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1) Continuing Sunday’s review of quarters (mixed in with some gaming), $ROKU also had a fantastic quarter. Streaming accounts up 40% to 27m, hours streamed up 62% to 24b and ARPU only up 30% to $18. ARPU growing at half the rate of hours streamed highlights continued opp
2) 25% share of smart TVs, #1 share in players and #1 share of overall TV operating systems. 1 in 5 TV households on $ROKU, equivalent to the #2 pay TV company and over 10% of overall TV viewing is now OTT.
3) Roku Channel is brilliant and there is a real need/opportunity for a free, ad supported $NFLX competitor. I see the future of premium video (as opposed to user generated) as a race between between $NFLX, $DIS, $ROKU and $AMZN with $NFLX obviously way ahead.
4) Monetized ad inventory doubled last year and should double again across the $ROKU platform. $ROKU’s $18 ARPU is an annual number and compares to $CMCSA video ARPU at $1000ish (unfair comparison but still interesting).
5) Lots of ARPU upside. Simple math: $70b TV ad market, 10% of overall TV viewing is OTT today (curious if they excluded $NFLX). OTT ad spend should be $3b or $7b depending on whether $NFLX was excluded. $ROKU's "fair" share of this is over 25%. All TV will eventually be OTT.
6) $ROKU's ad revenue today should be $750m -$1.75b ($NFLX exclusion dependent) instead of 2018's $292m (70% of platform revenue). This gap will close - monetization always follows engagement - and the "opportunity"/TAM should continue growing rapidly with the shift to OTT.
7) IMHO, EV/GP is the best valuation metric for $ROKU and the comp group is $NFLX and $SPOT. $ROKU is at 15x EV/GP for 40% growth in gross profit, $NFLX is at 21x for 29% growth and $SPOT is at 14x for 20% growth.
8) It is a mistake to ignore companies like $W and $ROKU because of $AMZN risk. Smaller, niche focused competitors can successfully compete with much larger companies. $ROKU is outcompeting $GOOGL, $AMZN and $AAPL in a highly strategic area. Focus is powerful.
9) Kinda funny that $DIS paid $4bish for BAMtech in late 2017 instead of buying $ROKU.
