Q2 2025 Roku Inc Earnings Call

It's about relevance and reach that drives results. For example, our friend who owns a cat and loves Regency Era dramas is going to get a different ad experience than her friend who only hangs out in the Sports Zone. All this custom tailoring means that as soon as our cat owner out there turns on her favorite show, she's going to see this personalized video ad.

New season.

New customers. Woah, free baseball games and customers, you didn't even know you needed.

I could use some new shirts.

Nice bottom line, Roku makes every part of the streaming experience better including your ads because better TV for everyone means better advertising for you.

Look, roku's, got this down to a science.

Take care of everything. Ooh, get 2, it's my treat.

Welcome.

To Roku.

Everything you love about TV happens here.

I saved her gathering for TV's biggest moments, original series. This is a Game Changer live sports center here and the year's hottest event. You ready for this? Nearly 50% of all streaming happens here and the best part Roku makes every part of the TV experience better, including the ads.

Wow, what it's not magic. It's the Roku experience. Come on, let's take a tour.

On Roku every Journey starts right here. The Roku home screen aka the leading to all of TV. Every streamer shows up here before they can hop into an app and find their next watch which means you can reach them before they even decide where they're going and talking about reach. When you put your ad in a single streaming app viewers might never see it, but with Roku you get massive, reach across multiple streaming apps and channels All In 1 place. So you can reach your audience wherever they stream. You can even reach those customers when they're not streaming. In Roku City, the heart and soul of your TV. A Whimsical world that celebrates the biggest and buzziest pop culture moments and is always accepting new residents.

So, you've got huge scale TV's, most creative and engaging canvas, and unmissable ads. Now let's talk about. Who's seeing them for that. I'll need a little help.

It's not just about reach, it's about relevant, reach that drives results. For example, our friend who owns a cat and loves Regency Era, drama is going to get a different ad experience than her friend who only hangs out in the Sports Zone and all this Custom Tailoring means that. As soon as our cat owner out there turns on her favorite show, she's going to see this personalized video ad.

Your special friend.

Gourmet.

And all those personal ad experiences help you reach existing customers.

New season.

New customers.

Woah, free baseball games and customers you didn't even know you needed.

I could use some new shirts.

Nice. Bottom line, Roku makes every part of the streaming.

Good day and thank you for standing by. Welcome to The Brokerage second quarter 2025 earnings conference call.

At this time, all participants are in a listen-only mode.

To ask a question during the Q&A session, you'll need to press star 1, 1 on your telephone.

You will then hear an automated message. Advising. Your hand is raised.

To withdraw your question. Please press star 1 1 again.

Please be advised that today's conference is being recorded.

On this call will make 4 looking statements which are subject to risks and uncertainties. Please refer to our Cheryl letter and periodic SEC filings for risk factors. That could cause our actual results to defer materially from these 4 looking statements.

We'll also present GAAP and non-GAAP financial measures.

Gaap Financial measures are provided in our shareholder letter.

Unless otherwise stated all comparisons will be against our results for the comparable 2024 period.

With that operator. Our first question, please?

Thank you. Our first question comes from Cheyenne patil with cesca Honda your line is open.

Hey guys, uh, great quarter. Um, I had a couple of questions

Um first, can you guys talk about what drove the outperformance in 2q and also the full year raise. And then second question um based on your outlook, it looks like you're going to become operating income positive in the fourth quarter. Just how should we think about the trajectory in 2026? Thank you guys.

Hey Sean, this is Anthony. Thanks for the question. Uh, I'll take the first 1 and then Dan can take the second question.

So yeah, it was a great quarter. Uh we're very happy excited with the quarter. Uh but I'd just say what I'm most focused on is what the results are telling us, which is that our strategy to grow. Our platform revenue is working. You know, we set our platform Revenue growth strategy in place, 18 months ago and we've been focused on execution and demonstrating progress along the way.

And this quarter, we're really starting to see the results of that strategy and we believe our strategy is going to keep working and will sustain double-digit platform Revenue growth while improving profitability.

Uh, you know, just a few points about the quarter in Q2. We grew platform revenue 18% year-over-year.

Growth faster than Ott and digital ad markets in the US.

And you know, this reflects our ongoing work to expand and diversify add demand.

