Roku Inc (NASDAQ:ROKU) saw its shares drop by almost 20% in after-hours trading on Wednesday after the streaming platform forecast fourth-quarter revenue below Wall Street estimates as advertising spending shrinks.
The company said it expects total revenue to be about $800 million in the fourth quarter, down from $865.33 million a year earlier and below analysts' average estimate of $895.5 million, according to Refinitiv IBES.
"As we enter the holiday season, we expect the macro environment to further pressure consumer discretionary spend and degrade advertising budgets, especially in the TV scatter market," Roku chief executive officer Anthony Wood said in a letter to investors. "We expect these conditions to be temporary, but it is difficult to predict when they will stabilize or rebound."
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Separately, Roku also said its financial chief, Steve Louden, will leave the company sometime in 2023.
The company reported a third-quarter net loss of $122.2 million, or 88 cents per share, compared to net profit of $68.94 million, or 48 cents per share, a year earlier.
Roku added 2.3 million "active accounts" in the third quarter, compared with 1.3 million net additions last year. Netflix attracted 2.4 million new subscribers worldwide in the quarter.
Record-high inflation and global geopolitical uncertainty from the war in Ukraine and US-China tensions have led companies to slash their marketing budgets, causing trouble for digital advertisers, leading to warnings from Google-parent Alphabet Inc and Snap Inc in recent weeks.
Contact the author at jon.hopkins@proactiveinvestors.com