Roku, Inc. (NASDAQ:ROKU) Q4 2022 Earnings Call Transcript

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Anthony Wood : Mike, I’ll let Charlie take the content acquisition question. But I mean just at a high level, I would say that we have done acquisitions in the past. We’re very cautious about doing acquisitions. We have a high bar — we do spend a lot of money on content, primarily to licensing and rev share, but also originals. And so we’re always looking at ways to spend that money most effectively. But I don’t think we have a particular strategy around acquisitions. I don’t know, Charlie, do you want to add anything?

Charlie Collier : Well, I think you’re right. The foundation — the base of our content spend will continue to be rev share and licensing. But you’re right, those City acquisition — those Quibi shows continue to perform well, and we renewed Kevin Hart series and he’s coming back soon. And then we acquired a content library in This Old House. And I look at our commitment for the advertising community to genres like food and home and having This Old House library for us globally has been a really has been accretive and really creatively has led to some really interesting relationships. So I think we’ll do so opportunistically and with discipline. But I like very much the fact, for instance, on weird that we own all the rights globally, and it’s been a calling card, both for the creative community and for the advertising community because they realize we’re going to build high-class distinct product for them at the right cost.

Anthony Wood : Yes. And on your second question in Q4, I mean, we’re — we’re pleased with the performance in the quarter against a pretty difficult consumer and ad market backdrop. Just to give you an idea, in our shareholder letter, we talked about just the trends in the U.S. ad market and how they weakened through the quarter. So the U.S. ad market was down 12% year-over-year in December. That’s after a decreased 2% and decrease 6% in October and November. So it just shows you the challenge of the trends. And when we’re giving the outlook, our expectation is to try to give our best estimate at that time. But certainly, with the high level of uncertainty and all the macroeconomic pressures that are both hitting consumers directly and then into the ad market itself based on those stats, it’s really challenging to get a handle on that.

So again, we’re pleased with the results relative to our initial expectations captured in outlook. But I wouldn’t say back to that other question around has our guidance philosophy changed, it hasn’t. And we’re kind of making a point in time call based on the imperfect information we have. And so that’s how we approached it in Q4, and that’s how we’re approaching to our Q1 outlook as well.

Michael Morris : So Steve in that, are you saying that when you gave the guide in November, you thought that ads were going to decelerate like 25% in December? Or I’m just trying to understand because it’s a big difference, right? I mean you talked about in letter to your point, that the trends did decelerate in December and yet you still came in meaningfully ahead. And now we’re looking at the first quarter and you’re guiding revenue to go backward by $34 million. I’m just trying to get a handle on it because the guide relative to we’re forecasting has proven to be a bit tricky.

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