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Roku (ROKU)
NASDAQ:ROKU
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Roku
(NASDAQ:ROKU)
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Rating:64Neutral
Price Target:
$108.00
▲(12.90% Upside)
Action:ReiteratedDate:02/14/26
Score is driven primarily by improving fundamentals (notably strong and improving free cash flow, return to positive net income, and moderate leverage) and an upbeat earnings call with clear 2026 growth and profitability guidance. These positives are tempered by weak technical momentum (price below key moving averages with negative MACD) and unhelpful valuation signals from a highly negative P/E and no dividend yield data.
Positive Factors
Free Cash Flow Strength
Sustained positive free cash flow since 2023 and a large 2025 FCF outturn indicate durable cash-generation ability. This supports buybacks, investment in ads/product, low cash taxes (deferred tax asset), and provides financial flexibility to fund growth without heavy external financing.
Platform Scale & Revenue Growth
Double-digit platform growth and billion-dollar quarterly scale reflect meaningful ad inventory and user engagement. Scale strengthens advertiser demand, improves ad yield, and underpins long-term monetization via owned channels, subscriptions, and licensing across the Roku OS ecosystem.
Profitability Turnaround & Margin Guidance
A return to net income plus sizable EBITDA guidance signals operating leverage and sustained cost discipline. Management's mid-single-digit OpEx plan, OpEx rightsizing and margin expansion guidance indicate a credible path to durable profitability and improved cash conversion.
Negative Factors
Retail Distribution Headwind
Loss of a major retail OEM relationship can materially reduce device distribution and weaken reach into price-sensitive channels. Diversification plans mitigate risk but re‑establishing equivalent retail scale takes time and could constrain platform growth and device revenue in H2 2026.
International Monetization Nascent
Monetization outside core markets remains inconsistent, limiting near-term revenue diversification. Slower ad-market development, lower CPMs, and uneven product-market fit abroad mean material international contribution will be gradual and could delay global ad revenue scalability.
Ad Platform & SMB Execution Risk
Key ad monetization levers—third‑party DSP integrations and SMB-focused Ads Manager—are early stage and operationally intensive. Slow ramp, measurement onboarding, or low SMB adoption would curb ad demand diversification and limit medium‑term revenue and margin upside.
Roku (ROKU) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$14.10B
Dividend YieldN/A
Average Volume (3M)4.09M
Price to Earnings (P/E)180.7
Beta (1Y)2.22
Revenue Growth16.61%
EPS Growth83.98%
CountryUS
Employees3,340
SectorCommunication Services
Sector Strength97
IndustryEntertainment
Share Statistics
EPS (TTM)0.53
Shares Outstanding130,717,710
10 Day Avg. Volume3,056,949
30 Day Avg. Volume4,089,881
Financial Highlights & Ratios
PEG Ratio-1.08
Price to Book (P/B)6.01
Price to Sales (P/S)3.37
P/FCF Ratio33.37
Enterprise Value/Market Cap0.95
Enterprise Value/Revenue2.83
Enterprise Value/Gross Profit6.47
Enterprise Value/Ebitda50.97
Forecast
1Y Price Target
$129.53Price Target Upside35.41% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering19
EPS Forecast (FY)2.16
Revenue Forecast (FY)$5.50B
Roku Business Overview & Revenue Model
Company DescriptionRoku, Inc., together with its subsidiaries, operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live TV, news sports, shows, and others. As of December 31, 2021, the company had 60.1 million active accounts. It also provides digital and video advertising, content distribution, subscription, and billing services, as well as other commerce transactions, and brand sponsorship and promotions; and manufactures, sells, and licenses smart TVs under the Roku TV name. In addition, the company offers streaming players, and audio products and accessories under the Roku brand name; and sells branded channel buttons on remote controls of streaming devices. It provides its products and services through retailers and distributors, as well as directly to customers through its website in the United States, Canada, the United Kingdom, France, Mexico, Brazil, Chile, Peru, North and South Americas, and Europe. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.
