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DATE
Thursday, Oct. 30, 2025 at 5 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Anthony Wood
Chief Financial Officer — Dan Jedda
President, Roku Media — Charlie Collier
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TAKEAWAYS
Platform revenue growth -- Reported 17% year-over-year platform revenue growth, with fourth-quarter guidance at 15% platform revenue growth. This includes political and friendly categories, and the ex-political/friendly growth rate is 19%. Management forecasts a slight step up for the fourth quarter.
Adjusted EBITDA -- Fourth-quarter outlook implies adjusted EBITDA of $145 million, which management stated is the company’s highest ever level.
Free cash flow -- Trailing twelve-month free cash flow exceeded $440 million, and management projects further increases.
Share repurchases -- Repurchased $500 million under a $400 million buyback program. Net share settlement offset about 40% of gross dilution in early 2024, and quarterly dilution was under 0.3%, noted as the lowest ever.
Adjusted EBITDA margins -- Expected to improve by 2 percentage points year-over-year, reaching approximately 8.4% EBITDA margin. Management anticipates a similar improvement next year.
Capital allocation -- Management reiterated, "we are and will continue to be CapEx light," and stated they are reallocating capital toward platform revenue growth initiatives.
Amazon DSP integration -- Launched recently and described by management as "just starting to ramp up" with early, strong customer interest. Its contribution is included in fourth-quarter guidance but is not yet material.
Self-serve ads platform -- Ads Manager attracted approximately 90% new advertisers, described as "growing fast" according to Anthony Wood. Management called the self-serve/performance marketing segment a "multibillion dollar" opportunity.
Subscription revenue -- Premium subscription business continued robust growth, highlighted by recent tier-one service launches and more upcoming in 2026.
Home screen improvements -- Ongoing user interface testing with a major home screen update planned for 2026, which has shown in testing to increase viewer engagement and monetization.
SUMMARY
Roku (ROKU +6.10%) reported its first quarter of positive operating income since fiscal 2021. Management cited multiple monetization initiatives—including premium subscription expansion, a deepening set of advertising technology partnerships, and a soon-to-launch redesigned home screen—as supporting continued double-digit platform revenue growth and margin enhancement into fiscal 2026. The company expressed high confidence in achieving 100% dilution offset via stock buybacks over time, driven by a disciplined capital allocation strategy and ongoing free cash flow acceleration, while emphasizing further investment in its scalable platform ecosystem and next-generation advertising solutions.
President Collier stated that approximately 90% of advertisers on Ads Manager were new to Roku, emphasizing the platform’s success with new client acquisition in self-serve ad channels.
Chief Executive Officer Wood said, "we believe we can be the most performant connected TV platform," referencing current investments in generative AI to enhance targeting and campaign outcomes.
Management specifically described the Amazon DSP as "in very, very early days," but noted that initial customer demand and client engagement trends are positive.
Roku executives stated that the company’s data is not currently being licensed to large language model (LLM) providers, but monetization opportunities in that realm remain under consideration.
Growth in active streaming households remains robust domestically and internationally, with management expressing confidence in reaching 100 million households in 2026 and projecting that average revenue per user (ARPU) will rise at a faster rate than user growth.
Multiple speakers underscored that, even in a consolidating media landscape, Roku’s position as the primary distribution partner in over half of U.S. broadband households ensures its strategic indispensability to content owners and streaming services.
Upfront ad pricing for the fourth quarter was said to be positive "as part of our upfronts, which is different from last upfront," according to Dan Jedda, providing improved pricing stability for Roku’s ad inventory.
The company’s SportZone feature is presented as a growing opportunity to simplify fragmented sports content access, enhancing both engagement and monetization in live sports experiences.
Executives described shoppable TV as a nascent but strategically relevant channel, with current activity focused on product integration in original programming and partnerships while consumer behaviors develop.
INDUSTRY GLOSSARY
DSP (Demand-Side Platform): Advertising technology platform enabling buyers to purchase and manage digital ad inventory, including connected TV ads, through real-time auctions.
Ads Manager: Roku’s self-service ad buying platform tailored for small and medium-sized businesses, supporting performance marketing campaigns on connected TV.
Premium subscription: Higher-tier paid content offerings available through Roku’s platform, often referring to major third-party services or proprietary subscription video on demand (SVOD) channels.
SVOD (Subscription Video On Demand): Streaming services that charge a recurring fee for on-demand access to TV shows and movies.
Marquee ad unit: High-visibility ad placement on Roku’s home screen, recently enhanced to support video creatives.
LLM (Large Language Model): Advanced artificial intelligence systems used for tasks such as natural language processing and data analysis, relevant to the value of proprietary data sets like Roku’s.
SportZone: Roku’s customer-facing aggregation and navigation feature designed to centralize sports streaming content access across multiple content providers.
M&E (Media & Entertainment): Industry vertical comprising traditional and digital video content producers and services, often referenced in relation to ad revenue diversification.
