ROKU - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the Roku Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. hand Vice over President to today, your like Grodd, Conrad of now the to conference speaker I'd Investor Relations. ahead. go Please

Conrad Grodd

website Thank our and are our can of CEO our welcome available and Steve Louden, earnings in today Good and Investor Full second found at and Anthony be operator. details CFO. by Founder XXXX roku.com/investor. joined call. which additional to Roku's shareholder Wood, results Relations letter, our quarter on I'm you, Roku's afternoon management commentary

Our financial discuss on and most these differ non-GAAP to comments ATB investments, related actual supply shareholder are outlook, conditions, your measures our which we'll to specific We'll projections These this questions as TV on shareholder inflationary factors our views and as and letter. to call, refer this headwinds, GAAP the market management's our our statements such today's other expectations, measures are results forward-looking or could periodic about financial on statements. our financial statements, call. also comparable and responses future any Reconciliations filings predictions, materially uncertainties. that the Please future for to from update involve forecasts cause statements and disruptions, call certain global our assumptions SEC of we to information and current and risks pressures. our provided to this events, forward-looking letter such based macro on are in reflect today obligation On streaming chain only, environment information. make regarding disclaim as statements

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

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

Anthony Wood

due we in joining platform the you us growth to business Roku's TV thanks saw macroeconomic the spend advertising all QX, short and Conrad, significant which environment, pressuring slowdown Thanks is in a In today. for term.

growing ever business are stronger stronger. strategic fundamentals However than and and Roku's

actions and grow into OpEx to That leadership. share of significantly streaming continues macroeconomic In advertising light current TV our QX investing to the said, to increase. taking continue slow active Our keep our market in started to accounts expect we we growth. environment,

are downturns change point long continue be to In see on XX in adults' unfold. term the TV was first TV cycles streamed engagement age founded significant for temporary TV. to economic TV difficult, pay that year, the legacy keep While it's belief not that in the streaming. that XX, this we to ads opportunity do tipping all mind Roku important on and TV half of where this will streaming passed of recent a exceeded all

us efficiency in from but of XXXX a now We of the pause causes benefit a opportunity publishing during one to where for active QX, seek million will the X.X of for short reminds term. proprietary term, number the the we print catalyst platform connected ad and accelerated we it this platform seeing assets, to We're the spend to Roku mid and greater TV ROI, in long when the the are where to market in viewership streaming and unique is reconsider added remains TV advertisers our However, selling TV. in causing TV TV just gap and is We bright legacy are upfronts world Roku spend our ultimate our to Mexico US and painful to reach which by surpassed streamed. leadership. driver number continue streaming billion is accounts their The our to in economic share viewers in and around we on XX% from spend, broadcast already advertisers million budgets one the OS the it innovative US, TV but exists them pay believe also the Canada in marketers differentiated shift ad digital. in networks Roku streaming. accelerate streaming TV commitments became ad that budgets. of and maintained milestone their accounts of recession, success and ad of TV The XXXX. the pause incremental hours to expected the This shift between by take from OS, the for $X and and current to which remain recently. to continue shift our closing XX.X Active advertisers spend channel we spot we Roku state similar

and me strategy hand With potential, we We our over market the remain position confident the are and in opportunity on to call than focused growth significant ahead. more ever let that, Steve.

Steven Louden

grow the models. unit Despite elevated inventory ending levels, including adding to QX sales, temporarily Roku TV TV XX.X million in environment, X.X million. and US the macroeconomic quarter, through Anthony. in prices accounts challenging resulted quarter retailers continues increase the In TV Roku a managed lowered short-term overall with in active Thanks which

less and activity expect lower over inventory US retail we forward, unit below and average X% the levels. levels US keep channels, promotional price XXXX player continue Roku remained the year. TV in sales decreased levels will selling believe we pre-COVID sales Going year which overall and to above

enables curtail moderate discretionary advertisers which which was in elevated XX% This which market business XX.X to year In growing Stream QX, to inflation acquisition. revenue our platform QX continued our QX, our our and to fears have growth, spend. expected billion XX% revenue This to to consumers from ARPU, $XXX up over over consumers significantly billion. net year total increased the billion but due million hours year account was our We X.X coming below spend based $XXX to to scanner in insulate as player seasonality. up affected from us over hours adversely down in million. prioritize still X.X year were year, increases expectations. year or pause caused was Recessionary and normal hours cost on

