ROKU - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2020, Roku Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Please be advised that today’s conference is being recorded.

Now it’s my pleasure to turn the call to Tricia Mifsud, Vice President of Communications.

Tricia Mifsud

you. Thank welcome ended results March and the call Roku’s quarter first XX, to afternoon conference financial for Good XXXX. Scott Louden, I’m with joined who CFO; will Steve for Platform Anthony today and and our Wood, Roku’s be of on Founder and Business, the our Rosenberg, SVP call Q&A. GM available CEO;

discussion our Relations additional letter following or management of we revise be such found responses section obligation can ir.roku.com. any which our including on are at available to details only not do questions views Full Investor your commentary results and the of website update undertake March and shareholder reflects in of as to our X, The management’s XXXX information. today,

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

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

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

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

the to over hand like I’d Anthony. to Now call

Anthony Wood

business our letter pain, is pandemic’s amount world. you for Roku’s a has for topic. question this effect that We a and recognized the call. uncertainty so of joining The shareholder today’s the pandemic on and have on earnings disruption call focused that tremendous COVID-XX created Thank top around we

Viewers Let The the main so the streaming more our value. the content than factors of are making pandemic the are People me a pandemic unemployment more by recession and selecting dramatic home time viewers new increases are increasing. on are rate in accelerating growth general. in streaming at shift spending TV important viewing because summarize its account what Roku since and to both I excellent took industry. and streaming believe is impacts likely is Increased have and ever. value and These driven hold.

short-term, the the pandemic advertising of In growth the business. video is Roku’s slowing

budgets marketers are While spending ad for more mean to ways and this advertisers to should less, are reduced invest bytes. accelerate looking streaming the shift effectively

and SVOD distribution pandemic that secular is is well and permanent. to content and changes believe TVOD will large We activity. perform trials accelerating a these trend be streaming continues in surge business increased Our seeing that the source

With that, over it to I’ll hand Steve.

Steve Louden

while our In adjusted continue also make COVID-XX. and responding for to operational and Anthony. we progress and the EBITDA XXXX of significant exceeded financial QX, Thanks impacts to initial outlook revenue

questions, your financial our and the of uncertainty. level given walk I’ll taking Before to approach through highlights outlook and discuss current operational

hours with of while in year-over-year active account XX.X accounts player million quarter, in million XX robust the XX.X subsequently XX% We billion up of added year-over-year. average increase X.X accounts decreased selling year-over-year. price Sales Roku be QX, in user to incremental units ending the an and the continue active quarter XX% active streamed passed mark X% million April.

a January, after hour rollout X streaming this prompts confirm that in growth add which of X a of We they’re percentage feature the feature year-over-year given growth feature completed the XXXX, point subsequent higher QX of this year-over-year point Still the You rate watching on and to now rollout on still estimate in we inactivity. Are slightly is Watching quarters impact expect the in period negative rollout roughly late percentage impact a the complete. of We to users in

up XX-month ARPU revenue Platform our with full modernization $XXX.X expectations years. Please as revenue. player of year-over-year to for to take million of especially continued $XX.XX fastest five XX% $XXX.X was financial came from year-over-year home total at revenue strong to increase effect. outlook few in on sales to stay year-over-year growth and XX% segment in the a again Platform our rate increasing a represented revenue of items. up basis driven reflecting million I’ll to XX% But XX% quarter. by in details orders March over Total ahead the Player revenue trailing letter QX growth shareholder XX% year-over-year. see QX mid-to-late highlight exceeded started

expected a profit in ad resulting higher year-over-year somewhat as sales Gross than XX% gross QX Platform video grew margin our $XXX.X spending of due gross on adverse related to part in from in anticipated margin was in mix gross platform. million COVID-XX lower as margin impacts well and than ad sponsorships higher XX%. development of DSP XX% to audience of revenues

margin was levels. products to QX as exceeded to adjusted rates. the gross anticipate negative increased up growth QX well we spike year-over-year. million air higher in resulting impart of change higher related freight $XXX from $XX.X in gross than short-term. expected due Player slowing was less thought million to of XX% outlook EBITDA owing higher costs rebuild OpEx the were return cost hiring our slower March. disruptions XX% air We than OpEx fast inventory down Player despite to as to due during tight due and as selling margins inventory freight expected some COVID-XX promotions lower quarter,

