(Reuters) -Roku Inc said on Wednesday that it was keeping a lid on costs and forecast first-quarter revenue above Wall Street estimates, as the company bet on its streaming devices and content platform to drive growth.
Shares of the San Jose, California-based company rose nearly 12% in trading after the bell. The stock, which closed up 12%, had lost nearly a third of its value in the past year but is up 56% so far this year.
Roku, which has benefited from people ditching their traditional cable packages and flocking to subscription-based streaming services, has pushed to put out more original content on its own streaming channel to gain subscribers and advertisers.
“Despite tightening advertising budgets in the fourth quarter, ad spend on the Roku platform outperformed the overall ad and traditional TV markets in the U.S.,” the company said in a statement.
Advertisers have cut their marketing budgets due to record-high inflation rates. Roku said, though, ad spending from restaurants, travel firms, consumer packaged goods and health and wellness appeared to be improving in the first quarter.
“Importantly, we plan to continue to improve our operating expense profile to better manage through the challenging macro environment,” Roku said in a letter to shareholders, echoing comments from U.S. tech firms that have laid off thousands of employees in the past months.
Roku forecast revenue of $700 million for the first quarter, 1.3% above expectations, according to Refinitiv. For the quarter that ended Dec. 31, it reported revenue of $867.1 million, beating analysts’ estimates of $801.7 million.
On an adjusted basis, the company posted a loss of $1.70 per share, narrower than an estimated loss of $1.73 per share.
Roku said U.S. smart TV unit sales were better than expected in the fourth quarter.
Jeff Wlodarczak, an analyst with Pivotal Research, was skeptical about the share run. He called the guidance “weak” and noted a giant short squeeze in the market this week.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Krishna Chandra Eluri and Shailesh Kuber)
