Thread by @peregreine

1) #PeregrineWatchlist thread for which has been falling since earnings. The story is not understood by most critics. But before I get into specifics, lets look at my four-hour, daily and weekly charts.

2) CEO Anthony Wood once led the startup ReplayTV which he founded. Built around the first digital recording machine which cost $1,000 in the late 90s. Then TIVO entered that market with a $500 machine and ate his lunch.

3) Early in the Aughts, Reed Hastings was still pumping out DVDs to Netflix subscribers and hired Wood to lead his Netflix initiative to come up with a dongle or box which would allow users to see Netflix content on TV's instead of just on laptops.

4) Hastings realized the hardware focus was slowing down Netflix's spread, so he spun off that biz, Wood took it over, and eventually, was born as a company which focused on hardware. Nascent in every box was an OS which started with NETFLIX and then . . .

5) moved into "Agnostic Agreements" with other content providers. ROKU is now making more money being a gateway to everything from Hulu, Netflix, Prime, HBO, youtube Red, etc., and hardware is only used as a foot in the door to introduce users to a menu of digital content.

6) Today, ROKU makes less money off hardware - which they sell at a loss (as does Amazon, Google, etc. with their offerings) during Q4. Again, the hardware is just to get inside the consumer's mind, and ROKU is first mover AND agnostic. Meaning they do not compete on content.

7) Recent earnings tell this new focus:

Q1 2020

Total revenue grew you 55% to $321 Million

Platform revenue grew 77% yoy to $233 Million

Gross profit was up 40% yoy to $141 Million

Roku added 2.9 million incremental active accounts in Q1 ‘20 to reach 39.8 million accounts*

8) That asterisk needs to be explained: a ROKU OS is now embedded in 1/3 of TVs sold in America today. And the boxes and dongles have gotten so tiny and inexpensive that families might have four TVs in one home, all using the ROKU agnostic OS for content surfing of all providers.

9) Streaming hours increased by 1.6 Billion hours to reach record 13.2 Billion hours in first quarter 2020.

ARPU of each user of $24.35 (trailing 12 months) up 28% yoY*

10) So exploded, every ROKU user is now providing about $24.35, or about $2.00 monthly of ad revenue .

Compare that to the money Netflix makes off $13 a month subscriptions for one house hold, or $156 yearly.

11) Now consider the costs associated with Netflix buying content to show, to making new TV shows and movies, to, ROKU's agnostic platform and easy to use OS which allows you to shift from youtube, to Netflix, to Spotify, to national news, PBS, Great Courses, etc.

12) If I use my ROKU remote to go directly to Netflix, ROKU doesn't make a dime. If I am introduced to HULU on the opening page of ROKU and subscribe using my ROKU account info, ROKU will get a cut of that.

13) And here are other ways ROKU is making a tad over $24 of ARPU these days: they sell advertising through a partnership with The Trade Desk. And ROKU has recently begun to sell movies and TV shows directly to you.

14) Eventhough ad revenue is going down during COVID-19, the ROKU platform, has become the favorite in America and with each passing quarter, ROKU seems to notch another deal with another TV manufacturer or country - which takes a lot to get right as many countries . . .

15) will not allow this content provider to work inside their borders until 15% of the content provided by say Netflix or Prime, is made in that country. ROKU has to negotiate what can be shows on their menus. This hard work is paying off. ROKU just signed up Brazil.

16) So being the Agnostic TV Guide for what content providers have to offer means content providers do not look at ROKU as competition. And ROKU doesn't have to worry about making their own content or securing content before someone else.

17) Instead of a subscription service, by giving away their OS to TV manufacturers and by selling their hardware at very tiny margins, ROKU has come in to your digital TV life to act as a barker for all content providers. And they are using cashflow from ads . . .

18) sales of TV shows and movies, and commissions for selling new content providers prominent spots on the opening page for new shows. Which means the software side of ROKU is now providing more dependable and recurring monthly revenues than a one-time sale of a box or dongle.

19) Soon Brazil will be adding eyeballs to the ROKU platform. Who is next? Think how Netflix spread. Now take an OS which is best of class, add it to TVs manufactured in country anywhere, and watch the numbers for the platform continue to grow. Worth repeating:

20) Total revenue grew yoy 55% to $321 Million

Platform revenue grew 77% yoy to $233 Million

Gross profit was up 40% yoy to $141 Million

Roku added 2.9 million incremental active accounts in Q1 ‘20 to reach 39.8 million accounts*

21) Streaming hours increased by 1.6 Billion hours to reach record 13.2 Billion hours in first quarter

ARPU of each user of $24.35 (trailing 12 months) up 28% yoY

22) I got a friend who owns an Apple TV in his bedroom a Samsung for the living room, and an LG for his daughter in her bedroom. He, his wife, his daughter sometimes have all 3 TVs tuned to different content, all accessed by ROKU's software.

23) He says the worst OS of all is Samsung, and that he had to add a ROKU box to the giant living room TV. He watches youtube how to videos on his Apple TV (you think Apple would give Google a space on their TV remotes?) with a ROKU box and remoted.

24) and his daughter uses her Roku box to hear music through a Bluetooth connection to her wireless earbuds. She plays youtube Red music streams from her fave EDM DJs (as do I).

25) So that's the ROKU story. Change your thinking from hardware to software. That's where the growth lies. And keep in mind ROKU has no enemies and everyone wants to be repped on their opening page. Get this right, read the charts, take a position soon.