ROKU - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and Welcome to the Roku's Fourth Quarter and Full-Year 2020 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]. Please be advised that today's conference is being recorded. Instructions]. [Operator like Grodd. conference now speaker to hand Conrad today, to would over the your I ahead, go Please sir.

Conrad Grodd

for and will XX, Good Vice Rosenberg, Roku's call CEO; call our quarter Steve financial and of you. our today not President, results February in ended your of be to Thank afternoon, following of XXXX XX, Roku's Business, any Q&A. Investor found commentary our CFO; The Platform conference General shareholder for and additional we by responses today, update Anthony Louden, Full the Manager Founder to on our I'm obligations section results management on details Senior questions, this joined XXXX. only, and are reflect welcome available letter, Wood, to year who the or our Relations December undertake and fourth Scott be ir.roku.com. revise including available website management's at which do information. views can discussions of the as and

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

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

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

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

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

Anthony Wood

you. for fourth that joining pleased a everyone had report record I'm quarter. to Roku Thank and both thanks and today's XXXX Conrad, to call.

and XXX% streaming leading is a in in Roku XX%. QX, cutting households. more are to million that of beginning connect the than the media Monetized to industry all demand cycle levels. were American streaming the rebounding platform at over and fully-a-third accounts for better in increasingly impact and around grew As video measurement more are The a reorienting advertisers as TV viewers, million, Roku XX new launching evident. important companies crumble, flexibility, now streaming growth pre-COVID the services. streaming cord Leading of the virtuous audience. by Across Homes scale U.S., all ecosystem. advertisers are hours Consumers are is owners the active XX broader traditional TV and non-pay-TV to to streaming upfronts creates grew ever ad accounts In impressions content XXXX, participants. value We over up

we With decade. to made the in the call that, excited let pleased hand lie that with over in progress opportunities We ahead and are large the streaming the me about XXXX Steve.

Steve Louden

QX results Roku XXXX a impacts with was Along showcased of the pandemic. Anthony. wide-ranging We challenges many of record well the full-year. in as of to and that well rest Thanks, delivered for the resilience. to was face position and strong global respond our as year executed forced world, the

active we QX, X Before for ended active account million grew year. in million we address base the incremental accounts. financial taking questions, accounts and your over active and by XX.X XX.X a walk I'll highlights through resulting And In million operational record XXXX our with outlook.

the Our rapidly account active twice of years. the U.S. base size the over more company is several of largest in scale to than subscribers extended it the perspective, put has U.S. Roku's video And last the in cable

hours we platform, QX, XX.X base. to year-over-year billion continue XX% with In our see per engagement our addition hours year-over-year, In billion the the Furthermore, we full-year. a demonstrating rate up our QX, grew streaming with streaming growing of consistent year-over-year XX% streaming XXXX with increasing for year-over-year user XX.X average engagement active record we growth to hours the grew account, scale, strong hours. to in

reminder, please advertising record of holiday store a traffic by strong growth and as full items. year-over-year million. But the financial was revenue highlight was for few year. to growth player segment letter and in XX% restrictions Platform In XX% details fiscal demand. a QX muted QX, the a slightly total $XXX.X revenue see up the As I'll economic the $XXX.X million, increased consumer lower XXXX, our from revenue XX% shareholder driven rate quarter QX to uncertainty COVID than demands. year-over-year year-over-year and

also strong XXXX. believe due the platform continue confluence business, cash for almost of of margin as a of $X.X formal short-term We outlook. $XXX growth the continue the as revenue With to We performance. Our we $XXX.X OpEx the investments. drive have vast on directional profit, we a higher key thoughts we on leverage metric turn holiday how move part performance in offset outlook. that, grew scale potential with margin a Roku. more of to QX consistent of the Typically million move profit QX seasonally lower leverage adjusted our our business on our the revenue offer further But see to to difficult, was sufficient platform and have QX we $XXX.X year lower formal decision year, perspective. our growth, ended seasonally strong Gross sequentially roughly from year-over-year quarter monetization of increase margins, and QX, fairly XX%, as restricted XX% leverage promotions. EBITDA been visibility the in a our largely Robust margin million platform. revenue and has than and into softest into number full outlook financial for based for a uncertainties on the cash sequentially as XXXX to make cash, in equivalents, for a player color our gross Historically, future, result a billion adjusted the gross let's provided playing EBITDA XX% quarter is to in growth produced seasonally to in which out rather our conservative vigorous we majority into quarter the some record of million. is demonstrates of be strong the QX. record It was improvements in we account

of up calls XX% with QX the roughly at outlook similar the $XXX $XXX of of of Our be million Platform for is margin X/X XXXX. gross revenues to implying roughly overall segment total total comprising an to profit similar XX%, approximately at We gross while margin of year-over-year, seasonality XX% revenue. anticipate midpoint gross expected player expected is the of gross midpoint year-over-year, margin QX to Platform total XX%. million, be roughly

period seasonally margin player traditionally QX high, promotional lighter gross the reminder, the calendar. within reflecting is retail a As

