Roku Inc at JPMorgan Global Technology, Media and Communications Conference (Virtual) Transcript

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

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : So I'll kick off with questions, but if anyone in the audience would like to ask, one, you can click on the blue Ask a Question button, type it in, I'll see it on my screen, and we'll get to as many as we can. So Steve, I wanted to start with the content because original -- Roku Originals launched last week. So I thought that would be a good starting point. A couple of questions, but to start, what's been kind of driving your appetite to get more into exclusive and original content? Why was now the right time?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : I want to talk a bit about This Old House. Unlike Quibi, and I guess, Cypher as well, it's not exclusive to The Roku Channel, at least today. So 2 questions here. One, I would be curious your strategy kind of around do you think this makes sense to continue to make available outside The Roku Channel? And if so, could you talk about how that helps your ad offering because presumably, you're not going to have ads you could sell against this content on other platforms.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Okay. That's helpful. Last one on content. I promise, we won't spend all 35 minutes on it.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : I think you launched 30 titles last week, Roku Originals. You'll correct me if I'm wrong, I'm sure. And more to come over time. How do you think about measuring the ROI on your content spend, just to kind of give us a sense of the level of investment we can maybe expect going forward?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Right. I mean you had This Old House available already. So presumably, you had a decent idea of who was watching it before the acquisition.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Shifting gears to a couple of, I don't know, hot topics, recent topics, whatever you want to call it. YouTube TV and then also media consolidation, I think 2 areas where we're probably both getting a ton of questions. Maybe starting off with YouTube TV. Look, there's been a lot of recent back and forth, of course. I think the latest move, Google created a clever workaround through the YouTube app. I guess what kind of stands out to me is this doesn't seem like your typical carriage agreement like you've had in the past. So my question would be, is that a fair characterization? And if so, could you walk through maybe some of the issues that made you say, "All right, we got -- we need to draw a line in the sand here."

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Okay. That's helpful. And then on media consolidation, never a dull moment, Discovery, WarnerMedia. I think that was, last week now, a speculation of MGM and Amazon. Curious to get your thoughts on the consolidation we're seeing. And then more specifically, from your seat, what does this mean for Roku?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : One kind of related question, and I think it's kind of getting at the heart of the consolidation, is just the balance of power and how it shifts over time, especially as media companies start to scale their streaming offerings. I mean for example, the question we get a lot is, okay, you sign a 1- to 2-year contract. Maybe I'm not -- this isn't a single [Disney+ out] by any means, this is just as an example. We're [not up] for renewal now. All of a sudden, you're negotiating with someone who was in the tens of millions of subscribers and now has 100 million subscribers 2 years later. So I guess my question is, is there a risk that Roku gets worse terms when you sign renewals with some of these streamers as they scale? I mean is this a valid concern in your view? I just would love to get your thoughts on the dynamic.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Okay. Kind of shifting a bit to the current environment. So I mean, we've certainly seen the shift to streaming accelerate quite rapidly over the last year or so. How are you thinking about the sustainability, especially as the world hopefully starts to normalize a bit? Any risk? I think it manifests itself a lot with you guys in active accounts. But do you see any risk that ad dollars could perhaps start shifting back to linear once things start to normalize?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : So maybe bigger picture. So you have 54 million active accounts, and most of those are in the U.S. Maybe one day, we'll know the specific number, which really isn't that far behind kind of the likes of Netflix, which is closer to 65 million active accounts. So I guess, my question is, what I'm getting at, is how much more room do you see for household growth in the U.S.? Or are we starting to kind of reach a point of -- saturation is not the right word, but where account growth is coming more international and then growth at least in the U.S. is more driven by ARPU.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : So that's a good segue. International, I think, was the next topic. You've hit on it. You've been very successful in Canada, Mexico. I don't know if you agree with this, but maybe the U.S. has been -- or U.S. -- the U.K. has been perhaps a bit tougher. And you're still very early in markets such as Brazil, where you recently launched. So the question I think I would have for you is could you give us an overview of just kind of the, maybe for those newer to the story, the state of your international business. I think people in the U.S., sometimes, it's such an ubiquitous product here, forget that you're really just scratching the surface internationally.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Could you talk about just the competitive dynamics internationally? How different are those versus the U.S.? And maybe, specifically, you've been so successful in the U.S. with your OEM partnerships, TCL amongst others. Could you update us on some of your OEM partnerships internationally, where you're starting to see success?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Maybe sticking with OEMs, some have certainly chose to partner with the likes of Roku. Others partner with Amazon or Google or whomever. But there's also many that are still giving it a go at their own operating system, Samsung, LG, VIZIO probably, off the bat. Curious your thoughts on how your conversations with OEMs are evolving. As you think -- as we think like 3, 5, 10 years out, I mean, do you think that we're going to have this highly fragmented base that we have today? Or do you think there's more consolidation around a handful of partners, like we've seen like in mobile over time?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Shifting gears from OEMs to your acquisition of the Nielsen Advanced TV Advertising Business (sic) [Nielsen's Advanced Video Advertising]. You were leasing their technology before, so presumably, similar to This Old House, you had a pretty good understanding of what you were getting here. Could you help frame what attracted you to this asset and just the opportunity that you see specifically for dynamic ads on linear TV?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : I'm going to ask one question on competition. I think by pretty much any measure, Roku and Amazon, clearly the 2 leaders in terms of Smart TV platforms in the U.S., but there are certainly others making a push and making more noise recently. I mean I think, and we were surprised, I think when Google said they had 80 million Google TVs. I forget the exact stat a few days ago. And then you have the likes of Comcast and even Walmart kind of seeming to get into the debate. So my question is, just curious, any real changes in your view on the competitive front, probably more U.S. speaking.

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Last question, I'm getting our 2-minute warning. And you just finished your strongest growth quarter, I think, in company history or at least as a public company. So growing triple digits, integrating 3, 3 fairly recent acquisitions of modest, modest size. What do you see -- what keeps you up at night? What are the biggest execution risks? What worries you could derail things here going forward?

Question: Cory Alan Carpenter - JPMorgan Chase & Co, Research Division - Analyst : Awesome. Well, Steve, I really appreciate you coming to the conference this year. We're out of time, so we'll leave it there. But thank you.