Roku (ROKU) 18 Feb 222021 Q4 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
Justin Patterson	KeyBanc
Laura Martin	Needham
Cory Carpenter	JP Morgan
Shweta Khajuria	Evercore ISI
Vasily Karasyov	Cannonball Research
Michael Morris	Guggenheim
Jason Helfstein	Oppenheimer
Jason Bazinet	Citi
Ruplu Bhattacharya	Bank of America
Rich Greenfield	LightShed

Call transcript

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Operator

All participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to turn the conference to your host, Mr. Conrad Grodd, Vice President of Investor Relations. begin. may you Sir,

Conrad Grodd

CFO; afternoon, XXXX to today roku.com/investor. of Earnings Founder Louden, Wood, Business, Good President be Senior our and General in at and be by Fourth Relations Year Roku’s our Steve CEO; Ended Call. and shareholder which Scott can and you. Rosenberg, who Manager on Roku’s Vice available welcome Quarter Anthony and Thank I’m details our Full website available Q&A. our commentary results our are Platform found Investor of and will for additional management letter, joined

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

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

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

Anthony Wood

in joining thanks, record And Roku everyone, Conrad. XXXX. today. another us you, Thank for delivered year

in have front that expect enormous an opportunity to capture. of we We us

expand platform. operating sophisticated to of Channel purpose. include this These The and assets set system, our streaming the We have ad Roku unique for continue Roku a built and

focused share further remain proprietary system best largest and away passed gain active costly shift and Roku has TVs million XX on Our streaming market being platform. as accounts, systems. we to scale operating poised operating from The the is

who Channel Channel ad-supported system to a marketing that a top which Roku in gain best-in-class manufacturers choose momentum. continues The consumers combining This our is flywheel expect send just the are OS a our to for Roku and X TV purpose-built want the content fastest-growing in TV. on four with Roku Free, to We portfolio we Roku to robust In services features. streaming. years, platform propelled Channel superior segment built the is advertising operating position The ability a with result content success U.S. The to a of

superior advertisers platform ad businesses, growth, hand on Roku remain and me our over that, focused Roku streaming. Steve. Our to on digital-first that And and industry in continue TV and built to for traditional targeting, both With to ROI accessible. large, internationally. measurement, extending will more let call the the optimization TV U.S. We competitive our driving the leadership and makes provide. believe we and advertisers is differentiators, We small advertising for TV for shift medium maximizing

Steve Louden

Anthony. Thanks,

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

part, in XXXX offset believe impacted that unit global disruptions This levels. was, overall TV chain sales and pre-COVID-XX attributable particular. market in to U.S. in partners above partially slowdown player by continue in that we our remained rate large have supply of the OEM half in TV Roku scale, account the the that the While to growth second we the year active was

continue with XXXX QX, up XX% year-over-year year per we XX% platforms. platform, we scale, was grew on the while per a outperform hour XX.X XX.X streaming our hours. year-over-year increasing to we as traditional active billion to hours addition streaming TV as year-over-year, also other streaming record In Average In hours flat grew and our day engagement full are billion year-over-year viewing hours we relatively demand both to account growth lap pandemic-related TV spike. streaming of growing

advertising metrics, business, billion over QX We account margin logistic for XXXX. pressured was quarter that by key prioritize QX short-term which supply was cash higher margin temporary costs. equivalents, to down XX% flat partially cash related As items. declined and our product supply and full revenue and XX%, roughly $XXX of would been Platform QX year-over-year X% and million. and our excluding from profit, year-over-year in gross been points year-over-year but to increases insulate to EBITDA cash, was X% player fiscal QX as player chain up year-over-year a most investments. higher XXXX. XX% was the have adjusted for cost letter relatively down points revenue was from In for year-over-year revenue were have This I’ll few X.X XXXX. up which verticals, offset the growth. X% a QX, M&E ended year-over-year and platform a CPG chain see by million, by toward year-over-year was restricted QX challenges greater mix financial was and distribution details video Player platform by reminder, availability impact chose performance $X.X advertising. to QX please of the X strong disruptions. in content versus as a for issues shifted auto total record we margin grew the highlight driven million, consumers total softness record with quarter component unit on the QX gross $XX shareholder spend financial the estimate and year, of business sequentially we within Gross XX% acquisitions net one of sales and Player the increased $XXX a impacted $XXX to the million.

first with of margin Looking we total to XX%; year-over-year; of EBITDA $XXX and of anticipate adjusted million, million. gross net XX% revenue up a quarter, $XXX of $XX gross profit the million

provide additional of reflects net of with I’ll color expectations standard chain impact million on our seasonality, advertising estimates. Now, the each for ongoing disruptions these revenue within combined verticals. supply QX $XXX of QX total certain spend on

XXXX, positively high-margin that gross conditions advertising margin of larger of affected profit distribution The QX to is portion XXXX. a in shifted. and in have video expected Next, gross platform which QX have portion XXXX a had business, greater content QX in

margin a had elevated margin continue Additionally, gross QX strong the a expected negative XXXX as QX absorb we in chain-related XXXX costs. positive gross in business, supply is to which to player have

Finally, XX% higher our due to is outlook as expect we for increase this approximately $XX EBITDA aggressively to invest year. QX plan we to year-over-year which adjusted million OpEx,

As of a investments combination comparison, slowed growth very a OpEx in EBITDA lower to investments by return monetization adjusted leverage the due from down demonstrates a platform XXXX model. our inherent and prior growth strong in as This COVID and QX $XXX million, strong was driven we uncertainty. business

to business. strategy confidence to chain, Looking share full want the the our year, investment my thoughts in and our supply on I

supply First, chain.

