By Priyanka G
(Reuters) -Roku trimmed its annual revenue expectations and forecast second-quarter revenue below Wall Street estimates on Thursday, due to economic uncertainty and tariff-related concerns, sending its shares down 4.9% in after-hours trading.
Roku (NASDAQ: ROKU ) faces tough competition from tech giants such as Amazon (NASDAQ: AMZN ) and Apple (NASDAQ: AAPL ), which offer similar streaming devices: the Amazon Fire TV Stick and Apple TV, respectively.
This intensified competition continues to pressure Roku to defend its market share.
The company’s devices segment — which includes Roku-branded TVs and streaming players — is projected to see a revenue decline of about 10% year-over-year.
Roku also said it is challenging to forecast tariff-related impacts in its devices segment.
"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," the company said in a letter to shareholders.
The company expects net revenue of $4.55 billion for the full year, compared to its previous forecast of $4.61 billion. Analysts, on average, expect $4.57 billion, according to data compiled by LSEG.
However, quarterly revenue from Roku’s platform segment — its largest business, which generates income from advertising sales and subscriptions — grew 17% to $881 million.
"Despite global headwinds, we expect Roku to achieve positive operating income by 2026, supported by its strong market position," said Kenneth Leon, director of equity research at CFRA.
Separately, Roku said on Thursday it has agreed to acquire Frndly TV — a subscription streaming service offering live TV, on-demand video and cloud-based DVR — for $185 million in cash.
"This acquisition supports our focus on growing platform revenue and Roku-billed subscriptions," said Roku CEO Anthony Wood.
It expects revenue of $1.07 billion for the second quarter, compared with analysts’ average estimate of $1.09 billion. However, Roku’s first-quarter revenue of $1.02 billion was slightly above estimates of $1.01 billion.