ROKU - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen and welcome to the Roku’s Second Quarter 2019 Financial Results Conference Call. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I’d now like to introduce your host for today’s conference, Tricia Mifsud, Vice President of Communications. Ma’am, please go ahead.

Tricia Mifsud

Thank you. to ended results June welcome the call and quarter second XX, afternoon Roku’s conference financial for Good XXXX. Louden, Founder I on am Platform CEO; Business, Roku’s for be of the joined and Steve and Q&A. call today who Rosenberg, pleased with Anthony our to GM our CFO; be available Scott will Wood, of in the which ir.roku.com. letter, found on our Investor website our section can and our management additional results details shareholder Full commentary available of Relations are be at

your to today, responses revise reflects management’s only including we of discussion following undertake or questions views as to August and The this information. update XXXX X, any do not obligation

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

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

reconciliations to you for posted our encourage Investor on our find the most at our is which And content. comparable visit measures I important will of You to IR in Relations non-GAAP letter, measures discussed shareholder today periodically ir.roku.com. website website

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

Anthony. to over like call would to I Now, the hand

Anthony Wood

today’s Thank you, joining call. and Tricia everyone thanks for

two am we results half we great progress second are passed making. and particularly I Our milestones. the quarter show pleased significant first

households that is scale our domestic U.S. the and X The million. X exceeded biggest reached MVPDs. active rivals $XX in We first accounts

like a expanded years these XX% we went $XX basis. in ARPU Achievements is trailing above execution public. since is and is strategy on second working The X the that our XX-month show was our ARPU has strong.

We expectations. for the our we rate full advantages profit are for Roku going QX to since financial our to among and outlook extend year. public and Strong QX OEMs, ways build us growth in had incremental gross highest that the advertisers. reinvest our strategic even greater also results and performance allows content continue exceeded consumers, raising publishers, preference

business. call to to over the having understanding draw distinguishing I a that growing a fundamental a at handing like is customer to first-party Before ad your scale would There Steve, characteristic advantage. of attention was our relationships

is targeting, OS Roku provider third-party distributors. business superior offer Our of inventory, that providing was create an reach content publisher for to ad built as advertisers thriving ad solution premium and individual value precision cannot match. unique tech a and we access sponsorships, to OTT The

of we proud are We business. their deliver the for value

it turn now Steve. will over to I

Steve Louden

We both player platform Anthony. segments. results exceptionally and Thanks, delivered the strong this quarter in

taking Before walk through financial highlights the full will shareholder Please for outlook. from details the our our financial see and address your quarter. letter questions, I

which This value agreements visibility quarter. estimated a increases recognition distribution the based revenue year-over-year last resulted content the performance on platform driven both year-over-year, to public year-over-year as Platform growth XX% accelerated outperformed revenue the XX% from of Roku highest sequentially since in player and growth went revenue level XXXX XX% in quarter. was of and in improved segments Overall larger-than-expected expectations. trends, by of increased in

can content lumpy be a revenue of recognition distribution As agreements quarter-to-quarter. reminder, our

continue that in trend monetized and continued to we impressions addition, as throughout double expect robust video again advertising growth ad XXXX. than more In once year-over-year, Roku

was Total ASPs XX% retail we gross channel year-over-year for units sales account million to rate quarter up year-over-year continued as up The XX% strong as player revenue XX% down growth optimize Player reported. were $XXX XX% year-over-year increased XX% driven were by and growth. sequentially last of from year-over-year profit growth. of core

million not the related did faster profit accruals total liabilities to Excluding potential rate. that would IP gross in XXXX revenue the growth licensing of is $X.X year-over-year, QX which than materialize, release a have from benefit grown XX%

anticipated, player advertising, gross due declined mix subscriptions, continued XX.X% overall of to from driving our of to XX.X% introduction shift to the sequentially the strategy and margin As premium video ASPs. down

in quarter and XX% by to XX% OpEx compensation. in the year-over-year driven grew $XXX headcount stock-based growth a million higher

revenue comp, was below well gross year-over-year, our Excluding XX% OpEx growth and which was stock-based rates. profit up

better in $XX allowed We million cash, performance A cash, us sale QX. expected restricted million strong transaction and stock the at-the-market common from with and of which $XXX in of revenue the during an the equivalents, quarter. Our short-term a investments, net included cash offering million EBITDA adjusted than to Class gross in profit deliver ended $XX of quarter proceeds

area. the year-over-year We first With are timing, Based in new taking the still outlook too half, our related of to any growth, half along uncertainties second strong level adverse mitigate impacts. potential we representing roughly that, growth of our this XX% results for year-over-year the are our many up XXXX year. at from as near-term raising are that prior midpoint, $X.XXX with outlook imposed in our and potential steps note include that to let’s to the full tariffs revenue the turn scope, Please our not outlook. on partners XX% goods does billion momentum in on changes foreign outlook sourced there impact if and to maybe

