Roku Posts Sharp Q3 Net Loss With Weak Ad Projections, Stock Crushed 18%

Roku's stock got slammed as it posted third-quarter earnings results in after-hours trading, with big net loss and a poor advertising outlook.

Platform revenue for the streaming distribution platform -- of which advertising revenues is a big piece -- grew 15% to $670 million. But this was a lower gain versus previous periods. For example, Roku's total second-quarter revenue was at $764 million, up 18% versus the year ago period.

“Advertising spend on our platform continues to grow more slowly than our beginning-of-year forecast due to current weakness in the overall TV ad market and the ad scatter market in particular,” said the company in its shareholder letter.

Roku points to Standard Media Index data showing the U.S. TV scatter market sharply fell a big 38% versus the scatter market in the same quarter a year ago.

In addition, Roku posted a net loss of $122.2 million versus $68.9 net income in the third quarter 2021. Third quarter revenue was up 12% to  $761 million.



Roku's stock was down 18% in after-market trading. Earlier in the day, at Wednesday's close Roku stock was down 4.4% to $54.32.

Adjusted cash flow -- earnings before interest, taxes, depreciation, and amortization -- got crushed down 126% all to register a negative cash flow of $34.4 million.

Roku added 2.3 million active accounts in the quarter versus the previous quarter, now totaling 65.4 million.

Looking forward, Roku says: “We expect the macro environment to further pressure consumer discretionary spend and degrade advertising budgets, especially in the TV scatter market.” 

For the fourth quarter, it projects net revenue of $800 million and steeper net loss of $245 million.

“We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or rebound. We therefore anticipate fourth-quarter player revenue and Platform revenue to be lower year over year.”

This story has been updated.

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