Roku NASDAQ: ROKU executives highlighted record fourth-quarter results, expanding profitability, and an acceleration in platform monetization initiatives during the company’s fourth-quarter and year-end 2025 earnings call. Management also addressed changes in retail distribution, the role of artificial intelligence in streaming and advertising, and the trajectory of newer subscription offerings such as Howdy and Frndly.
Record quarter, margin expansion, and cash flow focus
CFO and COO Dan Jedda said Roku entered 2024 focused on platform revenue growth, monetization, profitability, and free cash flow, following a cost-structure “rightsize” effort. He said Q4 platform revenue grew more than 18% and surpassed $1.2 billion, while Adjusted EBITDA reached $169 million and net income was $80 million—each described as quarterly records.
For full-year 2025, Jedda said platform revenue rose 18% and Adjusted EBITDA was $421 million, representing 255 basis points of margin expansion. He also reported record free cash flow of $484 million, which he said more than doubled year over year. With that cash generation, Roku bought back $150 million of stock and achieved “near 0% dilution for Q4,” which he called the lowest dilution the company has ever reported.
2026 outlook: platform growth, EBITDA leverage, and tax assets
Jedda guided to platform revenue growth of more than 21% in Q1 and 18% for the full year, explaining the difference as a function of an easier prior-year comparison in Q1, the full-quarter benefit of the Frndly acquisition, and greater visibility into Q1 than the back half of the year. He said the second half of the year is more conservative in guidance given uncertainty around political advertising and broader visibility.
The company’s full-year Adjusted EBITDA guidance was $635 million, which Jedda said implies more than 50% year-over-year growth and 267 basis points of margin expansion to 11.6%.
Jedda added that Roku expects free cash flow to again exceed Adjusted EBITDA because the business remains “CapEx light.” He also pointed to “over $1 billion of a deferred tax asset,” which he said will keep cash taxes low for many years. Looking longer term, Jedda said he sees a path to more than $1 billion in free cash flow by the end of 2028, “if not sooner.”
On platform gross margin, Jedda reiterated a 51% to 52% range for 2026 and said he does not expect significant quarter-to-quarter variability, though mix can influence results. He noted some stabilization in M&E in Q4 that helped margins and said that stability was continuing into Q1. He also said the company is working to provide more detail on platform activities and their margin profiles in future disclosures.
Distribution strategy amid Walmart changes and a 100 million household milestone
CEO Anthony Wood addressed a question about retail distribution following Walmart’s decision to shift its house-brand TV operating system to Vizio’s platform. Wood said Roku is focused on broadening and diversifying retail distribution, emphasizing flexibility in allocating “hundreds of millions a year” in distribution investment across retail and OEM partners.
Wood cited distribution expansions at Best Buy with the launch of Pioneer Roku TVs, at Target with Roku-made TVs, and broader presence at retailers including Amazon. He also said Roku expanded licensing and distribution agreements with key Roku TV partners TCL and Hisense, among others.
For first-party TVs, Wood said Roku expects sales to increase after shifting TV production to Mexico, which he said will lower costs. He added that streaming players will continue to contribute meaningfully to overall Roku OS distribution. Wood said the impact of distribution efforts should be more visible in the second half of the year due to longer cycle times.
Wood also reiterated Roku’s scale and competitive positioning, stating that Roku is used in over half of U.S. broadband households and that nearly half of U.S. TV streaming happens on the Roku platform. He said Roku is “on track to surpass 100 million streaming households this year.”
AI as a tailwind: discovery, advertising performance, and SMB opportunity
In response to questions on generative AI, Wood said he expects AI to reduce the cost of content over time, including long-form content, which he believes should drive higher engagement. “We monetize engagement,” Wood said, describing that trend as positive for Roku’s model.
More broadly, Wood said Roku views AI as an opportunity and “powerful tailwind,” rather than a disruptor, and is integrating AI across its technology stack. He cited examples in the viewer experience including improved recommendations, surfacing trending content, AI-generated “why to watch” summaries on content pages, and updates to Roku Voice enabling more conversational queries and contextual answers on-screen.