Full Conference Call Transcript
Operator: Our first question comes from Cory Carpenter with JPMorgan.
Cory Carpenter: Hey, good afternoon. Thanks for the questions. Anthony, hoping you could expand on the trends you saw this quarter in the platform business. How you're thinking about the growth drivers in 4Q in 2026. And Dan, maybe a question for you. You bought back 50 million shares this quarter. I thought it'd be helpful to hear your latest thoughts on capital allocation priorities, given your cash balance. Thank you.
Anthony Wood: And I would say very good outlook. We feel good about our outlook and also feeling good about next year. And it's, you know, to what's driving our platform revenue growth. You know, in 2024, we outlined our key monetization initiatives, you know, the general buckets of areas we're focused on to grow our platform revenue. And that strategy is working. You know, you can see it in the results, and I think we'll continue to see it, you know, for quite a while. And, you know, the results and the success of our strategy just give us a lot of confidence that we're gonna maintain double-digit platform revenue growth while increasing profitability in 2026 and beyond.
So just to recap, the three areas that we're focused on to grow our platform revenue, one is making better use of our home screen, which is a key strategic asset for us. Another one is growing ad demand, and the third is growing our subscription revenue. So in terms of our home screen, you know, like I said, it's a key asset for us. You know, every Roku customer, which is half of broadband households in the United States, they turn on their TV and they start their viewing experience with their home screen. How they discover what and decide what to watch. And, you know, we're always actually working on improving our home screen.
We're always testing changes, and when those changes result in a better viewer experience or better monetization, we roll those changes out. And that's ongoing. For example, we added, you know, the recommendation row to the top of our home screen, you know, recently. That's working well for us. But we have, as we've mentioned before, we are working on a larger update to our home screen. That's in testing. It hasn't rolled out yet. The testing is going really well. I'm getting a lot of positive feedback. We're being very thoughtful about that.
You know, it affects a lot of viewers, so we wanna make sure that it's both a big improvement for all of our viewers as well as an improvement to get engagement and monetization. But I think we'll see that based on the testing results we're seeing so far, I think that's gonna roll out in 2026. So home screen, continuous home screen improvements and UI improvements are one of the ways we grow our platform revenue. Another is we're focused on growing our ad business and our ad demands. You know, our goal is to or our strategy there is to work with all the major platforms, including all the major DSPs.
We announced the relationship with Amazon recently, you know, deeper support with the Amazon DSP. That's just turned on. So it's a little early to say, but, you know, so far, it's looking good. And I'm still very excited. That's gonna be a, you know, a contributor to our business, but it hasn't really ramped up yet. It's just starting to ramp up. Also, the ad side, we're focused on improving measurement. You know, we announced, for example, this quarter integration with AppsFlyer. Another area we're focused on is Ads Manager, which is our self-serve platform. For small and medium-sized businesses, but also, you know, really focus on performance marketing. It's a, you know, it's a business that's growing fast.
It opens up a big new area of advertisers, a big new category of advertisers. A different class of advertisers as well as performance marketers. That's a big area that we're focused on. We're putting more resources behind that. So, you know, and I think overall, we believe we can be the most performant connected TV platform. We have a lot of data. You know, we have the highest engagement by far in the United States. And it's an area we're investing in improving the performance of our ad platform. And then subscriptions are doing well for us. You know, premium subscriptions, particularly, are doing well. And in Q3, we continue to improve the premium subscription experience.
We also added new services, new pre we're always adding new premium subscriptions, but we added more services in the quarter. And we'll be launching, you know, more tier one subscription services and premium subscriptions in 2026. And then of course, there's Howdy, which is our latest, owned and operated service. Which is, you know, $3 a month with no ads, an SVOD service, and it really taps into a large underserved market. Scenario of the market that's not really targeted with a particular SVOD service, and I think it's a very large opportunity for us. So that's also still early.
But just like we grew The Roku Channel into a large business over time using our platform, I believe we're gonna do that with Howdy as well. So that's an area that I'm excited about, but it's still early as well. And then in terms of capital allocation, let me turn that over to Dan.
Dan Jedda: Thanks, Anthony, and thanks for the question, Cory. Let me just start by saying a few things about our financial position and capital allocation. We have $2.3 billion of cash and short-term investments on our balance sheet, a very strong position. We achieved positive operating income in Q3. That's the first time since fiscal 2021. Our outlook for Q4 on adjusted EBITDA at $145 million is our highest ever. For adjusted EBITDA. For the full year, our EBITDA margins are expected to be a 200 basis point improvement year over year to approximately 8.4% and we expect similar improvement next year. And I think I said several times, we are and will continue to be CapEx light.
And we're growing our free cash flow faster than our And all of this has resulted in a trailing twelve-month free cash flow of over $440 million. So we're very strong. In terms of free cash flow generation, and we're gonna clearly grow from there. Also, in early 2024, we initiated our net share settlement program offsetting about 40% of gross dilution. And last quarter, as you mentioned, we repurchased $500 million of our stock under our $400 million share repurchase program. So and total dilution for Q3 was under 30 basis points. That's the lowest dilution we've had in any quarter. So all this is a way of saying we're very focused on dilution, share buyback, free cash flow.
