Roku — Q3 2026 Earnings Summary

Financial Performance:

• Total net revenue reached $1.5 billion, a 24% increase year-over-year (YoY).
• Platform revenue grew 23% YoY to $1.3 billion, driven by Advertising ($727.4 million, +23% YoY) and Subscriptions ($580.9 million, +23% YoY).
• Devices revenue was $193.7 million, up 33% YoY.
• Total gross profit was $648.5 million, up 24% YoY; total gross margin was 43.2% (down 0.2 percentage points YoY).
• Platform gross margin was 53.3% (up 1.8 percentage points YoY); Advertising gross margin was 63.2% (up 4.7 percentage points YoY); Subscriptions gross margin was 40.9% (down 1.8 percentage points YoY).
• Devices gross profit was $(48.6) million, with a gross margin of (25.1%), down 9.4 percentage points YoY due to elevated memory costs.
• Net income was $183.3 million, a 639% increase YoY.
• Adjusted EBITDA was $248.8 million, up 113% YoY, with an Adjusted EBITDA margin of 16.6%.
• Free Cash Flow (TTM) was $795.7 million, up 80% YoY.
• Cash flow from operations (TTM) was $810.9 million, up 78% YoY.
• Operating expenses decreased 6% YoY to $484.4 million, driven by a 21% decrease in Sales and Marketing ($190.9 million).
• Income from operations was $164.1 million, up 1633% YoY.
• Cash and cash equivalents were $2.5 billion as of September 30, 2026.
• Deferred revenue (current and non-current) totaled $144.8 million.

Guidance and Future Outlook:

• The company remains on track for the second half 2026 forecast previously provided in the proxy statement.
• Due to the pending acquisition by FOX, the company will not host an earnings call or provide specific financial outlooks.
• Distribution costs for Roku TV model sales, a significant component of Sales & Marketing expense, are expected to be weighted toward Q4 2026.
• The company anticipates Roku TV model unit volume to increase in Q4 2026 due to expanded partnerships with TCL and Hisense.
• Additional live features for the Sports Experience are expected to roll out in the coming months.
• The new Home Screen is being rolled out to international markets following its U.S. completion in July.

Business Segments and Product Lines:

• Advertising: Video advertising growth outpaced the U.S. OTT and digital markets; over 80% of in-stream video ad impressions were delivered programmatically. Political advertising exceeded the comparable quarter from the 2024 U.S. presidential election cycle. The Media & Entertainment vertical saw the highest YoY revenue growth in four years. A new performance-based M&E ad unit is in beta testing on the Home Screen.
• Subscriptions: The largest factor in the margin decline was a strategic mix shift toward Premium Subscriptions. Approximately 95% of Premium Subscription sign-ups are from customers who had never subscribed to that service directly. Premium Subscription bundles launched in September offer over 35 combinations with savings up to 30%.
• The Roku Channel: Ranked as the #2 app on the platform by engagement in the U.S. and globally. Added content from Paramount, Disney, and NBCUniversal.
• Sports Experience: Launched globally for the World Cup, driving over one million subscription sign-ups. Launched in Canada, joining Mexico and Brazil. NFL Zone is available in all four sports discovery markets. Cloud DVR capabilities (Lookback and Record) launched for FOX One.
• Devices: Launched the first-ever OLED TVs (Roku Pro Series OLED and LX OLED) in September, available exclusively on Amazon. Roku-made TVs approached 8% of total U.S. TV unit sales volume. The Roku TV OS requires significantly less DRAM and Flash than competitors.

Market and Competitive Landscape:

• Roku is the #1 TV streaming platform in the U.S., Canada, and Mexico by hours streamed.
• Despite a sequential decline in the overall SVOD market in Q3, Roku grew its share of U.S. SVOD subscriptions.
• The platform maintains interoperability with every major buyer of advertising and all leading DSPs and SSPs.
• Roku TV OS is utilized by leading TV brands in more than 15 countries.

Risks and Challenges:

• Elevated memory costs negatively impacted Devices gross margins.
• The pending acquisition by FOX results in the suspension of standard earnings calls and financial guidance.
• Forward-looking statements involve risks including the ability to build the most performant CTV ad platform, successful rollout of new features, and the completion of the transaction with FOX.

Management Commentary and Tone:

• Management emphasized the principle that "we succeed when our partners succeed," citing alignment of interests with content partners, advertisers, and TV brands.
• The open platform strategy is highlighted as a driver for growth in both Advertising and Subscriptions.
• The pending acquisition by FOX is described as an "extraordinary opportunity to accelerate our vision, allowing us to scale faster and innovate more aggressively."
• CEO Anthony Wood and CFO/COO Dan Jedda signed the letter.

Other Key Points:

• Pending Acquisition: On June 15, 2026, Fox Corporation and Roku announced a definitive agreement for FOX to acquire Roku.
• Stock Repurchases: The company repurchased $162.7 million of common stock during the nine months ended September 30, 2026.
• Restructuring: A gain on lease termination of $22.3 million was recorded in Q3 2026 related to a corporate lease previously impaired.
• Merger Costs: $13.6 million in merger-related costs were incurred in Q3 2026.
• Content Assets: Content assets, net, increased to $181.0 million from $167.9 million at the end of 2025.
• Inventories: Inventories increased to $169.8 million from $114.6 million at the end of 2025.
• Streaming Hours: Total streaming hours reached 39.9 billion, up 9% YoY.