ROKU - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Q2 2018 Roku Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to introduce your host for today’s call, Mr. of President Vice Samford, Investor Relations. James Mr. may you now begin. Samford,

James Samford

than call we Roku's be responses conference contains obligation details June and Please any management's will Q&A. Founder to undertake to call much Good on XXXX. remarks. afternoon. Scott the and today, introductory only who results shareholder the review to to of do welcome X, the August information. joined our be reflects including cover ended which letter, will And CEO; update for The Steve sure Wood, our CFO; Business, financial second questions, views for discussion, or GM pleased of the as to be with not Platform Louden, this we available today Anthony XXXX I'm in more and Roku's XX, following your Rosenberg, quarter revise our

call our performance and the the of and and not and statements including of quarter forward-looking include, but future statements are on limited assumptions, results financial expected and and Roku, are third full-year forecasts are our to, on future today's regarding based business. involve These XXXX expectations, statements the Some made of growth uncertainties. the for risks current

could filings may Company's Our our with reasons. for actual a the Please these discussed for materially variety cause differ forward-looking actual the materially on from SEC results about of letter results shareholder refer those from this which factors, and statements. call to to differ information today's

you ir.roku.com. periodically important which is Web Relations Company's discussed to visit most site measures letter, our in to to Web I today IR our Investor measures reconciliations shareholder on non-GAAP encourage the find site at content. for You'll posted comparable

in this otherwise call unless will period results our be comparisons for the comparable on against XXXX. all Finally, stated,

to like call the I'd to turn over Anthony. Now,

Anthony Wood

reach to joining as strong you, as record entering XX was high saw XX% revenue ARPU a call. our quarter up per accounts, this we XXXX strong quarter continued growth. everyone active and thanks earnings customer second XX%. Thank momentum expanded James, up our to for The we year-over-year million continued

We early days providers be consumers, to Channel for of to continues focus are are continue make and pleased know The these streaming. content us. transition and an the this to but with still Roku growth as area advertisers, growth

Our free strategy platforms Roku to content, OS content beyond and extend Channel focus broaden the Roku is geographies. new to on longform into categories, expand

Web, And Channel availability For Channel example, we released we on launched Samsung Roku recently free Canada. anyone and app TV movies allowing shows. announced the select smart stream in news added and recently an the the TVs. Today, the to to for as Roku Channel we also Roku we

our TVs in These the announcement which and quarter protocol. improve loyalty is engagement. the to Roku use appealing Roku the to sound specifically TV more dramatically speakers designed wireless are and launch new These the wireless on should speakers. for TV. makes important consumers, This was TV Roku a how increase Roku connect Roku increase Another of it quality easy

accessible more marketplace. streaming we The front, enormous center moving our an publishers help business. we massive programmatic Roku, ecosystem of and to making advertising approach dynamic to determined targeted and content technology At content to time and to with thrive at are advertisers platform. our on through streaming platforms to the the benefits to innovative distribution. and TV audience modern in new our deliver content a the and exciting On be consumers more to are is is publishers capabilities advertisers This

our results and Before Steve opening comments for line the to I'll questions, for brief turn up it over outlook. on

Steve Louden

is another turning strong had a great year particularly quarter, We Roku. Thanks which for into XXXX Anthony.

the TV. And Player QX is and of was to of our on the before XX% platform from to platform channels. demand year-over-year robust shift growth compared of streaming revenue both impact Please distribution few be financial discounting full in largest from across Roku which mix strength part million units growth our to driven by but we details up a continues fastest we came will this but year-over-year advertising highlight were representing XX% letter saw content and quarter items players year. for I to revenue ASPs the were XX% nearly account from saw or up quarter, the and with of price players shareholder outlook. XX% year-over-year doubling this active see with Our strong total very X%. strong $XXX.X Total revenue XX% retail both increased our Monetization of particularly turning revenue. comment growth, players growing and again to also partner and low Roku, strong growth for last quarter. less revenue our Player

visibility and seasonally strong today, last QX to player in of retail said have growth. strongest of quarter we our chain be on for supply against anticipate year-over-year. and promotional the past, comping revenue be levels. into including year and we factors, based timing Heading we and is partner As roughly expect have very delivering shipments, QX, year-over-year we can are lumpy QX variety positive players a inventory a player we campaign revenues on modest and flat sequentially based

