Roku at Citi’s Conference: Streaming Success and Strategic Moves

On Wednesday, 03 September 2025, at Citi’s 2025 Global Technology, Media and Telecommunications Conference, Roku Inc. (NASDAQ:ROKU) showcased its strategic vision amid a rapidly evolving streaming landscape. The company highlighted its robust growth in user engagement and monetization strategies, while also addressing challenges in international expansion and advertising competition.

Key Takeaways

• Roku has achieved significant scale, reaching over half of all broadband households in the US.
• The company is focused on monetization through advertising and content distribution.
• Roku’s acquisition of Friendly aims to enhance its subscription offerings.
• The company targets double-digit EBITDA margins and announced a $400 million share buyback.
• Roku is expanding its presence in Mexico, Canada, and Brazil.

Financial Results

• Roku ended 2023 with an adjusted EBITDA of $4 million, with guidance for $375 million by 2025.
• The company is targeting double-digit EBITDA margins in the short term and operating profit margins in the long term.
• A $400 million share buyback authorization was announced, highlighting Roku’s commitment to shareholder value.

Operational Updates

• Roku claims a fifth of all TV viewership is on its platform, underscoring its dominance in the streaming market.
• The company has a significant presence in the US, Mexico, and Canada, with plans to surpass 100 million streaming households by 2026.
• Roku maintains over $2.2 billion in cash, supporting strategic acquisitions and operational growth.

Advertising Strategy and Performance

• Roku integrates with all major DSPs, capturing the entire CPM demand curve and maximizing ad inventory utilization.
• The Roku Channel’s viewing hours are growing by over 80%, with the platform being the number two app in the US.
• The Ads Manager tool for SMBs is gaining traction, tapping into a market valued between $60 and $100 billion in the US.

Future Outlook

• Roku is concentrating on deepening its market penetration in Mexico, Canada, and Brazil, while maintaining its US leadership.
• The company expects sustained double-digit platform revenue growth and aims for operating profit positivity by Q4 2026.
• Share buybacks are planned to eliminate dilution, leveraging Roku’s strong cash position for strategic growth.

Q&A Highlights

• Roku emphasized its monetization focus, particularly in advertising and content distribution.
• The shift to a more open advertising strategy with DSPs was discussed, highlighting opportunities in the SMB market.
• The rationale behind acquiring Friendly was explained, aiming to enhance Roku’s platform capabilities.
• Concerns about international expansion were addressed, with a focus on key markets and maintaining a competitive edge.

For more detailed insights, please refer to the full transcript below.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Unidentified speaker: Dan Jeddah, CFO of Roku with us here today. Dan, how are you?

Dan Jeddah, CFO, Roku: Great. Thanks for having us. Happy to be here. Yeah. Great.

Coming to New York? Yeah. New York’s great. Weather’s not bad? Weather’s not bad.

US Open’s going on. That’s right.

Unidentified speaker: That’s right. So I wanna I wanna start with just this is maybe a a dumb question because you guys have been around so long. But but it but you you play in a pretty unique space. And so I would just love for you to just start with a high level overview of how you would describe Roku’s strategy and how you’re currently executing against that strategy.

Dan Jeddah, CFO, Roku: Yeah. What what a great question because I agree. We are unique. There’s, like, no real peer Right. That we point to that that’s out there.

But let me let me talk a little bit about the strategy because I I do think the strategy is really important to understand, and then where we are in that strategy. We have a strategy of get scale, get engagement, and then monetize. And I’m let me just spend thirty seconds on what that means. Scale with scale, it means it basically means become, significant in broadband penetration, which we’ve done. We’re over we’re over half of of all broadband households in The US.

We have incredible scale in Mexico and in Canada, and we’re growing scale in Brazil and and Latin America and in The UK. So once you have scale and as you get scale, focus on engagement because you you want people to be engaged with the operating system, with the product. And so our the second, prong of our our strategy, prong of our strategy is engagement. And with that, we we’re also very far down the line. You know, we just put out a press release today that talked about that over a fifth of all, all TV viewing is on the Roku platform.

Over a fifth. That’s combined linear plus digital is on on the Roku. And within the digital, you know, you see the gauge reports. You know, we’re 5% of of overall streaming. So, you know, over a 100,000,000,000 hours.

