Michael Morris

Michael Morris inquired about the impact and progression of Roku's third-party ad demand partnership with Amazon, asking if it's additive to growth or has cannibalized revenue. He also sought clarification on the expected Q1 platform gross margin and its variability throughout 2026.

Answer

Charlie Collier, President, Roku Media, stated the Amazon partnership is in "early innings" but aligns with Roku's open, interoperable strategy to be the most performant CTV ad platform. Dan Jedda, CFO and COO, added that the ramp will take time but is tracking as expected, contributing more over time. For platform gross margin, Dan Jedda reiterated the 51%-52% full-year guide, noting Q4 2025 ended at 52%, and expects little quarter-to-quarter variability, with more detail on margin profiles of different activities to be shared next quarter.

Michael Morris inquired about the impact of Roku's third-party ad demand partnership with Amazon and the expectations for platform gross margin in Q1 2026 and throughout the year.

Answer

Charlie Collier, President, Roku Media, stated that the Amazon partnership is in its early stages, aligning with Roku's open and interoperable strategy to integrate with all DSPs. Dan Jedda, CFO and COO, added that the ramp will take time but is tracking as expected. Regarding platform gross margins, Dan Jedda guided 51%-52% for the full year 2026, expecting little quarter-to-quarter variability, and noted stabilization in M&E in Q4 2025 and Q1 2026.

Michael Morris from Guggenheim Securities asked for more details on Warner Music Group's M&A plans, specifically how they will accelerate growth in 2026 and the expected incremental growth contribution. He also sought elaboration on distribution as a strategic focus, what changes in strategy give confidence for its increased contribution to growth in the coming year.

Answer

CFO Armin Zerza stated that WMG has a strong M&A pipeline, expected to materialize in calendar year 2026, focusing on highly accretive catalog businesses. He noted the joint venture with Bain Capital provides over $1 billion in funding, enabling capital-efficient growth acceleration. Regarding distribution, Zerza explained that it's a significant and growing business, now under new leadership (Alejandro, former Latin America head). He expressed confidence in accelerating distribution growth in 2026 by building capabilities for better customer service and faster, more efficient client integration, aligning with WMG's portfolio strategy to grow business and enhance margins.

Michael Morris inquired about Warner Music Group's M&A plans, specifically what to expect in terms of incremental growth drivers for 2026, and sought further details on distribution as a strategic focus, including any changes in strategy and confidence in its increased contribution to growth.

Answer

CFO Armin Zerza stated that WMG has a strong M&A pipeline, expected to materialize in calendar year 2026, focusing on highly accretive catalog businesses. He emphasized the capital-efficient approach through the joint venture with Bain Capital, providing over $1 billion in funding. Regarding distribution, Zerza explained it's a significant and profitable existing business, now under new leadership (Alejandro, previously head of Latin America). WMG has been building capabilities for better customer service and faster client integration, expressing confidence in accelerating profitable growth in this area starting in 2026.

Michael Morris from Guggenheim Securities asked about the direct response advertising growth, specifically how much the 8% Q3 growth accelerated from Q2's core trend after removing the execution error impact. He also asked if Snap could return to double-digit DR growth, identifying the top two or three contributors, and sought an update on the stability and confidence in bidding and optimization tools post-error.

Answer

CFO Derek Andersen stated that direct response revenue grew 8% year-over-year, a 3 percentage point acceleration from the prior quarter, driven by pixel purchase and app purchase optimizations, and SMB segment strength. He noted strong ad revenue growth in Europe (12% YOY, 6 ppt acceleration) and Rest of World (13% YOY, 10 ppt acceleration), while North America's large client segment (LCS) lagged with a small decline, though North America SMB grew over 25%. He expressed confidence in the ad platform and units, with targeted adjustments in North America LCS to build momentum for future growth.

Michael Morris asked why price increases in the U.K. were smaller on a percentage basis compared to Australia, given both are bundled service markets, and whether future price increases would resemble Australia's or the U.K.'s.

Answer

Alex Norström, Co-President and Chief Business Officer, explained that price adjustments consider various factors like household income, market maturity, and specific value-to-price ratios in each market. He stated that Spotify acts when the timing and magnitude are right for each market.