And strength, strength, and performance through deeper Integrations with third-party partners. And, of course, the launch of new and exciting products such as the Roku ads manager, which all taken together are driving incremental, demand.

We're also growing Roku built subscriptions with premium subscriptions continuing to perform well.

Uh, we continue to launch new features that we can monetize, which are also adding value for our viewers. And, you know, we closed, of course, the friendly acquisition that we previously announced, and have begun integrating Friendly into Live, Search, and other key areas of our platform.

So yeah, again, it was a great quarter. I think it really shows our strategy starting to work. Uh, you know also of course, great execution, by the team. Uh, and Dan was there, anything you'd like to add and take that second question. Yeah, thanks Anthony, and thanks for the question. Sean, I'll just Echo an comments that, you know, great Q2, uh, very happy with it. Very excited, uh, for the rest of the year as well.

Um, and as Anthony mentioned our, our execution of our monetization in initiatives, gives us confidence to sustain double digit platform Revenue growth while also improving profitability in 2026 and and Beyond choms. So, we feel good about the rest of this year. We feel good about 2026.

Specifically, we've done a great job of investing in our key monetization initiatives. While expanding our ebit down margins,

So you can see from our full year guide, our Evita margin Outlook reflects a full 180 basis, point improvement year-over-year over 2024 we expect to see further margin Improvement uh in 2026. And while we continue to carefully, balance our investment in our platform growth with our margin expansion. We're also focused on operational efficiency and we expect 2026, Opex growth rate, and platform. Margins to stay relatively in line with with 25. Um, and as you point out, our guide does imply, we are on track to be operating in compositive in Q4 of this year. And and for full year 2026 and I'll just note that the Q4 op profit would be you know, earlier than what we said even last quarter. So we feel really good about our Q2 results, we feel good about H2 and going into 2026.

Great. Thank you guys.

Thank you. Our next question comes from Michael Morris with Guggenheim Securities. Your line is open.

Thank you. Uh good afternoon wanted to ask you a couple about advertising um you know you highlighted the progress that you're making both with your third-party Partnerships and then also now with Roku ads manager. So my question on that is can can you talk about? You know what that progress looks like whether there's cannibalization of other parts of the business and maybe how those 2? Um drivers are complimentary to 1 another.

And then my second question is just more broadly on on the macro economy and what you were seeing how, how are Trends now in terms of demand and, and Market Health compared to where we were about 3 months ago, thank you.

I'll take that. So um, you know, in terms of uh ad manager versus third-party Partnerships. Both are doing well for us, ad manager, obviously is newer and smaller business, but growing, uh, faster. I would say that, you know, I think the main thing about the Roku ads manager is that it's, it's opening up a new market for us. It's, you know, the advertisers the performance base advertisers, the traditionally often smaller, and mid-size businesses, that traditionally advertise on social media. Like it, it makes it brings uh, video on Roku as a as a way for those to those customers as a way for those customers to advertise. And so it's a big Market that we have a lot of hopes for over time. We think it's going to grow over time to become a big Market. Um, you know, demand side platforms, third-party Partnerships.

The big part of our strategy and that's working well to to Really lean into those Partnerships. Uh, I'm not doing great but those are, those are, those are and those are big advertisers. But those tend to be the more traditional, you know, traditional video advertisers. Um,

Uh, so I don't know Charlie, if you want to add anything and maybe you can also take the macroeconomy question. Sure, sure, thanks, Anthony. Hey, Michael. Uh, I look at it this way, you know, if you think about the strategy we've been talking about for really, the last 18 months, where we've talked a lot about diversifying demand, and both, third-party partnership expansion and and Roku ads manager, uh, fall beautifully under that heading, Anthony's, right? It's a bit of a high flutin way to say it, but

Uh uh, for the ads manager program, a lot of people say it democratizes television. It really does bring in hundreds of net new advertisers to TV, uh, that we wouldn't have seen and it's through self-service. And, and as Anthony noted, a lot of performance-based, small and medium-sized businesses, the third party Partnerships. Um, you know, that really has been. Uh, I think it's reflective in our results. It's really been working. And, uh, it's as Anthony said the demand side platforms, the supply side platforms, the measurement Partners, we have, uh, some really unique assets and it all starts with, um, authentication and everything else follows from that, we pass High Fidelity signals and really privacy. Safe ways and we drive results for marketers. And that inevitably is, is what both of those do for very different audiences. So, to answer your first question directly, it's completely complimentary, and I think there's a lot of expansion in both of those areas, uh, on the macro economy. You know, we just

