Roku (ROKU) 5 Aug 202020 Q2 Earnings call transcript

Company Profile

Participants

Tricia Mifsud	VP, Communications
Anthony Wood	Founder, Chairman and CEO
Steve Louden	CFO
Scott Rosenberg	SVP and General Manager, Platform Business
Vasily Karasyov	Cannonball Research
Mark Mahaney	RBC Capital
Laura Martin	Needham
Ralph Schackart	William Blair
Jason Helfstein	Oppenheimer
Tim Nolan	Macquarie
Michael Morris	Guggenheim
Mark Zgutowicz	Rosenblatt Securities
Michael Nathanson	MoffettNathanson
David Beckel	Berenberg
Alan Gould	Loop Capital
Ben Swinburne	Morgan Stanley
Richard Greenfield	LightShed Partners

Call transcript

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Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter 2020, Roku Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] As a reminder this conference call is being recorded. would the I Ms. over time, this like conference turn to At Mifsud. Tricia Ma'am, you may begin.

Tricia Mifsud

and our afternoon Full to CFO; are on we Platform letter, Investor XX, be and conference this obligation Good CEO; any website of with you. Thank welcome results commentary questions our which views of can discussion or Founder Roku’s Rosenberg, Relations details the information. update on our reflects to call shareholder for and quarter available management SVP in our Anthony joined GM Wood, your as call following Louden, Roku’s today, will first additional available ended of Scott responses not I’m The be the Business, at revise and August June our of do undertake to who management’s XXXX. Steve the only, Q&A. today and for including X, found results financial and ir.roku.com. section XXXX

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

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

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

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

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

Anthony Wood

Streaming today. innovation most control call. choice, today's joining television value is for is force unleashing you consumers. shaping powerful the to Thank and bringing and greater It

seeing the that We decade. the pandemic macro define will also that is ongoing trends screaming the accelerating are COVID-XX

effectiveness are partnering they adopting are turning consumers, Roku, their where in this more delivered backdrop, with looking consumers re-evaluating and like more good Against engage that content growth account to ads quarter. of are their growth streaming reach value. and to example, results platforms for offer For marketing order are brands and increase Roku strong to services and And more and mindset while the to to valuable owners appear campaigns. a the need audiences. retain ways second acquire, in Also, exceptional

retailers content advertisers, We ad and also platform declined. while our OEMs extending shift scale on relative overall are stood increasing streaming. helping the to competitive during owners, the ad market It the advantages, TV grew of The business our quarter. as out strong TV capitalized and performance

streaming Steve. CFO, talented over search hand decade. I'll team and Louden forward the work to our have that, will be will it of TV are outlook time. believe my levels. to wrap the for increase into share that and up marketplace investment Roku ended to Roku well-positioned on I'm saying With Steve, by I'm Steve recovers well headwinds, highly be the and uncertain Of as very the continuing with course, find leadership to very and in remains looking XXXX we a year, for believe successor. I'll to it ad the we comments over industry we these balance pandemic this TV we staying into large before guide ad Despite through we pre-pandemic as to with delighted the ad that the

Steve Louden

Thanks, Anthony.

express First to of continuing pleased as I'd on am like off, how CFO to Roku. be the I

continues TV a as team, to execution opportunity to significant great have a ahead, and strong We streaming. shift viewing

Before engagement letter. revisions accelerated the products. historical XX% since year-over-year. in demand forward. We we holiday Sales up revisions decreased X.X users for questions, take platform and have you accounts added in growth per Please account the QX, year-over-year, changes, and hours million to incremental million Strong, quarter, shareholder early active year-over-year versus hours while made XX% would with to streaming hours, QX. has and continued financial to into growth discuss units these required There active metrics. record for of in moderated looking the QX other to peaked of selling early Streaming impact continue tight due financial your has billion Year-over-year up less player be inventory viewpoint no QX. and year-over-year above I’ll price XX.X key streaming a operational note, also XX% activity is details highlights our we account strong average statement up Roku XX given quarter on in X% and our and a year-over-year, in promotional to levels with robust remains active in review the and no pre-COVID QX, walk are levels. only non-QX but XX% I certain ended encourage accounts, quarter, through active operating

freight Player in ad platform margin. XX.X% same QX transaction return was grew X.X% sequential growth the I'd roughly from persists. Gross tight of by air despite the in of our revenue Total gross $XXX.X to million few year-over-year, than well primarily segments, XX% as despite including like was a gross to higher of freight. in were negative million with higher margin revenue margin in rates. benefited environment headwinds, million, of elevated business, continued and margin due decline robust million, up Player overall the TVOD as both XX.X%. SVOD T&E a grew financial to the XX% of video ad advertising short-term, in in year-over-year external operating Platform reflecting segment margins impressions, rate trends, fewer the $X.X QX items. XX% to monetized to resulting Roku to to growing and We supply million adjusted five over in highest Player XX% due gross last with growth air year, facilities gross QX a million, years. year-over-year. $XXX usage subscription, year-over-year $XXX.X OpEx well QX in as gross increased costs continue XX% and as in as profit Platform to period revenue QX year-over-year anticipate EBITDA highlight player growth driven environment. higher strength costs. from to in $XXX Now, $XXX.X the similar continued lower QX, lower promotions

initial given significantly orders, seen reaction to a of potential slowed we've rate candidates increase in recent shelter-at-home hiring While rate. the the hiring

