Roku shares tank following earnings report

Company says sales from newer business efforts fell short

Many investors pulled the plug on Roku on Thursday after the streaming TV technology company said third- quarter sales from some of its newer business efforts fell short of Wall Street analysts’ expectations.

Roku’s shares fell more than 22 percent, to close at $ 45.74, after the Los Gatos- based company said Wednesday that it took in $ 100.1 million in what the company calls “platform” revenue, or sales that come from advertising and content deals, and not from Roku’s streaming TV devices. Analysts surveyed by FactSet had forecast Roku to report platform revenue of $ 103.2 million.

hile Roku is still best known for its streaming TV set- top boxes and sticks, the company has made a big push over the last 18 months into advertising and licensing its technology to TV makers that then build Roku’s streaming capabilities into their televisions. The company doesn’t disclose the number of streaming devices its sells, but said it ended its third quarter with 23.8 million “active accounts,” or accounts that have used Roku over a 30- day period.

Michael Morris, an analyst with Guggenheim Securities, remained upbeat about Roku’s opportunities due to factors such as the amount of time Roku’s users are spending streaming TV programming with their devices. During the quarter, Roku said its users streamed 6.2 billion hours of programs, up 63 percent from a year ago, and the average Roku account watched 90.3 hours of programming, up from 79.1 hours in the third quarter of 2017.

“The company boasts a user base that rivals the largest pay- TV companies,” Morris said. ” And has seen accelerating active account growth.”

The shortfall on platform revenue outweighed any enthusiasm that Roku’s other results may have generated. The company said it lost 9 cents a share, on $173.4 million in revenue, compared to a loss of $8.79 a share, on sales of $124.8 million, in the same period a year ago. Analysts had forecast Roku to lose 12 cents a share on revenue of $169.1 million.

Roku’s fourth- quarter outlook also gave investors some concern, as the company expects its sales to be between $255 million and $265 million, while analysts had forecast Roku to report $258.3 million in revenue.