Roku (ROKU) 7 May 212021 Q1 Earnings call transcript

Company Profile

Participants

Conrad Grodd	VP, IR
Anthony Wood	Founder and CEO
Steve Louden	CFO
Scott Rosenberg	SVP, General Manager, Platform Business
Ralph Schackart	William Blair
Justin Patterson	KeyBanc
Shyam Patil	Susquehanna
Matthew Thornton	Truist Securities
David Beckel	Berenberg Capital
Michael Morris	Guggenheim
Jason Bazinet	Citi
Laura Martin	Needham
Shweta Khajuria	Evercore

Call transcript

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Operator

Welcome to the Q1 2021 Roku Earnings Conference Call. My name is John. I'll your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. will the I Conrad over And Grodd. Instructions] now call turn to [Operator

Conrad Grodd

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

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

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

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

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

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

Anthony Wood

to Thank delivered quarter, an and call. today's in I monetization. report thanks first you, joining driven Conrad, everyone am by platform that to pleased strength Roku exceptional for

moving all saw virtuous Roku The that let cycle inevitability and make to to the model advertisers, the advertisers of the is viewers, quarter, allows streaming. community. services advantage their Roku's and stakeholders, partners. are including With audience content and that, successful. content for the clear increasingly tools we advertisers that streaming are business We us business offers money call of attracting to believe is and This Roku Channel's viewers, optimize And Steve. over streaming help streaming streaming build hand taking to creative partners me

Steve Louden

and and EBITDA Thanks, continue QX, gross outlook make our financial we operational Anthony. In profit progress. for adjusted and revenue, to significant exceeded

while Before quarter line million. an was active units year-over-year our uncertainty. up given to ending segment X% Roku selling users your Sales continued QX, up on increase year-over-year year-over-year. streamed of the XXX% through revenue the XX-month representing revenue I'll incremental in current macro year-over-year, with XX% trailing in XX% to million, a a accounts Total to XX% million price outlook, billion monetization taking year-over-year. revenue, total player our to of questions, revenue quarter, $XXX.X ARPU was approach record growth were average basis, year-over-year XX% QX Platform of $XXX.X up of hours added X.X with walk highlights increase We Platform with $XX.XX expectations. of year-over-year. while increased XX% in million. player and XX% of the XX.X level XX.X discuss decreased

player disruptions. gross record supply related part Our in to XXX% QX chain to resulting a XX%. XX% $XXX.X inventory higher-than-expected in to of in gross year-over-year record a to margin million, The grew tight was owing metric, key financial fewer margin gross due profit promotions, of

traditionally As a was margins. more-than-expected QX distribution is higher-margin due in of adjusted audience result our lighter our up lifetime period gross launches a development favorable to calendar, XX% resulting reminder, higher-than-average Platform to $XXX in XX% also of outperformance QX direct-to-consumer of promotional margin values impacts mix EBITDA in year-over-year. OpEx exceeded due the accounting as deal with retail and from investments a and increases of Platform million, outlook in positive million XXX the in estimated of new content activities player QX a gross $XXX.X monetization. was agreement. the

market the equivalents, ended of year reminder, believe uncertainty. XXXX QX visibility QX into cash its a future, number and outlook $X COVID-related investments. cash billion XXXX Thus, out growth to difficult QX of at turn make outlook. offer We sufficient more We forward. let's outlook. begin to slow OpEx anticipate cash approximately formal Roku comparisons restricted rate a a as an the formal the the difficult. that, our But $X.X further increased billion the in before have move position to lapping approximately with CapEx for cash, we of offering. quarter to With full capital into uncertainties providing we short-term growth manage we incremental last was significantly via raising a As equity expense liquidity our in going QX, actions and and in we

growth Our is acquisitions. growth $XXX EBITDA calls XXX% expected organic midpoint, gross $XXX year-over-year, than part the to to expected related up of for at of is and in with QX, in gross at in and million growth total an total million to OpEx year-over-year inclusion OpEx due of QX resulting implying be the growth XX% XX%. roughly revenue the overall margin at QX up recent of $XX Strong midpoint. million outpace higher XX% profit profit midpoint, outlook robust headcount gross the of approximately QX adjusted OpEx to net