XXX% million. year-over-year performance $XX.X was record up profit, to this key financial a quarter metrics Our which is gross

While XX% COGS licensing potential not $X.X liabilities to driver management platform of biggest lower benefited related of have release the year-over-year, accruals that profit from believes profit not and from the IP will million gross materialize. player was of materialized gross now growth

points year-over-year revenue, XX%. margin XX% did which expanded up percentage releases, total year-over-year gross accrual these six gross to and profit was impact not Excluding

inventory XXX accounting outlook. million outlook. impressions. terms Based the year-to-date of our in profit growth, of strong a of know were to million expect $X.X gross million the trends, variety and neutral strong about inventory will to reversal. OpEx timing we new XXX which in strategic primarily XX-Q, XXX outlook overall our in filed of disclosed to roughly revenue difference for what and on headcount, our details Adjusted initiatives, and via we revenue ASC Year, increased highly or on our In the resulting today $X.X XXXX. positive ad $XX delivery again of into positive let EBITDA continue we contract to million obligations have be in With growth the mix the and of on such overall account timing as ASC continue from benefit between licensing and platform back as of half, been first profit. half statement and May to performance at to we and depending split goods revenue Based on engagement income We raising million. $X standard year-to-date XXX accrual of have New related difference million and for full-year of year-over-year under that between well in back In on turn existing monetization our gross the of under in the results adopted IP segment XX% on ad impact under in of quarter now XXX visibility respectively. our $XX year be of volatile for modification, ASC reported me invest our and QX higher XXX the cost based our than ahead which The we came and Most $X.X are the the we roughly and sold contracts. signings overview, both to this brief XXX quarter, would factors are and up was they what gross revenue in

and or to XXXX XXXX, sales on of continued show in beyond. reinvest fuel year, provided in revenue outlook. is and growth XX% expected the growth marketing growth and XX% for the growth profit these we outlook and we XX% at and at near XX% from profit of up gross Our breakeven to now plan is we upside with headcount rates prior up into adjusted and when effect to in XX% updated strength and the growth XX% our and from midpoint, positive full-year innovation. which May of previously. first past, the February back the up said what half And in full related expect the increases we’ve gross primarily Consistent of investments, Based respectively outlook to EBITDA R&D

that you seen in have significantly next the may expand agreement X-K over real grow. footprint As capacity us will our recent estate and lease with filings, provide signed a to years, new we few

incremental We in expect XXXX XXXX. this in add to and expense CapEx

to the detailed in earnings during be in breakeven of at February. market manage business for Our provide continues more we and call roughly QX our will XXXX to expansion, this outlook goal period

in slowdown to factors in For and flat QX of QX, primarily XX% year growth grew growth, player revenue revenue in year-over-year. prior at XXX% our midpoint tough outlook roughly when growth modest year-over-year for the platform platform comp the a due revenue

and in midpoint, nearly margin seasonality player Continued at is year-over-year growth for X mix the shift in video to points reflected XX% our percentage gross margin and total of profit expansion. of outlook advertising

Roku. see potential. our the outlook business our the over in to business talent And EBITDA for strong turn to pace, are in loss your modest and On fundamentals Thank our seasonally of adding questions. growth call Overall, a to side, positive Operator? at we rapid QX. EBITDA let's into factors are expense that, plenty a our for you we the which of in opportunities in long-term adjusted interest our rebounding solidify to strong QX for adjusted continue reinvest with continued before

Operator

Instructions]. [Operator you Thank

first Markets. with Wingren comes from Evan Our question Capital KeyBanc

Evan Wingren

there just accounts necessary a you channel Roku a set the for longer-term Thank can Obviously, content on And how to and you in Just investment have Roku ask is incremental for announcement there wanted you. about that would monetization? engagement be is this give channel you devices. But with drive to of marketing? all the way about content think launching free currently available any be or the us then terms will in opportunity it's the early. sense that or very new for follow-up for

