Roku, Inc. (NASDAQ:ROKU) Q2 2019 Earnings Conference Call Transcript
Aug 07, 2019 • 05:00 pm ET
and advertisers. Before handing the call over to Steve, I'd like to draw your attention to a distinguishing characteristic of our ad business. There was a growing understanding that having first-party customer relationships at scale is a fundamental advantage. Our ad business is thriving because we offer a superior solution providing precision targeting, access to premium inventory, unique sponsorship and OTT reached at an individual publisher third-party ad tech provider cannot match. The Roku OS was built to create value for advertisers and content distributors. We are proud of the value we deliver for their business. I'll now turn it over to Steve.
Thanks, Anthony. We delivered exceptionally strong results this quarter in both the platform and player segments. Before taking your questions, I'll walk through financial highlights and address our outlook. Please see our shareholder letter for the full financial details from the quarter. Overall revenue growth accelerated to 59% year-over-year, the highest level since Roku went public in 2017 as both platform and player segments outperformed expectations. Platform revenue growth of 86% year-over-year increased sequentially from 79% year-over-year last quarter.
This was driven by increases in the estimated value of content distribution agreements based on improved visibility and performance trends, which resulted in a larger than expected recognition of revenue in the quarter. As a reminder, revenue recognition of our content distribution agreements can be lumpy quarter-to-quarter. In addition, robust growth in advertising continued as Roku monetized video ad impressions once again more than doubled year-over-year and we expect that trend to continue throughout 2019.
The total revenue growth rate of 24% year-over-year increased sequentially from 18% year-over-year last quarter, driven by strong core retail channel sales growth. Player units were up 36% year-over-year and ASPs were down 10% as we continue to optimize for account growth. Total gross profit of $114 million was up 47% year-over-year as reported. Excluding the $8.9 million benefit in Q2 2018 from a release of accruals related to potential IP licensing liabilities that did not materialize total gross profit would have grown 66% year-over-year, which is faster than the revenue growth rate. As anticipated, overall gross margin declined sequentially from 48.8% to 45.7% due to the continued mix shift to video advertising, the introduction of premium subscriptions and our strategy of driving down player ASPs .
OpEx in the quarter grew 60% year-over-year to $125 million driven by a 33% growth in headcount and higher stock-based compensation. Excluding stock-based comp, OpEx was up 46% year-over-year, which was well below our revenue and gross profit growth rates. Our strong revenue and gross profit performance allowed us to deliver a better than expected adjusted EBITDA of $11 million in Q2. We ended the quarter with $387 million in cash, cash equivalents, restricted cash and short-term investments, which included net proceeds of $81 million from the sale of Class A common stock in an at-the-market offering transaction during the quarter.
With that, let's turn to our outlook for the full year. Please note that our