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Why Roku Shares Plunged Today

By Evan Niu, CFA - Feb 22, 2018 at 12:58PM

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First-quarter guidance fell short.

What happened

Shares of Roku (ROKU 2.15%) have plunged today, down by 16% as of 12:30 p.m. EST, after the company reported fourth-quarter earnings. Guidance for the first quarter left a little to be desired.

So what

Revenue in the fourth quarter came in at $188.3 million, topping the consensus estimate of $182.5 million. Net income was $6.9 million, or $0.06 per share, while analysts were expecting the company to lose $0.10 per share. Active accounts grew to 19.3 million by the end of the quarter, and Roku streamed 4.3 billion hours during the quarter.

The Roku Channel on a TV

Image source: Roku.

Average revenue per user (ARPU) was $13.78 on a trailing-12-month basis.

Now what

While the fourth-quarter results topped expectations, guidance for the first quarter fell short. Roku expects first-quarter revenue to be in the range of $120 million to $130 million, with a net loss of $15 million to $21 million. Analysts had been modeling for $132 million in revenue for the first quarter. Adjusted EBITDA in the first quarter is expected to be negative $10 million to negative $16 million.

For the full-year 2018, Roku expects total revenue of $660 million to $690 million, with a net loss of $40 million to $55 million. Adjusted EBITDA for the year should be negative $10 million to negative $25 million.

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