OpEx. quarter marketing QX and two-thirds platform including the the is personnel. approximately dataXu amortization first acquisition in intangible impact related As full also a which COGS in roughly in was acquiring operations million reminder $X.X of dataXu included the one-third of includes QX to and sales in

million in March credit with down market draw revolving $XX cash our was conditions. a which and includes believe in light we $XXX financial of from QX move ended cash current a of investments. facility, restricted million equivalence, prudent This cash, Roku short-term

data caused seeing in by significant level shifts highlight to ranges manifest well withdrew the to trends year QX are term provide landscape. XXXX outlook this would revised the so full these may far of points outlook Given as into TV we as and on time. we’re longer some thoughts pandemic, like our previously some short-term at Instead not COVID-XX providing how in the sell uncertainty we

and approximately an April XX% of of Platform driven than of by XX%. since more roughly in in accounts hours Active have April. year-over-year grew XX% year-over-year. per continued range impacts increase Streaming year-over-year in streaming an grew hours new has seen new a Acceleration increase by accounts accounts mid-March. in driven in viewership monetization roughly account XX%

at seen to new trials and light an streaming in in well releases have as at uptick subscriptions home as have as brought TVOD orders. concurrently We increase SVOD in studios stay purchases

hand, offset other declined. to new high the from given our entertainment and have been by has of marketing events. But cancellation marketing has sporting budgets TV On seen business profile, advertising moving partially cancellations this some live as budgets Roku traditional

mid-April. a anticipate March basis year-over-year gross cancellation pace targeted, a viewers and followed originally most measurable at in to We continue our of were late we albeit to profit slower more that business in seek early for increasingly expected levels ad As and year. have Ad than advertising. substantially curious since on lower the will decreased pronounced and forms grow

curtailing us advantages. the in will in streaming spent areas time cutting believe shift light competitive home by We Ad term for at We buyers investment our the changes to spending extending likely to are behavioral that households to many longer committed TV and positive economic the in cord of accelerate. remain hardships, to continue with and strategic our more and

of took run Depending growth QX COVID-XX adjusted loss an of we the the operating however, steps of the XXXX. maybe our year and of the progress slow capital we’re on likely to full EBITDA of end slower. expenditures, to at for At expenses so rate impacts

and much short-term. committed that generally our in are operating are therefore related Given and headcount facilities the of expenses

the monitor the We will of continue adjust to trajectory and conditions business and accordingly.

in quarter, strong company employees how impressed bias the a be solvers characteristics toward at have current problem most our These navigate large. action. rapid uncertainty. adapting all Roku I’m a world Roku occurring that been of always industry the for will was QX changes well we who our has While the and been significant immensely another as have and helpful

that, With Operator? call over the for questions. let’s turn

Operator

with Thank [Operator Martin you. Instructions] and first is Needham. question Laura our

Laura Martin

Can you hear me, okay?

Steve Louden

Yes, we you. can hear

Laura Martin

lower the Thank Great Cash purchase couple A quarter almost almost $XX ops things. remind and you is, PP&E. by continuing what the in out with rev it, and four gross just that million offset Can Steve. that out see quarter? in you all was Then equipment the what’s the of margins and guys you’re you need other these post-COVID? out in much. one to in get my one lower? had third And I which TCL this like you still leverage trying US help negotiating the of just a going was to so numbers. now and to purchase us all and to who Canada, your three from of is sort one TVs more have your been say couldn’t awesome. share? for you of I you think advertising driving you of said the figure TVs Does letter is sell in margins That’s they Do both then

Steve Louden

one. largely first PP&E, the so phase here to that’s Laura, on complete out. this scheduled that. the next I’ll in the is our that are to expenditures related The build largely been We’ve build take out Steve. to that QX related headquarters of

Laura Martin

Okay.

Anthony Wood

Laura’s to second Steve, you take want question?

Steve Louden

a on actually profit. actual the revenues slower the not second that We anticipated. terms substantially on be would the fact expectations itself. said call gross business will that margin the We related Well is gross of growth to profit, lower said didn’t sure. margin that in but to and directional revenue at expectations Yes, ad original than give one. be which actually originally grow, gross We relative the

Laura Martin

Got you.