We have a goal of offsetting 100% share of dilution over time, and I certainly see line of sight to that. So we'll continue to look at opportunities to expand our business and maximize shareholder value through disciplined capital allocation and we're investing in all the platform revenue initiatives that Anthony just addressed and talked about, but we're doing so mostly through reallocation of capital. And we'll continue to look at maximizing our ROI as we continue to generate this positive free cash flow.
Operator: Our next question comes from Brent Navon with Bank of America. Good afternoon. Thanks for taking the question.
Brent Navon: Just want to look, in your shareholder letter, you cited progress from third-party DSPs and, you know, '26 for you guys, you know, seems like you guys are growing 20% organic political ex ASC 606 and 3Q. Your guide implies somewhat similar to 4Q. Seems like there's a lot of irons in the fire that you just mentioned. You know, are there offsets that we should also be contemplating or tough comps? Because, you know, it seems like you have momentum in Ad Manager. You have the Amazon DSP ramp. Political year, potential improvements in M&E. So just wanna make sure we're thinking through all the pieces correctly. Thanks so much.
Anthony Wood: Hey, Brent. I think, Charlie will answer that question.
Charlie Collier: Sure. Yeah. Why don't I take the DSP portion and ads manager portion of the question, then I'll turn it over to Dan. Hi. Hi, Brent. Stepping back, our strategy remains that we want to be open and interoperable and be deeply integrated with all DSPs. So that we can meet clients anywhere they wanna transact. So it was totally natural that we would do what you said, which is deepen our integrations across the board and of course, we announced the Amazon integration as well. And to put it in context, we've added dozens of ad tech partners over the last few years from, you know, the Yahoo DSP or AppLove and Whirl to Magnite, on the SSP side.
And last year, we really continued to our relationships with each of them. At the heart of your question on third-party DSPs, I think the best comparison is last year, we discussed on these calls quite a bit about our UID integration with The Trade Desk. And the deepening of our existing relationship with Amazon is very similar to that we talked about last year with TradeDesk. So our goal with all these partnerships, Brent, is to drive greater efficiency and performance. And we are very bullish about our position as the open and interoperable partner in a marketplace with so many walled gardens.
In terms of Ads Manager, you know, in the macro, the shift to, you know, proof of performance or performance marketing to CTV is a tailwind we love. And we like what we're seeing, but I should say it's early days. So generally speaking, there's a market push towards automation. And more sophisticated proof of performance and Ads Manager, which is our self-service platform. And that and many of the performance innovations we're building to prove that Roku is the most performance CTV platform. All those are providing tailwinds, but it is very early days. We do like what we see. We see new advertisers coming. We see them staying. Because their Roku campaigns are performing.
And in third quarter, approximately 90% of advertisers on Ads Manager were new to Roku. Which we very much like as well. Dan, do you wanna take the back half of that?
Dan Jedda: Yeah. Thanks, Charlie, and thanks for the question, Brent. So to answer your question on thoughts on 2026, and are there any offsets? But let me just address Q3 and Q4 for a minute. So you know, in Q3, we came in at a very strong 17%. It's slightly over 17% growth rate. And our guide is at 15% growth rate inclusive of political and friendly. And if you back out political and friendly for Q3, that number is 19% year over year. And if you back out political and friendly for Q4, it's actually a slight step up from the 19%. So we feel really good, on how we're gonna finish this year.
We're gonna finish this year very strong. To your question on 2026, obviously, we'll provide further guidance on 2026 after next quarter. But Anthony just went over many initiatives. Charlie just touched on many initiatives. You're right. We have a lot of irons in the fire. Many of them are launched and working. Some of them are yet to be launched. Anthony talked about the home screen, which we're very excited about, and the entire UI. Which we're very excited about. We have ads manager. We have a lot of new ad products that are performing well. We have premium subscriptions in our overall subscription business performing very well.
And so I would just say, I feel very good about entering 2026. I'm very excited for the year.
Brent Navon: Great. Thank you so much.
Operator: Our next question comes from Justin Patterson with KeyBanc.
Justin Patterson: Great. Thanks and good afternoon. Could you expand a little bit more on what this new home screen means for the business? How should we think of it influencing engagement and monetization versus the existing home screen? And then stepping back just around the deeper DSP integrations, there have been a lot of investor questions around just what comes after the DSP integration. So I'd love to hear about just what other ad product, innovation you have going forward and how you can you think that'll help sustain platform revenue growth? Thank you.