We expect two-thirds total represent to revenue. platform revenue of roughly

$XXX raising profit million at outlook up total the to from $XXX are midpoint, our gross million previously. We

purposes, modeling by ramp of advertising of and the continue premium subscription low video the mix platform continued year progresses. should the model to a shift in up driven percentage as to you as the For gross full-year margins revenue XXs

to And QX. to in margins similar low-single for to expect year, in the player gross XXXX. player last we expect be be digits We lowest margin the gross

well. reminder, gross a of for to are platform our player continues not As player we and margin account as for growth trading strategy profit optimizing growth revenue work

gross our profit competitive and in incremental business to to growth our strengthen is Our reinvest further strategy drivers. advantages

full from our half, outlook continued first a sales our the increases $XX of well EBITDA marketing talent, to expenses The raising operating million. sequential in year and impact million stock-based anticipate amortization of performance for efforts are XXXX $XX million million investments are $XX $XX million in the from loss prior and equity has XXXX. We in roughly costs. range to in to increased refresh comp of facility the income net million product development, as as adjusted to increased we our outlook, $XX estimate for in of price our and due income in additional and stock net grants. outlook higher roughly Depreciation $XX and Given reflected other largely

growth for and midpoint primarily $XXX.X gross XX% to facility million. particularly million at from headcount to revenue We related expenses $XXX.X increase to QX due a profit calls sequential QX. Our in QX outlook in the timing operating shifting costs, large costs, year-over-year of and XX% growth increased year-over-year expenses anticipate

income we summarize year performance with half. and result, second million in $XX EBITDA stock-based the roughly which million and depreciation be quarter. $X are loss income and million and first business saying possess of pleased roughly the the how of QX strong net with expect we the $XX by net other a we a and momentum of adjusted the comp I million, the into half to at our in midpoint in going of $X includes As will the loss the of amortization

your let’s for turn it questions. that, Operator? With over

Operator

comes with first Davidson. Thomas question Our [Operator D.A. the from line Forte of Instructions]

is now Your line open.

Thomas Forte

Great.

for was first at if to talk I the OTT? impact I spending at So going the privacy for know increased about level advertising for my market, question, OTT thought if regulatory wanted want including the to advertising have to negative on all a you focus on

Scott Rosenberg

Tom. Scott Great Hey, question. here. Rosenberg

As that control data would used relationship are and in but take a uses justify unique have explain third-party it consumers challenged know, puts how with us privacy we have intermediaries and a on it, to data. position a a going don’t as be consumer as the who consumers you we direct the contrast to that seriously of and first-party of and is direct who our relationship balance, platform entities, more against and course both very I to articulate to to company, just

So, it but platform course, that a first-party we consumer we feel relationship, very take on with a are positioned. balance of seriously, as uniquely

Thomas Forte

I my may potential, of XX-year be if question potential. was thought Great. X-year potential, wanted a X-year And this I a sense give you to kind for guess you then follow-up

as there was So, time, and mobile time a a large percent a of long follower industry for between of period extended an of spend. disconnect usage spend ad mobile as total the digital

see over see when it more parity do think You top, OTT? spent of and will for you usage advertising between percent and today Thanks. you the so

Scott Rosenberg

Good question.

still is are stages we the the to very that OTT, shift, in TV moving think consumer secular the of early and move that habit fast. I

in hours it see on platform. our streaming growth You of can the

than content content incremental of through and advertisers really to providers more to TV business delivers Pay. by effective day to take our subscribers. That progress ad they shown Roku side as we things substantial helping our down At of this we and content to TV, revenue and work is both our more making at are we do So, dollars, measurement, progress that on for out. owes really acquire it products distribution to like the in will over I ad linear the products, think great growth, Roku ARPU years at play proving the as that attracting deliver traditional growth, it proof reach end the us, ad going points and are come our X well as progress said, companies

Thomas Forte

for taking you. questions. Thanks my Thank

Operator

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

Your line open. now is

Unidentified Analyst

This you. Two Mark. thank is please. questions Great, Shwetha for

you shows little is in performance of please that? Roku based second the the that, talk as increase improved movies a of one comment visibility dozens performance two on value on over the do first which live of platform to led Last services. subscription trends what please distribution could and you Steve, bit over elaborate XX,XXX content The content and in And Channel. revenue over you is on strong on one distribution. said by you estimated mean channels the about XX and reasons. more agreements then Could the of quarter

in is focused on you your is inventory most, when So my content, product learning Roku on noted availability, the the question personalization, on content, that letter and how machine you the really shareholder Channel you. and viewers ad their what the grew versus subscription channels? improvements, is ad spending supported touched growing compare time which are it Thank well you and team

