Roku Forecasts Lower Revenue, Shares Drop in After-Hours Trading

BENGALURU, India — Roku Inc. warned on Thursday that its revenue for the second quarter would fall below Wall Street expectations, prompting a 4% drop in the company’s shares during after-hours trading.

The streaming service, which thrived during the pandemic, is now facing challenges as customers reduce spending amid ongoing inflation and uncertain economic conditions. The surge in advertising budgets that once buoyed its business is waning.

“While there is more macro uncertainty than normal, we are providing our best outlook based on our current visibility and what we are observing in our business,” Roku stated in a letter to shareholders.

Roku gained initial popularity through its devices that allowed users to connect to services like Netflix. Over time, it has expanded its offerings to include streaming sticks and Roku-branded televisions.

For the second quarter, Roku expects revenue of $1.07 billion, falling short of analysts’ average estimate of $1.09 billion, according to data from LSEG. In the first quarter, the company reported revenue of $1.02 billion, which slightly exceeded the analysts’ estimate of $1.01 billion.