Finished the upfront, and it was very positive. Uh, and obviously is a a forward-looking indicator. We we've, uh, grown well, the team executed brilliantly, and, and really, that's been, um, an interesting business to follow The Upfront, specifically business, uh, to follow over the last few years because it reflects the trends in the market, a you, uh, have a lot of people who don't have the visibility, they did, uh, a few years ago. So The Upfront has really turned into a full year-long marketplace and

It's also a marketplace where people are looking more than ever to television for performance. And I think both of those Trends, Hold Us in a really good position. And, uh, I suppose I should mention sports did very well. Uh, I think the macroeconomy is supporting, uh, some of the live events that you've heard about from others. And, and even that's good for us, we have unique Assets in our destinations like the sport zone that in a fragmented. You know uh macromedia economy, uh our our users are turning to our destinations to actually help them uh enjoy even the biggest sporting events more and find them more easily.

Thank you, I appreciate that.

Thank you.

Thank you. Our next question, comes from Stephen kahal with Wells, Fargo. Your line is open.

Thank you. Um, Dan, I was just trying to unpack the platform growth, a little bit, uh, between some things you had last year, plus what you called out for friendly? I think growth was about 20% in Q2, if I back out 606, and political and friendly. So, just wondering if that's the right number and I think it's applied around 18%, in Q3. Um, all those are pretty good, just wondering if that's just kind of conservatism in terms of the way you're thinking about, uh, some of the same store comp with maybe a 2 percentage Point slow down from, uh, quarter to quarter and then, secondly, just on the platform. Growth margin guide at 51%. Um, anything you can unpack in there for us, is this just mix? Uh, especially

Is eMoney, I think is a smaller component of Revenue, given the strong growth in video, um, or anything else going on. In the programmatic side that, uh, drives, the, the platform margin Outlook. Thank you.

Growth rates on that. Um, again, I I it's not really a sequential decline from what we're seeing right now. We're basically at around 17% for Q2 and we expect that 17% if you back, both those out in Q3. Um, and the full year would imply Q4 at a similar level and then if you back out 606, which as, you know, we had last year, uh, it actually adds a full point of that, uh, in h, in, in queue in Q2 and Q3, uh, smaller in Q4. We didn't have a big 66 adjustment in Q4 of last year. So we're seeing a very steady and very positive growth rate. When you back out political and then, if you exclude friendly in H2 of this year,

On uh, on the margin. Uh, question. Um if if you look at our, our gross margin uh, for our platform, margins of a 51% and we guided to a similar margin for uh Q3 and uh a full year of of around 52%, we are expecting that margins. Stay in that 51 to 52% range. Uh what we're seeing is, you know, any sort of mixed impact, where we have some of our uh higher margin uh activities like em and growing slower than, um, other margin activities. We're able to offset a lot of that with efficiency and Improvement. I think it's a positive that we're able to do that, if M and E were to pick up, we would see margin upside. We're not, we're not planning or counting on mine growth, uh, to any significant level.

In our in our guide or our forecasts, that would be upside. If any does uh, Rebound in in any way there's there's possibilities of that with some new Services launching but we're not planning for significant growth in that area. So the platform margins that we see are, you know, we believe are going to be in the 51 to 52% range

Thanks, Steve operator. Next question, please.

Our next question comes from Peter Subbena with Wolf Research. Your line is open.

Hey, this is Ron on for Peter. I just had two quick questions.

First following up on the gross margins. I think it implies though that the fourth quarter we should see a higher gross margin than the 52% for the full year. So I was just wondering if there was anything you could comment on on The Leverage there and then on the share repurchase authorization of the 400 million. Is there a way we should be thinking about the timing and why it could be about future opportunities to grow shareholder return. Thanks,

Yeah, I'll I'll take that 1 as well. Um, yes, you're right. It does imply. Uh, a sequential Improvement in in Q4 gross margins and we see that when just because of volumes increase, there are some fixed components in the gross margin line item, so that really just is leverage on on pure volume. It's it's not anything more than that. Um, the more volumes we get, uh, you know, we're able to, uh,