Okay. And then TVs negotiating makers? the with leverage your TV strong

Anthony Wood

software We is And the new which we TV lot software, TVs manage consumer for a in lots lot in we’re all the doing program is I it benefits the both demand, brings. think there’s Roku very retailers strong XX% to OEMs the benefits we bringing are and strong still partners doing room. OEMs. and strong. seeing tremendous brings players great Anthony. growth both of mean do with accounts there’s of why up program. that from products, factories, retail help we are love a the updates, Roku engineering, returns, of demand In there’s TV low promotions. few program is we do Everything reasons this Yes, over well. general, general weeks really the last that In our Roku really

days these and room We have still a sold TV three share think of over the there’s I in TVs that. smart are one grow US in to Roku

Laura Martin

read-through’s opinions Thanks have Super all lot to issues big the for Anthony. of you. post-COVID post-COVID. helpful those your on Thank a

Operator

Thank you.

is Blair. from Ralph William Our next with question Schackart

Ralph Schackart

It’s in in sense, going about and But the sports eventually some I’m just coming prepared moving moved remarks dollars the or ad can more growth budgets to important moved letter relative give the from rate us these perhaps anticipation the either not perspective linear much post-COVID quantify back you that how of at then you’re in And why over? to sequentially sure particularly over. also point? stickiness year-over-year Roku. on of

question for Steve. just And clarifying follow-up then a

some April. of improved there talked are the Thank in you color so, advertisers you. Can through more video talked add supported cancellation. and March that just your late and start color, seeing provide about maybe and mid-March any You models believe to all I be you seeing coming you some about you add back advertising ad will great? decreased if back But obviously cancellations come could them to

Scott Rosenberg

Ralph, here. Scott

in me parts. take Let that

First, up last OTT mid-March just XX% has Roku television on I’ll than linear That in age overall just positioned in linear. stats. down adults April, to instead down April. TV Roku to immune half say in been done places XX the Meanwhile ad streaming streaming for to said, market from we’re time of Primetime month late that couple is the not consumption is much is the of better that. and year-over-year XX% under over of their linear

to here OTT. linear. order that about relative we is was microcosm overlook, force [ph] believe significant we’re going between to reassess on here growing and see in marketers are accelerate disruptions in of seeing invest how the to A the of in you not caveats is linear happening the here to consumer there liner change Right observing shift can disruption relative a believe we assumptions that we’re their going that What audience to the already OTT to the in is and way and habits. major

upfronts being play think the example I disrupted. we’ll this are see which in significantly already for disruption out

it play I’d what what took never The significantly between early levels business print sustained and been in levels print. think digital has through investment we for offer to The best XXXX, analogy the the will ceding is of here really audience linear prior the reset media Print It that levels XXXX investment been OTT happened to and really out that But in to came coming XXXX. has the XXXX in recession recession. to out through back print. XXXX XXXs.

disruption of the I and force but view that this linear we will in had likely major it to in out you the it’s reassessment television play marketers. a back that that remain linear, the way something certainly we’ll by but broadly case think medium. similar certainly, in sports, - even to will come will think our been mentioned Spending come even but where with sports not that back,

Ralph Schackart

Great and or on and back that saw want Steve ads in of to around just anybody then comments April? anything in capping the spend you terms answer

Steve Louden

Why slowdown had QX, of seen in question question. COVID your but and close substantial through a of We well, we still the did ad since cancellations monetize impressions then the we’ve in ad came would our that rest that pipeline growth business sorry have I We don’t the for the while we video uncertain, year. uptick years missed an expect doubled, great mid-March take did in in part and as see, see April it stabilize. I

Ralph Schackart

you. Good. Thank

Operator

Thank you.

question next Ziv Israel from with of Bank America. is Our

Ziv Israel

advertising gross impact and another first mix we QX how impact margin. just due gross lower question of And the So in should of quantify ad-driven you much video for to on is subscription, content Can about between normalize? gross [ph] potentially then budgets video how the margins ad shift think distribution after the business. margin versus

Steve Louden

there. operates what was was our weakness of it one headwind lower why its a Profile development we than combination a Ziv, and QX on sales of Couple on margin sponsorships the including well and in business Steve. was margin. ad and around there which generally COVID-related businesses the as audience is cancellations Yes plus a XX% anticipated bit higher said as gross that’s side platform the factors, advertising hit margin.

net revenue from so impact gross profile We as a revenue also had the greater dataXu revenue the does DSP, rather than reminder within gross anticipated as But that mix versus DSP. not the as well dollars the of profit margin.

the So those were biggest pieces.

being about expectations or actually comments line expectations made It You down. a the video ad that sales ahead of QX. factor for for so margin was not contributing slightly with QX in was

Ziv Israel

and that’s accounts. Okay then helpful on active

free I’m accounts strong continuing kind How have growth million. in saturation obviously international US. talked about view your even sharing about in kind in [ph] I’m information. and COVID-XX some growth April. at on metrics XX the to stronger seen order your additional you the think wondering growth, growing previously talking impact additional far keep You account approaching pretty of the And and like it’s the sharing with you active active you’re hearing do you just decision in there accounts can that on Thanks. that active any US? also of

