Q1 2024 Roku Inc Earnings Call

April 25, 2024

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Narrator: [inaudible] FOLLOW US ON INSTAGRAM This town is full of stories. Welcome to Spiderwick. This house is full of secrets and surprises. My father cataloged every creature of the invisible world.

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Speaker Change: Good day, everyone and thank you for standing by welcome to the Rockies first quarter 2024 earnings 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 to ask a question.

Character from Spiderwick: Arthur Spiderwick's field guide will soon be ours. Ogre rat's a deceiver, a shapeshifter. I'm an ogre! You have to help save everyone. I'm just a kid. That's why you can succeed. You were all chosen because you are enough. You've made it. We are inviting athletes who could become the next WWE superstars. Coming from Cuba, my dad risked his life for me to have these opportunities. I'm Brayden Ray, aka Sexy BJ Ray.

During this session you will need to press star one on your telephone you will Dan here message advising your hand. This raced to withdraw your question Press Star One again and please be advised that today's conference is being recorded I would now like to hand, the conference over to Conrad Grodd. Please go ahead.

Character from Spiderwick: Who do you think you are? I see so much raw potential. This is your moment. Woo! It's life-changing. There is nothing else like being a WWE superstar.

Conrad Grodd: Thank you operator, welcome to <unk> first quarter 2024 earnings call on today's call are Anthony Wood.

Conrad Grodd: Brokerage founder and CEO and Jeff <unk>, our CFO Charlie <unk>.

Conrad Grodd: President revenue media and Mustafa question President devices.

Narrator: If you close your eyes and think about your future, what do you really want? We have invited the most promising female founders in the country to come pitch to us today. So Ashley and I have to decide if we're going to invest in your company, and you have to decide if you're going to quit your day job. Everything is on the line. I just can't let it die. I'm not going to feel like you.

Speaker Change: Full details of results and additional management commentary are available in our shareholder letter, which can be found on our investor relations website at <unk> Dot Com slash investor.

Conrad Grodd: This call will make forward looking statements, which are predictions projections or other statements about future events based on current expectations forecasts and assumptions. These statements involve risks and uncertainties.

Narrator: This is business, baby. You're actually turning your side hustle into your main hustle. [inaudible] This town is full of stories. Welcome to Spiderwick. This house is full of secrets and surprises. My father cataloged every creature of the invisible world.

Conrad Grodd: Please refer to our shareholder letter and periodic SEC filings for risk factors that could cause our actual results to differ materially from these forward looking statements.

Conrad Grodd: This call, we will present, GAAP and non-GAAP financial measures reconciliations of non-GAAP measures. The most comparable GAAP financial measures are provided in our shareholder letter.

Conrad Grodd: Finally, unless otherwise stated all comparisons on this call will be against our results for the comparable period of 2023.

Speaker Change: Now I'd like to hand, the call to entity.

Entity: Thank you Conrad we delivered solid results in Q1 growing streaming household 14% year over year streaming hours, 23% year over year.

Conrad Grodd: Latam revenue, 19% year over year.

Speaker Change: As I mentioned on the Q4 call. This year, we are directing more of our intention to top line growth and innovation.

Speaker Change: We will accelerate platform revenue adjusted EBITDA and free cash flow growth in 2025 by focusing on three key opportunities.

Speaker Change: Maximizing the Roku home screen as the leader for TV.

Speaker Change: Growing roku build subscriptions.

Speaker Change: And growing demand for Roku.

Conrad Grodd: Every day, the Roku home screen weeks U S households, with nearly 120 million people.

Conrad Grodd: Significant restraints a lot of opportunity.

Character from Spiderwick: Arthur Spiderwick's field guide will soon be ours. Ogre rat's a deceiver, a shapeshifter. I'm an ogre!

Conrad Grodd: I see many ways to improve the user experience, while also growing monetization growth.

Conrad Grodd: For example, the revenue sports experience, which viewers can click into right from the home screen.

Character from Spiderwick: You have to help save everyone. I'm just a kid. That's why you can succeed. You were all chosen because you are enough. You've made it. We are inviting athletes who will become the next WWE superstars. Coming from Cuba, my dad risked his life for me to have these opportunities.

Conrad Grodd: The rest of the fragmentation of sports as assist the screening, making it easier for viewers to find games and other sports related content.

Conrad Grodd: And I told them was our first leaves sponsored zone and for this year's Super Bowl. It was sponsored by Turbotax delivering massive reach to the brand during a critical time of year.

Conrad Grodd: We recently launched the MBA zone in partnership with the NBA in April.

Conrad Grodd: We also see a big opportunity to grow Roku builds prescriptions roku pay our payment and billing surface simplifies the sign up process for users. So they can quickly transact and start screaming and ensures content partners don't lose subscribers.

Operator: I'm brave. Good day, everyone, and thank you for standing by. Welcome to Roku's first quarter 2024 earnings 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. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, press star 11 again.

Conrad Grodd: Okay.

Conrad Grodd: Point of purchase.

Conrad Grodd: Additionally, we are making it easier for advertisers to execute campaigns programmatically on the Roku platform.

Conrad Grodd: And please be advised that today's conference is being recorded. I would now like to hand the conference over to Conrad Grodd. Please go ahead.

Conrad Grodd: By expanding and deepening our relationships with third party platforms in.

Conrad Grodd: In Q1, we continued to grow programmatic AD spend as a percentage of total video AD spend on the Roku platform.

Conrad Grodd: With our platform advantages first party relationships and more than 80 million screening household and deep user engagement, we're well positioned to accelerate platform revenue growth in 2025 and beyond.

Anthony Wood: Thank you, operator. Welcome to Roku's first quarter 2024 earnings call. On today's call are Anthony Wood, Roku's founder and CEO, Dan Jedda, our CFO, Charlie Collier, President, Roku Media, and Mustafa Ozgen, President, Devices. Full details of the results and additional management commentary are available in our shareable letter, which can be found on our investor relations website at roku.com forward slash investor. On this call, we'll make forward-looking statements These statements involve risks and uncertainty.

Conrad Grodd: Now I will turn it over to Dan to discuss our results.

Dan: Thanks Anthony.

Dan: We ended Q1 with $81 6 million streaming households sequential net adds of $1 6 million were in line with Q1, 2023, and driven by both Tvs and streaming players.

Dan: We continue to drive strong growth and engagement with streaming hours up 23% year over year, and surpassing 30 billion for the first time in a single quarter.

Dan: We also grew engagement per account globally with streaming hours per streaming household per day, a $4 two hours in Q1 2024 up from $3 nine hours in Q1 2023.

Dan Jedda: Please refer to our shareable letter and periodic FCC filings for risk factors that could cause our actual results to differ materially from these forward-looking statements. On today's call, we'll present GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures of the most comparable GAAP financial measures are provided in our shareholder letter. Finally, unless otherwise stated, all comparisons on this call will be against the results of the comparable period of 2023. Now, I'd like to end the call to answer.

Dan: In Q1, we grew total net revenue, 19% year over year to $882 million.

Dan: Platform revenue was $755 million also up 19% year over year, driven by both streaming service distribution and advertising activities.

Dan: Streaming services distribution activities grew faster than overall platform revenue benefiting in part from subscription price increases.

Dan: However, the year over year growth rate of streaming services distribution in Q1, 2024 was lower than that year over year growth rate in Q4, 2023, due to lapping past price increases and higher mix shift towards entry priced AD supported offerings.

Anthony Wood: Thank you, Conrad. We delivered solid results in Q1, growing streaming households 14% year-over-year, streaming hours 23% year-over-year, and platform revenue 19% year-over-year. As I mentioned on the Q4 call, this year we are directing more of our attention to platform growth and innovation. We will accelerate platform revenue, adjusted EBITDA, and free cash flow growth in 2025 by focusing on three key opportunities, maximizing the Roku home screen as the lead-in for TV. Growing Roku Builds

Dan: Devices revenue increased 19% year over year in Q1, driven by the expansion of retail distribution of Roku branded Tvs.

Dan: <unk> was $40 65 in Q1 on a trailing 12 month basis flat year over year.

Dan: This reflects an increasing share of streaming household in international markets, where we are currently focused on growing scale and engagement.

Anthony Wood: Subscription, and growing behind the man for Roku. Every day, the Roku home screen reaches U.S. households with nearly 120 million. This significant reach creates a lot of opportunity. I see many ways to improve the user experience while also growing monetization for Roku. For example, the Roku sports experience, which viewers can click into right from the home screen, addresses the fragmentation of sports as it shifts to streaming, making it easier for viewers to find games and other sports-related content. The NFL Zone was our first league-sponsored zone, and for this year's Super Bowl, it was sponsored by TurboTax, delivering massive revenue to the brand during a critical time of year.

Dan: Q1, total gross margin was 44% down slightly year over year.

Dan: Platform gross margin of 52% with stable year over year, while devices gross margin was negative, 5%, which was down eight points year over year.

Dan: Excluding the one time 10 million service operator licensing catch up benefit in Q1, 2023 device gross margin would've been roughly flat year over year.

Dan: Q1, adjusted EBITDA was $41 million, which was above our outlook of breakeven.

Dan Jedda: We recently launched the MBA Zone in partnership with the MBA. We also see a big opportunity to grow Roku Bill subscriptions. Roku Pay, our payment and billing service, simplifies the sign-up process for users so they can quickly transact and start streaming, and ensures content partners don't lose subscribers due to unnecessary friction at the point of purchase. Additionally, we are making it easier for advertisers to execute campaigns programmatically on the Roku platform by expanding and deepening our relationships with third-party platforms.

Dan: The better than expected performance was driven by our platform segment, along with improvements to our operating expense profile.

Dan: Free cash flow was $427 million on a trailing 12 month basis, and we ended the quarter with $2 1 billion of cash and cash equivalents.

Speaker Change: Let me turn to our outlook for the second quarter.

Speaker Change: We anticipate total net revenue of $935 million.

Speaker Change: Gross profit of $410 million with gross margin of 44%.

Dan Jedda: In Q1, we continued to grow programmatic ad spend as a percentage of total video ad spend on the Roku platform. With our platform advantages, first-party relationships, and more than 80 million streaming households and deep user engagement, we are well positioned to accelerate platform revenue growth in 2025 and beyond. Now, I'll turn it over to Dan to discuss our results. Thanks, Anthony.

Speaker Change: And adjusted EBITDA of $30 million.

Conrad Grodd: Our outlook for total net revenue anticipates, a 10% year over year increase.

Conrad Grodd: This takes into account challenging year over year growth rate comparisons with streaming service distribution, along with an elevated 606 adjustments in Q2 of last year.

Conrad Grodd: We expect platform margin to be similar to Q2 of last year at roughly 53%.

Dan Jedda: We ended Q1 with 81.6 million streaming households. The sequential net ads of 1.6 million were in line with Q1 2023 and driven by both TVs and streaming players. We continue to drive strong growth and engagement, with streaming hours up 23% year-over-year and surpassing $30 billion for the first time in a single quarter. We also grew engagement per account globally, with streaming hours per streaming household per day of 4.2 hours in Q1 2024, up from 3.9 hours in Q1 2023. In Q1, we grew total net revenue 19% year over year to $882 million.

