- Roku projects platform revenue will grow 21% to $5 billion in 2026, while devices revenue will come in at approximately $535 million.
- The company says it is “closely monitoring pricing pressure from tightening memory chip supply that is impacting the entire electronics industry.”
- Shares of the streamer and hardware maker jumped over 5% in after-hours trading following the results.
Shares of Roku jumped over 5% in after-hours trading on Thursday after a quarterly record in premium subscription sign-ups and strong video advertising drove the streamer and hardware maker to smash Wall Street earnings expectations and raise its full-year outlook.
But the company’s results were weighed down by lower player unit sales and promotional pricing in its devices business and executives warned the unit may face elevated memory costs in the second half of the year due to tightened chip supply.
“No one knows what will happen to memory prices beyond this year, and we really don’t know how the market will react,” Roku Chief Financial Officer Dan Jedda told analysts on Thursday. “The CTV market will react to higher memory prices, but even if memory prices remain elevated beyond this year, we’re confident that our strong platform revenue growth and our device and operational flexibility provide us to put us in a position to continue to expand our EBITDA.”
Total revenue grew 22% to $1.25 billion as the company swung to a profit of $86 million, or earnings of 57 cents per share, compared to a loss of $27.4 million, or 19 cents per share, a year ago. Platform revenue climbed 28% to $1.13 billion, while devices revenue tumbled 16% to $117.6 million.
Advertising and subscription revenues, which were broken out by Roku for the first time, grew 27% to $612.7 million and 30% to $518.5 million, respectively. Excluding Frndly, subscriptions revenue grew 23% year over year. Roku also grew total streaming hours 8% to 38.7 billion during the quarter as it now reaches over 100 million households worldwide.
Roku touts record premium subscriptions
Roku touted its highest quarter ever for premium subscription sign-ups, with the company recently adding Apple TV and Peacock to its offering. Executives said the platform would launch more premium subscriptions in more countries in the future.
“The growth rate that we see here is indicative of just the success that we’re seeing in premium subscriptions and our direct to consumer subscription that we’re having,” Jedda said. “But I think this growth rate is sustainable, just given all we’ve got going, adding more tier ones, tier twos and adding new features in our subscription segment.”
Executives talk Howdy strategy
It also expanded distribution of its $2.99 per month, ad-free streaming service Howdy, which is now available as an add-on through Prime Video, a standalone mobile app for iOS and Android and on Roku’s platform in Mexico.
The company has not released subscriber figures for Howdy, but Antenna estimates that the service has surpassed 1 million. Executives declined to confirm whether the Antenna estimate was accurate, but noted the service is doing “extremely well” despite being smaller than The Roku Channel.
“Its position in the market is going after the segment of the market that’s not currently served. Streaming services have been raising their prices, they’ve been increasing their ad loads, and so a low cost, affordable streaming service is something that didn’t really exist in the market. So that’s a segment of the market we’re going after, and that’s the segment we intend to stay in,” CEO Anthony Wood told analysts. “We’ll just keep improving the quality of the content. As we keep getting more and more viewers that will allow us to invest more and more in content and that is the positive cycle that we’ll just keep writing and I think it can be a very large part of the market.”
Wood added that there are currently no plans to add original programming specific to Howdy in the near-term, but didn’t rule it out in the future as the quality of its content improves and the service’s subscriber base grows. He noted that the service currently carries Roku Originals, such as “Laguna Beach.”
Roku says AI is a “powerful tailwind”
The company also said its video advertising growth outpaced both the U.S. over-the-top streaming and digital ad markets, which was attributed to “growing recognition among advertisers that Roku’s unique combination of scale, first-party data and innovative ad technology delivers measurable outcomes that help businesses grow.”
Ad spend through third-party programmatic partners increased 40%, driven by its deepened partnerships with major demand-side platforms such as Google’s Display & Video 360, Amazon, The Trade Desk, Yahoo and FreeWheel. The number of advertisers using the company’s self-service ad platform, Roku Ads Manager, during the quarter more than doubled year over year.
Additionally, the company saw ad spend from non-media and entertainment brands reach nearly 30% of its total Roku Experience revenue, an all-time high, as it looks to diversify its partners. The number of advertisers using Marquee Ad Video on its home screen doubled and its ad spend tripled during the quarter.
Roku said it sees “significant long-term opportunity” to target a meaningful share of approximately $600 billion in annual ad spend from small and medium-sized businesses as generative AI reduces the cost and complexity of producing
video creative.
Executives see the technology as a “powerful tailwind” to increase engagement, discovery, advertising performance and monetization and lower the cost of content over time. They noted that Roku Ads manager is built entirely on generative AI, including the creation of videos and that the technology is helping accelerate the speed at which it can develop new features.
“There are definitely ways to manage the cost, and at this point it’s very manageable,” Wood said. “We’re just watching it carefully.”
Devices drags amid tighter chip supply
Meanwhile, the decline in its devices unit was driven by primarily by lower player unit sales and promotional pricing.
In addition to its players, devices revenue comes from Roku-made TVs, which saw unit sales grow year-over-year driven by the continued ramp of Hiro Roku TVs at Target, relaunches at Best Buy and strength on Amazon. However, the figure excludes its TV models made by original equipment manufacturer (OEM) licensing partners, which account for the largest portion of its overall unit volume.
Roku said it remains “well-positioned with a diversified portfolio of streaming players, TVs, and projectors. However, the company said it is “closely monitoring pricing pressure from tightening memory chip supply that is impacting the entire electronics industry.” The company anticipates that higher memory costs will weigh on its device margins in the second half of the year, but noted that its TV OS requires “significantly less” dynamic memory (DRAM) and storage memory (Flash) than competing platforms.
Roku raises full year outlook
Looking ahead, Roku expects platform revenue to grow 20% year over year and devices revenue to grow by high single digits in the second quarter, which will result in nearly 17% growth in total revenue to $1.3 billion. Total gross profit is projected to hit $580 million in the quarter, while adjusted EBITDA is expected to hit $170 million.
For the full year, Roku is raising its outlook, with platform revenue now expected to grow 21% to $5 billion, while devices revenue will come in at approximately $535 million, resulting in total revenue of $5.5 billion. It also remains on track to drive double-digit platform growth and achieve $1 billion in free cash flow by 2028.
Roku is actively expanding and diversifying its OEM licensing agreements and expects new partnerships to begin contributing to Roku TV model unit volume in the second half of 2026. Overall device investment across gross profit and operating expenses remain unchanged, with the latter more heavily weighted in the second half of the year due to the timing of distribution expenses. Roku anticipate mid-single-digit year over year operating expense growth for the full year.
