I’m a bit behind so if this has been discussed already, pardon me.
1. I was a little dismayed that GM was so much lower on their platform revenue, but I’m sure this was due to lower bids per ad (and I think more subscriptions which carry a lower GM? don’t quote me on that part), which makes it all the more impressive that revenue not only beat guidance handily, but accelerated!
It is tough to know the different dynamics of ROKU’s business model. Certainly, ad prices likely came down late in the quarter. However, ROKU recognizes revenue differently for different pieces of revenue - gross and net.
Net revenue ends up with extremely high margins while gross does not. It does not impact total gross profit, but the margins are vastly different it seems.
But you can see where this would have the same effect on revenue growth. As margins drop, there is a good chance more of the business is of the gross variety versus net sending revenue growth higher at the expense of margin percentage.
I think the metric to follow here is gross profit growth. That grew at 39% this quarter. Last quarter was 49%. One before that was 59% and the one before that was over 70%. That is a bit of a concerning trend.
A.J.