Incredible engagement on our platform. So we have scale. We have engagement that that Stata gave us for The US. Like I said, a fifth of all viewership, happens on the Roku platform. That’s that’s incredible.

No one else is is close to us in that. And then now that we have, scale and engagement, the focus is on monetization. And I would say that that’s really been the focus over the last two years. The monetization piece of the strategy is now that you’ve got broad scale, broad penetration, you have engagement with the with the platform. Now we focus a lot on monetization, and that’s where we’re in early innings of our strategy.

That’s what you’ve seen happen, throughout, last year and this year. As we exited 2023, we got our cost structure in order. We rightsized our workforce. We, you know, we got rid of a third of our footprint. We really honed in on cost.

Unidentified speaker: Footprint, you mean real estate footprint? Sorry. Okay. State footprint.

Dan Jeddah, CFO, Roku: And then as we exited 2023, we we made it very clear, like, we’re now focusing on the monetization, the platform, revenue growth, which is the monetization, of our overall operating system. And so with that, you focus we have two main activities within platform. It’s advertising, and it’s called content distribution or streaming services distribution, which is by and large subscriptions and content distribution agreements. So our focus over the last two years has really been on that monetization. That’s what where you’re seeing the overall growth in platform.

That’s where you’ve seen our pivot to profitability. We exited 2023 just barely profitable for the full year on an adjusted EBITDA basis. I believe was $4,000,000 We’re now on track. We just guided to $375,000,000 of adjusted EBITDA. So in two years, we’ve really been able to grow our platform.

Our cost structure is right sized. Our margins are strong, and so we’re generating a lot of positive adjusted EBITDA and free cash flow. I’m sure you’ll get into more questions, but that’s the overall strategy. And like I said, we’re we’re very far along on scale and engagement, and we’re really in early innings of overall monetization, which is makes it a very exciting time to be at Roku.

Unidentified speaker: Can I can I go back to those engagement numbers? The the just so I understand what you what you said. The 20% of of all viewership happening on Roku, that is a measurement of, I have a Roku device, but I

Dan Jeddah, CFO, Roku: might be watching Netflix or I

Unidentified speaker: might be watching YouTube. So that’s like the umbrella term.

Dan Jeddah, CFO, Roku: That’s the overall engagement of us as a platform in terms of hours Using device.

Unidentified speaker: Stream on our platform.

Dan Jeddah, CFO, Roku: And we have multiple ways that we monetize on our platform. We don’t only monetize through ads on TRC. We have multiple other ways that we, have that we monetize, including with our content distribution partners. Understood. And then when people look at

Unidentified speaker: the gauge and they see that 5% number, that number includes both the Roku Channel tile and other engagement that what? Fill in the pieces for

Dan Jeddah, CFO, Roku: the That that 5% number is the Roku Channel now. And the reason why the Roku Channel is so significant in terms of, in this case, the Nielsen gauge rating is because, we ingress into the the we ingress in multiple fronts from our home page into the Roku Channel. So less than, 20% of actual ingress, the entry point into the Roku Channel is through the Roku Channel app that Right. We have so many different ways to enter the Roku Channel, which shows the power of our platform. So I I get asked this question, what is the big asset that Roku has?

It is the power of the platform. When you turn on your TV for that over 20% number I just gave on on overall, engagement in TV viewership, you start basically 99% of the time on the Roku home screen.

Unidentified speaker: Sure.

Dan Jeddah, CFO, Roku: We control that UI. So we can nudge people in certain directions based on the content we show, based on the, we have a left nav that has multiple sports multiple zones, a sports zone, a home and garden zone. When the Olympics are on, we have an Olympic zone. We have a content tile at the top, which is a machine learning based content row that is personalized so we can push people into subscriptions that we monetize or the Roku channel based on content we think you’ll like. Understood.

We have so many different ways to ingress into the Roku Channel and and into subscription products that we monetize. Okay. So on the on the monetization part of your strategy, you talked about advertising and streaming were the two high level categories. I wanna talk about advertising.

Unidentified speaker: Over the last few years, I think you’ve expanded quite dramatically the number of DSPs that you’re willing to partner with. Can you can you talk about that? Because I think you’ve said in the past it doesn’t hurt margins. It’s all Correct. Feels like all upside.