Steve Louden

the multiple few certain we a models whole the is and Yes, just this assumptions quarter that have related each X we the say evaluating first element deal. value, agreements deal where agreement. I Hi, the to are we agreements major in Steve. those, are value distribution reminder, we we there a take X-year question will Yes. on and – as content have have or

we incremental and that revenues deal will we revenue where quarter-to-quarter trends comment in lead a increases confidence have value As be basis can content performance potentially over have extent the to that have distribution result, of continuing that can we a quarter, which those increase to that when value into that on agreements time recognized to and then the those a also deal we is positive lumpy. made visibility the related the

And and quarter-to-quarter in there be so so in value trend, that it the had of of lumpy quarter, greater-than-expected recognized. some was we gets this can and how great recognition deals again which is in we the went had a up, deal our terms situation but revenue

Unidentified Analyst

quick quantify that a just can one, please? you Steve,

Steve Louden

revenue acceleration on a sequentially definitely the We value rate. that, was growth it haven’t but platform to specific contributing a in the given factor

Anthony Wood

is will Channel. the This on question Anthony. Roku the I take

Channel So, I doing working great. is the Roku overall It’s say well. would

it’s a advertiser Our distribution out Channel or our content our playing way customers. is a more experience way to and great has great for in Roku it It’s we great the content the content. distribute – experience their well. And for the place, in Channel as strategy Roku It’s increase usage effectively with expected. publishers is a

So, creates Roku virtuous cycle in things drives engagement three and those that Channel seeing. more together the this network more just are we

mentioned platform, the top on X the subscriptions. you premium With channels

premium subscriptions. we We have have AVOD,

live have We content.

and episode Channel of went example, for an there. on like, and HBO, I I Hard then used Die Chernobyl was I week, in thought that Roku Just last watched

ended So, I Die well. Hard up watching as

it’s So, reason for complementary. maybe one very end in up and People else. watching come something

well for working So, is the us. strategy

We the Channel. are with happy Roku very

Unidentified Analyst

Steve. Thank Thank you, Anthony. you,

Operator

Our next Laura question Needham. Martin comes from with

is now open. line Your

Laura Martin

hear you okay? Can guys. Hey me

Anthony Wood

Laura. Yes,

Laura Martin

These are are I not upwards, million. the about excited excellent $XX guidance Roku could These and more numbers. that be awesome Great. EBITDA love

ago learning Are getting in you market you, So a go displace, and years are money. really what think you go are where guys a are later again like Anthony for going I because China to into I these interested operator in systems there am you there and have into ton operating sort you or when you you guys you able went is announced when X like to than save have to was new go of it Brazil. to owner of

So thing needs if going the on they from and I distribution you if one. $X U.S. $X.XX on for last are rec your because like international hold I have rollout That’s this Steve Disney the of to that rec? go these don’t a is the the or sort is right a if you whether the the subscription, harder yesterday. but tariffs wrong wondering pace, the Roku that it bring U.S., exactly about but did is earnings payout ask you I if the whatever about affect it rev you name, is tariffs, cost the consumer the just recognize these rev understanding you and down? to to you you Disney. am Is And rec first know you business? tariffs doing easier, somebody of Disney because and how are or through, controls me rev you $X, tariffs, the Plus, than Disney list, China what of is, My pace know are these your then to my does roadmap tell on sell know our

Anthony Wood

is Hey, on international tariff. take start, Anthony. the Laura. will This and question will I I

it’s a world. around plus X big on TVs the So international, Obviously, it’s opportunity. billion

There other lot – in and to a made in have operating displace, the not incumbents open. systems international started way Roku no is has really say has in would a Regarding we of it international international I wide big general, is is yet. your leader still of focusing not like question really on yet license

think States is our technology believe the the the wide been is big strategy skills directly we lead developed, we our successful and there to number We international. in that the super United and – opportunity we’re I Obviously, growing So have open. the one. have, we that applies

will we mentioned So think you actually any think haven’t But be we announced Brazil. countries, we I successful there.

ready international anything not that this so, EFA what mentioned on time still is spending that, example, about would international year. we’re Brazil to haven’t say for giving more a early. our would it’s say I I We And and I’ll for a yet, reveal later am I officially. on bit plans personally be keynote

some tariffs. something there that of still expect around Now to variables but lot what is I’ll on from are tariff, – tariffs a and color try and we provide

future Depending So in variable. might our timing general tariffs impact on exact another rate, their results. scope,

of as as are impact the same. doing partners mitigate any of potential to steps course well are taking our tariffs, We

– of term, is still what just a But For tariffs size the or time. execution on example, in we’re looking opportunity business. streaming and there the of big or the our opportunity at I think over our is tariff relocating the strategy is picture that regardless huge happens manufacturing with our doesn’t short affect still in it

Steve Louden

Laura. Hey,

Laura Martin

Perfect. Thank you.