outlook cash, equivalents, growth, as available are of million with international headcount, litigation costs, significantly million mid cash well as retail and our the increased QX, Roku up acquired merchandising of In $XXX the of million XX% G&A COGS, growth $XXX marketing ended that and environment headcount the up position at-the-market including economic global capital, growth business remains short-term, personnel for of and facility. are pleased short-term its expenses year-over-year, has XX% caused. under of variable reflect included uncertain, this cash at an of issuing operations as time. formal dataxu raising in liquidity which one-third sales recent a restricted in well increased by roughly we the in approximately roughly credit the As and of and related a two-thirds primarily $X.X pandemic, against an legal OpEx performance the liquidity dataxu's reminder as are however, acquiring the via XXXX, the million in and QX platform in and expenses with and significant We're driven is both it QX and due marketing impact increased $XX expansion. of equity year-over-year and Sales not year-over-year, incremental We in QX, the including and to personnel, costs. and fallout rates inclusion marketing to backdrop intangible investments cash amortization, offering. two-thirds in have OpEx. IP macroeconomic financial

but importantly TV ad driving We shift and to believe in not remain season. most areas important shopping strong for expect well retail are chain the and streaming the recover will behavior the well disruptions, back TV levels, remains supply investment to strategic to in spend interest school, mindful committed during potential both as XXXX. the until we the total outlook the future pre-COVID-XX of and buying of including continue, We periods to ad consumer and industry our and consumer as second-half, to uncertain second-half to changes year, growth. into that holiday we The

relative in business, OpEx the let's will macro extremely that summary, we very are We believe ad ability year to questions. uncertainty, likely make created overall on the large fixed our expenses of strength in to by headcount run Despite remain pleased our our second in the streaming given the largely costs, the of based that, will which revenue the year. OpEx well-positioned business basis, business are hire, that and capitalize to and continue the turn full replatforming two-thirds but economic on competitive second-half, adjusted that performance the the the year-over-year an call anticipate we in prudently second-half uncertainty. short-term. with on the us for EBITDA and roughly the loss grow substantially will at a continue mean performance quarter, This television. sequential and of we and facility do over will for a of that With the on grow to our for up this In challenges and in XXXX. of we approach and the confident grow manage make Operator? advantages Roku's basis, as despite opportunity, the shift

Operator

from comes or question Research. Cannonball the line Karasyov first Our Instructions] from of Vasily the comment [Operator

Your line open. is

Vasily Karasyov

I have a question, for think Scott, you. I

advertising more How through can channel Because used of be understand what if that's I offerings true? conflict it's think, please Roku confirm to your do about maybe for Now speak advertisers thoughts complex, that you can doesn't to it I OneView, appreciate a be. as that? kind And specifically, there? one it's much is, now? a And necessarily a So can advertisers if you than you this? have like launched more OTT detail but you on go about a it situation view would it seem little inventory. you And buy not right

Scott Rosenberg

Hey, Vasily. Great question. the question, actually. Thanks for

that So, we users benefits, OneView of rebranded early could and relaunched OneView. that recall OneView the an to it media main had data same the through Roku in the buy we was can Important so your to many integrate is effect business when question they have Roku. they've book to QX, that bought of advertiser. and measurement, the with that optimization, targeting of expands do identity you negatively that OneView, and the performance may when they And from into that that the really of

our Now tools, Roku they're the they don't specifically, but directly. media data, buying from our of our using publishers identity, think from just buying power

bottom help So can like more clients channel produce campaign or strengths its broadly it ability purchases. in and rather visits across with advertisers site and also enables OTT, It's to work to their results, than one that marketer work of optimize a optimization. a is to us with. the actually mobile. we spend actually, OneView, product set The data funnel conflict of in broader expanding desktop their

actually who TV. Maybe that's have capability. a in where they social key invested a in performance traditionally advertisers, so platforms heavily to not in And invested bringing is class may performance

proud progress it's of bringing great set in advertisers, integrating the expanding in year. clients, and featuring there and is new can whereas OneView OneView upfront TV them. actually business the the the OneView actually We're do it's team. in very advertiser been case with in discussions tech So prominently that is our this Altogether, very we progress of of

Vasily Karasyov

quick would from assume that QX? grew A follow-up, it OneView compared contribution to to be the revenue fair

Scott Rosenberg

grown has break which But specifically. we that than platform, don't XX%. impressions we now the include Well, monetized more OneView out on

again transactions are in that is between it's participate for an OneView, Roku on the and the Roku. continue. to when advertiser in that an a see You'll us opportunity ecosystem, occurring publisher even

Vasily Karasyov

very you Thank Great. much.

Scott Rosenberg

you. Thank

Operator

Thank you.

or next the comes of Our Mark comment RBC. from line from question Mahaney

Your line is open.

Mark Mahaney

growth of revenue suggests pull forward. wasn't Could on about growth QX said. the what during just that I'm of was you advertisers and their any in the ramp And at of of can constant end into quarter at I decelerate? think of of throughout it at in on the came you think a be Anything as freeze account that you've would your did the back-half what continuing did through quarter, Or questions, all kind about whether compare terms March? couple about up of helpful trying comment very growth it helping demand? you comments, the of seen please. year. to there comments July continuing you in a Netflix linearity the Echo substantial think all you. forward mid-XXs Thank linearity strong us the quarter revenue platform then of out Steve those comment pull means active know the with Okay.

Anthony Wood

part This will Anthony. of take and part is Mark. your Louden first then the Hey, Steve take I'll the question. second

during -- to not forward indicators active year active we just shift of an accounts just look and of pull that growth the indicate say. everything it's difficult to is acceleration has versus the terms forward streaming seem a the it's just But In account, accelerated. pull at the that to that in

little a it's little -- a bit Netflix's bit that different graphs in So, graphs our than regard.

