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ROKU Shares Rise 6% on Q1 Earnings Beat, Revenues and EPS Up Y/Y
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Key Takeaways
Roku posted Q1 EPS of 57 cents, beating estimates and rebounding from a year-ago loss.
ROKU saw platform revenues rise 28.4%, led by strong ad demand and subscription growth.
Roku hit 100M streaming households and delivered record free cash flow, up 81% year over year.
Roku (ROKU - Free Report) shares have appreciated 6% since the company reported its first-quarter 2026 results on April 30. The upward momentum can be attributed to accelerating platform revenue growth and an all-time high in free cash flow on a trailing 12-month basis.
Roku reported first-quarter 2026 earnings of 57 cents per share, which beat the Zacks Consensus Estimate of 34 cents. The company had reported a loss of 19 cents per share in the year-ago quarter.
Revenues increased 22.4% from the year-ago quarter's level to $1.25 billion and beat the consensus mark by 3.8%.
Roku shares have appreciated 13.9% year to date, outperforming the Zacks Consumer Discretionary sector’s 7% decline.
The company posted strong first-quarter 2026 results, supported by broad-based execution across advertising and subscriptions and the continued monetization strength of its leading TV streaming platform.
Advertising performance was driven by Roku's expanding programmatic infrastructure, with ad spend through third-party partners rising more than 40% year over year on the back of deeper integrations with Google's DV360, Amazon DSP, The Trade Desk, Yahoo and FreeWheel. The Roku Ads Manager self-service platform more than doubled its advertiser base year over year, while non-Media and Entertainment brands reached an all-time high of nearly 30% of Roku Experience advertising revenues, reflecting growing demand diversification.
Subscriptions activity in the quarter was highlighted by a record period for Premium Subscriptions sign-ups, with Apple TV added in March and Peacock in April. The company further scaled its owned-and-operated SVOD service, Howdy, via Prime Video, a standalone mobile app and a launch in Mexico. Roku ranked as the fastest-growing distributor of third-party billed subscriptions in the broader SVOD category as of March 2026, per Antenna.
Devices performance was underpinned by a landmark milestone, surpassing 100 million streaming households globally on the Roku TV operating system. Roku-made TV unit sales grew year over year, powered by the Hiro TV ramp at Target and strengthening momentum at Best Buy and Amazon, while new OEM licensing agreements are expected to contribute to unit volume in the second half of 2026.
Q1 Segment Details of ROKU
Platform revenues (90.6% of revenues) increased 28.4% year over year to $1.13 billion. Starting in the first quarter of 2026, ROKU has disaggregated Platform into two reportable operating segments — Advertising and Subscriptions — to provide greater investor visibility into its business.
Advertising revenues grew 26.9% year over year to $612.7 million, driven by continued strength in programmatic demand and expanding adoption of the Roku Ads Manager platform.
Subscriptions revenues grew 30.3% year over year to $518.5 million. Excluding the contribution from the Frndly TV acquisition, Subscriptions revenues grew 23% year over year.
Devices revenues (9.4% of revenues) declined 15.9% from the year-ago quarter's level to $117.6 million, driven by lower streaming player unit sales and promotional pricing.
ROKU's Operating Details
Gross margin, as a percentage of total revenues, expanded 160 bps from the year-ago quarter's level to 45.2%.
Platform gross margin contracted 110 bps year over year to 51.6%. Within the segment, Advertising gross margin expanded 450 bps to 60.5%, reflecting improved fill rates, the scaling of high-visibility home screen ad units and greater programmatic efficiency. Subscriptions gross margin contracted 760 bps to 41.1%, reflecting a mix shift toward Premium Subscriptions. Devices gross margin deteriorated 250 bps year over year to negative 16.3%.
Operating expenses increased 2% year over year to $513.2 million. As a percentage of total revenues, the metric contracted to 41.1% from 49.3% reported in the year-ago quarter.
Research and development expenses rose 3% year over year to $189.5 million, while general and administrative expenses grew 8% to $102.5 million. Sales and marketing expenses decreased 1% to $221.2 million.
In the first quarter, adjusted EBITDA was $148.4 million, up 165% year over year. The adjusted EBITDA margin improved 640 bps on a year-over-year basis to 11.9%.
Operating income was $51.8 million in the reported quarter compared with an operating loss of $57.7 million in the year-ago quarter.
Balance Sheet of Roku
As of March 31, 2026, cash and cash equivalents were $1.65 billion compared with $1.59 billion as of Dec. 31, 2025. As of March 31, 2026, Roku had no long-term debt.
Free cash flow on a trailing-twelve-month basis reached an all-time high of $538.8 million, up 81% year over year.
Roku Provides Q2 & 2026 Guidance
For the second quarter, Roku estimates total net revenues of approximately $1.3 billion, up 17% year over year. Platform revenues are expected to grow approximately 20% year over year. Device revenues are anticipated to be down high-single digits year over year. Roku expects total gross profit of approximately $580 million and adjusted EBITDA of $170 million for the quarter.
For 2026, Roku raised its outlook. The company now projects Platform revenues of approximately $5 billion, representing growth of 21% year over year, with gross margin expected to be at the high end of the 51% to 52% range. Device revenues are expected to be approximately $535 million, with gross margins in the high negative-20% range.
Roku projects total net revenues of $5.5 billion, total gross profit of $2.45 billion and adjusted EBITDA of $675 million, translating to a margin improvement of approximately 330 bps year over year. Roku is targeting $1 billion of free cash flow by 2028.
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ROKU Shares Rise 6% on Q1 Earnings Beat, Revenues and EPS Up Y/Y
Key Takeaways
Roku (ROKU - Free Report) shares have appreciated 6% since the company reported its first-quarter 2026 results on April 30. The upward momentum can be attributed to accelerating platform revenue growth and an all-time high in free cash flow on a trailing 12-month basis.