Have a you know, we're able to um have leverage over our fixed costs that sits in in in cost of goods. Sold like not everything in cost of goods sold is 100% variable. So um, as we grow volumes, we could potentially see margin up size and we'll certainly see that or we believe we'll see that in Q4. We see that in every Q4 on your question, on sharer purchase, um I'm not quite sure I'm understanding. When you say the timing of it, we announced a hundred million dollar share of purchase program. We have been doing netshare settlement uh, since the beginning of 20024, we we plan to continue that the share of purchase will. Come on top of that. We do expect uh, that to offset dilution. We're offsetting, you know, over 40% of our dilution right now just on netshare, settlement, share repurchase will be on top of that. Um, as we execute the share purchase program in terms of capital, allocation, if that's your question, you know, we've we've got this question a lot and we've talked about Acquisitions, like, friendly. We've done some strategic Investments. We've done share of purchase and of course we're investing in

All our platform uh, initiatives. So we feel really good about our our Capital allocation strategy over the last 2 years. And as as we go forward, I'll let I'll update you more on the execution of the sharer purchase program.

Thank you.

Thank you. Our next question comes from Laura Martin with nem. Your line is open.

Hi, there. Can you guys hear me, okay?

Yep. Yep.

Fantastic. So Anthony Hard 1 for you. Um, so the 2 assets that I think have pricing power are proprietary data and proprietary content. You have both

The question is that becomes more valuable over time with the rise of the llm.

Roku can.

Then going stand alone.

To access the entire platform.

Okay, maybe I have that wrong, but that's the wrong place. Correct. But why would you sign exclusive deals with anyone rather than open it up to bid? And why the difference in deal structure between those two large CSPs? I'm serious about that. Thanks, guys.

Hey Laura uh it's Anthony. Excellent questions. Uh so I'll take the first question and I'll start on the trade desk question and turn that over to the Charlie. Um,

So yeah, I mean our first party data.

uh is a uh, super powerful asset that we have, and it's a key driver of our business, you know, we use it to increase monetization in many different ways

Everything from recommendations to clean rooms to, you know, just a variety of ways we use that. It's the driver of our ad business. Uh,

It's important components, you know, in interacting with and working with advertisers.

You know, although that's often in a clean rooms uh you know, through dsps. So you know, in terms of something being something larger, we're you know, we have a great business, we're very focused on growing our business, you know, and that's our Focus right now. In terms of, um,

Trade that uh, trade that Amazon Deal. Uh, you know, so I'll just say just

um,

to remind everyone that that doesn't know this, you know, we our strategy to grow our platform Revenue

At 3 Parts. 1 part is to uh, deeper integration with third-party dsps, which I'll talk more about in a second. Another selenium to our home screen, take better advantage of that. Uh, it's an asset that we can use a lot more to help our viewers, find things to watch, as well as help drive monetization for us, better more effectively. And then third is, there's, you know, we have a large subscription business but uh we're just leaning into that a lot more. So there's a lot of things we can do both uh with third-party and first-party subscriptions. So we're focused on that in terms of

Uh, our working with dsps.

And the Amazon deal that we announced, you know,

Our strategy with dsps is to work with all of them and to have, uh, deep integration with all of them to deepen our integration.

Um,

You know.

Each DSP is unique in its own ways. They have different technology Stacks. They have different approaches to coming to Market every due deal. We do.

With a DSP customized for that particular DSP partner, uh, and is focused on helping marketers achieve their objectives in the context of each specific platform. And so, you know, we're really customizing the deals to work best for each DSP. And, you know, we're not going to share specifics on the deal, but we haven't done any deals that, um, or wouldn't do any deals that would.

Tie our hands and doing deals with other dsps so you know and and DSC is 1 different things. So for example in the uh in the trade desk case which we have a great partnership with trade desks, they're very strong Partners, we do a lot of mutual business together uh really good for each other's business. You know when we did that deeper integration the main thing they were focused on was uid too which we've supported uh which we supported for them. You know in Amazon you know it's focused on

Um, integrating their DSP onto our platform.

uh,

and,

Being a good DSP for the marketers that want to buy through Amazon. So that's, you know, we have marketers that come to, uh, the Roku to buy ads and sometimes they want to use trade desks, sometimes they want to use Amazon, sometimes they want to use Yahoo, sometimes they want to use Google. So, you know, we support all the dsps and we support them all fully and we're always looking for ways to deepen, the integration and be a more effective partner uh with all of them.

so, but with that setup, I'll just

See if Charlie. If you have anything to add to have a boss who knows? Knows that knows it cold. I think that's right. Uh, really taking it from the marketer perspective, you know, each constituent. And this is true on the DSP side but starting with the the marketer who we're driving to outcomes and our agency partners, you know, they really are measuring outcomes differently than ever before. So our data and our you know,

Has proven to be effective and has a lot of upside.

