Roku stock tumbles on sliding user revenue in Q4

Roku, Inc. (ROKU) shares tumble lower in Thursday's after-hours trading as its average revenue per user dropped by 4% year-over-year in the fourth quarter. The TV and streaming company managed to beat revenue estimates and reach 80 million active user accounts in the last quarter.

Yahoo Finance Entertainment Reporter Alexandra Canal breaks down the earnings report and key figures moving the stock.

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Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

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JULIE HYMAN: Roku shares falling after that company reported its fourth quarter earnings. The streaming service beat revenue estimates in the latest quarter, with active accounts surpassing 80 million. Though, revenue per user fell 4% from a year ago. By the way, this is another ARK Invest holding. Alexandra Canal is joining us now to break down those numbers. Hey, Allie.

ALEXANDRA CANAL: Hey, Julie. Some pretty interesting moves here after hours, considering we did see that revenue beat also double digit gains in accounts and hours streamed. A negative, though, like you said, which could be driving the sell-off is average revenue per user dipping 4% to $39.92. The company said that dip reflected, quote, "an increasing share of active accounts in international markets, where we are currently focused on growing scale and engagement.

Along with that, we also received some bearish commentary in the press release management warning of near-term challenges in the macro environment and an uneven ad market recovery." They said there's going to be difficult year-over-year growth comps and also continued challenges in media and entertainment ad revenue through the rest of the year. So that's the negative side.

But on a few positive notes, revenue of 984.4 million, like I said, beating estimates, while an adjusted loss of $0.55 a share. That came in line with consensus. Full year 2023 active accounts coming in at 80 million. That was a net increase of 10 million from 2022. While streaming hours grew to 106 million. That's actually the first time that the company has surpassed 100 billion streaming hours in a calendar year.

And then, if you take a quick look at guidance, they are forecasting break-even adjusted EBITDA in the current quarter, adding they expected to deliver positive adjusted EBITDA for full year 2024. But again, we're seeing the stock down 15% in after hours, so I'm curious to listen on that call and see what the analysts have to say there as well.

JULIE HYMAN: Yeah, most definitely accelerating to the downside. Allie, thank you so much.

ALEXANDRA CANAL: Thank you.

JULIE HYMAN: I appreciate it.