Conrad Grodd: On the devices side, we expect margin to decline from negative 5% in Q1 to negative low teens in Q2, which reflects continued expansion and investment in our local branded television program.

Conrad Grodd: We expect to benefit from having implemented multiple operational improvements over the course of the past year and as a result forecast our year over year Opex growth rate in Q2 to be down to negative low single digits.

Conrad Grodd: Looking into the second half of the year, we expect normal seasonal spend in sales and marketing or devices, which will cause second half adjusted EBITDA to slightly moderate relative to the first half of the year.

Conrad Grodd: Looking at the full year, we expect 2024 year over year opex growth rate to be in the low single digits, when excluding impairment and restructuring charges in 2023.

Dan Jedda: Platform revenue was $755 million, also up 19% year-over-year, driven by both streaming service distribution and advertising activity. Streaming service distribution activities grew faster than overall platform revenue, benefiting in part from subscription price increases. However, the year-over-year growth rate of streaming services distribution in Q1 2024 was lower than the year-over-year growth rate in Q4 2023 due to lapping past price increases and a higher mix shift towards entry-priced ad-supported offerings. However, devices revenue increased 19% year over year in Q1, driven by the expansion of retail distribution of Roku-branded TVs.

Conrad Grodd: We continue to see leverage in our operating model with our third straight quarter of positive adjusted EBITDA and free cash flow.

Conrad Grodd: We will continue to drive operational efficiency.

Conrad Grodd: And as Anthony mentioned, we remain confident in our ability to accelerate the growth of platform revenue in 2025 and beyond.

Speaker Change: With that let's take questions operator.

Speaker Change: Thank you Anna Sorry reminder, to ask a question simply press Star one one on your telephone and wait for your name to be announced to remove your question simply press Star One again please.

Dan Jedda: Harpoo was $40.65 in Q1 on a trailing 12 month basis, flat year over year. This reflects an increasing share of streaming households in international markets where we are currently focused on growing scale and engagement. Q1 total gross margin was 44%, down slightly year-over-year.

Speaker Change: Please standby, while we compile the Q&A roster.

Conrad Grodd: And our first question comes from the line of Cory Carpenter with Jpmorgan. Please proceed.

Cory Carpenter: Great. Thank you I am hoping you could expand on the drivers of the platform EXL youre expecting between five and what are you seeing that gives you confidence in this happening.

Dan Jedda: Platform gross margin of 52% was stable year over year, while devices gross margin was negative 5%, which was down 8 points year over year. Excluding the one-time $10 million service operator licensing catch-up benefit in Q1 2023, device gross margin would have been roughly flat year-over-year. Q1 adjusted EBITDA was $41 million, which was above our outlook of break-even. The better-than-expected performance was driven by our platform segment along with improvements to our operating expense profile. Pre-cash flow was $427 million on a trailing 12-month basis, and we ended the quarter with $2.1 billion of cash and cash equivalents.

Cory Carpenter: Dan a quick follow up for you just could you elaborate on what's embedded in the <unk> revenue guide for the platform segment. Thank you.

Conrad Grodd: Hey, Corey this is Anthony.

Anthony Wood: I'll be happy to talk about that so.

Anthony Wood: So for some context before I start I'll just start by noting that last year, we grew platform revenues of $3 billion.

Anthony Wood: Last year also of course, we are focused on operational efficiencies and like I said this year, we're directing more of my attention that my team is correct more of their attention towards accelerating upfront revenue growth of 5%.

Conrad Grodd: There's a lot of opportunity to do that on our platform.

Conrad Grodd: But I will.

Conrad Grodd: I'll just highlight three key areas.

Conrad Grodd: Where I see a lot of opportunity where we are.

Dan Jedda: Let me turn to our outlook for the second quarter. We anticipate total net revenue of $935 million. Gross profit of $410 million, with gross margin of 44%, and a trusted EBITDA of $30 million. Our outlook for total net revenue anticipates a 10% year-over-year increase. This takes into account challenging year-over-year growth rate comparisons with streaming service distribution along with an elevated 606 adjustment in Q2 of last year. We expect platform margin to be similar to Q2 of last year at roughly 53%.

Conrad Grodd: Increasing our focus first is the roku home screen.

Conrad Grodd: And by the Homescreen I mean, not just of course, the actual Huntsville, the UI the user experience of your seats when they turn on their TV.

Conrad Grodd: Used to kind of find something to watch so the home screen.

Conrad Grodd: Is a big area programmatic AD capabilities and also broken build subscriptions.

Conrad Grodd: So talk a little bit more about the roku home screen.

Conrad Grodd: Every day.

Conrad Grodd: Broken home screen weeks of U S households, with nearly 120 million people that means everyday households, with 129 people turn on their TV and they start there.

Dan Jedda: On the devices side, we expect margin to decline from negative 5% in Q1 to negative low teens in Q2, which reflects continued expansion and investment in our Roku-branded TV program. We expect to benefit from having implemented multiple operational improvements over the course of the past year, and as a result, forecast our year-over-year OPEX growth rate in Q2 to be down to negative low single digits. Looking into the second half of the year, we expect normal seasonal spend in sales and marketing or devices, which will cause second half adjusted EBITDA to slightly moderate relative to the first half. Looking at the full year, we expect 2024 year-over-year OPEX growth to be in the low single digits when excluding impairment and restructuring charges in 2023.

Conrad Grodd: Ewing experienced there screaming journey on the rescue homescreen.

Conrad Grodd: Homescreen.

Conrad Grodd: What have you received before they select the net.

Conrad Grodd: And they used at home seem to find something to watch during that process. They are exposed to promotional advertising and they'll say advertising on our home screen before they select map and they might they might be selecting an app that doesn't actually had ads in it. So we have the ability to reach everyone on the platform not just people, but just the viewers.

Conrad Grodd: Perhaps with advertising.

Conrad Grodd: But to give you some examples of.

Conrad Grodd: The kinds of things, we're looking at on the home screen.

Conrad Grodd: On the upstream today Theres, a premier video Abbvie call the market yet.

Conrad Grodd: <unk> traditionally has been a static ad.

Conrad Grodd: We're going to add video to that Ed.

Conrad Grodd: So that will be the first video AD that we add to the homescreen that'll be a big change for us.

Conrad Grodd: Also testing other types of video AD units looking at other experiences we can add to the home screen.

Dan Jedda: We continue to see leverage in our operating model with our third straight quarter of positive adjusted EBITDA and free cash flow. We will continue to drive operational efficiency, and as Anthony mentioned, we remain confident in our ability to accelerate the growth of platform revenue in 2025 and beyond. With that, let's take questions. Operator.

Conrad Grodd: We can innovate more video advertising so that's something we're looking at.

Conrad Grodd: Another example, this quarter, we launched the MBA zone, and the Roku sports experience.

Conrad Grodd: The sports experience is away from viewers defined sports across the platform as a way for us to grow content, both Avon at as by content.

Operator: Thank you, and as a reminder to ask a question, simply press star 1 1 on your telephone and wait for your name to be called. To remove your questions, simply press star 118. Please stand by while we compile the Q&R list. And our first question comes from the line of Cory Carpenter with J.P. Morgan. Please proceed. Great, thank you. I'm hoping you could expand on the drivers of the platform reExcel you're expecting in 25 and what you're seeing that gives you confidence in this happening. And then, Dan, a quick follow-up for you, just could you elaborate on what's embedded in the two-key revenue guide for the platform segment? Thank you. Hey Cory, this is Anthony.

Conrad Grodd: No way for us to integrate advertising into that experience.

Conrad Grodd: Another example, we just launched we just rolled out.

Conrad Grodd: Personalized content ROE on the home screen.

Conrad Grodd: So this is the first time that over AD content recommendations directly on our home screen.

Conrad Grodd: The big change for us in terms of the homes and Anne.

Conrad Grodd: Well it'll be obviously, AI driven recommendations, but it will promote both subscriptions and <unk> content in that row.

Conrad Grodd: So there's lots of ways, we are working on enhancing the hodgkin's make it more valuable to viewers, but also increased the months based on the home screen.

Conrad Grodd: So thats the homescreen another area, we're looking at.

Conrad Grodd: Leasing our focus on.

Conrad Grodd: And I am spending more time on is programmatic AD capabilities. So we recently switched our programmatic strategy to be more focused on third party platforms and expanding our relationships with third party platforms, including Dst's spanning what we can offer advertisers.

Anthony Wood: I'll be happy to talk about that. But for some context, before I start, I'll just start by noting that last year we grew platform revenue to $3 billion. Last year also, of course, we focused on operational efficiency. And like I just said, this year, I'm directing more of my attention, than my team is directing more of their attention, towards accelerating platform revenue growth in 2025. And there's a lot of opportunity to do that on our platform, but I'll...

Conrad Grodd: From building out the relationships. We're also increasing the expertise in house and the talent, Kevin House <unk> programmatic advertising.

Conrad Grodd: And I think one example of how this will be useful is if you look at the Roku channel Roku channel in Q1 was the number three app on the Roku platform.

Conrad Grodd: I mean, thats pretty impressed the best number three app after Netflix and after Youtube and.

Conrad Grodd: And engagement in the Roku channel is up 66% year over year.

Anthony Wood: I'll just highlight three key areas where I see a lot of opportunity and where we are increasing our focus. First is the Roku home screen. And, you know, by home screen, I mean not just, of course, the actual home screen, but the UI, the user experience that a viewer sees when they turn on their TV, and they use to kind of find something to watch.

Conrad Grodd: Theres a lot of opportunity to close the gap and engagement in the Roku channel and the fill rates and Roku channel programmatic AD capabilities for one of the ways you tend to do that.

Conrad Grodd: And then the third area and a third.

Conrad Grodd: Third example of an area that we are.

Conrad Grodd: Lots of opportunities to continue to build one of today's most prescriptions.

Anthony Wood: So the home screen is a big area, programmatic ad capabilities, and also Roku build subscription. So talk a little bit more about the Roku home screen. You know, every day.

Conrad Grodd: Now we've talked about in the past we had various teams throughout revenue working on subscriptions, we reorganize them into one team.

Conrad Grodd: We allocated more resources.

Conrad Grodd: Person team that reports directly to me.

Anthony Wood: The Roku home screen reaches U.S. households with nearly 120 million people. That means every day, 120 million people turn on their TV, and they start their viewing experience their streaming journey on the Roku homescreen. And so that home screen, you know, is what a viewer sees before they select an app. And they use that home screen to find something to watch.

Conrad Grodd: And they've already come up with a good list of priorities.

Anthony Wood: During that process, they're exposed to promotions, they're exposed to advertising, and they'll see advertising on our home screen before they select an app. And they might be selecting an app that doesn't actually have ads in it. So we have the ability to reach everyone on the platform, not just the people, not just the viewers, to select apps with advertising. But to give you some examples of the kinds of things we're looking at on the home screen, you know, on the home screen today, there's the premier video ad we call the Marquee Ad, and that ad traditionally has been a static ad. We're going to add video to that ad.