Steve Louden

rev question. the rec hit me Let

about and to revenue, in there subscription rev then if be two talking net without content ways services part share multi-element treatment. a would of the it’s recognize are it’s particular the there deal a deal, distribution the of app So subscription types any

we’re premium Channel, general the COGS the contrast and was content can then subscription have Roku then change time, then is expectations in effectively and be deal the Channel that so by I incurred, as a which your we revenue the we’ve monthly in we it’s done would the portion revenue value of over recognize part how the there, that basis, that the it’s the we monthly the traditionally can wholesaler if business, partners revenue that just share. back we and we the and we it it’s quarter-to-quarter. a gross fee owner. the because that consumer part distribution deal of of that within get of subscription pay service premium recognition within of And have that’s will on what because to SVOD plus Roku content part say saying that recognize our cost total consistent of we XX are terms don’t lumpy revenue recognize value with So that and on

versus gross before, So models revenue treatment net that’s incremental are revenue of profit very for in gross treatment the but good a driving treated they’re both terms Roku differently.

Laura Martin

Super, helpful. much. very Thank you

Anthony Wood

Sure.

Operator

question comes next Cannonball Our Vasily with from Karasyov Research.

Your line is now open.

Vasily Karasyov

pricing of you Good improved and I but and call CPM. CPM quarter to you afternoon. ago, you. Thank the think years about stay out advertising couple ask your wanted $XX. over to pricing you mentioned is slightly language seems it from around monetization stable a I that your seems that Every

So the true is a you through is really CPM capability even to infer data growth, revenue much my all it hasn’t though list – and question two improvement. changed and advertising your part strong that this targeting

So keep how thinking publishers at my you’re party third to do they then about your from – they pressure the your And share they you will is to Fire will do your back TV trade for charge choose change advertising because given have you least and desk. them. with to that you XX% rev have demand, question said is why advertising XX% open it they – it and publishers do where think

what you if you expect? tell we would could should how So Thank you. are appreciate me really about and I thinking that that.

Scott Rosenberg

continue CPMs, not CPM, so demand than more of line to great TV Vasily. Scott the buy premium product the store in advertising measuring out it’s here. more prudently more but top granular and on interactivity, just advertisers ecosystem also alternatives buying Hey, ratings a showing characteristics, focused the more that like that digital of performs ways being drive function OTT better example. traditional targeting Nielsen into a do purchases, using net that for much command better ad We dragging of can it than by though currencies on they OTT, TV

but much our party I filed continue the pricing TV prize more demand view, the ad to dollars ecosystem. and question great larger about focused not question So we’re generally. Fire drive to followed fully and we third in regards your With which I’m sure is in on the attracting activity

in know framework DSPs as may ecosystem. standards ad the over as Roku own available into sales media As ecosystem. our to you many biggest made an now are advertising the that our has years media work IIB well advertisers. that an the to we connected based We the been based, the our to of Roku We think team. to and sales operating own and XX ecosystem, the a of demonstrate with are DSPs implemented ago, the OTT success in open driven Roku is ecosystem. There committed numbers open to ecosystem are highly years publishers, offering We it for data of attractiveness think it essential

Vasily Karasyov

Alright. much. Thank you very

Operator

next Our Oppenheimer. from question comes with Helfstein Jason

open. is Your line now

Jason Helfstein

quarter The but Thanks. Two strong revenue. questions. implies guidance slowing platform fourth

them that on about in logical seem coming Given for Disney pay example, there you they’re that America? think international share question of partners, earnings, Apple, this plus – a listed share over takes rollout full-year should willing Amazon the if the launch Roku of then and to they it and Could I no been assume did Thanks. as that yet you clients, pay would And you to agree you and on is relationship, their and broadly to we as initial ESPN some talk Europe far second the plus rev from TCL? guidance. time [indiscernible] Disney Google would Latin and type not on an that more or support would up has mention puts revenue impact