Anthony Wood

Scott I'll Anthony This is maybe something. can add and start

so - recap strategy our channel Just free content Roku to overall [indiscernible] it’s service. our strategy longform

[reach] to [ph]. is goal Our keep expanding

going way expanding one example, so plan regions. do launch We to that for geographical more platform, we’re today. is Web to our we So our announced to expand

entering example, Canada. And to So announced we adding longform categories, keep particularly recently we content we’re plan then more content. for

recently. So for example, added we news

answer Scott making let we’re the And on question progress strategy. that I'll economics. the around So good

Scott Rosenberg

number that OTT behind a this great is the amongst of content. given channel, users of for there thirst month. time or it add background, original success had is is to to platform in with the just on five of September. channel last reach already Anthony's channel the our and channel the by top launched comment Roku accounts And Channel it the And really free The We’ve terms that the a validates reaches since. in huge thesis in which consumers way

today and So the yet saw taking of experience for extension amplify our the off that that have partners, ultimately new may platform advertisers announcement that reach that you who can thesis really are extend content for and not we our impact Roku. we an have meet users where

same your the In and off the And strategy number question, really terms experiences dialogue the Channel. can same free in types money content, I Evan users that with take support our provide of like the is and ad of the people partners ultimately partnering is how earn experience. content of content they as said us -- around to the about give Roku with we platform expand

Operator

you. Thank

comes next Oppenheimer. Jason question from Helfstein with Our

Jason Helfstein

right that's your possible Thanks. then total compares will Roku Would business? $X.X potential question, the advertising color, strip older relative rest of of this obviously suggests quarter be one you to be and as Channel XXXX? or be the it advertising. to the Roku both wrong the you sets? helpful. help Any way time on sets, update be million Samsung that the in timing, newer advertising an on the agree that’s and of partnership, out really right work the could it how margins lastly, And Second is about for out, channel that and Steve, of guide, our any this really would as benefit. So could commenting do to get ad XX% Without think the high

Anthony Wood

it’s question terms create raw your new of material contribution say to but wholly not controlled the experiences, ad because to will first regards us a a just With opportunity percent our not already but going to sale, about in disclose to ad for the volume Roku channel, the it's of contributor the I’m today, experience. I

with already regularly are sponsorship live to And are that These users. been as the TVs we the Samsung the now within models, we’ve extending for sets. select live, experience channel. newer message in So active are platform. Samsung generally but Tizen launch, activity directly sponsorships question channel brands that Roku be These allow on experiences the today's example, your unique to Samsung, them. crafting Samsung the to Samsung we’ll the channel With to Roku going calls Roku about our regards models,

Steve Louden

$X.X Just contingencies for accrual and on the to do million likelihood a licensing all that’s materialize. We review the process regularly. we accruals release for assess the and them then IP we that our

large a number. This quarter it particularly was

I that and as big to given back at So we look it unusually quarter. in think appropriate it's versus you experienced what a accrual for any release standard out

Operator

Thank you.

comes Ben Our from Stanley. next with question Swinburne Morgan

Ben Swinburne

SKUs look for on just be network the have that, a principal then talk for little the about it’s might a OS Any think And revenue signing you. the Thank partners responded they new TV why And some But your over the but it? new. a there little commentary given of for opportunity publishing be the you’re of using agreements And it's might you give seller relationship any help landing thinking Scott, model some us use qualitative about could your great. your curious that. TCL? be to something Anthony, out expectations services can you to take for landscape the bit couple OS what any questions. Roku about than and you Roku, rather with business all Roku And next think how new partners and to help I in on Two that you know be I years. them. to bit have not would particular how where data audience of OEMs I’d

Anthony Wood

TV, So as this on I progressing so On a say we Ben is TV it’s at Anthony. high would expected. level,

in or manufacturers. of licensed OS all four the is company, licensed dynamic in that phone Our Android phone and will That TVs Roku smart same a is the licensor either OEMs switch we’re TVs. license to were the of in makers like Apple. thesis TV the by TVs happening TV operating number half all just to far year, first system, one One

at So it’s adding more coming to going will think the OEMs what's continue adding you well. SKUs dynamics retailers. and more And in I terms see of around us next

why learning So their sell do I because some that think will -- Roku SKUs, I not SKUs and finding are way continue. OEM they and learning - Roku XXX% The still still that carry OEMs better. think

all excellent and with they we necessarily deliver partners results the not increase working in are But they count with So at their SKU generally once. generally as business us progresses.