Steve Louden

early Steve. you which the it's we TV and sales active said Mark accounts Yes, on into encouraging. and is QX, player active as mentioned, in side strong we continued Hey, thought growth that account

active levels. above the that engagement, have spiked the but from significantly overall moderate metric per during terms a phase accelerated streaming have and account noted since bit, initial still pre-COVID has levels. the streaming year-over-year is a they of we lockdown moderated of In basis, On growth dramatically per been that -- pre-COVID it day hours hours

growth. So, we strong very active account do see

we that fact, that that quarter accounts the had holiday growth active the the of in was quarter outside million sequential added largest X.X period. In we've

monetize Now, than a XX%. had detail ad haven't provided we Roku video that, grown in to terms within impressions of revenue, lot of that other note the

COVID is So, down the grow is of to to Roku. strength the side on overall a The U.S. strong basis, the extremely year-over-year after significantly. landscape, showing plus content Roku which spend where in advertising continue our house relative distribution, advertising

Anthony Wood

I'd X.X But letter, just the to exceptional. the devices, Yes, the which this interesting in Anthony. Roku was shows existing accounts we quarter, the is the million X that which accounts affinity strength another customers million was Roku in their I purchased added think system. add for we mentioned of other that which fact our

Mark Mahaney

lower Okay, But throughout I don't anything But it's just than you Steve, whether not? or exit growth that's the rate than XX%. the whether I know, very higher nothing faster at that very of that a can curious is on there's helpful. growing was the actually. impressive if consistent rate. all quarter period or linearity that, think comment on the growth

Steve Louden

Yes, down, we haven't that broken Mark.

Mark Mahaney

Okay. you. All Steve. Thank right. God it,

Operator

Thank you.

question Needham. next Laura the line Martin of from comes or comment from Our

Your line open. is

Laura Martin

question. I'm to there, this ask get I Hey glad

you So, or how an guess Anthony, I Go that are yet HBO and platform. create you Peacock on value, they're is aggregation Max, HBO your not and platform,

platform think Roku think your that an very about And ad aggregation for us interesting. walk that about compared the excellent how And as how Scott So, one issues interested table how and you SVOD the you, product? services? on then guys. could to you through big as roll time the Kroger, Scott entrepreneur, role execution you to an from money over opportunity Kroger out? about for very Thank be could you. for you, I'm driven

Anthony Wood

Hey, Laura.

and some then to start, add over Scott me to I'll details. it Let turn

our services all add we platform. the it we're our new platform, that that's in said what first, it model are to with funds to want as to our innovation win, in comes because we've to the content can to it's our it's that us And invest available and to a win, low us we distribution well comes not partners, content So, what content, allows devices is when consumers. to we relationship, win that to always when I think often us to advertisers general, cost important business. with bring as establish, that adding economic a What excellent

asked particular important am. that in cases the than that about, it's a you But is So, that lot I Scott closer get right. that to we

let on specifically. more I'll him comment So, it

Scott Rosenberg

Laura. Hey, Yes.

thing side Let are mean, an me just we've had that and of I'll embrace mean, the just partners that to say winning. I one on comment come exceptional content I then I'll Kroger. Roku business the of growth, transactional, and quarter significantly. every from from who've subscription, engagement, tool. our scale partners of with benefited AVOD been invested working growth benefited in us marketing our have has segment And terms is grown that and

Anthony for recipe. and We to and achievable as for relationship, not said, our content something new helping our and carry the OTT it's excited for new get get for So, providers it think We're to to win first, Roku. these great, a goal is that win, deal and new content services. consumers, that's win, these We that's scale done always platform going services. but economics be look we're

really you'll question example where it's deal. leading with we've a optimization to onboard It's Kroger, it that on aggregator see measurement shelves. As in Kroger, got kind enable targeting both agree of for the Campbell's a of I of to leaving an and the of shopper a your are ultimately who's partnership, according exciting what and products goods of basically partnered to packaged CPG We've participating. what already, consumer ads, data more data

thing big a from buy for that they the to Roku, that the which the OneView is advertisers, product optimize media It's media CPG they So through run they sales. care win. to it's the about, ultimately opportunity

and an So, OneView. exciting what's of a Thank with example ad you. with possible capabilities our partnership some it's of tech

Anthony Wood

Laura, again. Hey, Anthony this is

comment. add just more one Let me

they the the of streaming when Disney platform I streaming in to the any announced on content And direct reached streamed were of Hamilton, customers platforms have platforms, that I like think partner good example XXX another phones. largest they including consumer million Disney, on Roku. fact, just we with relationships mean,

companies built good tools We've deal. them. of a those partner that we're And lot We So, this stream kinds of want what help of think and for customers, do can proud them, acquire a looks more us. win-win customers. we're partnership a to we I an help to important those to example is of to like

Laura Martin

very you much. Thank

Operator

you. Thank

Ralph line question next Our the from comment of Schackart Blair. or from comes William

Your line is open.

Ralph Schackart

Good afternoon.

in to highlighted and want spend certainly you Just back comments kind today. the of some of circle that ad

maybe to of visibility, kind that and how significantly any spend upfront it's And if pretty that, $X might on margin be the the even just partners. or uncertainty And to advertising that there's compare if of so. curious to improving to forecast down some then your around to with Just quarter? bolt billion on last

advertising curious your hearing the how Just see about in any the of you are generally that just what from you you're partners thinking benefits opportunity? Thank you. in speaking, sense back-half? might And

Anthony Wood

Scott that. take will

Scott Rosenberg

This good is your of new Two talk had listening I'll Ralph. new you platform client making were Hey, to points verticals, backdrop ad TV declining the of XX%, just backdrop, acquisition. on depending week. strong market kind progress XX%. up against campaigns. XX% driven We're this here, were on XX%. the impressions which grew larger We when retention, performance Video earnings about TV client revenues to strong networks

overall. OTT. So, dollars I think the challenging ad into OTT growth, shift at highlights monetization TV But into as linear it's our television a that's as market viewership occurring terms well both in of in

of of the and the the of to terms timing share committed. think as things growth we're the terms of uncertain Kroger of our the is think the the you audience, capture and I we're through But our a end partnership dollars capabilities, into market out strength through OneView, well-positioned continue and we the ad bit will with are the we'll get when year. end year. our like disarray in an in offer of in market, upfronts point well-positioned It

Anthony Wood

add, of you is of market ad all strongly just think course, OTT for a the the all the that. It's terms if early going are I'd about think in business, us. stream to I to about in we're news, advertising days just TV our key also, for all opportunity ahead growing, that Anthony. down the ad is business. to what's ads fact switch growing very stream, business is that think we're still of our thing This a And huge the is video. of that to advertising that going is And television just in

Ralph Schackart

Anthony you Steve, Thanks, around. And to hear and sticking good Scott. Great.

