Why I'm adding to Alteryx and not ZScaler

Investment Analysis Clubs Saul’s Investing Discussions
5

Dreamer,

Have you looked into ROKU as companion to TTD in CTV/OTT ad space? Here is the reason why I like them as a concentrated CTV play.

  1. #1 by a mile in streaming hours. 43% and increasing of connected TV streaming hours and 22% across all mediums. Amazon was #2 at 18% and holding steady of share.

  2. Most recent data I can find (April 2018), 83% of all US OTT Programmatic Ads were delivered on ROKU platform.

  3. Roku dominates and is pulling away with US device sales. US accounts for 85% of OTT global OTT market. US accounts for 70% of global streaming hours. The international market is very much undeveloped, and to immature to have a leader yet.

  4. CTV ad inventory on ROKU platform “more than doubled”, again. The company says they are in early innings and building out the full market is at least a three year event to truly mature.

  5. Revenue growth has accelerated every quarter for at least the last year from mid 30’s to 59% most recently. The amount the company beats it’s top of line guidance has been accelerating, most recently $25M over managements top line guidance. A $25M beat this next quarter yields further acceleration to 62%.

Q3&4 are seasonally the strongest quarters which gives me high hopes for the rest of the year of upside surprises.

  1. CTV ad delivery averages a 47% failure rate due to technical decencies along the supply chain resulting in missed revenue opportunities. Not sure if ROKU has the same failure rate or not but there is significant room for improvement in revenues without the already more than doubling of inventory. These issues will get solved by the industry sooner rather than later.

  2. Far from the walled Garden image, Roku is an open source developer platform with a several year mature Unified Ad Framework. This framework connects Ad inventory fro ROKU supply and ROKU publishers supply and over 40 DSP including “major players” like The Trade Desk.

In summary on CTV space programmatic ads are almost all being delivered on ROKU platform, that’s where a lot of TTDs ads are going. ROKU gets a larger chunk of the Revenue equation than TTD does.

Some of the sources of data

Programmatic ad share

https://www.businessinsider.com/roku-wants-to-control-the-fu…

http://blog.pixalate.com/programmatic-tv-connected-ott-unite…

Streaming hour share and CTV fail rates

https://drive.google.com/file/d/1CwtY4lX55k-IvHyOLAs5ZvuMUSj…

http://www.conviva.com/wp-content/uploads/2018/08/Conviva-Q2…

Most other sources come from earning call or ERs.

Darth

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