So can you just talk about what what this, I mean, many years ago, I think you bought your data zoo, I believe it was called. Correct. And so this is a pretty big shift in your strategy in terms of embracing these demand partners.

Dan Jeddah, CFO, Roku: Correct.

Unidentified speaker: Talk a little bit about that. Yeah. How was that integral to your monitoring?

Dan Jeddah, CFO, Roku: It’s a great question. It goes back to that focus on monetization. Monetization. So, So, again, like, when we as as we as we, focus on this overall monetization, we we said back and we said, you know, we could drive a lot of volume through our own DSP, which which is through the DataXu acquisition. It was a product that we called OneView.

And we we felt as we looked at that, and that was the only way you could list in in essence, come in and buy off Roku media

Unidentified speaker: Yes.

Dan Jeddah, CFO, Roku: Was through our own DSP. We were not integrated with other DSPs back in, 02/2023. We again, is is that really a strategic pivot? We said, you know, if we want to be really open and interoperable across the media network, we need to be more open to other integrations with other third party demand side platforms and and supply side, platforms as well, SSPs. And so we we we changed strategy, and we said rather than forcing advertisers to come through our DSP, let’s meet advertisers where they wanna transact in whatever way

Unidentified speaker: Makes sense.

Dan Jeddah, CFO, Roku: They want to transact. It was a big pivot internally. And, you know, in hindsight, it was, you know, it was really a no brainer. At the time, there was some discussion on it, but it was really it was a really smart thing that we did because we ultimately then said, hey. Let’s integrate not with one, not with two, not with the biggest, not with the, you know, not with certain ones that specialize.

Let’s let’s integrate with all of them. Like, let’s be open, and let’s let the advertiser decide where they wanna transact and be as deeply integrated as, the DSP is willing to go with us. And every DSP has different, different, areas that they’re trying to integrate. Now with with Trade Desk, it was adoption of UID two dot o, which is a hashtag hashed email to make sure that, you know, that they can recognize the customer and, of course, push as much media our way as possible. With Amazon, it’s a different integration, which I’m happy to talk about.

And we’re integrated with all the DSPs. Everyone says, well, are you gonna integrate with more? We’re integrated with all of them. Now we’ll go deeper with with many of them. We’re integrated, as I mentioned, Trade Desk, Amazon with AppEleven’s world.

We’re integrated with Yahoo. We’re integrated with the SSPs. And so we’ll continue to be integrated because we want an open and operable, platform of which the advertiser can transact on any point of the CPM demand curve. The ultra premium down to the lower priced CPMs, we’re gonna we’re gonna operate across the entire demand CPM curve, which is really, different and unique. Most don’t do this.

We do do it, and we have the inventory to do it. Like, we have the inventory to operate at all prices. So when I hear a lot of CPMs are going down, that doesn’t concern me because that’ll just mean more demand Right. Come our way, and we have plenty of inventory to sell.

Unidentified speaker: Why so I’ve heard you use that phrase before in terms of, you know, set your pricing so you capture the entire demand curve. Why do you think others have not pursued that strategy? Like, what is it that makes that right for Roku but might be wrong for others?

Dan Jeddah, CFO, Roku: Yeah. First of all, I I do believe that there’s a supply constraint for some publishers out there where they’ll just run out of inventory during peak times. I don’t I I obviously don’t have actual data on that. But from what I can tell and the way we look at internal demand, I’m pretty certain I’m right on that. That there is, there’s supply constraints.

Others, play so much in a premium space, they wanna protect CPMs at all cost. And so they’re going to, try to hold CPMs higher.

Unidentified speaker: Is that is that because they have some, like a a linear business they’re trying to protect? No.

Dan Jeddah, CFO, Roku: Could be that it could be that they just have ultra pre that the bulk of their content is ultra premium CPM.

Unidentified speaker: Okay.

Dan Jeddah, CFO, Roku: That’s how they’re gonna play. We have the whole board. We have, again, the whole gamut of of, across the demand curve that we we can and do play in. So, you know, if you want an ultra premium type experience, you can come and advertise on Roku City, for example. That’s you know, so many viewers have looked at Roku City, or you can be on our home page.

