Shares of streaming platform provider Roku Inc (ROKU) plunged 22.46% on October 31, 2024, despite the company reporting better-than-expected third-quarter results. The stock's sharp decline was triggered by Roku's disappointing guidance for the fourth quarter, raising concerns among investors about the company's near-term growth prospects.
In the third quarter, Roku's revenue rose 16% year-over-year to $1.06 billion, surpassing analyst estimates. The company's Platform segment, which includes advertising and content distribution, drove this growth, with revenue increasing 15% to $908 million. Roku also achieved its fifth consecutive quarter of positive Adjusted EBITDA and Free Cash Flow on a trailing 12-month basis.
However, Roku's guidance for the fourth quarter fell short of market expectations. While the company's Q4 revenue forecast of $1.14 billion exceeded the consensus estimate of $1.11 billion, it represented a slower growth rate of 16% year-over-year, compared to the higher growth achieved in previous quarters. Additionally, Roku's guidance for Q4 gross profit of $465 million and adjusted EBITDA of $30 million fell short of analyst expectations, raising concerns about the company's near-term profitability.
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