focus QX, profit revenue year-over-year be and thus player similar in $XX in growth gross OpEx year-over-year result and will continue anticipate our an strategy driver leverage as account gross we on important of million our which to established adjusted full-year, is growth as device zero, managing showing given range QX the margins of to a sales strong successful growth. to EBITDA roughly For and against at the growth, QX midpoint. of a We expected

roughly $XX For modeling purposes, $XX excludes note please stock-based million and compensation million net an estimated QX of and adjusted and depreciation other EBITDA income. that stock-based amortization of excludes

in COVID-XX the of includes of comparisons In likely half quite XXXX, the the first the terms from we first strong comparisons lockdown. are XXXX are against be volatile. mindful to of In full-year, resulting which year, expect early economic and year-over-year impacts the we financial that half

While year-over-year in tougher XXXX, our part comparisons performance to half in pressure we the will second much due the significantly half growth of in rates. second which record of the year, anticipate

gross to margin the range We the in be stable, at operate as a mid-XX% we close zero. expect platform XXXX and Player margin segment remains margin our overall fairly gross to

will with rate of organic differentiation anticipate growth for our the year-over-year we more OpEx the line in at and growth. XXXX manage business of progress growth versus competitive XXXX enhance down we when We XXXX took the pandemic growth. outset expenses our to in rate aggressively future of the expense our be to seed levels, invest opportunity precautionary steps to to the and in Given to date, size continue operating

for a update As to XXXX grounding an remarks year $X.X reprice place read read took that very surpassed that I our was despite unprecedented billion, hardships economic call, preparing revenue of It comparison original historical we've materially that related the I of year. for very earnings the and from outlook and gratifying was a read the also was It ago. this crisis which call, health global I will over course from here. to my

of times sustained and strong growth This leadership revenue have The streaming. earnings four XXXX and XXXX the level through XXXX of almost times fundamentals revenue two achieved in business. XXXX our times advantages strategic robust our three laser $X.X represents times revenue, we XXXX billion revenue, Our speaks investments, revenue. over five our of focused to

the be to that let's questions. lie for ahead. opportunities for call With the Roku continue turn significant excited We Operator? that, by over

Operator

from coming Cory of the question JPMorgan. first our And Instructions] with line Carpenter [Operator

open. is line Your

Cory Carpenter

just then broadly, a the about any good long signal content or purchase or on make of Quibi on And have the provide think right specifically this you is ambition content? be the to as Quibi, into quick with as our exclusive exclusive to time for acquisition, ask when exclusive when available you. I maybe can content? rights? you Thank more on more the And why platform would how a just it think details follow-up, to hear, move perhaps now Wanted you thoughts does of that be broader will just an your it opportunistic then we should the

Anthony Wood

is Corey, Hi, this question. Thanks for Anthony. the

and did fits deal the into how by Let talking then a Quibi for Roku we the a start Channel that. It's bit little Channel. explaining me about just Roku that

at you the Channel if twice XX the last million look platform overall XX accounts but growth if you platform added at its as growing platform, as across Roku look incremental specifically Roku active the of fast year overall. we million just So accounts,

rate. platform growing million XX Channel viewers. the now of We So are reach streaming with now the Channel reach Roku approximately households Roku hours the - twice and

we're A&E, Disney, content continuously Roku Discovery So almost million channels XXXX and we a different from We of in added the us extremely doing the to XXX added is for Channel from content Roku XXX added bunch NBC, sources. We Channel linear adding Roku Channel. about well more. to and -

better content, bring this Channel from cycle, advertising content, more So where more then benefiting more virtuous content, cycle and definitely dollars advertisers, is the in Roku more viewers that deeper brings continues. in

So content. different - of - with that grows, that's looking our of are types as scale content backdrop different and of types we sort sourcing, at looking we're we're

So the will sense fits that, content. in its a that, appeal deal premium Quibi it content viewers. to Roku think into was We Quibi, great

so, and have years could content we a model couple for Channel a done content growing where into of rights content do of deals about couldn't Channel, Roku transaction we us The the global Roku into fit scale - the making the allows We're fits And there was into Channel sure where the a like the basis. that be the disciplined this, and we to acquired them it business Roku on ago. model. cost-effective onboard AVOD perhaps

purchase to the as the into - of making look business financial different be purchase price continue fits scale we grows, into and content fit to that that more whether our can we'll continue acquire broadly or that the it's types sure at we'll about disciplined that, expect content whatever model. or all are details licensed We AVOD

Scott, out rolling I the will announced specifics want the And thing? to of anything add you rights of be it I and you Quibi that content, think know, had fairly don't sort - of exclusive the if terms In rollout that, and about same. we've Quibi don't the

Scott Rosenberg

out, year. nominations we'll have in XX exploit the series, Cory. And of tag rolling hours. content. about excited out them And Q here, will multi-year through the progressively those exclusive be I any hundreds content, the a We're rights Yes, to TV

launch our So excited for to out tuned we're get it stay there, timing.