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

we into lap we observed tailwinds These exacerbated rates will will by in revenue of periods the first anticipated shareholder significantly year-over-year letter, anticipate availability decreased the logistics our that a with the second for be we were half mix but as and COVID-XX. and XXXX in slower rest growth of XXXX volatile cost face increases issues. XXXX associated be We the impacted headwinds supply likely global comparisons and at rate by a player As and inventory than robust, chain half. of will and

gross the outperformance to of high normalize XXXX the in to year. distribution will full expect in For expect we that be gross as half we and the content QX the the back platform similar to year, margin margins overall anticipate range. We in be XX% of levels

gross player but at rather business, ahead the growth. do account player Looking a not optimize reminder, we as profit, for

half given strong let's with margins increasing for component we the face, second Roku. broader over across landscape the saying in chain the and slightly the negative such, are and cost pleased XXXX, turn the of questions. performance I'll we momentum supply how we the given seeing the negative likelihood anticipate of With for by anticipated are benefits player business As increases. that, call Operator? we streaming that player issues margins the of QX summarize

Operator

you. Thank

will Ralph is William now from our first begin from session. Schackart Instructions] question Blair. We [Operator the And question-and-answer

Ralph Schackart

share revenue, advertising, mentioned Steve, talked budgets, social impacts. about platform again. on of had but TV accelerated some you performance letter capturing XXX In question The And budget. larger it also about the positive talked

some of So we're was of sense sort outperformance, driving if starting given just maybe then see of you sense curious a reopenings that And to give what that second, could that. importantly, us now. more

a sense Just future curious business the driver on growth scale over TV the pandemic of of sort give of and of forward? the that platform that, going durability have that the sort shifted of and budgets since of of the the us impacts the

Anthony Wood

Anthony. to to linear versus saw, there's as close, a I ad that Overall, is general think that. is a can you'd viewers new streaming and just to think, over mainstream, Ralph, lot us. has introductory few I'll biggest full buyers is that been to long the gap is we And that streaming That tend was then to we've if lot remarks, in but to for started the of way of the this a there's go I streaming. about, prefer still gear. which said patterns asked TV this. governor to TV a like but gap Scott, shift Scott a our versus advertising, a take in room still move momentum traditional make add big advertising go, gap What don't I But ad there buying look know, growth of at you If traditionally example, dollars. there's that, growth historically business of we like or very things to and impediment they pandemic the in ahead but strong.

Scott Rosenberg

towards for you Yes. accelerated your reallocation couple Yes, was points offer streaming. Thanks, as believe that that, of I'll and reallocation TV a to Would accelerated Anthony. question, add stay this Ralph, budgets Ralph. here And data to question. storage pandemic I'd that on proof advertisers the to of

is Plus, saw where of Roku us Meanwhile, of We're Nielsen to on call ad that services, we closely the ad to of have at Discovery Media strength direct-to-consumer more are XX monetized entertainment TV really saw Max, side Roku these by down business, with platform, our opportunities TV in adults up linear Those these doubled, a services the created ratings, promote XX%. with has spending March, now couple their impressions doubled. course, launches to companies et users. a and I'd great partners and cetera, our where holding Radar. than every according ad point down strength. and was adoption spending and ad We example, partner agency for with leaning really to for major drive to HBO for XX% providers, major we was video One, the to launched. areas according of business. service out to ad in So the service these ratings investing QX XX down

we So growth side our very of saw the strong entertainment business. in

especially to performance We as advertisers. diversify out, business, are continuing also called with you the

advertisers. non-top age our business we aggressively significantly with while continue We to So advertisers grow top faster. XXX with grew business ad XXX

with a well have case top mid- medium. spend of a of -- and can and really left and with advertiser a indication focused offer of an top that's on and the on all our performance are example who as ad think funnel advertisers, who It's funnel both and significantly I'd mid and we a performance-based as streaming appeal branding both came And that as branding-oriented us medium with traditional, to like very broad at performance return attribute advertisers saw right. as long-tail a funnel unique invested top back X.Xx an of platform then of compete funnel, Chef, more Home bottom studies invested as up us. advertisers well I of that

So strong to really overall, business well I reallocation of and that budgets social think an stay. the advertising budgets quarter indication, is the digital a TV towards for as and here as streaming

for the thanks, question. Ralph, So

Operator

Our is from from Olson Oppenheimer. next Jason question

Unidentified Analyst

on Sean point you on started can where also, call has changed for pricing how growing? to you Company? the is large very Jason. demand CPMs on versus the sales This then commentary increase provide Can trends? effort comment the of volume in Has supply OneView the the And overall ad are offset some to

