A video sign displays the logo for Roku, after the company’s IPO at the Nasdaq Market in New York, September 28, 2017.
Brendan McDermid | Reuters
Roku, while reporting its second-quarter earnings Wednesday, said the advertising industry outlook remains uncertain in the second half of the year, and believes total TV ad spend won’t recover to pre-Covid-19 levels until “well into 2021.”
The company, which saw shares up less than 1% in extended hours trading Wednesday, said it was still confident in its ability to grow its ad business, “albeit not as much as we would have expected prior to the pandemic, as marketers re-allocate spend and follow consumers in the shift to streaming.”
Roku reported revenue of $356 million for the quarter (up 42% year over year) versus analyst expectations of $315 million. It reported a loss per share of 35 cents, versus analyst expectations of a loss per share of 50 cents.
“As economic pressures caused advertisers to further re-evaluate how much and where to invest media dollars, Roku delivered strong growth in our ad business, particularly relative to the overall TV ad market that was down,” the company said in a shareholder letter Wednesday.
Roku said in the letter that advertisers in industries like casual dining, travel and tourism in particular have significantly slowed spending. It said it believes its overall revenue will grow “substantially” on a year-over-year basis in the second-half and for full-year 2020, just not as strongly as it had anticipated prior to the pandemic.
The letter outlined the pandemic’s negative impact on advertising and TV advertising in particular, but said factors like Roku’s performance advertising business helped. The company said that business grew 346% year-over-year in part because marketers are reevaluating social media spending.
Roku also announced chief financial officer Steve Louden, who it said in December would be relocating and leaving Roku after finding a successor, would be staying on with the company after all.
“Over recent months, Steve has proven that he is more than capable of performing the CFO role while residing in Seattle,” the company said in its letter. “Hence, we are delighted that Steve will be staying on as Roku’s CFO and we have ended the search for his successor.”