Roku reported first-quarter 2026 earnings of 57 cents per share, which beat the Zacks Consensus Estimate of 34 cents. The company had reported a loss of 19 cents per share in the year-ago quarter.
Revenues increased 22.4% from the year-ago quarter's level to $1.25 billion and beat the consensus mark by 3.8%.
Roku shares have appreciated 13.9% year to date, outperforming the Zacks Consumer Discretionary sector’s 7% decline.
Roku, Inc. Price and EPS Surprise
Roku, Inc. price-eps-surprise | Roku, Inc. Quote
Roku's Platform Strength Powers Q1 Momentum
The company posted strong first-quarter 2026 results, supported by broad-based execution across advertising and subscriptions and the continued monetization strength of its leading TV streaming platform.
Advertising performance was driven by Roku's expanding programmatic infrastructure, with ad spend through third-party partners rising more than 40% year over year on the back of deeper integrations with Google's DV360, Amazon DSP, The Trade Desk, Yahoo and FreeWheel. The Roku Ads Manager self-service platform more than doubled its advertiser base year over year, while non-Media and Entertainment brands reached an all-time high of nearly 30% of Roku Experience advertising revenues, reflecting growing demand diversification.
Subscriptions activity in the quarter was highlighted by a record period for Premium Subscriptions sign-ups, with Apple TV added in March and Peacock in April. The company further scaled its owned-and-operated SVOD service, Howdy, via Prime Video, a standalone mobile app and a launch in Mexico. Roku ranked as the fastest-growing distributor of third-party billed subscriptions in the broader SVOD category as of March 2026, per Antenna.
Devices performance was underpinned by a landmark milestone, surpassing 100 million streaming households globally on the Roku TV operating system. Roku-made TV unit sales grew year over year, powered by the Hiro TV ramp at Target and strengthening momentum at Best Buy and Amazon, while new OEM licensing agreements are expected to contribute to unit volume in the second half of 2026.
Q1 Segment Details of ROKU
Platform revenues (90.6% of revenues) increased 28.4% year over year to $1.13 billion. Starting in the first quarter of 2026, ROKU has disaggregated Platform into two reportable operating segments — Advertising and Subscriptions — to provide greater investor visibility into its business.
Advertising revenues grew 26.9% year over year to $612.7 million, driven by continued strength in programmatic demand and expanding adoption of the Roku Ads Manager platform.
Subscriptions revenues grew 30.3% year over year to $518.5 million. Excluding the contribution from the Frndly TV acquisition, Subscriptions revenues grew 23% year over year.
Devices revenues (9.4% of revenues) declined 15.9% from the year-ago quarter's level to $117.6 million, driven by lower streaming player unit sales and promotional pricing.
ROKU's Operating Details
Gross margin, as a percentage of total revenues, expanded 160 bps from the year-ago quarter's level to 45.2%.
Platform gross margin contracted 110 bps year over year to 51.6%. Within the segment, Advertising gross margin expanded 450 bps to 60.5%, reflecting improved fill rates, the scaling of high-visibility home screen ad units and greater programmatic efficiency. Subscriptions gross margin contracted 760 bps to 41.1%, reflecting a mix shift toward Premium Subscriptions. Devices gross margin deteriorated 250 bps year over year to negative 16.3%.
Operating expenses increased 2% year over year to $513.2 million. As a percentage of total revenues, the metric contracted to 41.1% from 49.3% reported in the year-ago quarter.
Research and development expenses rose 3% year over year to $189.5 million, while general and administrative expenses grew 8% to $102.5 million. Sales and marketing expenses decreased 1% to $221.2 million.
In the first quarter, adjusted EBITDA was $148.4 million, up 165% year over year. The adjusted EBITDA margin improved 640 bps on a year-over-year basis to 11.9%.
Operating income was $51.8 million in the reported quarter compared with an operating loss of $57.7 million in the year-ago quarter.
Balance Sheet of Roku
As of March 31, 2026, cash and cash equivalents were $1.65 billion compared with $1.59 billion as of Dec. 31, 2025. As of March 31, 2026, Roku had no long-term debt.
Free cash flow on a trailing-twelve-month basis reached an all-time high of $538.8 million, up 81% year over year.
Roku Provides Q2 & 2026 Guidance
For the second quarter, Roku estimates total net revenues of approximately $1.3 billion, up 17% year over year. Platform revenues are expected to grow approximately 20% year over year. Device revenues are anticipated to be down high-single digits year over year. Roku expects total gross profit of approximately $580 million and adjusted EBITDA of $170 million for the quarter.
For 2026, Roku raised its outlook. The company now projects Platform revenues of approximately $5 billion, representing growth of 21% year over year, with gross margin expected to be at the high end of the 51% to 52% range. Device revenues are expected to be approximately $535 million, with gross margins in the high negative-20% range.
Roku projects total net revenues of $5.5 billion, total gross profit of $2.45 billion and adjusted EBITDA of $675 million, translating to a margin improvement of approximately 330 bps year over year. Roku is targeting $1 billion of free cash flow by 2028.
Zacks Rank & Stocks to Consider
Roku currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are Capcom (CCOEY - Free Report) , Sony (SONY - Free Report) and Fox Corporation (FOXA - Free Report) . Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Capcom is set to report fourth-quarter fiscal 2026 results on May 12. Capcom shares have declined 8.1% year to date.
Sony is slated to report fourth-quarter fiscal 2026 results on May 13. Sony shares have declined 22.7% year to date.
Fox Corporation is set to report third-quarter fiscal 2026 results on May 11. Fox Corporation shares have declined 13.3% year to date.