Good day, ladies and gentlemen, and thank you for your patience. You've joined the Q3 2017 Roku Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference may be recorded.
I would now like to turn the call over to your host, Mr. James Sandford at Investor Relations. Sir, you may begin.
Thank you. Good afternoon, and welcome to Roku's financial results conference call for the Q3 ended September 30, 2017. I'm pleased to be joined on the call today with Anthony Wood, Roku's Founder and CEO Steve Louden, our CFO and Scott Rosenberg, our GM of Advertising will be available for Q and The following discussion, including responses to your questions, reflects management's views as of today, November 8, 2017 only, and we do not undertake any obligation to update or revise this information. Some of the statements made on today's call are forward looking and are based on our Current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of Roku, including expected financial results for the Q4 and the future growth of the business.
Our actual results may differ materially from those discussed on the call For a variety of reasons, please refer to today's shareholder letter and the company's filings with the SEC for information about factors which could cause our actual results in our shareholder letter, which is posted on the company's Investor Relations website at ir.roku.com. I encourage you to periodically visit our IR website for important content. Finally, unless otherwise stated, all comparisons on this call will be against the results of a comparable period in 2016. Now I'd like to turn the call over to Anthony.
Thanks, James, and thanks, everyone, for joining our first earnings call. We had an outstanding quarter and now believe that we are on track to reach or exceed $500,000,000 in revenue this year, a big milestone for Roku. We are more excited than ever about our streaming platform, our competitive position in the industry and the massive shift of the TV ecosystem to streaming. The The Roku story may be relatively new to many of you, so I'll recap some highlights. I'll then hand the call over to Steve to review our results and our outlook.
I've also asked Scott Rosenberg, GM of our ad business to join us for Q and A. If you haven't already done so, please take a look at Our 3rd quarter shareholder letter posted on the IR website for more details. TV and TV advertising is in a massive shift And 1,000,000,000 of dollars are moving to new platforms and services. When the Internet disrupts large existing businesses, the opportunity emerges to create a new large scale platform. That is what Roku is, the leading platform for streaming TV in the U.
S. Many of you probably first learned about Roku through our popular Streaming players and Roku TVs, but buying a Roku device is simply the beginning of the relationship we have with our viewers. Almost 90% of our gross profit comes from our advertising, audience development and content distribution services In our Platform segment, this segment is driving our strong gross profit and revenue growth. The Platform segment grew 137% this quarter And our ad business, which contributed 2 thirds of our platform revenue, grew even faster. As we add more content publishers like DIRECTV NOW and as our content partners enhance their streaming channels like Hulu Live and we make a wealth of free ad supported content available.
Users continue to use the Roku platform more and more. Our value proposition to content publishers and advertisers is clear. Roku is a large scale platform that monetizes the hard to reach and valuable TV streaming audience. Many streamers start their OTT experience with ad free services like Netflix, but ad supported content is To better service our viewers and advertisers, we launched The Roku Channel in September. It features tons of great movies and TV shows, All free, ad supported.
And while it's still early days with The Roku Channel, we are pleased with the progress so far. The Roku Channel is already a top twenty app in The Roku Channel Store in just the 1st month since it launched. We grew our active accounts primarily by licensing to TV manufacturers and selling our streaming players. In the Q3, active accounts were up 48% year over year $16,700,000 with over half of new accounts coming from licensed sources in the quarter. To put our scale in perspective, If Roku were a traditional cable company or service operator, we would be the 4th largest in the country.
But while consumers move to streaming and Our Roku TV program has great momentum and is contributing to our scale. At the end of last year, one out of every 8 smart TVs sold in the U. S. Were Roku TVs made by brands like TCL, Insignia and Sharp. So far this year, 1 in 5 smart TVs sold in the U.
S. Is based on our Roku TV design and our operating system. Our low cost reference design is a key advantage for our TV manufacturing partners We benefit from lower bill of materials costs and the best in class purpose built TV operating system. I I'm very pleased with the progress we're making with our license programs like Roku TV and Roku powered. In fact, we hit a new milestone this quarter with over 50% of new accounts coming from licensed sources.
