(Reuters) – Roku Inc forecast second-quarter revenue above Wall Street estimates on Wednesday, on optimism that increased cord-cutting and a broader shift to ad-based streaming will boost business.
Shares of the San Jose, California-based company rose 6.4% in trading after the bell.
The company’s ad-supported streaming platform has gained popularity with users trying to cut down on their discretionary spending. Moreover, with streaming giants like Netflix and Disney+ adding ad-supported tiers to their services, more advertising dollars are flowing to streaming from TV.
“We expect the advertising market in the second quarter to look much the same as it did in the first, with ad spend from certain verticals improving (travel and health and wellness), while others remain pressured(M&E and financial services),” Roku executives said in a letter to shareholders.
The company, which aims to be profitable by 2024, is also cutting costs to ride out the weakness in the ad industry.
The company forecast current-quarter revenue of about $770 million. Analysts on average expect revenue to come in at $767.6 million, as per Refinitiv data.
Net revenue rose 1% to $741 million in the first quarter ended March 31, compared with analysts’ expectations of $708.5 million.
(Reporting by Akshita Toshniwal and Chavi Mehta in Bengaluru; Editing by Shailesh Kuber)