assume issues and decrease While overall prices believe seen logistics available these persist. to XXXX, will relative elevated Thus, costs we and to some to verticals and term. conditions And impacted peak by costs market we negatively of availability player disruptions inventory component size ad continue issues have until the margins continue will that remain significantly component affect in our short normalize. TV we in in the spend certain ongoing be the

growth. of people, markets investments intend both in demonstrated growth. the in is has continue technology surpassed and U.S. our Roku’s U.S. and our base To date, the our cable and to international strong account of Second, been the ARPU successful, Growing all share companies as our core active plan. invest to video part the content have we our our U.S. extending subscribers lead, in of combined. by

we drive the XXXX, XXXX maintain line and we plan opportunity innovation to absolute continued on continue against on For platform. invest in levels full a with adjusted significant as roughly EBITDA basis an to year

continue chain estimate grow. that XXXX full believe to growth from even to with volatility our supply And Third, the year-over-year ongoing we mid-XXs. for the in expected Roku is disruptions, is will result revenue year

remain growth of us, that front of in build With and execute. in There our platform growth runway We place, is belief upon. that in drivers remain we to streaming core and ability have of our as to questions. over confident long business exceptional and a Our our turn opportunity. foundation all to are it an is favor we to capture Operator? let’s our this secular investing that,

Operator

[Operator Instructions] Our of from Thank first comes you. Justin KeyBanc. Patterson question

Justin Patterson

out perhaps the tease very related, aggressive what and get contribution Could the more Steve, the manufacturing reflects Great. like some back going you there? you and talk Thank acceleration That play of you just from whether of about guidance that player priorities healthy you. controlling annual And XX%. called confidence top investment. Thank you in to Could some TV and about then revenue much. of gives things that? a platform into of QX levels. from very talk the out you’ve to

Anthony Wood

is kick this we’re platform our we’re leader and high well to in to business a streaming level, expanding answer it leadership opportunity. the Justin, that the Hey in I’ll is it. And large super off turn over a Steve. positioned Anthony. a then very global keep At

in our investing the going And opportunity keep we’re so, to appropriately to business.

few with And Roku built the build keep The designs, we’ve driving and then with we’ve to reference driver on profit households built the we’ve in just X for million help reached merchandise was us. it’s we great a making The keep invested our been purpose-built If But big extremely system valuable in four the Roku our year number them system, people we’ve a $X.X one which our itself, the ad assets, is up you our in license super program accomplished the think some and investing manufacturers platform. operating operating and together, very the business, those successful a gross were them. and OS complete far TV which for what been country they retail, in internationally. our at XX billion, business, television progress the of them so and quarter TV XX%. then last we’re Channel, for program about only and of top industry’s years, is the platform, and it’s instrumental going which and to assets where ad is is Roku over channel sophisticated in those money growing

So, comp. -- tough over a

want still just So, opportunity like global be in there’s the big in a huge global business, international, on, early to add reasons. some going streaming business still see to then, feel still for starting will we’re progress as is those front to which you much we or keep very us. Steve, investing we’re It’s well. good a But, of And so it’s business, which specifics? course, days any of do there’s but platform early

Steve Louden

Hey thanks the for question. Sure. Justin,

quarter. outlook what adding said, we’re near-term providing in So to for formal Anthony general, the

full So, case, color and year. some in QX on this the

the that. a that factor said, would lot revenue like monetization. investments we’ve mentioned on thought out that You be we’ve and investment drive some a key there more the There’s year-over-year things had in growth revenue areas. year, scale basis. mid-XXs in both the that said Historically, strategic successful we for there’s we Anthony to these opportunity into Obviously, think

terms is year. headcount saw rates just In That’s side same we on and year good of significant of comp similar do saw couple coming with the to monetization were because lot full we point this and a the there’s where then I’d QX of spend performance QX, is, to XXXX. the other current note, to has a terms example of we the versus to the growth a At and One year. incremental revenue time, this over view, things. growth into QX our in and investment COVID as strong QX, well in QX XXX% the in last and a of couple with the year-over-year the uncertainty. back conditions on curtailing of things revenue And platform of that side QX of

leverage inherent aspect So, XXXX business. really in the that the in shows early

fast go the to see what a QX comp side we forward on So, we M&E because shifting into we see the of back such is particular, pandemic, we through we side. ad aggressive or we time, of year, business of worst historical of we around when of -- and a mix the the mid got the XXXX, distribution as would same last content you -- uncertainty levels. in that continue our At in some investment more decided strong kind to kind

XXXX of strong XXXX. back half And so, you’re seeing in and the investment into

in XXXX, comp the as disruptions it. had we through, tracking working result, mitigate And goes other and over half of slightly think we year we’re the part a but As tough back maybe time. still QX, that supply will strong less those those hopeful that chain is in will through be we’re we the we’re

Operator

question Our Needham. from comes Laura next from Martin

Laura Martin

we have the today on Scott Do no? line or

Scott Rosenberg

Yes, I’m here.