Roku is the leading streaming platform in the country based on streaming hours. But why is that? It's because we are focused on winning customer reviews and word-of-mouth using a purpose built for TV Roku operating system. If you look back in time, operating systems rarely, if ever, made the transition from leading on one type of computing platform For example, Microsoft Windows became the OS for PCs, mainframe operating systems didn't. Android and iOS became the operating systems for phones, not Windows.
We believe Roku is very well positioned to maintain its lead as the OS for TV streaming. We've been busy getting ready for the holiday sales season, and we believe that we are well positioned. We just refreshed our entire streaming player lineup to excellent reviews. For example, our new streaming stick plus just won CNET Editor's Choice Award. We've been working with our Roku TV partners to launch lots of new TV models.
A great example we're proud of is the progress we've made with one of our partners, TCL. By combining TCL's huge manufacturing scale and great picture quality With the Roku OS, TCL achieved the number 2 spot for U. S. Smart TV sales in September and is number 4 year to date in 2017, From number 19 for the full year of 2014. That's pretty amazing.
Streaming is mainstream and a huge market. We believe every TV will one day run a streaming OS and what we're seeing now is just the beginning. I'll now turn it over to Steve to discuss Q3 results and our Q4 outlook.
Thanks, Anthony. Q3 was indeed a great quarter. The full details of our financial results and key operating metrics are available in our shareholder letter. So I'll focus my comments on key trends in the business and our outlook for the Q4. Unless otherwise specified, All comparisons are on a quarterly year over year basis.
As Anthony mentioned, our growth strategy involves growing scale, Growing engagement and growing monetization. Our key metrics that measure our progress are active accounts, which is defined as Accounts that have streamed in the last 30 days, streaming hours and average revenue per user or ARPU, which we define as trailing 12 month platform revenue divided by the average active accounts at the end of Q3 'seventeen and the end of Q3 'sixteen. Active accounts grew 48 percent to $16,700,000 with over 50% of new accounts coming from license And ARPU increased 37% year over year to $12.68 on a trailing 12 months basis per account With the largest and fastest growing portion of that coming from video advertising, which includes 15 and 32nd video ads inserted on ad supported channels, as well as audience development ads that our content publishers use to acquire subscribers or to promote their content like the recent Game of Thrones home screen takeover when HBO launched the new season. The streaming industry continues to move in our direction as OTT advertising adoption and IP distribution of content trends continue to drive our rapid growth. Turning to our results, total Q3 revenue increased 40% year over year to $124,800,000 and year to date revenue through Q3 increased 29% to $324,500,000 Our focus is on gross profit growth, which we generate primarily from the higher margin Businesses in our Platform segment.
Gross profit increased 92% to $49,900,000 and year to date gross profit through Q3 increased 65 percent to 126,400,000 Gross margin expanded 11 percentage points to a record 40% as we continue to benefit from a mix shift to our faster growing Higher Margin Platform segment. Operating expenses increased 44% to $58,000,000 resulting in an operating loss of $7,900,000 an improvement compared to the loss of $14,100,000 last year in Q3. Adjusted EBITDA loss improved $7,000,000 year over year to a loss of $3,700,000 in Q3 down from a loss of $10,700,000 in Q3 last year. Turning to our segments, platform revenue grew 137% year over year to $57,500,000 with the largest contributor coming from advertising. Our platform segment represented 46% of our total revenue up from 27% last year.
Platform gross profit grew at an even faster pace, up 156% year over year to $44,600,000 and represented 89% of our total gross profit dollars in Q3, up from 67% last year. Platform gross margin of 77% increased 5 percentage points year over year driven by a favorable mix of higher margin Owned ad inventory. While Q3 was a great margin quarter, we expect the source of inventory to be more balanced in the 4th quarter, thus bringing platform gross margins back down closer to 70% in Q4. We acquire accounts through our operating system licensing programs, both Roku TV and Roku powered, which are our fastest growing sources of new accounts and through the direct sale of our streaming players. In the Q3, player sales generated $67,300,000 in revenue, up 4% year over year.