I’m gonna go I’m gonna go all the way down to the low end of the CPM demand curve. Maybe you’re an app installed, and you want, you know, you’re you’re only willing to pay, you know, 4 or $5 CPMs at the low end based on an app install. We’re gonna play in that space, and then we’re gonna play we we play in every place in between. A lot of it is based on what signals you get, you know, in the in the on the exchange, how the auctions work. This is where measurement comes into play.

This is where signals come into play. This is where our first party data helps us out a lot is allows us to play in all these different aspects of the CPM demand.

Unidentified speaker: Okay. And presumably, the pricing into that sort of, you know, being flexible on the price to must be must the goal must be to get your utilization rates up or your fill rates up in terms of unsold inventory. What what can you share with investors, if anything, about what your fill rates were once you started pursuing some flexibility on CPM pricing, where your fill rates are now, and where could they go?

Dan Jeddah, CFO, Roku: Yeah. So it’s a great question. So one of the benefits of, as I mentioned, on having so many entry points or ingress points into the Roku channel means our hours in the Roku channel are growing. I think we stated that they’re growing in excess of 80%. They’re they’re they’re growing very strong.

They probably won’t stay at 80%. That’s a very high growth rate, but but they’re gonna be significant double digit growth rates. At least I I I believe that when I look at the numbers. And, remember also, we’re the number two app, on the platform in The US, the Roku Channel. So not number five, not number four.

The we’re the number two app on the platform. So there is an incredible amount of impressions that we have available to sell through TRC and then, of course, what we call, our our our we our our media network, which is outside of TRC on our platform that we can sell add inventory against. And so, because we have such high growth, we are not sold out. And, you know, quite frankly, it’s it’s not that difficult to create more inventory because we control the UI. I don’t need to go spend a ton of money on content to go get more inventory.

Right. I can use the UI to direct people because we have great content in our fast channels, in our direct license business, and, you know, we even have, Roku Originals, which which do very well. So, it’s not it’s not difficult or expensive for me to create or for us to create more supply. So, when when you talk about sell through rate, no. We’ve said in the past, we’re roughly half sold out.

It tells you the the you know, we’re we’re, our sell through rates, we’re we’re very specific on how we optimize. Like, we we fill the highest gross margin impressions first. We have campaign goals that we have to hit, of course. We we we we have algorithms that basically maximize the campaign performance and the the gross profit Yep. Of the ad campaigns.

So, we are you know, I mentioned we’re in that around half sold out. We’re growing very fast on supply. Good news now. We’re growing very fast on demand. Will that you know, what’s the theoretical max?

I you know, I suspect it’s somewhere 70 to 80% is a is a theoretical max on sell through rate. I’ve really never done that math, but I’ve never had to do it. But my my point on this is I don’t focus so much on on sell through rate as as I do on, of course, the overall demand that we’re driving because, again, like, it’s it’s not that difficult for us to create more supply.

Unidentified speaker: Understood. So can I ask a another question on advertising where I get a little bit confused? I hear a lot of investors on on the the buy side say, oh, look at all these linear dollars. You know, that’s really good for CTV ad trends. And everyone’s watching the growth in in social media.

Right? And I get a little bit confused about how marketers think about what CTV advertising is. Do they do they view it as an Internet channel, and therefore, it’s performance based, and therefore, they put it in the social media bucket? Or do they put it in the linear TV branded advertising? I don’t need, you know, somebody to install a app or take an action, and it’s really more brand based.

Where do you think we are today, and and where would you like it to go?

Dan Jeddah, CFO, Roku: That’s a that’s a great question, and that’s one we we discuss a lot, because I I I do think it matters. And you’re right. Of course, linear was was all brand based, very difficult to measure despite the, you know, the models and the attribution models. It was it’s very difficult to measure, true on performance. CTV, at first was probably more branding, more big, but it’s become more measurable.

I I think the DSPs have become really good at this. I think Amazon as a DSP will be very good at at, of course, at measurement. When we match our first party data up with external sources of measurement with companies that we integrate with companies like EyeSpot, we can actually measure performance on it. So I do believe this whole market is shifting to primarily be a performance driven market.

Unidentified speaker: You think it’s shifting? Okay.