I So doing well. think the TV it’s business

homegrown that OS. everyone Our biggest with own competitor OSs. in start ship to share I [inertia] that But license systems think market as an will to to there lose companies then continue business that drive continue is their [ph] operating eventually

Scott Rosenberg

make at very marketplace, advertising modern interactive, regards TV much that way highly is advertising Roku digital has with what to expects. more to evolve by about the with Ben, elevate, from any like Roku targetable, advertising state marketer recently media provide question audience I’d the been of your a announced background of measured the our that to goal beginning, natively

know, we of platform run sales very fast growing sold is by on but ad you business own, the ad and of publishers flowing As our robust our through our platform. majority inventory a still

CPMs same And they capabilities, in so this world. empower the TV them ways of from request beginning serve so been higher many has our with consistent and some publishers commence in that themselves from a to evolving can help the we that compete

and at addressable about the and leveraging our Roku So Fox, system. Turner publishers capabilities high-value marketplace into interactive that can data we that our the like our ad operating built really is deploying sell so premium tech Viacom campaigns,

Operator

Co. with Needham & question comes next from Martin Our Laura

Laura Martin

a upfront? through you’re Second affecting what so upfront think got that this Anthony, know more us us just Maybe are willing I’m the them. TVs quarters, of the saying year about the means first, granularity on huge you over our is added couple China you are X%. if you upfront tariffs users, But I these showing deals tariffs Chinese and and TV we at from in so manufacturers? whether that anything learnings think was you Scott, lower, process far, final assume the your first just numbers were went side any Roku you these any TV you will can in let my player with today we then is or Can said up I on -- Chinese that Apple was the and of not how that it couple, have your being us us the interested normally upfront, for your of lists TV. this your what given affect any give of more. whether last of and units And -- accounted -- delivery meaning half last the question give

this user much be TVs So how great? us Roku the could side units size quarter would added for you to the versus on Thanks guys. that

Anthony Wood

tariff, time our affect any They something we’re terms in from and an So it. appear seeing so it eye It’s the we’re don’t on financial keep carefully of impact tariffs. products. the of any to we’ll monitoring that’s changing not this

Scott Rosenberg

Laura, to their advertisers mention to the This now And don’t I think specifically of is the of as us big to your to window. for where sales planning our XX% business proactively delivers about really upfront first is very annual history for ad uniquely that year upfront, this plan. the OTT XX any planning they spending here XX. with TV Roku the things regards the question takeaway participating in which is well. in we are really part adult time have first were except say went I in

planning you’ve that budgets the think in in portion equipping with were demo, to And critical that teams we your very tools their of spent include these active should So town about be if the against OTT. to you're got planning process. across against OTT

So characterize is do activity Anthony, want upfront question… you our to in I’d the successful. the very take

Anthony Wood

that? you do Steve, take think, to I want

Steve Louden

users. Laura, the do I will

terms versus between So player players went had a the lumpy. that particularly quarter. licensing strong think slightly mix and for the But that's given consistent but can of yes, players, trend. be It under don't a in certainly the licensing XX%, we mix

majority we sources. will will from be new think be forward -- the so generated licensed And going still accounts

Operator

you. Thank

May Our comes with Mark from Citi. next question

Mark May

Thanks have two if for could. I I taking questions my

into of player XX%. the about talked about quarter, First in Can on players, in and And to you’re this revenues terms margins accounts active shift new you to the source position upside and back how revenue. you the of player given are than if your move channel gross XX% talk secondly channels closer where that? greater ad about thinking mix

relates channel higher Just -- and to the margin the margins. to one higher impacting the it Thanks. since much your of is As XX%? of trying platform it its a that than that’s give fair to Roku is say channels, how sense

