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Media News

UPDATE 2-Roku's dour ad industry outlook clouds upbeat earnings

(Recasts first paragraph, adds details from conference call)

Aug 5 (Reuters) - Roku Inc said on Wednesday uncertainty in the ad industry will persist through the third and fourth quarters, overshadowing the video-streaming device maker’s upbeat results and sending its shares sharply lower.

The company puts advertisements on its free Roku Channel and also charges a commission from media companies that stream programming on the free, ad-supported channel.

That model has come under pressure as the COVID-19 pandemic forced companies, particularly in the hard-hit sectors such as casual dining, travel and tourism, to pull back advertising spending.

“The outlook for the (ad) industry remains highly uncertain. We believe that it will be well into 2021 before TV ad investment recovers,” Chief Executive Officer Anthony Wood said on an earnings call.

The company expects overall revenue to grow substantially on a year-over-year basis in the second half and for the full-year 2020, though not as strongly as it had anticipated prior to the outbreak.

Still, the pandemic-induced lockdowns helped Roku beat quarterly revenue estimates as sales of its video-streaming devices soared and more users logged on to its content platform for entertainment.

Sales of Roku devices, which connects televisions to streaming services, jumped 35% to $111.3 million in the second quarter.

With audience stuck at home without access to theater, live music, shopping excursions or live or televised sporting events, streaming device makers and services including Netflix Inc , Walt Disney’s Disney+ and Amazon.com Inc’s Prime Video have attracted record number of users.

Platform revenue, which includes ad sales, surged 46% to $244.8 million, beating estimates of $239.9 million. Total net revenue rose to $356.1 million, topping analysts’ estimates of $315.4 million, according to IBES data from Refinitiv.

Shares reversed course to be down nearly 5% in extended trading. (Reporting by Munsif Vengattil in Bengaluru; Editing by Sriraj Kalluvila)

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