Anthony Wood

world to is This broadband lot I’ll probably a grow and households switch mean domestically all room streaming. around growth in internationally. the take the US. that there’s billion potential to of they’re Anthony. and for both There’s I Roku a going have to

year-over-year account I accelerated strong. just definitely new So COVID. rate mean over by very you at being I recent the if look But numbers. is growth XX% mean

do saturation. to - accounts. think we’re don’t room there’s active growing I I reach So continue think

Steve Louden

the the as forward. at well short-term. conditions and more is specific that did future. in areas mention occur to the on break and said sometime depending some We previously the investment likely this was other as it as get that resulting sense pandemic But economic roll plans we countries point our But to such strategic little that the impacted may will international thought make a likely as international committed the not second part. we issues the out I’ll provide would on results remain We disclosure although take Steve. Ziv, that. in color timing COVID

Ziv Israel

you. thank Okay,

Operator

you. Thank

Our with Rosenblatt. next question - Zgutowicz Mark apologize,

Mark Zgutowicz

on gross are that’s very helpful. on upholding the the thanks and video more gross a Steve just commentary margins particularly for profit margin side. the the detail bit Maybe

You line. mentioned you’re the to DSP OneView the get of and ad mix know of I just - that’s revenue, trying about early a assume sense talking I

QX the gross that OneView mix And up saw terms the how also letter question to of quarter long-term with of sense the Roku much stepped specific of impact of get in just margin may SVOD that what and maybe in mentioned the objectives channel the again pricing differential how So Roku the of a of on that maybe TVOD, that mix there, off there. forward. your you was, in how curious profit that, channel shareholder trying in are In you much given versus terms term just and up. that platform Thanks. was then step go-to-market was I’m near sort going and a

Scott Rosenberg

this Mark, Scott. is

capability Let for me some November. financial into for the we the aspects. strategic take your substantial capability ACR. We on data, targeting the beta We’ve tightly relaunch dataXu info, about that the hand bought our ad then party more it launch did identify for DSP, our question I’ll our we’ve integrated rebrand integrated and the in very stack the first Steve a do OneView commentary of end

to DSPs party OTT five strongly that more Roku identity platforms, that capabilities advertisers and platform that and reach across as households to reach to It’s media, that many to we a help think the advertisers going fundamental other out namely and inventory, first that relationship reach differentiated it’s of other four when acquired we goals equips desktop of Our dataXu. an Roku data us big and measurement we media mobile as US the to consumer optimization. and with achieve set in measurement us capabilities. ad scale that, It’s allow and relative data realization out have do for we info milestone better where users, more equipped company

effectively. answer that we expand sell questions of But advertisers really the them with goal do not just to product our specifically media. them is sell to with business set So in the your a to the more questions take to about them all platform Mark? in excited platform. we’ve very investment you follow-up that Steve, that made helps do want media and OTT I’m from on progress

Steve Louden

Yes, on general. margins sure. Thanks Scott. just in Mark, platform

subscription uptick segments. at very increase will TVOD shares the about think the video where you and If trials margins certainly has so as short-term traditionally those content business run a all plus of TVOD these pieces an I the see margins, in goes. equation trend. run high the as side pieces and that’s those apps. ad then is Those have, the high third-party well for development as different subscriptions and mentioned, higher margins are you other of it sponsorships But platform SVOD the rev distribution at We’ll which it’s XX% margin

Within so margin channel, premium profile. the growth different the and Roku on be subscription basis a basis is would that a

kind the it net You gets net mentioned stay into Scott standard Roku so integrated to tightly platform OneView will same with and to more advertising getting anticipate treatment more as the integrated business. that as shift mentioned that’s the overtime DSP potentially the of or gross we

different some We’re on pieces and trends might the how them. of that, not those affect are providing but formal guidance

Mark Zgutowicz

and Excellent, Scott Steve, thanks appreciated.

Operator

Thank you.

question Morris Our is Michael from with Guggenheim. next

Michael Morris

about advertiser direct that functionality couple about perhaps percentage to even maybe me. also just of the the a year talk more it’s curious upfront approaching been what television you that there. maybe given broader and this users something you’re you I’m [ph]? you talk functionality you’re Can of you’ve targeting A more response compared your base dislocation know can if I focused. how from buy

put it just I’m a audience for spend you you seems And just perhaps to great advertising are development because dollars a approaching to streaming impacted like So to play talked about of finally, are the your there? mix COVID. you surprised being work. how by expecting demand little grow negatively then that bit and

curious you’re maybe if as Thanks. of terms just were in you I’m and well trend So surprised what seeing the there.