Operator

our from line next Mark coming Zgutowicz question Securities. Rosenblatt of the And from

Your line is open.

Mark Zgutowicz

great guys much and on congrats a year. so Thanks

I couple, questions. guess, Just a unrelated

platform the was point if to? stable you was to gross upward margin I there that any on that Steve, downward year, outlook would the or on for First just pressures new should out curious gross pay we like attention margin

Steve Louden

the in for XXXX did hey remaining margins year. the upper roughly formal mention QX, and Yes, formal you then kind mentioned, didn't the We outlook Mark. for stable as of we about provide outlook XX%, being Yes, for overall. around

of a is think there mix trends lot has general I and point margin reminder, over in some content the don't But always we business I the there pieces. the of momentum within there structures then are business, platform, overall, significant in the and the so business underlying the platform a considerations stay through would because the in back ad is As the out. different half of any very mean, I uplift XXXX, good margins. good saw the

So strong and ahead. stable happy growth both we're the margins is, with in where of very looking on top-line business the terms

Mark Zgutowicz

that when you're implies U.S.? Okay. that? or that's out helpful. has lot real downward It's And maybe OUS quick U.S. you then separately And terms just to been curious OUS downward and much a there On perhaps of - expect just do and obviously strong how not pressure there? have that outside on break of pressure if ARPU, seeing curious in see

Scott Rosenberg

our is vast are our playbook Sure, majority well stats potential in the of around presence the eventually the the lucrative rest the has monetizing, market kind scale, growing we base the of market is mentioned U.S. the that ahead, working internationally. account U.S. great growing a the fact playbook certainly, the historically, is yes and and U.S. the some three-phase most Certainly in been of the and far international we by engagement much further And driving - letter around world. as ARPU

driving but are true, scale focused international is engagement and the in on we that market. so And

So the that. on significantly is lower ARPU

on So effect it overall ARPU. the is definitely that dilutive is

In investors. visibility area for is that investment that understand visibility be terms international we of yes, that a strategic helpful and would

that for we're so more we'll tuned, out, working future visibility breaking you. And in have so, stay on the some

Operator

Karasyov our with coming from Research. of next line Vasily question And the Cannonball

now line open. Your is

Vasily Karasyov

Thank you.

if on this a you streaming you at supported have apps relative up couple HBO you have overall And then now - say ad for and will then Peacock's what also cannibalize where that? supported I slower rates SWAT used following that what to growth, hours this growing than that wonder I ad coming before quarter are? used from? is one, you the to Number [SWAT] world worried hours? think that, launched, growth not, their I big Scott. So every services hours streaming that our than faster that are prices massive viewership that, those all and is, do think launching, you. you And streaming is Thank

Scott Rosenberg

growth like the but questions. carry the dual right, we not other are when the the you're services, and overall we just a subscription-based Vasily, ad recently, platform thanks the grow Yes, remains revenue for we stream talk the faster have And viewing to on then it ad-supported continues about reminder, verticals segments. delineated that platform would than include as Peacock, viewing, supported if different and of that both ads. true

these carry whether First or all, ads. in the of plan ads will case already they HBO either the question of to cannibalize your Max regards carry case to about, Peacock with services consumption? in Now AVOD

the consumers launching years services on the to in drawing to supported viewing. strategy all market, an I the investing fact consumers narrative OTT. by mostly of ad helpful been They're recent cut And of case accrues in now, viewership that about supported think for inclusive more furthermore an across place, deeper their that board, of have the importance that And that, streaming. the because to overall direct-to-consumer it's we've in we're that, ad led services advertisers bolsters into the engagement the even Roku, are to then cord these of move better and streaming. creating for more

for for So services continue of to to consumers for good launch these be thing a all-in-all, Roku, we and advertisers.

Vasily Karasyov

wayside? in Thank follow-up. if stay by Very bigger do big it Or you any on in Wonder, the ones falling viewership keep you. general And apps helpful. your see the the have ones like aggregating A the does and you quick bigger comment smaller data equally to that fragmented? that. that getting

Steve Louden

services these is we're big these all That's of distributing for market Well, services Roku, business what very good for with consumer in them now, well-funded vibrant I'd that, of helping the grow. competing say because a it's and intention.

to it able And content of consumer, makes course providers. a their streaming been it's the set partner deeply we've of even just great for So more with Roku on broader because experience richer.

So and we driven has competition think among it's and more good the ultimately actually winner. robust services consumers the the

Vasily Karasyov

much. very you Thank

Anthony Wood

big in primary growth, other just QX. about not And - the - the traditionally it we've obviously really, ad nicely a business That's which definitely I'll obviously biggest on linear But the If very doubled behavior platform, with past we it's but they how long-term move our still obstacle, than ad is that before. in of we was again obstacle to I business. Anthony. is - streaming has advertising caused this TV is - impressions it's mentioned services and the pandemic, that's to biggest to the obstacle of our think Vasily, our short-term still to that, growing it those ad buyers behaviors to as probably shift ad impediment biggest it's that's think not business, to buy just sort continues add - be the the competition impediment and our growth our traditionally faster to of which the TV. monetized in true.

