社区

One of the reasons that $Roku Inc(ROKU)$ stock price plunged recently, is the concerningof losing Youtube TV App after receiving anticompetitive demands from $Alphabet(GOOG)$ including requests for preferential treatment. It has sunk 22% in one month before last trading day. However, on Dec.8th, the two companies has competed in a number of areas and their carriage agreement. The new three-year deal could be beneficial for both companies given the large runway within connected TV (CTV) and their potential to take market share by aggregating hundreds of channels and premium content, offering a better user experience vs linear TV. Why this deal means that much? Youtube is different from other streaming platform, it's the largest UGC or PUGC content community in the world. It has already been the most "time-spent" app, together with $Netflix(NFLX)$ except from linear ones, according to Nielson's research. As we all known, Youtube is one of the growth engines for Google, and the YoY growth rate reached 40%+ these two years. it made 7.2 billion dollars in the last season (21Q3) Since Roku's dominant cash flow is from the CTV ads, you can understand why Roku is so desperately eager to argue more benefits from YouTube. In October, Roku suggested, "We have not asked for a single change in the financial terms of our existing agreement. In fact, Roku does not earn a single dollar from YouTube’s ad supported video sharing service today, whereas Google makes hundreds of millions of dollars from the YouTube app on Roku. Google required a preference for YouTube over other providers". We don't know exactly whether Google agreed to share the Ads cash flow to Roku, But the 56.4 million active accounts seems the Roku's biggest bargaining chip. Anyway, the agreement benefits both of them. While on 21Q3, Roku missed on revenues, the media company nevertheless enjoyed strong revenue growth and improving user monetization in Q3'21. Roku's third quarter revenues soared 51% year-over-year to a record $680M while gross profits surged at an even faster rate of 69% year-over-year to $363.9M. Platform margins remained high, at 65%, and Roku's income from operations increased by a factor of 5.7 X year-over-year. For Roku, if real cash flow comes from YouTube ads, it will definitely accelerate it's monetization, and help the company beat the undervalued guidance. That's the main reason of the optimism for Roku last night. We shall keep an eye on it.