Roku vs TTD Ad revenue in 2020

From both companies’ Q1 cc.

Roku:
Overall advertising expenditure in the U.S. is likely to fall in 2020, but we expect our ad revenues to still grow substantially year-over-year;

TTD:
In early April, the year-over-year decline in spend continued to increase. By mid-April, the year-over-year decline in spend stabilized. During the last 10 days in April we started to see more stabilization and then some improvement primarily driven by CTV as Jeff had described. Over that 10-day period, total spend improved to a negative high-teen’s year-over-year decline.

My take: even after “improvement”, it is still declining high-teens in late Apr, it seems that TTD is even less robust as “walled garden” giant like FB.

My estimation is that ROKU’s platform revenue shall at least grow
50% (to justify the word “substantially”), while TTD’s revenue might be just flat year over year in 2020, in best case scenario might be grow 10-20%?

Zoro
Long Roku

12 Likes

Hi Zorosg.

Welcome to the board. Looks like you’ve been a Fool a while but are just joining the boards. Great post earlier of Roku earnings.

You posted an interesting dichotomy between the Roku and TTD forecasts on ad spend, but I don’t agree with your takeaway about open vs walled gardens. I think it isn’t factoring in the different ad mediums and audiences each platform supports.

One thing about TTD is that it is a buy side platform for all digital ads, including desktop, mobile in-app, mobile video, audio/podcast, and ConnectedTV (streaming video). These all contribute to the mix — here was a good breakdown of the %’s: https://discussion.fool.com/here39s-what-i-wrote-yesterday-in-q2… . So if any of these portions are affected in the decrease of ad spend, it will affect their overall numbers, even if other categories have increased spend in the stay-at-home environment. TTD plays in all digital ad pools, so when times are great and ad spend is up across the board, they flourish. But if the times are affecting ad spend differently across mediums, they can feel its impact.

This is a broader mix than FB’s walled garden (desktop & mobile in-app and video, not audio or CTV). Roku only competes in CTV. (Though beyond that, Roku is making a new category as well, allowing for blending CTV with interactive, akin to an in-app.)

So that might explain why you can see things like FB and ROKU ad spend flourishing (folks having more free time and spending it on binge watching CTV, and reading social media), yet TTD might be feeling an impact from a greatly reduced spend on the wider digital platforms (mobile, desktop). it seems all the ad platforms and social media platforms (FB vs PINS) are feeling the effects of this ad environment differently.

-muji
long ROKU

22 Likes

Thank you muji and your comments on TTD revenue mixes make sense.

But it seems that market still decided to punch ROKU harder than TTD today despite that TTD is much higher valued and much less revenue growth forecasted. Is it only because TTD is managing profitability better than ROKU?

I see ROKU is taking an approach similar as Amazon or Netflix in terms of R&D and S&M investment in the beginning of their Era while Jeff Green is taking a more balanced approach which seems to be favorable by the street.

This quarter’s high operating cost in Roku seems to more relevant to dataxu acquisition though but as I explained in earlier Roku shareholder letter update, I saw a much more positive sign (out of the negative Adjusted EBITDA margin this quarter) is that they actually delivered a positive FCF in Q1, which is very rare and promising.

2 Likes