Good Morning! Markets and economics reporter Will Daniel here, filling in for Sheryl Estrada today.
Old school cable company execs may wince every time a viewer cuts the cord, but it’s music to the ears of Roku’s CFO Dan Jedda, who joined the company in May. Jedda arrived at Roku after a stint as CFO of the online personal styling service Stitch Fix, and 15 years at Amazon, where he served primarily as a vice president and chief financial officer for the Digital Video department.
“Streaming hasn't slowed down at all. It continues to grow year-on-year despite the pandemic ending. And it's a trend that we feel very good about and one that we feel will continue,” he told Fortune. Roku saw its users’ total streaming hours jump 21% to a record 25.1 billion in the second quarter, while streaming hours for Roku Channel, the company's in-house app featuring original content, rose roughly 50% over the same period.
More broadly, Americans streamed more than 19.4 million years—yes, years, not hours—of content in 2022 alone, a 27% jump from the 15 million years they streamed in 2021, according to Nielsen data. And with the number of original scripted shows falling in 2023 (something FX chairman John Landgraf has labeled "Peak TV"), Nielsen revealed last month that overall streaming consumption jumped by another 30% year-over-year in May. (We’ve yet to see what effect the ongoing writer’s strike may have on streaming habits going forward).
That’s helped boost Roku’s stock, which is now up 118% year to date after plunging 91% from its July 2021 peak of over $473 per share to just $40 in January. ARK Invest CEO Cathie Wood has been a Roku believer for years, and while share prices dropped in 2022, she added to her holdings. ARK Invest’s ETFs now hold a combined 8.8% of the streaming giant, making it the firm’s second largest position behind Tesla.
For Jedda, who promised he would “continue driving growth” while “focusing on profitability” in a March statement after his hiring, the ongoing strength in streaming—and the stock’s bounceback—is a welcome sign. Roku has been attempting to slow down the growth of its operating expenses over the past year, cutting costs with two rounds of layoffs in the months prior to Jedda’s hiring. Though he didn’t mention more layoffs, he said the firm is looking abroad for cheaper talent. “One of the things we are doing is we're hiring in lower cost environments. We're managing our op-ex that way, and then we continue to look at spend, but it's not an area where we're necessarily cutting back, we may just grow slower,” he explained.
Jedda may have profitability on his mind amid talk of Peak TV (the notion that the era of booming scripted show growth seen over the past decade is coming to an end), rising interest rates, and consistent recession predictions from Wall Street, but he’s also focused on what really matters over the long-term: customer experience. “As a clear market leader, we're really focusing on just continuing to engage our streamers and ensure they have the best experience while not losing, or even in fact growing, our market share,” he said. “It really all goes back to the customer experience.” In that vein he’s a Steve Jobs adherent. As Jobs told a group of eager young programmers at Apple's Worldwide Developers Conference in 1997, “you’ve gotta start with the customer experience and work backward to the technology.”
Jedda said that he is always, first and foremost, asking himself: “How does this decision impact the customer or streamer experience?” And then secondly, turning to his CFO brain, he asks: “What's the ROI on it?”
“When you’re constantly asking those two questions, you find ways to allocate capital that are best in both the long term success of the business and growth,” he said.
Will Daniel
will.daniel@fortune.com