Dan Jeddah, CFO, Roku: I do. I think that the programmatic side of it, whether it’s one to one, one to many, whether it’s an actual campaign goal of reach, we’ll still have a performance or the auction itself where people are willing to bid up to a certain amount because they know how the impression is gonna perform. Right. I think this whole market shifts to primarily performance. I think you have the ultra premium space, the football games and the original content, or in our case, the Roku City or home screens that will primarily be for those brand, budgets.

Don’t get me wrong. That then and with that will be required media spend, but I think the bulk of this market shifts. I think 75% of it shifts to programmatic with a measurement component within the programmatic. Interesting. And I actually kinda think that 75% is very close.

I think it’s gonna get I think it’s gonna be soon.

Unidentified speaker: You think you think let me just rephrase that. You think of all the advertising sold on Roku, you think 75% of that relatively in short order will be performance based advertising?

Dan Jeddah, CFO, Roku: On Roku. I think in general. Okay. I think in general, that 75% of the market is gonna be being sold through programmatic pipes

Unidentified speaker: Okay.

Dan Jeddah, CFO, Roku: That have a measurement component to it.

Unidentified speaker: Okay. So you’re you’re including all advertising just sort of writ large?

Dan Jeddah, CFO, Roku: All digital advertising. All digital advertising. Linear, there’s no way to understand. And I think that I think because of that shift, I think the the the switch to linear from linear to digital is going to even more become even more prevalent and possibly even speed up. And and it’s not just that.

Like, now it used to be, like, you know, live sports were the last holdout of linear. And I I was just thinking about this the other day. Probably three years ago, maybe maybe three three years ago, the bulk all you had to all all of, like, NFL was available on linear. Now, I think almost I think every game is now available on digital, and I think something like 20% of the games are only available on digital. Think about that.

That is a huge shift from three to five years ago where all a certain amount is only available Right. On digital. If you think of Thursday Night Football and then the exclusive games.

Unidentified speaker: Right.

Dan Jeddah, CFO, Roku: That is a big positive to shift the linear to continue to shift the linear Yeah. Great. Over into CTV. Then you add on performance where you can measure and or have campaign goals that you either hit or don’t hit. I think the winners in this space from a publisher standpoint are gonna be the ones who are the most performant.

Right.

Unidentified speaker: Okay. That makes sense.

Dan Jeddah, CFO, Roku: And I think Roku is in a great position given our first party data and our overall scale.

Unidentified speaker: Okay. Great. I’m gonna shift key I’m gonna still stick on ads, but I wanna talk about Roku, Ads Manager, your self-service tool. It seems to have gained pretty good traction with small and medium businesses. But I’m assuming that SMBs represent a very small portion of your advertising customers, but maybe I’m wrong.

Dan Jeddah, CFO, Roku: So so you you’re not wrong, because we we literally have launched this six months ago. K. It’s already, picking up steam. It’s something I’m I’m personally, very excited about. And and let me tell you why.

So the SMB market has been really shut out of the overall I I can’t say linear because there are local. Sure. But the broader linear and much of I mean, it was pretty much shut out out of all CTV. And what you had is all those budgets, being focused on performance, which is really social and search for all intents and purposes. Sure.

And, you know, different, There’s different studies that have the markets at 60 or a 100,000,000,000. So I’m I’m just gonna say it’s somewhere between 60 and 100,000,000,000 in The US. So now for the first time, that in those budgets are available in CTV. And and well well, how are they available? Really, it’s it’s it’s actually very cool because now there’s self-service products like Ads Manager out there where in a couple of clicks, you are running a video campaign.

It’s very specifically geotargeted for you with campaign goals similar to what you could get in the performance market, which is very, by definition, performant driven.

Unidentified speaker: Sure.

Dan Jeddah, CFO, Roku: You can get that same level of engagement, and performance metrics. And the holdout was the reason why you couldn’t do it is, one, you either didn’t have access to an agency, you were too small, or you didn’t have access to a DSP, and you can’t and you you certainly can’t make a video, commercial out of it. Now because of Gen AI, you can do that in seconds. I mean Right. You can be up and running in minutes on CTV now because of these self-service products Right.

That do the same thing on performance based. That is very exciting. And, really, it’s it’s about making sure the UI is super easy and super simple to use, and, of course, marketing to make sure it’s you’re aware of this because the performance is there. I mean, we have incredible ways to measure these performance. Like, we can, you know, we can cookie sites.

