Roku Inc. shares dropped more than 10% in after-hours trading Wednesday despite a quarterly earnings report that topped expectations, as the company's profit projection for the holiday quarter came in light.

Roku reported a loss of $9.5 million, or 9 cents a share, on sales of $173.4 million, up from a loss of $8.79 a share a year ago on revenue of $124.8 million. Analysts on average expected a loss of 12 cents a share on sales of $170.4 million, according to FactSet.

For the holiday season, Roku projected sales in line with expectations, but forecast the bottom line in a range from a loss of $4 million to a profit of $3 million. Analysts on average were expecting fourth-quarter earnings of $7 million on average, according to FactSet; Roku reported net income of $6.9 million in the fourth quarter of 2017.

Roku, Inc. (ROKU) today announced that the company has hired Mustafa Ozgen as SVP and GM of Account Acquisition. Mustafa will join Roku in February from SmartKem Limited where he served as CEO. He replaces Chas Smith who serves as GM and SVP of Roku TVs and player. After a transition period, Chas is expected to retire and leave the company at the end of Q1 2019.

Fellow Shareholders,

2018 was an excellent year for Roku, with record results and solid progress towards our long-term vision of powering every TV in the world. As more than 3 million U.S. households cut the cord, Roku added nearly 8 million active accounts in 2018, increasing our total active accounts to more than 27 million at year end. We estimate that nearly 1 in 5 U.S. TV households now use the Roku platform to stream at least a portion of their TV viewing. While our growth has been impressive, we believe we are still only beginning to capitalize on the large opportunity streaming presents. We expect to reach $1 billion in revenuein 2019, by focusing on these key areas: increasing monetization per user and scaling the number of households using the Roku platform. With our fundamental strategic advantages and continued strong execution, we believe we are well positioned to deliver another excellent year.

A few 2018 highlights for the full year:

•Total net revenue grew 45% YoY to $742.5 million;
•Platform revenue increased 85% YoY to $416.9 million;
•Gross profit was up 66% YoY to $332.1 million;
•Roku added 7.8 million incremental active accounts in 2018 to reach 27.1 million at year end;
•Streaming hours increased by 9.2 billion hours to 24.0 billion;
•Average Revenue Per User (ARPU) increased $4.17 to $17.95 (trailing 12-month basis);
•Roku monetized video ad impressions more than doubled in 2018;
•More than one in four smart TVs sold in the U.S. were Roku TVs.


Q4 highlights

Q4 results exceeded our outlook for revenue, gross profit and adjusted EBITDA driven by strong operational execution and robust active account growth. We added 3.3 million incremental active accounts in the fourth quarter and ended 2018 with 27.1 million active accounts, thanks to great retail execution and strong holiday sales for both players and TVs. Player units were up 30% year-over-year with the highest growth coming from the sub-$50 category which drove an 8% decrease in average sales price (ASP). Our U.S. smart TV market share also continued to grow as “home grown” TV operating systems continue to become increasingly uncompetitive. We ended the year with Roku TV holding a significant lead among licensed TV OS solutions in the U.S.

Engagement on our platform continued to grow as Roku users streamed 7.3 billion hours in the quarter, up 69% year-over-year. In just the last 18 months Roku users streamed more than they did in the prior nine years of the company’s history. Finally, platform monetization was particularly strong as we continued to grow video advertising impressions across the platform, including on The Roku Channel. For the full year of 2018, Roku monetized video advertising impressions across the platform more than doubled year-over-year.

Amazon Is Reportedly Working on a Fire TV News App That Could Compete With Roku

March 29, 2019

As more people become cord cutters, turning away from traditional cable, companies are being pushed to innovate and adapt to the new ways people are consuming news and content.

With the competition becoming crowded, Amazon is reportedly working on a Fire TV app that would distribute ad-supported, live and on-demand video news updates from media partners, according to a report from The Information. An Amazon representative did not immediately return a request for comment from Fortune.

In addition to providing more content for viewers, The Verge points out that the app could also be used to generate ad dollars for Amazon. One way could be to run spots before the content opens, or between segments. The move would also position Amazon Fire TV to compete with the Roku Channel, which offers programming from ABC News, Cheddar, Yahoo, and other partners.

Roku drops after report says Amazon is turning up the heat on streaming

Apr. 3, 2019

Amazon is planning a "vast" expansion of its free streaming service on Amazon Fire TV devices, asking marketers to pledge millions of dollars to support the new offerings Cheddar reported, citing multiple people who held discussions with Amazon. Amazon declined to comment to Cheddar.

"Amazon has talked to executives at media companies and advertising agencies about its plans to include more ad-supported streaming channels to compete with Roku and Pluto TV, which offer free access to TV shows and movies with commercials," Cheddar's Michelle Castillo reported.

Advertisers are reportedly reluctant to pledge money before they know what content might be available on the new channels, and some buyers said Amazon is asking for "as much as a large cable network for advertising commitments."

Roku is the latest in a string of companies that have seen their share prices dip, if only briefly, following news that Amazon is expanding, or looking into expanding, into a given industry.

Roku shares have tripled this year but they just gained another bull

June 5, 2019

Even with shares up more than 200% so far this year, Roku now looks like a “buy” to Guggenheim’s Michael Morris.

He turned bullish on Roku’s stock in a Wednesday morning note, arguing that there’s more room to run as the hot streaming-media company continues to benefit from new over-the-top services as well as rising digital-ad spending.

“We recognize the heightened risk associated with the company’s high relative valuation but believe that at its current $10.6 billion market capitalization, Roku’s asset value is compelling given its strong and growing household penetration,” wrote Morris, who raised his price target on the stock to $119 from $79 in conjunction with the upgrade.