Our Q3 player revenue benefited from a strong new product lineup launch at the end of the quarter with a more powerful Roku Express and a new 4 ks HDR Roku Streaming Stick. We are leveraging our cost advantage to strategically drive down the prices of streaming players to drive account growth, which we monetize over the life of the account. Our highly successful low priced Roku Express remains very popular and was a key driver of our 35% year over year player unit growth in the Q3, but was also a big contributor to the 23% year over year decline in player ASPs and lower player gross profit dollars. We are happy to make the trade off of player revenue growth for faster account growth As we view this as an attractive account acquisition path and we believe our low cost leadership in the industry is a competitive advantage. Player gross profit dropped 38% year over year with player gross margin down 5 percentage points year over year to 8%.
In addition to the pricing mix dynamics discussed, we also gave incremental discounts to clear the way for the new product lineup launch at the end of the quarter. And our low cost player strategy combined with our Roku TV strategy are clearly working to drive these higher. Operating expenses increased 44% year over year to $57,800,000 in the 3rd quarter, largely driven by headcount growth with a 57% year over year increase in R and D expense. We continue to see tremendous opportunities to invest in future growth and strengthen our leadership position in the streaming ecosystem and we'll continue to reinvest a large portion of our gross profit back into innovation and platform development. Our net operating loss for the quarter was $7,900,000 an improvement from our net operating loss of $14,100,000 in the Q3 of 2016.
Adjusted EBITDA loss of $3,700,000 improved $7,000,000 year over year compared to $10,700,000 loss in the prior year. As a percent of revenue, adjusted EBITDA loss improved 9 points year over year to 3 percentage points. GAAP net income loss of $46,200,000 and EPS loss of 8.79 dollars a share includes a one time non cash $37,700,000 expense related to the change in fair value from our preferred stock warrants to common stock as a result of the IPO and does not account for the conversion of preferred shares into common. Adjusting for this one time non cash item, pro form a EPS loss was $0.10 based on basic and diluted share count On an as if converted basis, an improvement compared to the $0.17 loss in the Q3 last year on the same basis. Please see our shareholder letter for GAAP to non GAAP reconciliations.
We ended the quarter with $67,000,000 in cash and cash $23,000,000 of term debt. After the end of the quarter, we received approximately $135,000,000 in net proceeds from the IPO and have subsequently paid down the term debt. With that, let me turn to our outlook for Q4. Based on what we know at the time of this call, we are providing the following Q4 outlook. For the Q4 2017, We expect to generate total net revenue between $175,000,000 to $190,000,000 up 24% year over year at the midpoint.
Total gross profit between $58,000,000 to $64,000,000 up 37% year over year at the midpoint and adjusted EBITDA ranging from negative $6,000,000 to breakeven or negative 2% as a percent of revenue at the midpoint. Please see our shareholder letter for GAAP to non GAAP reconciliation items included in our outlook. We plan to provide Q1 and full year 2018 guidance on our Q4 earnings call in February, but I want to provide a quick reminder about seasonality. As you can see from our Q4 outlook, there is a significant seasonality to our business with nearly 36% to 38% of total annual revenues typically coming in the Q4. Revenues typically declined sequentially in Q1 and we expect this trend to continue in 2018.
Overall, Roku remains on a compelling trajectory with robust year over year top line growth, expanding gross margins and decreasing operating losses. And while we continue to make significant investments against several strategic initiatives, if trends persist, We expect to reach EBITDA breakeven or better in 2019. And now, I'll turn the call over for questions. Operator?
Thank Our first question comes from the line of Mark Mahaney of RBC. Your question please.
Great. Thank you very much. Congrats on a nice really nice quarter out of the gate. Three questions please. First, could you talk about the drivers of that ad revenue?