We can we can have we can do APIs with with measurement companies to do causal lift analysis. Like, we can do amazing things for these SMBs. It’s just, you know, getting them to try it. And and once they try it I’ve I’ve read some studies. We’re doing our own research on this, but I’ve read some studies on this that once an once a small bit a medium sized business does come and try, 15 to 18% of share of wallet stays.

Like, imagine that that budget shifts over if that were to happen. Interesting. You’re having a significant shift of the performance budget come over into CTV. That is another tailwind in addition to the linear budgets for the big advertisers coming over. So no longer is CTV going to be about the top 200 advertisers.

It’s going to be about a 100,000 advertisers.

Unidentified speaker: Understood. And do you think this is should investors think of this as a someone ad dollars that would compete with local TV station dollars or think of this more as, I’m just a small business. I’m putting an ad targeting people, but I’m not trying to target a particular DMA or geo?

Dan Jeddah, CFO, Roku: It’s gonna be you you it’s exactly what you’re gonna do. You you may like, if you are a, if you have a, you know, several regional car dealerships

Unidentified speaker: Yep.

Dan Jeddah, CFO, Roku: You might wanna target a geo Yeah. A geo targeted location. And you may want to measure site visits and or, you know, emails and all that. And, again, like, you can be up and running in minutes between that. And that that is likely not going to be the local TV.

It could be that’s likely gonna be the marketing that they were doing in the performance market with, you know Social media. Keyword bidding and or social media, you know, those sorts of things. Okay. And so they’re they’re still gonna do that, of course. But now we’ve we’ve put out an entirely new way for them to market that is showcases what everybody wants, meaning video.

Yep. Because Gen AI can create this video in seconds now. And, you know, we have a Gen AI product that does it. We also, you know, you can you can use third party companies that do this. It’s so simple to do.

Unidentified speaker: Okay. I’m gonna shift from advertising and go over to subscriptions for a second, if that’s okay. So last quarter, you closed on Friendly. Yes. Can you just remind investors what Friendly does?

And why is that why is that integral to your strategy? Because I certainly it wasn’t on my bingo card that you were gonna acquire Friendly for

Dan Jeddah, CFO, Roku: the end

Unidentified speaker: of the year.

Dan Jeddah, CFO, Roku: So Friendly is, you know, what you call a virtual MVPD or a skinny bundle of of channels. It’s got it’s it’s it’s over 50 channels for a very good price point to enter into. It’s it’s like it’s got hallmark. It’s got history channel. I I think we just added a and e.

So it’s this it’s this bundle of channels that’s at a it starts at a $7 or $6.99 price point. So it’s very inexpensive for those who don’t want to pay on for the full cable bundle but wanna see Hallmark originals, around the holiday or any time for that matter or who wanna watch the history channel or who wanna watch A and E. And so, the reason why we liked it is that, one, it’s a growing business. It’s not in decline. It was growing.

And we think we can accelerate that growth for the same reason we talked about, on The Roku Channel is our control of the UI, our power of the platform Yep. Will allow us to, accelerate that growth because we can integrate Friendly into our search results, into the home screen, into the left nav, into, the Roku channel experience where all the content is embedded within TRC, and then you can go subscribe. It it it’s it’s basically, using the same power that powers TRC or the same, assets that power TRC to power owned and operated subscriptions and non owned and operated subscriptions. But, you know, now that we own and operate one, we we can actually, you know, integrate in multiple different ways. Like I said, imagine where it’s embedded all throughout the search experience, Friendly will.

So, again, like, Hallmark pops up. You know, you sign up for Friendly on our platform, and now you’re subscribed at a really, reasonable price point.

Unidentified speaker: Okay. I’m gonna shift gears, and I’m gonna go back to your original point about, first, we wanna build scale and ask you a question about international. This is something that I’ve never really understood. You guys were out of the, you know, innovator in this whole space, leading market share. And I always thought the dominant market share that you had have in The US, Canada, Mexico, that we would have seen five years ago, seven years ago, just release after release after release of Roku expanding into Germany, expanding into Japan, expanding and you mentioned in your opening remarks, you’re making progress internationally.

