Roku fell short of Wall Street revenue targets for the fourth quarter of 2021 and warned of ongoing supply-chain disruptions to its business into 2022, prompting a steep drop in the streaming platform company’s stock.
The company posted overall revenue of $865.3 million for Q4, up 33%, while net income came in at $23.7 million, or 17 cents per diluted share. Net income for the quarter was down 65% year over year as costs increased in Roku’s player hardware segment.
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Wall Street consensus estimates were for Q4 revenue of $894 million and EPS of 7 cents, according to financial-data provider Refinitiv.
Roku’s Q1 guidance also disappointed investors: The company said it anticipates revenue of $720 million, which would be up 25% year-over-year, which is below analyst forecasts of $748.5 million, per Refinitiv.
Shares of Roku were down more than 22% in after-hours trading Thursday — to their lowest levels since June 2020. That came after the stock dropped 10.4% in regular trading amid a broader market downturn.
Roku boasted that it ended 2021 with 60.1 million active accounts, up 17% year over year and an increase of 3.7 million for Q4. For full-year 2021, it netted 8.9 million new accounts, well below its pandemic-fueled gain of 14.3 million in the year-earlier period. Still, last year, Roku’s U.S. active account base “surpassed the U.S. video subscribers of all of the cable companies combined,” the company noted in its Q4 letter to shareholders.
In Q4, Roku’s platform revenue — representing advertising and content revenue-sharing deals — grew 49%, to $703.6 million. That was below analyst estimates and a slowdown versus Q3, when the segment’s sales boomed 82% year over year.
According to the company, monetized video ad impressions grew 67% year-over-year in Q4 and nearly doubled year-over-year in 2021, both driven by an increase in client acquisition, retention and spending per client. In 2021, total number of advertisers grew by more than 20% (excluding political advertisers). On a year-over-year basis, Roku retained over 95% of advertisers who spent $1 million or more.
Sales in the company’s player segment declined 9%, to $162 million. Similar to Q3, overall U.S. TV unit sales in Q4 fell below pre-COVID levels, according to Roku. “Some of our Roku TV OEM partners were hit particularly hard with inventory challenges,” the company said, while Roku player unit sales were down 4% year-over-year.
For 2022, because of ongoing supply-chain disruptions, Roku said in the shareholder letter, “Overall TV unit sales are likely to remain below pre-COVID levels, which could affect our active account growth.” In addition, the company warned of delayed advertising spend “in verticals most impacted by supply/demand imbalances.” But, it added, “we view all these factors as temporary and for the full year,” and Roku said it expects total net revenue growth to be 35% for the full year (compared with 55% for full-year 2021).
During the fourth quarter, Roku reached a multiyear deal extension with Google to distribute bothYouTubeandYouTube TV, resolving a months-long disagreement between the parties. Among other things, Roku had objected to what it said were Google’s demands to give YouTube search results preference over other content sources via a dedicated row and to omit search results from non-YouTube sources if users were in the YouTube app on Roku.
Meanwhile, last month Roku said Scott Rosenberg, SVP and GM of its platform business, plans to exit the company this spring.
