Roku Inc. (NASDAQ: ROKU) reported its fourth quarter financial results for fiscal year 2017. Although the company beat analysts’ estimates, shares plummeted by 21 percent during Thursday’s after-hours after it had forecasted a weaker 2018 outlook.
For the fourth quarter, Roku reported renueve of $188.3 million, increasing 28 percent year over year, and beating analysts’ estimates of $182.5 million. The company reported an EPS of $0.06 and beating analysts’ estimates of an EPS loss of $0.10.
Roku’s strong growth in platform revenue drove its fourth quarter results, as revenue increased by 129 percent year over year.
Hardware business fell by 6.5 percent as sales of devices rose by 8 percent in 2017, but selling price declined by 14 percent as Roku tried to encourage customers onto its platform, where the company generates higher revenue from ad sales.
Although Roku’s platform revenue increased significantly, its player revenue still amounts for majority of the company’s revenue. Player revenue was $102.8 million for the quarter, falling 7 percent year over year.
Active accounts increased by 44 percent year over year to 19.3 million, resulting in an average revenue per user of $13.78, increasing 48 percent year over year. Streaming hours grew 55 percent year over year to 4.3 billion hours.
For the full year, Roku reported revenue of $513 million, growing 29 percent year over year, driven by its platform revenue growing 115 percent. The company reported an EPS loss of $2.24 for the fiscal year.
“We acquire accounts by selling and licensing players and by our Roku TV program. We're competing effectively and each of these ways of acquiring accounts made an important contribution to increasing our base to more than 19 million accounts.” said CEO Anthony Wood in the earnings call.
Although the streaming service company had reported a strong quarter, Roku forecasted weaker results for 2018. For the first quarter of 2018, the company forecasts a net loss of $21 million to $15 million on net revenue of $120 million to $130 million.
Roku’s first quarter revenue forecasts represents approximately a 35 percent decline quarter over quarter, which led investors to be cautious and hinting at a problem of possible user and ad revenue growth beginning to slow down.
For the full year 2018, Roku forecasts a net loss of $55 million to $40 million on net revenue of $660 million to $690 million.
Roku shares are up 69.8 percent since its initial public offering launch back in September.