Steve Louden

last to we in of basis little answer down but and modest then new strong the -- a flat on something in the terms promotion, a question, quarter, just player licensing a will we mentioned of be to business, don't growth The in under give revenue I trend QX remarks QX. sequentially so account partner more player our consistent demands our XX%, and business business extrapolating players licensing year-over-year in That and was. the can that think in particularly where be the mention player we did promotion. had player we drive that forward, did roughly how lumpy strong as part a both wouldn’t year-over-year recommend percentage was As retailer that that’s content a a and blip going think that’s

side, look ad better. terms really it business the of in slightly of is the average mix pieces development terms platform then or on In the at higher margins. XX% or video the within tend business of to of in advertising platform other I And roughly segment, distribution terms would content shift be much the audience -- revenues, in those

versus ad video CRC how video ads, non-CRC specify of the necessarily wouldn’t more business I runs. overall So

Scott Rosenberg

It’s add us to fully just new that incredibly I I healthy off for this are channel new vehicle go channel strategic control. Mark create that us reasons We it’s for for platform. an can to a a is while the TRC would ad we in and also that Scott. earlier. product mentioned experiences. margins It’s

a in so strategic are the channels, us the platform. while care And healthy about we incredible it’s and achieve margins margins value certainly got also -- to as

Operator

Thank you.

comes Schackart question from Blair. next Ralph William with Our

Ralph Schackart

could. I if questions Two

impact talked hours, or Roku what the breakeven and drove there. general just that you say First, two, streamed then clarifying would know reinvestments. you facility margins. mind the the OpEx increased business in us curious what potentially channel the EBITDA you I run But reacceleration look about market with just or pronounced you’re talked about for going at XXXX. modest reacceleration OTT continuing in did to Steve for And to have you

Steve Louden

terms streaming accounts of accounts streaming they XX%. were Active quarter. active the each in were growing in and can range, in Just the streaming have and bounce hours similar been the hours up the hours, around up XX%

wouldn’t relative in it's material note consistent account. any relatively the of been change I terms growth active rate of So per streaming the hours acceleration to of se,

growing it's increased speaks than accounts active platform consistently, to on has been faster nothing more the engagement which that. but So significant than

for business our CapEx. of we as to Frankly, usual up have will out we In incremental facility, and we’re OpEx lease space. running will soon that's been new and be terms a continuing headquarters EBITDA the lease, really and grow as think as we that signed mentioned of we’ve that

streaming. so of profit a consistent of invest running so we that’s on when that. terms before call. growth think But continues. opportunity more into still the we continue been been just gross get to these the to In that’s to great lot get tons specifics the February stated the I guidance a a reaffirming there plan in as we of a have to we going breakeven we’re manage growth investments is days business will and opportunities in goal we’re And growth transition in the is XXXX, Certainly, mean early the of XXXX

Operator

you. Thank

with Forte from Davidson. D.A. Thomas comes question next Our

Thomas Forte

So have questions. I two

SKUs with of engagement news. I live mid now user about launch speakers. have players? to speakers example, how with it tell -- is content versus profitability? Thanks. on you Can in to is, your what breakeven the your the do then the similar think additional hardware Can platform? And you that other all talk us the strategy you that is the the you content For was other May hardware, intend first with second The at

Anthony Wood

So on is of doing channels. news, in well terms the news Roku

We continues adding meeting haven’t to out well expectations to and Engagement Roku its broken five the but engagements. percentage, on our the grow doing up in a and reach. channel, top channel it’s moved

said So The pleased progress. keep the I with is strategy more adding of sources. we’re like course before to content

course So content we well, geographies. of more we’re adding added reach and news off-platform with content types longform of to be new expanding as primarily and distribution and going more free and

am it’s revenue, I’m doing speakers the reason new us, using excited platform. them we’re speakers, I the making it’s an for TV really terms really sound better -- even They’re our and hardware really not TV awesome wireless But In enjoying generating Roku it’s is at about not of home They platform about speakers. them. about excellent. the

are a new level it make is TV licensing thinner do or can to think license TVs from And one their sound the to use we the getting to they smart we that the the enhance to gets it platform we their of industry, that or so the that believe bringing that we better And easy upgrade better. expensive -- super physics it is of to quality things and can audio easy, of be and when platform TV sound not but bars, can it So today quality people are the we they Roku TVs. best just a one wants with systems customer those home results of making use audio an in want theater OS ease systems is ways connect. of make worse certainly TV.

