Roku (NASDAQ:ROKU) delivered better-than-expected Q4 sales. Additionally, the company ended 2023 with 80 million active accounts globally. The company, which offers streaming and related audio devices and smart TVs, registered double-digit year-over-year growth in platform revenue and achieved positive adjusted EBITDA. Despite these positives, ROKU stock dropped nearly 15% in Thursday’s after-hours trading on concerns over average revenue per user (ARPU).
Roku’s trailing twelve-month ARPU fell 4% year-over-year, reflecting a growing share of active accounts from international markets, which carry relatively lower average revenue. Notably, the company is focusing on growing scale and engagement in the international market, which implies that its ARPU could remain under pressure in the short term.
With this background, let’s zoom in on Roku’s Q4 performance.
Roku – Q4 Results
Roku delivered total revenue of $984.4 million in Q4, up 14% year-over-year, reflecting strength in streaming service distribution and video advertising activities. Further, Roku’s top line exceeded Street’s expectation of 967.7 million.
The company delivered positive adjusted EBITDA and narrowed its net loss to $78.29 million from a net loss of $237.20 million in the prior-year quarter. Its net loss of $0.55 per share came in line with the consensus estimate. Meanwhile, the loss per share narrowed from $1.70 in the prior year quarter.
Roku said it expects to deliver a total net revenue of $850 million in Q1 of 2024, up 14.7% year-over-year. Moreover, the company’s Q1 top-line forecast came higher than the Street’s expectations of $834.1 million. Roku expects its Q1 gross profit to be $370 million, slightly lower than the analysts’ estimate of $373.4 million.
Is Roku a Buy or Sell?
With five Buy, seven Hold, and two Sell recommendations, ROKU stock has a Hold consensus rating. Roku stock has gained nearly 34% in one year. Analysts’ average price target of $91.83 implies 2.835 downside potential from current levels.
