Roku withdraws forecast for annual revenue growth rate, shares tumble
By Deborah Mary Sophia
(Reuters) -Roku Inc posted a wider-than-expected quarterly loss on Thursday and withdrew its revenue growth rate estimate for the year as the current economic turmoil squeezes its ad business, sending the streaming platform's shares down 26%.
While inflationary pressures and fears of a recession have forced advertisers to make cuts to their marketing budgets this year, increasing competition has also added to the headaches of companies selling online ads.
California-based Roku, which issued a downbeat revenue forecast for the current quarter, was also hit by consumers tightening their spending amid soaring food and fuel prices.
"We are facing an increasingly difficult and uncertain environment. Recessionary fears, inflationary pressures, rising interest rates and ongoing supply chain issues will continue to impact both consumers and advertisers," Chief Financial Officer Steve Louden told analysts on a call.
Roku's dismal forecast mirrors updates from major tech firms including Snapchat-parent Snap Inc and Twitter Inc, which have warned of a slowdown in the ad market over the next few quarters.
Facebook-parent Meta Platforms also took a hit from slowing ad sales, forcing it to issue a grim forecast and record its first ever quarterly drop in revenue on Wednesday.
In contrast to Roku, the world's largest streaming service, Netflix Inc, said last week it was expecting to return to customer growth in the third quarter and that it planned to launch its ad-supported option next year.
Roku's total net revenue rose more than 18% to $764.4 million for the second quarter ended June 30, but failed to match analysts' estimates of $805.2 million, according to Refinitiv IBES data.
It also reported a loss of 82 cents per share, wider than the 69-cent per-share loss that analysts had expected.
The company projected current-quarter revenue to grow 3% to $700 million, lower than the $901.7 million estimated by analysts.
(Reporting by Deborah Sophia in Bengaluru; Editing by Anil D'Silva)