And if you could maybe qualitatively talk about the difference and the drivers of volume, Access to inventory among some of the OTT ad supported channels and pricing, so just peel that ad revenue back a little bit. Secondly, in terms of the trade off between the player gross margins and active accounts, any updated thoughts on the Guardrails you want to put around those margins, how low are you willing to run those gross margins? Or does it make sense to actually run it at a negative gross margins given the big boost you're seeing to active accounts? And then third, Just if you'll talk briefly about what are the major toggles that would cause EBITDA to reach breakeven earlier or later than what you're looking Then what you just talked about in fiscal 2019, like what's going to be key there for you figuring out when to take that to breakeven? Thank you.
Hey, Mark, thanks. This is Anthony. I'll turn it over to Scott in a second to answer your question about ads. But In terms of players, we don't have a specific plan on how How low we would take gross margins and what makes sense there. So I don't really have any color to add.
But Our strategy is working. Active accounts grew 48% year over year and players are a big contributor. So we're happy with the way things are trending there. In terms of ads, Scott, did you want to talk about some of the drivers there?
Sure. Hi, Mark. This is Scott. In terms of the key drivers of our ad revenue this quarter, that attributed to a couple of factors. One is we continue to make great inroads with agencies.
We've written Upfronts are annual commitments with 2 other major holding companies. We continue to have great progress penetrating TV buying teams who of course $70,000,000,000 of ad spend. We've had great progress in some of the newer ad products. One of our goals as an ad team is Bring innovation to the table, so our sponsorships category has really been strong in Q3. In terms of CPMs and pricing, we continue to drive them.
As I think we've mentioned in the past, we sell in the $30 plus CPM range, and we Continue to see good growth there as we layer in more products and capabilities.
And then I think in terms of EBITDA and breakevens, Steve, do you want to?
Yes. Hey, Mark, it's Steve. Yes, so in terms of the trajectory of the business, we feel very good about the business, Robust pipeline growth as we continue to mix over to the platform segment, it's faster growing, higher margin. So continued gross margin expansion there has been helpful. As you know, the on the OpEx side, Yes, we are investing significantly into a massive opportunity and that is largely headcount based.
So in terms of the levers that are related The EBITDA trajectory, we feel confident in the guidance about 2019, but really it's the relationship on terms of how fast that gross profit dollars are growing and the margin is expanding relative The investment rate, so that's really what would tweak the timing of the breakeven trajectory.
Okay. Thank you, Anthony, Scott and Steve. Thank you.
Thank you. Our next question comes from Ben Swinburne of Morgan Stanley. Your line is open.
Hi, thank you. I have two questions. Anthony, could you talk a little more about the Roku channel, which is obviously off to a great start. Just that's a little bit of a different business in that you're getting in the sort of your own content that you're monetizing directly with the consumer, licensing it or rev sharing it with studios. How big What business do you think that can be for you over time?
And does it create any complexity in your conversations with All your other partners on the content front who are sort of in that business. I'm just wondering if you could talk about sort of the opportunity and also how it may or may not change your relationships with other players. And then I have a follow-up
Sure. So the yes, so The Roku Channel addresses a couple of different areas for us. One is And just to set the record straight, there's lots of content in The Roku Channel that is also available on other apps on our platform. So it doesn't compete Directly with existing content partners instead it provides a new way for existing content partners to reach audience I mean there's 5,000 apps on Roku, many of them are free ad supported, but many customers are just not willing Good look in every app. So one point of The Roku Channel for us is To start doing a better job of merchandising and recommending content with a content first UI to our customers.
So that's and that helps our existing channel partners. Roku the other point about studios, I mean Roku is a large scale publishing platform. And we see that over time a lot of content We'll become we'll come directly to Roku, publish directly on Roku through a mechanism we call Roku Direct Publisher. I mean there's a lot of content out there That's not being monetized. That is owned by companies that don't have direct to consumer marketing ability, don't have ad sales teams I would love to monetize that content on the big stream.
So that is another purpose of The Roku Channel. And I guess, finally, the 3rd point of The Roku Channel is that consumers want free content. Free is one of the top search terms on our website. Consumers are looking when they move when a consumer cuts the quarter moves to streaming, they obviously want a better experience, but they're also looking for better value. And so that's so free is important and The Roku Channel really addresses that.