Operator

you. Thank

from from next or comes Our the of comment question Shyam line Susquehanna. Patel

Your line open. is

Unidentified Analyst

Hey, guys, on Shyam. it's Ryan

any call a the is bunch talk you could to key channels channel. traction the there? of about of a Roku first channel? recently And added how like driving And Have driven you So then it more is those interest other count pandemic on secondly, to bit? there Just Roku international little the kind internationally out there? domestically? are Thanks. you if gained And initiative

Anthony Wood

is let then and This about me Anthony, can talk international take TRC. Scott the question maybe

the broadband we They position good is internationally. generally progress. So, good eventually. advantages, us the we skills internationally. the The is working It's in the going great. making technology for progress. households. huge a U.S., in a We're U.S. international will It's streaming we're built the built market, billion be And seeing the and all

strong Canada year-over-year. four So, TVs example, in sales for in TV TV Canada. in sales in the player in build Canada. are smart one quarter and sales, UK, the Roku doubled

Our today. progress. -- making announced with We Sharp we're TVs Mexico, partnership Roku TV great

so great TCL that's models off our start. a geographies And include And OEM a local manufacturer AFC, TV to partners world. to the recently shipping with more started Mexico expanded Roku now. Brazil, in a relationship recently we TV have six with around of total we also we

going it of U.S. market. is a mature U.S. then the growth in Scott, want So, account than active more the the terms did to stronger U.S. I versus TRC think international international you or? on, in -- because is question, take is that good mean, I the And is

Scott Rosenberg

services more deepen that's the in significantly users added year-over-year, an active XXX. EPG, XX reach, engagement. doubling of their one linear channel find just like Yes. interesting But despite new And and example expanding an TRC. ways Roku the grow the quarter in who in order app, of content how grid the the quarter. accounts reaching and is an Two added content Hey, not a in reach live households million starting We on of offering just that something content into with partners to Ryan. are our continues OTT. a part broaden key of One experience publish it's to to integral is the a TRC platform, we're than the XX very service for points total the

For a many a data, standalone necessarily it marketing, greater does similar in is exclusive doing if the get a can that bear DXC it mutually of experience. to than in content source partners, or they monetization experience, personalization, audience help they're doesn't It's DXC it but in, bring not DXC achieve with faster content, going alone on-boarding, partner experience.

So, grown looking engagement, are TRC the partners very grow OTT substantially TRC of but of set not has significantly, who to content in audience. terms their just to consumer

Anthony Wood

supported but just And We've had with content Roku very also has that premium advertising driven as by strong content, growth been recently SVOD growth not as subscription well. channel well.

Unidentified Analyst

thanks. Great,

Operator

you. Thank

Our Jason Oppenheimer. from next comment of comes from or Helfstein line the question

open. is line Your

Jason Helfstein

can see One, there bit distribution international any say mean, when the in America factors a kind margin mentioned high any a that revenue you you Two to platform you any your just color release, weaker release, change think include if expand provide it in basis, this beyond you other TCL did impression, including benefits if on economic stronger, and you any year then around. questions. that that saw other streams color or year? the glad ad dataxu? relationship? other talk ago were was a secondly, that more Steve, can And to that of there to partnership margin, there's to and intend about you markets, sticking with on is but video year-over-year about there, the profit North you content of just I monetized being if weighed Thanks. gross

Anthony Wood

the about Steve part can question -- TCL. I'll can your of first take I and talk

Steve Louden

Jason. Hey, shout the for I Thanks appreciate out. it. Yes.

similar platform quarter. for of which we very XX.X%, where segment were last terms up at ended overall, to we the In was margin,

higher You're in that note of have. the have terms the performance and a TVOD that we content And tends shares strong right, to we SVOD in profile rev quarter. distribution margin did

on We you also a noted, subscription premium if which, treatment revenue is basis. strong performance, remember gross

revenue I'm relatively the margin. that's so And at dollars. on but for profit the Roku and gross low premium there channel good subscriptions, basis, the progress within is And that about a dollars happy margin for

quarter of one different to There kind terms terms versus was that a of similar in factors. of then of factors So, there. the certainly net last ad some business, similar other phenomenon the the And in gross mix, in few within side TCL, is there's was terms and I ad kind the platform the Roku on margin. basis, of in to which traditional this the of similar And then of quarter then was the dataxu's comments. business last things, have

co-project We strong current have our the them recently a relationship to They're We expanded an with We to Roku partner. countries. relationship just with announced good a move TCL. create to more XK TV.

