Roku (ROKU) 2025 Conference September 04, 2025 11:20 AM ET Company ParticipantsDan Jedda - CFO & COOConference Call ParticipantsNone - AnalystNoneBank of America. Really delighted to have Dan Jeddah, newly appointed chief operating officer and CFO of Roku. Thanks so much for being here. So maybe to just kick it off, high level overview. Your business appears to be doing really well with your platform revenue guidance implied in high teens organic growth in March, mid to high teens in April.Maybe we can just ...

Core Viewpoint - YouTube and Fox have successfully negotiated a new distribution agreement, ensuring that Fox News, Fox Sports, and other Fox channels remain available on YouTube TV, following a previous short-term extension to avoid service disruptions for subscribers [1][2]. Group 1 - YouTube expressed satisfaction with the deal, emphasizing the preservation of service value for its subscribers, although the financial terms of the agreement were not disclosed [2]. - Fox had previously requested payments significantly higher than those received by other partners with similar content offerings, indicating a potential strain in negotiations [2]. - The potential removal of Fox channels from YouTube TV could have led to subscribers missing key sporting events, including a major college football match and the start of the NFL season [3]. Group 2 - Brendan Carr, chair of the Federal Communications Commission, welcomed the agreement, highlighting its importance for college football fans and the avoidance of blackouts [4]. - YouTube TV has approximately 9.4 million subscribers and pays broadcasters like Fox for streaming their channels [4]. - Fox broadcasts significant sporting events, including Major League Baseball games and the World Series, which is set to begin in late October [5].

Core Points - A jury awarded a $242.5 million verdict against Tesla for its role in a fatal crash involving its Autopilot system, which occurred in 2019 [2][3] - Tesla had the opportunity to settle the case for $60 million but chose to reject the offer [1] - The jury found the driver responsible for two-thirds of the blame, while Tesla was assigned one-third [3] Legal Proceedings - The lawsuit was filed in 2021 in the U.S. District Court for the Southern District of Florida [5] - The crash involved a Tesla Model S with Autopilot engaged, which failed to brake in time, resulting in a collision that killed one person and severely injured another [2][3] - Tesla plans to appeal the verdict, citing "substantial errors of law and irregularities at trial" [4]

Core Viewpoint - Walt Disney is experiencing a positive market response due to its strategic move into direct-to-consumer sports streaming with the new ESPN service, which is expected to enhance growth and profitability in its sports segment [1][2]. Group 1: ESPN Service Launch - The new ESPN direct-to-consumer streaming service went live on August 21, and Goldman Sachs analyst Michael Ng maintains a bullish outlook with a price target of $152 [2]. - The service consolidates ESPN's linear networks and digital offerings, covering over $7 billion in annual sports rights, which broadens its reach to cord-cutters and cord-nevers [3]. - The automatic migration of 24 million ESPN+ subscribers to the new service provides an immediate subscriber base, with additional growth expected from new content deals like WWE's five-year rights agreement starting in 2026 [4]. Group 2: Customer Engagement and Bundling - ESPN's bundling options, including ad-supported and ad-free packages with Disney+/Hulu, are anticipated to improve customer lifetime value and reduce churn across Disney's direct-to-consumer ecosystem [5]. - The enhanced ESPN App is designed to increase engagement and average revenue per user (ARPU) through personalized dashboards, interactive features, expanded NFL highlights, second-screen functionality, betting integration, and e-commerce tie-ins [5]. Group 3: Financial Outlook - Ng expresses greater confidence in Disney's ability to achieve its fiscal 2026 sports EBIT growth guidance of low-single digits, expecting the ESPN DTC launch to contribute positively to overall sports revenue [6].