Anthony Wood

here. Scott’s

Laura Martin

Fabulous. Oh!

for you, Okay. one for Scott. Fantastic. Anthony, one

So, data, Anthony, yours is data.

a So, data. million VIZIO $XX their year of selling makes some

in Your data Scott, it a you Mexico? Is revenue question Is you’re better international you for part of data, funnel would hearing see because new I’m up the as upfront Thanks, as in in proprietary driver your in growth for you to upside new you times most as bunch is, Is interested your a the excited is the I’m e-commerce very many X where bottom coming it ad consider, with really for keeping interested about of you, integration stream, Is it like like while growth? about stream? revenue ever ad most what what May? that’s My XXXX? it think others subs. and you’re markets XXXX. of new have you selling the most as advertising? use, excited revenue guys. from

Anthony Wood

on great hear from data. question the again. it’s take Laura, you to Sure, I’ll Hey first

platform basically of I data which data an data But part key of in I think, a that generally, ad different Recognition, ways, key our we we to. that’s Content that the you’re VIZIO I view ACR, including competitive and advantage. is referring mean, view probably existing Automatic think generate business. we as our a lots

an mean, as is the the he data ad, key And we data lots know, takes don’t sell sell of any on maybe I ads. is we when We one question, have business drivers. plans have I so, growing incredibly well. it. that sell Scott and to don’t might and of our opinion fast,

Scott Rosenberg

Data our that. most Yes, I’ll to valuable just is add asset.

frankly, something revenue experience a data consumer the from not for optimizing it’s perspective. advertising. it It’s we obviously also consumer so, And and of it optimal use keep sell. optimizing to And we move wrong the think is use and

are back at as ad regretting we’ve year you actually, are And out think actually those there opened reasons some of recall, replacement close platforms, and a With regards in of of hold So, decision if their cases commercial. some I the look consumer-oriented other pulling lots that few we opportunities, my ad a and linear excitement and back. things. data One to is, technology. ACR bought about includes XXXX division there last that you’ll they’re Nielsen

programmers. well. category. rolling excited We with progress big lots other that holding will data outcome, that about I’m in XXXX be units excited because Nielsen will ecosystem. DAR advertising last the progress about year an extend stack think in made be to purchases-type selling whole in cetera. of will our ad out year our business, the in with or our our into to enable buying programmers a and agency week I’m We’ve leverage be And age, data can to We just continued breakout This companies et we advertiser to advertisers real gender stack really guarantees a is use Roku We sold to performance goals the the our and drive help shine growth our and from when very announced marketplace optimize product ad OneView. us. beta and it it’s reach. also good I to for ad to partnership OneView into advertisers. for OneView a as other

that product for sold years. our own media We with have

Roku on platform. industry it all extending We’re what’s an now to the first impressions in

I the might few just near this about. the just excited driven tons but guess, highlights ARPU potential I’m business. year-over-year, punch ad in there’s lift Platform mean the Roku the We I opportunity -- is business. of nowhere those in So, growth of are ad line for contribution ceiling the of categories a XX% we’re have to

Anthony Wood

is streaming. me, -- advertisers XX% streaming going overall ask the spend of with just am anyway. you One moved industry which time most there’s have And only I of mean to their budgets consumers things. two over state, move about highlight all TV Anthony. This I business? is would And excited I our ad to but is Yes. about I’ll their TV answer didn’t I Laura, What watching but to is advertising TV, time, that their XX% streaming. think

highlight And So, budgets there’s for how opportunity is would just of and then become thing to I just capture still much there, a around how how ad so to continue second us innovate. Channel for upping inventory cycle well. both to a just existing in and that’s to has powerful the as source and for invest The -- driving Roku us those originals our us in business just allowing this opportunity becoming incredible that creating virtuous big be as is scale advertisers viewers, to needed scale content, just successful and that’s and really the

Operator

question comes Morgan. Cory Our JP from Carpenter of next

Cory Carpenter

I’m your there? hoping a coming or simply weaker that auto else expected, to led being XQ, expectations out bit And you about on or see verticals how could supply the then, you you. in in drivers XXXX. active you below just in accounts revenue anything CPG to call the you Thank to on at of expand the all, signs expect if but starting improvement than and talk impact maybe to that any could are chain,

Anthony Wood

platform with extremely general, supply This talk business in start Cory. commentary But to business. on Scott Hey, Nonetheless, just to in Steve I’ll jump doing about our Platform well. wants our some is Anthony. or chain. is

revenue. platform And revenue circumstances. look XXXX picture, XX% That increase XX% $X.X by extraordinary driven billion. big that some there the If was at grew in you to just year-over-year in an were

moved But up in quarter I XX% a mean, room that. a about Laura’s growing with keep should there’s lots stat ARPU. so there’s for doubled question. of I fundamentals the it’s I of mentioned impressions XXXX. letter small mean, our year-over-year. nearly ad the video how part just streaming such are look ad shareholder much business has growing the in was to before true, keep Monetized and I room at the And strong. take the to mean details. so You to ARPU

key which us, inventory with The revenue XX an and people. Channel, reached it -- households estimate If driver a estimated an at million look ad for is you Roku of

content room a business, and that different in So, it’s for into the lot revenue of have of sources And of they’re distribution, billing. you I But, business. business There’s advertising, is lot advertising, guys don’t of a a of different just and lot There’s still doing of revenue sources all M&E, if or -- platform our business, growth. strong if very know, add. has kinds Scott, want to great. Steve, a diversified you

Scott Rosenberg

just is just I’ll partner breaking launches that, down moderating still significantly Steve more. M&E, so faster The chain some answer. Yes, our overall. advertising a little is color endemic than better after it I platform, and this bit very content platform little a Yes, business app and think add business major in on growing -- certainly there’s on the and Cory, but XXXX, early apps a promoting more for supply XXXX of the question’s the to platform

the excluding these sales, the advertising, brand our are yet. the brand doubled on factor largest to bottom segments real Xx, And are It Our or brand a studio, there. category, Restaurants platform brand M&E advertisers and integrations advertiser COVID, also a quarter. the strongly. our business regards in outcomes, had sponsorships executions I back performance unique to It is its from unique sales CPG. we’re to and optimizing funnel ad of roughly up with quarter our our services. was still growth Roku. was and not were bounce which segment, strong ad softness -- travel up want overemphasize auto was in relatively going for financial minor Other don’t who temporary

So bullish growth the the on bottom platform remain line is of continued we business.

