What happened
Shares of Roku (ROKU 0.31%) were moving higher last month after the video streaming platform posted better-than-expected results in its fourth-quarter earnings report, and got a boost from a strong fourth-quarter earnings report from The Trade Desk.
According to data from S&P Global Market Intelligence, the stock finished the month up 13%.
As you can see from the chart below, the stock's gains came primarily during a two-day span in the middle of the month around its earnings report.
So what
Roku stock rose 25% from Feb. 15-16, initially getting a boost from Trade Desk's better-than-expected fourth-quarter earnings report. The leading demand-side ad tech platform posted better-than-expected revenue, giving peers like Roku a lift as investors anticipated a better-than-expected round of results from the streaming platform.
Roku followed through on those expectations as the company's numbers weren't strong, but were up against a low bar. Revenue in the fourth quarter was flat at $867.1 million, but that was well ahead of the analyst consensus at $801.7 million as the company had guided to a revenue decline in the quarter.
Despite the sluggish top-line performance, the company continued to see strong usage growth as active accounts increased from 60.1 million to 70 million in the quarter, and streaming hours jumped 23% to 23.9 billion, showing the platform continues to attract new users and viewing time, a positive indicator for its long-term growth potential.
Further down the income statement, Roku struggled as the company had ramped up spending in anticipation that strong ad demand would continue. Instead, ad demand stalled out and the company finished the fourth quarter with adjusted earnings before interest depreciation and amortization loss (EBITDA) of $95.2 million.
On the bottom line, it reported a loss per share of $1.70, in line with estimates at $1.73.
Now what
Looking ahead, the company said it expected the ad market to remain sluggish through 2023, and it forecast its first-quarter revenue to decline 4% to around $700 million. However, that was still better than the consensus at $690.6 million.
Investors were also pleased with a new target of an adjusted EBITDA profit for the full year in 2024.
With its user base and consumption still putting up steady growth numbers, Roku stock should have a lot of upside once the ad market and the economy recovers, especially after the stock fell more than 80% last year.
