Platform Monetization and Future Growth
Q: What's your plan for accelerating platform monetization?
A: Anthony stated that a big goal is to reaccelerate platform monetization. They are expanding third-party partnerships to increase demand for advertising. There is significant opportunity to grow subscriptions by signing up new subscribers and reducing churn. A major focus is the evolution of the home screen, a key asset reaching households with over 120 million people daily. They have enormous opportunity to make it more useful and drive monetization.

Impact of Excess Supply and CPM Pressure
Q: How is Roku affected by excess supply and CPM pressure?
A: Anthony explained that Roku is not impacted by market-driven pricing changes like other streaming services because they are a diversified streaming platform, not solely a streaming service. Their platform business includes diversified revenue streams from streaming services distribution and advertising. They continue strong growth with 2 million net adds, reaching almost 84 million streaming households. Their unique ad products and ownership of the platform provide resilience against market supply dynamics.

M&E Vertical Weakness
Q: What are your expectations for the M&E vertical?
A: Anthony acknowledged continued weakness in the M&E vertical. Despite this, they expect advertising activities on their platform to accelerate in the second half and continue to grow platform revenue. Charlie noted that M&E is now a significantly smaller percentage of their overall platform business compared to prior years. They have diversified their ad business well and are not relying on M&E for future growth.

Third-Party Ad Sales and DSP Integration
Q: Why are you now integrating with third-party DSPs?
A: Anthony said they are focused on accelerating platform revenue and have chosen to expand relationships with third-party platforms as a key initiative. Integrating with third-party partners is not new, but now they're prioritizing it as they believe it will have a big impact over the next year. Charlie added that partnerships like with The Trade Desk, using Unified ID 2.0, make Roku more performant and efficient for clients. This open approach differentiates Roku in the market.

Revenue Guidance and ASC 606 Impact
Q: Why is platform revenue growth decelerating next quarter?
A: Dan explained that the ASC 606 impact for Q3 of last year was similar to Q2, causing approximately a 200 basis point sequential decline. Additionally, the Streaming Service Distribution (SSD) business faces more challenging comps due to significant price increases that happened last year. While there are some price increases this year, they are not at last year's level.

Advertising Outlook and Political Impact
Q: How will political advertising affect second-half ad revenue?
A: Charlie stated that political advertising positions them well as they approach the 2024 election cycle. While political ad sales are strong, they are just one part of their growing and diverse advertising business. Their tools and technology allow them to target desirable audiences and geographies effectively. They expect a steady ramp of demand and ad revenues into the back half of the year.

Device Business and Gross Margins
Q: When will devices reach breakeven on gross profit?
A: Dan noted that device margins were negative 11%, and they guided to similar levels in Q3. As they scale, component costs should decrease, but it will take several quarters to achieve the scale needed for cost benefits. Their Roku-branded TVs are ramping up, and they are seeing great results from expanded distribution partnerships.