Conrad Grodd: Increase our focus on monetization on subscriptions one area that we're looking at of course is broken pay which is our payments and billing service.

Anthony Wood: So that'll be the first video ad unit we add to the home. That'll be a big change for us. We're also testing other types of video ad units, looking at other experiences we can add to the home screen. That would be where we could integrate more video advertising. So that's something we're looking at. Another example, this quarter, we launched the NBA Zone in the Roku sports experience. And, you know, the sports experience is a way for viewers to find sports across the platform.

Conrad Grodd: Broken pay is very popular but it can be even more popular this great per viewers that allows them.

Conrad Grodd: To sign up for a subscription in a frictionless way.

Conrad Grodd: Without having to enter their credit card number and it's great for our business partners because it allows them.

Conrad Grodd: To reduce friction and let our customers signing up for a subscription.

Conrad Grodd: So those are three examples of how we're working on increasing monetization of our.

Conrad Grodd: And monetizing our unscreened programmatic and subscriptions.

Conrad Grodd: And I just think overall if you just look at the platform advantages, we have as a brand the viewers love.

Conrad Grodd: First party relationships ships with more than 80 million streaming household with deep user engagement.

Conrad Grodd: And we're well positioned.

Conrad Grodd: Continue to Reaccelerate platform revenue growth 2025 and beyond.

Conrad Grodd: And then.

Speaker Change: And then you want to take the I'll take the second part of that question. Thanks Cory for the question. So let me talk briefly about the change in Q1 Q2 before I answer the question on platform revenue in Q2 last year Q1 platform revenue growth rate was negative 1% due to a weak weak ad market.

Anthony Wood: It's a way for us to promote content, both AVOT and SVOT content. It's also a way for us to integrate advertising into that experience. Another example, we just launched, we just rolled out a personalized content row on the home screen. So this is the first time we've ever added content recommendations directly to our home screen.

Speaker Change: So Q1 of this year grew 19%.

Speaker Change: As it had a relatively easy comp on a year over year basis.

Speaker Change: Platform growth in Q2 of last year was plus 11%. So we went from negative 1% in Q1 to plus 11% in Q2 and that was due to streaming services distribution growth rate, increasing primarily from increases in both subscriptions and subscription prices.

Anthony Wood: It's a big change for us in terms of the home screen, and, you know, it'll be obviously AI-driven recommendations, but it'll promote both subscriptions and ABOT content in that row. So, you know, there are lots of ways we're working on enhancing the home screens to make them more valuable to viewers, but also increase the monetization on them. So that's the home screen.

Speaker Change: Advertising revenue growth also improved in Q2 relative to Q1 last year, but SSD was the primary growth driver and so we faced a challenging comp in SSD in Q2, and really for the rest of the year.

Speaker Change: We also had a positive $6 six adjustment in Q2 and Q3.

Anthony Wood: Another area we're looking at increasing our focus on, and I'm spending more time on its programmatic ad capability. So we recently switched our programmatic strategy to be more focused on third-party platforms and expanding our relationships with third-party platforms, including DSPs, expanding what we can offer advertisers by building out the relationships. We're also increasing the expertise in-house and the talent we have in-house with programmatic advertising. And I think one example of how this will be useful is, if you look at the Roku channel, the Roku channel in Q1 was the number three app on the Roku platform. You know, I mean, that's pretty impressive.

Speaker Change: Platform revenue last year, adding to the difficult comp. So if you exclude that $6 six adjustment in Q2 of last year, our outlook for total revenue growth rate would increase by nearly 200 basis points.

Speaker Change: For Q2 of this year. So again, we did see positive growth rate in advertising in Q1 versus the easier comp Q1 last year and our Q2 guide assumes a similar year over year growth rate in advertising versus what we exited the year at so were seeing momentum there, but the comp is the reason for the sequential decline in growth rate.

Anthony Wood: That's the number-three app after Netflix and after YouTube, and engagement in the Roku channel is up 66% year-over-year. But there's a lot of opportunity to close the gap between engagement in the Roku channel and the tool rates in the Roku channel, and programmatic ad capabilities are one of the ways we intend to do that.

Speaker Change: From Q1 to Q2 and to answer your question specifically of the 10% growth that we guided to for Q2 I would think our platform growth as very high single digit growth rate inclusive of 606, and if you were to exclude 660 606 adjustments in Q2 last year, we would be in low double digit growth rate.

Speaker Change: <unk> revenue.

Anthony Wood: And then the third area, another example of an area that we have lots of opportunity to continue to build monetization is subscriptions. You know, we've talked about in the past that we have various teams throughout Roku working on subscriptions. We've reorganized them into one team, and we've reallocated more resources towards subscriptions. That team now reports directly to me, and they've already come up with a good list of priorities. One area that we're looking at, of course, is RokuPay, which is our payments and billing service. RokuPay is very popular, but it can be even more popular.

Speaker Change: Does that answer your question.

Speaker Change: Yes, Thank you Luke.

Speaker Change: Thank you so much.

Speaker Change: One moment for our next question please.

Speaker Change: Okay.

Luke: He comes from the line of Vasili carrier with Cannonball Research. Please proceed.

Vasili Carrier: Thank you Dan I would like to follow up on your comments on Opex.

Anthony Wood: It's great for viewers because it allows them to sign up for a subscription in a frictionless way without having to enter their credit card number. And it's great for our business partners because it allows them to reduce friction when a customer is signing up for a subscription. So those are three examples of how we're working on increasing monetization and monetizing our home screen, programmatic, and subscriptions. And I just think overall, if you just look at the platform advantages we have, we have a brand the viewers love, we have first-party relationships with more than 80 million streaming households, and we have deep user engagement. And we're well positioned to continue to re-accelerate platform revenue growth in 2025 and beyond. Yeah, I'll take the second part of that question.

Vasili Carrier: And if you remember.

Vasili Carrier: Last quarter call you made the comment about annualized in Q4 operating expenses on applying a growth rate and then.

Speaker Change: It looks like this quarter.

Speaker Change: Expenses came in lower than we expected. So can you help us understand exactly how we should think about this map for the remainder of the year.

Speaker Change: In terms of quarterly progression. So from this 460 this quarter how has it gone up for grabs and what the full year.

Speaker Change: Full year estimate should be at this point should be.

Vasili Carrier: The boat estimate should be and when you say mid single digit growth rates.

Speaker Change: Would you.

Vasili Carrier: Could you please specify what.

Vasili Carrier: Range is.

Dan Jedda: Thanks, Cory, for the question. So let me talk briefly about the change in Q1 and Q2 before I answer the question on platform revenue and Q2. So last year, the Q1 platform revenue growth rate was negative 1% due to a weak ad market. So Q1 of this year grew 19% as it had a relatively easy comp on a year over year basis. Platform growth in Q2 last year was plus 11%. So we went from negative 1% in Q1 to plus 11% in Q2.

Speaker Change: For you. Thank you.

Speaker Change: Yes, Thanks Cecilia.

Speaker Change: I will take that.

Speaker Change: So we exited the year in a good place with our operating expense profile based on all the work we have done throughout the year and in 2023 and you see that.

Speaker Change: Our Q1, Opex and as I mentioned in my prepared remarks, we expect full year opex to be in the low single digits from FY2023 excluding the impairment and restructuring charges that we had in FY2023 so let me just be clear on that so our GAAP Opex in 2023 was $2 3 billion if you exclude impair.

Dan Jedda: And that was due to the streaming services distribution growth rate, increasing primarily from increases in both subscriptions and subscription prices. Advertising revenue growth also improved in Q2 relative to Q1 last year, but SSD was the primary growth driver. And so we faced that challenging comp in SSD in Q2 and really for the rest of the year.

Speaker Change: <unk> and restructuring our Opex would have been $2 $8 billion, just a little bit above $2 8 billion in FY2023 so think about it as and I'll be very clear that mid single digit but think about it at low single digits off of that $2 billion is what we'd expect.

Dan Jedda: We also had a positive 606 adjustment in Q2 and Q3 for platform revenue last year, adding to the difficult comp. So if you exclude that 606 adjustment in Q2 of last year, our outlook for total revenue growth would increase by nearly 200 basis points for Q2 of this year. So again, we did see positive growth rates in advertising in Q1 versus the easier comp of Q1 last year. And our Q2 guide assumes a similar year-over-year growth rate in advertising versus what we exited the year at. So we're seeing momentum there, but the comp is the reason for the sequential decline in growth rate from Q1 to Q2.

Speaker Change: For full year 2024.

Speaker Change: And to be down double digits off of GAAP basis, but the way to look at it is off of our $2 billion Opex, excluding restructuring in 2020, we will likely grow low single digits up that number.

Speaker Change: We do expect <unk> to opex to be higher than H, one I mentioned that in the prepared remarks, and that's due to normal seasonality that we see in sales and marketing for devices.

Speaker Change: And then Q3 Q4 is possible.

Speaker Change: Again, we'll update that.

Speaker Change: Giving you a very clear guidance for overall Opex all up all up eight Q3 and Q4 once we close on Q2, but again think of it low single digits.

Dan Jedda: And to answer your question specifically about the 10% growth that we guided to for Q2, I would think of platform growth as a very high single-digit growth rate, inclusive of 606. And if you were to exclude 606, the 606 adjustment in Q2 last year, we would be in a low double-digit growth rate for platform revenue. Cory, does that answer your question? Yes, thank you both. Thank you so much.

Speaker Change: Of that $2 billion.

Speaker Change: Okay. Thank you so much.

Speaker Change: Thank you.

Speaker Change: A lot of that I, just wanted to add a lot of that timing depends on how sales and marketing ramps in Q3 and into holiday in Q4, which is why I'm not providing specific guidance, but we do have a very good view for full year.

Speaker Change: Okay makes sense. Thank you.

Dan Jedda: One moment for our next question, please. And it comes from the line of Vasily Karyashev with Cannonball Research. Please proceed. Thank you. Dan, I would like to follow up on your comments on OPEX. If you remember, on the last quarter call, you made the comment about annualizing Q4, operating expenses, and applying a growth rate. And then it looks like this quarter's expenses came in lower than we expected. So, can you help us understand exactly how we should think about this map for the remainder of the year in terms of quarterly progression?

Speaker Change: One moment for our next question.

Speaker Change: Comes from the line of Steven <unk> with Wells Fargo. Please proceed.

Steven: Thank you. So first on device margins I was just wondering if you could elaborate on some of the sequential change you are talking about from Q1 to Q2 is that mix or channel partners.

Steven: Els that takes it from the pretty good down five in Q1 to that low teens, a little weaker in Q2 and with the seasonally higher marketing spend in the second half of the year is there anything that also is reflected in device margin being weaker in the back half Relatedly and then secondly, Anthony just on Roku pay it seems like it's a really big.

Dan Jedda: So, from this 460, this quarter, how it's going to progress, and what the full-year estimate should be at this point should be what the reasonable estimate should be. Would you please specify what that range is for you?

