Roku (NASDAQ:ROKU) reported stronger-than-expected third-quarter 2026 financial results, supported by continued growth in advertising, subscriptions and device sales. The streaming technology company delivered adjusted earnings per share of $1.20, more than double Wall Street’s consensus estimate of $0.53, while quarterly revenue increased 24% year over year to $1.5 billion.
Despite the earnings beat, Roku shares were largely unchanged in US premarket trading on Tuesday as investors continued to assess the company’s pending acquisition by Fox Corporation, valued at approximately $25 billion. Fox shares edged higher ahead of the market opening.
The transaction, expected to close during the first half of 2027, also influenced Roku’s financial reporting arrangements, with the company choosing not to hold an earnings conference call or issue financial guidance.
Roku reported adjusted earnings per share of $1.20 for the third quarter, surpassing the analyst consensus estimate of $0.53 by $0.67.
The result represented an earnings beat of approximately 126%, reflecting stronger profitability than Wall Street had anticipated.
Quarterly revenue reached $1.5 billion, compared with analyst expectations of $1.41 billion.
The figure represented a 24% increase from the corresponding period in 2025 and exceeded the consensus forecast by approximately $90 million.
The company also reported net income of $183 million and adjusted EBITDA of $249 million.
Total gross profit increased 24% year over year to $649 million, demonstrating continued expansion across Roku’s operations.
The results reflected growth in the company’s platform business, alongside higher revenue from streaming devices.
Roku’s Platform segment generated third-quarter revenue of $1.3 billion, representing a 23% increase compared with the prior-year period.
The division includes advertising and subscription-related revenue and remains the company’s largest business by sales.
The growth reflected continued monetisation of Roku’s streaming platform through advertising services and subscription offerings.
Both advertising and subscriptions recorded annual revenue increases of 23%, indicating balanced growth across the two principal components of the Platform segment.
The results demonstrated Roku’s ability to expand revenue from its streaming ecosystem as viewers continued using its services.
The Platform segment’s performance was a major contributor to the company’s consolidated revenue growth.
Roku reported advertising revenue of $727 million during the third quarter, an increase of 23% year over year.
The performance marked the ninth consecutive quarter in which the company’s advertising business achieved double-digit revenue growth.
The sustained expansion reflected continued demand for advertising opportunities across Roku’s streaming platform.
Advertising remains an important source of revenue for the company as it connects advertisers with audiences using streaming television services.
The growth also contributed to the Platform segment’s overall 23% revenue increase.
Roku’s ability to maintain double-digit advertising growth over nine consecutive quarters demonstrated the continued development of its advertising business.
However, broader economic conditions and competition within the digital advertising market remain relevant considerations for future performance.
Roku’s subscription business also delivered strong growth during the quarter.
Subscription revenue reached $581 million, representing a 23% increase compared with the corresponding period last year.
The company highlighted customer acquisition activity through its Premium Subscriptions offering.
Approximately 95% of Premium Subscription sign-ups came from customers who had not previously subscribed directly to the relevant services.
The figure suggests that Roku’s platform is helping subscription providers reach customers beyond their existing direct subscriber bases.
This customer acquisition capability represents an important part of Roku’s role within the streaming ecosystem.
The growth in subscriptions complemented the company’s advertising performance and supported the overall increase in Platform revenue.
The Roku Channel continued to demonstrate strong engagement during the third quarter.
According to the company, the service ranked as the second-largest application on the Roku platform by engagement in both the United States and globally.
The ranking highlighted the importance of Roku’s own streaming service within its broader platform.
Streaming activity also increased during the quarter.
Total streaming hours reached 39.9 billion, representing a 9% increase compared with the prior-year period.
The growth reflected continued viewer engagement across Roku’s streaming ecosystem.
Higher streaming activity provides additional opportunities for the company to generate advertising revenue and support its platform monetisation strategy.
Roku’s Devices segment recorded third-quarter revenue of $194 million, representing a 33% increase year over year.
The strong sales growth reflected higher revenue from the company’s streaming hardware business.
However, profitability within the division remained under pressure.
The Devices segment reported a gross margin of negative 25.1%, primarily due to elevated memory-chip costs.