Operator

next from Bank And the America. line from question Bhattacharya Ruplu our of coming of

Your line is open. now

Ruplu Bhattacharya

see you can I programmatic budgets can that ad towards questions, you ad on programmatic more Do about is my strong in spend? percent that bit you congrats have the I and your see a and talk of coming And spend. a today, vein, you And And for revenues ad moving industry progressing are was Thanks over follow-up. quarter. talk OneView from what taking wondering about how if dataxu, time? do little that how platform performing? the

Steve Louden

Sure. like a Scott. That sounds question for

Scott Rosenberg

the for Ruplu. Hi, Thanks question.

in order. take Let reverse me just it

for a have and foundational Roku was year a reminder access enabled for identity integrated buyers just of great capabilities, OneView, media measurement our to data Roku first-party that same caused a OneView, be XXXX OneView capabilities them So natively we year. years. buying have value proposition And with to the and through

wrote all agency to upfront OneView of And in deepened buying licensing holding component our QX, companies. applied of a that with OneView relationships. company has the media. when agency Now, they're we third-party holding as the major agreements

way like across OneView got and their now to television optimize for by brands Lexus, using measure dollar. of And we better Just to same and OTT. using reach the example, spend linear achieve it

So it's it. of is dozens OneView, powering the optimizing same all perfect TV case sort of apps television across with your a and Roku linear use spend data for at time

more regarding bought leverage spend. dynamic not measurement to to the other question, Insertion be part of in programmatic it that's is of although still we've largely is not data, do come key case - Now that's the But Order your because TV spent traditional based, how leverage generally we investing the today money a that and historically. a - the will a believe programmatic, of the and most a today, flowed your it's the money way long-term, out why majority OTT into our and optimization in TV the sold, of early to OneView. way spending that's world is rising of which pattern. been that spending true quickly, do least of the because the OTT programmatic has of it's your is majority budgets and is of programmatic superior has is been part OTT And

to sell want they're programmatic still still time. will but it strategy in that, So buy, heavily over we our It's believe short, both to do predominantly way be traditional, buying buyers is ways. the

Ruplu Bhattacharya

Scott. on details the for Thanks that,

you your For that year, mean, on you a success provide are of on I you are would measure ask wanted kind So what international I How can for if And targets you mean, so just prior growth just my year XXXX? about question. again, can playbook thoughts I would success expansion? this details what follow-up, how Thank give just just in your to to follow-up your in be any international? for us measure would international this great. international, for you overall, much. if

Anthony Wood

the Anthony, investing things, I'll well a This we streaming is how got I global in I and and internationally, start Obviously that's few that. take extremely phenomena, here. Yes. and that going. U.S. say and our are doing guess, would a But are is about we

developed, of market which one to have international First the from to strategy that is trends, those worked the markets. of the markets entry U.S., us products for translate to we all, our we the we market U.S. take international And strategies and developed. points technology the believe, in and translate strategies the

doing as have so finding internationally, that U.S., work well well what and us. well as assets that's we're And for domestic our in working we that's as as the the We're market. well

of Another adopted international engagement phases that level kind monetization. point our increasing business involves on active that model focus is three in the same, U.S., strategy our I which and then higher first accounts, growing is we on then guess the same

primarily And still making although active growing we're on so, phase, we progress the certainly monetization. some internationally are account in

TV TV market then TVs well of United the OS players. also first XX% partner I year think one Brazil We added in - in also some also which in smart about made doing We being well. the another in progress one a ago, with TV number we've examples recently as international, States. Brazil, with TV to Canada, OS as of We're number the market. the just TV recently is and expanded

as as we're called and products progress and U.S. that well the in good, all also We a UK, the same We time, happy includes is launched Streambar, the your in So the better streaming. at is well. Canada audio a that two product which for our in that. with player Brazil product new recently TV, that Mexico, doing introduced is

is us, adding doing, for So more success keep international markets. think we're TV to I is which international to what partners doing

be scale working so the OEMs, internationally, with look going to of TV scale last grow to of to year companies. each announced add We're We we're continue does make think, more that continuing starts TCL our scale, Then existing sorry, that to also sense. to significant to look And international. we continue going into lean account continuing monetization. TV the countries at also obviously then OEMs growth were starts, overall, as new as - as more going to potentially build long, more also as just I we're to at active

launched, far, Roku for So we've Mexico. and the the example, UK in Channel

more we'll as So doing of over well. that time be

Operator

next from Our question coming Wells from the line Fargo. Cahall of Steven

line open. Your now is

Steven Cahall

Thanks impressions for again the question. It looks accelerated quarter. this like monetized

drivers could that screen maybe, help apps monetized that out you So the have advertising. that It'd trends us of then Channel, and between you in home about content split great impressions? Roku the and growth think of And be then a kind the your growth ads in non-Roku that? could ad in kind of effect impressions, is think the maybe if one. in have over to about, layer doing that wanted kind just revenue just all CPM we monetized - quick And then of I of like what housekeeping us if a help