Thank you very much, very helpful.

Thank you. Our next question.

Rob Cooper with Abercrombie isi. Your line is open.

Great. Thank you very much. Uh for taking a question uh wanted to ask on Roku ad manager in the SMB and performance opportunity in CTV. Um just a broad question on Market structure, just to compare it to opportunities for, you know, search and social to online display. Do you think performance marketers and TV are are likely to gravitate towards or uh uh platform direct opportunities. If you will um, versus working by dsps and uh, you know, secondly do you think the the Market's going to ask for, you know, winter tick most or or you know take characteristics or be governed by a sort of multi-homing costs where you know, the earliest or the largest players in the market are likely to sort of uh earn outside monetization? And then the second quick 1 on uh TRC I was just wondering if you could share uh streaming hours growth with respect to that. We I don't think we caught that in the letter. Thank you very much.

Uh, hey Rob, uh, Charlie, you'll take that question. Hey, thanks, Rob. It's a good question. You know, when we look at the small medium-sized business opportunity, uh and all of our ads manager and self-service opportunities, I really get excited because it it's, it's so focused on performance. And and so your question about

Where the winners will be, uh, without question. The winners will be the ones who can prove that, uh, you know, uh, a dollar in actually produces the desired result and and so, if you look at what we're able to do, just, and it's very early days on things like shopability. And all of our action adds, we're seeing a really positive signs again, early on that we can be a leader in, uh, teaching the world, how to shop on television. I I think that, and, and, and some of the opportunities, uh, for these clients who are so sophisticated to actually, uh,

Activate through self-service is complimentary. As I said in an earlier answer and allows us a ton of Headroom. Uh, we also see, you know, you you talk compared it to uh, direct platform tools to to the DSP again. I I think it's really a different set of advertisers. We are, we are going deeper with all of the traditional television players, I can tell you again, in The Upfront, a lot of it will be executed programmatically, but we're seeing the business grow, uh, with our traditional partners, and then the SMB opportunities are net new, you know, hundreds, possibly some day. Thousands of advertisers that can take advantage on a self-service basis on QRC growth. And you yeah, I'll take that 1. I I do want to just follow up on on uh Charlie's answer as well like you know we do view this as a new market Anthony said that earlier we're very excited about it and

Um, these are a lot of advertisers who wouldn't go through a DSP? Remember, this is a self-service portal and uh it's it's an it's basically you're up and running in a matter of clicks with a very um uh with an exceptional uh video. Add a lot of a lot of SMB advertisers want to do this, we're seeing this, we're seeing the demand grow. We're seeing the revenue grow. We're seeing the number of advertisers who are coming in the self-service platform grow. And this could be, um, a few big players that could be many. We're going to integrate and we are integrated with all of them. So our product is exceptional and will continue to be exceptional. But we also integrate with other players in this space because when you have over half a Broadband households, you're going to want to integrate with Roku to take advantage uh, of us as a platform. So uh and and of TRC in that respect. So it's a really exciting New Market for us to play in in this space and we're really excited about it with respect to your question on TRC, the Roku Channel continued, its strong performance

Performance in Q2 the app was the number 2 app on our platform of our engagement and the number 3 app uh, by globally by reach, um, you know we we talked a lot about neoen gauge and the ranking it has on that. It's, um, it's growth in hours. Uh, was around was around 80%, uh, for Q2. Um, I, I do expect that growth rate to probably come down from that level in future quarters, just because we're comping the content row at the top of the home screen, and that drove a lot of Ingress into the Roku Channel.

Town and we have a lot of other ways to Ingress into the Roku channel. So when I say, we expect it to come down, it's still going to grow. Well, well into the double digits going forward. So there's been no slowdown in terms of Engagement with TRC and while it might come down from you know, that 80% level it's still going to grow and grow a lot over the next several quarters.