So yes, we think I mean, we're I'm super bullish on The Roku Channel. It's just the beginning That's a big strategic effort for us.
Right. And maybe if I can just be a little greedy and ask a follow-up to that For you or Scott, is an hour of viewing on the Roku channel worth more to Roku than an hour viewing and other ad supported engagement on the platform generally speaking
This is Scott. I'll answer it qualitatively. One of the benefits of Roku bringing forward a channel like The Roku Channel, We fully control the playback experience and we can optimize it to be a great consumer experience and a great opportunity for advertisers. So the Roku Channel brings forward all the advanced ad tech that we put into our operating system and lets us sell at premium rates. It also integrates sponsorships, so we can create new It's in our opinion, it's one of the best ways to monetize ad supported attention on our platform.
Okay, that's helpful. And then just Scott, I mean Steve, excuse me, I think I did this right. It looks like the guidance for the 4th quarter implies a Decent gross margin step down from Q3 to Q4 in platform and I think you mentioned mix of inventory driving that. Can you just remind us why Seasonally, Q4 has maybe a more rev share advertising versus O and O versus Q3. Just maybe that would be helpful color.
Yes. Sure, Ben. So based on my prepared remarks, Q3 had A relatively high percentage of owned Roku owned inventory and that is at very high margin. And then And we also help content publishers sell their inventory. So we're a great source of demand for them.
Then we share the revenue back for them. So there is a margin differential between Roku owned and partner inventory that we sell. In Q4, there's a significant step up just in the overall Roku business, Both on the player side and the platform side and specifically in advertising, there's a big step up in the number of Impressions. And so, we are helping the content publishers sell we're asked to help them sell More of their inventory and hence the mix shifts back over to a more balanced first Roku owned and partner owned, Which puts a little headwind on the overall gross margin for advertising and thus the platform segment. And as you know from this quarter, Platform was 89% of the overall gross margin.
So as the platform gross margin goes, so goes the company gross margin.
Sure. Yes, that makes sense. Thank you.
Thank you. Our next question comes from Mark May of Citibank. Your line is open.
Hey, guys. Thanks. I had a couple just back on the platform gross margin. You commented obviously around Q4, but maybe if you could just talk a little bit about how we should be thinking about that longer term and How the mix of the various inventory sources may likely trend over time and how we should be thinking about long term platform Gross margins and then in the quarter just looking at sort of average streamed hours per account, Just which I think was 8% year on year. How are you seeing the new Express users in terms of their propensity to stream average hours relative to sort of your existing customer base?
This is Anthony. So I'll why Why don't I talk about the Express hours first and then a little bit about platform and turn that over to Steve. Hours are growing strong. As consumers shift their viewing to streaming and watch more and more of their household viewing On streaming we see per user hours growing. I don't have anything specific to this comment on Express.
I would add a little color, I guess, about Roku TVs. Roku TVs, we are seeing, at least in some of the early data, that Roku TV customers Do stream a little bit less than the streaming box customer, but they're still great they're great customers. They still stream a lot. And We also have lots of ways we have other ways to monetize TVs that we don't actually have on streaming boxes. For example, every interaction With your TV starts with the Roku home screen where we run ads, we have technology like ACR that we're starting to use to monetize Traditional linear TV viewing as well as our traditional streaming viewing monetization.
So in terms of the platform Business, it's going extremely well. Ads, both big parts of our platform business, advertising and content We're really doing excellent in the quarter and both have grown nicely. And I'll turn it over to Steve to Maybe add some color on trends.
Yes. Mark, it's Steve. So yes, we'll have as mentioned in the prepared remarks, we'll have some more Detail on the outlook for 'eighteen in our next call, but just give you some qualitative thoughts On the platform makeup. So if you remember platform as ads, content distribution and then a little bit of licensing in there. So ads is Two thirds, it's growing.
It's the fastest growing piece within platform. Content distribution is the majority of that remaining third. And And then there's a little bit of licensing from the Roku TV and Roku Power Program. Most of that value is on the balance So if you think about the components within advertising, you have audience development, which is a great example of that is our home screen ads And that tends to be very high margin. Within video ads, which is the biggest piece within advertising, as we talked about in the other question, we have Roku owned inventory, which is very high margin.
