Roku Inc (NASDAQ:ROKU) shares are trading higher in Tuesday’s after-hours session after Netflix Inc (NASDAQ:NFLX) reported better-than-expected financial results for the fourth quarter.
What Happened With Netflix: Netflix reported fourth-quarter revenue of $10.25 billion, beating analysts estimates of $10.11 billion. The streaming giant reported quarterly earnings of $4.27 per share, beating analyst estimates of $4.19 per share.
Shares appear to be soaring in response to the company’s strong subscriber growth. Netflix said it added 18.91 million paid subscribers in the quarter, bringing its total subscriber count up to 301.63 million.
Netflix noted that its advertising plan continues to be quite popular, generating over 55% of sign-ups in the quarter. The company’s ads plan grew nearly 30% on a quarter-over-quarter basis.
“We're on track to reach sufficient scale for ads members in all of our ads countries in 2025. A top priority in 2025 is to improve our offering for advertisers so that we can substantially grow our advertising revenue,” the company said.
NFLX Earnings: Netflix Q4 Earnings: Record Subscribers, NFL, ‘Squid Game’ Push Past ‘Highest Expectations’
Why It Matters For ROKU: Roku is well-positioned to benefit from strong advertising trends from Netflix and other streaming companies.
Roku creates revenue opportunities with streaming companies through partnerships and advertising. The company operates an advertising distribution platform, allowing it to capitalize on the growth of streaming. Netflix was reportedly considering a takeover of Roku a couple of years ago, but a deal never materialized.
Roku is due to report its fourth-quarter financial results in early February, although a date has not yet been confirmed by the company. Analysts expect Roku to report a loss of 41 cents per share and revenue of $1.15 billion, according to estimates from Benzinga Pro.
ROKU Price Action: Roku shares were up 3.71% in after-hours, trading at $82.70 at the time of publication Tuesday, according to Benzinga Pro.
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