Roku (ROKU) 9 May 182018 Q1 Earnings call transcript

Good day ladies and gentlemen and welcome to the Q1 2018 Roku Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. James Samford, Vice President, Investor Relations. Sir, you may begin.

you. Thank welcome ended results March and the call Roku's quarter first XX, to afternoon, conference financial for Good XXXX. our and I'm the pleased Platform Steve Business, Founder for be of call on Scott Loughton, CEO; Q&A. today with who the to Anthony Wood, our be GM CFO; and joined available Rosenberg, will Roku's sure more remarks. will we the introductory details to cover our letter shareholder review be and Please which much contain in May this management's following XXXX discussion obligation to responses we as not only X, The today do your questions and views to of reflects update information. including undertake any or revise

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

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

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

this all to turn call over comparable our on the be to stated, of for otherwise like period comparisons Anthony. unless I'd Finally, the will results XXXX. against call

way another XX% aggregating gross services providers from XX%. deliver audience transformation Consumers to kicked call. our joining for advertisers accounts profit [indiscernible] and was first to were off TV up building everyone to X.XX earnings moving Roku and traditional pay long services streaming services. and you, Thank thanks large active for a streaming James, are of TV content Internet TV the with year from go. quarter, is and but We has up legacy pace The a great for consumers. quarter

leading have with TV U.S. the XX a active in We million screening customers. platform nearly

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build are in QX five operating Roku licensing last smart working was two X.XX The to TV TV is up in It the is best-selling of Roku’s base well number growing we’re United licensed players TV by our strategy scale U.S. by our market OS and in one and system the one streaming four [indiscernible] selling one TV Our increase TVs from the installed smart in States in year. in OS fast. and number aggregate Roku the share.

now business. the over our significant TV a the making business It’s traditional continues platform We're also The sold in Nielsen, with the results to as ads. As We're per Steve believe channel. that I'll comment time Roku to platform TV to and licensed IPG streaming to XX-year-olds are our streaming better. compared before, TV. purchase like TVs strategic Roku And all be in also of progress purpose smartphones According only more just intent the XXX% I ads continues licensed to U.S. shift advertising built publishers. in follow only exposure up study simply viewers. in to to it And advertisers the turn recent driving on to A initiatives room. ads are in on platform reachable on advertisers the OS I’ve like were for OS. XX% at quarter. and linear great on on Roku streaming content that Roku OS by to virtually U.S. most each the outlook. makes MAGNA living said spent the in XX in work relationship Roku's XX% run well year concluded perform XX extremely effective billion deepening and

strength active a positioned accounts on end last half Player gross revenue million. again year-over-year year. profit X.XX. from Thanks primarily account year-over-year of to and ultra. were was [indiscernible] via Active and revenue. Streaming came were platform strong XX.X revenue ASPs due [indiscernible] low-cost continued mix of and platform player reflecting players, at player decline down all was ASPs Revenue well three offset TV. a quarter profit licensed in X%. price Player six new monetization. of were and our million XX% paths to XX% X% than XX% profit accounts growth account our the segment in very growth. our add sources strong high are our down X% Express growth XX.X lower to account strong Gross like Roku had Anthony. deliberate up lower to with partially largely and shift year-over-year And range revenue another up to with came doubled exceeds XX% XXX.X Roku Roku XX% TV, our QX XX% total We to units outlook We above important million. X.XX for accelerated year-over-year by contributors QX now Total Platform quarter year-over-year growth gross increased to year-over-year more

promotional. QX to margin strongest be in percentage quarters. record Importantly, compared of points Player prior airfreight to to lower in gross we a gross XX%. tend seven XX% charges which margin less experienced And is quarter the this addition, two expanded seasonally segment year-over-year

In quarter. of the file the There were helped new which come that next accounting to details at million gross we in last of rest revenue loss in expect disclosed our player loss year our in year. $X.X than of ahead adjusted down ASC are outlook to at the QX to $X.X single lower the adopted new items which of million the well OpEx we back expect few a in the XXX standard several a XX-Q impacted days. digits We of million for year. come better in XX in expected EBITDA came QX margins which than

adoption any in revenue million on adjustments flushed receivable we XX the our There to balance including as income earnings other January statement. XX that opening upon from X, million well. of related to retained were without and accounts other deferred revenue First assets recognizing

the of net gross in obligation benefits for statement net the performance X partner The powered of positive by during million and in impact the profit. roughly changes. a to XXX largely revenue the of offset to quarter X.X positive benefit delivery partially resulted adoption related Roku income quarter other was the XXX Second to roughly our revenue driven by million

contract. that value XXX IP customer. accounted transfer is life the obligation software spread a as obligation attributed a recognized upon the performance the is value was software under to As of of for performance Previously to IP the and reminder the over the the

types seeing our full-year allowed brief targets turn and midpoints. periods. provided XX% expect respectively in to outlook we outlook. revenue We overview, the timing recognition we the me gross were With at set to of and When the we profit of these XX% February, entering affect let revenue future amount in and momentum that thus that growth to XXXX transaction of variability risk confident the us increasing were our that of and

or at XX% our QX sales results to outlook our plan and revenue of the increase investments growth our strength there to to midpoint. but gross we year to on profit breakeven at EBITDA continued adjusted is the growth increases We a full-year basis. R&D innovation, QX growth to and XX% levels and With fuel updated in path clear being marketing believe this near an compared and

year-over-year which for reflected revenue growth we're and at platforms in our XX% seeing strong outlook players QX, For is demand the midpoint. across both of

is margin Continued for outlook to in year-over-year at in shift mix video and player profit of reflected the growth seasonality gross advertising midpoint. XX% our

in side, of the half new On hires roughly expense came QX March.

new in well full as our QX will of incremental impact see So our plans. as operating hires those we the hiring expenses,

As $X is to QX dip to a million $XX result, a of EBITDA adjusted to million. back from down expected loss

seasonality on outlook for the our year. words few back a of the half Finally in

expect revenue of QX. revenue QX roughly with topline revenue and on in continue We total of seasonality XX% year normal the in full XX% to

seasonal seasonal and XX% We gross mix also holiday in to roughly revenues player promotions. back of pull anticipate to primarily QX from margin

expenses Our we Overall from roughly mid-single-digit our over fundamentals. and you will as another was range. linearly EBITDA for about the optimistic and With losses QX teams quarter your the continue Thank ramp engineering in industry keep and for this results and the call that, Roku as remain you support. grow Operator? sales see turn more trends are great million the loss for we're both seeing we let's in our to can expected marketing to which questions.

[Operator Instructions] Company. with will Laura question Martin And our Needham come & from first

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open. is line Your

any TV sales, your the acceleration Just from incremental on or that getting new share partnerships relationships in your launched existing the in that Roku is there you contribution quarter? was OEM OEM

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Mark with from comes Citi. May question next Our

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will And Loop with from question come Alan our Instructions] [Operator next Capital. Gould

Your line open. is

by owners is sense can content any the all there you Roku the questions, of Plus any of is how Two And taking you content upfront some also the all Universe app. content the limitations at Scott it ESPN Roku us share? of you or pay is that on that do and doing give for off channel, on revenue

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

Your line is open.

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Plus needle about live ESPN know wanted talking or not I you So about thought heading sports what Roku? OTT specifically mover more Thanks. could that in whether for and to without for just be to revenue a

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now for Anthony [Operator I'm questions this Mr. call closing to time. turn And would at back Instructions] no to the showing remarks. Wood I further like

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participating conclude and Ladies program a conference. gentlemen, does great have in you and you thank Everyone for day. may the disconnect. This all today's