Example of that is inventory we get through as an inventory split for distribution of Channels that have that are ad supported and then we help our partners sell their inventory and then we rev share back on that. So that has higher COGS And then we also have content sponsorships, which tend to have a high margin. So a lot of what's Involved in the margin trends of the Platform segment is really around the mix The ad business relative to other parts of the Platform segment and then within the ad business, the mix Between primarily the Roku owned inventory as well as the 3rd party inventory, but can also be the relative growth rates So really it's the moving pieces and the mix
Thank you. Our next question comes from Laura Martin of Needham. Your line is open.
Guys, great quarter. Thank you for over delivering all these. I love this engagement number you guys are showing. So a couple of things. One is you're, got a little bit of a revenue headwind as we, sort of mark down the player revenue, which you were telling us I'm very interested in the breakeven economics of that.
So if you take $10 off a player, I get the fact that What you're playing for is the annuity stream of the ongoing revenue that comes from that customer. Does that take a 12 month breakeven to get back that $5 $10 discount you gave on the player 2 years or 3 years. How do you guys think about the breakeven that justifies lowering the upfront player cost? And then for you, Scott, I'm really interested in endemic advertisers, which as you think about your whole ad pie, what I'm sort of asking is what Like categories, like is it travel or is it normally I would ask like travel or consumer products. But what I'm really what I want to know is how many are endemic that are just advertising their channel on Roku versus how many are what I would call normal branded advertisers and how what are the relative growth rates of those two categories?
Thanks.
Hey, Laura, thanks. This is Anthony. In terms of active accounts and players specifically, Active accounts growth is strong. We had 48% year over year increase in growth in active accounts Coming from both players and Roku TV. One way to think one way I think about it is that both of those Sources of new accounts are in essence negative customer acquisition costs.
We get paid a license fee from Roku TV partners when they ship a Roku TV and we We get a positive gross margin when we sell a player. So but you're right that our primary objective with players is to sell as many as we can and unit sales were up 35 1 of the levers we use to increase sales is price. And so coming out with a great product with a great value is important to us. But And the platform business does support lowering the margins on players. The ARPU increased 37%, for example, year over year On the platform business.
So there's no currently, there's no sort of periods to make up Gross margin on players because players are positive gross margin for us. And then on the sources of ads on our platform, I'll let Scott Talk about that.
Hi, Laura. Great question. As you might expect on the endemic front or entertainment clients, we certainly over index there. We're We're an entertainment platform and so whether it's an app promotion for an app on our platform, a theatrical tune in, virtual MVPD, Those class of advertisers spend significantly with us and it's a great category for us because it's very data driven. We can predict based on Behaviors on our platform, how users are likely to engage that content, but it is not a majority of our ad revenues.
A majority of our ad These do derive from traditional advertisers and we're active across every ad vertical out there, whether that's travel, financial services, QSR, CPG, Retail and that's because those are huge categories and we are a TV platform first and foremost. So every TV advertiser Is investing in OTT across all categories. And we're already now, by the way, about half of all top 200 ad age advertisers are
Okay. And you're not seeing any downdraft in CPG or retail because you're just too early in the growth curve?
Sorry, can you repeat that? We're not seeing any what's that?
Down draft in CTG or retail.
You mean because of changes in those categories themselves? Yes. Yes, I'm just not I don't have that data, but I would say those categories are big for us as well alongside all other categories.
I mean the big trend is that we're still in very early days and 1,000,000,000 of dollars of Traditional TV advertising that's moving to OTT to follow their viewers.
Perfect. Thank you.
Thank you. Our next question comes from Ralph Schackart of William Blair. Your question please.
Good afternoon. Thanks for taking the question. Just on platform revenue, I think you called out advertising being about 2 thirds of that revenue mix in the quarter. Can you give us a sense of how that compared to last year And how that sort of progressed through 2017? And then as a follow-up to that, can you give us an update of what percent of Our stream were from ad supported content and then also how that would have compared from last year and I have a follow-up.