Steven: Focus for monetization of growth I think you said, it's really popular any sense of what percentage of your streaming households use roku pay and how we think about what the <unk> uplift is when you've got that thank you.

Anthony Wood: Yes, I'll take I'll take the device gross margin. So again Q1 device gross margin was negative 5%.

Speaker Change: Probably flat if you exclude the $10 million positive service operator licensing catch up in Q1 of last year.

Speaker Change: In terms of like the near term and the change from Q1 to Q2. It really is reflective of the ramp up in our in our.

Dan Jedda: Yeah, thanks, Cecilia. I will take that. So, we exited the year in a good place with our operating expense profile based on all the work we had done throughout the year in 2023, and you see that in our Q1 OPEX, and as I mentioned in my prepared remarks, we expect full year OPEX to be in the low single digits from FY23, excluding the impairment and restructuring charges that we had in FY23. So, let me just be clear on that.

Speaker Change: Roku branded.

Speaker Change: Devices and again, that's a positive we are continuing to ramp that up it is we're far more distributed now we're in 2023 I'm sure. Mr. Alpha can talk on that but we see that as a positive and we would expect those margins to be in the Q2 ballpark going forward again.

Speaker Change: We grow and scale. This program, we will improve our cost structure within devices and over time those margins will get better.

Dan Jedda: So, our GAAP OPEX in 2023 was $2.3 billion. If you exclude impairment and restructuring, our OPEX would have been $2.0 billion, just a little bit above $2.0 billion in FY23, so think about it as, and I'll be very clear, not mid-single digits, but think about it as low single digits off of that $2 billion is what we'd expect for full year 2024. That just happens to be down double digits on a gap basis.

Speaker Change: Relative to where we are now but again, we are in the ramp up stage of Roku branded Tvs and so for the near term as we ramp that program up I would expect to see margins similar to Q2.

Speaker Change: Yeah and in terms of Roku pay I don't.

Speaker Change: I think we broken out assuming households to use it I'll just say that.

Dan Jedda: But the way to look at it is that off our $2 billion OPEX excluding restructuring in 2023, we will likely grow low single digits off that number. We do expect H2 OPEX to be higher than H1. I mentioned that in the prepared remarks. And that's due to normal seasonality that we see in sales and marketing for devices and then Q3, Q4 if possible. Again, we'll update that.

Speaker Change: The primary way that we drive subscriptions on our platform is through.

Speaker Change: Having dealers sign up to a subscription service with the ease of using rope to pay at a lot of a lot of the way. We we plan and we have improved broker pay adoption on our platform is.

Speaker Change: Things like integrating <unk> content more throughout the recommendation engine. So for example, like EMS just mentioned, we're adding up.

Speaker Change: It just rolled out our content wrote a recommendation of content.

Dan Jedda: I've given you very clear guidance for overall OpEx. We'll update Q3 and Q4 once we close on Q2. But again, think of it as low single digits off that $2 billion. Okay, thank you so much.

Speaker Change: A row of recommended content at the top of our home screen that will include recommendations of <unk> content, both entitled Untitled desktop content, meaning <unk> content that you have a subscription for which will increase engagement, which will reduce churn as well as <unk> concept that you don't have a subscription borrowers with few bandwidth sign up get a free trial of sign up using.

Dan Jedda: Thank you. A lot of that, a lot of that, I just want to add that a lot of that timing depends on how sales and marketing ramps up in Q3 and into holiday and Q4, which is why I'm not providing specific guidance, but we do have a very good view for the full year. It makes sense.

Speaker Change: Revenue.

Speaker Change: But we also sort of integrating <unk> throughout the platform more but also the user experience of how easy it is to sign up with Roku pay also.

Speaker Change: Technicalities of running a large scale billing platform things like pass the cancellations.

Speaker Change: A lot of operational focus on improving the numbers so.

Dan Jedda: Thank you. One moment for our next question, which comes from the line of Steven Cahall with Wells Fargo. Please proceed.

Speaker Change: It's a big business and it's it's.

Speaker Change: And there is still lots of opportunities to improve it.

Speaker Change: Thanks.

Steven Cahall: Thank you. So first, on device margins, I was just wondering if you could elaborate on some of the sequential change you're talking about from Q1 to Q2. Is that mix or channel partners or anything else that takes it from the pretty good down five in Q1 to the low teens, a little weaker in Q2? And with the seasonally higher marketing spend in the second half of the year, is there anything that also is reflected in device margin being weaker in the back half, relatedly?

Speaker Change: Thank you one moment for our next question. Please.

Speaker Change: And he comes from the line of Ravi Shankar with William Blair. Please proceed.

Ravi Shankar: Hi, good afternoon. Thanks for taking the question Dan just a question on <unk>.

Ravi Shankar: It did increase sequentially.

Ravi Shankar: <unk>. So just kind of curious how we should think about that trend line going forward, particularly with some of the monetization efforts that Anthony highlighted.

Speaker Change: And then just maybe as a follow up maybe bigger picture a couple of quarters now of higher levels of EBITDA and free cash flow just kind of thinking.

Steven Cahall: And then secondly, Anthony, just on Roku Pay, it seems like it's a really big focus for monetization and growth. I think you said it was really popular. Any sense of what percentage of your streaming households use Roku pay, and how we think about what the ARPU uplift is when you've got that? Thank you. Yeah, I'll take the device gross margin. So again, Q1 device gross margin was negative 5%, which was perfectly flat if you exclude the $10 million positive service operator licensing catch-up in Q1 of last year.

Speaker Change: Give some perspective.

Speaker Change: Are you thinking about just philosophically about these levels of sustained profitability. Thank you.

Speaker Change: Okay.

Speaker Change: Yes, Okay. So I'll take the <unk> question first.

Dan Jedda: In terms of the near term and the change from Q1 to Q2, it really is reflective of the ramp up in our Roku branded devices. And again, that's a positive. We are continuing to ramp that up. We're far more distributed now. We're in 2023. I'm sure Mustafa can talk about that.

Speaker Change: We were flat year on year in <unk> and Thats of course.

Speaker Change: Mixing out.

Speaker Change: Two more international than U S, where we're in our scale and engage phase we are starting to monetize in areas like Mexico and continue to monetize in areas like Canada, UK, and Germany, but essentially a lot of our international growth does have a lower arpus. So we do mix out I will say, what we do see which is positive as one.

Dan Jedda: But we see that as a positive. And we would expect those margins to be in the Q2 ballpark going forward. Again, as we grow and scale this program, we will improve our cost structure within devices. And over time, those margins will get better relative to where we are now.

Speaker Change: <unk>.

Speaker Change: If I were to just look at U S. In isolation, we of course look at it in multiple ways.

Speaker Change: On a trailing 12 month basis U S <unk> was up.

Speaker Change: Year on year, and when we mix in international it becomes flat for total company. So that as a positive for us that we are improving our <unk> on a trailing 12 month basis. So we also look at it on a quarterly basis that also was positive.

Speaker Change: The U S.

Speaker Change: Looking at the most recent quarter, which is a positive so I like the trends I see in terms of on a mix adjusted basis at <unk>, but only mixed things out.

Dan Jedda: But again, we are in the ramp-up stage of Roku branded TVs. And so for the near term, as we ramp that program up, I would expect to see margins similar to Q2. Yeah, in terms of Roku Pay, you know, I don't think we've broken out the percentage of streaming households that use it. I'll just say that it's the primary way that we drive subscriptions on our platform by having viewers sign up to a subscription service with the ease of using RokuPay.

Speaker Change: The <unk> does tend to be.

Speaker Change: Flat.

Speaker Change: Just given the growth that we're seeing for active international which again is a good thing as we continued to scale.

Speaker Change: And grow engagement internationally, ultimately, we will monetize international.

Speaker Change: We are monetizing pieces of it but we'll continue to monetize it and that should improve international <unk>.

Dan Jedda: And a lot of the way we plan and we have improved RokuPay adoption on the platform is, you know, things like integrating SVOD content more throughout the recommendation engine. So, for example, like I just mentioned, we're adding a content row, a recommendation of content, a row of recommended content at the top of our home screen.

Speaker Change: Over time.

Speaker Change: This is Anthony I'll, just I'll just comment that we're seeing great progress with our international.

Speaker Change: Growth plans for example in Mexico.

Speaker Change: We've now achieved 40% market share for Tvs, 40% of TV Solar Mexico, Roku, Tvs, which is a great achievement for us.

Anthony Wood: That'll include recommendations of SVOD content, both entitled and unentitled SVOD content, meaning SVOD content that you have a subscription for, which will increase engagement, which will reduce churn, as well as SVOD content that you don't have a subscription for, which you then would sign up for, you know, get a free trial and sign up using RokuPay. But we also, so integrating SVOD throughout the platform more, but also the user experience of how easy it is to sign up with RokuPay.

Anthony Wood: So starting to ramp up monetization I mean, it's still early days internationally, but we are starting to make progress with for example, watching the Roku channel in Mexico and things like that.

Speaker Change: And now I'll just take the second part of that question, Ralph on EBITDA and free cash flow.

Ralph: We feel very good about EBITDA.

Ralph: Basically we have had our third straight quarter of positive adjusted EBITDA and we guided to.

Ralph: Positive adjusted EBITDA of $30 million or Q1, so four quarters inclusive of the guide I feel very good about what we need to have going forward.

Anthony Wood: Also, the technicalities of running a large-scale billing platform, things like passive cancellations, you know, there's just a lot of operational focus on improving the numbers in RokuPay. And so, you know, it's a big business, and there's still lots of opportunities to continue to improve it. Thanks.

Ralph: We said.

Ralph: In that letter and enhance the repeated that is.

Ralph: As we focus on growing.

Ralph: The growth rate of our platform in FY 'twenty five we will continue to grow EBITDA and free cash flow I will say I've said it many times free cash flow EBITDA adjusted EBITDA will be a good proxy for free cash flow as we are Capex light and we will continue to be Capex light for.

Anthony Wood: Thank you. One moment for our next question, and it comes from the line between Rolf Schachardt and William Blair.

Rolf Schachardt: Please proceed. Good afternoon, thanks for taking the questions. Dan, just a question on ARPU. It did increase sequentially. So I'm just kind of curious, you know, how we should think about that trend line going forward, particularly with, you know, some of the monetization efforts that Anthony highlighted. And then maybe, as a follow-up, maybe a bigger picture, you know, a couple quarters now of higher levels of EBITDA and free cash flow, just kind of thinking or giving some perspective, if you could, how you're thinking about just philosophically about these levels of sustained profitability. Thank you. Yeah, okay, so I'll take the ARPU question first.

Ralph: At least the next year.

Ralph: Really really happy with the capital that we have and how we're focusing capex being capex light. So adjusted EBITDA will be a great proxy for free cash flow. So we see that growing along with adjusted EBITDA I will say one thing that we did will do in Q1.

Ralph: Does something called the net share settlement, where when we issued our shares.

Ralph: Our restricted stock units in Q1.

