Sign in
RI

ROKU, INC (ROKU)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue and EPS beat consensus: Total net revenue was $1.021B vs $1.008B* consensus, and diluted EPS was -$0.19 vs -$0.26* consensus. Platform revenue grew 17% YoY to $881M, gross profit rose 15% YoY, and Adjusted EBITDA was $56M .
  • Mix shift toward programmatic advertising and strong subscriptions drove outperformance; The Roku Channel became the #2 app in the U.S. by engagement and grew Streaming Hours 84% YoY, bolstering ad reach and monetization .
  • Guidance reset: FY 2025 total net revenue lowered to $4.55B (from $4.61B prior), platform gross margin guided to ~52% (from 52–53%), while platform revenue ($3.95B) and Adjusted EBITDA ($350M) were reaffirmed; Q2 2025 guidance calls for $1.070B revenue, ~$465M gross profit, and ~$70M Adjusted EBITDA .
  • Strategic catalyst: Roku announced the acquisition of Frndly TV for up to $185M to accelerate Roku-billed subscriptions and support platform revenue growth; management emphasized programmatic momentum and subscription initiatives as offsets to macro and tariff uncertainties .

Values with asterisks (*) are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Platform strength: Platform revenue rose 17% YoY to $880.8M, in line with outlook; advertising activities (ex-M&E) grew faster than overall platform revenue and outperformed the U.S. OTT ad market .
  • Engagement and monetization: The Roku Channel became the #2 U.S. app by engagement, with Streaming Hours up 84% YoY; AI-driven content row and Home Screen features increased ad reach and subscription sign-ups .
  • Subscriptions and scale: Tens of millions of Roku-billed subscriptions, with Premium Subscription sign-ups a bright spot; streaming hours reached 35.8B (+5.1B YoY) and the platform exceeds half of U.S. broadband households .

Management quotes:

  • “We reaffirmed our platform revenue and adjusted EBITDA outlook for the full year 2025… Advertisers… are shifting… to programmatic… and Roku’s good at all those things.” — Anthony Wood .
  • “We do think… in the back half of the year… some of our new initiatives should help to offset [macro].” — Dan Jedda .
  • “Our multiyear push to diversify demand is absolutely working… [SMBs via Roku Ads Manager] are net new to the platform.” — Charlie Collier .

What Went Wrong

  • Margin headwinds from mix: Platform gross margin declined to 52.7% (vs 54.1% in Q4 and 54.2% in Q3) as guaranteed budgets gave way to shorter, nonguaranteed, programmatic campaigns; FY 2025 platform GM guided ~52% .
  • Devices drag: Devices gross profit was -$19.3M with a -13.8% margin due to continued holiday promotional activity; devices revenue YoY growth came with losses .
  • Outlook trimming: FY 2025 total net revenue and total gross profit were reduced (to $4.55B and $1.975B, respectively) amid macro uncertainty and evolving advertising product mix, though key platform targets were reaffirmed .

Financial Results

Headline Metrics vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Total net revenue ($USD Millions)$1,062.2 $1,201.0 $1,020.7
Diluted EPS ($USD)-$0.06 -$0.24 -$0.19
Total gross margin (%)45.2% 42.7% 43.6%
Platform gross margin (%)54.2% 54.1% 52.7%
Adjusted EBITDA ($USD Millions)$98.2 $77.5 $56.0

Q1 2025 vs Wall Street Consensus

MetricActual Q1 2025Consensus Q1 2025
Total net revenue ($USD)$1,020,672,000 $1,007,630,680*
Diluted EPS ($USD)-$0.19 -$0.2616*

Values retrieved from S&P Global.

Segment Breakdown

MetricQ3 2024Q4 2024Q1 2025
Platform revenue ($USD Millions)$908.2 $1,035.3 $880.8
Devices revenue ($USD Millions)$154.0 $165.7 $139.9
Platform gross profit ($USD Millions)$491.8 $559.9 $464.3
Devices gross profit ($USD Millions)-$11.7 -$47.4 -$19.3
Platform gross margin (%)54.2% 54.1% 52.7%
Devices gross margin (%)-7.6% -28.6% -13.8%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Streaming Hours (billions)32.0 34.1 35.8
The Roku Channel U.S. app rank by engagement#3 #3 #2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total net revenue ($USD Billions)FY 2025$4.610 $4.550 Lowered
Total gross profit ($USD Billions)FY 2025$2.005 $1.975 Lowered
Platform revenue ($USD Billions)FY 2025$3.950 $3.950 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$350 $350 Maintained
Platform gross margin (%)FY 202552–53% ~52% Lowered
Total net revenue ($USD Billions)Q2 2025N/A$1.070 New
Total gross profit ($USD Millions)Q2 2025N/A$465 New
Adjusted EBITDA ($USD Millions)Q2 2025N/A$70 New
Net income (loss) ($USD Millions)Q2 2025N/A-$25 New
Other income (Q2/FY) ($USD Millions)Q2 / FY 2025$20 / $80 $20 / $90 Raised (FY)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 / Q4 2024)Current Period (Q1 2025)Trend
Programmatic shift vs guaranteedDeepened TTD integration; expanding programmatic offerings Advertisers shifting to nonguaranteed, shorter cycles; Roku positioned to capitalize; margin mix impact Accelerating programmatic adoption
Subscriptions growth & bundlesPremium Subscriptions net adds high; Roku Pay expansion Premium Subscription sign-ups strong; Frndly TV acquisition to accelerate Roku-billed subs Strengthening
The Roku Channel performance#3 app; strong sports/news content #2 U.S. app by engagement; Streaming Hours +84% YoY Material step-up
Home Screen/AI-driven discoveryContent row debut; boosts sign-ups/ad reach AI-driven content row drives daily ad reach and subscriptions Continued improvement
Tariffs/devices outlookFY25 devices +12% revenue; Q4 devices margins pressured Devices GM -13.8%; tariff impacts uncertain; diversified manufacturing mitigates Persistent headwind, mitigated
DSP integrationsTTD/UI2.0, Yahoo DSP, Data Cloud Ongoing deepening across major DSPs; broader platform partnerships Expanding
Data & measurementRetail/data integrations (Instacart), clean rooms Focus on monetizing high-fidelity first-party signals within campaigns; more initiatives pending Strategic priority

