Prediction: This Will Be Roku's Next Big Move
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Media-streaming technology veteran Roku (NASDAQ: ROKU) has plenty of growth catalysts up in the air. The most important and promising is the opportunity to grow the business abroad.
For example, digital advertising is bouncing back from three slow years, the company is diversifying its client list, and the Roku platform's home page ads provide a uniquely efficient marketing space. Roku is also in the early stages of integrating its ad services with The Trade Desk and its Unified ID 2.0 ad-tracking system.
And I haven't even mentioned the Emmy-winning Roku Channel yet, which adds another eyeball-magnet revenue stream. This company is pulling every possible lever to ensure long-term business growth.
That's all good stuff, but I'm only scratching the surface of Roku's many growth-boosting ideas. Nothing compares to the most important strategy in Roku's tool belt. It's a big world out there, and the next era of Roku's growth story will be written overseas.
The untapped potential of Roku's global markets
International sales are not a big deal yet. Roku doesn't even break out these sales in its quarterly earnings report but simply notes that non-U.S. sales account for less than 10% of total revenues.
But that will change over time. Of Roku's long-lived assets, 17% are found in the United Kingdom and other foreign countries. These assets are data center installations preparing Roku for local streaming services and content production facilities. The company is building a large footprint in overseas markets, far exceeding the current revenue generation in those countries.
Furthermore, Roku is actively distributing its media player hardware through major retailers in Brazil, Germany, Mexico, and the United Kingdom and is in the early stages of monetizing its products and services in places like Canada and Germany. Roku is taking the international opportunity very seriously -- and it's just getting started with this long-term strategy.
Lessons learned from Netflix
Roku isn't the first media-streaming expert to explore the international growth avenue. The greatest example is Netflix (NASDAQ: NFLX), which started out with deeply American DVD-mailer and streaming services before going global in 2016. The worldwide expansion was a pivotal moment in Netflix's history, opening the floodgates for torrential growth. It's easy see this top-line acceleration with the naked eye:
Soaring profits followed a few years later, and Netflix investors have pocketed a 4,430% return in 13 years. This is the role model Roku is emulating, with the added benefit of going global about a decade later.