it’s a TV the you pair just wireless your with sound just they and speakers, in, the so now on you much, better got TV much plug TV, better and Roku sound to they speakers great. the And experience

appealing So result for even we to the to and loyalty will think Roku Roku the it’s platform us TV more about more making better, in that platform. customers

Operator

you. Thank

Our RBC Mahaney Markets. with Capital next from Mark comes question

Mark Mahaney

the you I lot. give -- verticals, efforts call So trying that then any final can color with want as solution. thoughts side just a advertising other opportunities, particular on that thing how on advertisers color or more are OTT business. use with with lot you’d us engaging Roku, just advertising, And to any of you an out that have a to about advertisers, lot on the outreach are more out a advertising many on of Thanks people go that, have or programmatic of application then to and the really

Scott Rosenberg

to of we advertisers service, platform. regards With day, the a ad we’re the end TV at the

be in because end activity auto. every seeing index, we’re would so platform. And entertainment, farmer in or CPG If we at day, an the that’s over that's vertical across active it we’re of TV entertainment advertising, whether the financial services or

on spent well advertising this stack, most about securing are $XX is is sold component the of the today that’s future in bought Data TV programmatic a in central be call, the vast more TV and how natively platform. go regards a audience is XX% crack way XXX With and we’re of business we true with that new which majority of also that spoke But its opinion, are, of we national the in programmatic about is We’re our techniques advertisers renewal now driven digital a to programmatic marketplace, ad phases doing us. core. billion with little business, based over accounts, to quarter every the we going that traded. XXX The selling top earlier of top it’s a coursework at advertising traditional in fashion.

that’s that upfront so Martin's also do aspect as go that well. the central ad And business the secure about participation services which we And our we in question to dollars a a team in as earlier TV way have Laura of well.

Operator

Thank you.

comes question Capital. next Our from Paul with Golding Macquarie

Paul Golding

to you or earlier. of guys. around starting this to was the speak of speak on players, these suppliers you more was wondering pay was could follow-up inventory you of that. I not And there a opportunity is now quick is in around right pretty to any functionality sure That could that? or And premium if through then is and opportunity opportunity processing if said a around around are geography off this just engagement. be I So services then to through are and tariffs fed a for Roku so anything I’m that there's and the as OS developments of free for user whether color functionality whether and supply display or interface question an last well, diversification platform, it, my wondering featured if like OTT seems going of question ad TVs new Pay subscription the anything for be simply easing

Anthony Wood

Let little talk a about just feature free. bit me

it’s a available aggregates Roku, free it where gross switch of the is that lot but -- for well. the look business so all poor Roku content to we’re of to Obviously, feature And on content. to easy that’s believe that viewer a know our the driver are free they is supported one free big also paid is and want free course means content and Roku of the ad option on our free Roku it’s X,XXX of to as the feature things of all free menu not but So people like about new for free might find the channels makes There profit, streaming customers and free content. that services available content. is pathway it, platform go best -- content all there The fans of in as people when for we the the of is not content the main but platform lots and value

a into aggregate that it So for they they find on from spot the runs app, consumers into to UI it something then watch And it app that to and channel. is that goal primary click one and launches links it the it. deep so to they make experience easy find want when then

relationships want put I there. good want that of help combination -- what combination it's as we into decided there in we kind editorial good a want well, we based feature also we that’s consumers so free. so an So editorial economic have content but And obviously there content -- in feature with goes to we of mean, a

to In us. terms except tariffs, don't that affect much don’t say I tariffs, about more of currently have they

a different they we China. not TV have lot and Our in of TVs manufacturers built -- are

have built I'll places different TVs well. in Scott as Pay. the let world around We to talk And Roku about then