Anthony Wood

do want take Scott, that? you to

Scott Rosenberg

Yes. Thanks, question. the Jason, for

relationships. OneView So role in advertising very playing already prominent is a our

better like platform the tool For which that traditional to their performance ad accelerate an was featured prominently. we media are is Monday. new of orders, OneView OneView traded. platform, a writing optimize set the IAB for insertion fronts automate kicked way DSP example, do spending going their to than plans Marketers and TV And off spending them on in ultimately way the to that is a towards continue traditional to very and

a our different an sources OneView it's importance results for and outcomes is and way the Roku's advantage frequency of us optimize better on supply and across to to way to identity transactions and a data drive it's to your of It's just the for platform. publishers a advertiser add better between for way advertisers. also reach in ad our the also Now unique take value optimize not a of spend lot

for data. us they're just when with from when way our a media where buying media from transaction buying not third that parties but it's would they're from to So advertisers, work us, benefit

like ACR across we And our who manage a call dimension spend. in their and new TV the the spend in streaming the to That's holistically into so and kind order that OneView just equation frequency they brand spend we exactly traditional and using brought use a with optimize of OneView reach for. case whole OTT that advertisers. how to I'd in way it's And out data significant Lexus, is work

call a CPMs, call on pricing part to the CPM tactic be that Ralph advertisers site But rules TV, that drive. Jason, they're that means also added, earlier but second better executing all to well price into media And of time. the auction scenario, over that, spectrum just data, at. buy reason one question the I answers will rather better what performance a premium streaming a command our that outcome products purchase. that about the I streaming to ultimately visit, from going premium be the newer per your whole to question CPMs is out the I the measurement, product to that the continuing I And out just your whatever think that of If increasingly by better able the aren't will line The media. looking they is long-term we've per product cost was ad cost the per because where prices targeting, remains unlike effective sort product. question. bodes is not volume cost is but anything, is be top for them that also increasingly type and to hope that at advertiser And trying dictated and a traditional of

Ralph Schackart

Good.

Anthony Wood

now an an I just me analog. days to buy they to basis $X is got saying couple increase let a from it with basically that our acquisition. they because on partners. e-mail cost could or zero And were one advertising interesting per million smaller Anthony. Jason, of content CPA was add, close a they us, of spend ago to that on going This but

So does spending a the wouldn't up lot that with be open it to market of companies us. otherwise

Operator

from question is Our from Patterson KeyBanc. next Justin

Justin Patterson

On and made building reach adding The nice originals. Roku Channel, in you've its some progress

the Roku this attracting So streaming comes licensing The around changing Channel. with your content then with more BXC how is there's advertisers, creators companies? more and from curious content I'm conversations unique working

Anthony Wood

This is Anthony.

TRC, really doing us. It's been fire, driving more spend to on into cycle it's yes, viewers is increasing on which virtuous basically, is revenue, more there's is us that where TRC, So -- it's good more ad which coming for content flywheel. this our allowing consumers

reach as both is engagement, Some last grew and twice overall, hours the examples, as streaming which than fast fast growing than platform quarter. more

investment we're continue. from grows, scalable continue with But from content our quality we're almost house. example, we're as budget different those content buying licensing well it's better content strategy, is grow as going say you as our the revenue, which as deals, licensed advertiser but to can for So the budgets we Is will going content I'd as more that originals doing deals, and commensurate But viewers, so that -- Scott, just comment content companies are bringing to the through well. model. business want quibi, with strategy to that. comment doing creative we we brought content And Scott focused licensing that? part higher that on are more what about well. interested just originals, growing relationship, XXX in commensurate advertisers on some this diversified content buying license old a revenue. quality growing do a I and is so, today or those in to maintaining do today. think And And of on

Scott Rosenberg

our before working most our I'll content is The about also, I What asked platform you've are our an potentially also is But with that. that, in channel just partners, Justin, on us of changing Roku with say you hit I'll good. got owners. also Channel. I'd sounds conversation this It with Yes. our Yes. go say the app there, how

be their owner big they rights fit parts a even can strategy, while A into DXC they doesn't want executing the on of proposition. maybe that either/or an effort. of direct-to-consumer catalog monetize that not it's strategy have So to elsewhere the

by their a or which as free -- look awareness, place for So The and content. Tier their example, at surface market Channel drive Roku services help to they a to

The we partners, advertiser we experience, reasons and to ad brand was be in create. ability Roku a surface studio, way with of to our core could our that partners. into but ads example, deliver serving not we're the products launch also experiences and broadened one advertising, the a years sponsorships or deepened third-party when advertiser to general, in user wholly And has The experiences our -- that's With the integrations clients launched not or our our we the able that the the way that is, Channel of in nearly for kinds relationship four to underwritten otherwise regards the opportunity So possible now the Channel might with channel ago of own Roku to content innovate channel. manifests

Bell, addition So well. well important strategy to for -- as example, it our is our performs XX-plus service Roku to our efficient target relative it's serve effect. significant well, five And frequency for reaching a it The linear a to drive us partners, found at Channel investment. our traditional of is is more in consumers ability times the Like way because content adults an in of TV as to and control and that it advertisers Taco