Scott Rosenberg

Scott Michael. here. Sure,

of you diversified is the platforms It ability and number and advertising our first as broad a I’d say results. more the we course a with or and So of off, as over across the breadth with has serve to of data diversification well especially the performance advent clientele rapidly the as DSP type access business suggested. DR to optimize that offering clients of into accelerating advertising advertisers,

diversifying at our and business and that to heavy to Fortune first we relationships. scale advertisers chose essential their we very as budgets grow party with to and they machine rapidly data historically as TV targeting, move that’s XXX is learning but are have in So platform ingredients deep stages OTT

lot folks brands shift be A Your shifting talking upfront. significantly is a now. second and presentation. view the It upfront I a which hear investment a programming out will TV big will as pictures that fall disrupted. make the question TV traditional about the have the decisions is virtual being basically going to typically many Most available year, Programming of can about are in our production quarter calendar to TV be upfronts. of you the that be traditional upfronts networks are not was live that paused. will the on mean flipped

we in them that reconsider and uncertainty as investments is traditionally this money the reconsider, a shine period upfront alternative. an and of and do marketers OTT heavy through ultimately fundamentals of think their as ultimately spells and especially very out All the the a to scatter into marketers we catalyst think will for will of what for OTT move investment upfront

especially consumers television. COVID is to the important in just during shift who are to reachable have consumer offer our and in no as we and is it and strong stats the to how longer there continue behavior upfront reach few aggressive and for process to years the in be linear we last money the So participate we plan for marketers think speak move to

Anthony Wood

Anthony.

Scott Rosenberg

Yes, go ahead.

Anthony Wood

the and desire that pandemic to I going in. is think free trends for one then current area an accelerating leads the impacted say, economy in that just the the is has which was Roku of is and jump I TV,

So going products that us we improve, to robust think grade. and we channel super very probably strategic like that growth their above and already Roku are have the to important is this

Michael Morris

the streaming? given thoughts trend the audience on development greater and Any Thanks.

Scott Rosenberg

Yes, I’ll part there. letter. seeing I we’ve entertainment development our comment But audience now you’re our as that would in say of we’re effects right mixed shareholder and marketing is and highlighted broadly. right of category

a in services significant surge seeing Roku We’re trials. in in that’s the the offering extended of which subscription seen have services trials especially in supported inside channel, free offered ad has subscriptions free growth premium clear the a services especially

see to with we leaning work our of partners in side content the so And their content services robustness of general in, business. in a and to our bit see market fair do us

Michael Morris

you. Thank

Operator

you. Thank

Our question is Susquehanna. from Patil next Shyam with

Unidentified Participant

is Shyam. for This Oliver

TV to it I over So the new you what budget just Can like the or quarters? talk sports you’re cancellation And wanted how given seeing in move about sports Roku could budgets. to general? coming ask, of OTT into

Scott Rosenberg

interest the quick working a did are sports Oliver. surging consumers in did create or brands creative people of at ways and who Roku or home we of realized actually needed by investments to feel with for lot reach lot weren’t to see might question, they streamed. action, Thanks of especially challenges, some relevant We heavy reallocated. Yes, is get less at were drove that here. have while sheltering to there Scott messaging that so a Moreover relevant against new see this movements messaging brands that lot a had these of

that them in consumers how is awesome content of bring called free this news come TV And have launched a of sponsor phase. We a which problem brands and Marriott which T-Mobile, kicking forward we Chase like solve Together and something is free also to home week of [ph] experience. and movies aggregation But us helps at within bunch shelter a our content Home TurboTax, reach It helped consumers. shows. it for we during an for off

Anthony Wood

aspects I streaming. before clear particularly - Anthony. that already just we’re that, trends the a pandemic is seeing would its we’ve of that and to are This here add transition started that the trend various accelerating all pandemic the is

lack for desire and are trends a cutting their Those of up like a things all streaming cable. going they’re of accelerating accelerating So towards cord are to back. cutters move But save will kinds come and sports, to those not value. money, sports resign cord

are a I these be changes of So to permanent. going think lot

Unidentified Participant

can about how pricing Got to XQ coming and you it. ad trended And you quarters? talk trend how in expected into

Scott Rosenberg

funnel effective that OTT remains to a premium being premium down think our well. and in optimize better a of Well function has historically and the it care and technology got data, just with frankly pricing commanded like view the we that’s product more measurability to that media performs results It’s OneView marketers better opportunity about.