Scott Rosenberg

area Pay investment us. for of remains major a Roku

acquiring and up Our users the view consumers movies are our our content buy for on is our for that it friction interested to for platform. on a great sign platform removes service in partners who it’s services,

funnel. of basically And key from pay that publishers of really and our things our so a buy also development business to talent it audience investment into people and and remains to advertising drive subscription technology side where area and our business us central

Operator

Thank Instructions] from next Cannonball Vasily you comes [Operator Our question Karasyov Research. with

Vasily Karasyo

the I could was advertising we in wondering if into revenue drill the video quarter.

percentage volume around what you hours were versus you color could drivers So actually help SVOD -- monetizable tell helpful. either year-on-year of up YouTube? super variables were what most that you and those you, us any to be And supported, excluding pricing? growth revenue exclude important and Thank us much. would size would If streaming for of very video i.e. willing size be or also, the the

Scott Rosenberg

say business portion up about out and runs what flows and revenues that of that We -- it the of have two down is not about video our specifically, our ad revenues thirds the business. largest broken but I'll platform video is ad ad ad

platform. can see just is strongest volume volume portion engagement that and ad regards really existing you our the We of exact really and the there making -- to don’t our AVOD. say or of our such of accounts us. big a that and growing. one for driver more on and new part strong that’s us segments. TRC pricing The pricing by getting a as investment big viewing It's remains support into really growing investment and disclose free leadership our with in is growth monetization I’ll of advertisers spend to selling of featured Your question progress with our and

Operator

you. Thank

Gould comes Alan Capital. Our next Loop question from with

Alan Gould

got please. I’ve two questions

across do new at I on the be market programming of market to the First, to Roku now geographies, Roku getting think is think successful. -- holiday you’re XX% programs share share is close also that my the as what are to the the to programming question do just And TVs look you at getting channel the have more rights What second channel season? have depending are the shipments do what the geography? that's content going across you about you from Roku, different would season. getting kind I producers of the platforms channel assume believe we’re the Roku holiday take the TVs for on of And you’ve that supply you whether powered. your will and got response or

Scott Rosenberg

us in The with on response great. has their partnership been TRC Alan content partners from

important to there’s its content monetizing being Roku mountains there because has programming of our reach under-monetized. and thing that’s success, And vehicle powerful IP the know really to platform. for is become channel, mountains of just a The out in that partners of great consumers

now part Our are of success TRC other exporting big platforms. there how we to is a

Our content endeavor. with partner us in partners want to that

had question geography. about You a

mean I into our teams or you yes, within the to the singular other geographies, deals to be deals. cross-platform U.S. So go licensing shift but as tend paradigms

Anthony Wood

doing systems. remain and and of TV share and smart choice. are and the TVs, well X-Series I’d is And we’ve TVs much of TV, are is more changed second cost OS and believe in the content awesome licensed four on OS and that Roku we that structure believe more the a just TVs have a getting an of better the are than one say is we we user having and market U.S. CNET manufacturers is top-selling year. Other we’re in our any great business our TVs the license would all given, TV our That fundamental reviews, there. for regarding TV But are amazon.com. I outlook just which thesis outlook not case. really And the call experience number editor’s Roku is market that was in all, one TV those of particular TCL going the would dynamic an the that half one licensor don’t share a better half three the Roku to first switching OS result the -- and we Roku position. to what more expect is almost four And TVs to that homegrown U.S. in not the that operating OEM resulting in means growing

So to OSs. think licensed switch share TV the I is continue to market as grow manufacturers to going