How the Company Makes MoneyRoku generates revenue primarily through its Platform business and secondarily through its Devices business. Platform revenue includes (1) advertising sales, where Roku sells video and display ad inventory across Roku properties such as the Roku home screen and the Roku Channel and also participates in ad monetization related to streaming on its platform; (2) content distribution and business-to-business arrangements with streaming services and content publishers, which can include fees and/or revenue-sharing tied to user acquisition, subscriptions, or transactions initiated through the Roku platform (for example, sign-ups and billing facilitated via Roku Pay, where applicable); and (3) licensing and other platform-related revenues derived from partners that integrate Roku software and services into consumer experiences, including TV manufacturers that license Roku OS for Roku TV models. Devices revenue comes from sales of Roku streaming players, audio products (where offered), and other hardware, typically sold through retailers and direct-to-consumer channels. Key factors influencing earnings include growth in active accounts and streaming engagement (which expands monetizable ad inventory and platform commerce opportunities), the scale and performance of Roku’s advertising technology and demand relationships, and distribution partnerships with TV OEMs and streaming content providers that extend Roku’s footprint and monetization opportunities.
Roku Key Performance Indicators (KPIs)
Any
Active Accounts
Measures the number of user accounts actively engaging with Roku's platform, indicating growth in user base and potential for increased ad revenue.
Measures the number of user accounts actively engaging with Roku's platform, indicating growth in user base and potential for increased ad revenue.
Data provided by:
The Fly
The FlyRoku Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call presented multiple strong operating and financial achievements — double‑digit platform revenue growth (18%), record adjusted EBITDA and free cash flow, aggressive 2026 guidance for revenue and EBITDA expansion, improving monetization through Ads Manager and DSP integrations, and strategic distribution and cost actions. The primary risks highlighted were timing and visibility into H2 (political ad spend), early-stage ramps for third‑party DSP integrations and international monetization, and the need to scale new home‑screen ad formats and SMB advertising. Overall, the positives around profitability, cash generation, product momentum and clear guidance materially outweigh the manageable execution and timing uncertainties.Q4-2025 Updates
Positive Updates
Strong Platform Revenue Growth
Platform revenue grew 18% for full year 2025 and platform revenue grew over 18% in Q4 2025, with Q4 platform revenue surpassing $1.2 billion.
Record Profitability Metrics
Q4 2025 adjusted EBITDA was $169 million and net income was $80 million (both records). Full-year adjusted EBITDA was $421 million, representing a 255 basis point margin expansion versus prior year.
Exceptional Free Cash Flow and Capital Deployment
Generated record free cash flow of $484 million in 2025, >100% year-over-year growth. Used cash to repurchase $150 million of stock and reported near 0% dilution in Q4 (lowest ever). Management sees a path to >$1 billion free cash flow by end of 2028.
2026 Guidance Upside on Revenue and EBITDA
Guidance for 2026: Q1 platform revenue growth above 21% and full-year platform revenue growth ~18%. Full-year adjusted EBITDA guidance of $635 million (over 50% year-over-year growth) and margin expansion to 11.6% (267 basis points improvement).
Stable and High Platform Gross Margins
Platform gross margin guidance of 51%–52% for 2026; FY2025 ended at ~52%, and management does not expect significant quarter-to-quarter variability.
Scale in Streaming Households and Subscriptions
Continued growth in streaming households U.S. and globally; management expects to surpass 100 million streaming households in 2026. Q4 was the company's biggest quarter ever for premium subscription net adds. Owned/operated subscription businesses (Howdy and Frndly) showing early subscriber growth.
Monetization and Ads Platform Momentum
Expanded integrations with third‑party DSPs (Amazon DSP, Trade Desk, Yahoo DSP, AppLovin, Wurl, Magnite) and growing Ads Manager traction targeting SMBs. Management highlights AI as a tailwind to improve recommendations, ad performance and expand addressable ad buyers.