Anthony Wood

want to... you do Steve,

Steve Louden

side. just on supply chain the And Yes.

news good in that well are component world availability some still bit or their as think some and mentioned component cases, costs from very elevated. the XXXX, those continued to elevated XXXX, have costs as disruptions. into back earlier, coming chain overall come I is, terms logistics issues, of continues in in seek guess I the inventory As supply saw both We but a we peaks they’re component

between the those expect team go normal, to in a streaming side way job players we do here stock. The a of on over there’s keeping to So, done has and good but player the normalize time.

had to the And main the impact the ARPU impact our is so, main gross the thus, prices flexibility, we there been thanks to consumers has on the for insulate margin increasing in and the term. at that we negative outlook down our market the below we be U.S. on margin. But do overall levels, in short that pre-COVID gross TV said least sales expect will where

business of in And bit something so. industry. for the that’s that’s a headwind a our

Operator

question Evercore comes Shweta next Our from ISI. of Khajuria

Shweta Khajuria

Thank Okay. very much. you

And try two supply on Could not your And same for that is XXXX quick then, chain? be within the us make right. the play it One to why I what heard want Let EBITDA. EBITDA question me TVs? please Steve XXXX? chain. to supply Roku, you I just own role, you please. Steve, make to of did remind on you follow-up level is the say

Anthony Wood

I’ll different the ways. in is over a Shweta, of bunch chain We Hey Steve. interact Anthony. and with TV then turn supply to start it this

source build manufacture key manage or or supply when streaming I ourselves. that contract we the players, issues, mean, -- we talk design components. components the like So, build entire that about key chain the source and device help process. manufacturers are we we We but use those products we and industry,

bunch use price redesigning go engineering chain -- we have team so, to when That more are more it to issues that chips they it so the impacts to when causes costs products the also including but supply. because in semiconductor a supply to up. shortages. supply SoCs our ways, products, time general get to short spend build to in can of alternate become us access become causes That of impact main us And just SoCs around called the or what players

couple through general, and that ways. time. So, mitigating managing over But a of impacts are those in issues we’re it in us

we TV, about is quick of I’ll -- terms In program, just second for designed been talk -- the Roku us. mean, I been our has TV which Roku where role it’s TVs, hugely with don’t the successful manufacturing the brand sell build as a retailers And TVs with and work to has super reference work that partners designs and those then to to and for continues television, for program be them and program then the and well. merchandise TV we This we we been program. successful. with take successful us, a help

number country TV one in in as TV sales the we’ve hours by And as number We’re platform the streamed. the in number hours by Mexico streamed, well streamed. unit hours become platform one one Canada by

lot by We’re are the built other a TV sold through making TVs TV Roku in world. program. of through markets, that and manufacturers progress retailers program, great our that around But, the in international around those world

that’s bigger, it impacts ship also the there’s to ship and panels been that been so, been been And supply It’s it’s well, expensive then -- shortage much chain. happening so has are a more as but players it what’s televisions. more. and been TVs And TVs them to of is more expensive in

So, for for demand TVs. consumers, the gone and prices result that lot a all TV that’s up reduced have of is

And so, picture the of happening. big that’s what’s

It’s just also a super a great offer system been successful, speculate for We great partner rumors. a and we but And for TVs. their very us is on share. because We smart growing we we’re there’s manufacturers are our full successful. making that rumors for market I’ll own operating terms TV, a them TV purpose-built helpful program In that. out just don’t for stack solution TV really of are the us. Roku of big not around area of point investment TV, have

Roku thoughts So, want like to you chain. on TV and supply don’t if to add. if there’s Steve, anything know, that’s some I you’d --

Steve Louden

Yes, chain. question you to XXXX. compared I was supply the around XXXX it your got Shweta, just EBITDA levels on the think second

lot great in The and course. yes, So build investing upon. in of the what significant against we’re the a levels, growth remarks, things and vectors, have operating itself the investment investing about a we is platform, aggressively some the talked we opportunity then about of investing a OpEx and those platform We great in system, of and Channel to Roku Roku talked ad around prepared

mid-XXXX we things one is when the pre-COVID aggressively era, to was were growing In of the more fact that So, XXXX comparison normalized late terms the against to in of opportunities. a these so key XXXX, or it kind mention curtailed investment bit the and the growth stepped we’ve kind into the is and gas of pre-COVID like our or aggressive a we XXXX, OpEx more COVID investment on because of OpEx XXXX -- then XXXX that of uncertainty back level. was a basis

in OpEx that, think especially we’re slower. to the at of media a where with us growth in percent platform were front well the So that much combined That’s investment compared XXXX, I business levels better in comp as terms the where as and a growing in fact half, based more a the to normalized distribution the you level. and content strong entertainment on pre-COVID had XXX-plus platform growing leading

range on an XXXX So, absolute XXXX levels EBITDA we did that the say around be basis. would same EBITDA as we thought

the at XXXX in saw that and I we fair curtailed -- a some top line surge versus the a think the better is comparison So, same investment on growth time.