Ralph: We did offset some of that with net share settlement. So we offset a third of our dilution by essentially issuing less shares and paying the taxes and cash <unk>.

Dan Jedda: We were flat here on urine ARPU, and that's, of course, mixing out to more international than U.S. We're in our scale and engage phase. We are starting to monetize in areas like Mexico and will continue to monetize in areas like Canada, the U.K., and Germany. But essentially, a lot of our international growth does have a lower ARPU, so we do mix in. I will say what we do see, which is positive, is one, you know, if I were to just look at the U.S. in isolation, we, of course, look at it in multiple ways, and on a trailing 12-month basis, U.S. ARPU was up year on year, and when we mix in international, it becomes flat for total companies.

Ralph: The impact of reducing the dilution impact of shares issued that's just one way we utilized cash and as we continue to focus on free cash flow and free cash flow per share that will have a positive impact.

Ralph: I do expect us to continue to do that for the rest of this year, which should offset.

Ralph: About a third of the of the dilution of future issuances.

Speaker Change: That's helpful. Thanks, Anthony Thanks, Dan.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Alright comes from the line of Rich Greenfield with <unk> partners. Please proceed.

Dan Jedda: So that is a positive for us that we are improving ARPU on a trailing 12-month basis. So we also look at it on a quarterly basis. And that was positive in the U.S. looking at the most recent quarter, which is positive.

Hi, Thanks for taking the question Anthony earlier in the call you touched on this idea of this personalized speed that you rolled out at the top of Roku.

Richard Greenfield: For a long time, Roku was always about apps or clicking on apps.

Dan Jedda: So, you know, I like the trends I see in terms of on a mixed-adjusted basis in ARPU, but when we mix things out, the ARPU does tend to be flat just given the growth that we're seeing for actives international, which again is a good thing as we continue to scale and grow engagement internationally. Ultimately, we will monetize international. We are monetizing pieces of it, but we'll continue to monetize it, and that should improve international ARPU over time. This is Anthony.

Curious sort of.

Richard Greenfield: Fundamentally what made you take the shift because it seems like a pretty big fundamental shift in how content is sort of surfaced and as you think about this personalized feed obviously as you think about directing the traffic to the Roku channel, where you sell ads or apps that you.

Speaker Change: Could subscribe to it seems to give you a lot of power to drive revenue and I'm trying to think about how the interplay between purely what a user might want to watch next versus how it drives revenue Roku and how you think about that balance going forward.

Anthony Wood: I'll just comment that, you know, we're seeing great progress with our international growth plans. For example, in Mexico, we've now achieved a 40% market share for TVs. 40% of TVs sold in Mexico are now Roku TVs, which is a great achievement for us.

Speaker Change: Sort of just how this evolves for roku, we'd be really interesting here. Thanks.

Dan Jedda: And we're also starting to ramp up monetization. I mean, it's still early days internationally, but we are starting to make progress with, for example, launching the Roku channel in Mexico and things like that. And I'll just take the second part of that question, Ralph, on EBITDA and free cash flow. So, you know, we feel very good about EBITDA. We basically, we have had our third straight quarter of positive adjusted EBITDA, and we've guided to a positive adjusted EBITDA of $30 million for Q1.

Speaker Change: Hey, rich, yes so.

Speaker Change: Yes, I think theres a few different things I think that I think about when I think about being a content ROE on the home screen one is our viewers.

Speaker Change: The fundamental driver of our success has been building a custom built operating system for TV that has.

Speaker Change: A simple and delightful experience and we have an iconic.

Speaker Change: Homescreen this different differentiated recognizably different than our competitors. So we don't want to you obviously don't want to lose that we're not going to lose that.

Dan Jedda: So, four quarters inclusive of the guide, I feel very good about EBITDA going forward. We said that, you know, in the letter, and Anthony repeated that, as we focus on growing the growth rate of a platform in FY25, we will continue to grow EBITDA and free cash flow. I will say, I've said it many times, free cash flow, EBITDA, adjusted EBITDA will be a good proxy for free cash flow, as we are CapEx Lite and will continue to be CapEx Lite for at least the next year.

Ralph: But also if you just look at the evolution of what.

Speaker Change: What people view on a platform that growth there used to be that a lot of being spread out a lot of different apps.

Speaker Change: I would say for example, the number that we said the number three app on our platform is the Roku channel.

Dan Jedda: But.

Speaker Change: But it's not really an app I mean of course, it isn't app, but it's also more than that its content that we have SaaS content premium subscription content and <unk> content.

Dan Jedda: Antenna that we've licensed directly that we have direct distribution deals with them that we integrate throughout our user experience one way to access that content just due to the broker channel App, but you can also access it through the more ways to watch interface on our UI you can access it through the sports zone.

Dan Jedda: Really, really happy with the capital that we have and how we're focusing, you know, CapEx being CapEx Lite. So, adjusted EBITDA will be a great proxy for free cash flow. So, we see that growing along with adjusted EBITDA. I will say one thing that we did in Q1 was something called a net share settlement, where when we issued our shares via our restricted stock units in Q1, we did offset some of that with a net share settlement. So, we offset a third of our dilution by essentially issuing less shares and paying the taxes in cash, which had the impact of reducing the dilution impact of the shares issued.

Speaker Change: There's just lots of different ways and it's one of the fundamental.

Speaker Change: Parts of our business model is to expose content to viewers.

Dan Jedda: And drive engagement and content.

Speaker Change: While being disciplined about how much we spend for content and we can do that by integrating it into our UI.

Speaker Change: It's important for our viewers both that content is super important for our business model.

Speaker Change: <unk>.

Speaker Change: It's exposed content so.

Speaker Change: And then of course.

Dan Jedda: That's just one way we utilize cash, and as we continue to focus on free cash flow and free cash flow per share, that will have a positive impact. I do expect us to continue to do that for the rest of this year, which should offset about a third of the dilution of future issues. Great, it's helpful. Thanks, Kathleen.

Speaker Change: This year as last year for me was the euro focusing on operational efficiencies. This year I'm focused on driving platform revenue growth.

Speaker Change: Tons of opportunity on the big ones is just the <unk> and its iconic but it hasnt changed really in a long time and there's lot of ways, but still.

Speaker Change: Still keep what's made it great, but also make it more useful for our viewers and drive revenue. So that's that's sort of a may different kind of aspects.

Dan Jedda: Thank you. One moment for our next question. All right, it comes from the line of Rich Greenfield with Light Shed Barners.

Speaker Change: Maybe asked another way do you think ultimately it becomes the content feed and not in App feed like long term.

Richard Greenfield: Please proceed. Anthony, earlier in the call, you touched on this idea of this personalized feed that you've rolled out at the top of Roku. For a long time, Roku was always about apps or, you know, clicking on apps, various sorts of. Fundamentally, what made the shift because it seems like a pretty big fundamental, how, you know, kind.

Speaker Change: Well I don't want the designer Homescreen Scott on.

Speaker Change: On the earnings call, but but.

Speaker Change: The homescreen by goal with the hopes that it will evolve.

Speaker Change: While maintaining its iconic.

Speaker Change: Brent Jason.

Speaker Change: While increasing monetization and increasing its usefulness for viewers and a big part of our strategy for that.

Speaker Change: Some of this content.

Speaker Change: It's not it's also about what we call experience so things like the sports experience.

Anthony Wood: As you think about this personalized feed, and obviously, as you think about directing the traffic to the Roku channel where you sell ads or apps that you could subscribe to, it seems to give you a lot of power to drive revenue. And I'm trying to think about how the interplay between purely what a user might want to watch next versus how it drives revenue at Roku and how you think about that balance going forward, you know, and sort of just how this evolves for Roku would be really interesting to hear. Hey, Rich.

Anthony Wood: Just to bring it up because it's just a good example is an experienced for helping juress spine sports content across the across the across the platform. So I think one of the things we plan to do with the homescreen, it's still more of these types of experiences.

Speaker Change: To make them more useful viewers at to use those ways to integrate advertising or promotion sponsorship as well. So that you might see more of that kind of thing integrate into our homescreen long term, but.

Speaker Change: But no I don't think it will ever become Jeff's content recommendations.

Anthony Wood: Yeah. So, you know, there's a few different things to think that I think about when I think about putting a content row on the home screen. One is our viewers, you know, the fundamental, driver of our success has been building a custom-built operating system for television that has a simple and delightful viewer experience, and we have an iconic homescreen that's different differentiated and recognizably different than our competitors so we don't want to we obviously don't want to lose that we're not going to lose that but but also you know if you just look at the evolution of, What people view on a platform like Roku used to be that a lot of things spread out a lot of different apps, you know, now I say, for example, the number, we said the number three app on the platform is the Roku channel. But, you know. But it's not really an app.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Okay.

Speaker Change: He comes from the line of <unk> <unk> with Bank of America. Please proceed.

Speaker Change: Hi, Thanks for taking my questions I have two one on active account growth and one non programmatic revenues.

Speaker Change: On active account growth do you see more growth in the U S or do you think that more growth now comes from international markets and with respect to the Walmart Vizio deal do you see any impact from that and do you see yourself, maybe potentially gaining share at other retailers and then the second question on programmatic Charlie I wanted to ask.

Speaker Change: Q what innings are we in with respect to opening up to other DSP and have you seen a meaningful uptick in the fill rates and any impact on CPM.

Anthony Wood: I mean, of course, it is an app, but it's also more than an app. It's the content that we have. It's fast content. It's pre-use subscription content. It's AVOD content. It's content that we've licensed directly, that we have direct distribution deals with, and that we integrate throughout our user experience. One way to access that content is through the Roku channel app, but you can also access it through the more ways to watch interface on our UI. You can access it through the support zone. There are just lots of different ways.

Speaker Change: Thank you.

Speaker Change: Right. So this is Anthony and I actually see I think three questions in that question.

Speaker Change: So I'll take the first part.

Anthony Wood: Turning it over to staff, it and talk about Walmart.

Anthony Wood: <unk>.

Anthony Wood: And then Charlie to talk about <unk> I mean in terms of active account growth.

Charlie: We're seeing growth I mean.

Anthony Wood: Obviously.

Anthony Wood: Its more future growth our Pharm D opens you ask because theres just a lot more humans with broadband households, the watch TV outside of the U S than inside the U S and certainly we're seeing stronger growth at this point outside U S and inside the U S but.

Anthony Wood: And it's one of the fundamentals. Part of our business model is to expose content to viewers and drive engagement with content while being disciplined about how much we spend on content. And we can do that by integrating it into our UI. So it's important for our viewers to expose that content, and it's super important for our business model, you know, to expose content. So, and then, of course. This year, last year for me, was the year of focusing on operational efficiency.

Anthony Wood: But there is still I believe.

Speaker Change: Plenty of room to continue to grow active accounts inside the U S for for a while and of course, there is tons and tons of room to continue to grow exit paths outside the U S, which we're making good progress there.

Speaker Change: And our approach outside the us has been to focus on.

Anthony Wood: This year, I'm focused on driving platform revenue growth. There's tons of opportunity. One of the big ones is just the home screen. It's iconic, but it hasn't changed much in a long time.