XX% margin a unit our quarter. XXX shift year-over-year discretionary basis. which margin period, TV was which consumer a content had a sets. while from gross therefore distribution of significant which launch platform QX mix QX reduced down pressure negative new disproportionately Total expect XX% selling revenue, compared platform sales year-over-year. forecast spend points player higher services the greater to to reduced toward revised of unit XX%, QX M&E, This market player adjustments from and the quarter. term year the $X.X margin was TV down year-over-year player XXX down ad we XX reflected unit on for with gross was investments. year-over-year due lower the margin adjusted were was disruptions on we as growth down QX the acquisition addition our of points XX% and to ago, was in in forward, impact for roughly the on player a supply prioritize caused margins quarter and the total and platform gross compression Going model, Roku sales XX% XX%, short our a nine video and and QX negative to advertising of a revenue benefited growth as million which was growth revenue. unit nearly to negative of net and based billion costs in we cash by expectations player X% well in player in versus Roku in higher consumers profit chain chose ended and negative as $XX resulted insulate in pressures. EBITDA account was inflationary The weakness year-over-year, We year-over-year

to both to As chain to to increasingly impact spend an quarter, the continue we issues ongoing we interest pressures, continue the We Recessionary are discretionary environment. look scanner moderate uncertain consumers will and consumers third inflationary will difficult ahead market remain ad pressure. supply going rising facing fear, and and advertisers. believe and rates are

These $XXX X% with revenue gross gross adjusted of year-over-year, our As total increasingly quarter second up $XXX a result, challenging. the half third following; environment that of million is the margin a EBITDA and of estimates reflect will for million viewpoint $XX operating outlook negative our be XX% profit the that million. of

We margin sequential expect a platform stable roughly basis. on

will chain challenges, anticipation caused head ongoing from growth. continue macroeconomic significantly pressures. of pressured took as cost and from flow, to inflationary In expense consumers player insulate QX be we to in operating and margins supply ongoing disruptions both we increases steps by headwinds count Our

rates color percentage and XXXX. in QX roughly OpEx QX points call. points XX reduced percentage that reduced provided our points, our percentage growth QX rate by our rate, QX down bringing growth year that QX OpEx on the We rates We we the plan XX underpin year-over-year reduce and QX that by from full we to by OpEx of have XX year-over-year growth line OpEx with

the long-term We our manage Roku the in scale to the will business, macroeconomic we channel content We on potential the prudently continue spend channel both of given to invest plan and factors. based on our the see.

continue to will spend. monitoring We our conditions and flexible are and content OpEx closely macro be with

XXXX. we the and Given are full revenue withdrawing our outlook environment, the of previous volatility for year uncertainty macroeconomic current growth

based always a provide of Our macroeconomic us full outlook. assessments been for macro outlook broader on that and too uncertainty business at year there feel point environment to this has is we and the both our much our

with Operator? in in secular sheet say Before cycle. We're thing. strong remain The have that, last some we take a the a and current that not position our strong I to have opportunity leader and term market we long economic questions, the confident get is model, in to and questions. one balance And We the it. by strategy. a support want changed trends significant business in as right let's streaming

Operator

[Operator Cory instructions] Our with first JPMorgan. comes from Carpenter question

line open. is snow Your

Cory Carpenter

like could based the would when in turn broad helpful. verticals for It to sounds see the what market expand the pretty a started you're or you you. ad were but any Hoping impacted Thank what on most perhaps you saw a color market. thanks on seeing dramatic, be Hey, you pullback, question. bit

Anthony Wood

that This color. Cory. it Steve add to Hey more I'll Anthony, is then over some take to turn and

possible at off are seeing a spend we and about their of So, in that so places high for seeing them level, and turn reduce turn to advertisers recession, them a easy course worried on. are back we're

ad and factors an and Roku that's easy important short we're one advertisers So example, so that's the impacting revenue environment scanner macroeconomic seeing from is the turn on, back off of in to term. market the is, for for growth and the which for an rate big of market source the turn

ad another back in TV. though the even scanner into of, are there continuing their point like streaming of they spend more or places but the to spending invest growth their pulling back on than I terms guess on market, important advertisers are In traditional pulling

impacted a they as we particularly saw advertisers auto they couple verticals look you continue we of auto, at growth X% down and quarter. that that example, down dollars. TV, and ad were saw for So to in traditional were for their the prioritize But recently our, were CPG CPG in digit the if double and streaming

very just you of the onion, is if that's the you market the if is that peel rebound. and strong. around that turn us, for -- kind We're like it'll will macro happens but look So of super environment, fundamentals important become at in terms advertising just they're trending very I in share cycle think an back economic business things the into important down, ad when the where size

