a five-year compound annual progress fee (CAGR) of 43.6%. It is a rocket-powered progress firm tethered to a geriatric deep-discount inventory.

In different phrases, Roku’s inventory seems to be like a no brainer purchase proper now. When the give attention to profitability begins to maneuver the needle, you do not wish to be left empty-handed as buyers embrace the in a single day success that was years within the making.