Management Commentary

  • “We reaffirmed our platform revenue and adjusted EBITDA outlook for the full year 2025… There’s a lot of Roku-specific positives… shift to streaming… programmatic.” — Anthony Wood .
  • “We have a very diversified platform revenue stream… subscriptions are growing well… we continue to see the path to achieving positive operating income in 2026.” — Dan Jedda .
  • “Our multiyear push to diversify demand is absolutely working… SMBs using our self-service product… are net new to the platform.” — Charlie Collier .
  • “Frndly is growing… we do think that we can grow it faster. It also will be Adjusted EBITDA margin accretive in its first full year.” — Dan Jedda .
  • “We have a diversified manufacturing strategy… mitigate the impact of tariffs… streaming players offer lower price-point upgrades if TV demand softens.” — Mustafa Ozgen .

Q&A Highlights

  • Guidance confidence and buffers: Management reaffirmed FY 2025 platform revenue and Adjusted EBITDA despite macro volatility, citing diversified demand, DSP integrations, and subscription initiatives (including Frndly) to offset weakness .
  • Advertising mix shift: Shift from guaranteed to nonguaranteed programmatic is near-term margin headwind but demand-positive given flexibility and ROI measurement; Roku can meet advertisers along the CPM curve .
  • Platform margin color: FY 2025 platform GM guided ~52% due to mix; potential improvement if guaranteed budgets recover in H2 .
  • Devices/tariffs: Diversified manufacturing, selective price increases, and OS distribution pillars mitigate tariff risks; devices not a strategic revenue focus vs growing households .
  • Trajectory: Underlying platform growth teens ex-606/political; Q4 growth may modestly decelerate vs tough comp, but secular tailwinds remain .

Estimates Context

  • Q1 2025 beat: Revenue $1.021B vs $1.008B* consensus; EPS -$0.19 vs -$0.262* consensus, driven by stronger video advertising and subscriptions .
  • FY 2025 framing: Company’s FY 2025 total net revenue outlook ($4.55B) is below the prevailing FY 2025 revenue consensus of $4.695B*, while platform revenue ($3.95B) and Adjusted EBITDA ($350M) were reaffirmed, implying potential consensus recalibration on total revenue mix and margins .
  • Near-term (Q2 2025): Company guides $1.070B revenue and ~$70M Adjusted EBITDA; consensus ahead of the print was $1.072B* revenue and -$0.158* EPS, suggesting modestly conservative profitability expectations embedded in the Street .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue/EPS momentum: Solid Q1 beat with 16% YoY revenue growth and improving profitability (Adjusted EBITDA up 37% YoY) supports a constructive near-term setup as programmatic demand and subscriptions scale .
  • Mix and margins: Expect platform GM near ~52% as programmatic grows share; margin expansion depends on guaranteed demand recovery and continued operating discipline .
  • Subscription flywheel: Frndly acquisition should be accretive to Adjusted EBITDA margins and accelerate Roku-billed subs, reinforcing diversified platform revenue beyond M&E .
  • Engagement assets: The Roku Channel’s #2 rank by engagement with 84% YoY Streaming Hours growth enhances monetization via Home Screen and AI-driven discovery .
  • Devices risk contained: Devices remain a distribution lever for household growth; tariff exposure mitigated by diversified manufacturing and price actions .
  • Guidance reset: FY 2025 total revenue and gross profit trimmed, but platform revenue and Adjusted EBITDA reaffirmed; watch Q2 execution and any H2 mix shifts .
  • Trading lens: Near-term catalysts include subscription momentum post-Frndly close, expanding DSP integrations (programmatic tailwinds), and potential stabilization in ad mix; monitor margins vs guidance and any macro/tariff developments discussed in H2 .

Appendices

Non-GAAP Adjustments Noted

  • Adjusted EBITDA excludes total other income, stock-based compensation, depreciation/amortization, restructuring, and income tax effects; Q1 2025 Adjusted EBITDA was $56.0M with detailed reconciliation provided .
  • Free Cash Flow (TTM) was $298.4M in Q1 2025; reconciliation provided .

Additional Q1 2025 Press Releases

  • Financial results announcement and call logistics .
  • Frndly TV acquisition (up to $185M cash including $75M earnout contingent over two years) to enhance subscription growth and platform revenue .