Roku Q3 Earnings Beat Estimates, Device Weakness Weighs on Stock

Roku, Inc. (ROKU) has reported its third-quarter 2025 earnings, beating estimates with a profit of 16 cents per share. The company’s revenue increased 14% year-over-year to $1.21 billion, surpassing the consensus mark. However, the stock fell about 5% after the earnings report due to weakness in the device segment.

Key Highlights

• Earnings Beat: Roku’s Q3 earnings of 16 cents per share exceeded the Zacks Consensus Estimate of 7 cents.
• Revenue Growth: The company’s revenue increased 14% year-over-year to $1.21 billion, beating the consensus mark by 0.45%.
• Device Segment Weakness: The device segment’s gross margin declined 15.7%, weighing on the stock’s performance.
• Ad Momentum: Roku’s ad business continued to show strong momentum, with video advertising on the platform outpacing year-over-year growth in both the US OTT and broader digital ad markets.

Platform Growth

Roku’s platform growth was a key highlight in the quarter, with the Roku Channel maintaining its position as the most-watched FAST service in the US. The company’s ad ecosystem is also expanding, with integrations with leading third-party demand-side platforms (DSPs) and partnerships with major DSPs like Amazon.

New Ad-Free Streaming Service

Roku has launched a new ad-free streaming service called Howdy, which offers nearly 10,000 hours of content from partners like Lionsgate, Warner Bros. Discovery, and FilmRise. The service is priced at $2.99 per month, making it an attractive option for consumers looking for affordable, ad-free entertainment.

Outlook

Despite the device segment’s weakness, Roku’s strong ad momentum and platform growth are expected to drive the company’s performance in the coming quarters. The company’s focus on expanding its ad ecosystem and improving its monetization capabilities is also expected to contribute to its growth.

Conclusion

Roku’s Q3 earnings beat estimates, driven by strong ad momentum and platform growth. While the device segment’s weakness weighed on the stock, the company’s focus on expanding its ad ecosystem and improving its monetization capabilities is expected to drive growth in the coming quarters. With the launch of its new ad-free streaming service, Howdy, Roku is well-positioned to capitalize on the growing demand for affordable, ad-free entertainment.

Technical Analysis

Roku’s stock has been volatile in recent months, but the company’s strong earnings report and growth prospects make it an attractive option for investors. The stock’s current price-to-earnings ratio is around 50, which is relatively high compared to its peers. However, the company’s growth prospects and expanding ad ecosystem make it a compelling investment opportunity.

Investor Takeaways

• Roku’s Q3 earnings beat estimates, driven by strong ad momentum and platform growth.
• The device segment’s weakness weighed on the stock, but the company’s focus on expanding its ad ecosystem and improving its monetization capabilities is expected to drive growth.
• The launch of Howdy, Roku’s new ad-free streaming service, provides a new revenue stream for the company.
• Roku’s stock is attractively priced compared to its growth prospects, making it a compelling investment opportunity.