Roku , Inc. (NASDAQ:ROKU) reported its fourth-quarter earnings, slightly surpassing analyst expectations for revenue but still posting a loss per share.
The company's Q4 revenue reached $984.4 million, exceeding the consensus estimate of $965.85 million. However, the adjusted earnings per share (EPS) showed a loss of ($0.55), which was marginally better than the analyst estimate of a ($0.57) loss.
Despite the earnings beat, Roku's stock price plummeted by 16% in premarket trading Friday.
For the full year 2023, Roku achieved several milestones, including surpassing 100 billion streaming hours and ending the year with 80 million active accounts.
The company's platform revenue saw a double-digit year-over-year (YoY) increase in both the fourth quarter and the full year. Gross profit for the year rose to $1.5 billion, a 6% increase YoY, and the company reported positive adjusted EBITDA and free cash flow, achieving this financial goal a year ahead of schedule.
Looking ahead, Roku provided guidance for the first quarter, projecting revenue of $850 million, which is above the analyst consensus of $833.5 million.
The company also anticipates a total gross profit of approximately $370 million and expects to break even in terms of adjusted EBITDA for Q1.
The company's CEO stated, "We are executing well and ended 2023 with 80 million Active Accounts globally and our first year of more than 100 billion Streaming Hours. We grew monetization with Platform revenue up double digits YoY in both Q4 and full year 2023."
"We also achieved positive Adjusted EBITDA and Free Cash Flow for 2023 — a year ahead of schedule. From this position of improved operational efficiency, we are focusing more of our management attention in 2024 on innovation and growth."
Moffett Nathanson analysts maintained their Sell rating on the stock after the report's release, ringing alarm bells about rising competition.
"Without much evidence to support our initial thesis, we have long been worried that Roku’s first mover advantage in streaming connectivity would be usurped by the rise of larger-scale competitors and a slowdown in streaming platform competition," analysts wrote.
"Recently, we believe that there is a strong and growing body of evidence that supports the view that Roku is at the precipice of being squeezed by the emergence of challengers on all flanks," they added.
The bearish sentiment is shared by Oppenheimer analysts, who downgraded ROKU from Outperform to Perform.