Operator

Please question ahead. Patil. Our next from Shyam go

Shyam Patil

of great quarter. had Congrats questions. on a a couple I

gotten. a iOS shift to and little the the have than of alluded to be talk you how more upcoming it maybe shifting how a bit agencies? around? going with a in think so have deprecation, then on might positive this with catalyst Roku letter proposition budget otherwise of Nielsen little beneficiary? be you question, your feedback to Do Do that shareholder is upcoming changes And that enhances then get deal, privacy value your do in XX and First, dollars second far and this CTV cookie a you've you about about you bit could you gotten terms from can a advertisers for guys but you think think

Anthony Wood

bit Let add then privacy maybe Scott talk I'll on can me about and to little changes, a about -- just the and Nielsen. also talk that

value So seeing, is operating you have I mean, ad business regulation you high as a of seeing rates. a customers, fairly and in terms with applications to relationship, becomes That what to to offer relationship or allows you of business changes direct or privacy to difficult of changes allows it consent does. very don't of environment targeted we're have with first-party ads targeted that a kind as ad take a tenable your are it as well we're you the to lot the some systems data-driven get needed more making have when opt-in and viewers any becomes up. Roku relationship actually that to When doing first-party -- shape to it in those the that like do generally

don't we add know we're So Scott, then, that position you think or in a if regard. in the I talk a Nielsen relationship? want good about in And to

Scott Rosenberg

Yes.

the I think on points. privacy

We're hit and on help independent example, with IDFA changes reach and platform more to You ad it. the the advertisers for data leverage pending a for our users a I uniquely our cookies. it tech, difficult access, to say, identity environment around challenging more to positioned is as and should deprecation or iOS

OneView, able from a that if to us buying relationship, be deliver were we whether to able third you because buying party. precision get So media through you'd and than have more we're or more scale directly you're through

first with advantage the deal. we to question core that the closed There it is two to deal last back regards reasons just in us. Shyam, Nielsen are go for your did month. So with I'll

fingerprinting tech our embedded video for last a had long-standing We've that the with Nielsen. in First around was or relationship acquire this we've the years. to had televisions actually five technology ACR

as is happening is also have substantial intellectual amount ad for own the significantly. over while the a significant a consumption significant ability input a There's but as growing replacement still property HDMI do the through well as on So new impact around to revenues, or a now tech won't Roku company linear of development for air. insertion us traditional and on streaming the TV or fly. the linear ad TVS, the on we digital it That XXXX example,

we dynamically the partnership optimize user And swap fly to so on to it on the opens our in all with use of to inventory our using reach in data we can the technology the programmers. relevant of clients the partnership to more class business, deliver ability to up and data side use program the or ad that's our an new a streaming and with end whole additional that

the So ad it's a business. significant new adjacency for in us

our The enable second we the with expanded measurement. partnership deal we did to cross reason Nielsen screen is measurement

frequency measurement frequency will across television, to streaming, to reach four screens, desktop screens partnership across and do an advertiser reach, this holistic enable across screens mobile. four those say, measurement traditional able across attribution And do media and those a those audience linear So manage site at, run the purchase. a that or media effectiveness to to again, be driving and screens, of visit so product determine and to, holistically and

So it. it but was that about a us question, excited great and significant opportunity. we're your deal days, early Still answers I a Shyam. for hope

Anthony Wood

is Anthony. This

one it. thing, which to one take positioned digital has television done add platform States, Let TV really just is to as are well we small relevant makes advantage position there's And our one and is TV. especially inside administration that's really something valuable to be of it of else no number United as is the that in us, that the me to software DAI,

Operator

from Thornton is question Next Truist from Securities. Matthew

Matthew Thornton

Maybe two me. ones quick for

page. thoughts an a always TV that model sponsored opportunity the type the page, a will, if something that to the some you've you as around networks on almost platforms to up of landing there's the listing gotten guide, from out initial be like on I'm and And there's other from landing following could guys that's that expand any kind feature especially question about an also last I'm Just the then if feedback license wondering Nielsen. and that broadcasters? just around thinking if scope you are opportunity opportunity. if opportunity technology whether there's with well, of on or secondly, sponsor just any wondering I'm almost if curious

Anthony Wood

see. Let's

operating talk that software, terms So terms Scott license mean, tech, like well, of we The the about well I about system many our we more we But as second. can it talk let in that and technology to built TV what licensing manufacturers, that. years IP business I in I'll purchased. over our Scott licensed Roku in a we've of includes TV in and general, the mean, obviously, in as -- And

terms several We we thing. features. released program and live including adding continue home adding the added features or mean, that guide OS enhancing been -- that go guide want Scott, our sponsorships just do live offer of that our of we something which streaming that, and guide you players about to is In and the XX, screen, on we've new EPG, something on we be I do to TV have But -- licensing? to and sort enhancing TVS, been it's on we've we'll smart

