Roku shares drop as Q4 guidance disappoints

Investong.com-- Roku Inc (NASDAQ:ROKU) reported better-than-expected third-quarter results but saw its shares fall 8% in after-hours trading as investors focused on the company's fourth-quarter guidance.

The streaming platform provider posted a narrower-than-expected loss of -$0.06 per share for the third quarter, significantly better than the analyst estimate of -$0.32. Revenue for the quarter came in at $1.06 billion, surpassing the consensus estimate of $1.02 billion and marking a 16% increase YoY.

Roku's Platform revenue, which includes advertising and content distribution, grew 15% YoY to $908 million. The company also reported its fifth consecutive quarter of positive Adjusted EBITDA and Free Cash Flow on a trailing 12-month basis.

Despite the strong Q3 performance, Roku's Q4 revenue guidance of $1.14 billion, while above the consensus of $1.11 billion, seemed to disappoint investors, leading to the stock's decline. The guidance represents a 16% YoY growth, with Platform revenue expected to grow 14% YoY.

Anthony Wood, Founder and CEO of Roku, commented on the results, stating, "We delivered strong results in Q3, our first quarter of more than $1 billion in Total net revenue, with Platform revenue up 15% YoY."

The company reported 85.5 million streaming households, a net increase of 2.0 million from the previous quarter. Streaming hours reached 32.0 billion, up 5.3 billion hours YoY.

Roku expects Q4 total gross profit of $465 million and Adjusted EBITDA of $30 million.

The company remains confident in its ability to grow Platform revenue in 2025 and beyond, focusing on increasing ad demand, leveraging its Home Screen, and growing Roku-billed subscriptions.