But partners. well. we TCL in be Roku growing as a good and us. Roku TV, and have So have terms TV relationship that's probably large biggest, the been but continuing partners is of very a long-standing other is some also for to strong relationship and we many

brand for there. seeing we're AOC, a share, mentioned on So both lot adding example, And in internationally Brazil quarter, taking markets a the of so Hisense growth of growth house in Sharp I Walmart's had like lot Mexico. then, with market and strong

their array partners at to price So, content. them share, with the terms it's the market value participate Roku points a amount broad brings excellent of allowing an of that TV of deliver most lot for customers the possible grow solution of that lowest a them in in program

for a to continues us. TV great Roku program So, be

Jason Helfstein

you. thank Okay,

Operator

you. Thank

comes the or from question Nolan line Tim next from of Our Macquarie. comment

open. is line Your

Tim Nolan

Hi, to very like I'd everyone. come Thanks much. back to dataxu.

become your as not say that and know done general. was time its old-fashioned TV your to if you process the which this more a me people been wonder very I always struck the and acquired some And is that ironic may real you think very, can is TV Thanks. maybe I in have if asset of of And progress ad in one I making. real reasons sales address small bidding? of ad sort of its lot can kind time a more could general it an of many in using business liked process connected the how bidding, I that connected technology. way, in necessarily automated just you

Anthony Wood

that. take Scott

Tim Nolan

the into television. Hey, the you Tim. most old-fashioned that the budgets we're to is in question. however Look, way it. bottom line or Great And out buyers And they're still CPV coming bought here of sell want buy. to how positioned coming are of

that automation So optimization you it's the And measurement are way. with of a way. be if you're benefits that to actually targeting of Ultimately, have comes you able selling also of and data tremendous to suss and work amount machine when sell there's scale to from going that efficiency marketer to important to really only help a But it. you and out and do many available and whole roadmap doing the optimization the need so rails, give also that the and visit site advertisers. And our speak a is to that part mix. that laying in to want you of of product ad product that's marketers and big level to There's ultimately. of what need machines and OneView a with know we're class or we they optimize audience purchase, the asset

And CR able to reflects have XXX% of in power ultimately is lot ROI. out the that marketers We highly up brands. This machine-driven advertising year-over-year. segment winning. of shareholder being grown money especially Brands in brands, in performance the in our invest high media letter have ad growth you sale was of which highlighted itself of performance course, programmatic automated buying, the Of up segment significant because segment, machine-driven that social in media. primarily spent a BXC social

these very So, need both. advanced trading answer both play the of we're in fields, investing optimizing marketing. both enabling heavily ways but and to is more in We

Tim Nolan

a this for positive also evolves would you. as growth your Would would in automated there be and way? cost Thanks. in this ad toward general, And be assume the revenue ecosystem a I efficiencies more doing

Anthony Wood

For sure. as earlier, with And tasks done that there also, be are just you. mentioned can't I some

help to deliver to find audiences do you need If machine you're use really ROI, trying a marketer's you that to really the machines learning that.

we ML our deliver are outcomes optimization why ads investments our so are keeping. And that's that that important, so back so and in marketers can in those

Tim Nolan

Scott. Great. Thanks,

Operator

you. Thank

Guggenheim. from line from comment the or question Morris next Our Michael comes of

is open. line Your

Michael Morris

question one performance you. advertising. have Good I partnerships on afternoon. Thank on OEM and one then

general, of in a of on advertising the social to There's especially media disrupting the curious more experience side. you this adds it format sense platforms, a that partnerships, experience. get generate sort on it in complicated performance revenue what in platform, relationships more lot. taking I'm TV not? How makes OEM the those an consumer? a for them to in on value? you It then any Thanks. intuitive for Do based therefore, the And on OEM to how where a terms clearly and bit you're asked And where basis, Is have of rev to you feed variable that perhaps. great a make have lot seems have of enthusiasm are share a partners, you question revenue the them? or on that relationships, compensating a with them we payout I on want get you the you you. traction ad a steps present stop OEM them all to there? on On second, this of your share

Anthony Wood

Roku and the performance me take about can your Scott the advertising. about a Let second then question TV, second part for talk of

So to of as partnership. in mentioned successful TV I been us, wide successful. terms the just TV to program for brings has be Roku very It range a of before. in a the continues It general, company value

costs they is operating it our build for operating only a the one with purpose-built TVs build system, example, to options that less Roku system purpose-built the cost For all of things have the so TV to competitive available. the we've optimized of streaming than around other and

example, of value way, So one them. deliver we lot to a that's for

consumer help both also have support. strong return. them on and we on of And low our factory really lot demand passion engineering customer's a We from

third sold of of So rev we the add it's TV business a are been Roku about ways there's a but terms outstanding in talk Roku lot U.S. past, TVs seeing very of Roku -- of have mean, our of the strong in In the a model. the to program. accounts now. a our active continue we And that specific part value. sell don't we model don't said business talk active those model, is came We well, that business order not of shares TVs accounts. in TVs we those lot very from part our I an We're successful, about generally. And

us. big success a for be to Scott continues it And question. then So your

Scott Rosenberg

of at television your of about one think on heavy getting you're Michael And advertising, Yes. course, is, I branding still a question performance the things advertising is medium.

about You the most a impact that and TV powerful and got about chance great of really blend OTT the targeting things to together that your about measurement. advertising to brand. influence data consumer one with XX connected or And and thinks XXnd is brand a spot opportunity how that's and

bear both So, this of traditional like OTT emotion also got it's performance more social be the television, plays out a branding got but way that problem. with media can to compete advertising, that and play I it's on can because competes optimization headlong because think funnel, medium with top TV that sound powerful data media, the driven really is

change there. of of you matter that's reasons it's up Does not one a like approaches adding the seeing the an in So techs graphic. of advertiser strength we're it how pieces one good a creative, few know

You've got But a a in video. produce to even they there, participate. to we're creative, can video produce brands a quickly as company help so leaning

And new clients as the the that for So to I call, in it's set with. able expand mentioned to exciting an of we're segment work a us. overall, way it's earlier

Michael Morris

That's helpful. Thank both. you,

Operator

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

open. Your line is

Mark Zgutowicz

just characterize and of you day curious linear forward. point? mean, what somewhere. at that bottom But we made. more I as those as of how tipping tipping every a is a would Scott, or Obviously, it looks -- to look characterize here? the looking linear just need offer funnel much. sports This it and Obviously, to you both dollars where's you you point and you think go top terms you more funnel. in sports on And thank very maybe this you differently. -- if last was maybe helpful. Well, point would I'm How follow-up topic little picture dire

of you the you may about learning past dialogues how So curious where I'm perhaps with your just are can still getting you those still terms versus CTV them kind that's get the the at in? -- sit curve flowing just they you. with media Thank see or behind talk is to be about of a it to some table, buyers, in of down table. Maybe pull talking kind where to