heavily ad our of and company a accelerate transition. the OTT we not we’re focus So to that as we’re over TV attracting dollars opportunity next that’s see plays certain quarters. that more on how But pricing, an focused there’s markets out much how the do couple into

Unidentified Participant

you. thank Okay,

Operator

you. Thank

Oppenheimer. with next question Our Helfstein is from Jason

Jason Helfstein

Two questions.

any they were price sense a were they let’s And accounts then first offer So second say advertisers on advertisers? what streaming of do international Roku the you you Thanks. details before? able Roku hours, what assets might sensitive were and And get through the dataXu active thoughts who advertisers the when can provide to progress so your can we more be question, if what historically that there? will cannot do advertisers and on not and

Scott Rosenberg

questions. fundamental OneView behind the part the There take I’ll are of your platform. advantages Jason, first

achieve and then is measure can can our the inventory, will confidently ultimately identity so in the large in system to identity to and data to more anchored info marketers that of think that’s optimize so toolset key example we graph you into a a it so that recent quality the accurate For results. that advantage. our our marketers info relaunch, consumer base And scale, you more got higher device when and use can first access reach enable we you party more and identity better better to

Roku on and a advertiser’s site product. ad of For the based then example optimizing to website purchase visit a or on the an buying it

Roku new first fundamental and for offer app be are scale those our able from place the data. to in So to they’re market anchored because differentiated party capabilities they’re

The other essential in difference DSP. that our available I’ll point making out is this by data

We’re just to it, media as But on is we’re not excited us for they’re marketers offer Roku. publishers buying market. and a buying Roku that take that well when they’re from Roku off very fundamental enabling media to also use when as to new and from

your take I’m going let second Steve to question.

Steve Louden

Jason its Steve.

before growth initially So We’ll Anthony nicely. particularly in our the it’s Right markets accounts continues on opportunity in the majority terms vast The although building big of amount. very a grow international US, for international scale. focused of I new are to aren’t mentioned mean material us. now as

will account form So some when the down do operating it likely we and breaking and out be provide be domestic when metrics kind growth it, ARPU. key will in of breakout of of the road likely it on we international versus some our in

Jason Helfstein

Thanks.

Operator

All right. Thank you so much.

Our D.A. is Tom Davidson. next Forte question from with

Tom Forte

well. hear that to everyone’s Glad doing

I the AVOD on have Anthony I a if we little SVOD on can comments his this and consumption the expand of in then touched but I So hoping after had, first that. versus was question follow-up maybe mix

Anthony Wood

This is Anthony.

take will Scott one. think I that

Scott Rosenberg

to significantly Thanks up growth of itself. Tom. which overall course is relative robust They’re streaming hours both

in both strength seeing we’re So segments.

bunch those in Disney+. and a OTT, the get and uptick are tired On news, elsewhere. consumers We’ve from matters really as although into that as well Roku significant that’s consumers family a shopping taking surge and like And the it paid. people in especially of services in good then then seen extended advantage side like moving and from early increase when driven the so a services for the so has free services to to always We’ve part free services it’s now and channel value conversion resonates. entertainment it’s ad a Roku matters in in lot new news. available and subscription consumers, those and subscription viewership seen but of it support a consumers in significant And channel of trials their viewing of

we’ve both set significant seen So COVID and up driving hours since they’re both streaming in that increase in. the

Tom Forte

I follow-up. I my to for how this. to sure wanted Great because think know about wasn’t and then

How new the that So and stocked. have down extent content disruption new in to TV the Roku film the affect production could you line?

Scott Rosenberg

Anthony. ahead go Yes,

Anthony Wood

a it’s have a much I that’s start already a have There’s produced Scott on. material so and I those while to changes large been going very know, before take content don’t if thoughts to you backlog. just think impact. any

Scott Rosenberg

networks programming. what are Yes I’d problematic whose services to original new particularly add that and is, that and proposition it’s core is for

supported For as out Anthony great there just its field and there’s free desire wealth ad playing such for the us content said a and content. levels of a

content in stay best course and breadth the in its the for continue channel. and depth doing available So of in the Roku

Tom Forte

Great, thanks taking for my question.

Anthony Wood

in There’s Roku just there’s over titles channel. thanks. I going over XX,XXX was the to comment -

of there’s a lot So content.

Tom Forte

Wonderful. Thanks.