So advertising are to as for continue we dollars share growing like streaming of and move market the our to platforms example, advertisers Roku.

so, scanner in for faith quarter to their the we scanner the even for the place recently term, a where And sort of commitments commitments dollars scanner in billion commit we're So is quarter dollar advertisers the upfront, upfront the of robust billion over sort for had $X vets. opposite is plus shows, the upfront market the place a advertising market. first for the we though by a we, is and continued time. upfronts short next in where streaming them And year are the softness, example, in for closed advertisers seeing of market

robust in added upfront. accounts. Recently, the active good, also we X.X million quarter So

So grow. active accounts continue to

of as TV share ROI dollars continues advertisers continue their move over environments as dollars pay to to Our like streaming. ad to shipped higher grow dollars

the some few a that's impact thoughts would you thoughts? add the on to environment. I Steve, of macro So like don’t know

Steven Louden

Yeah.

quarter that quarter perception half that in advertiser Certainly made advertiser was digital QX the amount significant almost scanner TV. the advertisers of the as factor on market noted which traditional TV the passed on, in similar spend on survey TV and Just adding but pauses an on their in went video progress pullback on streaming, the ad a overall. color was some to in that

other or significant broad uncertainty that's within happened degree So this itself similar advertisers that about a to downturns. the and scale, definitely of quarter worried that a one is times pullback impending pretty historical economic of

they greatly the lot start paused they or on got their detailed flexible a to budgets scanner market then a the which is added at this Like example, of back. For the close spend very those and pandemic, Anthony the end of better is mentioned, very way once was when similar timing. of advertisers a market going, world handle

back usually the comes it's also when there's one money that generally streaming. a to first something things so And more it higher of on outlook, TV or And but ROI comes that demonstrateable into comes negative be when uncertainty it's dialed like disproportionally back markets back. back,

Anthony Wood

all more TV to of half about Yeah. XXXX I I think they're versus on to XX% spent that dollars. TV to half note, a that, ways effective all lining And stress That's evaluate hours causes silver think, is on TV budgets just to add, important hours on how those of people dollars, streaming spend looking which here. at of spending streaming. budgets in their streaming is sorry,

accelerate from positive from to streaming, will have this acceleration. that on to impact transition opportunity and TV the big advertising a traditional there's traditional a dollars -- event So

Operator

Thank you.

Helfstein Our comes next from with Jason question Oppenheimer.

line is open. mute Jason, Your open line button. now Checking your please. is

Jason Helfstein

you. thank Oh,

Sorry. our you maybe Two can tailwinds, seem versus ago? and questions. I an perspective. a then revenue on just us the from really It are generating the give Steve, quarter? update XXX Just least how about one on view. year specifically, impact thinking any drag unpack you the at back And material be to doesn't go

on So how going to inventory? harder are the thinking programmatic forward? maybe allowing considering, times are And you Thanks, about especially on your just business other bid during DSBA you impact Roku

Anthony Wood

I'll question. XB want take the first the you Steve. question? to Do take

Steven Louden

Yeah. sure. thanks for Jason, the question. Hey Okay,

pullback, were headwinds, everybody saw saw and the material quarter and with sort we a the by we're impacted So in foreseeable our going necessary. We overall a terms just of every and through economy TV many the only certainly is those that quarter looking that This we we deal where market of that being US we're updating XXX macroeconomic the that verticals the future. getting sales reminder, expectation yeah, in are also US at hit. the discretionary the a but where the and that of in the overall are is that in spend pull remarks models, some as spending and the process advertiser mentioned of our continues contracts, underpin not consumer size TV of the back letter player in assumptions

kind to our broad kind revenue acutely the forecast of around of our most reflect of that As of the expected shortened some a size updated value smaller result and lower our impact, in deals. XXX midterm, most market we unit button in had a models, the impact on