But it just feels like this isn’t really a globally scaled platform, but it should be. It feels like and so I always feel like I’m missing something either in the tech stack or just something that I don’t understand about the industry that makes it more difficult maybe to expand internationally than I would have thought. Yeah. So can you unpack it? Of course.

Okay.

Dan Jeddah, CFO, Roku: Great question. So, first of all, like, we are number one in US, Mexico, Canada. I I do believe we’ll get there in Brazil. We’re doing starting to do very well in Brazil. And those are areas where we, like The US, could take advantage of the first mover, you know, first move first market mover Yep.

Simply because, you know, you know, Anthony and the team were very quick to realize this market when no one else was talking about what an operating system could do. And so the you know, we’ve spent a lot of money to become number one in The USA. I’ve said this, like, we spent billions of dollars to become number one in The US, and we’ll we’ll stay number one in The USA. Have complete confidence in that. The some of these other countries are are are just much more entrenched.

It’s not as simple as going out and just getting started in those. I mean, we’ll look at that, and, you know, we may launch new countries. I’m I’m certainly not saying that’s off the table. But our focus right now is on growing these countries where we already are well down the path of scale.

Unidentified speaker: Okay.

Dan Jeddah, CFO, Roku: Because we’ve got like, in Mexico, we’ve got scale. We’ve got engagement TRCs in Mexico. Subscriptions are starting to do well in Mexico. What we don’t have is an ad market that’s really pivoted from the traditional way over in the digital, and that’s gonna take some time. So we’re working on that piece.

Canada, very different. Canada, the market is there. We have less scale than in Mexico, but we still have significant scale in Canada. We have feet on the ground now in Canada selling advertising, and it’s doing very well. So these are all these countries are at different stages of the scale, engage, and monetize strategy.

Unidentified speaker: Okay.

Dan Jeddah, CFO, Roku: And I’m not I I would never take a country off the table, but our focus we see so much opportunity in The US and then in Mexico, in Canada, in Brazil. That is our focus right now.

Unidentified speaker: Okay. I’m gonna talk about the operating system. Anthony, in the past, has, I think, made the parallel between other operating systems coalescing around two. Right? Android, iOS, Windows, Mac.

And so I think I think your firm has a belief that we might be migrating in the terminal year to this sort of two operating systems, two dominant operating systems. When I look out on the landscape, one of the things that I think is going on is we have Walmart acquiring Visio, and I think maybe Amazon moving from a forked version of Android to an a sort of organic build where they’re they’re doing their operating system sort of de novo. I guess, is that is the second part of my question, is that true? Do you agree that Amazon’s building their own tech stack? And what does that mean for your market share, if anything, in the countries where you are, Dom?

Dan Jeddah, CFO, Roku: Yeah. I I I don’t know the answer on on Amazon. I I I you know, the forked versions are are never good, and it wouldn’t surprise me if they got away from that. But let me address the OS, the operating system market, because it’s not surprising that now people are realizing that this is an incredible space to be in. Like, this is how capitalism works.

They see how powerful the UI experience is, and now you have a, you know, a lot of large companies saying, hey. You know, I wanna play in space. That’s not surprising at all. We expect that, we were, not surprised with the, acquisition of Visio. You know, we’ve known this for quite some time.

And and and quite frankly, like, companies are just coming around to what Anthony and team and have known for a long time is you wanna control the operating system. The the good news is we have that first mover advantage. We’re over half of broadband households, as I mentioned. We spent billions of dollars to get there in building an awesome OS that is really a premier operating system. And our our streamers, our customers absolutely love it.

We hear it every day. They love the simplicity of it. They love the functionality of it. We’re very focused on making it the best operating system out there, and that’s just not easy to do. That’s very challenging to do.

That being said, we also spend hundreds of millions of dollars, on distribution with our distribution partners. And, you know, while I don’t expect that to grow, we’ll continue to spend, you know, roughly the same amount on distribution. So I I have a lot of confidence that we’re gonna continue to eat not only maintain our our scale in The US, but grow it as we have. We’re we’re still growing in The US. It’s it’s great to see.

I think I’ve mentioned before, like, you know, we will surpass a 100,000,000 streaming households in the not too distant future. You know, we’ll say when when that happens. That will happen likely in ’26. And, you know, with that comes all come all the benefits of having an incredibly powerful operating system. So the this the the the movement of of from Walmart’s acquisition of Visio and and the movement to SmartCast is something we’ve known about for a long time.