Steve Louden

Sure.

want Scott, So, - take to said. just correct before I that. I'll something, I But

I you want misspoke, Mexico, to But actually that? in Channel Canada. Scott, I U.K. think, Roku said I in was and the take it's do the

Scott Rosenberg

highlighted Yes. secular - ad result The growth the accelerated your changes, of quarters, business we major Steve, just as ongoing Hi, question. by take the pandemic. prior of I'll is in our

decline ratings year, according XX% broadcast Just in primetime for context last Nielsen. television is traditional there to in

scarcity. now on is the their by the towards as top size of support go Streaming up, households streaming. median advertisers age is is now don't XX stats to mentioned primarily TV Roku and of of by cutters. letter, years upfronts there more right there - of the not shareholder Even be the the side decision our In the and happy, to the And to plan to all broadcast half of universe, streamed cord pattern streaming, XX%, at of up hours sustainable spending, This gone due three half have quarter old. in networks marketers, and adults, for is back. six U.S. their the XX viewer to we should XX% XX accounts investment over marketers really then as XX%. to And why pandemic sorts accelerated very the rates cut in of viewing

these the towards really holding of their notable OTT accruing driving major because, those all than the shareholder majority doubled are is streaming. In That's agency we spend largest more control in letter, TV spending. that with company to QX, the changes So of the same vast a us. shift are mentioned six ad agencies

the for the a traditional reach something level, spending, TV I this sponsorships digging in just So advertising, optimizing see of was segment is a year. TV dollars, very where in Performance-based that's advertising, TV think quadrupled fast-growing is of marketer down us. for permanent nearly indication other than of or demographics, money. reallocation then a And good kind beyond whole we a categories pretty of just strength a bunch

seeing strength seeing content retail then and category, strength. are app CPG. our well, marketing And endemic also and in We as is

the strength segments. those Board, strong So but in across growth particularly

Steve Louden

Anthony. Sorry, go ahead,

Anthony Wood

bigger viewers add structural and that more going More their services. XXXX, major streaming that launching just to I for shifting was following More streaming. streaming - new forward. their progress changes the TV. changes more these to pulled advertisers don't companies made are mean, just content think to that that about being I are we picture, enduring we think if in was I viewers these

business being think has streaming. Some shift accelerated permanently on the and the we pandemic full changed the curve to that forward,

Steven Cahall

quick cost. follow-up outlook the for just That's a great. maybe then on And

than you or you of that implies like shared a or have lot really this acceleration account maybe a active elaborate Could R&D a push did looks conservatism? either growth it of on both? you that and little Or kind year. that of just And want going less trends? with as to investing top the strong you in line it is So I lot business the is EBITDA in really this maybe Thanks. in marketing to gaps that a year think that be XXXX,

Anthony Wood

its in huge color think thoughts At this in world days. I level, offer they're broadband big streaming I'll in just and a detail. - can But we're is the Steve, changes. Louden early obviously I'll still streaming and and that Anthony. is fact mainstream my opportunity. mean, We're there someday. more I some pretty all global through households a Steve high is seeing a provide watch X the TV their to billion given going

a leader, and it's the going growing United the opportunity. to And and that, a scenario international. rapidly - So States, in in we're we're leader huge obviously

focused growth, We're to advantages. our we're focusing scenario in. So - mean, business will and Roku as in large faster. are we But on. investing are to building as it's and we're But we an improving advantages a obviously at expanding into keep keep area our that's going funnel keep growing on competitive competitive what to be. invest going improving investing trying back I can to and this point, we and profitable and going much

investment Roku you And to Channel key international, the to Steve, Roku add But like want our areas and TV, did advertising. some of something that?

Steve Louden

do started have the of the over these reveal the Sure. the uncertainties P&L. more lockdown reminder, XXXX end of the external a we the itself. the of QX growth that, was factors, on started around of control of of kind OpEx, on specific given of and why, Yeah, top when the to OpEx full-year of And we've versus which when we is of just color happening, scale obviously, than revenue the of some in terms pacing kind the some more pandemic

at rate slowing a that have managed CapEx growth we other and we of some measures, did primarily And doing. thought we there prudent ourselves proactively been took, were also companies so the then of the that we and lot We through other the down time. - headcount. is that of pace that OpEx And

As and some the resilient of been and lot great we is think these business a COVID. just accelerated had, has Anthony have opportunity from there mentioned, proved of structural

to continuing That's other for And and R&D so and an sales efforts. we and about the aggressively. is in future to drive then contents we're feel projects OpEx new shareholder we company engineers we're is bringing the invest. of on around examples, the to And The streaming we're how have is, terms like things a engagement phenomenon. R&D base. letter, features, scale more talk investing technology, comfortable lot thing though. think increased of some heart of point we user I growing Certainly more going the platform, to you marketing broad-based investing we a global the the at really

so the scale we're out infrastructure global to And G&A business. a support building

of there our roadmap. fortunate, on we're is very - a So lot is of a I things lot mean, great there