Wood said AI is also a major driver on the advertising side, supporting performance improvements and enabling access to small and medium-sized businesses through Roku Ads Manager. He said AI tools make it easier to create high-quality video ads and automate workflows such as reviewing and adapting ad formats. Wood added that Roku is using AI internally to improve operational efficiency and productivity.
Advertising ecosystem: DSP partnerships, home screen units, and performance
On third-party demand partnerships—including an agreement with Amazon—Roku Media President Charlie Collier said the company’s strategy is to remain open and interoperable, integrating with demand-side platforms so clients can transact where they prefer. Collier characterized the Amazon relationship as “early innings” and said ramping takes time, similar to other ad tech partners Roku has onboarded. Jedda said the Amazon DSP integration is live and “tracking as we’d expect,” with contributions expected to grow over time.
Collier also discussed expanding home screen advertising beyond media and entertainment categories. He said Roku has already broadened into other categories, noting that Roku City and the marquee unit with video are performing well. Collier said home screen advertising to date is not programmatic and emphasized continued experimentation with home screen designs.
Wood said Roku is testing a new home screen design and multiple variations, aiming to improve engagement and viewer satisfaction and to increase monetization through more subscriptions and ad-supported viewing. He said Roku is also testing new ad units and ways to increase impressions and click-through rates.
On performance advertising and the balance between enterprise upfront commitments and SMB performance campaigns, Collier said Roku can “price up and down the pricing curve” and offer different inventory types, from sponsorships and premium placements to lower-priced options. Wood added that advertisers across the spectrum are increasingly focused on performance, though definitions vary. Jedda also pushed back on the idea that performance ads are lower margin for Roku, saying that performance-oriented campaigns do not drag down margins.
Subscriptions and international: Howdy, Frndly, and monetization stages
Wood said Roku’s subscription initiatives are contributing to growth, noting that Q4 was the company’s “biggest quarter ever for premium subscription net adds.” He said Roku expects to add more tier-one partners and roll out bundles, and plans to expand Howdy on Roku and make it available on additional platforms.
On Howdy and Frndly specifically, Wood said both integrations are going well and that subscriber growth for Howdy is “continuing to grow nicely,” though he did not provide figures. He described Howdy and Frndly as part of Roku’s owned-and-operated services portfolio that began with The Roku Channel and said they represent a strategic expansion into subscriptions that should add incremental revenue. He added that Frndly is already available outside Roku and that Roku plans to launch Howdy on non-Roku platforms as well.
On international expansion, Jedda said Roku’s focus countries are at different stages, with Canada and Mexico reaching scale and moving more into monetization, while Brazil remains more focused on building scale due to the state of the ad market. Jedda said ARPU is strong in Canada and that Mexico has “incredible scale” that rivals the U.S. He also said Roku launched premium subscriptions in Mexico recently and expects to expand to more countries over time, adding that international should become a larger percentage of platform revenue over time, though it remains early.
Finally, addressing industry consolidation questions, Wood said Roku’s scale makes it an essential partner to content owners and streaming services and that the company does not anticipate that changing “regardless of how the industry consolidates.” Jedda said Roku expects mid-single-digit operating expense growth, aided in part by stock-based compensation trends, while continuing to invest—particularly in engineering—behind its growth initiatives.
About Roku NASDAQ: ROKU
Roku, Inc NASDAQ: ROKU is a technology company that develops and operates a proprietary streaming platform designed to deliver entertainment content to consumers via internet-connected devices and smart televisions. Since its inception in 2002 in California, Roku has focused on simplifying access to streaming services for viewers worldwide. The company’s platform enables users to discover, access and manage a wide array of over-the-top content from major streaming services, free ad-supported channels and niche providers.
At the core of Roku’s product lineup are a range of streaming players and sticks, which connect to televisions via HDMI and deliver the Roku OS experience.
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