Anthony Wood: Hey, Justin. This is Anthony. In terms of the new home screen, you know, I would say, first of all, we have a very iconic home screen. You know, it looks different. It feels different. It feels simpler. It is simpler to use than our competitors. You know, we're very proud of that. And it's also fun, a lot of delight, built into our home screen. So, you know, an important goal for us is to maintain and improve that. We wanna keep it iconic. We wanna keep it differentiated. We wanna make it more delightful but we also wanna make it more useful. You know, our current home screen is I mean, customers love it.
It's very useful, but we, you know, we can make it even more useful. So that's a big goal. So we wanna increase customer satisfaction with our home screen. But we also wanted it to drive more monetization. So there's lots of things that we're testing that testing does show. It drives more engagement, increases monetization. You know, whether it's, you know, helping get viewers to sign up for more subscriptions or to watch more ad-supported content, you know, those are all important goals or whether it's, you know, more promotion. So those are the two goals for the business. Higher viewer satisfaction, more engagement, more monetization.
And, you know, testing our testing is showing that we're achieving both of those. So, still testing, optimizing. And like I said, we'll hope to roll that out in 2026. And then in terms of DSP integrations, what comes next? I mean, you know, I'll just say, like, we're not done with DSPs. Like, we do integrate with most of with all the major DSPs. But I still think there's lots of room to continue to deepen those integrations. To increase our business, you know, create stronger business relationships with those partners that we're we continue to work on that. And in terms of ad products, there's a whole suite of ad products under development.
I mean, would say kind of high-level categories. One is we're very focused on performance. You know, delivering on, we already have a platform that is very performant, you know, very measurable. Focused on performance and targeting, but we, you know, we're doing things like integrating next-generation generative AI into our ad system to make it even more performance-oriented. So just the overall of being by a wide margin, the most performant connected TV platform, a lot of our ad work is going into that. And then, you know, our traditional ad businesses, is, you know, brand advertisers, the agencies. That's a big and important business for us.
But, you know, looking at small and medium-sized businesses, businesses that traditionally advertise on social media are more, you know, digital-first type advertisers. You know, those are big markets, and we're building products to address those markets as well. So I don't I think I covered it. I don't know, Charlie, if you have anything.
Charlie Collier: You nailed it. I'll say, Justin, this is Charlie. You know, really, you asked what comes next. I'll tell you what comes before it is equally important too. You know, if you think about Anthony mentioned we're in half the broadband households in the country. Authentication leads everything. I mean, literally, all else follows. So if you start to think about the fact that Roku has high fidelity signals, we have an ability to drive results for marketers. In authenticated premium content. That's where it starts. Then everything Anthony talked about is exactly right. We're gonna continue to refine our integrations with each of these partners.
And I think what the best thing is we'll drive outcomes for our marketers and be able to actually continue to refine to meet their needs. Dan, I don't know.
Dan Jedda: No. I don't have anything to add except to say that the question was around sustainable revenue on ad product, and I think Charlie and Anthony answered that. We also have a subscription business, which is driving a lot of revenue growth and is, in fact, growing faster subscriptions. Is doing exceptionally well. We had a tier one launch last quarter. We'll have more tier one launches in the coming months that we feel very good about. So we have a whole other business in subscriptions that is also growing exceptionally fast, and we fully expect that to continue. In addition, to the ad revenue that Charlie and Anthony just discussed.
Operator: Our next question comes from Laura Martin with Needham.
Laura Martin: Hey there. My one for Anthony is on data. So I understand that all these new revenue streams you're working on used, Roku's best-in-class data. Do you have any updated feeling about licensing your best-in-class data to the LLMs, which you're spending at Meta $72 billion this year and Gemini $85 billion this year, and they're running out of data. These LLMs. So you guys have, I think, an un revenue stream that is really valuable that you're not utilizing at all. And then for Charlie or Dan, lots and lots of so there's auction density that you're working on. There is subscription revenue you're working on, and you didn't mention shoppable.
Is that sort of the order you see in terms of driving upside from these, let's call them, ancillary or newer revenue streams over the one to two years? First would be getting the sell-out rate higher. Second would be the subscription, and then third would be shopping.
Anthony Wood: Hey, Laura. Thanks for the questions. Great to hear from you. Hi. On data, I'll just say that, yeah, that's right. I mean, our first-party data is an extremely important asset. We use it in a lot of ways. We use it, you know, it's what powers our ad targeted advertising. It powers our AI behind all our performance marketing. It's how we personalize our home screen, recommend, make recommendations to users. So the primary way we use it is we use it to sell more ads, sell more subscriptions, deliver a better experience for our viewers.
But we are, you know, we do we are I'll just say, always looking for ways to get better monetization out of our data and, you know, I mean, working with LLMs is certainly something that we've thought of and are considering. But it's not something that we're doing today. But it's certainly something that we're investigating, I will say. And then there's other way I mean, there's other opportunities to monetize our data as well that we're also looking at. So, Charlie, Dan, do you wanna take the session?