Steve Louden

pleased of first it’s the question on the Jason, performance really We’re take Steve. outlook. platform Hey the with Yes, business. the I’ll

to I exceptional platform And in factor on the think answer based that was in and the in saw And QX. terms an quarter a can about contributing the was lumpiness rev occur exceeding about in both rec. the expectations. earlier I player sequentially QX acceleration talked of platform segments revenue we that certainly another

the but the and we the time, over quarter. guidance lumpiness has relative our a it have increased trends have in of the quarter-to-quarter to we to on do lot based of quarter confidence the some with So business

versus very quickly. prior where growing to is but business the we The Just It’s at a predict market scale, very feel reminder, our accurately things about evolving is we’re these outlook. better this rapidly. impossible at

we of the back So the raised year. the for expectations have half

Anthony Wood

This is TV question OEMs. I’ll on Anthony. take the

I successful know you is Roku very bring US three So continues of for we the OEMs across share, very would our say to going in to the provide OEM answer TV lot sold partners market your are cost It’s well. a lot to mean in I TVs. We see hardware One it Roku smart great TVs a a taking of but TV program dimensions. value question our platform. to us. be low

content We lots we in we industry. well. the believe them a provide We have best products, software we help actually of and is as other what We relationships. of ways help the retail, lot market there’s the help

and we’re not good to in that’s terms we So consider say don’t commercial our specific commercial on just with OEMs valuable term. comment the partnership of we to deal I them. something would very that the a

Jason Helfstein

helpful. Very Thanks. Alright.

Operator

Our next Morgan Ben comes question Swinburne Stanley. with from

open. line now is Your

Ben Swinburne

curious percentage just how quickly still how And differentiated the to to that of shorter. advertisers how load get and for matter product needs or those things because that more innovation much I’m the ads like up. perspective. sort and some follow emphasis I buffering of the then much blocking advertiser off things complete, Hey, at or and an I ad is tackling XX the of of Roku certain places advertising good if sort world a you starting you things of And think time of afternoon. on right is in do Scott, are you and sort second advertisers? think to get Roku eyes wondering about points from completion OTT in of and do in was if asked how one around more what the is those product had – and spot drop I ad the are OTT

Scott Rosenberg

focus why place. into in the the for of business part huge It’s big to better ad but simply got a a product not ad it’s part the Yes, our deliver chance was ad opportunity, we opportunities. the brand formats interactivity, a just It sponsorship actually. new of consumers. much integration for revenue the a first touch rates in That’s new marketers quality and this ad new points space create better There’s buffering also experience so marketers. about completion opportunity for and to

TV heavily With we true invested not in drive just proving behind the new back-end terms are the consumer of the that OTT very in viewer, retailer product it. ads ad the visitation, incremental experience, all site measurement but targeting The visitation. purchase, lift can

big us a and push huge think part of it’s So a it’s we do success. our for

Ben Swinburne

And – Anthony. sorry, then go ahead Great.

Anthony Wood

I of ad going and the Roku satisfaction. the platform was a part to towards customer lot experience of platform we effort say just in like consider the Roku performance there’s that and things

Ben Swinburne

sense. Makes

higher of have guys you’re different Just higher if that some players narrowing? mix you has or time kind engagement mean of that powered more historically follow-up think and versus impact if TV I your reversion and I active still on I’m topic, is smart going over over versus account. Roku is its on? there towards account actually that on gap wondering just as sort it guess or TVs active more on any a shifts players active generated that ARPU case is use the the OS a accounts

Anthony Wood

I than factors sold TV, sure the from more versus of screen to the lot This not there I’m complicated is the to everything model engagement, it’s players just mean say about reversion. the the the of size would is drive But the to of player. through devices retailer, Anthony. a

but XX% in are forth. TV TV all to growing. excellent exactly of are when with a very that hours engagement And that I and we’re for on engagement. campaigns But X.X primary more nicely in we but what use things where we they’re all and devices on a in – in matter we and device. the obviously the experience say the for we the we’re and the to have units and of and those no be sales TVs day those optimize But monitor player us overall, are terms the position things a our would the monitoring general quarter. So up determine average strategic experience, players players, specifics important growing not user are in so

view TVs as obviously more strategic. So we we but sell both,

Ben Swinburne

Thank Makes Yes. sense. you.

Operator

Matthew comes Thornton SunTrust. next question Our with from

Your line now is open.