So of the on had anyway, overall portfolio. an view that

past, a, that on deal many, lowering unit the a values, XX most sales has models in common for have you with don't good do when the a up, a the to did deal this case, we or As the had say significant bad, input some to impact the impact down get change the go portfolio. that. of have you reminder in you we tend quarters some, In disproportionate a go the all same we've across that's

did expected to and that on subsequent we that an QX lifetime well, quarters as the will segment have revenue the a deal the impact impacted. So deal, various of models ongoing see platform, hit in based are in

Jason Helfstein

we saw companies that over guess quadruple a spending QX, the in streaming agency quarter inventory And view in I TV year. then couple is view thoughts. holding in on from One one year, on one

to from biggest to strategically TV time ad and to greater That's in TV compared think, more plus streaming TV business, TV just So pay shift it's We but We're dollars and and is growing TV growing of our still of is streaming. closed media, our traditional and proportions is upfronts. programmatic. TV a a business driver contributor billion part important, compared to the one expect advertising more we a it fairly to greater to seeing continue dollars over of move media share it I just streaming, small is also but generally. also,

one something think important. having DSP so strategically robust that view solution And a is is we

Operator

line Truist. now your Our Matthew next open. is Matthew, comes with from Thornton question

Matthew Thornton

the taking for thanks Yeah, question.

of year. Sorry, we you about back, how guys, thinking curious launches things roll I and a launches, we about go through new accretive to net AVOD starting you're obviously those as contributing, that. Thank are guys about then I we but we thinking very of I'm how any be Roku as any contribution is sorry you into I'm, curious there high helpful. thinking the finally curious kind the were be, I'm expect few this of late kind thought one if would having through guess move to you. service impact have profile international kind be about year I'm the a be, that Hey political next year? Similarly, you couple as would would small, and into for And know probably you year,

Anthony Wood

This was Anthony. I'll that. questions is a there. lot of take There

fast as question large the us, the going in and to the platform good They're streaming launched broadband make global well in international number around all billion We're streaming hustles a reminder Brazil generally streaming. is in one in So TV a a international, growing well Germany. just recently on but States, is the just Latin Roku over going the world. switch obviously to progress and And Canada UK. starting first is in United America for doing also the Mexico. opportunity, we

on come on will in now on monetization, it business most at something there. the We to haven't yet, future started then we am expansion. companies, We're going first global international monetization on international. our is for focus that least primarily second scale, happy do I is that, are on so focus results well and the we model scale, generally. focused with So, --

political. Roku, asked TV a vertical that's growing. number by scenario then is one is platform the Streaming America's And up. Obviously for streaming a us. about Political season see. mainstream good coming you Let's It's is had is ours. political

that, So political part our is important of ad of business. an

So it's I It's advertising for not yet is, one I'd important, the to high huge not it's say become, that's of the primary us. business but that's markets. good reasons, tends certain, a but various lot very growth it's a growing, business for reasons a think political localized in it's And be a an demand, driver.

a fairly in recaps though of so have we'll market, we even And scale lot a particular quickly.

this launch so think, important And and the other all in HBO supported yeah, to is tier an tier on be supported level, Max, seeing about impact SVOD they're continue important is SVOD tiers. which also cost you grow The Netflix do. services streaming to as so, the And we growth, to then I lowering consumers industry, an of tier the which have services of we're for viewers, amount supported to well continue AVOD that that's ad increases what's going for obviously the an the one most but if streaming political trend just example. for ad that add continue have expect limiters to the plus vertical Hulu, this recent primary Disney, of and Disney us. services And impact ad the the to high SVOD think already announced is supported, of

when our it's as, more leading TV. engagement it for like business platform, We is So US and good people watch engagement for streaming good streaming the and overall. more

So big factor. that's one

those we'll and It the moving to advertisers, Another to advertisers. big mainstream, makes streaming to I ads makes TV even more it continue or over advertiser to even ads. ads them they're into like And, traditional already companies drive appealing and ads trend mainstream. Disney accelerate factor more think streaming. buying Netflix but moving from is with

industry. grow it'll the So

advertisers lot help for for for effective well make platform. have of to a as partners ourselves We as ads more our on tools, and

and our So lot into it's, we of obviously an area have ways partners. partner we're and help leaning a can service

focused accounts net is you trend people your in built home and that promote ways of watch think you of have. our ads help service, platform of on the to to services interesting service, drive of lot active advertis if I And historically content also more the and platform. you're that number ads a on or in you're M&E subscribers five engagement then by TV, more the focused see, have a screen so Another, they But rise our if you're advertising in one because on engagement, just the drives that throughout more business. we obviously our the that's tools keys driven our

going So partners. M&E a partnership our to business us. more I think it'll and It'll and be ads opportunities over mainstream positive move influence creates continue the rise it'll faster. it of It'll, for key dollars drive make is to for us our ads