Charlie Collier: Sure. Yeah. Hey, Laura. It's Charlie. In terms of the order, I think they're all important. I'll address your shoppable question. You know, we're bullish on shoppable, and it's one of those opportunities that I think is early, but working, you know, from original programming where we've integrated product and made the products in the show shoppable. To the far larger opportunity, which is to, you know, teach America how to shop on TV. I think Roku will be the best place to do that simply because of our scale. But in terms of behavior, I think it is slightly early days.
We do see, obviously, great performance metrics across our platform and certainly with some of our ads, including our shoppable ads. But it wasn't mentioned because it's early days, not because we don't have great interest in pursuing it. And we have lots of partners who are working with us on that.
Laura Martin: Thanks very much. Great numbers, guys.
Operator: Our next question comes from Michael Nathanson with MoffettNathanson.
Michael Nathanson: Thanks. Hey, I have two, Charlie and Dan. Hey, Charlie. As more and more sports content moves to streaming, it feels like you guys have major opportunities here with sports experiences. You talk a bit about what you're seeing to date. Is it driving revenue growth? And then longer term, do you envision a time when I can actually watch all my sports in one experience zone? Right? So instead of going to different apps, can I just have one centralized aggregation place to watch my sports? That's for you. And then for Jay, I just wanna confirm. Said distribution revenues are growing faster than advertising. And you had one new launch.
But I think we had both Fox and ESPN launch in the quarter. So is there a timing issue? Because those are two major launches. Just wanna confirm that. Thanks.
Charlie Collier: Hey, Michael. It's Charlie. Good to hear from you. Look. The fact that every NFL game is now available in streaming is nothing but a tailwind for Roku, which, again, represents half the broadband households in the country. We have tremendous opportunities with sports for a number of reasons. Number one, think about it, and we talk a lot about being the lead into television. And when the last Olympics came, we took great pride in being the fact that we were the front door to everything you wanted to experience, and we helped drive that with NBC as our partners. And we'll do the same for the World Cup. That's coming in and other opportunities.
Because frankly, in Anthony talked about simplicity of the home screen. The simplicity and delight of us getting people to what they wanna watch, especially their favorite sporting experiences through our destinations like the sport zone. I think we're really just scratching the surface of what that can be. And as a sports fan myself, you see in Major League Baseball how your team travels from site to site, and we or from excuse me. From app to app. Throughout the very same week. And, of course, the sports experience we create make that really simple.
So as a long-term vision of having a time where you can watch them all in one place, I think that is a vision every sports fan would like. You know well the realities of these rights fees and how they are ending up behind paywalls. But I will say, regardless of how it settles out, experience for watching sports will be on Roku, and we're really refining the way to help sports fans operate, in a confusing landscape. Dan, do you wanna take the back half?
Dan Jedda: Yeah. Thanks, Charlie. The short answer to your question is no. It's not a timing issue. With revenue associated with Fox and ESPN. We would have, you know, you back out any partner launch, you back out M&E, still growing incredibly fast, faster than the market. It's not a timing issue. And faster than advertising. Right.
Michael Nathanson: Yes. Okay. Thanks.
Anthony Wood: Yeah. And I'll just add, like, on the sports thing, I mean, Charlie answered it, but just to be super clear, like, it's a big opportunity for us. The fact that sports is and will continue to be fragmented across a lot of apps is a big opportunity for us with products like our SportZone to create a simple experience that allows viewers to find the sports they wanna watch. So it's an area that we're focused on. It's also an opportunity for marketing and promotions and advertising and sponsorships. As well.
Michael Nathanson: Hey. Thanks, guys.
Operator: Our next question comes from Vasily Karasyov with Cannonball Research.
Vasily Karasyov: Thank you. Good afternoon. Dan, I have a question for you. Now that we have had a few quarters in a row of very, you know, steady growth in platform revenue. And you just outlined you and Anthony and Charlie outlined the growth drivers for the years ahead. Can you help us think in terms of ARPU growth given where your user base is growing and the platform revenue growth? Is that if I were to think sort of in the ballpark terms, would ARPU grow at double the rate of the platform revenue growth in the, you know, in the midterm just if you could help us dimensionalize that trajectory would be really great.
Dan Jedda: Thanks for the question, Vasily. It is it's a good question. And, you know, I would say several years ago, I know we had an ARPU when we actually had that KLM. Is roughly flat. And we talked a lot of a lot of mix. I will say that in The US and globally, platform revenue continues to grow. That's, you know, we've talked about the overall platform revenue growth of 17%. The guide is at 15%. We are growing, our streaming households as well. We've grown them well internationally. We've grown them in The US. They continue to grow in The US. But overall, our is growing. I expect that to continue.
I think I mentioned in a prior call at some point, like, I truly believe our ARPU can get significantly higher for with all of our monetization initiatives. And while we will grow streaming households, like, we I strongly believe we'll hit 100 million streaming households in 2026. Our ARPU is gonna grow faster because our platform revenue initiatives simply going to grow faster. So it is a good story. On both US and international ARPU.
