Roku shares drop after streaming company misses revenue estimates

Roku shares dropped in after-hours trading Wednesday after the company reported a third-quarter revenue that missed expectations.

The company’s revenue came in at $680 million, just below a Refinitiv forecast of $683.4 million. That’s still up 51% from a year earlier. Roku’s earnings per share of 48 cents, however, topped expectations by 6 cents.

Active accounts on the platform rose 23% year over year to 56.4 million. That’s also an increase of 1.3 million active accounts from the second quarter.

In its shareholder letter, Roku said the deceleration is a result of “global supply chain disruptions that have impacted the U.S. TV market.” U.S. TV sales in the quarter fell below pre-pandemic levels in 2019, while original equipment manufacturers suffered from inventory constraints, the company added.

“The pandemic continues to disrupt global supply chains,” CFO Steve Louden told CNBC, in an interview after the report. “For the TV industry, you’re having elevated component pricing, inventory availability issues, and supply chain logistics delays.”

Player revenue, which includes the company’s streaming devices, fell 26% year over year in the third quarter to $97.4 million, while costs went up because of supply chain issues. The company said it “chose to insulate our consumers from these increased costs to prioritize account growth.”

Platform revenue jumped 82% to $582.5 million. Roku makes money on its smart TV streaming platform largely through advertising and content distribution.

Streaming hours in the quarter rose 21% from a year ago to 18 billion, with active accounts averaging 3.5 streaming hours a day.

— CNBC’s Alex Sherman contributed to this report.