Roku Shares Dip 16% as Company Shifts Away From Streaming Households in Q4 Forecast
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Though Roku, Inc. (NASDAQ:ROKU) posted its first $1 billion in quarterly sales, its Q4 outlook fell below Wall Street estimates, which led to its share price dropping 16% in early Thursday trade. With an adjusted EBITDA of $30 million, the media-streaming company forecast a gross profit of $465 million for the current quarter; both missing analyst projections of $477 million in gross profit and $36.2 million in adjusted EBITDA.
The earnings release also indicated changes in Roku's key performance indicators. Beginning in Q1 2025, Roku will no longer provide streaming household figures, in line with Netflix (NASDAQ:NFLX), which lately revealed it will stop sharing membership information next year. Rather, Roku will mostly measure streaming hours, platform income, modified EBITDA, and free cash flow.
"Since our IPO in 2017, the streaming business has evolved significantly; Americans now spend more TV time on streaming than on cable," Roku said. "Our company has also changed, mostly with an eye toward increasing profitability and platform revenue." The decline follows Roku's prior three-month rally over 30% in response to forecasts for platform revenue expansion and ad market strength.
This article first appeared on GuruFocus.