Morris argued that the company’s first-quarter results were “representative of the core trajectory for key metrics.” One data point that stuck out to him was Roku’s disclosure that its operating system was found in a third of all U.S. smart TVs sold during the period, up from “over 25%” the previous time Roku reported the statistic.

“Management once again expressed confidence that monetization of usage, which has lagged overall usage growth, is poised to follow consumer demand for streaming video,” Morris wrote. “We assume continued growth in demand for addressable video advertising opportunities and display advertising as new product launches allocate meaningful marketing budgets to endemic advertising opportunities to drive adoption.”

He expects the streaming-ad market to get a jolt “as growth in streaming volume and the higher advertising return on scaled, targeted video advertising becomes increasingly apparent.”

Roku stock falls amid new competition in streaming from Comcast, Facebook

Sept 18, 2019

Roku Inc. shares are off 8% in Wednesday trading after the company got some new competition in streaming video. Comcast Corp. announced that it would be giving internet-only customers a free Xfinity Flex device, which lets them watch their streaming services on a TV set. Also on Wednesday, Facebook Inc. announced its $149 Portal TV device, which supports video calls that get streamed to a TV set and also allows users to watch various programs.

Analyst initiates Roku with sell rating, says cost of streaming devices going to ‘zero’

Sep 20 2019

Key Points
.

• Pivotal Research Group sees Roku, an over-the-top (OTT) streaming device maker, stock falling 55% because it looks “overvalued despite the recent pullback.”
• Roku shares dropped sharply on Wednesday after Comcast announced it would be giving free Xfinity Flex streaming boxes to its internet-only subscribers, a direct competitor to Roku’s devices.
• “We see dramatically more competition emerging that will likely drive the cost of OTT devices to zero and put material pressure on advertising revenue,” Pivotal says.

Q3 Highlights

•Total net revenue of $260.9 million, up 50% Year-over-Year (YoY);
•Platform revenue of $179.3 million, up 79% YoY;
•Active Accounts of 32.3 million,a net addition of 1.7 million over last quarter;
•Streaming Hours increased 0.9 billion hours over last quarter, to 10.3billion;
•Average Revenue Per User (ARPU) of $22.58 (Trailing Twelve Months), up 30% YoY;
•Gross Profit of $118.5 million,up 50% YoY; and
•Roku monetized video ad impressions again more than doubled YoY.

OUTLOOK

We are increasing our revenue and gross profit outlook for 2019 reflecting our strong Q3 performance and the inclusion of dataxu for part of Q4. Our raised revenue outlook midpoint of $1.106 billion represents roughly 49% year-over-year growth, up from 46% year-over-year in our prior outlook. We expect Platform revenue to represent roughly two-thirds of total revenue including approximately $13 million in revenue from dataxu. We are raising our total gross profit outlook for 2019 to roughly $492 million at the midpoint, up from roughly $48 5million previously. We have updated our 2019 adjusted EBITDA outlook midpoint to $30 million from $35 million previously reflecting continued investment in the business as well as an approximately $5 million headwind to adjusted EBITDA in Q4 related to dataxu operations and dataxu acquisition related expenses.

Roku drops sharply on disappointing revenue and guidance

Thu, Feb 17 2022

Roku shares fell as much as 20% in extended trading on Thursday after the video-streaming company issued fourth-quarter revenue and first-quarter revenue guidance that came in below consensus.

Here’s how the company did:
.

• 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.

Revenue grew by 33% year over year in the quarter, according to a letter to shareholders, compared with 51% growth in the third quarter and 81% in the second quarter.

With respect to guidance, Roku called for $720 million in first-quarter revenue, which implies 25% revenue growth. The Refinitiv revenue consensus was $748.5 million. Roku said it sees $55 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, in the first quarter, below the $79.2 million consensus among analysts polled by FactSet.

Roku expects revenue growth in the mid-30s percentage range for all of 2022, Steve Louden, the company’s finance chief, said on a conference call with analysts. Analysts polled by Refinitiv had expected 36% growth. Louden said the company sees EBITDA would be consistent with 2020, when it was $150.0 million.

Not long after the announcement, Roku was trading at its lowest point since June 2020. During Thursday’s trading session, in which the S&P 500 index fell 2%, Roku’s stock had gone down 10%. Setting aside the after-hours move, Roku stock has fallen about 37% since the start of 2022, while the S&P was down about 8% over the same period.

Management attributed the slower growth to supply shortages that hurt the U.S. market for televisions.

“Similar to Q3, overall U.S. TV unit sales in Q4 fell below pre-COVID 2019 levels,” Anthony Wood, Roku’s founder and CEO, and Steve Louden, its finance chief, wrote in the letter. “Some of our Roku TV OEM partners were hit particularly hard with inventory challenges, which negatively impacted their unit sales figures and market share in Q4.”

The company chose not to pass on higher material and shipping costs in order to benefit user acquisition.

Roku reported 60.1 million active accounts in the fourth quarter. That figure was up 17% year over and year and more than the 59.5 million that analysts polled by StreetAccount had been looking for. The number of hours each active account watched declined year over 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 49% and lower than the StreetAccount consensus of $732.2 million. Platform revenue had grown 82% in the third quarter. The segment’s gross margin came in at 60.5%, narrowing from 65.0% in the third quarter.

Automotive and consumer packaged goods companies endured their own supply challenges, which resulted in light advertising spend, Wood and Louden wrote.

Player revenue, from sales of streaming players and audio devices, totaled $161.7 million, declining 9% as analysts surveyed by StreetAccount had expected $162.5 million.