Operator

comes with Thank Greenfield from Rich question our BTIG. you. And next

Rich Greenfield

couple. a got I

the that Roku I different? more that are First, upfront to cetera? or the access those things Cheddar essentially on when opportunity to and like assume people TV, I content are I programming all I content and question country, amount of the the content trilogy, based Roku devices, work the in a that essentially quick to on getting does that How the upfront And And presents Roku center channel highlight Roku see the is in asked. I really Do follow-up. than high-profile the Canada vary of or when channels or you're today advertising is from up Alan economics think on But then Are platform seeing does willing Matrix have given for you the channel see it that last that that channel? et from that Warner Roku Brothers? content off benefit like in you across when channel. movie tied we're showing which Are that that have usage buying channel. paying the things

Anthony Wood

answer and channel. quarter person want our note who on question I’ll that But the today. first I let me Scott on to call or Roku congratulated not just a has Steve your single

not on what's Speakers] [Multiple sure So would going rich… I’m be

Rich Greenfield

amazing… was That

Anthony Wood

But anyway, Scott, you want to…

Rich Greenfield

Anthony… quarter, Great

Anthony Wood

thank Yes, you.

Scott Rosenberg

days models really for for part geography in here mix ad geographies. case capabilities another in TRC U.S. is we’ve push built answer Canada other take We the the as certainly is us that’s international. launched same a to of of early the just some new Rich, to evolving, in of abroad it’s that the the still

Web are are Our many our Roku on channel. with then platform also a apps economic the of of, mix now models shares into syndicating our content content partners and

the IP but supercharge channel. for and So they like them a And on they platform. and going with up you Since is earnings Roku day Roku a they Cheddar, like owners is traffic audience stream the live on to and way us of is around to the the end the channel monetization view a to property that at partnership Roku Speakers]. Cheddar have matter what's app that is the Cheddar, [Multiple see there have a is that our then there Cheddar brought within

Rich Greenfield

capital actual a that is minimal so content, level committing of should And assume we some but that towards of some there amount amount capital? licensing you're of

Anthony Wood

just offers the the some for channel, on directly license titles Matrix, economic do example the this part model I ability think, popular a increasing scale But same I We reflection of like to more think know that come with that content. and content. -- of the Roku Roku the channel I it's operate

Scott Rosenberg

little than got a year under our less a belt. We’ve

to more resonate what's with We’re going more what going are confidence and consume, to getting predicting them. in users

driving We’re Matrix like us bolder getting see it more with that’s and will why around great more the prediction promoting, traffic expert get -- Trilogy. actually not just titles and but you at

Rich Greenfield

a just then quick follow-u, question. separate And or a

last which Locast, its They on on I at to on Areo I it shut a potentially array new even that before and about on wide down. and you're seen television making years was high-quality forms called one Roku Dallas. the But to air your great premium apps have Android, been on a one content. interesting the launched think television free interested a is point air do looking ways? So other at like channel, basically platform. the know of over had of way seem the few in Roku over York you that channel most of something how and think over Roku that app you Is But providing way devices, the something would launch don't a I’ve in offer yet. Roku has is for New

Scott Rosenberg

to or coming Rich. Most open in interest on the of we’re is reading won’t their But demonstrated what all We about I specifically platform. on think on think your do the and its I a platform. on note programming apps know in on future to it, I Locast t remain strategy coming platform don’t I comment we’ve an from merits. position comment

Anthony Wood

couldn’t But Roku there to see on Locast how we’re does. be no and reason it the curious is platform

Operator

in to thank Anthony call for would today’s over gentlemen, Thank of Mr. Wood participating turn I you. you any the like closing question-and-answer to the portion remarks. Ladies and for call. now

Anthony Wood

saying I’d we to the rest are results by for outlook quarter's close and positive Thanks. like XXXX. with the of pleased this

active excited growing content TV engaging making and reach am our strides accounts, about particularly We’re helping I brands rate in and viewers them. innovation. great publishers of

alone, for seeing support quarter expanded today's Happy and streaming. joining speakers for Roku to again wireless quarter. free, your we the TV This marketplace And you I Roku forward look call. Thanks feature all and next channel. introduced audience the

Operator

Ladies conclude This and gentlemen, thank you for participating does in program. today's conference. the

may You have all day. disconnect, wonderful and a

Roku (ROKU) 8 Aug 182018 Q2 Earnings call transcript