Roku drops sharply on disappointing revenue and guidance

The video-streaming company issued fourth-quarter revenue and first-quarter revenue guidance that came in below consensus.

The company did it.

• Earnings: 17 cents per share, adjusted, vs. 9 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $865.3 million, vs. $894.0 million as expected by analysts, according to Refinitiv.

In the third quarter, revenue grew by 51% and in the second quarter it grew by 81%.

The U.S. market for televisions was hurt by supply shortages.

TV unit sales in the US fell below pre-COVID levels in the fourth quarter, according to a letter from Anthony Wood and Steve Louden, its finance chief.

The company decided not to pass on higher material and shipping costs in order to benefit users.

Wood and Louden wrote that they do not believe the market conditions will be permanent.

In the first quarter, the company called for $720 million in revenue, which implies 25% revenue growth. The Refinitiv revenue was higher than expected. In the first quarter, the company sees adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of $55 million, below the $82 million consensus among analysts.

The stock was trading at its lowest point in over a year. In the trading session on Thursday, the S&P 500 index fell 2% and the stock of Roku went down 10%. Since the start of the year, the S&P has fallen 8% while the stock of Roku has fallen about 37%.

In the fourth quarter, there were 60.1 million active accounts. That figure was up more than analysts had been looking for and it was more than the 59.5 million that they had been looking for. The number of hours each account was watched declined over time.

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 49% and lower than the StreetAccount consensus of $732.2 million. In the third quarter, platform revenue grew. The gross margin for the segment narrowed from the third quarter to the fourth quarter.

Light advertising spend resulted from automotive and consumer packaged goods companies' supply challenges.

The revenue from the sales of streaming players and audio devices was down as analysts had expected.

In the quarter, the company said it had an agreement with the company to keep the service.

Executives will discuss the results with analysts on a conference call. Time.

CNBC's Ari Levy contributed to the report.

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