Vasily Karasyov: I'm sorry. You said faster than the active accounts growth? Or than the platform revenue growth?
Dan Jedda: It's gonna depend on the country. Will say that The US. The US is we're we're going both the numerator and the denominator of those quite of that of that equation. But because of the platform revenue growth is, because of our, our constant yeah. As we said, we're gonna continue to grow double digits and, again, 17% growth. In Q3 is very hard, you know, is very steady. Like, I do believe our will grow. And I think the more important point is I think our ARPU can go up significantly higher from where it is per account per streaming household today. Again, we're gonna continue to grow streaming households. But ARPU is gonna grow fast.
Vasily Karasyov: Very helpful. Thank you.
Operator: Our next question comes from James Heaney with Jefferies.
James Heaney: Great. Thank you guys for taking the question. I know it's been under pressure for a while now, but is there anything you can say about M&E vertical this quarter and in Q4? And separately, how do you think about the consolidation in the media industry and how that potentially could influence your position as a distribution partner for streamers? And then I had a follow-up.
Anthony Wood: Hey, James. This is Anthony. I'll take the second question on consolidation first and then turn it over to Charlie for to discuss M&E. You know, I guess I would just say that as we've said many times in The US, more than half of broadband households use a Roku to watch television. That means half of all streaming TV streaming happens on our platform. That, of course, means that we're an essential partner to every content owner and streaming service. And, you know, I don't you know, however whatever consolidation happens in the industry, that's not gonna that's not gonna change. I mean, gonna remain an essential partner. The streaming sector is robust. It's growing.
It continues to grow nicely, and I think that's, you know, that's just creating a lot of opportunities for us to continue to grow our business. Oh, and then on M&E, Charlie?
Charlie Collier: Sure. Yeah. I think that's right. You know, it is easy to see, obviously, that the M&E is still figuring itself out as a whole. I'd say how many companies are still, you know, focused on profitability. And as such, there remain some, you know, general challenges in CTV. Our advertising business is doing remarkably well despite some of those headwinds. We got some benefit from the new launches. This quarter, but the industry remains pressured. So inside M&E for us, there is quite a bit of good news. The theatrical side of M&E as a category is really starting to perform.
And we're seeing those advertisers invest in the benefits of some of our unique units, like our custom home screen takeovers and the video in our marquee unit. Which has been very popular. I'll say, James, you know, we have been focused on both diversifying and growing our platform business. And today, we're less reliant on any one vertical than we've ever been. Including M&E. And because we're so big, we're in half The US broadband households. We do remain the best place to spend on M&E to attract and engage and retain subscribers and to measure ROI. So we're not relying on M&E to drive our growth improvement in the industry, at any time will represent upside for us.
And when and if the segment really rebounds, it'll be a tailwind for us because we're really good at building the M&E business, we I believe we're the best place for an M&E advertiser to invest their dollars.
James Heaney: Great. And then maybe just a quick follow-up on just overall macro environment in the quarter and so far in Q4, like anything stand out that's been particularly strong or weak? Anything on to call out there, maybe for Dan.
Dan Jedda: I think, well, maybe Charlie wants to take the macro environment as it relates to ads, and then I can talk a little bit after Charlie. Charlie, you wanna?
Charlie Collier: Great. Sure. Thanks, Dan. You know, James, I like what we're seeing trend-wise. I really do. And Roku has unique attributes that allow us to take advantage of today's ads trends. I think that's equally important. One of them is you got to remember that as a platform, Roku, and I said it earlier, is a lead into all of television, and that comes with some real advantages in this market. Also, we've been diversifying demand across our platform. And our streaming service, and we've built programmatic excellence in and numerous third-party relationships that allow us to meet our clients, as I say, you know, wherever they wish to transact.
So Roku's seen the benefit of the market as a platform and as a publisher. If you think about it. When I say publisher, I mean owner and operator of the Roku channel, which look at the Nielsen Gauge, we're a top five streaming service. And on our own platform, we're number two in terms of engagement in The US. So as a platform, the value of our home screen engagement has allowed us to benefit from our ad product evolution among other things. An example of this is, like I said, our marquee ad unit, which is now very popular, and it's now a video unit. That's been great.
And in terms of diversifying demand and the programmatic excellence I just mentioned, we're seeing positive impact of both heading into fourth quarter and moving forward. Actually, Dan mentioned our platform revenue grew 17% year on year. That's due in part to the strong performance in video advertising. And, of course, that means we're growing faster than The US OTT and digital ad marketplaces. And then if you look at that ex-political and ex-friendly, third-quarter platform revenue grew 19% year on year. So to answer your question, James, the trends are positive, and Roku is really uniquely positioned as both a platform and a leading streaming service to compound the value of these market trends. Dan, did you wanna?
Dan Jedda: The only thing I would add I think on upfront pricing, Charlie, like, I think I'll just say that the one trend going into Q4 is we're pretty happy with our upfront in terms of pricing. Maybe you wanna touch base on that as a trend because I think that is a change.