The negative margin indicated that the cost of generating device revenue exceeded the associated sales during the quarter.
The result contrasted with the stronger profitability achieved across Roku’s overall operations.
Although device sales contributed to consolidated revenue growth, higher component costs continued to weigh on the division’s financial performance.
Roku reported total gross profit of $649 million during the third quarter, representing a 24% increase from the prior-year period.
The improvement was supported by higher Platform revenue and continued growth across the company’s advertising and subscription businesses.
Adjusted EBITDA reached $249 million.
The company also generated net income of $183 million.
The results demonstrated stronger profitability despite the negative gross margin recorded in the Devices segment.
Growth in advertising and subscriptions helped support the company’s overall financial performance.
The combination of higher revenue, gross profit and adjusted EBITDA contributed to Roku’s substantial earnings beat.
Roku’s financial results were released while the company awaits completion of its proposed acquisition by Fox Corporation.
The transaction is valued at approximately $25 billion and is expected to close during the first half of 2027.
The pending acquisition remains an important consideration for investors assessing Roku’s shares.
Despite the company’s stronger-than-expected third-quarter results, its stock showed little movement in premarket trading.
Fox shares, meanwhile, recorded a modest increase.
The transaction is expected to bring Roku under Fox’s ownership, subject to completion of the acquisition.
The companies have not yet completed the deal, and the expected closing timetable remains an important factor for shareholders.
Because of the pending Fox acquisition, Roku did not provide financial guidance alongside its third-quarter results.
The company also chose not to hold its usual earnings conference call.
As a result, investors did not receive updated management forecasts for upcoming quarterly revenue, earnings or other financial measures.
The decision reflects the company’s reporting approach while the acquisition process remains underway.
Without formal guidance, investors will have fewer company-issued projections available for assessing near-term financial performance.
Attention is therefore likely to remain focused on the proposed transaction and its anticipated completion during the first half of 2027.
Analysts at William Blair maintained their Market Perform rating on Roku, citing the pending acquisition as a central factor in their assessment.
“We maintain our Market Perform rating based on the pending acquisition. Risks to our thesis include a highly competitive market, macro advertising concerns, AI, and larger competitors with significantly larger capital resources, key distribution partner relationships, etc.,” the analysts said.
The comments highlighted the competitive pressures facing Roku despite its strong quarterly results.
The streaming and digital advertising markets include major technology and media companies with substantial financial resources and established distribution relationships.
Macroeconomic uncertainty surrounding advertising spending and the growing influence of artificial intelligence were also identified as potential risks.
The pending acquisition remains a significant consideration in William Blair’s assessment of Roku’s investment outlook.
Roku’s third-quarter results demonstrated continued growth across its streaming platform, with revenue increasing 24% to $1.5 billion and adjusted earnings per share reaching $1.20.
Platform revenue rose 23% to $1.3 billion, supported by advertising revenue of $727 million and subscription revenue of $581 million.
The company also reported 39.9 billion streaming hours, an increase of 9%, while The Roku Channel ranked second by engagement on its platform in both the United States and globally.
Devices revenue increased 33% to $194 million, although elevated memory-chip costs contributed to a negative gross margin of 25.1%.
Despite these hardware-related pressures, Roku generated adjusted EBITDA of $249 million and net income of $183 million.
The company’s pending acquisition by Fox Corporation, valued at approximately $25 billion, remains the principal corporate development affecting its outlook.
With the transaction expected to close in the first half of 2027, Roku has suspended financial guidance and earnings conference calls during the acquisition process.
Investors will be monitoring progress towards completion of the deal, alongside developments in advertising demand, streaming engagement and device profitability.
Roku is a US-based streaming technology company that operates a television streaming platform connecting viewers, content publishers and advertisers.
The company provides streaming devices, smart television software and digital advertising services.
Its Platform business generates revenue through advertising, subscription distribution and other streaming-related activities.
Roku also operates The Roku Channel, a streaming service offering entertainment content to viewers.
The company’s technology is used across streaming devices and connected televisions, providing access to a wide range of entertainment applications and subscription services.
Roku operates within the competitive streaming television market, where advertising, subscriptions and viewer engagement are important drivers of revenue.
Roku stock price
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