It doesn’t overly concern me, because we have this number one position, because of what we built and how our customers absolutely love the operating system.

Unidentified speaker: Okay. So in your opening remarks, Dan, you talked about the improvement that you’ve made to EBITDA and EBITDA margins and hitting profitability. What how should investors think about the long term EBITDA margins in this business? If I went out five to seven years or something, what does that look like?

Dan Jeddah, CFO, Roku: That’s a that’s a great question. And it’s something that, you know, you know, I I I think about a lot. You know, maybe maybe sometime I’ll I’ll I’ll give some targets on on how I’m thinking about or how we’re thinking about it at Roku, but I’ll I’ll I will answer your question on this. So as I mentioned, like, in 02/2023, we basically eked out a $4,000,000 adjusted EBITDA, profit. We weren’t expecting that.

We matter of fact, I think we announced at the start of 2023 that we would do it in 02/2024, and we did it a full year early. We had a very strong 2024. I think it was $260,000,000 of adjusted EBITDA, and now we’re guiding in 2025 to $375,000,000 of adjusted EBITDA, which is, I believe, around 9% EBITDA margin. So we’ve gone from zero two years ago to 9% EBITDA margins. We’re gonna hit double digits very soon on EBITDA margins, and we’re gonna grow from there.

And the reason I am confident in saying that is, we’ve said, like, we do see sustained double digit platform revenue growth. I’ve made, I’ve not, you know, I’ve not, I’ve I’ve made the point that OpEx will continue to grow below our revenue. I basically said it’s gonna continue to grow in the single, mid single digit range and on our on our OpEx basis, and I I believe that’s still valid. You know, do I you know, I we we mentioned about being operating positive, operating profit positive in 02/1926, and, you know, this is a good based on our guide, there’s a good chance we hit that in q four. I’m very excited about that.

And, you know, from there, we’re gonna continue to see margin improvements. And so, you know, longer term, you know, people say, hey. Are you gonna get to double digit EBITDA margins? Yeah. In the short term.

Longer term, I expect double digit operating profit margins. Like, that’s just where we’re going on this. We are very focused on, operating margin profitability and free cash flow and free cash flow per share is our ultimate North Star metric. It’s free cash flow per share. And that starts with very strong operating margins.

Unidentified speaker: That’s great.

Dan Jeddah, CFO, Roku: And then great working capital and then limited CapEx.

Unidentified speaker: Last question. You announced a $400,000,000 buyback authorization in the second quarter of this year. That’s about our estimate of your free cash flow this year. But one of the things, at least based on our numbers, you’re gonna have about $15 of cash on the balance sheet at the end of this year. That seems like a lot of cash to me.

Like, what are you guys sort of on the hunt for sort of tuck in acquisitions like Friendly? Could it mean that, you know, you end up this becomes a real capital return story and the buybacks become bigger once this current authorization is exhausted?

Dan Jeddah, CFO, Roku: Yeah. So first of all, like, we’re we’re always looking at acquisitions, and we’re we’re very selective. We we focus on acquisitions where we can take an already growing ax an already growing, the company and accelerate that growth based on Powerfly. We did that with Friendly. We didn’t acquire, but we announced Howdy.

It’s very, very small and very early days, but that’s another area where we think the power of our platform can serve can grow an an underserved market. But to your answer, yes. We did announce a $400,000,000 share buyback. We also do net share settlement. You know, I’m executing on the on the buyback.

And, you know, my goal we’re we’re not it’s gonna take a little bit of time. My goal is is, to, not have any dilution. That that is that is a goal I have. We’re not again, I’m not saying we’ll get there right away, but I do think eventually we’ll get there. And we’re gonna selectively look at acquisitions as as well.

The the great news is we have, you know, over $2,200,000,000 of cash. We’re free cash flow positive. We expect to continue to be free cash flow positive, and it’s a great position to be in. And, you know, I’ll have more to say on capital allocation as as the opportunities come up.

Unidentified speaker: That’s great. Dan, thank you very much for your time.

Dan Jeddah, CFO, Roku: Thanks, everyone. Thank you.

Unidentified speaker: Fantastic. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.