Scott Rosenberg

or the we think are positioned the we're Yes, of on to on It's in partnerships promise. the Anthony open data, as third -- the for promise ingredients, generally the the say, the But ad making said, number field, focused programmers with reality. we're TVs uniquely will tech I of business. a the scale, Matt, we But of that model depth tech, just we been long to DAI, parties. insertion discussed we the a time remain have the to licensing the digital that's deliver in

as but about. the long-term promise. in And positive. bigger substantial from feedback that effect we a XXXX, said So programmers keen. the will And is a earlier, delivering that don't we're against been They're opportunity just it we're think have I excited very very has on all focused

While targeting and the bring decline, keen linear of in they're and now a they services. measurement the streaming television And that of there's lot have inventory kinds at to consumption it. is to progressively that still same optimization their on

And CPMs exciting product. better -- to enrich prospect them their so ultimately and to better a for inventory that deliver it's advertisers an command ad

Operator

from is Beckel David question from next our Berenberg And Capital.

David Beckel

have I questions. two

in the meaningful I'm is first here competition rate I publishers can you up Roku question, apps OneView's going you placed if using as the growth outside prior only becoming media ad third-party material brought purchased time as material first part how growth, are forward? I the have the it Is revenue content DSP platform. Roku's help that to that way for a that ads for I'm that how and The imagine quarter. a platform grow material this think dynamic to because entertainment the this when more us direct-to-consumer enlighten would really compared which And is quarter and of of curious then business of curious second it? third-party was business maybe on than is, will of that you or maybe or around

Anthony Wood

companies platform So on the we the media reduce hadn't to consumers, churn, to happening. advantage all increase thing of a -- we've that our saw that attract huge during yes, to direct-to-consumer that's already that's recruit obviously, allow engagement, the built sort apps, of thing. that's I those mean apps. aggressively that them the pandemic, And launched I into taking tools app say, direct-to-consumer would viewers, launch

taking I amazing of really the is their some that, And make kind Even theatrical directly and business so them we've transition is big happening seen these large to in streaming. just mean releasing companies of extent models to around streaming. the releases changes media that this industry. reorienting

those For of service a kind HBO HBO huge like but this while. amount convince of us also watch that Go, was HBO of which Go, been difficult when HBO, it that was remember for original doing I their a just have add device, streaming cable could of was your that you you to -- had on just services subscription, effort. a if one

streaming. releases we're go straight Now to the seeing actual

and obviously in for viewers companies, and media it's industry the still a business huge well. models all it's as the transition But streaming the great days. So it's for early for it's of great Roku

viewers. you all continue that Scott, -- business right you're number and to there's great tools want to know is that And grow. business, And of that and that. do increasing is some And then, that's for to OneView the still long offer progressing? TV be streamed, if to has although think so we that way I the I we going that mix of a how until it expect competition of streaming to about fixed kind go to talk don't mainstream,

Scott Rosenberg

in of I'll of these of better because the Yes. in add good services at the that to we've adoption Anthony's comments thing we keep on products Dave, side such not business through of but consumer this surge the to of pandemic, business, launch drive streaming the also because getting one and because the and services. just promotional the is seen M&E of segment advertising growth interest these the

So behind a for sole deliver also per full-screen basis. theming cost key of that cost attractor that's buy not and those is that they -- a services. just so it but the other can start background mean could for on format, per a trial them outcomes products, we new ad incremental Disney plumbing the guaranteed I our like subscriber

for the the their to screen and guaranteed outcomes up service. the what than to end on place going So services are actually watching them is strong and promote ROI better and the the consumer where

that the account growth the significant continued growth. for about we're the there, are and those So factors excited

OneView to that party use whether publisher identity media that were doubled, overall, Roku The and of accelerated a course, help on year. the for cross of well But terms can we and data your in DSP. In and selling, buy example, service. on ad segment even we're a also better through than than capabilities one that I the Roku, has Roku have through screen is media, video third that's media. faster them of question strong more will cases do across Roku, media that ad all runs about a because, to but say we Channel or not use OneView, just media growth OneView, bought have significantly, on that's they we That an really growing from third-party buy optimization to

large off are media using growth ads For to omnichannel ACR your what Thanks, of cases that of part use retarget question. or advertising platform. example, in or on desktop using Those the robust Dave. use driving conversely screen interested screen on cross cases what a OneView spending mobile-based or through visitation of content and inform our some run are on Roku user and site data on is cross the answers most to what the I screen. hope information in they're are