Speaker Change: A small number of specific countries I think I'll focus countries.

Speaker Change: Established scale in those countries and then add more countries. So the countries. We've been focused on historically are primarily.

Anthony Wood: And there are a lot of ways to still keep what's made it great but also make it more useful for our viewers and drive revenue. So that's sort of a different kind of aspect. Maybe ask another way, do you think ultimately it will become a content feed and not an app feed, like in the long term? Well, I don't want to design our home screen on Ernie's call, but my goal with the home screen is that it will evolve while maintaining its iconic differentiation and while increasing monetization and increasing its usefulness for viewers.

Speaker Change: Entries in the Americas, like Mexico, like U S, Mexico, Canada sale and then.

Speaker Change: Outside the Americas, primarily the U K.

Dan Jedda: And we're seeing great progress in all those countries.

Speaker Change: And.

Speaker Change: And then at some point, we will add other countries as well so.

Anthony Wood: Although Ms stuff that you wanted.

Speaker Change: Anything to add on the international or if you go to slide no.

Anthony Wood: So online marketing.

Speaker Change: Okay.

Speaker Change: Former.

Anthony Wood: While we are busy.

Speaker Change: Sure Hi.

Speaker Change: So we've spent the last 15 years building America number one TV streaming platform and the brand and our users log broker and ask for Roku.

Anthony Wood: And a big part of the strategy for that is some of its content, but it's also about what we call experiences, things like the sports experience, which is just, we bring it up a lot because it's just a good example. It's an example for helping viewers find sports content across the platform. And so, I think one of the things we plan to do with the home screen is to build more of these types of experiences to make them more useful for viewers and to use them as a way to integrate advertising, promotion, and sponsorship as well.

Anthony Wood: And many have multiple devices in their homes.

Anthony Wood: Coming to the platform where they consume.

Dan Jedda: Their content.

Speaker Change: So we know what our customers want and we are always innovating.

Anthony Wood: Aviation is not just about launching new features but also bringing down the cost of the existing features for our customers. So.

Anthony Wood: So we havent very strong set up here, we are confident in our ability to continue to grow our streaming households.

Anthony Wood: So, you know, you might see more of that kind of thing integrated into our home screen long-term, but no, I don't think it'll ever become just content recommendations. Thank you. One moment for our next... and he comes from the line of Ruplu Bhattacharya with Bank of America. Please proceed.

Ruplu Bhattacharya: Obviously, we have a great relationship with all of our retail partners, including Walmart, where we are an important part of their shelf space in streaming players Tvs and smart home categories.

Ruplu Bhattacharya: Additionally, we have a wide retail distribution and then outside of the U S.

Speaker Change: We can expand it and also deepening with select retail partners.

Ruplu Bhattacharya: Hi, thanks for taking my questions. I have two, one on active account growth and one on programmatic revenues. On active account growth, do you see more growth in the U.S., or do you think that more growth now comes from international markets? And, you know, with respect to the Walmart-Vizio deal, do you see any impact from that? And then, on programmatic, Charlie, I wanted to ask you, what innings are we in with respect to opening up to other DSPs? And have you seen a meaningful uptick in the fill rate and any impact on... Right, cool. So this is Anthony, and I actually see three questions in that question.

Speaker Change: So overall, we have a robust strategy to continue to grow our streaming household without devices.

Speaker Change: Includes statements players.

Speaker Change: Our licensed broker television program in our Roku branded Tvs that we launched last year.

We opened on the Roku branded Tvs.

Ruplu Bhattacharya: We are expanding the product lineup with recent introduction of higher performance <unk> with the Roku pro serious.

Ruplu Bhattacharya: Which complement the existing select them plus serious.

Anthony Wood: And we're also spending.

Ruplu Bhattacharya: Its distribution they are now available.

Speaker Change: Costco, Amazon Dot com and Walmart Dot com.

Speaker Change: So these factors and our strong track record capacity.

Anthony Wood: So I'll take the first part, turn it over to Mustafa to talk about Walmart and video, and then Charlie to talk about DSPs. I mean, in terms of active account growth, you know, we're seeing growth. I mean, obviously, more future growth outside the U.S. because there are just a lot more humans with broadband households that watch TV outside the U.S. than inside the U.S. Certainly, we're seeing stronger growth at this point outside the U.S. than inside the U.S.

Speaker Change: Such as recently announced AI based picture quality settings.

Dan Jedda: Along with our singular focus on streaming and low cost hardware. That's enabled by our spill TV operating system gives us confidence that we will keep growing our distribution and our streaming households.

Speaker Change: And this is Anthony again, so just back third part of your question was on DSP.

Anthony Wood: I'll turn it over to Charlie, but just I'll, just say that like I said before.

Anthony Wood: But there's still, I believe, plenty of room to continue to grow active accounts inside the U.S. for a while. And, of course, there's tons and tons of room to grow active accounts outside the U.S., and we're making good progress there. I mean, our approach outside the U.S. has been to focus on a small number of specific countries and many more, establish scale in those countries, and then add more countries. So, you know, the countries we've been focused on historically are primarily countries in the Americas, like the US, Mexico, Canada, Brazil, and then outside the Americas, primarily the UK.

Anthony Wood: I highlighted three areas, where I think theres a lot of potential for us to increase our focus drive more growth accelerate growth in 2025.

Anthony Wood: And we're seeing great progress in all those countries, and..., you know, and then at some point, we'll add other countries as well. I don't know if you have anything to add on the international scene or if you just want to focus on Walmart. Walmart, Vizio.

Charlie: Platform revenue growth and DSP, So I wanted to one of the pillars and.

Charlie: We've changed our strategy.

Charlie: A bit there to be much more focused on working with third party partners.

Charlie: I would say, it's pretty early in that.

Anthony Wood: And that trend and that sort of adoption that new strategy and theres a lot of room to grow but we've had some early successes and we're making good progress.

Speaker Change: At the high level to you I don't know Charlie if you want to expand on that.

Charlie: Great. Thanks for the question. It's early innings for sure I think we're getting to the heart of our lineup.

Anthony Wood: There continues to be a ton of opportunity for us with third party DSP and it's an important priority for all of us.

Anthony Wood: As you know over the last year. So we made the strategic changes Anthony talked about.

Charlie: And we've been really focusing on incorporating more third party DSP is now.

Charlie: It is going well, but the expanded access to our platform that I talked about on the last call. We now have over 30 partners not just all the names you think by the way. Our list includes all the notable partners, but also it's the cart and Cox, our auto and others you might not immediately have pop to mind. So this expansion is part of our commitment to an open.

Mustafa Ozgen: Sure, Hi Ruplu. Look, we've spent the last 15 years building America's number one TV streaming platform and brand, and our users love Roku and ask for Roku, and many have multiple devices in their homes.

Charlie: <unk> system, which is central to our growth strategy and I think this will be a key differentiator for us versus large closed ecosystems.

Mustafa Ozgen: We are becoming the platform where they consume their content, so we know what our customers want, and we are always innovating. Our innovation is not just about launching new features but also bringing down the cost of existing features for our customers. So we have a very strong setup here. We are confident in our ability to continue to grow our streaming households. Obviously, we have a great relationship with all of our retail partners, including Walmart, where we are an important part of their shelf space for streaming players, TVs, and the smart home category.

Charlie: As I've shared before we're committed to flexibility and meeting advertisers, where they prefer to transact and district strategic pivot, it's been paying real dividends.

Charlie: In the first quarter, we continued to see increases in programmatic AD spend as a percentage of total video investment on our platform and that underscores for me the strength and appeal of our offering our strategy isn't just about expanding the platforms. We operate on its also about <unk>.

Mustafa Ozgen: Additionally, we have a wide retail distribution in and outside of the U.S., and we continue to expand and also deepen it with select retail partners. So overall, we have a robust strategy to continue to grow our streaming households with our devices, which includes streaming players, our licensed Roku TV program, and our Roku-branded TVs that we launched last year. And over on the Roku branded TVs, we are expanding the product lineup with the recent introduction of higher performance TVs with the Roku Pro Series, which complement the existing select and plus series, and we're also expanding its distribution. They are now available at Best Buy, Costco, Amazon.com, and Walmart.com.

Charlie: Inning. These relationships, so we're making it easier for advertisers to execute campaigns programmatically with us and easier for them to use roku inventory. So as we continue to deploy our programmatic strategies ruble.

Charlie: Really expect us to continue the early traction we're seeing and prove that this is really just as you said early innings.

Speaker Change: Thank you so much for all the details and congrats on the quarter.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Charlie: And he comes from the line of Jason Bazinet with Citi. Please proceed.

Speaker Change: I just had a quick question on the home screen.

Jason Bazinet: I'm always surprised when I turn on my Roku, how much sort of white space there is there.

Mustafa Ozgen: So these factors in our strong track record and capacity to innovate, such as recently announced AI-based picture quality settings, along with our singular focus on streaming and low-cost hardware that's enabled by our purpose-built TV operating system give us confidence that we will keep growing our distribution and streaming business. And this is Anthony again. So just back, the third part of your question was on DSPs. I'll turn it over to Charlie, but I'll just say that, like I said before, I highlighted three areas where I think there's a lot of potential for us to increase our focus, drive more growth, and accelerate growth in 2025 in terms of platform revenue growth. And DSPs are one of the pillars.

Speaker Change: My question is is your sense that this sort of move from static to more video centric is sort of the key unlock to monetize it.

Charlie: Or do you think there's just something about marketers.

Charlie: That don't quite understand.

Charlie: Since it's a pretty unique sort of piece of inventory to buy.

Charlie: In other words do you think that this shift to video.

Charlie: Sort of a key enabler or could it take more time.

Mustafa Ozgen: Thanks.

Charlie: Okay.

Charlie: <unk>.

Charlie: This is Anthony I think I think that to see.

Charlie: Frankly, there's lots of areas, we spend our time and our resources on.

Charlie: Our homescreen has served US well there is a lot of white space as part of what makes the iconic different recognizable as part of our brand.

Anthony Wood: And we've changed our strategy a bit there to be much more focused on working with third-party partners. And I would say it's pretty early in that sort of adoption of that new strategy, and there's a lot of room to grow. But we've had some early successes, and we're making good progress. That's at least at a high level.

Charlie: But I would say the big change is that you just identified it like okay. We're going to we're going to we're going to prioritize resources to work on the home screen Theres, just a lot of untapped opportunity there, but you asked is one of the one of the areas of opportunity.

Anthony Wood: The waiting some form some content like the rig.

Anthony Wood: Recommendation road that we're adding.

Anthony Wood: But there are just lots of business lots of areas on the whole screen in terms of the potential to both increase engaging experiences with our viewers.

Charlie Collier: I don't know, Charlie, if you want to expand on that. I agree. Thanks, Ruplu, for the question. It's early innings, for sure.

Charlie Collier: I think we're getting to the heart of our lineup. There continues to be a ton of opportunity for us with third-party DSPs, and it's an important priority for all of us. As you know, over the last year or so, we made the strategic changes Anthony talked about, and we've been really focusing on incorporating more third-party DSPs. Now, it is going well, but the expanded access to our platform that I talked about on the last call, we now have over 30 partners.