Yes. Hey, Ralph, this is Steve. Thanks for
the question. So in terms of
platform revenue, the ads are about 2 thirds of the platform revenue. It is the fastest growing piece. We haven't specifically talked about the historical breakdown, but it has been gaining share pretty consistently driven by the video ad business within ads, which is, as Scott and Anthony talked about, is a massive opportunity that we're at early days. So It is it has been growing the fastest and we think there's a huge opportunity for that to continue. And so we're very happy with the progress there.
And And then
maybe just on the ad supported channel question.
Yes. So ad supported, I mean, in general, ad Viewing on Roku that includes ads continues to grow. And there's still a lot of upside in Streaming hour growth on Roku as consumers spend more and more of their time watching streaming versus traditional linear TV. And Our view is that a big chunk of that is going to go to ad supported content just like ad supported content is a big chunk of mainstream Traditional TV viewing.
Anthony, maybe a follow-up. Just can you give us a sense of what you're hearing from your Retail channel partners and maybe the OEMs for this holiday season, maybe more specifically within the player and smart TV Category and then sort of how Roku is positioned this year versus last year?
I mean Roku is positioned well. We just launched an entirely new line of products. The Roku Streaming Stick Plus won CNET Editor's Choice Award. TCL in September was the number 2 seller of smart TVs in the country, selling more smart TVs than Any TV company except for Samsung. So we've got a lot of new models.
We'll see, but I think we're well set for the holidays.
Okay, thanks.
Thank you. Our next question comes from Jason Helfstein of Oppenheimer. Your line is open.
Thanks. Two questions. So on the Roku channel, did it have any impact on ARPU this quarter or just because the launch Too late to matter. And do you think it will impact ARPU in the Q4? And then another question, Roku channel outside of Roku on Tablets and browsers, any thoughts?
And then to the extent that that strategy is going well, would you consider M May, for assets, to bolster the Roku channel and that strategy overall? Thanks.
It's still early days in the Roku channel. Did it contribute to ARPU? It probably did a little bit because we it's doing well for a brand new channel. And I think it's premature to talk about Q4. I guess the big picture, I think, is that we think that the Roku channel is sort of the beginning The shift in content viewing, or at least a lot of content viewing away from apps and into a content first user interface.
And we think the Roku channel is a great way to do that. So we're very bullish on the Roku channel. We're going to keep investing in it. And I don't have any comments on taking it off Roku or
And then maybe one follow-up. Do you think you saw any pull forward of active accounts or increase in streaming Activity, given the publicity generated by the IPO?
I have trouble wondering.
Jason, can you repeat that? We're having a hard time hearing you. Sure.
Do you think as a result of the publicity generated by the IPO, Do you think you saw any pull forward in active account activations or an indoor picked up increase in streaming usage?
Okay. Hey, Jason, this is Steve. I wouldn't attribute any significant change based on The IPO, the IPO was late in the quarter regardless, but Roku has got a great consumer brand and we've been the leading streaming TV platform. Our active account growth has been robust, 40% plus for a while. It was a little higher at 48% This quarter and that was really driven by the Roku TV business, really in the kind of middle to late part of the quarter around Back to school.
So I think that is unconnected to the IPO, although certainly the IPO there was great pressure on the IPO itself.
This is Anthony. I think the main effect of the IPO was to increase awareness among investors and others about what Roku's business really is that we're a platform business That we're becoming a large ad platform and a big way to distribute Content and our real business and the stream players that we make are awesome, but they're just one of the ways we acquire accounts.
Thank you.
Thank you. At this time, I'd like to turn the call back over to Anthony Wood for any closing remarks. Sir?
Yes. Well, thanks, everyone, for dialing in for our first earnings call. We had a great quarter. We were super happy. It was a milestone quarter for Roku.
We more than doubled the size of our platform business. We refreshed the entire line of players. We released Roku 8 with exciting new features for Roku TV and we expanded our reach significantly. It's a great time to be in the streaming business and thanks everyone.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.