Rocco Shares tumbled as much as 20 percent in extended trading Thursday after the video streaming company released its below-consensus fourth-quarter revenue and first-quarter revenue guidance.
Here’s how the company did:
- gains: 17 cents a share, adjusted, versus 9 cents a share, as expected by analysts, according to Refinitiv.
- Revenues: $865.3 million, versus $894.0 million analysts had expected, according to Refinitiv.
In terms of guidance, Roku called for $720 million in first-quarter revenue, which means revenue growth of 25%. Refinitiv unanimously received $748.5 million in revenue. Roku said it expected $55 million in adjusted earnings before interest, tax, depreciation and amortization, or EBITDA, in the first quarter, below the consensus of analysts polled by FactSet of $79.2 million.
Steve Lowden, the company’s chief financial officer, said on a conference call with analysts that Roku expects revenue growth in the mid-30s percentage range. Analysts polled by Refinitiv had forecast 36% growth.
Soon after the announcement, Roku’s trading was at its lowest level since June 2020. During Thursday’s trading session, with the S&P 500 down 2%, Roku’s stock was down 10%. Regardless of the after-hours movement, Roku’s stock is down about 37% since the start of 2022, while the S&P is down about 8% over the same period.
The administration attributed the slowdown in growth to a supply shortage that hurt the US TV market.
“Similar to the third quarter, overall sales of U.S. TV units in the fourth quarter fell below pre-COVID 2019 levels,” Anthony Wood, founder and CEO of Roku, and Steve Louden, its chief financial officer, wrote in the letter. “Some of our Roku TV OEM partners were hit hard by inventory challenges, which negatively impacted unit sales numbers and market share in the fourth quarter.”
The company chose not to pass on high material and shipping costs in order to benefit from user acquisition.
“While we expect market conditions to keep costs related to players high in the near term, we do not believe these conditions will be permanent,” Wood and Louden wrote.
Roku announced 60.1 million active accounts in the fourth quarter. That number is up 17% year over year and more than the 59.5 million that analysts were looking for in a StreetAccount survey. The number of hours watched by each active account decreased year by year.
In the fourth quarter, the company’s platform segment, which includes subscription digital advertising, revenue sharing and sales of branded buttons on remote controls, generated $703.6 million in revenue, up 49% and below the StreetAccount consensus of $732.2 million. The platform’s revenue grew 82% in the third quarter. The sector’s gross margin came in at 60.5%, shrinking from 65.0% in the third quarter.
Wood & Louden writes that auto and consumer packaged goods companies have endured their own sourcing challenges, resulting in light advertising spending.
Total operator revenue, from sales of broadcast players and audio equipment, was $161.7 million, down 9% as analysts polled by StreetAccount expected $162.5 million.
Executives will discuss the results with analysts in a conference call beginning at 5 p.m. ET.
CNBC’s Ari Levy contributed to this report.
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