Roku Posts Strong End to 2022, but Weak Ad Revenue Market Will Hurt 2023 Top-Line Growth

Roku reported a positive end to a challenging 2022 as fourth-quarter revenue came in well ahead of guidance and net new active accounts tied for the second strongest behind the pandemic-influenced fourth quarter of 2020. While revenue of $867 million was well ahead of the $800 million guidance, growth was the weakest on record at barely above 0% year over year. Management expects first-quarter revenue of $700 million, implying a 5% decline versus the same quarter in 2022. The company still expects to generate positive adjusted EBITDA in 2024, suggesting a second straight year with adjusted EBTIDA losses in 2023. We are maintaining our $65 fair value estimate, which we lowered last quarter to reflect slower revenue growth expectations and sluggish margin expansion as content and research and development costs move higher.