Operator

you. Thank

Khajuria Our next question Shweta with Evercore from ISI. comes

Your now open. line is

Shweta Khajuria

much. Thank you very Okay.

me Let expenses please. on let gross on one me try one and profit,

terms bit talk how this a little thinking Not much as without, you're to think it in and have of So about your high potential you year, don't you expenses? guide, of of could where through year flexibility control just a terms help officially be back about in us but down you you here please think we expense about but only have slowing on most at pulling do expenses. your would level, even how just overall the next

on to question is margins how please would And product? margins potential is platform? second stability you should original gross should then that? how segment, platform the Thank of international we So gross be long help the expansion please, margins but on about content, the with provide for you, you of guided where, we it Could QX, color you've gross think us is think to term about for the

Anthony Wood

Steve. to want you take Do that?

Steven Louden

biggest bucket and in we expenses. Twitter hit margin. OpEx, headcount then the or headcount the OpEx Hey Yeah. is growth terms gross at reminder And a yeah, of related OpEx, our look single when I'll

slowing non-headcount of variable, And slow took that along growth or is down headcount well. OpEx, actions with in as QX, to the significant we one so, growth

we've the of model with that the In commensurate inception the the, scale ad lived of within the We've, TV do make sure the the addition, to Roku. channel. what is we Roku since it is trajectory channel exported growth this and Roku wanted spend content

reflects disruptions macroeconomic economic important. it certainly making the, the so sure And is the realities of short around factors the term

the think the we there mentioned QX call. talked originally OpEx when to what we than this, rate going remarks growth is So, about about are be on that lower I and had

in points. it'll apologies of by to, XX lower higher closer Just will be think about range. percentage points QX similar actions rate points otherwise the We the and a level QX that by year that take been your That back down his rate of QX growth or XX percentage in XX% would've QX. of to the QX

so the in the content amount is down, again, spend And spend OpEx balance spend majority continue day talk thing a as as deliver And curve as there. the about realities CRCs is has to the and to models well the while party short the that reminder of do still bit one to, go opportunity we're licensing. of from we'll the cost when side, the convinced the on against been as manage maintaining, can biggest share. rep channel bend third handle, we're term we there, between a the of different two from position angle that things one we There's predominant foundation bit, to that content a The but is long in still there. a of right leadership investing term RO

newer and of a piece variables third of minority but of that that's kind So gets which you one obviously own and spending. the its And originals, then have party that the attention, the licensing. on is is lot Roku things

the and is keep program for incremental it consumers important original of Roku as also help the with helps the And so then proposition engagement. advertisers, value relationships And in the reach sure successful to But drive that where content our we completed billion we're, going over revenue dollars. line keeping that we're outlook. the we're to in with make a just surpass the, upfront part we and that

specific past handle the Obviously the mix So we degradation better And point. year margin. over in toward margins, and remain has revenue side, of world's content being about a uncertainty that's the going year we flexible the kind terms you've the we of providing ad some the XXXX. that. we'll the we how in and we mentioned then are on that had some, which more some QX also very offs especially out as the world's and tier guidance world, with spend the, around get of one this market. uncertain the and at so seen on do shift entertainment that's lot video, distribution one growth of way at the there's think platform new a to as higher Certainly Again, percentage media mix weakness of services as some in end online obviously XXXX early came largely a

growth that So environment and on some impacts we will not revenue anticipate pressures on that have, also term of the in only the that the the short the macro will rate around but continue knocked structure. margin

Operator

question next Our Stephens. comes from Nicholas Zangler with

Your now open. line is

Nicholas Zangler

are love the engine to any, is to near a any you headwinds launched seems on the, any advertising a but monetizable could if there, that you there's offset the turned It that home I then watch serving term point in catalyst as in kind I'd to, through, And just get just screen of I you to if talked would but it, April. product. in curious go like to love what term, the kind that know potential the specific out near to of you clarification political. know I'm guys. Hey forces Yeah. Mexico. about industry