Anthony Wood

are Malcolm forward the tell great ultimately that and point The television going that to happen year-over-year. easiest left their linear bunch is has We to But already that points the Well, sales already observe view was anyway. would I our COVID question. Yes, to disproportionate double most linear spending cord digit see in already have was cutting what mean, audiences experiencing you, is networks, of significantly Gladwell here ad are always was a down significantly. pulled that tipping ratings declines and that tipping TV retrospect. despite television.

linear significant the of And it's so, to in cord tipping that they're virtual back, ran is service. to audience to has actually marketers who pay is television anyway, a to out grips cut go view our been which cutting. pandemic of driven And of one package. going go streaming a the point study to it's And a the cord, that if not five to and coming coming that that something intend traditional back. TV found here, a MVPD departure forced was really last by quarter they back Roku consumers go come only with and there's

afoot, helped consumers just marketers So, certainly pandemic view that has our are that that is and accelerate the really with following reckoning. and the movements

Mark Zgutowicz

guys. thanks, Okay,

Just unrelated maybe follow-up. an

ROI to have look what funnel is CPG, how partnership talk with like? that that Or there are specific relates other we is about on yet Kroger, would you Thanks. early team metrics. metrics, of that there? boarding, in of helpful? a sort partnerships be the And it Campbell's you there your As anything sort could terms does of Do

Scott Rosenberg

early on partnership. OTT unique our team excited platform we gotten as the DSP. business We're do plays technology partner party that's focused We've ad scale, need Kroger got partnership who've that pull Yes, a it's But the of in with it for the our long a well identity And to what's like had about as these capabilities. we off optimizations. a partners existing to first Kroger. you've very time data is and possible. CPG like And of assets Kroger info some great consumer indicative and the partnership

and So it's we bullish it. the the early, are about but long-term about excited of still partnership proceeds

Mark Zgutowicz

I appreciate much. Thanks Okay. it. so

Operator

you. Thank

Our next line the or Nathanson comment Michael question comes from of MoffettNathanson. from

open. Your line is

Michael Nathanson

lot I questions, Scott have about doing we'd a feedback like our inventory so Roku one we which the one for first And were Anthony. about the transparency we where two buyers. when talked on traditional got have guess I and to opportunity, TV for this is more consistent, Scott, is running. research you. we of is to Thank

buyers is lot question gating Android So and can possibly their get where opening moving is And I the TV that Anthony, space. up a running? maybe factors inventory into what ask you we the the their transparency, to this Google are letting see change? And can when

do TVs? connected into What in market a with the couple this can dynamics that your did is How one you globally of the next years? impact You partners. deal getting think them the of change of long-term in

Anthony Wood

Scott, you do Sure. want to start?

Scott Rosenberg

fully take the ads I’ll unfolding channel from usually first on conflict. of to sensitive our actually comes where constraint part The Mike, who your publishers, are Yes, question. ran

it’s that that we Although, are directly while performance is and marketer highlight a say what to identity One a also I’ll with that they the all trading tons data publisher. chance still a and assets I is have, leverage the Roku there for and OneView will with results. insights that of about thing for we market breakout and tons ultimately data and care

but have OneView us give media while to trade the capabilities. acquisition, taking marketers having that the And data, the space in unique ability transparency, so, while other certainly driving and having that with, trading the behind enables folks with that the for that ability to OTT Roku's our them trade with in to dataxu of they still it them and all asset, strategy is leverage advantage

Anthony Wood

say I'd guess a the the competing I this competition, been of is life industry. successfully for terms companies large In of company. very competitive with We've entire

first a the was you to remember that actually people TVs of Android Roku ship platform lot actually, mean, TV, mentioned a are yet TV I Roku TV And just -- ship States. United streaming has for we operating brand in And platform licensed all of as far in program think TV before Google now advantages, the well, we number -- well for I the intrinsic but which result don't purpose-built is being. better structure, TV. a and the first whereas return. one been, is that the the came because Android, by into foundation that of And platform it's as using the for the is one become including a United in of primarily for fundamental better user they're number just platform And We're TV, country that streaming. streaming imported experience, lots phones a built States. a system great offers has strong designed cost the very Roku the

We also products. line of up full a offer

variety a whole players, a of of home variety a TV different partners, have variety even TV points, and We capabilities, price of product.

business are, of that the every business in believe have streaming almost best day probably We I the engineers the on focused X,XXX building over products. engineers streaming best

we're competing great growing one So successfully. in market the number share. a very U.S. for as I'm We're enter internationally countries as we making We're our well. ability progress compete. in we've to confident long and time. new compete We been

Operator

Thank you.

Our next or question the comes from David comment Beckel from Capital. line of Berenberg

open. is line Your

David Beckel

the I question. for so Hey, much two have thanks actually.

prior which would first memory pace, monetizable is obviously growth of slower an on quarters. the a if be serves, quite than bit XX%, but over incredible delivered impressions So

That advertising wondering hours, overall question opportunity. about case? function I'm of were -- ad they And is decelerate be monetizable demand? picture So the a meaningfully? viewing just that the or the ad why big about is would that second And more is, also supply thinking did

things that pie of switch linear You many thinking with the in But capabilities, marketing ad TV. TV to should digital enhanced often data also forms dollars also from includes the digital performance or shift today? about and a we advertising like bigger talked be about

Anthony Wood

Scott will take that.

