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Roku (NASDAQ:ROKU) is down a sharp 17.7% after a third-quarter earnings report in which it beat sales expectations but issued a bearish outlook for fourth-quarter sales and profitability.
Revenue rose 12% to $761 million, beating expectations as strong growth on the platform (up 15% to $670.4 million) offset a slowdown in player revenue (down 7% to $91 million). ) more than trumped.
However, gross profit fell 2% as platform revenue fell 1% to $374.2 million and player gross losses rose to $17.5 million. Gross margin declined 6.7 percentage points — down 9.2 points for Platform and down 4.2 points for Players.
With sharp cost increases, the company swung from an operating profit of $68.8 million last year to a hefty operating loss of $147 million.
The outlook was grimmer, however: Roku forecast fourth-quarter revenue of $800 million versus expectations of $894.6 million and gross profit of $325 million; a net loss of $245 million; and Adjusted EBITDA of -$135 million (below expectations for -$45.5 million).
The company was focused on “significant growth in scale and commitment.” Roku added 2.3 million additional active accounts in the quarter to reach 65.4 million (a 16% year-over-year growth); Sequential streaming hours increased 1.1 billion hours to 21.9 billion (up 21% YoY), and streaming hours on Originals Home The Roku Channel grew more than 90% YoY; and average revenue per user (trailing-12-month basis) rose to $44.25, up 10%.
Roku also said Chief Financial Officer Steve Louden plans to leave the company sometime in 2023 after helping recruit a successor and transition. He originally planned to leave in late 2019 before reversing course and staying with the company.
Conference call at 5:00 p.m. ET.