Operational and Cost Advantages
Rightsized cost structure achieved adjusted EBITDA breakeven early in 2024. OpEx grew only 3% in 2025 and is guided to mid-single-digit growth as stock-based compensation trends down. Shift of TV production to Mexico expected to lower device BOM costs.
Negative Updates
Retail Distribution Headwind — Walmart House TV Shift
Walmart is shifting its House brand TV to VIZIO OS, creating a retail distribution change; Roku is responding by broadening and diversifying distribution (Best Buy Pioneer Roku TVs, Target Hiro Roku TVs and expanded OEM deals) but expects impacts to take time and materialize more in H2 2026.
Third-Party DSP Ramps Still Early (Amazon DSP)
The Amazon DSP and other third‑party ad demand partnerships are 'early innings' and will take time to ramp. Management expects these partnerships to be additive over time but they are not yet a material contributor.
International Monetization Still Nascent in Many Markets
While Canada and Mexico show promising monetization, several international markets (e.g., Brazil) remain early stage where ad markets have not fully shifted to digital. Management notes international is a meaningful long-term opportunity but currently early and uneven by country.
Visibility and H2 Political Uncertainty
Management highlighted stronger visibility for Q1 but more uncertainty in H2 due to political ad spend timing. Political advertising is expected to be impactful in H2, making full-year pacing conservative and more dependent on how political spend materializes.
Product/Go‑to‑Market Execution Needs for New Ad Units
New home-screen designs and unique home-screen ad units are in testing and not yet fully rolled out; many home‑screen opportunities are currently non-programmatic and may require significant go-to-market and advertiser education to scale.
Device Unit Volatility and Disclosure Gaps
Company acknowledged Roku TV unit sales may fluctuate quarter-to-quarter and did not disclose granular unit or segment-level margin details; management noted they are working on providing more detail but the lack of breakout limits near-term visibility.
Ads Manager and SMB Transition Execution Risk
Ads Manager is growing but scaling from hundreds to thousands of SMBs presents execution risk (sales funnel, measurement onboarding and product maturity). Management is optimistic, but widespread SMB adoption will take time.
Company Guidance
Roku guided to Q1 2026 platform revenue growth of over 21% and full‑year platform revenue growth of about 18%, with full‑year adjusted EBITDA of $635 million (over 50% YoY growth) and an EBITDA margin of 11.6% (≈+267 bps); platform gross margin is guided to ~51–52% (2025 finished at 52%), and management expects free cash flow to exceed adjusted EBITDA in 2026 with a path to >$1 billion FCF by the end of 2028. For context, 2025 results included platform revenue growth of 18% (Q4 platform revenue surpassed $1.2 billion), Q4 adjusted EBITDA of $169 million, full‑year adjusted EBITDA of $421 million (+255 bps), net income of $80 million, free cash flow of $484 million (>100% YoY), $150 million of buybacks executed (with $250 million remaining), near‑0% dilution in Q4, expected mid‑single‑digit OpEx growth, CapEx‑light operations, and a >$1 billion deferred tax asset to keep cash taxes low; management noted Q1 benefits from the Frndly acquisition and that last year’s Q1 comp was just under 17%.Roku Financial Statement Overview
Summary
Financials are improving meaningfully: 2025 returned to positive net income, operating results are near breakeven, and free cash flow was strong and rising (FCF up sharply in 2025 and positive since 2023). Balance sheet leverage remains moderate (~0.33 debt-to-equity), but margin compression vs prior highs and still-slightly-negative operating earnings in 2025 suggest the turnaround is not fully stabilized.Income Statement