Matthew Thornton

fee mix afternoon. days? taking you In how you changes? you working but then very terms with the the trying guys. a rev to that of per similarly little getting or to upfront could. their guys. first, be the rec color Hey, marketplace exchange deal can percentage every a on can for. when content got And revenue? quick release. helpful. private are coming breaks any in rec, of they about if just question then talked would impacts programmatic the when is sold, refresh sub. back A Is change buttons you’ve remote good secondly rev memory flat I buttons versus Any producers us just which sell kind open Thanks Thanks the questions, just give Any player the you these guys there? for of channel I without direct versus subscription talk price press And one-time ones assume on the remote device couple the Can a just that time of raise my TV, are is that getting bid that or their you small, – how just two you and update on accounting SVOD you or I in virtual MVPD guess, programmatic bit a that own out Are a about economics. you how color

Scott Rosenberg

Matt. take on is I’ll question programmatic. This Hey, your Scott.

and majority very for well we be more to not reach into invested stack programmatic generally. a automation function programmatic flowing buyers, premium big that data uniquely particular as buy, advanced as broad of OTT that the way the sales the a we’re us great want a in is support growing growing have fact got advertisers the by budgets. and it a that’s of channel. to advertising of business. But and today because and to are coming the as significantly We’ve we proprietary programmatic them premium of continue ad offering faster trade in our fast of most out Programmatic targeting, targeting is we’re terms It that We programmatic situated today, believers they help in as deliver available of platform. to think here in than our the sales already with can dollars is TV the

So as an important a channel, sales us. for one it’s

Steve Louden

Yes, question. rec deal the take I’ll rev

earlier So in share about the agreements sign service as if up subscribers I content distribution you’re elements, these on SVOD those for. rev have a so could that multiple we include an we talked

ad and buttons, into which requirements some be audience SVOD virtual guarantees could if as have a can that of X-year over what it’s signed we well etc, we’re the as access it. spending in minimum model could we on make say, standard look be for So accounting part MVPD. bounty. many do how in advertising like making is not up it deal, deal, display share the development of be let’s is If that a then we rev a we goes or time sign the little that service getting because money. subscribers of display, terms things how different we on they on toolkit are value mix our total might The that The the comes though, estimates spending, of at is we

factors. sign So and entire value how expectation we we around many might there other up subs is the or deal

and meet when certain changes And when we in the so recognized obligations the recognized it’s value of not deal it’s deal. upfront, performance the

occurrence, directly why that’s and time not to business business you we deal. can of it’s underlying lumpy and will revalue So tied each these over – change if the major for can it quarter assumptions be each these as

Operator

Michael question next Morris Guggenheim. with Our comes from

open. line Your now is

Michael Morris

afternoon, I questions you. Two topics two Thank Good if can. or guys.

about some incremental are of meet that basis How display there. does building out to and and there. and would where – to fixed launched something is would it’s number there sponsorship successful maybe maybe detail through XX meeting you’re growing demand. can the you expand from over development then seeing in value is be audience demand? on sort going inventory of a some create of a seems thinking letter, assuming Is an you – it sponsorship some big give where you it your opportunity the next the kind First your increased example that an growth new and to Can are how it how quarter, and a there, services inventory Thanks. that which called or materialize. us Is can a you it that or months, you situation of a be of little over-the-top And demand amount you should see how that expect the somewhat second, of that reference frame in shareholder pricing this the more on saw be. power it

Scott Rosenberg

least we for the just we’ve the excited Roku OTT essential these we help our not but partners are because that these got tools the of your into It’s audience new With about question because an regards and Scott big to audience platform. say of content platform to coming scale, here. about build services are and vibrant services, believe the development to a on

capabilities And create second these continue spot. download help platform. XX new drive services products setting that launched in screen a partners email your whole on the ads they products from audience as in video app ad have you units, the a to development featured build home of Roku array unit the We content store, placement launch ad like when that to lets audience and a of starting to we channel a our recently you’re we off ad

who to a We technologies, machine in innovate better better backend technologies client, but to our in efficient product efficient predict and learning to use likely continue service, the driving to subscribe which just being deliver more is helps us not also inventory results. to more of the that

throughout sponsorships your experience. we’re about creating user active In Roku in the terms question of sponsorships, very

them the Bowl, of that game. watch TurboTax we different For breakout example, they around showed where ways that the users our experience of are had just the our of that and Super partnership the That’s be their scale KPIs for we of another all an to data. big an in are. experience meet a we an with could terms are because where day great with these national the in that and opportunities day And the brand [indiscernible] had at We OTT the streaming craft us partner is a end objectives can home we as around whatever helping sponsors into example. screen we we and leaning the the the experiences content and content for for own of partners and platform they think as example one [indiscernible] essential that breakout brands advertising their against in want up just

Michael Morris

you there interactivity response provide in Is those or partnerships? that sponsorship can any or provide direct

Scott Rosenberg

ad formats testing. we’ve there lots been and that developing new Yes, of are

For ability bringing SMS on example, exciting ad to to off ad traditional a an interactivity example, spot. a is an second video or a the an spot, that’s XX email of an rift fire

We sponsorship still but had, they have emerging to not be a to advertising. bring Our experiences TV to it’s dimension traditionally capabilities. an as advertisers, view similar interactive have capability able it’s TV exciting for capability new

Michael Morris

Thanks great. a That’s lot.