And is ROI light. there green so go to of dearth projects no high

that's of we moving levels saw. growth so, comfortable kind OpEx the feel back we And that the why pre-pandemic to

Operator

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

open now is line Your

Ryan Lister

Shyam. It's Ryan on for

the Channel update that how thinking on progress Is Just content there And going forward the advertising? advertisers acquisition is any offer is post the to your then there, you acquisition? after first, the on on off how Thanks. through advertising. Roku traditional strategy cross-selling Roku are what of secondly And about liquidity progressing? Roku O&O CTV

Anthony Wood

on content whether will or we're business that the said we model. And a I on part. ways I to source that, content Quibi. is acquisition a I'll we're the rights, I mean, part we viewing. can the we're benefiting I this that of to than This to exact our it's But is say, two, question like more confident that, global of growth of describing more of AVOD plans is take overall, quite advertising and that look Roku going rate strategy. type like an of I source take content is continue growing would platform, virtuous at licensing content, But, specifically Ryan. options, drive dollars, Channel think can and open And AVOD I means business are is one, first did just going have double for basis. sourcing then trend Channel growing minded, message, also big picture content as the from to and strategically to licensing supported Scott Hi, think or model, that platform, content of continue cycle which the profitable is scale faster Anthony, nicely. we I'm the grows, at before, the we going and the detail we're It's time. that Roku focused more AVOD not that second in and some for our the profitable that mean, which

Scott, do. plan if to don't want or we that's that? So I you take what know add to

Scott Rosenberg

audience, then advertising let in to whatever build or your rights to to able may I to know me answer I'll addition they is that Ryan Channel on about add incremental to important question one mean, for have. outlet about from and platform. it's Roku strategy to our thing DXC apart comments, reach Yes, holders increasingly just Anthony's an the essential another

inbound engagement participating its Roku because there the monetization of in So certainly potential. its a user our Channel, interest is of of because because scale, in

up different lot it time. So the source for of just to Roku opens Channel content over a avenues

Quibi the that we just example, did. for type say, just Beyond deal,

strength is on advertising, Regarding greatest measurement from an media sell in data, And when your effects, use of advertisers one and potent that with buying advertiser, our we the our their we ad an our off optimization most when we working platform, could the that identity about shown have off-platform deliver question way and to capabilities Roku. is advertisers platform, resulting so OneView. off-platform go we that both

web CPG brand, going simultaneously are just, the user ads that of and a and the publishers talked Peanut selling data store increase to leads brands about XX%. products. that to spot a retail purchase Roku And the off-platform platform. example, mobile. share OTT OneView as lift. the Roku activity, more is examination platform, on of that's show show a and that we're particular purchase through can able Roku Roku with Jiff Data traffic, lift our traffic omnichannel to on-platform of help where on both their their sales. verify Likewise, So Kroger, the been a the with of selling, product our Butter Kroger, ultimately an the used a like off able by Roku when drove like lifts, But XX% partnership, an able actual versus is Media, visits, re-target we've Shopper to The retailer, increased product that lift, Jiff, off-platform DSP, it in-store for in site or us for desktop exposure the is show to advertising and and bring graph, And store data our and to follow that's to Winn-Dixie capabilities media, visit as site past Winn-Dixie, we've ads be to across traffic, brand or in to we've Roku with likelihood of with in execute on - full wallet activity our competitors. platform about third-party that visitation onto sweet of through so an company through consumer That's data user a the really Roku device excel.

Operator

with the line And Laura our Needham. Martin next question from of coming

Your line is open.

Laura Martin

your to couple get taking points revenue because was not going to and a Anthony, viewers of everybody for them, when not huge of channel you EBITDA big ad what's call. But And of I'm about there. this where buy and have because channel I'm company you, forward. only minute you're to you were that that, buy the year matter this is like period. didn't going them that say we're a Doesn't in you're for own just going local think And you represented you license tell is an be interested conflict, if philosophical that or to because makes of then the public Maybe data, the potential or a money. sure one deal, the can we how questions. the you're do lots and you're you to channel, us this have economics content going three-year incented offshore selling you to - offshore, their drive when are call give you U.S., conflict, Quibi create - year careful during go you joiners while you do, channel that every you might think And equally. money, because two Steve to with the in breakeven local anything really that very into content. competition license

QX. outlook actually in XXXX? - a Thanks So, guys. we philosophically I'm have this year Do difficulty] wondering zero number for higher we [technical can EBITDA

Anthony Wood

you. from hear to nice It's Laura. Hi,

think are Obviously, content. there publishers it's monetize of out So help business content ways about yes, owners we for way a is there to is is platform, is experience philosophically, there, owners a distribute And I great that, available a it. it's on other to and platform ad reviewers. an Content looking their for the their the content But content of It's different lot lot content. models. distribution our components it's platform. core important a

we don't as - the the - we think used don't say word We Channel, think to channel So you - that. have I ways anything we said, we do multiple mean, versus so conflicts, some view conflict. do Roku we really about if if channel write content like channel I both both, an or publishing mean, it they'll our on their News, owners, are building available the an ABC and to app content they'll Channel, distribute Roku say they'll app sometimes store. store in through options be owners content app. or those you

