Roku, Inc. (ROKU) Presents at Needham 17th Annual Technology & Media Conference (Transcript)

Company and Industry Overview * Company: Roku, Inc. (NASDAQ: ROKU) * Industry: Streaming and connected TV * Date: May 16, 2022 * Participants: * Laura Martin - Senior Internet and media analyst at Needham & Company * Steven Louden - CFO of Roku Key Points Competition * Increased Competition: Roku faces increased competition from companies like Samsung, VIZIO, LG, and Comcast, as well as from Google and Amazon. * Competitive Position: Roku maintains a strong competitive position as the leading streaming platform by engagement in the US, Canada, and Mexico. * Innovation: Roku views competition as a means to fuel innovation and stay ahead in the market. Scale and Monetization * Active Accounts: Roku has over 61 million active accounts globally, with the majority in the US. * ARPU: Roku's ARPU is over $40 on a trailing 12-month basis. * Monetization: Roku's scale and engagement drive strong monetization capabilities, particularly in advertising. * Reach: Roku's large user base provides significant reach for advertisers, making it an attractive platform for ad spend. Content Strategy * Content Spend: Roku's content spend is focused on the free ad-supported TV (AVOD) model within The Roku Channel. * Content Approach: Roku's content strategy differs from traditional SVOD services, focusing on efficient spending on back catalog content, Roku Originals, and fixed licensing deals. * Data-Driven: Roku leverages data and engagement metrics to inform content investments and ensure positive return on capital. Advertising * Ad Inventory: Roku has a strong ad inventory, with over 50% of US TV viewing time now occurring on streaming platforms. * Ad Spend: Ad spend on streaming is lagging behind viewership, presenting opportunities for growth. * Frequency Capping: Roku implements frequency capping on The Roku Channel to improve the consumer experience and ensure better ROI for advertisers. SVOD and Ad-Based Tiers * SVOD Growth: The rise of ad-based tiers from major streaming services like Netflix and Disney+ presents opportunities for Roku as a platform. * Economic Deals: Roku will likely need to renegotiate contracts with services like Netflix if they introduce ad-based tiers. * Platform Value: Roku's platform value grows as more services adopt ad-based models and require monetization support. Dongles vs. Smart TVs * Dongles: Dongles remain a significant part of Roku's business, accounting for half of its active accounts. * Smart TVs: The transition to smart TVs is ongoing, but Roku expects the player business to remain relevant for several years due to the large number of TVs with outdated operating systems and the need for low-cost streaming options.