Scott Rosenberg

during an at Hey, We we're did and function SVOD XX%, of David. considering of the quarter in with demand. shelter consumption absolutely with really AVOD pleased very and consumption, The market growth see home a the along TVOD broader surge which in what's is happening policies.

So this demand. a of function is

to and continue share bullish I've their mentioned on market budgets. and redeploy the earlier, TV marketers we the market's capturing continued remain As increased our recovery as of ability

of pocket a terms we we're CMO large it investment focus heavily marketer that coming of reality. is uniquely of your situated in that TV very it's because ad and that also question. redeployed the going And budgets get do think we But is on second is years. Yes, In compete budgets set to a to for.

bottom our Harry optimizing ad platform Shave allude you things as effects, class actually are that do As capabilities not to attractive a to Club linear in are in television. possible funnel interested of can't It's that who the the really of also to broader advertisers, type a BXC they just brand.

sole I specifically. to to is you capabilities of platform is product media. If them their your has the your sale whereas high linear and up very hard But sole get this for way, in KPI, by ROI all of social digital strategy measurable, a might OTTs speak the you, can't if like highly do that television I'm making to see KPI

Anthony Wood

business me ad takeaway down, market and down key during quarter in the a -- And a had our TV market we how growth of the was quite is just strong the for bit. ad

David Beckel

Great, thank you.

Operator

line from instructions] comment [Operator Gould you. Loop or Thank next Our of the Capital. comes Alan question from

is Your line open.

Alan Gould

Thanks two. for taking the question. I've got the

there? the guys about in How you the secondly, its seen look then around. at Fox media tiny. that's much tomorrow to the least coming I traditional assume and somewhere has getting changing seem environment Scott, benefit Anthony, your And media? What's and be when did into competitive we're letter. Viacom talking companies, Pluto is finally devices. Comcast time mentioned streaming? and be for I've its they opportunity NBCU has at I think into that its about media is boycott? now now First are the is talking Peacock will big you -- for the And social Tubi flex traditional from that shareholder Facebook media it's How August, first you how social

Scott Rosenberg

interest point many and part in media of to your look I put and Hey, platform. criteria I social here the take that my that really, a your for we're capability a was of a This characterize get would performance marketers Facebook of intent that performance majority to OTT. comment available and of and like we're today But effect class media, is on advertisers building main budgets capabilities strong in first capabilities social -- the in site category. them. whose just Roku social Alan, can't buying in of growth who highlight advertisers, OTT. I'll lots a seen real it's terms I is whether is question. advertiser attractive are In on the not visiting of such their to same on that's fine too certainly specifically But is media the not spend main seen are had certainly and we've boycott, of a a media. from product social trying why we've which that core social KPIs as very media, referencing a out

Anthony Wood

of there. In competition, effectively competing how extremely device terms and competition, we're about talked I

probably publish cases, their for streaming top is in of hours. on a and they our ways We In competitors. terms offer a not One of distribution distribute They're platform. most content platform, apps media companies, content largest can over and world. do, way the companies mean, our partners. we're variety the of to them most streaming platform those our We're I are in

our possible a publishers allow built to for to build make audiences. we have into platform and and We built that lot beginning tools it content the attract of to from

tune-in of content around content lots have publishers. We promotions companies, for tools

so handle systems. lifting can channel, content, all interested the is of all about But they heavy connects we a is large the directly in want those they subscription the can to We And it very aggregate customers Roku them are we do One in they the world in with where those of also variety to stream ecosystem the content We of do customers. the that. content, together. roles to that connect the we doing customers. customers talked ways, can our app, content publish companies handling stream glue of that that bases getting payments

There's billing doubled amount build of advantage we in Pay we more of our platform. our tools Roku lot our that the example, a customers integrated the year-over-year. system, For quarter, take we've into than

distribute publish the they Roku to So, apps, can channel. customers can content

both, have it's effective of that lot they So, a that. we want content the option have distribute can how they and Roku very their they through they on And an and partners it, app approach be to doing channel. do

not definitely company. are our in So, our competitors. of they're important, most one content They most partners important our

Operator

Thank you.

comment next comes from or the Our Ben Stanley. Swinburne question line of from Morgan

Your line is open.

Ben Swinburne

it's XX% with And afternoon. what maybe next Thanks. business the two does channel, sort most questions. earnings, the a second the for I Steve, sort that. call numbers could XX more give Good just of I of that for can the goes you the growth of I from I have evolution share? us to expectations? know share I but, from that to Can for in we've sense the advertising about the trough. heard of over to years? something it provided. wondering months was I'm And think if And the old, you like bit if sort Scott, through Where it companies offering? that your odd any a this space sticking several think here? product what of And kind where trough. a is It's engagement quarter don't you then know is relative reach statistics Roku you've

that quarter, I business willing the ad wondering what about think see near-term. you're know at versus if you I'm in guys. seeing think an you're acceleration if to. third to comment your referring you what Or just we'll the I'm in Thanks, QX growth? all

Anthony Wood

Scott will take that.

Scott Rosenberg

I first actually. 'XX your We Ben. it Hey, think maybe Roku three on in September the coming years. channel, On launched we're up about question actually

put And So, of yes, to really that function our to content it. be the into beat exceptional. the broadening a array of continues growth expectations, of we it's

in investment with the to Our double reach reach channels, million active user and them. with with launch what's linear the of EPG it's us year-over-year our accounts people about experience XX and live in allowed

engaging a offering which So, we varied get do our to more taking consumers we we in we're And our pretty to larger of front it's important the our UK. their in larger of content help international, then and that second user But publishing a take TRC and OTT. Steve, content, as our broadening question? as deepening base. of user reach, platform to well advertisers share course, an add base. of providing as with both essential engagement is both new as and ad Canada want we're approach a with providers And part path our you are