Is open.

Thank you so much for taking my questions. My first 1 is just on frndly TV. I just wanted to to ask about maybe what are the early learning so far as far as the cross sell opportunity into your your your your base of streaming households and then my second is just on Walmart transitioning on the smartcast here before the holiday season, just what tools do you guys have your disposal maybe to to mitigate some of those headwinds from a from a net, add perspective uh for streaming households. Thank you so much

Hey, Matt. Uh, this is Anthony. Uh, so Dan will take your question on friendly and I'll, uh, and then I'll take your questions on Walmart.

Uh yeah thanks for the question, Matt unfriendly. You know, we mentioned in the letter that friendly at at 1.8 points of growth in Q2 and we've been working closely with the friendly team. We're very pleased with the progress.

So far 1 big Focus. 1 immediately was integrating friendly more deeply within our platform. That is an ongoing initiative, just a couple examples. We added friendly to the apps that are installed on our home screen when a user activates new devices, you know. We so obviously app installs immediately increase as a result of that integration, we indexed friendly into our live TV search results. Thereby making friendly more Exposed on our platform. These are just a couple of like immediate things that we did and how we can leverage our platform to drive more subscriptions and we have a lot of more growth initiatives on the road map of just giving you 2. Very

Very simple examples. We have a lot more on the roadmap. We're very pleased with what we're seeing with Friendly so far, and I'll let Anthony, uh, ask the second part to answer the second part of your question.

Uh yeah, so just on Walmart. Let me, I'll just um, maybe expand a little bit on your question. Just talk about a little bit generally about how we think about Walmart acquiring Vizio smartcast and um what we expect their first, you know, first, I think, you know, they announced the acquisition, um,

Uh, 18 months ago. So it's been a while and, you know, it's playing out as we expected. Uh, you know, and I would say that we're just like we said on prior calls. We're still very confident, we can continue to grow our Broadband household penetration globally,

And even if we simply just, for example, even if which we expect it to grow, but even if we just simply maintained our us penetration in the US, which is more than half Broadband households, we can continue the grow platform Revenue, double digits for years to come because we have so much room to grow. Our monetization in the US,

And internationally.

Uh, another point I would just make is we've invested billions to build the market leading operating system. We spent the last 15 plus years building. The most popular and best-selling Smart TV experience and by a wide margin, you know, if you look at our engagement, for example is 3 times more than the next the next closest Smart TV brand. So it's very popular. Roku is a powerful brand consumers, love it. It's a great.

Experience and this experience and what we built over the last 15 years, causes consumers to walk in, to retail outlets every day asking for a Roku device and that's going to continue to drive demand for Roku devices.

So it's a great asset to have the best smart TV, but, you know, on top of that, we invest hundreds of millions of dollars a year in distribution.

And we're going to continue to spend at that current level in the most strategic and effective ways.

And this includes, for example, adjusting the mix. If we need to cross our retail partners,

I probably spend those dollars.

So again, you know, we're very confident we can continue to grow our streaming households uh, for years to come.

Very helpful. Thank you.

Thank you. Our next question, comes from David Joyce, with cport research Partners. Your line is open.

Thank you. Uh, various ad industry, participants, you know, Supply ciders are concerned about the volume of connected TV advertising. But how are you managing the volume, uh, of ads out there, to keep the inventory scarce and, and maintain, uh, either the price

Uh, in this kind of environment.

Actor or purchase media and and due to our scale and our supply, which is your point and and the unique add products, we can price really from premium sponsorships. By the way, that doesn't always mean, uh, low price. So your premium sponsorships and sports inventory. Our unique ad units and Roku City on the high end. And then we have broader streaming video packages. That can clear at lower cpms and often, uh, of course those come with fewer signals attached. So look, we just completed our upfront. Uh, we did not see pricing deflation, and, uh, we feel very good that we're positioned, almost regardless of where the price is fluctuating in the market.

All right. Thank you.

Thank you. Our next question comes from Rich. Greenfield with light shed Partners, your line is open.

