On Wednesday, Roku Inc projected second-quarter revenue higher than Wall Street estimates, buoyed by the rise in cord-cutting and a wider shift to ad-based streaming. After trading hours, shares of the San Jose-based company surged 6.4%. Roku’s ad-supported streaming platform has become popular with users trying to reduce their discretionary spending, while streaming giants such as Netflix and Disney+ have added ad-supported tiers to their services. Roku executives stated that they anticipate the advertising market to remain similar in the second quarter, with some verticals like travel and health and wellness showing improvement, while others such as M&E and financial services are under pressure.
The company is also cutting costs to weather the weakness in the ad industry as it aims to become profitable by 2024. Roku predicted revenue of around $770 million for the current quarter, with analysts expecting revenue to come in at $767.6 million on average, according to Refinitiv data. In the first quarter ended March 31, net revenue climbed 1% to $741 million, exceeding analysts’ expectations of $708.5 million.