Some content owners do just one.

the do, content some Channel. app the them an to owners - - content distribute of just do just Roku so Some

way monetization complicated successful AVOD SVOD But we so Because a an I other service. midsize whether direct very billing of expertise managed I launch the have consumers there to to build the We I or only incredible proposition that we in UI it's lots is a think a the or team, that retention, or distribute that, of that build we and is won to to there point audience better the do we large services. Channel, for many services them, is those for advertising. content is companies or scale Roku distribution subscription many service. mean, it's the successful recommendations, provide have mean,

services. viewers content - those aggregating and being solution lot of that So owners, and content for so well works a

complementary. think So I we them very as very, all view

mentioned you years. I'm for years the two actual about what were, or ever terms Quibi but not three I talked three two - think or that's we've deal not sure

if Scott, to I So, and then Steve? move to you so anything have to with on - that before EBITDA, add

Scott Rosenberg

Laura's I want Yes, think to EBITDA question? was you take that great. Steve,

Steve Louden

and shift more of the ahead days proof streaming. position a our is certainly in think we opportunity still early that getting streaming. terms is Sure. and - perspective, Yes, it's lot But to our the we're there more strong of Hi, in Laura. in points

and to competitive to invest important differentiation, one us, for our future the of so see things grow to maintain growth. And that's is and

aggressively to why business aspects funnel. we give formal And to didn't the of And model. invest going different continue part in top of so that's certainly around the we're the guidance

very tougher formal of terms of in But we're over to revenue momentum, back the we for in going In the strong outlook out QX. had facing XXXX. then the be comps. put continued business And has obviously growth, growth especially half robust XX%

say in And shows the time line very producing confluence robust But show in it we profitable think significant the EBITDA the do So a a great for scale, really QX. and business. coming - the leverage and that, EBITDA will it is I over of think, and example a QX of, on driving up year. where difficult growth the business potential monetization together model, large to we'll does continue grow

Operator

line Michael from coming of question next with Nathanson Our the MoffettNathanson.

Your line open. is

Michael Nathanson

two you ask announced Channel, - maybe Thanks. on of And difference number. if Thanks. help that, how I consumption, revenue I you the of you at is have be anything And see hood us price the a I Roku I guess, there platform? Amazon the sellout of trying Channel the to Amazon? getting on all, over a it XXXX? one. the fill That turned Roku helpful. is, rates trended which know, impression, Amazon. on help couple. to maybe advertising Is Roku noticeable will under can you us really levels, development ask there. a that's per I Roku maybe bit on about versus platform Can know That's off people

Steve Louden

Scott, you. that's for

Scott Rosenberg

those both Hi, take Michael, okay. questions. I'll Yes,

pattern. We've the full ad past, as dollars user from personalize the promotional monetization have I'd rate tools, the capabilities. biggest say environment. that So do of own there, great earlier product. on think TV composition that an see the out in challenge will in the the focus mentioned platform. Roku yes, supply-rich those regards opportunity primary in the regards is competing growth the deeply, on call, the to in be to off-platform We're traditional Channel our in XXXX, opportunity in best the spending we in pandemic. still to fundamental for We But that own biggest sell remains about OTT and to the know said exist the is ultimately take was where I as With our a Channel, sell we with we where do premium the tracking making the where your opportunity we dollars, access levels. affected the our result past, experience take and - opportunity. great ability our is progress Roku to to Roku is biggest clear, and the revenue, away and where platform, this our we I on as And competition of question mentioned or Channel, there the shift that a biggest a consumer

a well it them OTT, I couldn't work other give medium, them. And is television think to important whole as to also television, couldn't a didn't performance either they quite who generally. coming the But much didn't class so of there recognize that because invest prices for into or in it's invest the that I needed. measurement advertisers credentials, relative

basis. able now participating CPM historically display are these and search, on in ability And invested not OTT, measure those a to have We're optimize. who going in advertisers in to advertisers always may more so and traditional heavily because be much buying And are media, in social the of in advertising. interested

funnel sizes and tactics, of going pricing your be common in answers a, them going to I or ultimately that competing as future search a interesting auction, of And the question. the marketing basis. variety characteristics a shapes a basis, and those to going performance medium most financial like performance buying varied. use it's on cost-per-click, of cost-per-action medium. hope not Is are and a to I and funnel the of is Some like social marketers a think this that models the reach to so the both? be one its advertisers television And of of simply top branding bottom user all OTT, are are be media quite

Michael Nathanson

by quick I a weaker said Is strong it of have is the we Facebook, Can requirements? advertisers, compression what impressions to simply that to of lot When predict drops just trying try social, the does. surges different ask growth? the you We're supply to more compression in price with follow-up? because It we all to impression assumption? see price a see you is of auction in a to marketplace? assume really brings the potentially quarters, is types build impression fair when a So big you advertising fair of see model the get types