Operator

Thank you so much.

question with next Berenberg. David Our is Beckel from

David Beckel

picture ecosystem of sort related bigger trend. to two I’ve

operating couple media those investing companies those already believe increase might to affect in I system in The you’ve you you in in yourself? services have to like by shift most heavily a most and a first you that an expecting being, will seen own bit going to providers to profile we’ve about that thus second manufacturers this that future. operating outsourced TV operating seen Which going source, little systems. if comment your bigger how system? there be ones TV high own service. your their their have they’re counter, the wondering been still if seeing manufacturers in the forward are AVOD past in you’ve way Are service said manufacturers monetization of any to a what that outsourced related M&A And that manufacturers far. change announced do on among in of TV Anthony dynamic have featured was Do provider to that the purchase activity relationships, prominently forward and on could

Anthony Wood

Yes, so supported pioneered is first and we’re area ad leader Free we question. an a television on your that in.

of a I realizing big companies it’s think in growth a lot OTT. to are going area be

step I if take economics, a terms our back. In of

the provide propositions and of our is key value that a of bring users try that One and lot customers we free a we of TV are end lot to options.

options great also but have well other channel as on those a options option is the of the there it’s that content. Roku platform and great are One

channel monetize all Roku, in on such watch model is content irregardless have if business on and in available partners another generally a win Roku they channel ad Our if our it win when we or we that’s that economics our platform supported watching also they’re we situations. those

So free different proposition for our of on big in ways more platform is we platform. bunch us, value It’s free picture a and monetize advertising users content for and our key content is good. our in a

these of - and need It to and you’re be but terms needs to TV think large viable In partners. TV platforms which company I interested a companies I’m TV already partners on invest economically be are not and that platform to, run they just competitive don’t general platform. in think to to a huge have many years to single of a it to so different for to expertise, I across amount television for too it mean in economics something the content amortized it’s need OS’s. base allow in started ago not and gotten world they’ve be content R&D that OS apps build just effort their and of to sure any takes support. the bunch days referring you it’s of be viable building sort today’s I of and

we’re build or using the Every operating it’s TV company it’s on. desktops are operating position completely a mobile advantages is so to built the TV. first focused using system only the HTML that purpose of for working or is So leading we is position would also just I actually leading TV And keep really have feel space to TV that strongly and Roku consolidate add, the skilled on going we’re I scenario we’ll and still OS well. at that today are in incredibly numbers doing it’s purpose well designed system focused us. operating it’s we Android on for fundamental us for and designed and either for system built for which other gives fact just

David Beckel

thanks Great, guys.

Operator

you. Thank

is Mark from RBC Capital. with question next Our Mahaney

Mark Mahaney

somebody ad about Scott, I But earlier the this can quickly could talk of or that you in may then know Steve, term on Amazon of at have anybody the the that’s press I didn’t, in talked a thanks. if growth. and the and asked bit there question, earlier about talked back on year-over-year don’t apologize, you about revenue if wonder your and release challenges doing answer and out a substantial Okay, they case. growth on - you near know know I basis the ad little I if except you business your substantial seeing was back for revenue year-over-year I the more ads business. But

up. So your holding really it sounds is actually like business

your substantial think areas are year-over-year you, you of very done dark ads Talk you stay basis. or talk company the about what if are want revenue business on it. robust thing. quarter? that’s of of there’s talk the happened it can’t you if challenges Can rate growth to about There near to Did that any doing signs really, term verticals the course particular the you relatively I March the sort during - which short-term seeing don’t linearity have don’t comment the of about of challenge and a that on did few, growth

missing Thanks. actually that what positive sounds same but at set So time. [Indiscernible] warning here. very I’m

Scott Rosenberg

there, got just you it right think I Yes, Mark. it. That’s

sets strength growth. the would in We us are at middle the but put and choices just go back for year-over-year and matter. we start strong for money disruption in and and we’re as piling also they performance, of like television. all it’s lot And the not of times still towards budgets. acceleration what fundamentals caveats ever, discriminating streaming and as your got clearest robust thought the OTT more they of some a the that highlight back It’s ROI assumptions be this and consumer streaming had their it tough and trend have it seeing that marketers up year, this of be their indicator linear the measurability, scale you revisit up those are They been to advertising the about it’s where in

and investment linear it’s it’s even to media macro mix. level down go the I don’t this not next stronger. that is sustainable we is, side answers reality your that come but double-digit is ratings if Anthony. the that’s year-over-year. disruptions is encouraging be At going we television And television years we held out we now time like speaking know relatively But think their other the a ahead, know as to see, business in we rethink all for linear The think up brands that declines are suffered question.