Anthony Wood

will quickly. comment I just

unappreciated well, median the commitment fact as portion been and us in display AI. think heavily I investing world most in and have limited class strong well commitment M&E and learning machine building as algorithms and helps we out our is to another correctly internal business sort driver capability. that our that a inventory that or big of machine is And to allocate general -- ad target obviously, that best-in-class entertainment effectively. of learning our a We've

Operator

Michael Morris next from Guggenheim. Our from question is

Michael Morris

consistently. two contract, have I that look is of the you gross and of you coming and the more margin Channel. The gross historically, questions. you've the and was margin one on back My think at XXXX, pretty growth first seen the did see We there explanation expansion the platform look shift Roku I if from

expansion. looking at Now quarters of five consecutive I'm

development or just question, driving or what's bit terms. of share better third-party. curious Or understand kind little at if layman's Channel? is my expansion, second it's in that whether privacy. so, if margins more other I'm privacy The to you can audience whether maybe The profitability it's And I'm And better why? a a follow-up so Roku to trying shift mix on And

doesn't me. something third-party to understand question my guess Roku the You relationship identifiers I Roku watching your on on consumer advertising I'm direct and or possesses is then say back rely that me is, cookies. deep -- with I consumers watching

question I targeting platform. help progresses to sources, if my from robust information third-party that it's getting and from on so how make maybe you coming guess all here. that's your is, me that with not So the how But are

Anthony Wood

Anthony. is this So

Steve question, then consumer it Let you give turn helps over to I'll privacy increased just the gross world with margins. I'll a privacy for of the having and of regulation. relationship a me example the first-party take simple in how

way that data track the permission them. manifests So your often regulation consumers is itself from get requiring opt-in the or before you target you

feature before but for should have -- we ACR Automatic an we that really feature we is we of we a little felt have example, data. collecting the And regulation Recognition. for have a like, should so we okay, consumers get example like unclear, Content -- felt where in TVs feature ACR start opt-in And a -- we our that's

opt-in also to we ask we "Oh, will ask first episodes get all them, watching you'll tracking say, Channel, consumers us they you you Rockford for the and your ads you're might which and back to also the can we Files TV, is let's more a with watch, viewing more so the Roku The Do linear ways for in enable a rerun but feature And our want based called time say where product. of we the watch on using ACR on a example. -- data start because relevant feature

makes so And a experience their and that has on impact that's better. feature direct a direct viewer a

features they're get data more to as they as likely so well to because tracking. access And opt-in

So data. are features track kind way high the create well do way of on the that as -- going we're because the example, just for to opt-in is we Roku consumer-centric very not ACR, of rates your TVs we

-- relationship having direct you that, you and allows targeting. that's allows with and them that to in with participate So build to like there's and it for interest lots consumers tracking data consumers why like their make in of examples trust to beneficial that

that's So to anything I example. know, have Scott, add? don't as if you an

Scott Rosenberg

Roku in on of Channel. ability would that's They right on gains I engagement. just highlight recommendations Roku tiles And example. another row platform insights just profiles Yes. our The Channel advertising. These consumer for put drive things aren't top drive to I huge made about also taste front like the to significant. on increased our We've The pretty mean, consumers that in in

more to a that load better are marketers going ads work front relevant in relevant user still consumers to for ad to more to lighter experience they're still the and for be move make The enough the providers whole have shown it's to and to but regularly to to content, and consumer exchange that have able So important Anthony got still of And money. to able ads relevant. and business mutual said, willing be value consumers getting reach math ads is is a a experience. get content the free consumers that, as get that's

good a expense. as an relationship So with that it's of we this position proposition consumer is unique the all the Roku value direct in to holder think around, achieve

Anthony Wood

of right. you trust to them interface for building that's Yes, with it user your regularly on the participate consumers would a pontificate few interact mean their minutes. Anyway, and like while Steve, in because through I a to you gross with offering it's targeting. combination just margins them value, worth making

Steve Louden

Thank yes, platform to, in had QX in Michael, we love XX%. Anthony. of did would platform margins, strong I roughly talk about gross we terms margins you. gross very at

reminder, a platform segment Just has the different of a number businesses.

that activities, a are business. we pointed increases QX, some part that's talked with are several higher entertainment in margin, the of for they're the about content in due business XXX margin to those value deal are or the accounting lifetime media which gross we was new high-margin high-margin that mix strong earlier of pushed net. our also deals along of these deals combination the and the that treatment, whether lower of and to what Some model of up, And distribution direct-to-consumer spend out services,

parts half quarter any lot QX forward kind times, the with platform segment XXXX mix to front, a activities line the of see in that QX of be then more content So throughout and the that trending in outperformance more is the in the looking working the of because in thought relative platform. year. terms given the the do we of on the that normalizing of the different growth the how for back of in rest year in with would margins we in has within margin And gross did distribution say we the

Operator

Jason Bazinet from next from And question is our Citi.