Anthony Wood

the obviously opposed that as market Hey, they to is, advertising do industry, look in there favorably which Roku still maybe is advertisers growing we this amounts decide important seeing are is shrinking. dollars. business, TV just platforms you look one on in especially advertising Anthony. streaming, how They scanner platforms at as industry I to versus do, if that ad versus the invest of more limited general would are are factor say,

grew double faster is ad X% said overall mark, And a And but and the it digits example of to stat. auto, so, in rate. I the causing good industry TV dollars that at a we in down to was I that it the CPG streaming think in our platform. is down where causing shift before, saw on quarter,

So higher budgets. viewers I to, that follow beneficiary the and And TV only XX% we still to streaming, Like ROI TV starting big to there's of continue to are, starting before, the hours happen. to are are, follow advertisers, to opportunity for higher, now streaming. said but of about street we of half a about

So get budgets, behavior one serious X them spend behavior they that, is cause on budgets causes think I change so bright pressures their to changes to how that spot people their permanent. and about think more

we position. oh, like when then, think I sorry, ahead. better And come I So go a said, of out be in oh, this, we'll that's

Steven Louden

like pretty know up. a I all I a don't early of trade to with like curious add, and, you Oh, status half could was demand. if on mind. now. Amazon via and catering on and guys starting I, because just you ads mid-size a this it's Roku, announced going type small guys desk, this advertisers Shopify but had brands the you, to was to get there, last we promote partnership know on, if to from set peacock, heard I seems announcements just performance within targeted a and on And going were, just this, to was there's, year if enabling also I, priority I it the recent curious, growing I We've were you

other So we And I lot our there emphasis have more driving our to on engagement a putting more Sure. causing UI recently been be about any, that more worth on watch, ways noting appreciated. engagement. Thanks. any, platform. had it asked other, think more than also is that's on, ways you factors would also One

there. improving, created of executive low hanging a improving, engagement, whole We on hired that's food a new new We have a team. there's and focused lot

that area still for going us. that that performance is advertising of advertising. space. an terms focus continuing we of We are process on in So is That's a in to of Yeah. focus also the to think moving lot a performance is to,

We getting, We're at better. have a tools to even of we're lot getting it. that. We're good do

by sales to didn't a of that that traditional Then, fairly historically but that's us an TV a that it small look us in It area into, So tap to revenue in tap biggest is budgets, a into revenue they XX you an of streaming. us. part continuing source growth. is for starting growing. budget are budgets area. that billion ad opportunity it's we're digital is And if it we is still the -- moving at the factor our is for our we're see still it's far, And alone. But, a to

more So based that's becoming as focus our those are performance primary of budgets some well. and

Operator

Thank you.

Our Stanley. from question Morgan with Swinburne next Benjamin comes

Your is open. line now

Benjamin Swinburne

a, clarification for afternoon. you. Steve. question then Good Anthony, Thank One and for a for

that to quarter to to just least at something dynamic tied you wanted buyers in you just said just think heard which it something think your confirm outta April, in Steve acquisition XXX launched product, whether I want ad and I better And the for or that and can back are any I six was next, of was you Nielsen national Do I but for third then sales. into guide. turn networks you was adjustment. player guys. beta, sort guys a also that, just said how came have the don't back I update I just And we've to excited to wanted that's that. I the that, linear understand Thank make XX think impacted And sure, driver to trending? months. your on outlook confirm about. apologize revenue think the ad you true. going in

Anthony Wood

Thanks, Ben. Yeah.

or TV still they're So familiar just help so answer, a with ads technology quick that aren't early your linear that publishers linear a well DLA on dynamic real Roku's those when ads that it's for days time, replace in targeted. update going is still, dynamic, to allows

we're we and AMC So better fairly It's still but with like the broadly ads. it's beta going in partners for CPMs discovery well, to in and it early, view. buyers did release higher of one QX targeting allows in it

view ads. can to one well that target buyers partners So as traditional as DLA ads streaming now

So out It still more still early. than it's, broadly, early promising, but rolling Steve. looks

Steven Louden

Yeah.