Core Insights - Stingray has launched six new free ad-supported streaming television (FAST) channels on The Roku Channel in the US and Canada, expanding its content offerings to millions of viewers at no cost [1][2][3] Company Overview - Stingray is a global leader in music, media, and technology, providing a wide range of services including TV broadcasting, streaming, radio, business services, and advertising [4] - The company operates 97 radio stations and offers subscription video-on-demand content, FAST channels, karaoke products, and music apps, reaching 540 million consumers in 160 countries [4] New Channel Offerings - The newly launched channels include: - **Stingray Cozy Café**: Combines trendy coffee house visuals with lo-fi beats for focus and relaxation [5] - **Stingray Naturescape**: Features scenic imagery from around the world, promoting tranquility [5] - **ZenLIFE by Stingray**: Offers wellness content with meditation videos and tranquil sounds [5] - **Stingray Stargaze**: Provides serene cosmic visuals accompanied by calming music [5] - **Stingray Cityscapes**: Showcases aerial views of iconic cities set to downtempo music [5] - **Stingray Free Riding**: Focuses on extreme sports with breathtaking action and landscapes [5] Strategic Partnership - The partnership with The Roku Channel enhances Stingray's audience reach and provides users with premium content tailored for various moods [3]

Core Insights - The streaming industry is experiencing intense competition, leading companies to invest heavily in exclusive content to differentiate themselves and capture market share [2][3] Company Performance - Netflix Inc. reported second-quarter 2025 adjusted earnings of $7.19 per share, exceeding estimates by 1.7% and showing a 47.3% increase year-over-year. Revenues reached $11.07 billion, a 16% year-over-year increase, driven by membership growth and higher subscription pricing [6][8] - The Walt Disney Co. reported third-quarter fiscal 2025 adjusted earnings of $1.61 per share, beating estimates by 10.3% and increasing 15.8% year-over-year. Revenues rose 2.1% year-over-year to $23.6 billion, slightly missing estimates by 0.1% [13][14] Subscriber Growth - Netflix's subscriber growth was bolstered by the success of "Squid Game S3," which garnered 122 million views shortly after release. The company also launched its Ad Suite, which is expected to enhance subscriber and average revenue per user (ARPU) growth [7][10] - Disney+ reached 127.8 million subscribers, with a sequential increase in average monthly revenue per paid subscriber to $8.09 domestically and $7.67 internationally [14][15] Future Guidance - Netflix raised its full-year 2025 revenue forecast to $44.8-$45.2 billion, driven by member growth and advertising revenue expectations [10] - Disney anticipates a total increase of over 10 million subscriptions for Disney+ and Hulu in the fourth quarter of fiscal 2025, with adjusted earnings per share projected at $5.85, an 18% increase over fiscal 2024 [17][18] Estimate Revisions - For Netflix, the Zacks Consensus Estimate for 2025 shows revenues of $45.03 billion and earnings per share of $26.06, reflecting year-over-year increases of 15.5% and 31.4%, respectively [11][12] - For Disney, the Zacks Consensus Estimate for fiscal 2025 indicates revenues of $94.91 billion and earnings per share of $5.85, representing year-over-year improvements of 3.9% and 17.7%, respectively [20][21]

Core Viewpoint - Analyst recommendations, particularly for Netflix, suggest a strong buy sentiment, but reliance solely on these recommendations may not be prudent due to potential biases from brokerage firms [2][5][10]. Group 1: Analyst Recommendations - Netflix has an average brokerage recommendation (ABR) of 1.75, indicating a position between Strong Buy and Buy, based on 46 brokerage firms [2]. - Of the 46 recommendations, 28 are Strong Buy (60.9%) and 3 are Buy (6.5%) [2]. - Despite the positive ABR, studies indicate that brokerage recommendations often fail to guide investors effectively towards stocks with high price appreciation potential [5][10]. Group 2: Bias and Limitations of Brokerage Recommendations - Brokerage analysts tend to exhibit a strong positive bias due to their firms' vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [6][10]. - This misalignment of interests can result in misleading insights regarding future stock price movements [7][10]. Group 3: Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of near-term stock performance compared to ABR, which is solely based on brokerage recommendations [8][11]. - The Zacks Rank is updated more frequently, reflecting timely changes in earnings estimates, while ABR may not always be current [12]. - For Netflix, the Zacks Consensus Estimate for the current year has increased by 2.4% to $26.06, contributing to a Zacks Rank 1 (Strong Buy) [13][14].

