Following its second-quarter earnings release on Wednesday afternoon, Shares of streaming-TV platform Roku (NASDAQ:ROKU) fell sharply on Thursday. The stock was down nearly 9% as of 12 p.m. EDT.
The stock's pullback was likely primarily due to an uncertain view for the advertising industry, which led management to refrain from providing a financial outlook.
Roku's second-quarter revenue jumped 42% year over year to $356 million. This crushed analysts' consensus forecast for revenue of $315.4 million. The company's net loss per share of $0.35 was also much better than the $0.50 loss analysts had modeled for.
Growth was driven primarily by a 46% year-over-year increase in the company's platform revenue, or revenue mainly derived from Roku's share of ads and subscriptions on its platform. Platform revenue, of course, benefited from an acceleration in streaming hours as people sheltered at home and spent more time in front of the TV. Streaming hours on the Roku platform soared 65% year over year to 14.6 billion during the quarter.
But it's Roku's outlook that may have spooked some investors.
"The ad industry outlook remains uncertain for Q3 and Q4, and we believe that total TV ad spend will not recover to pre-COVID-19 levels until well into 2021," management said in Roku's second-quarter update. "Advertisers in industries like Casual Dining, Travel and Tourism have significantly slowed their spending."
Management, however, said it still expects its ad business to grow as marketers shift ad budgets toward streaming TV. But it expects growth to be slower than the company was planning for before the pandemic.