Roku Beats Q3 Revenue Forecast as Net Loss Grows, Remains Cautious About ‘Uneven Ad Market Recovery’

Roku shares popped after the streaming-platform company beat Wall Street expectations for the third quarter of 2023 on the top line. But in providing forward-looking guidance, Roku told investors that the macroeconomic environment remains “uncertain.”

The company reported Q3 revenue of $912 million, up 20%, and a net loss of $330 million (or $2.33 per share) — more than double the net loss of $122 million in the year-ago period. Wall Street analysts on average expected revenue of $853.2 million and a net loss of $2.08 per share, per Refinitiv data.

More from Variety

Shares of Roku were up more than 16% in after-hours trading on the earnings report.

“We had a solid rebound in video ads in Q3 and we expect the YoY growth rate of video ads in Q4 to be similar,” the company said in its shareholder letter. “However, we remain cautious amid an uncertain macro environment and an uneven ad market recovery.” In addition, Roku said, it will face difficult year-over-year growth rate comparisons in content distribution and media and entertainment marketing spending “which will challenge the YoY growth rate of platform revenue in Q4.”

For Q4, Roku provided guidance of revenue of $955 million (which would be up 10% versus the year-earlier quarter) and a net loss of $85 million.

The company took a $62 million write-down on content in Q3, cutting into its bottom line, after it removed content from the Roku Channel to reduce costs. In September, the company pulled more than three dozen shows from the service, most of which had been produced for Quibi, the defunct mobile streamer whose assets it bought in early 2021. Among other cost-cutting measures, Roku in September announced a layoff of 10% of its staff (the third round of job cuts in a year) and plans to consolidate office space and reduce outside services expenses.

For the third quarter, operating expenses were up 43%, to $718.6 million — and Roku is hoping the cost-cutting moves will reduce that rate in the coming quarters.

VIP+ Analysis: Media Had a Not-Bad Q3 — Was It Just a Fluke?

During Q3, Roku gained 2.3 million net active streaming accounts to reach 75.8 million (up 16% year over year) while total streaming hours across its platform hit 26.7 billion (up 22% year over year) compared with 25.1 billion hours in the previous quarter.

Roku generates the majority of its revenue and all of its operating income from the Platform segment, not sales of streaming devices and connected TVs.

The company’s Platform division comprises ads sales; revenue from distribution deals for streaming services including FAST channels; media and entertainment promotions; and Roku Pay. The Platform segment’s gross profit margin in Q3 was 48.1%, while Roku’s Devices business had a gross profit margin of -7.5%.

Best of Variety

Sign up for Variety’s Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.