Anthony Wood

it a chain how by affected how might -- our some the we’re of were worth bit about disproportionately OEM partners Steve, the little TV be issues. just -- mentioning supply

Steve Louden

Yes, sure.

consumer went about up, component it’s you about sort TV the because thus, TV of talked a prices think demand chain supply and we So, impacts weaker prices business. industry, when low-margin on the

largely those past got So, along.

below TV levels, we term. short pre-COVID continue the think market overall think XXXX. will size and So, we did go down And that in the in that’s

TV impacts and outages. thus share unit which in had the The some TV our was piece, component other their specific sales partners terms share and OEMs inventory of in Roku market OEM market of

some their QX impacted sales that QX. of and so And in

a piece internally big and that’s our on us for to player largely to available, the leveraging team our the that’s our so, we TV thanks inventory scale a Yes, And headwind relationships. have side. fortunate side on were

availability in quarters inventory a on the the that last the player have side. we on So, side, couple factor didn’t TV is the of material but

Operator

comes of question next from Vasily Our Research. Cannonball Karasyov

Vasily Karasyov

for promotional it’s Can advertisers, ask in growth have over cetera? growth evolve and may And this think so offering I pricing in did through revenue to it. how CPM then, driving And power effective this forward? price advertising? that So, are it be appreciate to entertainment would I media revenue. also or more could up? drive Scott, detail CPM pricing to and currently you tell sell-through going about how of you you. lot about just speaking if you in us time Is you a wanted us detail I performance-based, do M&E get their about stream, impression? et speak think versus you the options more what questions about of your you you type see effective Do tell

Scott Rosenberg

Thanks, Vasily. question. Great Yes.

in you maybe Our yes, -- North can Star the on -- the mute. call

Sorry.

North are business do on Roku. we Star uniquely the positioned this for Our and is our clients, outcomes M&E driving to as

moment make the all what of checkout ads, that watch, Roku setting to First, the it. up, we’ve promotional are the In there many on the video at counter from your we the home the throughout device screen, e-mail. influence the is a ad experience choice trying time to the to you’re got we’re units consumer teams, ways,

we’re the data download reason conversion the happens especially service reason these the to our their promotions. this the to second and for The our do on M&E uniquely got the And then, of is, optimize the events, platform. app, third target positioned we’ve subscription clients, is to

users, data-driven way M&E drive we more on to basically optimizing than new outcomes television. linear have a clients beautiful engaged clients care And they for might efficiently got users. that media for is buy And M&E of media that enables other our closed us the outcome so, about, retained our in the which loop, all or users, social

Now, question for or price your basis. on performance price both as on evolve. about a well we basis and that how it how Today, as a CPM might as we impression

outcome of on us. to You or way Most can they ultimately basis on CPM buy They’ll clients, buy out that. the either are our CPA in net a it for measuring a that about. care they whether

In have there’s out we factors. competition QX, of scarcity. just function a often as that is such programming pricing of lot new Our is a coming

user creating engagement the also home So, that’s screen. we’re we build experience But, sensibility Roku throughout user more more as supply pricing. the in

innovation then, among around confident we get to And pricing. doing, seek. grow better bidders of drive and auction from will these pricing that outcomes basically answers and sizes question, and keep drive that’s So tends that to trying the these their data, M&E to service, at driven day, more in offsetting be of is of the factor. of at consumers our as the to end And our Ultimately, driving ability we’re hope course, M&E subscribe Vasily. an to this outcomes, our I clients by various an long use though, how attention the our drive and pricing. we to getting we’re keep deal our services business your which because as ability growing that so

Operator

question comes Morris next Our from Michael Guggenheim. with

Michael Morris

costs. revenue I a question and have question a about about

you driven guys come number. this Roku but have to hoping billion, next you guys challenged meaningful been break but you from for spoke said of to sort to number, over going could your and or was you revenue, like huge a Channel of industries year. chain levels pre-COVID side, -- my still I looks you growth kind were trajectory almost really $X just of EBITDA supply what goes Steve, back that these is big think growth versus a slowdown spending XX% guide. forward? the before. By just doubling revenue about I going video a that to on question, spending And it’s bit is back double which mean, up much using like that this behaviors, seeing about I’m the at math, noted on feel looks second on it’s ad what to well advertising that believe, pretty I time. of spending my it you revenue impressions I pretty monetized us how And it’s want little your how a quarter, by down First, multiples you

a really you’re think coming the is I call. of big much now, bigger company Now out but obviously deal this a

And incremental on detail the do on? we Like this one you’re line should power? when you take of to more what top return -- ask Thanks. see to to is which sort want more spend? to going spending this I expect in So, areas think the opportunity

Anthony Wood

take if Scott, sure not do the I’m XX% you correct. want to which was question, that

Scott Rosenberg

sure. Yes,

huge video for hours, terms growth growing all our is keep platform the of The generally and than usage stat volume -- for impressions very Michael, whole. more much Channel I citing, a break is as significant in to for you’re think, Channel. specifically. the ad Still faster platform. us a on specific rate growing our Roku that not represents don’t opportunity much Roku that’s the into to total us a monetized impressions, Channel video The We ad ad out Roku streaming

I is OpEx. take that? Steve, think want your sorry, other do on -- to question you

Steve Louden

talked Roku Yes. three ad also areas, investment support system, I around that Channel business. they’re throw in markets international operating mean, in areas about these only in core of not will terms of Hi, can U.S., the Yes, take And but Michael. that. well. I our the The in investment as the also investments the Anthony Roku are and

terms the source main invest, how people-based. of we of is usually In investment

OpEx. headcount that item on is line so, largest expense the single And our

in existing continuing we’re hiring to expense ramping so our And rates. we’ve where invest been up employee

investment. that’s very So, to the important

this recently Channel, of of talk is In that that terms about effect. we’ve specific one of items things some we’ll talked the particular, in The around about the Roku flywheel

with invest kickstarted more flywheel licensing faster in to Roku Roku -- AVOD house, The by we’ve the The there. of then lot original growth done That Quibi’s Channel. the it’s primarily since got with So Roku much that trajectory which driven basically and allows as front is we based that partners content, sell mentioned, increased on viewership, also Channel Scott which a we is the reach to which the it’s acquisition us Roku allowing is us The Really is XXX-plus of But the of scale XXXX, in supported, more well. licensing. from Channel but platform the supply the And of growing came and combination a than the content. side overall. out on driving ads -- We’ve content distribution rights,

business, a our there’s model. is And that big of opportunity AVOD ad piece that, but so, with And then within continued there. same the

invest in parts of the of There’s on continuing lot So, innovation we’re a features. technology to various road maps.

