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Near term, she did not believe connected TV (CTV) revenues would be immune to the deteriorating ad environment that forced her to lower the 2Q22 estimates for the AdTech companies she covered.
ROKU is 100% CTV Streaming revenues, making her cautious going into 2Q22 earnings.
Roku's potential revenue stream from data is far more intriguing to her from a fundamental value POV.
She calculated that selling its 1st party CTV data to 3rd parties could add nearly 3% to revs and 30% to EBITDA without hurting its first-party data competitive advantage with advertisers.
More importantly, it would add Roku to the conversation about what a CTV currency should measure.
Today, VIZIO Holding Corp (NYSE: VZIO) dominates CTV currency, which sells its glass-level data to everyone, and LG, which sells its CTV data to iSpot.tv (a private pure-play measurement company).
She saw Roku as a pure-play way to invest in the growth of the U.S. over-the-top (OTT) and connected-TV (CTV) ecosystems.
She believes that Roku's advertising addressable market (TAM) in the U.S. is the $60 billion of U.S. traditional linear TV advertising revenue reported in 2021plus TAMs it adds over time.
Roku devices were in 61 million homes on March 30 and reached about 150 million U.S. consumers, making Roku the most significant premium long-form film and TV content platform for CTV ads.
From a valuation POV, she preferred to value Roku as a digital video aggregation platform such as YouTube (valued at $300 billion).
She concluded that winning platform aggregators typically benefit from winner-take-most economics, and Walled Gardens (like Roku) naturally maximize value capture.
Price Action: ROKU shares traded higher by 2.58% at $87.98 on the last check Monday.
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