Charlie Collier: Yes. So you're right. With October comes the new upfront schedule starting to run, not only do we have a really powerful upfront, but, you know, we saw pricing stability. And if you want me to go deeper on pricing, it's really interesting how pricing affects different services in different ways. And the headline I suppose I'd leave with Dan is that we have multiple levers to pull, and that's consistent with what I just said. And on pricing, we don't have a supply issue, so we can price up and down a demand curve and use that to our advantage.
So we're doing really well both in volume, and I think our pricing approach really is distinct in this market.
Dan Jedda: Yes. Exactly. So pricing is positive for us in Q4, at least as part of our upfronts, which is different than last upfront. So that's a good positive trend for us. In terms of other trends, like, our guidance that we provided, which was roughly 15% platform, and, again, backing out political and friendly, it's above the Q3 growth rate of 19%. I, you know, it actually implies 20% growth on our next political ex-friendly basis. Just would imply that a lot of the trends that we're seeing in Q3, we expect to continue. And it's, again, it's it is advertising.
For sure on everything Charlie just said, but it's also our subscriptions business, which is performing incredibly strong, including our premium subscription business, which is growing very well.
James Heaney: Thank you. Very thorough.
Operator: Our next question comes from Ross Waldahl with Cleveland Research Company.
Ross Waldahl: Hey, thanks for the afternoon the question. I just wanted to ask a little more detail on the Amazon DSP partnership. I know it's early days, but you talk to what the rollout looks like from here? Any customer feedback and whether this could be a material driver going into either Q4 or '26?
Anthony Wood: Hey, Ross. This is Anthony. I'll start. I don't know if Charlie will have anything to add, but I'll just say that yeah, you meant as you said, it's still early on the Amazon DSP. I mean, it's, you know, it's live now, but it's just basically gone live recently. So I would say there's strong there's strong interest from customers. I mean, you know, there's a lot of customers that are very interested in using the Amazon DSP. And, we're obviously a key partner for them in that. There's a lot of customers obviously that wanna use TradeDesks, but also these days also Amazon. So I'd say there's strong there's strong customer interest.
You know, the signs we're seeing so far are good. But it's just a little early to say. I don't know. Beyond that, Charlie, did you is there anything else?
Charlie Collier: Yeah. I think you did. You mentioned Trade Desk. You saw in the Trade Desk integration last year, it takes some time to roll out. But I like what we're seeing so far. We're seeing clients ask us the right questions about how to use it. We know there's a general push towards outcomes-based buying and measurement of performance and our strategy to be everywhere, including now Amazon at depth. Has us in a good position, and I do think it'll ramp well into 2026.
Dan Jedda: And then I don't know, Dan, do you wanna say anything on Q4 2026?
Dan Jedda: No. I guess I would just say that, you know, I'm going to reiterate both Anthony and Charlie's point is, you know, we just turned it on first of this month here. We're in very, very early days. We like what we see. It is contemplated in our Q4 guide. And we're going to have a lot more visibility as we exit the year and go into 2026, and we'll update you at that point in time.
Ross Waldahl: That's great. One other question on the self-serve business. Do you think you have the right tech and partnerships in place to really scale this? Like, are all the pieces in place, or are there, like, additional capabilities or partnerships that you need to add? And I think just ultimately, like, where can this business go long term?
Anthony Wood: So this is Anthony. I'll start and then see if has anything to add. I mean, I think that I mean, it's a so the short answer is yes. We have everything we need. We got the partnerships we need. But it's also early in the evolution of this business. So we'll be, you know, we're still investing in R&D. We're still building more partnerships. I mean, we have our own self-serve platform called AdManager, but there are other businesses that are doing something similar. And we're working with those with those companies as well. We're not we're not wedded to our just using our own platform for this to serve this market.
I mean, it's a big market, and it's a large market. It's a market that's multibillion dollars. It's as large as it's almost as large as the, you know, the traditional brand advertising business. So it's a big business. And, I mean, the other thing we're really focused on is integrating generative AI into our platform to do an even better job on targeting and performance-based marketing. So, you know, I think that there's nothing there's nothing that we're missing, but there's a lot more evolution and growth that's to come. But, Charlie, I don't know.
Charlie Collier: Yeah. That's right. We have everything we need, and we're going deeper. I mean, so funny. We talk about deepening these integrations. We continue to do the same with our own products and look for ways to refine and prove more and more performant. One thing that's unique about our product, obviously, is that, you know, these small and medium-sized businesses will now have access to authenticated premium content. And so when they see that they're able to, you know, we said in the early days, democratize television, and access our platform, I think we have a really compelling and differentiated offering. And, of course, because we have the scale that we do, we're gonna perform really well.
And what's great about these platforms which is different than our traditional business, is that when we prove ROI, people will leave it, you know, leave it on as long as there's a positive return. So I like these I like how many new advertisers are coming to the platform. And I think there's a lot of opportunity ahead that we're poised for.
