Roku stock is down 25% after the video-streaming company issued fourth-quarter revenue and first-quarter guidance that was below analysts’ expectations.
The company’s earnings per share (EPS) came in at $0.17 U.S. compared to $0.09 U.S. per share that was expected by analysts, according to Refinitiv data. However, Q4 revenue came in at $865.3 million U.S. compared to $894.0 million U.S. that Wall Street had expected.
Revenue grew by 33% year-over-year in the quarter, compared with 51% growth in the third quarter and 81% in the second quarter of last year.
With respect to guidance for the current first quarter, Roku called for $720 million U.S. in first-quarter revenue, which implies 25% growth. The Refinitiv revenue consensus was for Q1 revenue of $748.5 million U.S.
For all of this year, Roku said it now expects revenue growth in the mid-30s percentage range. Analysts polled by Refinitiv data had expected 36% growth for 2022.
Roku stock is now 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 declined 10%. Before today, Roku stock had fallen 37% year-to-date, while the S&P index was down 8% over the same period.
Management attributed the slower growth to supply shortages that hurt the U.S. market for internet-connected television sets. The company said it has chosen not to pass on higher material and shipping costs to benefit user acquisitions.
Roku reported 60.1 million active accounts in the fourth quarter of 2021. That figure was up 17% year-over-year and more than the 59.5 million that analysts had been looking for.
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 U.S. in revenue, up 49% but lower than the consensus estimate of $732.2 million U.S.
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. In the quarter Roku said it had completed an agreement with Google to keep YouTube and YouTube TV on its streaming service.