Anthony Wood

Yes.

and going the my Sorry, business, for a very platform there In potential. PC And a huger view, business become business and number and level, think a that high want from And this small happened the companies to got it’s very to about large systems I just even with the of bigger where larger, to point in is an what just is it’s a different streaming similar to going amount of it’s it’s at way of I jump business. to lot where operating of desktops, of be a some kind be winners. ways, to example, software. there’s only PC used make like huge

software winners. software fragmented, phone companies a lots There is handful United PC different down TV the every you States making lots can smart Android the -- to be And to now. TVs or happening iOS. providers, used Apple historically been different OS. of to in in or of And right operating same it’s buy operating phones phone very you the that a with and either Windows thing get and there’s different comes Roku stacks, Same thing and phones. have consolidating, Now of leading of in Microsoft is the now going Mac system TVs. system, it’s world every with comes can happened and consolidate lots places to either

extremely from continues that to position stack. other in It Scale the happen the And we’re the investment. -- grow also on in to applies TV is that We’ve to leadership to few successful of in a free been scale, We’re kind making as Channel has well that been producing consolidation our for back hugely great space. originals. other It happened important scale super and keep movies to positioned areas like investing that business. increasing low-cost, well. multimillion the in progress and of platform us. ad-supported content. ad dollar gone the leader old Roku platform supports just And in own a applies content. countries in leadership position that’s ad The as We’ve hugely licensing

we getting And so, a a unique in areas, we just just lead and in we’re huge position. that And -- stakes it’s leadership grow position our The bigger. opportunity. can there’s these are all

our accidental really of just lot in large financially that’s why, And a the think And quest flowing gas build to of makes bottom we on experiment on how so, future, sort pulled COVID business. the to invest sense the we a to for huge, in started saw for ran where during investment -- I us, line. back the continue we EBITDA this and

will what And so, that’s happen eventually.

still start to these normalize. -- our and streaming with we’re and want to will winning leadership But building early these We the keep of days position. in where we pretty platforms, maintain

Michael Morris

inflation such inflation increase, given big on spending existing versus just that how spending or part the wage a is part ask, wage areas of is much So, of comment can people where going. sort like of a just you’re is much meaningful this is your I expanding how is the

Steve Louden

market there. there this certainly, it’s Steve. is Yes, a Yes. very I -- out mean, competitive

our going our that’s one up. number wages in And are I OpEx. So like said, certainly, component

of factored certainly So, outlook. into what’s that is the part

Anthony Wood

expand people driver But we the keep of just as main these is areas. hiring each more we key a lot

Just example, one small use originals. we to make didn’t

didn’t Brazil. Now we sell on team Roku have working a We Originals. in to TVs whole use

Now, we’re models more for building and more Brazil.

seeing two to you on it those year are you. where ahead of headcount. results, places are So start examples results. the The headcount increase We have comes the those we work a -- Thank usually right? before or for places of our investment

Operator

of Our next comes question Oppenheimer. Jason from Helfstein

Jason Helfstein

So, the going to applaud I’m investment.

heard investors that For from years, you weren’t we spending enough.

earning. I’m going a data So, echo albeit tough to report that

that. sorry kind So about of

but to start bucket Could anyone that of want revenue. what talk then of you say of ask material Mexico. just Steve, that? quarter? like So, Thank just color ad I with second the announcement bit the about revenue there. you expect of if guide anybody to missed the out did Maybe asked, you in I be asked you. us this. the saw I international revenue. agreement don’t give kind -- a And kind just first Entravision, Thank resale maybe why don’t International you. with just some know my question, I think the

Anthony Wood

revenue then, international to question. Steve, do you question? the take other want the can And Scott answer

Steve Louden

Yes. appreciate you investments. that for I wanted the and investors mentioning Jason, kind the thanks words, incremental

yes, the us. of So shows investment have trajectories think, on mean, growth just maps the ahead I incremental the and frankly, bullish road we’re I great opportunity the --

we So, decision. strategic the that’s think right

a in position. As Anthony is talked and going we’re about, the to leading consolidate around industry

chain availability like which sales the challenges. impacted In QX, of supply a OEM terms the the on size that market QX, a mentioned because I on TV the we were our TV outlook demand, smaller had the around TV had TV in were expectations industry, terms XX% and year-over-year partners in us tamp down prices was in then biggest original was in versus both and acquisition partners said, prices. that the of of particular, account the side, theme disruptions of results we inventory specific level higher the that had up it

about And but some spend. softness auto had around of was so, deferred on and the we saw inventory temporary side, challenges some verticals the so account was they that we their what where in acquisition and impact also CPG, the availability revenue own of certainly talked some main

more than the would that was it into disconnect. and driver thought going the of quarter, pronounced was that so, we the biggest be what And originally

