Roku Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Cory Carpenter - J.P. Morgan & Co. - Analyst : Okay. I wanted to ask what's giving you confidence in reiterating the full year platform guide and EBITDA guide, just given the current market environment and uncertainty around tariffs. And perhaps related to that, could you just talk about the recent trends you're seeing in the platform business and in particular, on the advertising side.

Question: Brent Navon - Bank of America - Analyst : I guess just as a follow-up to your comments there. I mean it sounds like some of the more idiosyncratic drivers are able to offset maybe some macro overall weakness. And I guess I'm just trying to think through how much buffer do you still feel like you have with some of these idiosyncratic drivers should macro trends deteriorate a little further going forward?

Question: Vasily Karasyov - Cannonball Research - Analyst : Charlie, I think I have a question for you, and it's about programmatic and the whole transition you're going through. What's the best way for us to think about the contribution of programmatic to platform revenue growth. Is this revenue that entirely incremental? Or is it some inventory that was previously sold direct and now executed programmatic. So there is some cannibalization going on. And then programmatic guaranteed and open -- transitioning to open pragmatic (inaudible) the same question, will we be accessing a completely incremental budgets or there is some offset that you're losing in direct.

Question: Justin Patterson - KeyBanc - Analyst : Great. Could you talk more about the significance of Roku Channel becoming the number 2 app on your platform in the US. How does that change your conversation with content providers just given that reach. And at the same time, how does that change the time frame to really do deeper integrations with more DSPs. It seems like you've got a lot of supply there that needs to be filled.

Question: Laura Martin - Needham & Company LLC - Analyst : Great numbers, you guys. Congratulations. (inaudible) but start with the hard one. So I understand that Frndly drives your subscription revenue. However, I would like you to tell us why you think the virtual MVPD market is a transitory market going to zero. And then staying on Frndly for this question, Charlie, can you talk about how it aids your bundle of ad services and why it doesn't look backwards into the linear TV space, which I think Wall Street thinks is dying rather than stick to streaming, which is the growth aspect of advertising. So that's my first one is on Frndly.

Question: Matt Thornton - FBN Securities - Analyst : I guess two, if I could. First one is a housekeeping one, probably for Dan. Frndly TV, is that assumed in full year or 2Q guidance? Or would that be incremental? That's the first question. Second question, as we think about tariffs and the impact on the devices business and volumes in the balance of the year, I'm just kind of curious kind of what you're assuming for the balance of the year in guidance? And tied to that, how quickly can you move sourcing, production warehousing? I'm sure you've got lots of different scenarios kind of planned out. But I guess, is that something that can get moved in days or weeks? Or is that months or quarters once we get final clarity on the end tariff rates.

Question: James Heaney - Jefferies LLC - Analyst : Dan, can you just walk us through how we should be thinking about the revenue trajectory for platform growth just for the remainder of the year? I know you'll have the tough [political] comp in the second half, but just any other puts and takes that we should be considering?

Question: James Heaney - Jefferies LLC - Analyst : Okay. Yeah. Great. Appreciate the extra detail. And maybe just 1 more, just on home screen. Would -- just love to hear how you're thinking about the growth drivers outside of the M&E vertical? And then just curious if there's any verticals you'd call out where you've seen traction and others that you're looking to expand into just on home screen.

Question: Steven Cahall - Wells Fargo Securities, LLC - Analyst : Thank you. Dan, if we could maybe just dig in a little more to what you're talking about with the platform revenue growth. So thanks for that math. I was kind of getting at the same place that Q2 looks a lot like Q1 underlying. If we think about the back half of the year and we take out both 606 and political, is it logical to assume some deceleration just as you start to comp some of the DSP integrations and other things that you started to do towards the end of 2024. Or do you think that, that kind of teens growth rate is sustainable for a little longer? Because I know there's a lot of work that is still ongoing. So I'd just love to get kind of a sense of that underlying growth rate, maybe more for the medium term. And then the 51% platform margins for Q2, that's a little bit of a degradation from what we've seen historically, not a lot, but a little bit. Is that just mix because you're growing AVOD so much faster than some of the other parts of the platform revenue or anything else we should think about in the margin mix platform?