Anthony Wood

viewing TV going was worked of steaming ad just that’s to going Yes, that only comment I of through were the COVID X% XX% but to dollars happening prior staffs streaming.

are and me and to to the takeaway to the So this. change right to change of that’s decisions from what’s outcome going their and going buyers be think now that’s going pandemic to something biggest that’s to anyway that to now, I is clearly behavior those change happening that’s companies forcing big is that the things make to for we change make

Mark Mahaney

on most the just is at Can terms areas, spent? in weakness look from particular the particular Are pronounced so where of Scott. you there I or side? follow-up any negative verticals where Are there ad

Scott Rosenberg

advertising diverse, is Well looks with it very like generally our caveats. business some

like saw down. categories movement at can’t their But spending, consumers platform. recalibrate and going linear remix service, be there looking we still in went in their over we’re are their because index anymore. still messaging everybody entertainment We had as these to reach who investment investing verticals are serve that other you that and to reached Quick their are on just strong on and streaming an change opportunity to the a quickly know. up travel, are restaurants verticals But downtick as revenues entertainment to entertainment else make

Mark Mahaney

Scott. thank Okay, very you much,

Operator

you. Thank

question next Stanley. is [indiscernible] from with Our Morgan Tom

Unidentified Participant

Swinburne. first. calling Thomas Ben is This questions, in Two

value TV Roku’s months on the what’s differential the point up on recent budget in acceleration traditional business reallocation, widened CPM Following video been has shift between your share seeing the even linear behavior that you’re pricing and the widen philosophy and the delivering. of TV on and advertising [ph] or the premium that and accelerated that hold opportunity viewing you’re the given to

Scott Rosenberg

being aggressively COVID as or the prompted the think pricing or the impeded allocations. much I as most circumstances and, to audience not case, revisit in their Well shift marketers is driven following by

measurability, As achieve we’re calls, with ROI I’ve the can on pricing better marketers on OTT. focused previous providing in better focused more mentioned less that solutions,

ultimately fundamental of alone I well reach deliver the going OTT over as audiences that’s sound and think to strong capabilities It’s growing advantage that of ever unduplicated to really it’s bring and dollars about pricing. OTT the can value is is proposition not that as as the and OTT.

Unidentified Participant

sense. secondly Yes, that makes the trajectory. long-term growth margin And on

see mix or balance platform long-term growth the of how on VOD you likely side growth growth stabilizing long-term look a you’re transactional change drivers, view your margins over or the wave biggest remains could you there? subscription on the premium like range the the seeing that Do still As opportunity. plus does advertising the XX%

Steve Louden

of Yes, we’re this now is right this Steve. Yes providing any point. outlook in terms at not updated

Unidentified Participant

thank Okay, you.

Operator

question Chris last our And is from Sakai Singular you. with Thank Research.

Chris Sakai

things are are mentioned I could going Just quick how Mexico. that nine know you you just Coronavirus? last light, TV things with in even smart there? you shed I guys quarter if brands question. wondering how had the some was going And

Anthony Wood

Mexico selling the This I on are short-term the future. still we’re But little is like bullish there and Anthony. challenges else. players we’re obviously Mexico. and Things clear. in mean going we have less in TVs everyone I well mean

it’s huge I be to going for streaming market overtime. a us think

Chris Sakai

market that Okay, reach? your you latest great. I And you you Brazil Brazil. know want Is mentioned of went into sort to

Anthony Wood

recently. in Brazil Well we’re markets we channel the before the launched Mexico Canada in. as and we’ve launched and of Mexico UK in UK. in Roku the that launched that We in course SKUs and well in Brazil. mean TV, most are Roku launched more content recently market. adding We we’ve more I TVs the We been launched

where players We’re more build more offerings sort the thing. to or continue more there’s those adding, to of retailers depth content adding partners, countries, our and SKUs TVs that in continue countries or add we of more more we’ll

Chris Sakai

there go guys you next. specific that continent a going Can you’re share, is where targeting Like mean you I are to? to

Anthony Wood

We lines just future don’t launches. and our about product

Chris Sakai

all Okay, Thanks. right.

Operator

and for his Thank back CEO, the to Anthony Wood you. to thoughts. would like Ladies our turn gentlemen. And final I call

Anthony Wood

hope staying and operator, support. joining from today’s I you to listening your for you, call and thanks Wherever safe ongoing of you’re Thank you’re all healthy. and

look people in quarter. important lives. We’re more an than are Thank you. that and to even more ever part pleased streaming has forward next Roku to people’s choosing becoming you We speaking that

Operator

ladies that thank for We gentlemen. with you today’s and And conference. in participating

disconnect. You may now

Roku (ROKU) 7 May 202020 Q1 Earnings call transcript