Operator

Our line next Mark Rosenblatt Securities. from comes the question Zgutowicz of with

now Your line open. is

Mark Zgutowicz

It’s guys. couple high-level of a questions. Hi,

here imply which First about think only of sort terms what so kind you might and am curious, broadband your XX acknowledging on and in what Apple accounts, homes, obviously be to so, you the that $XXX months think you’ll just I if XX% in the and closing million on close growth. on over or is solely addressable next Fire ceiling of about of account, TV

quarters, be but perspective the would growth over had helpful Thanks. several obviously impressive your there. You’ve last incredibly

Anthony Wood

This is Anthony.

and a going to smart I could because a will will the system. way come some down long the is about things solution. to is fade a run a away run and think role with come you time, operating come of it be great over going so but States shipped think operating smart period be important a to every slowly over over it player it like United will long broadband it TV it time, licensed is TV, devices, If down And system, time so – you’re TV will

over market down what’s the And so, it share. is to time really what comes

broadband And we’re So, and there is our the are, I I number then household, think think every is our Amazon the market Samsung TV households, contenders what growing. TV and the share And is one lead question is TV. TVs. and every market is for addressable then Android Tizen. has

Mark Zgutowicz

I’m of lot you’ve Okay, then hours a that user five, of roughly in hourly even your on hours, a viewing that of it here sort terms closer daily. much hours of a thanks. follow-up beyond rate growth curious, higher a in four now maybe And impressive again on pretty closing to or seen day. pull usage just six

sort is So, sort above that of ads down you curious, bringing I’m what that new I sub keeping whether they’re number daily daily you’re of in average is number of and or just are Thanks. guess if rate that watching, that report. that the

Operator

next question Nollen Macquarie. Our from with comes Tim

Steve Louden

we to there Can answer next? before question the last we go

Anthony Wood

I think right. user for vary a particular lot, a hours

TV viewed comes TV we grows. you is but have their higher as hand occasional the you platform see to Roku example, streaming cord watching are watch through other watch on with average. customers cord for cable of on that more have and lot amount, be as cut So, have going cutters, then a the day of most Roku. But Americans it’s trend then on than on most hours just to movie, the pay their hours you of then more the TV a streaming their the [indiscernible], And the other, subscription. what X.X content

Steve Louden

And the higher is engagement of cohort question, prior answer engagement generally continue coming into at and to in Yes. grow in specific Mark, the to your and new coming each ecosystem cohorts older a level cohort.

Anthony Wood

market this shows you in it have a third market question quarter asked your how great And about shareholder letter the that and chart then we share share, where on changes.

Mark Zgutowicz

Thanks appreciate the guys. I thanks. color. Okay,

Operator

comes next Our with Macquarie. Tim question from Nollen

Your line open. now is

Tim Nollen

Therefore, But the you’re to with more it OEMs of understand help international not the the the be lot to on Great, you color you’re if that it’s platform expansion, U.S. integrations side your understanding in of I’m bigger on might on lower to countries. hoping us bit the integrate it other or player other share thanks. a I whole My get other more yet. with seeing try a a a a you about opportunity for side, in push market OEMs. i.e. bit gather, not TVs. is is many could

opportunity us give OEM could on side, TV player you the color and please. any the maybe split just smart and on the So, between integrations

Anthony Wood

on This don’t international. is Anthony. We more really detail any have

work. to not reveal yet just to expansion expect how and plans for ready We’re we international that our

Tim Nollen

Alright.

We have Thanks. to own then. make assumptions our

Operator

of Our next Shyam Patil question the line from Susquehanna. with comes

now Your line open. is

Shyam Patil

Hi, questions. Thank of couple guys. a you. I had

Roku Day? to Channel, a talk in there? you mind about is, Just guide are half, especially keep press you. kind very And a The strong of suggesting the active there guys second can Thank wondering with if the about then little on given time. to in any that over way bit anything reports kind first but Prime had guys it you think ad one you active where too to you accounts, question accounts of there’s don’t second just think can know relative where you be load I

Anthony Wood

a recipe just We the on delivering Roku not it’s of for Channel. part are better pretty marketers. We but attentive with more load passionate a about a of experience the user, our think, delivering impactful ad low ad more user experience

ad run streaming at about And effective great within much load. I so load deliver what more and per in think I that ad you’re lifting So, we’ve eight-minute more Roku that. think hour how Channel, that on made suggesting progress target focused even more products better we do on than load the ad we we’re