Revenue has grown steadily from 2020–2025 (with a sharp slowdown in 2024 and a re-acceleration in 2025). Profitability has meaningfully improved versus the heavy losses in 2022–2024, returning to positive net income in 2025, and operating profitability is close to breakeven. Offsetting this, gross margin has trended down from the 2021 peak and remains well below prior highs, and operating earnings are still slightly negative in 2025—suggesting the turnaround is not fully stabilized yet.58
Neutral
Balance Sheet
Leverage looks manageable, with debt-to-equity staying in a moderate range and ending 2025 at ~0.33, supported by a sizable equity base. Total assets have been relatively stable while equity has gradually improved since 2023, and return on equity turned positive in 2025 after multiple loss years. The main weakness is the increase in absolute debt in 2025 versus 2024 and the fact that balance-sheet strength still depends on sustaining the recent profitability recovery.72
Positive
Cash Flow
Cash generation strengthened materially: operating cash flow and free cash flow rose sharply in 2025 versus 2024 and are significantly above the weak 2022 level. Free cash flow has been consistently positive since 2023 (after turning negative in 2022), indicating improved operating discipline and capital efficiency. A key risk is volatility—cash flow swung meaningfully over the period, so maintaining the 2025 run-rate is important.84
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.74B | 4.11B | 3.48B | 3.13B | 2.76B |
| Gross Profit | 2.07B | 1.81B | 1.52B | 1.44B | 1.41B |
| EBITDA | 334.98M | 219.86M | -362.87M | -148.61M | 408.78M |
| Net Income | 88.36M | -129.39M | -709.56M | -498.00M | 242.38M |
Balance Sheet | |||||
| Total Assets | 4.43B | 4.30B | 4.26B | 4.41B | 4.08B |
| Cash, Cash Equivalents and Short-Term Investments | 2.32B | 2.16B | 2.03B | 1.96B | 2.15B |
| Total Debt | 871.80M | 591.93M | 654.27M | 719.33M | 521.71M |
| Total Liabilities | 1.78B | 1.81B | 1.94B | 1.77B | 1.32B |
| Stockholders Equity | 2.66B | 2.49B | 2.33B | 2.65B | 2.77B |
Cash Flow | |||||
| Free Cash Flow | 478.44M | 212.98M | 173.24M | -149.90M | 188.04M |
| Operating Cash Flow | 483.72M | 218.04M | 255.86M | 11.79M | 228.08M |
| Investing Cash Flow | -782.37M | -25.06M | -92.62M | -201.70M | -176.82M |
| Financing Cash Flow | -280.10M | -89.20M | -61.24M | 8.36M | 1.00B |
Roku Technical Analysis
Neutral
95.66
Price Trends
97.62
Negative
100.27
Negative
95.51
Positive
Market Momentum
0.23
Negative
49.85
Neutral
37.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROKU, the sentiment is Neutral. The current price of 95.66 is above the 20-day moving average (MA) of 94.92, below the 50-day MA of 97.62, and above the 200-day MA of 95.51, indicating a neutral trend. The MACD of 0.23 indicates Negative momentum. The RSI at 49.85 is Neutral, neither overbought nor oversold. The STOCH value of 37.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ROKU.
Roku Risk Analysis
Roku disclosed 65 risk factors in its most recent earnings report. Roku reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Roku Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $399.84B | 36.11 | 43.25% | ― | 15.49% | 35.54% | |
69 Neutral | $176.12B | 21.11 | 11.35% | 1.10% | 3.61% | 152.34% | |
68 Neutral | $23.29B | 34.54 | 16.22% | 0.75% | 14.91% | 9.30% | |
64 Neutral | $14.10B | 180.68 | 3.40% | ― | 16.61% | 83.98% | |
62 Neutral | $67.83B | 98.11 | 2.05% | ― | -4.29% | ― | |
61 Neutral | $12.85B | 22.61 | 48.36% | 2.47% | 4.37% | -16.22% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% |
* Communication Services Sector Average
ROKU
Roku
95.66
21.84
29.59%
DIS
Walt Disney
99.42
1.64
1.68%
NFLX
Netflix
94.70
-0.38
-0.40%
FOXA
Fox
57.65
4.94
9.38%
WMG
Warner Music Group
24.60
-7.06
-22.30%
WBD
Warner Bros
27.35
16.70
156.81%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.