Roku reported its first quarterly operating profit since 2021.
Management expects double-digit platform revenue growth and improving operating margins to continue into 2026.
Based on Netflix’s recent results, there’s still a lot of room for growth for Roku.
10 stocks we like better than Roku ›
Roku (NASDAQ: ROKU) stock has struggled since the pandemic as the brief surge in demand for streaming proved to be more of a curse than a blessing for the leading streaming distribution platform.
The company ramped up spending and hiring before the pandemic ended, and has been trying to rightsize and streamline the business since then. That process took a big step forward on Thursday after the company reported an operating profit ahead of schedule and for the first time since 2021.
On a generally accepted accounting principles (GAAP) basis, the company reported an operating profit of $9.5 million, compared to a loss of $35.8 million in the quarter a year ago.
Overall growth was solid too, with platform revenue up 17% to $1.07 billion and total revenue up 14% to $1.21 billion, which matched estimates. Usage continued to grow steadily as well, with streaming hours up 14% year over year to 36.5 billion.
Gross margin narrowed in the quarter, a sign that direct costs are growing faster than revenue. However, the company was able to turn profitable by keeping operating expenses like research and development, and sales and marketing flat.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $116.9 million, up 19% from the quarter a year ago, and GAAP earnings per share was $0.16, up from a per-share loss of $0.06.
Image source: Roku.
Roku’s efforts to expand integrations with demand-side platforms like Amazon and The Trade Desk are paying off as it’s increasing ad demand and giving it a greater ability to serve advertisers. Its own ads manager, which serves small and medium-sized businesses, is also delivering solid growth.
It’s also improving the ad product with better…
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