- Roku reported revenue of $1.5 billion and a profit of $1.20 per share, compared to revenue of $1.41 billion and a profit of 55 cents per share expected by analysts, per Yahoo Finance.
- The media & entertainment vertical saw its highest year over year ad revenue growth in four years as companies invested on Roku’s platform to promote their content and services. It also benefitted from higher political advertising, which exceeded the comparable quarter from the 2024 U.S. presidential election cycle.
- The company did not host an earnings call due to Fox’s pending $22 billion acquisition, which is on track to close in the first half of 2027
Roku is showing why Fox is so keen to acquire the home streaming player.
The streaming platform and hardware maker smashed Wall Street expectations for its third quarter on Monday, with profits soaring 639% to $183.3 million and revenue climbing 24% to $1.5 billion, driven by strength in its advertising and subscription businesses.
Ad revenue grew 23% to $727.4 million, driven by the highest year over year spending growth for the media & entertainment vertical in four years as companies invested on Roku’s platform to promote their content and services. It was also fueled by higher political advertising, which exceeded the comparable quarter from the 2024 U.S. presidential election cycle.
Meanwhile, subscription revenue grew 23% to $581 million, boosted by a a “strategic mix shift toward premium subscriptions” and the World Cup, which drove over one million sign-ups across services including Peacock, Paramount+, Fox One and ViX. Roku has built a strong business managing customers who sign up for those third-party streaming services through its own ecosystem.
In July, Roku completed the U.S. rollout of its new home screen, which has improved its ability to provide relevant recommendations and helped reduce cancellations in its Premium Subscriptions business. The new home screen will now be rolled out to international markets. In September, Roku’s Premium Subscriptions business also launched over 35 bundle combinations.
“We are building a diversified and durable business by focusing
on monetization initiatives: deepening integrations with third-party advertising platforms, growing Roku-billed subscriptions, and enhancing the Roku Experience,” Roku CEO Anthony Wood said in the company’s quarterly letter to shareholders. “With our open platform, we help our content partners attract and retain audiences, and we offer advertisers the ability to reach viewers at scale, all while providing viewers with an outstanding streaming experience.”
Overall, platform revenue increased 23% to $1.3 billion, while the unit’s gross profit rose 27% to $697.1 million. Total streaming hours also grew 9% to 39.9 billion. But that growth was weighed down by Roku’s devices business, which grew revenue 33% to $193.7 million, but posted a widened loss of $48.6 million due to elevated memory costs.
The devices unit includes revenue generated from the sale of its players and branded TVs, but does not include Roku TV models that are made and sold by its original equipment manufacturer (OEM) licensing partners, which exceeded expectations in the third quarter and approached 8% of total TV unit sales volume in the U.S.
Looking ahead, Roku anticipates that its partnerships with TCL and Hisense will contribute to Roku TV model sale volume in the fourth quarter. As a result, distribution costs for its branded TVs, which are a significant part of its sales & marketing expense, will be weighted towards the fourth quarter.
Shares of Roku were up 0.3% in after-hours trading following the results.
The latest quarterly results come after Fox and Roku shareholders approved the former’s $22 billion acquisition of the latter. The deal, which remains subject to regulatory approval, is expected to close in the first half of 2027.
If approved by regulators, the Fox-Roku deal would cement the former’s dominance in the free ad-supported streaming space. Fox’s Tubi reaches a total of 110 million monthly active users, while Roku reaches more than 100 million streaming households. It would also be the fourth-largest media distributor in the U.S., trailing behind YouTube, David Ellison’s Skydance and Disney.
“Our pending acquisition by FOX is an extraordinary opportunity to accelerate our vision, allowing us to scale faster and innovate more aggressively for viewers, partners, and advertisers,” Wood added.
Upon the Fox deal’s closing, Roku stockholders will own approximately 27% of Fox’s outstanding shares, while Fox shareholders will own the remaining 73%. Wood will join the company’s board and serve in an ongoing executive leadership role for the combined streaming business.
Roku did not host an earnings call due to the pending transaction, but reiterated its previous guidance that platform revenue would grow 21% to $5 billion for the full year, while devices revenue would come in at approximately $535 million, resulting in total revenue of $5.5 billion.
It also anticipates mid-single-digit year-over-year operating expense growth for 2026 and is on track to drive double-digit platform growth and achieve $1 billion in free cash flow by 2028.