Jason Bazinet

sort of the in And least but sort front at be cadence both? our a comment I'm given COVID? shortages So you better the that wondering sort guys of numbers had helpful. net of active accounts that if missed versus chip XXXX area if be on quarter. really Or good or XXXX of maybe might just just add one given was Any the would sort financials,

Anthony Wood

do take want Steve, you to that?

Steve Louden

Yes, Yes. sure.

lockdown mid-March. We recently you're over initial the So U.S., comping started orders right. in home hit which the absolutely in state

the the business comps year-over-year rest for well makes volatile some but as metrics, as certainly that not key the only well for into other XXXX. operating parts XXXX as throughout So of of for

particularly did hours, the active streaming in in key year-over-year the a the streaming In streaming well initial QX. account numbers. in very pandemic growth terms account of the show metrics, spike operating elevated active and there parts And of significant those our in as as is hours

what change continue we account apt right, quarter-over-quarter And or it's grow at prior year-over-year. probably comps think to the the from to rates look metrics more is to the level. year-over-year the we bit and to growth that streaming And you're So closer down the active are on whereas sequentially above were QX will we net those QX our pre-COVID from tracking growth QX levels. that but think numbers hitting said a I on or actually those said nicely,

active million as roughly added if accounts. added at you QX year, X million active X.X Just we QX an accounts. example, we 'XX, look In this of

the do to growth continuing we we did hours. engagement accounts We over just just noted from see is increase outlook time. we and other robust -- anticipate of color active do on on thing The more aside streaming

gives number a streaming spear that TV be capture think rest the our industry note streaming count more for that and XXXX, XXXX. against early over. our the to than continue will that, that shift that obviously, have that very to do COVID-related we're backdrop, good think really, And of still -- will greater we much in this the the that the said were to very it's continue we I position impacts value we is So the innings. us believe, as position points but streaming one in to And that in durable of us U.S. long-term the important platform significant shift and proof

Operator

question Martin Our from is next Laura from Needham.

Laura Martin

Could of growth. advertising we have three now forms

content television coming the advertising, brand from have advertising have we We studio performance ads.

cycle that this in that said you you changing you licensed content promoting you using if when other next you order licensing that the and as Roku? because one. new to the because here, was talk you're is say over exclusive it could then that's one, decisioning to mix in So when on as number put Page -- guys actually, would licensed that you guys one be you data is Or your three content, about content? And years? better That I'm show see you're is make at around getting X, that interested

Anthony Wood

you great again. it's Scott can This take to then ads. and I'll hear the question, from Laura, about a second talk is --

been based we've content well. help we use data seen sure, as We we've end that streamed and inform think The in use we name helps that say seen have grows, actors user. of per that the appropriate the as sure people the we -- -- was gets use going more tools for being Channel, our or more like use them expensive can it as our the because what's hasn't right helps basis, brand our help also because I and that. our content, So would cheaper but our promotions, viewing -- drive we target usually it that on to to the more if and it Roku we all of that built can cost scale you'd thing I to on pick in means yes, for content other mean, maybe which more or that up recent for data a buy -- partners. well we ourselves -- knowledge on viewers is something we appealing buy promotion hour we just certainly it's I that the And them Cypher and before. use more for maybe perform

kinds also people those helpful. of well, But Cypher, something our never new to were before, -- So unknown that a that it No shows. has And unknown they was it in completely of fact target use it. was one in interested had the the promotion relatively we ever of seen case heard title. that's

kinds are the those So things. of

ads? both use about as well. content So much yes, ad what promote how Scott, types to of use and do inform pay particular And in to license, our want we you promotion talk capabilities, the how also summary, different The data, our but to we to we mix.

Scott Rosenberg

Laura, thanks for the question.

Company linear the for follow about been consumers for the of right, certainly talked the brand elevation think as an that is advertisers is incubating that positioned really sponsorships a launched of lot budget through have manifested. digital, there spot, be and there. it's the interactive advertisers consumers online dimension the represents significantly much gone our second can and traditional budgets media, XX-second Historically, effort many to you're reach not long we've that spot. innovations compete TV we're beyond history as into investing And we've brand XX into help I XX, we've a advertisers to exciting ad the are an those uniquely social, time television because experiences because that's ad they've gone capability those as where studio

self local the list are business discussing call, you medium closely this of three are compete of service So positioned the through say, mix segments in earnings compete the a what's performance own. gave then uniquely we're both I'd to and been their of advertising. over And we related we've to a calls, the those media of advertising us, other opportunities, substantial, asking as replacement, small, we significant those sure, them also quite sure the well each as is in add medium couple commerce-related And to you're the positioned opportunity very as not streaming but is that uniquely discussing TV enhancements on time? been as there. I'd we've as service think ad AI, that last to advertisers frankly, add tools, linear connected to branding quarters'