Hi, it's Rich Greenfield. Um, Anthony and Dan, you've talked a lot about diversifying revenues towards subscription. I'm curious how you think about two things: 1. The bundling opportunities of other services, other streaming services, with Roku now that you own it; and 2. As you think about using the home screen, you've talked a lot about how you drive people to things like the Roku Channel and into places where you drive advertising revenue. But also starting to think about how to drive subscriptions using that service, like surfacing content that a subscriber might be interested in based on what they've watched before.

But they don't have a subscription to, so you can drive subscription revenue and sort of broaden out the subscription revenue of Roku over time. Thank you.

Hey Rich, nice to hear from you. Uh, yeah, so we're doing all of that, I mean, you know, so I I think when I think about driving uh

Uh, growth in our subscription business.

You know, a lot of it actually the, a lot of it are the tactics you're talking about, which are, you know, using recommendations to recommend content that would cause a viewer to sign up for a subscription. So, for example, in our recommendations, uh, content recommendations row, which we, you know, we added,

Not too long ago to the top of the home screen.

It does include subscription recommendations and some of those subscription recommendations are recommendations for shows that you don't have. You haven't purchased yet. You haven't purchased a subscription for so I'm just but you could. You're eligible for a free trial?

So that, but there's lots of different locations across our UI, where we can, we can recommend content, uh, including subscription content, and then, um, you know, bundling is a big factor in industry and 1 of the things we're focused on is is improving our capabilities to do bundling.

Uh and then putting together bundles, creating bundles of bundles include technical capabilities, product capabilities, but also deals and Commercial relationships. So we're working on all of that and that's, that's improving. Certainly friendly, you know. We're definitely looking at doing different kinds of bundling and adding more content creating more packages around friendly. Um,

And but a big, you know, a big part of our. So all these are things we're doing but I would say what's kind of changed that Roku when it comes to subscriptions is just the emphasis we've given it. We've increased resource allocations, you know, in terms of uh people working on it, we uh you know we elevated it in the company in terms of seniority and we or the company around

To be better structured to be more effective at driving our subscription business. So, you know, it's a it's an ongoing project we're making good progress, but there's a lot we can continue to do.

How do you decide whether you drive someone to an ad supported place or a subscription supported place?

Yeah. Well, it's a very complicated question. Like, and also, how do we decide whether to, you know, promote a Roku property or, or a property that someone's paying us, you know? So we have a, we have an excellent machine, learning machine, learning team. Uh, there's a lot of work that goes in every day on optimizing. The yield from our UI looking at both viewer satisfaction, as well as Revenue, you know, can we show a piece of content to this customer that will sign up for a service that we get a good rep? Share on? Would you make more money showing a piece of content that, uh,

That they'll actually watch this ad supported where we know we're going to fill some of the ad inventory. Would we make more money by, uh, promoting a piece of content that someone's paying us to promote?

Is it important that we keep this viewer engaged by just showing them more content that they actually, you know, are just want to watch even if we don't make money on it and then balancing all that, you know, because of course, the viewers the most important thing for us and second but still important is is generating Revenue. So there's a very complicated algorithm. There's a whole team that works on that every day and it's the, it's an ongoing project.

Thank you.

And I would say we're good at it like this. We've been doing it for a long time, so we're going to get better, but we're pretty good at it.

Thank you. Our next question comes from Barton Crockett with rosenblat. Your line is open.

Okay, great, thanks. Thanks for taking the question. Um, I wanted to uh um explore a little bit more. Um the um Roku ads manager and the small midsize business.

Uh, you know, given the, I think you've launched this less than a year ago. I think it was in September of last year.

Um, and I was wondering if you could give us some sense of the materiality of that to you at this point, the last time you spoke. I think the suggestion was I think from the CFO dance out of that. Um, there was Great Hopes about it but it was still not Material. Now you seem, you know, totally much more kind of excited and interested um and what you're seeing there. So I was wondering if you could give us a sense of is this starting to really move the needle at this point? Is that a change from the past couple of quarters.