Charlie Collier: And more deeply integrating promotion and advertising in ways that work for marketers as well as our viewers and so.

Charlie: No I think the video, though adding a video ads at Altria is going to be very popular my prediction is it'll be very popular with advertisers.

Charlie Collier: Like I said as households, with 140 million people in their daily rates before they enter in many of those apps don't have video advertising so I.

Charlie Collier: Not just all the names you think of, by the way. Our list includes all the notable partners, but also Instacart and Cox Auto and others you might not immediately have popped to mind. This expansion is part of our commitment to an open ecosystem, which is central to our growth strategy. I think this will be a key differentiator for us versus large, closed ecosystems.

Charlie Collier: I think it will be popular.

Dan Jedda: And like I said, we're also looking at other ways to integrate video answer homescreen, but.

Charlie: Somebody who is not that that's the only thing we're looking at.

Speaker Change: And then.

Charlie Collier: Do you think you'd be marketers understand the value of your advertising do.

Speaker Change: Thanks for the question Jason.

Charlie Collier: As I've shared before, we're committed to flexibility and meeting advertisers where they prefer to transact. And this strategic pivot has been paying real dividends. In the first quarter, we continued to see an increase in programmatic ad spend as a percentage of total video investment on our platform. And that underscores, for me, the strength and appeal of our offering. You know, our strategy isn't just about expanding the platforms we operate on. It's also about deepening these relationships.

Speaker Change: It's really about distinction, we do so much well, but as Anthony said when you've got nearly 120 million people. That's a huge distinction that enough itself and there is a whole class of viewers today crude purchase that feed AD free streaming subscriptions for example, and they do so they see fewer ads and so it's worth noting.

Charlie Collier: You should remember that the one thing all viewers seat when they turn on their Tvs are home screen and broker ads. As you note are placed in an uncluttered AD environment. So we literally have the privilege of engaging viewers before they choose what to watch before audience splinter into apps and if you think about the problem for marketers a lot of it is attention frankly.

Charlie Collier: So we're making it easier for advertisers to execute campaigns programmatically with us and easier for them to use Roku inventory. So as we continue to deploy our programmatic strategies, Ruplu, I really expect us to continue the early traction we're seeing and prove that this is really just, as you said, early. Thank you so much for all of the details and congrats on the quarter. Thank you. One moment for our next question, and it comes from the line of Jason Bassinet with City.

Jason Helfstein: Inflation, so our home screen is a huge opportunity.

Jason Helfstein: Does it really differentiations.

Speaker Change: That's great. Thank you.

Speaker Change: Thank you one moment for our next question. Please.

Speaker Change: And he comes from the line of Barton Crockett with <unk>. Please proceed.

Jason Helfstein: Okay. Thanks for taking my question.

Jason Helfstein: I was curious about sports, which is kind of theme you touched on a lot and.

Jason Helfstein: Please proceed. I just had a quick question on the home screen. I'm always surprised when I turn on my Roku how much sort of white space there is there. My question is, is it your sense that this sort of move from static to more video-centric is sort of the key unlock to monetize it? Or do you think there's just something about marketers that they don't quite understand since it's a pretty unique sort of piece of inventory to buy? In other words, do you think that this shift to video is sort of a key enabler, or could it take more time? and Michael Nathanson.

Jason Helfstein: In particular, I mean, there's been some media reports, perhaps that roku.

Jason Helfstein: Could be looking at buying some sports rights directly I think I'm still something recently about the major League Baseball Sunday.

Jason Helfstein: Lead off that wasn't on Peacock.

Jason Helfstein: And you guys have done something as small scale articulates formula E.

Speaker Change: Just wondering kind of just structurally is buying sports rights directly.

Speaker Change: At a meaningful level does that makes sense for roku it would seem to be questionable given that anyone's streaming sports just kind of want to have a deal with you to go through you I would imagine so if you could talk through how you see sports rights deals and the role for Roku direct or through kind of third party kind of intermediaries.

Anthony Wood: This is Anthony. I think that, to be frank, there's lots of areas we spend our time and our resources on, and our home screen has served us well. There is a lot of white space as part of what makes it iconic and different and recognizable, you know, as part of our brand. [inaudible] But I would say the big change is that we just identified it like, okay, we're going to, we're going to, we're going to prioritize resources to work on the home screen. There's just a lot of untapped opportunity there, but you add just one of the areas of opportunity. I mean, integrating some forms, some content like the recommendation row that we're adding.

Anthony Wood: Yes. This is Anthony.

Speaker Change: I would say the primary so first of all we don't comment on rumors or speculation that sort of thing. So I can't comment on that particular member but.

Anthony Wood: Just a bigger question like how do we think about sports I mean, I think the primary way I think about sports is that we're a platform.

Speaker Change: We're a platform.

Speaker Change: Many different streaming services that we distributed on our platform.

Speaker Change: Many of them have sports.

Anthony Wood: So sports in particular is incredibly fragmented.

Anthony Wood: Viewers just have no idea.

Anthony Wood: But there's just lots of areas on the home screen in terms of the potential to both increase engaging UI experiences with our viewers and more deeply integrate promotion and advertising in ways that work for marketers as well as our viewers. And so. No, I think adding a video ad to the home screen is going to be very popular. Well, my prediction is that it'll be very popular with advertisers. You know, like I said, it's households with 140 million people in them every day before they enter an app.

Anthony Wood: To find the game they want to watch your favorite team or so so the primary opportunity for us is to help our viewers to be the place. They go to help them find a sporting event.

Anthony Wood: To watch.

Speaker Change: Now.

Anthony Wood: It doesn't mean, we also have we also have content that we monitor that we license directly we are currently a rev share content, we have direct license content, we have broker to originals. So.

Anthony Wood: We've done we've done but you mentioned from <unk> I mean, the way I would think about Rocha original.

Anthony Wood: Many of those apps don't have video advertising, so I think it'll be popular. And like I said, we're also looking at other ways to integrate video into our home screen, but video is not the only thing we're looking at. And then I want to ask, Charlie, do you think TV marketers understand the value of your advertising on the home screen? Look, you know, it's really about distinction. We do so much well, but as Anthony said, when you've got nearly 120 million people, that's a huge distinction in and of itself.

Speaker Change: Budgeted content budget for content that we either produce or.

Anthony Wood: Sure.

I have more exclusive relationships around so.

Speaker Change: And there is things like the <unk> show, which.

Speaker Change: Which is the roku original that we integrate into the into the <unk> zone.

Anthony Wood: We also look of sponsorships with the sports side and we also look to think about what it is that a place where we can have a video ads I mean, so for us it's really the experience of helping bureau spine content.

Character from Spiderwick: So do licensed content and produce content and so that also could end up in our sports zone, but but the primary goal is to be just the go to place for viewers to find what's the Washington.

Charlie Collier: And there's a whole class of viewers today who purchase ad-free streaming subscriptions, for example, and they do so so they see fewer ads, and so it's worth noting, and you should remember that the one thing all viewers see when they turn on their TV is our home screen. And Roku's ads, as you note, are elegantly placed in an uncluttered ad environment, so we literally have the privilege of engaging viewers before they choose what to watch, before audiences splinter into apps. And if you think about the problem for marketers, a lot of it is attention fragmentation, so our home screen is a huge opportunity because it really differentiates. That's great!

Speaker Change: To monetize that whole experience when they figure out what they want to watch.

Charlie Collier: And at the end up watching something that we have licensed directly that we monetize that as well.

Speaker Change: Okay, Alright, that's great and then if I if I could squeeze in just one other.

Speaker Change: I was just curious if you could give us an update on what youre seeing in terms of the endemic kind of media marketing partners.

Charlie Collier: At this point, it's been a headwind historically, but that business is somebody is kind of normalizing in that somebody is still going through some structural issues with some of the media companies and cost cutting at the streaming services. So what are you seeing in that kind of market right now for you guys.

Charlie Collier: Thank you. Thank you. One moment for our next question, and this comes from the line of Barton Crockett with Grossenblatt.

Barton Crockett: Yes, Charlie Charlie will take that great. Thanks.

Barton Crockett: Thanks, Barton look we have a large <unk> business and good news is we're really good at it and Roku is really the best place for marketers to build audiences so simply put.

Barton Crockett: Okay, thanks for taking my question. I was curious about sports, because it's been a theme you've been touching on a lot. And in particular, I mean, there's been some media reports perhaps that Roku, you know, could be looking at buying some sports rights directly. I think there was something recently about the Major League Baseball Sunday leadoff that was on Peacock. You guys have done something at a small scale, I think it was formula E. I'm just wondering, kind of just structurally, whether Roku is buying sports rights directly at a meaningful level.

Barton Crockett: We build content companies businesses.

Barton Crockett: I think you used the right word obviously the market has been normalizing versus what it used to be and so our efforts have been to monetize our home screen.

Speaker Change: Hey, Anthony described and we're now focused on all verticals as we continue to diversify and successfully sell inventory that was previously utilized nearly exclusively by many advertisers. So we're also growing engagement and monetization by creating new experiences on the home screen actually.

Barton Crockett: Does that make sense for Roku? You know, it would seem to be questionable given that, you know, anyone streaming sports is kind of going to want to have a deal with you to go through you, I would imagine. So if you could talk about how you see sports rights deals in the role for Roku direct or, you know, through kind of a third party kind of intermediary. Yeah, this is Anthony. You know, I would say the primary so first of all, we don't comment on rumors, speculation, that sort of thing.

Barton Crockett: Anthony mentioned there rich is on the shelf. So a notable example worth sharing is BMW sponsorship.

Anthony Wood: The rich items show, which included.

Anthony Wood: <unk> key add on our home screen as well as custom advertising within Roku city or state sponsored his live show by the way is that the draft. This week for us and doing a lot of shows from there.

Anthony Wood: So I can't comment on that particular rumor. But just your bigger question, like, well, how do we think about sports? I mean, you know, I think the primary way I think about sports is that we're a platform. We're a platform, and there are many different streaming services that we distribute on our platform. Many of them have sports. And so sports in particular is incredibly fragmented, and viewers just have no idea how to find the game they want to watch or their favorite team.

Anthony Wood: And then our partnership with BMW is growing so our home screen is being deployed beyond M&A and for the client, we're enhancing brand visibility and engagement.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you one moment for our next question. Please.

Anthony Wood: And it comes from the line of Mark Mahaney with Evercore ISI. Please proceed.

Anthony Wood: This is Ian Peterson on for Mark. Thank you for taking my questions first question, the Roku channel streaming hours accelerated for the second quarter in a row can.

Anthony Wood: So the primary opportunity for us is to help our viewers, to be the place they go to help them find a sporting event to watch. And now, that doesn't mean we also have content that we monitor, that we license directly. We have RepShare content, we have direct license content, we have Broadway originals.

Speaker Change: Can you help us walk through some of the drivers of that.

Anthony Wood: Where within the Roku channel or what areas of content are you seeing the strong.