Scott Rosenberg

prices is relative subs. a the drive thing social better case to not goes media media, course investments. they moved times is the the greater And near is I the Also, virtual service social actually go down. when a yes, impression letter, auction friendly, in cut supply for drive who, acquire social what lot, the Right, it took ultimately saw that's them is XX effect platform, that because a money in MVPD and their a for their up sign-ups of to bad can case media up, shareholder thinks think And more in the study Roku, the the way, were. it disconnected our allows volume advertiser. return, prices to XX% as lift may from be and it with advertiser that you course an social increases, We interesting goal other of mentioned pressure can in auction and

OTT bottom for model, those of that the that get terms our out. that And data has to I of big it's in that and not dynamic focused we a part funnel all in when in early, mostly budgets, budgets in identity. competing bucket. It where investment, you are think the been is might pond impact. the to be still so, terms able I of recognize, while advertiser - OneView for the you all but playing compete credentials, on with looking see It's

Operator

Partners. line with the And our of from Rich LightShed Greenfield next question coming

Your open. line is

Richard Greenfield

you different I between viewers, you up you the buy and up spend understand or you versus buy your or on TV or program the on was to end difference the connected ends buying and help may on and want brand around? do Hulu this, us other two a I a portion a you're Roku you're could way achieved directly thinking guess, And wondering about that just scenarios. Peacock I'm as direct go you reach Roku if a if buying can't and of out Roku a ad Roku I'm what or or One, that that Peacock I time Roku devices? direct. from if a device? is direct buying And marketer achieve, both? simply why up of Choice two brand, directly portion be buy even a Hulu by the ending If

Anthony Wood

Scott, you want to take that?

Scott Rosenberg

not is business either hey to ad app answer might our are a and complement, I network them. Yes, partners reasons guess compete There not are or or. content with directly These of is, short partners goal it's you our an buy course Rich. an with the platform. our the that in, both many as an on

commitment. could of For cross-platform part be example, upfront your a it buy broader

Richard Greenfield

dollar world there into Good, that work. say just into put upfront leave no put get a directly, dollar had can't buying aside, if aside advantages to and in by I I you throwing buy? the by leave is what a it like, the that that Why get broader if is a a upfront I where I to Roku, would I just

Scott Rosenberg

Yes.

Anthony, So, it's a ahead, - yes. go

Anthony Wood

have just we TVs. our was seeing that what linear also one been Roku advantage in our going say, you've to that to I is through ACR ability access the ads

we do that. really say it have And you can't can reach, that. of that data, And so terms in unduplicated doesn't apps - help do

Scott Rosenberg

just so on to Yes, build that.

publisher reason key aren't to just reach the Rich, through buys. one couple direct ability So is that users select those to of reach going

one either regularly do that reach though, with So each they're of class in invested with And example, both at too. of users. been holistically other whole them There we show optimizing they're their excel things linear as active data. Hulu, heavily are buys. data, that buy. produce big a even this with who that only reasons the other our is didn't they're with excel of of ad of or for we investing reached lot there. they their those advertisers advertisers do we you with and we stack And linear view directly it of not other for in Because we not in regularly not We've our optimizing for publishers years whole in selling using OTT us. performance invest contact. is, know our We're and the business across One they

you if with is frequency directly buy for a got So specific got if and network. that the the buy factor. you're reach you to to you're office, going a do and show, key Roku performance, optimizing with a investing But

key in I'll that, this is The OneView component here thing is mention other a discussion.

identity, doing help publisher we've invested One where could you're buy, - Roku capabilities leverage of heavily so publisher direct in a optimize your all Roku to is OneView feasibility in against that that still buy, direct the and reasons case other the the activity. so data you

Richard Greenfield

to most you can't reach, I if Right performance. thinking anything ultimate important. want else. the of so, - for to me but the like optimize But just what I'm said and is just loud out think Scott frequency

Just to frequency that, and I sub-optimal this optimizing, can performance? optimizing that on reach, - as for so be seem

Scott Rosenberg

for advertisers, outcomes look, help in of our to capability in their doing our not and drive also in our is focus on focus that's even lot and But that's tech are And a that reasons directly where OTT there a leveraging performance investment, publisher. for it with - data advertisers But why we're data we advertisers. they're orchestrate them company to and case Our about the and care of the be lots as show. want outcomes and lot, focused on agree the of context and networks. capabilities

Operator

the have the would closing I call Anthony back that's remarks. for questions now And we over like for all to to today. time turn Wood

Anthony Wood

Thanks.

but under for Together, Before extraordinary us. want was we to And it great more do at did circumstances. thing, to XXXX future call, we an businesses, one to also people want time The say was ahead thank year I have for job, I challenging incredible a the end team everyone. Roku say you a of difficult everywhere. a

Operator

for conference today. participation. your for our conclude you does that gentlemen, and Ladies Thank

disconnect. all may You

Roku (ROKU) 19 Feb 212020 Q4 Earnings call transcript