Roku stock comes alive in a better-than-expected Q4 report

Roku shares rallied after the close on Wednesday after the streaming specialist reported better-than-expected fourth-quarter results.

The company reported total revenue of $867.1 million for the period ended Dec. 31, which was in line with the prior-year period but significantly higher than Wall Street analysts’ forecast of $801.7 million. Another positive sign for investors was Roku’s guidance of $700 million in revenue for the first quarter, nearly $10 million higher than the current Wall Street consensus.

Roku, which has taken a hit over the past year-plus, rose 12% in regular trading to close at $63.49 and rose another 12% after the bell on the back of heavy pressure. The stock was one of the worst performers of 2022, falling 80% on fears of softening advertising and overspending on original content.

Roku also said it ended 2022 with 70 million active accounts, more than 10 million more than 2021. Total streaming hours increased 23% to 23.9 billion in the quarter.

Losses at Roku continued, with negative EBITDA of $95.2 million for the quarter compared to positive EBITDA of $86.7 million for the same period last year. On an operating basis, losses were $249.9 million compared with a profit of $21.4 million a year earlier. Despite all the red ink, the company still managed to clear the Wall Street bar on the bottom line, with earnings per share of -$1.70 beating analyst expectations of -$1.73.

Technology companies of all kinds have faced major economic challenges in recent months due to inflation, supply chain issues and other factors. Advertisers pulled back across the board, hurting the bottom lines of giants like Google and Facebook, as well as smaller players. In its quarterly letter to shareholders, Roku said it was experiencing some of the pressure others experienced during the holiday season, which is typically a good time for most consumer companies.

“While the holiday season is typically the busiest time for most consumer companies, as expected, this past fourth quarter was different,” the letter said. “Macro uncertainties and inflationary pressures weighed on the consumer electronics category. However, in the fourth quarter, sales of smart TVs in the US were better than expected, thanks to lower TV panel prices and shipping costs. Unit sales of Roku TV models in the US outperformed the overall market as consumers focused on value. International sales of Roku TVs also benefited from the same trend in the fourth quarter.