Speaker Change: Engagement trends from.

Speaker Change: And maybe to follow up on the earlier programmatic question, how should we think about the trajectory and mix of video AD revenue coming from third party a programmatic demand going forward and last question on advertising anything you can call out on the macro front on quarter to date advertising trends youre seeing heading into the upfront season and.

Anthony Wood: So we've done, like you mentioned, Formula E. I mean, the way we think about Roku Originals is a budget for content that we either produce or have more exclusive relationships around. So we do things like the Rich Eisen Show, which is a Roku Original that we integrate into the SportsZone. We also look at sponsorships for the SportsZone. And we also think about, well, is that a place where we could put video ads?

Anthony Wood: Progress on some of the SMB advertiser initiatives, you've laid out and attracting them to the roku platform. Thanks.

Anthony Wood: Hey, Ian this is Dan.

Speaker Change: Thanks for all the questions.

Anthony Wood: Let's see I think we'll start with Charlie you got it.

Charlie: Thanks, Ian you asked about Trc.

Anthony Wood: I mean, for us, it's really the experience of helping viewers find content. We also do license content and produce content, and so that also could end up in our SportsZone, but the primary goal is to be just the go-to place for a viewer to find what to watch and then monetize that whole experience when they figure out what they want to watch. And at the end of watching something that we have licensed directly, then we monetize that as well. Okay, all right, that's great. And then if I could squeeze in just one more.

Anthony Wood: The Roku channel offers three types of content, primarily light TV and premium subscriptions and we deliver them via viewing experiences that are integrated throughout our platform.

Anthony Wood: As I mentioned earlier, we've made some strategic programming choices for the Roku channel.

Anthony Wood: Strong growth.

Anthony Wood: In the first quarter made it the number three app on our platform by both reach and engagement and as the program type. This past weekend. For example, the Spiderwick chronicles opening weekend debut made it the most watched on demand title on the Roku channel with the highest reach and most hours streamed.

Anthony Wood: I'm curious if you could give us an update on what you're seeing in terms of the endemic kind of media marketing partner. At this point, it's been a headwind historically, but that business is, in some ways, kind of normalizing and, in some ways, still going through some structural issues with some of the media companies and cost cutting at the streaming services. So what are you seeing in that kind of market right now for you guys? Yeah, Charlie will take that.

Any title in the history of broker channel for its opening weekend.

Dan Jedda: It shows there is a tremendous opportunity to engage new audiences with the power of the Roku platform. Other content. We briefly also added short form content launching clips from popular NBC shows like Saturday night live and sports and by servicing this content throughout the roku platform, including our home screen.

Charlie Collier: Great. Thanks, Barton. Look, we have a large M&E business, and the good news is we're really good at it, and Roku is really the best place for marketers to build audiences. So, simply put, we build content companies' businesses.

Charlie Collier: Able to generate additional reach and engagement.

Charlie Collier: Mentioned, we had a live TV, we continue to expand our lineup of fast channels. We recently partnered with the NBA to launch the first ever MBA SaaS channel and that's exclusively on the Roku channel and we now have more than 35 sports focused live TV channels. So all of these examples point to the opportunities for us to serve.

Charlie Collier: Obviously, the market has been normalizing versus what it used to be, and so our efforts have been to monetize our home screen in the way Anthony described, and we're now focused on all verticals as we continue to diversify and successfully sell inventory that was previously utilized nearly exclusively by M&E advertisers. So, we're also growing engagement and monetization by creating new experiences on the home screen. In fact, Anthony mentioned the Rich Eisen Show.

Charlie Collier: Serve and delight, our audiences with the content they love and.

Charlie Collier: Im going to head into the new front last week and I look forward to sharing more of what's coming at the Roku channel.

Charlie Collier: So, a notable example worth sharing is BMW's sponsorship of the Rich Eisen Show, which included a marquee ad on our home screen as well as custom advertising within Roku City. And, of course, they sponsored his live show.

Charlie Collier: Yes.

Charlie Collier: Well look.

Charlie Collier: I talked a little bit about it before there is a lot of opportunity for us in third party DSP.

Charlie Collier: By the way, he's at the draft this week for us and doing live shows from there. And then our partnership with BMW is growing. So, our home screen is being deployed beyond M&E, and for the client, we're enhancing brand visibility and engagement. Okay, thank you.

Dan Jedda: Mentioned that we expanded our relationships to now over 30 partners and while we don't break out the mix.

Charlie Collier: Really.

Charlie Collier: <unk> focused on the Reacceleration of platform revenue and <unk>.

Charlie Collier: Focus will play a huge part of that.

Charlie Collier: I mean dft's one of the things that will happen with more focus on DSP users increased diversity of advertisers and I think I don't want to try that will probably help attract more SMB advertisers. So for sure our firm as well Yeah third question number three.

Charlie Collier: Thank you. One moment for our next question, and it comes from the line of Mark Mahaney with Evercore ISI. Please proceed. This is Ian Peterson. I'm from MARC.

Mark Mahaney: So you asked about the small and medium sized businesses for sure. The demand diversification is something we've been focused on for several quarters I've talked about for a few quarters in a row and I answered earlier that we're in the early innings I really think you're going to see the reacceleration of the platform revenue growth into 'twenty, five and beyond and it is.

Ian Peterson: Thank you for taking my questions. First question, Roku channel streaming hours accelerated for the second quarter in a row. Can you help us walk through some of the drivers of that?

Anthony Wood: Where within the Roku channel or what areas of content are you seeing the strong engagement trends from? And maybe to follow up on the earlier programmatic question, how should we think about their trajectory and mix of video ad revenue coming from third-party programmatic demand going forward? And last question on advertising, anything you can call out on the macro front on quarter-to-date advertising trends you are seeing heading into the upfront season, and maybe progress on some of the S&B advertiser initiatives you've laid out in attracting them to the Roku platform? Thanks. Hey, and this is Anthony.

Anthony Wood: Both small and medium sized businesses and it's also expanding the work we're doing with so many of our existing partners.

Anthony Wood: Got it thank you.

Anthony Wood: Thank you.

Anthony Wood: And with that we conclude our Q&A session I will turn it back to Anthony Wood for final comments.

Anthony Wood: Yeah.

Anthony Wood: Well, thanks to everyone for joining and thanks for our employees customers and partners and advertisers.

Anthony Wood: And with that ladies and gentlemen, thank you for participating.

Anthony Wood: Thanks for all the questions. We offer three types of content primarily, AVOD, live TV, and premium subscriptions, and we deliver them via viewing experiences that are integrated throughout our platform. As I mentioned earlier, we've made some strategic programming choices for the Roku Channel. Its strong growth in the first quarter made it the number three app on our platform by both reach and engagement. And as the program type this past weekend, for example, the Spiderwick Chronicles opening weekend debut made it the most watched on-demand title on the Roku Channel with the highest reach and most hours streamed of any title in the history of the Roku Channel for its opening weekend.

Anthony Wood: You mean.

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Anthony Wood: So it shows there's a tremendous opportunity to engage new audiences with the power of the Roku platform. Other content We've recently also added short form content, launching clips from popular NBC shows like Saturday Night Live and sports. And by servicing this content throughout the Roku platform, including our home screen, we're able to generate additional reach and engagement. As I mentioned, you know, live TV; we continue to expand our lineup of fast channels. We recently partnered with the NBA to launch the first ever NBA fast channel, and that's exclusively on the Roku Channel.

Anthony Wood: Okay.

Anthony Wood: Yes.

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Anthony Wood: Yes.

Anthony Wood: This is Thomas post stories welcome.

Speaker Change: Welcome. This final question.

Anthony Wood: And then housing.

Anthony Wood: It seems to trend.

Speaker Change: Hi, Kevin.

Anthony Wood: Could you update in Ctrip and <unk> Parker Spider ratio guide assume reality okay.

Anthony Wood: And we now have more than 35 sports-focused live TV channels. So all these examples point to the opportunities for us to serve and delight our audiences with the content they love. And, you know, I'm going to head into the new front next week, and I look forward to sharing more of what's coming on the Roku Channel. DSPs.

Anthony Wood: So placebo.

Anthony Wood: I'm an older space.

Speaker Change: Thank you Stephanie.

Anthony Wood: That's why you can succeed.

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Anthony Wood: You are all chosen because you are enough you've made we are inviting gasoline she will become the next WWE superstar coming from Cuba.

Anthony Wood: I mean, these opportunities Brian Ray Hey.

Charlie Collier: Well, look, I talked a little bit about it before. There is a lot of opportunity for us in third-party DSPs. You know, I mentioned that we expanded our relationships to now include over 30 partners. And, you know, while we don't break out the mix, I'm really focused on the re-acceleration of platform review, and the DSP focus will play a huge part in DSPs. One of the things that will happen with more focus on DSPs is an increased diversity of advertisers. And I think, I don't know, that'll probably help attract more SMB advertisers. So you asked about small, medium-sized businesses.

Speaker Change: Hey, guys. Thanks, Vijay ramp up do you think you are.

Charlie Collier: So much raw potential this is your moment.

Charlie Collier: It's life changing there is nothing else like being a WWE superstars.

Charlie Collier: Okay.

Speaker Change: Thank you.

Charlie Collier: And think about what do you really want.

Charlie Collier: We have invited them, commenting female founder in the country.

Charlie Collier: Yes.

Charlie Collier: So I have to decide if we're going to invest in your company you have to decide if youre going to quit your day job.

Charlie Collier: Yes.

Charlie Collier: Everything is on the line I just cannot.

Charlie Collier: I'm now going to sale by Keith This is business aviation.

Charlie Collier: For sure, demand diversification is something we've been focused on for several quarters. I've talked about it for a few quarters in a row, and I answered earlier that we're in the early innings. I really think you're going to see the re-acceleration of platform revenue growth into 2025 and beyond, and this is both small and medium-sized businesses, and it's also expanding the work we're doing with so many of our existing partners. Got it. Thank you.

Charlie Collier: So any time you thought also it seems you might have.

Charlie Collier: Okay.

Anthony Wood: Thank you. And with that, we conclude our Q&A session. I will turn it back to Anthony Wood for final comments.

Anthony Wood: Yes.

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Anthony Wood: Well, thanks to everyone for joining, and thanks to our employees, customers, partners, and advertisers. And with that, ladies and gentlemen, thank you for participating. You mean... [inaudible] This town is full of stories. Welcome to Spiderwick. This house is full of secrets and surprises. My father cataloged every creature of the invisible world. Arthur Spiderwick's field guide will soon be ours.

Anthony Wood: Okay.

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Narrator: Ogre rat's a deceiver, a shapeshifter. I'm an ogre. You have to help save everyone. I'm just a kid. That's why you can succeed, you're all chosen because you are enough you've made it we are inviting athletes who become the next wwe superstars coming from cuba my dad risked his life for me having these opportunities i'm braden ray aka sexy bj red who do you think you are i see so much raw potential this is your moment it's life-changing there is nothing else like being a wwe superstar, If you close your eyes and think about your future, what do you really want?

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