Core Viewpoint - Momentum investing contrasts with the traditional "buy low and sell high" strategy, focusing instead on "buying high and selling higher" to capitalize on fast-moving stocks [1] Group 1: Momentum Investing Strategy - Momentum investing involves betting on stocks that are trending upwards, but determining the right entry point can be challenging [1] - Stocks can lose momentum if their future growth does not justify their inflated valuations, leading to potential losses for investors [1] Group 2: Bargain Stocks with Momentum - A safer investment approach is to target bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score [2] - The 'Fast-Paced Momentum at a Bargain' screen helps identify fast-moving stocks that remain attractively priced [2] Group 3: fuboTV Inc. (FUBO) Analysis - fuboTV Inc. (FUBO) has shown a four-week price change of 8.4%, indicating growing investor interest [3] - Over the past 12 weeks, FUBO's stock gained 11.4%, demonstrating its ability to deliver positive returns over a longer timeframe [4] - FUBO has a beta of 2.28, suggesting it moves 128% higher than the market in either direction, indicating fast-paced momentum [4] Group 4: Valuation and Earnings Estimates - FUBO has a Momentum Score of A, suggesting it is an opportune time to invest in the stock [5] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investors [6] - FUBO is trading at a Price-to-Sales ratio of 0.76, indicating it is relatively cheap at 76 cents for each dollar of sales [6] Group 5: Additional Investment Opportunities - Besides FUBO, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [7] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [8]

Core Viewpoint - iQIYI is planning a secondary listing in Hong Kong, aiming to raise approximately $300 million, which has garnered significant attention in the industry [1] Group 1: Company Developments - iQIYI, a streaming platform controlled by Baidu, has initiated discussions with several international banks regarding the specifics of its potential Hong Kong listing [1] - The recent appointment of He Haijian as the new chairman of iQIYI, who also serves as Baidu's CFO, adds confidence to the company's listing plans due to his extensive experience in capital markets [3][7] Group 2: Financial Performance - After a period of continuous losses, iQIYI achieved an operational profit of 2.2 billion RMB in 2022, attributed to its cost-reduction and efficiency-enhancement strategies [8] - However, in 2024, iQIYI's total revenue fell to 29.23 billion RMB, with net profit significantly declining to 764 million RMB, prompting the company to seek new growth opportunities [10] Group 3: Market Environment - The resurgence of IPO activity in the Hong Kong market, with fundraising reaching 106.7 billion HKD this year, provides a favorable external environment for iQIYI's secondary listing [11] - iQIYI is focusing on developing a new content ecosystem, including the transformation of micro-short dramas, which is expected to enhance advertising revenue and support its listing strategy [10]

Group 1: Industry Trends - The National Football League's (NFL) deal to acquire a 10% stake in Disney signifies a shift towards partnerships between entertainment giants and sports leagues, indicating an acceleration in such deals [1] - The rise of digital streaming services is overshadowing traditional broadcast sports, as evidenced by Fox Sports' 2025 deal for IndyCar, which resulted in a 41% increase in viewership [2][3] - Analysts suggest that while streaming prices may face resistance due to economic conditions, the popularity of sports could sustain consumer willingness to pay, benefiting platforms like ESPN [4] Group 2: Company-Specific Developments - Disney's NFL/ESPN deal exemplifies the evolving landscape of sports/media partnerships, raising questions about its implications for investors [6] - The NFL deal is expected to enhance subscriber lifetime value for Disney, although it may not significantly improve profit margins due to associated costs [7][8] - Paramount Skydance's merger and its $7.7 billion deal with TKO Group Holdings for UFC media rights reflect a strategic move to strengthen its sports and streaming assets, with an estimated $300 million in annual advertising revenues [10][12] Group 3: Competitive Landscape - Amazon has made significant investments in sports streaming, including a $3 billion annual commitment, and aims to achieve profitability in its Prime service by 2026 [13][15] - Amazon's exclusive NFL game broadcasts and its recent $100 million deal for a podcast with the Kelce brothers further integrate it into the NFL ecosystem [14] - Rivalry in the streaming market is intensifying, with Alphabet securing the NFL Ticket package, posing a challenge to Amazon's position [16]