models, on deals clarify, which be, the certain to to connection that remotes. we've In us link TV and sold were would of most than oh side Yeah, just revenues assumption changes various lower button the the size XXX prior explicit side mentioned things, in primarily expectation that I in terms translate a that where estimates the active funnel then the of lower to the of be buttons change of would through in expectations related lower would into we then. that of XXX accounts, those player model market markets six

thing. that's primary the So

from it's QX. So not on change it's Whenever we largely change expectations have portfolio And the hits of quarter. this, wind of majority question a necessarily the have consumer just a you XXX XXX that in like the recessionary the the a assumption scale environment. then you macroeconomic spend models impact the player, broad disproportionate tied that to mentioned the in discretionary you models, of a and lower

quarters, QX, but ongoing have impact subsequent an this in QX. you case, So including do in

negative of six contemplated down. in a QX is that That's call oh the impact six there so outlook. And

Operator

Thank you.

from Nollen next Our comes question Tim Macquarie. with

line no Your open. is

Tim Nollen

Thanks.

X.X is help you X.X understand followed last accounts it adding QX you did how us more could active in you're which than in year at million So and QX.

smart sales. as If system I mark your player XXX sales as are are implies TV down. much Good. the But they operating down have it now

break Anthony turn then us if us for you if So I'm help account and TV much more coming from. smart wondering is if that up where operating could between side. that's Thanks. growth I'll you possible. to help the system How the right, and that over I'll, international, detail. illuminate I'm if that is more side it's could just Steve This some And start

just Roku would I still high players. So level, a of at buying streaming are lots people say

Streaming love have at low, have players very prices. We great them. are People low products. available

Our are great value. TVs

use OS the purpose super TV. Roku lots of We the OS to lots content, only for still have easy of

Roku's brand all to products buy these and Roku liking in continuing continues our strength So and grow. resulted to our have products buying, of people

and TVs you So, to are, want I about maybe both and big the details? both, think do players a of streaming But well some talk that's factor us. for doing Steve, are

Anthony Wood

sure. Yeah,

versus about there shareholder or net that terms in ads talked in in of was the biggest QX the So factor letter of QX, the we kind on the TV side.

of feeling some see they're that to also of right they lower promos to tends are retailers verticals a a as to on that part spend especially to consumer discretionary more recessionary temporarily basically overall So, their now the reduce have term inventory that number TV the sold including of TV which kind in general the temporary that's of ads quarter models We lot kind order net of that short a rid blip. market, over starting side, of inventory, the due price result, like levels excess retailers the thing, to Roku looking weakened fears they're and part the on they over the basis. fact which on inventory of that a to and become inventory in aggressive in a their they're have more is costly cautious. increased inventoried lot A of across a TV a get, of get on said levels be the quarter biggest boost put think the and had number of TVs in of lower the trying

in electronics because is the pressures. that consumer Like of consumer fears recessionary during, six general be the temporary answer, expectations phenomenon. pressures a will and we in of continue the the, term with the discretionary near smaller in including these at to As markets, general said, many look of so more I six market that continue the inflationary as a that and there out the

Tim Nollen

breaking And international. maybe out Okay. help any on versus us qualitatively

Anthony Wood

nothing We there. haven't that haven't, add to provided we before, so yeah,

Tim Nollen

Anthony. Thanks Steve. Thanks Okay.

Operator

Thank you.

Alan question Gould with next Capital. comes from Loop Our

snow of open. line Your

Alan Gould

you advertising was of any all taking tell down verticals the for did slow in Thanks big the question. the there entertainment or the time various terms us, median same and difference at specifically it do? had in vertical Anthony, can

Anthony Wood

stronger publishers verticals growing to verticals like that in well, for impacted of of digits us problems example, favor we're more for would've I X% it's and I traditional that the I type promotions just before, just absence do to good of the we not the designed But seeing. just were but think, which different business start one others. continuing in were for tend is services And media, but to new then were acquire declining SVOD impacted, are focus now growth, them business double particularly, Well, definitely than CPG to that promotions, customers, mentioned in for acquisition M&E, I macroeconomic do publishers, expected which, on good example a think us. some said subscription auto subscriber particularly retain but TV to are and growth generally, seeing terms customers. fundamentals we

services, reducing as to think I engagement, tiers more the drive as start said promotional more supported in see. engagement before, so churn going I well like the advertising, more industry offer customers. the And wanting retaining And as customers, it'll matures, ants acquiring more spending is dollars people to to the trend on result then, the, because

