Roku (ROKU -15.06%), the connected TV platform powering millions of streaming devices and smart TVs, released its Q2 2025 results on July 31, 2025. The big headlines were a strong revenue beat, with GAAP net revenue of $1.11 billion against estimates of $1.07 billion, and an unexpected swing to positive net income (GAAP). Reported GAAP earnings per share reached $0.07, far ahead of the consensus loss forecast of $(0.15) and a marked turnaround from last year's $(0.24). Platform revenue drove these gains, rising 18% year over year, though platform gross margins slipped. The overall quarter showed substantial execution in Roku's platform-focused strategy, signaling growth even as some metrics came under pressure.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.07 | $(0.15) | $(0.24) | $0.31 |
| Revenue | $1.11 billion | $1.07 billion | $968.2 million | 15 % |
| Platform Revenue | $975 million | $824 million | 18 % | |
| Gross Profit | $498 million | $425 million | 17.2 % | |
| Adjusted EBITDA | $78.2 million | $43.6 million | 79.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Focus Areas
Roku runs a digital streaming platform that connects users, advertisers, and content partners through its Roku operating system (OS). Its business has two main parts: the Platform segment, which includes advertising, content distribution, and billing content subscriptions; and the Devices segment, focused on hardware such as streaming sticks, TVs, and smart home products. The company generates most of its revenue and profits from its platform, making further growth here a main strategic priority.
Recent efforts have centered on expanding advertising innovation, strengthening its device ecosystem, and growing monetization through platform offerings. The ability to attract advertisers and drive user engagement using tools like its Home Screen and direct user data are key to financial performance. In addition, international expansion, innovation in ad formats, and compliance with regulatory requirements remain important for future growth and risk management.
Quarter in Review: Growth, Platform Shifts, and Product Momentum
The standout for Q2 2025 was Platform revenue, up 18% to $975 million (GAAP), exceeding internal forecasts. Management cited "strong performance in video advertising and the successful acquisition of Frndly"—a subscription skinny-bundle service that contributed approximately 1.8 percentage points to Platform revenue growth. The advertising business also posted growth faster than the broader U.S. digital and connected TV ad markets. Vertical integration with demand-side platforms—a type of software enabling automated ad buying, also known as programmatic advertising—played a big role, as deeper ties to partners like Amazon and Wurl opened up new demand streams.
Platform gross margin, however, dropped to 51%, a decline of 2.3 percentage points year over year. This reflected a shift from traditional direct ad sales to more programmatic and non-guaranteed ad orders. These bring in more flexibility and new customers but tend to offer slightly lower margins. Management expects full-year platform gross margin around 52% for FY2025, mirroring this trend for the rest of the year.
In the Devices segment, Devices revenue fell 6% year over year to $136 million. Despite this drop, devices gross profit (GAAP) improved to break-even from a $15.2 million loss in Q2 2024. Devices gross margin recovered to 0%, up from negative 10.6%, mainly due to the timing of TV unit arrivals and product mix. The company maintained its lead as the top TV OS in the U.S. Canada, and Mexico, and cited growth in global reach. Roku also launched new, more energy-efficient streaming sticks and expanded TV distribution in Canada, underscoring ongoing product innovation. Management downplayed the Devices segment as a strategic revenue driver, emphasizing its role in growing streaming households instead.
User engagement hit all-time highs, with streaming hours up by 5.2 billion year over year to 35.4 billion. The Roku Channel—a free, ad-supported content app—kept its position as the number two app by engagement in the U.S. and third globally by reach, representing 5.4% of all U.S. streaming TV viewing in June 2025. Recent content investments included exclusive Major League Baseball broadcasts and sports documentaries, supporting differentiated content and deeper platform engagement.
On the financial side, Gross profit (GAAP) rose 17% to $498 million, and adjusted EBITDA grew 79% to $78.2 million. Adjusted EBITDA margin (non-GAAP) increased by 2.5 percentage points to 7.0%. Operating expenses edged up by 5% year over year, mostly in sales and marketing, reflecting ongoing investments in growth. The company had $2.3 billion in cash and cash equivalents as of June 30, 2025 and introduced a $400 million stock buyback program, its first ever, authorized through December 31, 2026. Free cash flow (non-GAAP, trailing twelve months) improved 23% year over year to $392 million.
Financial Outlook and Look Ahead
Looking to the third quarter, management projects GAAP revenue of $1.205 billion (up 13%), gross profit of $520 million, and adjusted EBITDA of $110 million. For the full fiscal year 2025, the company raised its Platform revenue outlook to $4.075 billion (up 16% year over year) and Adjusted EBITDA (non-GAAP) target to $375 million. Platform gross margin is expected to remain steady at approximately 52%.
Leadership cautioned that revenue growth may slow slightly in Q4 due to tough comparisons and less political ad spending. Devices revenue is anticipated to be flat or down slightly for the full year, affected by tariffs, though profitability, as measured by Adjusted EBITDA, is forecast to be $375 million, compared to prior guidance of $350 million for FY2024. The company projects no further large accounting adjustments (ASC 606, a revenue recognition rule) for the rest of the year. Roku does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
