Roku shares fell as much as 20% in extended trading on Thursday after the video streaming company released fourth-quarter and first-quarter revenue forecasts that fell short of consensus.
Here’s how the company did it:
- Earnings: 17 cents per share, adjusted, versus 9 cents per share as expected by analysts, according to Refinitiv.
- Income: $865.3 million, versus $894.0 million as forecast by analysts, according to Refinitiv.
Revenue grew 33% year-over-year in the quarter, according to a letter to shareholdersagainst growth of 51% in the third quarter and 81% in the second quarter.
As for the forecast, Roku called for $720 million in Q1 revenue, implying 25% revenue growth. Refinitiv’s revenue consensus was $748.5 million. Roku said it expected $55 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, in the first quarter, below the consensus of $79.2 million among analysts polled by FactSet.
Roku expects revenue growth of around 30%, Steve Louden, the company’s chief financial officer, said in a conference call with analysts. Analysts polled by Refinitiv expected growth of 36%.
Shortly after the announcement, Roku was trading at its lowest since June 2020. In Thursday’s trading session, in which the S&P 500 index fell 2%, Roku’s stock was down by 10%. Aside from the after-hours move, Roku stock is down about 37% since the start of 2022, while the S&P is down about 8% over the same period.
Management attributed the slowing growth to supply shortages that hurt the US TV market.
“Consistent with the third quarter, overall U.S. TV unit sales in the fourth quarter fell below pre-COVID 2019 levels,” wrote Anthony Wood, Founder and CEO of Roku, and Steve Louden, its chief financial officer, in the letter. “Some of our OEM Roku TV partners were particularly impacted by inventory issues, which negatively impacted their unit sales numbers and market share in the fourth quarter.”
The company opted not to pass on higher hardware and shipping costs in order to drive user acquisition.
“While we expect market conditions to result in elevated player costs in the near term, we do not believe these conditions will be permanent,” Wood and Louden wrote.
Roku reported 60.1 million active accounts in the fourth quarter. That figure was up 17% year-over-year and more than the 59.5 million sought by analysts polled by StreetAccount. The number of hours watched by each active account has decreased year on year.
In the fourth quarter, the company’s Platform segment, which includes digital advertising subscription and revenue sharing and sales of branded buttons on remote controls, generated $703.6 million in revenue, up from 49% and below the StreetAccount consensus of $732.2 million. The platform’s revenue had increased by 82% in the third quarter. The segment’s gross margin was 60.5%, compared to 65.0% in the third quarter.
Automotive and consumer packaged goods companies have faced their own supply issues, leading to low advertising spend, Wood and Louden wrote.
Gamer revenue, from sales of streaming players and audio devices, totaled $161.7 million, down 9% from analysts polled by StreetAccount had expected $162.5 million.
During the quarter, Roku said it reached an agreement with Google to keep YouTube and YouTube TV on its service.
Executives will discuss the results with analysts on a conference call beginning at 5 p.m. ET.
– CNBC’s Ari Levy contributed to this report.
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