I M&E and so we'll start see we lot to tools of to a And in engagement. business increasingly. have for our drive them And helping think used

is business M&E when the a this targeting Comcast from lot was trends think, I platform business ad growing I the but lot being the of choppy, could scatter sounds didn't you our say, up, big not had traditional these where just you're, one digits I industry sounds we quarter. like double wondering we talked follow down And a most pause vertical coming they one, grew whole about players. business for from. up reported one saying about and digital, guys but the a CPG auto, more more discrepancy to So in your I was is Well, the for going but be that digital having us. you're pause. gains the ask the digital TV, like overall, and that morning, in talking If like market us. nicely

we just did are in had seeing as see strong growth not QX ad initially we as we business, in are, expected. our we So

Okay.

think I yeah. And so

a So, dollar to XX business billion still, to starting But lot which moment. compared reasons small well. of the got as is a TV we to are plus to there's digital at the has budgets the, access relatively ad and transition business, overall streaming

our the growing. is think overall is that yeah, growing So business

as strongly if as back. not weren't it have pulling advertisers Just would

business is factor, we change. on guess we I index our do, traditionally versus to Another starting that's in scatter do upfronts. over

lot have this Our we traditional of billion than in more year. upfronts traditionally more a are the Mm-Hmm that year we dollars, than business a scatter TV but, getting do to but business every , bigger be upfront. passed network more tends and a their bigger

Alan Gould

easy Okay. pause advertisers market's scatter then for and And to restart. the on

Operator

you. Thank

open. is your question line MoffettNathanson. from Our comes last Nathanson now with Michael Michael

Michael Nathanson

Right. Great. to I Thanks. in and six, what too back to wanted streaming I seeing is, you to one churn gross wanted are get, the change services ask to know funnel dynamics? of Can just material additions Steve, or top six, I come either

your there and of was assumptions? economics look a group on back anything come is, were M And sticks of and dons? a dons wonder off. impressions lot think, I about was running So the maybe a study what doing and legitimate do a the then, maybe streaming if the, that that. you're set And is point to that you So you bigger a and concern June it that when that is on TV on impressions of in have through at question and thanks. study guys about of And the the back talked makes the is then address SNS you group quality view come M

Anthony Wood

want, take take impression you but can ahead. Steve, the if to go question want I you that? Yes. do

Steven Louden

deal active sales as of we certainly in take six player the services six say of is on level, what the competition and change to there's then filters terms SPO of well terms on within update specific for the down models, the sort of assumptions the market the overall space. estimates, in players the funnels the as of numbers. sales, some, there, I'll would in account material Certainly unit of then like of more in I said kind in SPO that, terms TV TV which marketizing Yeah, kind the sorry, around and into piece, Sure. the, player sales,

the over to there macro a may time. the models factor, models. changes But like not seen with in certainly so be, different material we make impacts XXX we've it's what And that the,

time. potentially more really, That's quarter, related and single that's in or what's the change every models change size opposed of six competition the a broad say would at TVs of the I set this driving look market players. we a of So in scale as changes that six to

then And Anthony Okay.

Anthony Wood

few advertising just specifically, then about is a talk on point Yeah. in picture. maybe the the And you ad raised things impressions I'll would rookie say about on other quality. then talk big do we so the leader a I

XXXX, off edge the TV TV, then out rolled are watching? and inactive they ask we, TV of player that you send in to play. a we of obviously most And rookie lot turn stop, there's we go specific it's will a inactivity, out A cases that the longer catch we signal the when goes to inputs the a rookie when still of a a in terms get So, Roku user, from know Where TV being called, TVs sorry, all TVs, we inactive period things, if you if player a no but don't still the then when we if watched. continue signal, not feature they're there.

that make steps generally think sure I quality. inventory a to the proof So of and we the lot I numbers. our is in is it confident is And we're, think take high

the at, versus the that higher that performing If we platform on ad look platform see of, linear lots campaigns on then on and of consistently are run on also we Roku. you campaigns And we our lots do run just do linear traditional analysis TV.

Operator

turned over Thank question you. answer back the to know. I concludes Wood session. the Anthony This conference and I will remarks. closing for

Anthony Wood

stronger in their of for the our value advertising want emerge to transition the streaming. expect current in than difficult and focus I partners downturn to thank ever but to better Thanks. employees, environment, and we of, position very TV commitment from operating to customers, the capture and

Operator

conference concludes This participating. for today's call. you Thank you. Thank

You may now disconnect.

Roku (ROKU) 29 Jul 222022 Q2 Earnings call transcript