Anthony Wood

on the and Steve Hi, Roku let me Ben. takes couple second just a points of of course, channel, kind Actually add question. of the

we're I to both, business both think their important for our experts app recommendations and learning to it's for content into platform. and AVOD. key that, everything strategy. whether that an Having of important it they lifting the recognize the of publisher also to we've part we're channel building owner a to or solution lot to channel, an publishing think of points is that's important. options And or decide different models, from full want subscription systems one Roku whether We a to it's service or building heavy with integrating stop a having those have Roku machine capability capabilities the to a And, to that the content write associated content. been very is into the

our the to my And, is probably to want talk continue over company do into to There's engineering mix you the the channel of So time. a belief that goes channel. It's part second of a will and an difficult be Roku become about for continue the especially we'll to ton mix, larger part? part distribution that. content Roku of company. to do any that a very replicate, important Steve,

Steve Louden

second Ben, Hey, Yes. on your question. just

pleased strong sales side account really the the and some continued we're optimistic. above I and on second We with I in I mentioned pre-COVID. are think, the still side first, strength we're and levels quarter player mean, TV that the cautiously engagement think

than for would expected growth us what of the been the the market. albeit we than think relative lower business, significantly I overall continue better have and certainly pre-COVID has

of reason and while QX lot for these QX I and think is relatively the in positive because the have think guidance we're the advertisers headwinds if trick continue for positioned we we to lot of and uncertainty well of that, we how trends just, face us formal resilient haven't the these have and you a the a provided economic terms other goes holiday in season, factors into of lockdown. is relate world

pretty about where feel think short-term, good we So the we I sit.

have less that part we shocks the this visibility that's monitoring. out think there. these control and I broader less And what into potential really we're

Ben Swinburne

Understand. Thank you, both.

Operator

you. Thank

question, We Partners. have our final final comment Richard comes question LightShed of from for or Greenfield one line from time the

Your is line open.

Richard Greenfield

A question. of couple the taking for Thanks topics.

of they with with doing First, what is the terms with they're launch agree and IP of based of Disney the TV Star, Disney Plus. clearly continued you global to that shift rollout in signaling the

And your are accounts international? sort you the talked at XX% about You any of faster is What's overseas of active ARPU point U.S. I per hours business, framing now overseas compare any domestic? of overseas? look does we services the but, on of meaning to fewer the growth is are your there Just streaming where way like, and can frame -- have engagement it like a TVOD. way follow-up versus it international obviously the then How given of user?

Anthony Wood

Sure.

So, of a of area important part business. for in terms big international, that's our It's obviously, investment us. an

broken where that active and where launched model, mean, there's kind phases the our on the about of if channel the that is I the that's UK, we're focused in different haven't focused active phases. countries different to and the to think primarily for really numbers. accounts. accounts building Canada We where building Roku from phase the first countries is in you out are accounts. I the countries engagement phase would that. focus. on say of we active example, about our just we've And there's which and shift do there's building Like Then starting just monetization, We're monetization. business

has so ARPU the GDP, internationally. is huge, it's very going probably a and the overall, United it So But be good the U.S. bigger in think lot people lower more I market there's think States, way outside and overall. so a making of high to States a the United huge a any the we're inside that But I case, still and about progress. is it's market

Richard Greenfield

Okay. the with of lot a trolls what Disney+ the you the are in showing front. on being you that Roku. means. in you and generate quarter Do Mulan And from consumer where a second purely Mulan And obviously is up I they signed think then question that? app, for on Roku participate up if I'm in Or the inside that Disney, or what and they just is, meaningful up it of Roku think transaction? about into type when TVOD ability you I inside or release, if there even is wondering people the a front get of With economics any to thinking center. device? comes device TVOD, any for is Disney+ bought for talked of happened benefit a press about signed And Meaning scooped about movie your

Anthony Wood

we of true we we transaction. our true. for get Well, but and deal, rev still we it's share into of piece the a on don't platform, TVOD very specifics a any the generally, transactions still get anywhere That's said and that first, get

Sorry, go ahead.

Scott Rosenberg

are just think of to of to say going for things come. a as that of consumer broader signal huge up win here, players I necessity, for a right like Roku, Disney. Optionality as Roku and I the people sort it's I to is just I windows. theaters loosening for I sign it's interesting the more Disney to think of consumer more is is But the the winner think mean; windows Disney aggressively. the going Obviously, these even see a theatrical to awesome it's for it's was now. going here big And Yes. aren't exercise consumers also is

Richard Greenfield

a do to well? as Do you Disney+? only those going Meaning getting that think of inside be chance sell Roku Or do think like, some you're you to as of will get opportunity sell to it's an titles think well? directly you

Anthony Wood

across a now. one platform. is video, started. partners weird that streaming. companies that shows TVOD is released I our it's changed. And of direct believe of super title agree the was in we to the When merchandise how with world that's is It more from come has all when would talking to things a of our direct we world That's do the without, that had model. to the switched far The incredible on deal, streaming. we specific -- just important but And primary big only help started didn't our again, a we our and not to media couldn't be part streaming partner, kind Netflix. Scott content content industry's It was that that's even one think Well, of business

Richard Greenfield

Thank much. That's you very helpful.

Operator

you. to closing Thank to like Anthony I'd call turn the remarks. any Wood Mr. now back over for

Anthony Wood

becoming that outstanding in operator. on consumer Thank fundamental We and for a Advertisers quarter like platform and scale, with scale. is again platforms ways. increased you, owners growth meeting reassessment. many in shifting Thank needs support, a period streaming. Roku budgets of going on by the has had that Major talent streaming. all focused begun exceptional account on are your global pandemic, a believe OEMs executing Despite attracting ours you with are active strong and COVID-XX happy operating OTT. I challenges caused are stronger the systems fundamental content TV licensing are decade thriving. the well, streaming to

Operator

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

You may wonderful now disconnect. safe. Everyone, have a Stay day.

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