Roku Inc at UBS Global Media & Communications Conference Transcript

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

Question: John Hodulik - UBS Group AG - Analyst : So the move to streaming is obviously still very much in the early days here in the US and even more so, I'd say, globally. What do you see as the biggest drivers of growth for Roku over the next several years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 3:30PM, ROKU.OQ - Roku Inc at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Group AG - Analyst : Sure. Maybe we'll start with sort of the highest level of sort of competition in the CTV OS market, especially maybe in the US. How would you characterize the competition? Is it -- versus this year, say, versus a year or two years ago, how does competition appear to be shaping up to?

Question: John Hodulik - UBS Group AG - Analyst : Maybe if we drill down into a couple you said. There's some recent news on the CTV OS or competitive front. First, Walmart's acquisition of VIZIO. How much of a headwind or how does that impact Roku?

Question: John Hodulik - UBS Group AG - Analyst : So you don't think it -- it sounds like, I don't know, words of mouth. But it doesn't sound like you think this deal is really going to change your account growth that we've seen.

Question: John Hodulik - UBS Group AG - Analyst : That's great. What about competition from big guys like Google and Amazon? I mean, obviously, they make -- with their devices and now their TVs or at least from Amazon Fire standpoint. But how should we think about competition? Obviously, these guys have big checkbooks. But at the same time, from what I understand, they're doing other things as well, not just CTV?

Question: John Hodulik - UBS Group AG - Analyst : Got you. Just a couple more, again, getting back to sort of recent events. The Trade Desk recently announced it was developing a CTV OS, even though the CEO said it won't necessary compete directly with Roku. Do you see this as an eventual risk for the company and maybe portending sort of changes to the business model?

Question: John Hodulik - UBS Group AG - Analyst : Got you. And just lastly on this. If you look at your crystal ball, I mean, how do you see the market over the next five years from a consolidation or M&A or -- we don't have to give names. But do you expect there to be consolidation? It seems to be, frankly, aside from Roku and your dominant market share, there's a lot of smaller players out there. Do you think they eventually get rolled up?

Question: John Hodulik - UBS Group AG - Analyst : Got you. Now let's shift towards monetization of the platform. And maybe let's start with outside the US or opportunities outside North America. First of all, what's competition like in terms of the OS market? And then how big is the opportunity, right? A lot of these markets aren't as advanced from an advertising standpoint, and they might even be behind from a streaming standpoint in general. So just how would you characterize the non-North American opportunity?

Question: John Hodulik - UBS Group AG - Analyst : And speaking of monetization in the US, so you laid out, I think, the landscape. 40% of the viewership, just based on our numbers, has migrated to stream, but just 25% of the ad dollars. So, do you think just given the initiatives we've seen more recently at Amazon, Netflix, and Disney and some of the other sort of media co. D2C services, is that -- the shift in the ad dollars gaining momentum in your view? Or how do you see that over the next.

Question: John Hodulik - UBS Group AG - Analyst : Yes. What are the impediments to growth? Because you would think now that the sort of the inventory is growing so rapidly that the dollars would be flowing very quickly, but we often hear that bill rates are not where you'd like them to be?

Question: John Hodulik - UBS Group AG - Analyst : Got you. How is the relationship with The Trade Desk count here in '24?

Question: John Hodulik - UBS Group AG - Analyst : Got you. Moving over to Roku Channel. Me and the team look at the Nielsen gauge numbers very closely, cuts the numbers in a bunch of different ways, and you guys have had phenomenal growth. So, what's driving that growth maybe even versus a lot of the other fast guys? And then do you think that you can continue to grow at those rates?

Question: John Hodulik - UBS Group AG - Analyst : So you've talked about the strength and the -- of the home screen in terms of getting viewers or suggesting what to watch for viewers and how effective that is. And one of things that we had to -- that was hard for us as we looked at the company, it's just where you are in terms of monetization of that. And you would think that as the -- so we cover all the media companies, D2C companies move from new subscriptions to driving revenues based on engagement and advertising that the value of that home screen is, if it really is that big of a driver on viewership, would just go up. You know what I mean. It would increase in value as we move more towards advertising-based D2C models. Can you help us get a sense for what inning we are in terms of your monetization of the home screen as a result of that?

Question: John Hodulik - UBS Group AG - Analyst : Got it. So, it sounds like you got -- you have the -- from a home screen standpoint, you're optimizing the platform with these new products. And at the same time, the M&E market obviously has been under pressure. I mean we got to the point, so you have these sorts of conflicting issues because the M&E segment has been the largest buyer historically. Maybe putting them on the -- first of all, do you at least -- can we, at this point, say that M&E has bottomed at this point? Or what do you think are the trends in the spending there?

Question: John Hodulik - UBS Group AG - Analyst : Makes sense. Maybe just shifting to distribution for a little bit. Obviously, it's an important growth driver. The number of new sort of sign-ups has slowed, but price increases have been a tailwind. How do you see growth in the SSD business as you look into 2015? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 3:30PM, ROKU.OQ - Roku Inc at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Group AG - Analyst : Got you. I got to sort of move ahead. We have only a couple more minutes. Platform margins have been in the low to mid-50s range for the past couple of years. How should we think of this, given the evolution of the business and the different parts that you've laid out there? And how should we think of that progressing from here?

Question: John Hodulik - UBS Group AG - Analyst : Got it. And then 4Q guidance implies that you'll come in at $200 million plus of EBITDA in 2024. How should we think about the trajectory of EBITDA growth from here as we look out to '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2024 / 3:30PM, ROKU.OQ - Roku Inc at UBS Global Media & Communications Conference

Question: John Hodulik - UBS Group AG - Analyst : That's great. I think that's a great place to leave it. Dan, Conrad, thanks for being here.