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Streaming TV platform Roku (NASDAQ: ROKU) announced better-than-expected revenue in Q1 CY2025, with sales up 15.8% year on year to $1.02 billion. The company expects next quarter’s revenue to be around $1.07 billion, close to analysts’ estimates. Its non-GAAP loss of $0.19 per share was 24.8% above analysts’ consensus estimates.

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Roku (ROKU) Q1 CY2025 Highlights:

• Revenue: $1.02 billion vs analyst estimates of $1.01 billion (15.8% year-on-year growth, 1.5% beat)

• Adjusted EPS: -$0.19 vs analyst estimates of -$0.25 (24.8% beat)

• Adjusted EBITDA: $56.02 million vs analyst estimates of $60.43 million (5.5% margin, 7.3% miss)

• Revenue Guidance for Q2 CY2025 is $1.07 billion at the midpoint, roughly in line with what analysts were expecting

• EBITDA guidance for the full year is $350 million at the midpoint, above analyst estimates of $337.7 million

• Operating Margin: -5.7%, up from -8.2% in the same quarter last year

• Free Cash Flow Margin: 13.4%, up from 6.4% in the previous quarter

• Total Hours Streamed: 35.8 billion, up 5 billion year on year

• Market Capitalization: $10.28 billion

StockStory’s Take

Roku’s first quarter results were shaped by shifting advertising demand and continued growth in its subscription offerings. Management highlighted that the ongoing migration of ad budgets from traditional TV to streaming, combined with increased adoption of programmatic advertising, were central to recent performance. CEO Anthony Wood emphasized, “Advertisers have already been shifting their budgets from linear to streaming and from direct insertion orders to programmatic. Those are two big trends that are positive for Roku.”

Looking ahead, the company’s guidance is built on expectations that these advertising trends will persist and that new initiatives, including the recent acquisition of Frndly, will accelerate subscription growth. CFO Dan Jedda noted that Roku’s outlook incorporates some macroeconomic caution, but the company is confident in its diversified revenue streams and expects platform revenue and adjusted EBITDA to benefit from both secular industry changes and specific product initiatives over the rest of the year.

Key Insights from Management’s Remarks

Management identified several business drivers and operational changes influencing first quarter results and the outlook for the rest of the year.

• Advertising market evolution: Roku’s ad business benefited from the industry’s shift toward programmatic buying, allowing advertisers increased flexibility and real-time campaign adjustments. Management stated that this trend, accelerated by macro uncertainty, played to Roku’s strengths, with Charlie Collier, President of Roku Media, describing programmatic as “gaining share, because… it offers the flexibility and performance that advertisers need.”

• Subscription momentum: Roku’s subscription business continued to expand, highlighted by the acquisition of Frndly, a “skinny bundle” service. Management explained this acquisition as both a growth driver for subscriptions and as immediately beneficial to adjusted EBITDA margins in its first full year.

• Platform diversification: The company’s multi-year strategy to diversify its revenue base—across advertising formats, subscription products, and home screen engagement—has reduced reliance on any single segment. This diversification was cited as enabling better navigation of market volatility.

• Home Screen and Roku Channel engagement: The Roku Channel became the number two app on the platform by engagement, growing 84% globally year-on-year. Management attributed this to enhanced Home Screen features and targeted UI improvements, which have also increased subscription signups and advertiser interest beyond traditional media & entertainment verticals.

• Tariff and supply chain management: Management addressed concerns over potential tariffs on devices, emphasizing a diversified manufacturing base and the ability to shift production as needed. Mustafa Ozgen, President of Devices, noted that the current tariff structure is not expected to materially affect gross profit for the year, and existing flexibility would help navigate any changes.