Scott Rosenberg

and on Mexico. QX Scott. I’ll robust other to of XXXX. about over about I’d question, One is a I’ll answer were just comping thing we Jason, in QX sort This tag question, that your say was really Entravision

a business back business. ad for made strong they roll then, in us in and, our And in it QX. Drove advertisers spending QX XXXX. the really really you If QX for across XXXX, suppressed up frankly, to

-- a drivers couple strong of the story, a ‘XX. a regards this our the had we going is a great business, in QX of abroad. for real so, the in part addition of Steve ad in comp, the to narrative QX couple the as of the softness quarter of Mexico, were And With verticals, mentioned, great But guide. to

first significant hands, by posture course, then there user we try we And players in to in and consumers’ through seek of winning televisions second then engagement. getting Of terms household monetize. and in we the scale we phases are penetration, Mexico, engagement the with and drive

And very for timely was us it Mexican launch ad business. so, to

Internationally, success ad Entravision. our where and it also we’ve for our with in doing out our in call scaling business several I’d partnership M&E business now. We’re Canada, been years

Mexico. And excited entry progress of a great course, elsewhere it’s So, in the we’re activity also about in LatAm. into

Anthony Wood

in countries is about far Mexico. just Brazil are the by markets you think Americas, biggest This if the mean, Yes. I States, international Anthony. and south the the and of United two

Mexico, So, the we on TVs great we just Roku with In in markets. by those of that’s both hours we’re why primarily, TV platform focused number streamed. streaming those and passed share for that And the program. we’re market one doing announced XX% we

monetization a now. on why region. in add scale our we’re there for That’s has that to starting so years been growing And few

Operator

next from Our question Citi. comes of Bazinet Jason

Jason Bazinet

question about not for I was side you guys year provide There think or would is of the buy sort outlook, you. of bit which whether a a full unusual in little a

sort I’m two, me year of is curious of or of much I’d easier? correct wrong. And But decided quarterly a of guide can lay when that? versus then, guide, is your sort do things. you to if what conservatism isn’t out two sort You full a Thanks. presumably Why about be you level which

Anthony Wood

question. Steve a That’s Steve? sorry. I’m -- Scott

Steve Louden

Yes.

the extent for have the on or outlook approach to in start our of a some visibility. view near term have QX and on years, the of the terms focused the -- In longer on pandemic, to annual two quarter, formal coming we color we this the since case, providing providing so outlook,

we so, the that shareholder strategy And and on estimate. from the with about in permanently talked our tweaking a range outlook, to is what letter continuing best moving

the for really we’ve And last what so, different than that’s years. no been doing of couple

what provide trends short well the that, I we we revenue the In year-over-year think this the case, didn’t for on formal fact but range the the for growth as and as we provide rough full outlook thought level. for year, reflects did outlook the have we the EBITDA were color into year, we better it full obviously, some term. visibility provided a

in of in that level uncertainty just prudent think we’re we of between, but So, factor. somewhere that’s kind the given

Operator

question Our of comes from America. Ruplu Bank Bhattacharya of next

Ruplu Bhattacharya

your XQ Thank Can vertical’s taking on comments shareholder two, revenues. on us M&E had spend, just respect came faster back in you says for the platform letter, If have XXXX. full quarters your pretty on media spend that revenues the It you ‘XX, full very strong. With for the platform for than and revenues, imbalances into the Roku maybe were year most revenues. spend, platform XXXX? we one the to entertainment continue OS. XQ, your in give and and on M&E my year, questions. I thoughts platform was the XQ it grew And one the pretty back to go by back, but after spend advertisers they XQ in pandemic delayed pulled may quick about, of strong impacted ad talk and

come seems this Just reading be back the shareholder year delayed. letter, it that this might

you So, on come just more and when the spend back CPG on advertisers auto thoughts your think might the the and platform?

Anthony Wood

Scott?

Scott Rosenberg

here. Hey Ruplu. Yes, take in parts me let this

verticals. First some all, I We of of would those overstate softness. again, not saw the impact just

we guess robustness CPG see broadly of issues, I their anybody’s but think rest chain deal and auto business. the supply ad across how with the the businesses it’s

going user to on as have We’ve compete guide top unsubscribe. the very grand streaming to with it that but don’t continues subscribe And shifting of forward. I’ll a us our a to and to XX services. strongly. The spend the grow they minor apps these to have just It’s to say subscriptions And significantly acquiring services they going environment. to attention. easy not scale, done that it’s retaining all they’re share in the outlook they so, Roku, users. of to With relatively specifically. critical. business, also becomes within users pick Consumers and of regards we’re we -- and it’s choose. them because world, aren’t going biggest continue They’re seen launched quite hit for competitive factor scheme And a M&E very bit QX for as in a business

aggressively their pressure behind front answered a choices to to just new stay promote they users. best to programmer awareness programming, one And as they and to and on want the partners competitive of lot the a there’s programming. of question get to I center invest possible in so, our in it drive it big when tune and it utilize, for earlier, we’re And

remain you know, Steve on M&E business. Anthony, we want bullish or anything? overall, really So to don’t of I the add future if the

Steve Louden

QX it is kind Steve. this of add back popped Well, because quick mentioned and with I’ll you XXXX just pretty advertisers.