Scott Rosenberg

like to streaming, TV is add driver thing load Yes. And biggest moving dollars that’s the ad just and CPM. one

Steve Louden

and time seen at TVs time, we’ve been growth accounts. million the been so we’ve the and Roku, the ending active when on both the certainly in first of for and accounts accounts in we any outlook is this on Number terms But in increased quarter terms a of Hi, we Steve. active continued two, in million of we’ve $XX.X any key XX scale provide we with Yes. active milestone metrics. players, great operating the don’t very that passed passed happy building robust over

we the well as another well with monetization above milestone hit $XX. As getting as on ARPU side

progressing nicely. both increasing scale and the So, is increasing monetization

Anthony Wood

just our Yes, working. is add, I’ll strategy I mean

are it well. see doing strong the are TVs and doing players execution and in results well can Roku You our

Shyam Patil

Thank Great. you.

Operator

from comes Rich Greenfield. the question next line of Your

line Your is now open.

Rich Greenfield

even market competitor’s a a which What everyone many a number Investor a what as customer, Thanks apps the curious Hi. second, to tend major Buy Walmart for you buys more you an it question. the Best also, and guess attribute where just year, lot a as lose cutting I years XX%, picks agree reason your spend is we behavior. probably or it mobile step versus walks in Apple a cord just maybe actually the increasing just and number in about do you tend more time you you the time that lopsided do if think really see would media when about time from this made favorites and into coming you I taking phone then I for I’m streaming, they you’re more totally this we’re on more call share, apps a launched losing that. a that on with As of chart add and more we spend the or apps that different apps very people are Fire TV. why how three to the use customer spend apps they next How comment like are spend I dominate of from Anthony, companies you that streaming your question when think is a to the back that’s somebody about two, that talking already think people guess that if apps all but or that letter, actually is is you stream XX% of using device? four or have of I helpful TV up one as are over year? more curious one people

Anthony Wood

apps. we Hi, question, mean say the too is app many apps here I is would of picture there’s It’s you, I from your nice hear that again. also to one just be consolidation big and I believe the in that’s think Roku we customers Roku industry. some on reasons Rick. content there behind is Channel, in it’s general, of strategies hard think to for of one on thousands there going the the the

on unified is a for content publisher them of it’s distribute goal allow publishers ad. the provide problems whether the Roku And to we’re their to content their or our our of successful with platform. eliminates the so, publisher Channel to whether experience it’s the where it’s allowing And or one humongous and us a a mid-size is that to that machine hard be to so and any a we tail doing ways learning get recommendations that in long viewership

In mostly in ahead terms active competitors. U.S., we more our of third on of customers, getting a why I all focus more on we’re we’re that, mean focused of do devices the I’m lose customers, not really

number We’re third States. and more one streaming United player we the in devices are the number platform two active the

just So, focused happy customers. customers bringing on in we’re and our more keeping

Rich Greenfield

your when to just is trade-off. And important up on answer, making someone it’s because think first follow I really a

to be to Roku that any why I’m going benefit choice App market, part obviously spoke the there So, versus store? is and giving the just things they the on app Disney the to I reason publisher streaming Store the Roku want Plus, be to simply any on the new am the is NBC HBO Max to up Channel, or in in the in you being app Channel wouldn’t versus embedded be of

Anthony Wood

both. First incremental. the ABC example, very They Channel News, streaming have the they Roku Channel. also and find we to so whether don’t allow in brand they usually and for What we they It’s a common pretty Roku their show is more decide, of popular in get all, own that app. have it’s

learning, reduction, expensive, I economics we using just customer takes that increasingly why think and hard to better the is it its churn the a lot into main just is machine an R&D, The for including that’s are build, that app that. are consumer be it so acquisition, reason to a up to takes requires it’s of requires just an experience overall it direct build Roku difficult to expertise are publishers not Channel. to it audience, going do seeing

Rich Greenfield

you. Thank

Operator

showing at back call no turn closing I’m the time. would queue for further Mr. like to remarks. Wood I questions in to this

Anthony Wood

had outlook very are full talent in strong year. become and Thanks. ways. we attracting We outstanding another pleased stronger the with for executing fundamental is well, the quarter company The and

we growth happy the the again big are Thanks ARPU, far-reaching still and how and your streaming. in two will TV. we watches reshape milestones for support passed changes While early that in world account

Operator

and Ladies participation today’s This may Everyone you, now disconnect. thank the day. you and your conference. concludes in great gentlemen program have for a

Roku (ROKU) 7 Aug 192019 Q2 Earnings call transcript