I many that opportunities, the but on at bullish executing we're we're appreciate the point, to the And the adjacent uncertain long-term as of businesses categories So question, though, there of this significant are to Laura. those think mix I them. on. size

Operator

Evercore. is question from last our from And Shweta Khajuria

Shweta Khajuria

we said of the about a And year? you try this couple, international in think sort markets, me how measure success next about is year of how That's Some first. think Let please. international international. today? materiality on meaningful or should maybe help can how you the about last color us One, this operating XXXX comparable EBITDA, full letter, full not the Steve, we does second last year the hold? that year to still be had expense to you you And is, for levels then but -- one, think as in growth one, shareholder your

Anthony Wood

to distributed content international, is We've This our around then that Roku found question, Roku OpEx. will areas, streaming is and globe. can talk also use the products often the take and our formula well And our global -- have We've about strategy, of in monetized and those areas. for are investment take the and and past that's International our strategy companies worked The the with the key we U.S., transform our one the phenomenon -- a basically and us relationships use which advertising. Channel investment is one that seeing a market that's is well key same more and we're strategy definitely markets time us, for kind Anthony. international of in global and focus Steve good markets. working at TV, obviously, in And outlined way I'll our international progress. four and adding and on

first players It's long we good then still Mexico, a TVs We're that still is we're Samsung, not making there. in TVs number too two And days. We're was Brazil TV The now ago, smart one Roku Mexico. licensed we're sold market three Mexico, sorry, the entered came well. TVs number -- Canada, OEM, number as well. early in progress was is TV doing in in U.K. one that we're A Canada recently first the number we with now. TVOs smart but and market good we're in the the another also are streaming after than Canada progress. Canada. one platform two making market entered

we active indicators. accounts. all done doing really thing the about So talked active And is other account we're of we've in on scale by focusing I just internationally metrics are U.S. those really that the start

of a sales, monetization number in market to number first, accounts. then and on TV active is for us one becoming in result then one and So in which up for engagement that's eventually going accounts, focusing building scale success so active being is

and with then so monetization. And on follow that

do to starting some we're that So markets. in

are ads now we in Canada. For example, selling

Roku The in Channel We launched in the U.K. Roku have We Channel The Canada.

markets. in we're good in Steve, to to a progress it's take go, second the still then, long question. And And making you international general, so way want but

Steve Louden

Yes.

So of question in QX. can last you last about the what in repeat not that said that followed something part? we I part your sure around EBITDA I'm QX,

Shweta Khajuria

said QX that in that shareholder -- letter, levels that year would full operating the for because so are growth still rate Well, EBITDA to you XXXX that year. about you the full be to in year Is you your it? full expense impact we and comparable expect when reiterating for think

Steve Louden

time, Yes. mainly different pretty we I prepared mean the But talked we the that haven't in of we year-over-year of part of half what in comps an business. was in discussed about guidance letter OpEx the remarks shareholder year. provided from my variable formal parts and the perspective, for the are back about this

we to CapEx OpEx, and terms bend In of proactively year. starting last cost growth QX the curve tried down in of

overall But in pre terms of those the to now anticipate starting Anthony, how been OpEx of extremely international business, good to to invest around I line invest so as better The is comp So we're still QX got go level, actions. Especially in to Channel talked you general, our we Roku we've TV of been advertising up we year-over-year traditional continuing growth to growth has business. and strong with the been us. think we lap sort we've OpEx of Roku a in about, continuing well a doing covet in just the then on in vectors of -- that course, for comp sort sight like continue has of performing. The things momentum and we're date, and

So we'll fronts. forward these push investment continue strategic to on

Anthony Wood

I'll few done other we've mention on is that we've -- reminder, So done the a other just a thing on mention thing acquisitions. just that a different I'll just is the

the you'll And so growth those of the we did from QX mention OpEx acquisitions to as QX well. that that part see include sequential from

Operator

turn the over now call to I'll closing Wood remarks. Anthony for back

Anthony Wood

and content end partners will customers about shift way transform you quarter. the joining I the excellent excited Thank we're call call. an and global monetized, employees, distributed today's for want is road to streaming for our be The and and to the ahead. will thanking by

Operator

Thank for concludes and today's Thank and you. Ladies may that now you participating, call. you gentlemen, disconnect.

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