very certainly, part different I I advertisers think was think situation, was business a a off of There right? for pandemic. going their in there, that was is the drop of a was lot That board the uncertainty early across it -- there cliff. days was but advertising that a pullback to

selling have where ship, the that to lower chain for constraints, artificial operating so, are they’re going. an to of have in on advertising But produce. companies they’re pricing disconnect weakness And part, tell see market what everything power of a And things they a as actually are can these position this and is strength of the the marketing opposed or world the can more in advertising, much I advertising the market. temporary a and in in position burn having a case supply of kind stabilize for expense normalize the right? once the where was on that front. you there of in where And slowdown a a is of and In strong producing, there’s case, so, auto large not lot weakness. But you they certain an concern because being

for this their disconnect of shape versus fearful companies disruptions main these will and pandemic, levels and verticals point, were demand at temporary normalized strong So, they’re -- the not. But I quite Scott’s what stop a spend their a it’s are are spend. of But, in of well-being. lot chain position, they whether on their about -- created kind that’s a start -- the I of to in otherwise, just or the very temporary determinant in certainly, think think in it’s be supply great certain actually supply

Anthony Wood

Ruplu, answered a something you So want about that did know question was wasn’t or your And not. ask I about question sure have don’t if I if to you that OS? Roku there. also,

Operator

you. Thank

question LightShed. final Greenfield of Our Rich is

Rich Greenfield

Netflix you And the what the the the of you streaming streaming, globally get -- of as then the I about buy way get of new consumer many dongles what last they big the the you of obvious guess, from then wondering of just most sort sort over year? inactive change do is a the where that you sort XXX because earlier obviously, think on couple dongles really think accounts like mean, of state from to sort after wondering, time you is One, television, of of fear shift of as to do What accounts. people one TVs, And I that the Curious the out, to million, think sort TAM notably inactive do telling seeing as results -- think of TAM? Kilar move investors the how streaming going everyone that from market active those it’s Roku years? some have and players, of someone’s how to X billion, X of I’m TAM I about seeing? and in when moving you billion. panicked like behavior, dongles TAM? people Anthony, to are the the two XXX or picture quarter, have sort think from the of to million, -- become think play said of next long-term Jason some And about you in those sort you or just lies, I of what seen you TVs when are of over that questions. sort any just happens things revising people

Anthony Wood

questions. Great Sure.

We minutes do best. I’ll left, so have X my

players, our both. sell we of Let’s important both they’re And millions TV see, to millions and streaming to us, on versus business.

a into quite I we have -- features the streaming some of so the that think older TV or -- that an and smart of people to content older like or and there dynamics sell doesn’t with TV And then, that competitor buys the TV they’ll that are have they think take lot to I upgrade players a TV, someone it move would a streaming get they’ll that the also a to player. they a new want bedroom, when and that want.

smart a going But so, both probably And there’s accounts. would a soon. big dynamics. of different streaming say, updates are think They’re too. great years after place everyone solution. TVs more happen I software TV, on about a before try player, the two we smart guess, us because updates important if sell it’s also else roughly. strategically, them in because just I their doing both TV X will I just anytime the a sources not industry at very that for have hard buy to smart better software becomes lot That a They’re who about for questions long away than keep years. when a active both updating will important. They’re you TVs a sometimes Roku to long don’t to -- you There’s of And then abandon how need you a buy TV, time, great for keep or stop and you our TV -- people whatever we’re smart

go And you both a they’re important. So, if older look there’s overseas, of really when you -- lot TVs.

both I need is message both we both, think different we do they’re very have do well. us. They but dynamics, main to important do the very and just suddenly so, And for just

TV TAM, is every if In that going the watches is to I household it streaming. of terms -- switch to think broadband

it’s households. billion X So,

Rich Greenfield

of much? slowed it Do why any you so feel down have

Anthony Wood

what? Sorry,

Rich Greenfield

sort your that stock. talking streaming entire people really concerned. that even been sense investors. about you slowdown I’m to think about of of sector why any do have are the you talking panic just there’s this I’m starting Do not like get

Anthony Wood

No, I ahead, think -- go Scott.

Scott Rosenberg

worth I number what and would are through said, reception streaming notwithstanding, to television, hasn’t or advertising as market’s say, they it. all that results of the eyeballs their of look, company’s this on consuming of households in spend television, changed what terms the Anthony

has their of to according the -- perception think rise and at streamers share. the their Roku playing the individual consumer and I So, changed. the really fate And market we fall not And day, they’re the while for on like TAM of will their and will performance, that our to out going Roku. great platform, for for great all see on and end it’s and competing be never ultimately before

Anthony Wood

Yes. consumers as I there’s a now they’re say as all possible both a streaming as options. mean, many you’re a are platform a is that fact be think dynamics right services I if Roku. -- our businesses service great streaming And strategic differences our the they’re growing. to between mean give and goal, But service, I terms of your in and different. different I offer platform, streaming that important to in like would just differences

If you’re really one the streaming time, other have consumers early didn’t composition you options. services, now have much a for of and long

small now. platform streaming So, we to But, that’s we there’ll them model a which level going industry. -- trying Roku TV. on provide and high works growing, provide can of there’s successful provide do keep smart and of to consumer doing where provide the there’s just one not be a the and -- that a monetize dynamics try them -- our to those and a a different And and lot -- The And free find mean, course, different Channel, entire lot us, use watch a content great to that marketplace, right going business streaming be dynamic. the I allow most services and the X a to for trying partner, And is rise for be industry. just affecting monetize tools at solution there’s platforms of is built just of be services also, then, help like streaming gangbusters, change And happening there’s number just good households be to of a going to a win. TV only that we billion to

Operator

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

Anthony Wood

All streaming continuing for right. and say we’re Well, thanks we’re just the that our everyone. business growth our investors call I to looking forward And the continuing. our want in joining employees, to to and Thanks robust today. to

So thanks, everyone.

Operator

this and Thank Ladies for participating. gentlemen, today’s conclude you. does all you conference. Thank

You may now disconnect. Have a great day.

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