Uh, this is Anthony. I'll let Dan take that, but before he takes it, I'll just say that the reason I'm excited about it is because it's a very large Market that we don't currently really tap into that, you know, uh, it's not, it's not like, uh, the traditional video Market, which is also a very large Market, but we've been working on that market for a while and we have um, you know, established competitors. And like, that's a well understood market and we're doing a good job of growing, our share of that market and that market is moving over to streaming from traditional TV. So it's, you know, it's a market that's growing well for us strong. But this is a market, that is a multi-billion dollar. Many multi-billion dollar market that just traditionally was not

Not even, uh, tapped into you by TV platform. So it's just a big New Market. That's why I'm excited about it. But Stan, do you want to answer? I'll just, I'll just add. I, I fully, uh, agree with that. Um, it is, it is a big Market, you know, we've seen estimates that the overall Performance Based we we know it's like 60 plus billion dollars and um in this market and you know, when we, when we look at where we not only what we're doing now, but where we can go with this, it is very exciting. So, as I mentioned, it's, it's a self-service product. These are basically self-service products where you can be up and running in the matter of of minutes. Uh, and a few clicks with an AI generated, uh video, uh, professional professional AI generated video that looks amazing. Uh, on CTV and many small and medium-sized businesses want to do this. Now, um, you know a lot of it is medium-sized businesses now and we're starting to see them go into the even smaller businesses and that's, that's why that's why we like it in terms of whether or not it's material or not. What what I will say is it is a

Very typical new, uh, uh, ramp of a product. Where every, every month we do this, we see more advertisers, and more revenue on it, which is why we're very excited about it. And we're talking about our ads manager, but the market itself is also going to be significant. And, like I said, we we'll play in this market in a big way, just because of our over our our reach, our Broadband penetration in, in many ways. Uh, so as Anthony said, like, um, this is why we're excited about it. And, you know, we're, we're, we're just starting to put Market.

Marketing behind this, as an example. So, really, we'll give updates as we go forward with this. But we really like what we're seeing in this market and in this space.

Okay. All right. That's very helpful. Thank you.

Thank you. And our next question comes from Jason Health, seen with Oppenheimer. Your line is open.

And thank you for taking the question. So, just, uh, uh, first were there any factors that that held back platform growth in the quarter? I mean, growth accelerated on a reporter base is 100 basis points, but it was against an 8 point easier comp. So just if it was kind of, I guess, um, you know, any weakness that kind of played out in the quarter or anything that that was held back. And then, are you expecting any Amazon, DSP Revenue in the fourth quarter? Or at this point? That's more for 2026. Thanks.

Hey Jason, it's Anthony. Hey, I just want to mention that I heard you on CNBC this morning. Great job. Um, but

No, I was I have to I was in my car. So um, yeah, I'll I'll take this. I'll take this question in in, in the form of like, you know, do do we see any weakness? You know, I I think both Anthony and I and, and Charlie and Mustafa have expressed our our uh how pleased we are with our Q2. I'm not

Sizable amount. So we feel pretty good on what we're seeing across, uh, across, uh, advertising. We, we, we talked about ads manager. We talked about Charlie talked about video. Uh, we're doing very well with video in the Marquee. We're starting to see that pick up. It's, it's great. It's a great ad product. That's really starting to take. Hold on the subscription side. We continue uh, to see momentum premium subscriptions, which which we really haven't addressed, uh, doing very well on our platform. So net, net, um, you know, across all the activities maybe say for, uh, many, uh, very strong quarter with respect to Amazon. Um, you know, I just want to remind people like we've talked a little bit about this that the the integration of these types of Integrations.

Take time, you know, our our primary focus uh with our dsps is you know, remains on being open and and performant. Um and as we onboard more Partners into our ecosystem, we'll naturally improve the bid density across our demand curve.

Um, which will optimize pricing, and improve fill rates, and this will lead to more demand. Uh, we're in the middle specifically with Amazon. We're in the middle of this integration now. Uh, we we mentioned, uh, that it would be completed towards the end of of Q3, and we're on track for that but it's uh similar to our other deep Integrations, like with trade desk, it takes time to build and ramp. And so what we've factored in some into Q4, for Amazon, it's very difficult to predict the exact impact and we'll update you as we know more post integration, we're excited about the deal. Uh, but again, these ramps just take time because you got to build the integration, uh, then you actually try

Turn it on and then of course, you optimize that over time, which is exactly how trade desk worked.

Thank you. Thanks. Jason

And that's all the time we have for questions. I would like to turn the call back over to Anthony for closing remarks.

Uh, well, I just like to say, thanks to our employees customers, advertisers, and content partners, and thanks to you for listening.

Thank you for your participation. This does include the program and you may now. Disconnect everyone, good day.

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