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Roku shares plummeted more than 25% in extended trading on Thursday after the company missed expectations on the top and bottom lines for its second quarter and warned of “an economic environment defined by recessionary fears.”
Here’s how the company did:
- Earnings: Loss of 82 cents per share vs a loss of 69 cents expected, according to Refinitv.
- Revenue: $764 million vs $805 million expected, according to Refinitv.
The company attributed its poor financial performance due to macroeconomic conditions including inflation as well as supply chain issues.
Roku added that the advertising market will continue to suffer in the current quarter, and that consumer spend will moderate, which could hurt the company’s business of selling Roku TV and related hardware devices. The company said it trimmed operating expenses and slowed headcount growth in the second quarter.
“We believe this pullback mirrors the start of the pandemic in 2020, when marketers prepared for macro uncertainties by quickly reducing ad spend across all platforms,” Roku said in a letter to shareholders.
Additionally, Roku missed on its guidance and said that it would bring in $700 million in revenue during the third quarter, well below the $902 million that analysts surveyed Refinitiv were estimating.
Because of market volatility, Roku said it is withdrawing its full-year growth estimate.
The company said that advertisers curtailed their spending on television advertisements during the quarter, underscoring how fears of a recession are causing businesses to pull back on marketing.
Meta, for instance, reported poor second quarter financial results this week in which executives blamed “macroeconomic uncertainty” and a “weak advertising demand environment” that will last through the current quarter.
Snap and Twitter, which both rely on online advertising, also reported weak financials and cited a tough advertising market that doesn’t appear to be recovering anytime soon.
This story is developing.