Anthony Wood: Yeah. And I'll just add. I mean, I think it's kinda it's probably evident, self-evident, but you know, this is a large business that exists in, like, it's what caused the growth of social media platforms. In terms of their, you know, their advertising business. What's unlocked it for platforms like for Roku is basically generative AI that allows a business to create a video ad, you know, for free, basically, with a single click of a button producing a very high-quality high production value, professional-looking video ad. So that now makes a video platform like Roku as easy to use as a social media platform for performance marketing.
Ross Waldahl: Thanks, guys.
Operator: Our next question comes from Robert Kulbright with Evercore ISI.
Robert Kulbright: Great. Thank you very much. Two questions, please. First, on performance. Wanted to ask maybe about some of the advantages that you may have to deliver on that as a platform player, your ability to provide feedback loops or certain types of consumer interactions with ads. On your platform. And then also wanted to ask, you know, of related to that as well, your ability or your interest level in perhaps launching new pricing models like a cost per action or something along those lines. And then second, I just wanted to quickly touch on the streaming hours. It looked like you had a bit of deceleration there.
Wanted to just ask if there were any comp factors or anything else to be aware of on that? Thank you.
Anthony Wood: Okay. So just on performance, let me start, and maybe Dan will have someone say. So, you know, I think, you know, the advantages of our platform include extremely large scale, a lot of first-party data, and a very advanced technology platform, including a lot of AI, you know? So like, these are the things. These are the key the key, and then a user experience that has a lot of places to promote and place ads as well as video ads. So, I mean, these are the things that are sort of the base capabilities that we build our performance on top of.
So and I think, you know, we're unique in our scale and the amount of data that we have and you know, we have a we have a world-class, I would say, probably the best TV engineering team in the world. So, you know, we have all the pieces, and we're putting them together. In terms of our interest in new pricing models, I don't know, Charlie, did you wanna take that one?
Charlie Collier: Well, the answer is, you were asking about CPA. Think that performance is in the eye of the beholder. Right? You have some large pack goods company who just wanna see incremental reach, and then you've got some, you know, other businesses who have a very specific KPI. And we can help them reach all of them. You know, it's interesting. When I step back, I think about the use cases we can meet, and there are many. But, ultimately, they all sort of fit into one of three buckets. Which is planning or activation or measurement.
And we've got tools and we have Roku Data Cloud and all sorts of other ways to help people maximize the efficacy of their media across the largest streaming platform in America. And so the answer to your question is directionally, absolutely. We will meet people not just where they wanna transact, but we'll start to prove ROI in deeper and deeper ways. And then our platform in terms of the ads manager platform will really make it easy for them to do so and continue to see a return on their investment. In terms of streaming hours, do mean?
Dan Jedda: Yeah. I'll take that one. On streaming hours, you know, it was a slight result from prior quarters. But really, there's nothing there from a monetization standpoint. What you're just seeing is these numbers are just getting very large. And so, you know, we still are growing well into the double digits in hours. I think it's also really important to note that here, see streaming hours and monetizable hours, which is something I look at across the platform is actually growing very well. And we're actually gaining traction not in terms of acceleration of percentage hours, but any the TRC continues to be the number two app on our platform by streaming hours.
And it's actually, you know, it's gaining ground from other apps in that perspective. So nothing on streaming hours is concerning in any way. It's just very, very large numbers. You know, hundreds of billions of hours that are being streamed here. So, the decel from quarter on quarter is nothing that is of any concern in fact, like I said, monetizable hours, especially our premium subscription growth and our TRC growth has been it continues to do very well, and it's very strong.
Charlie Collier: Yeah. It's ahead of ad monetization. It is a nonissue. I think it's actually we have what we need to come to market and we're maximizing that inventory opportunity.
Robert Kulbright: Got it. Thank you very much.
Operator: Our next question comes from Alan Gould with Loop Capital.
Alan Gould: Thanks for taking the question. I've got two, please. First, on the Amazon, just one quick follow-up. What are the key features and functionality that Amazon provides with the other DSP? Don't in addition to diversification. It's a key issue there. The frequency capping. And then for Dan, when I look at 3Q and 4Q platform, growth, and you back out friendly and political, if you were to also back out 606, would the numbers be north of 20%? And would 4Q still be growing quicker than 3Q? Thank you.
Anthony Wood: Hey, Alan. Charlie will take your first question, and then Dan will take your second.
Charlie Collier: Great. Thanks, Alan, for the question. Look, the easiest way to talk about it probably is that we're powering audience addressability, frequency management, and closed-loop measurement. As I said, we actually, again, tend not to advise a client on which DSP to use. We actually are everywhere they wanna be, and we're very proud of this Amazon deal. But at the highest level, that's what we're working on with that DSP integration. Dan, you wanna start?
Dan Jedda: To your question, sorry. I'll take the second part of your question. You're right. It would be slightly north of 20%. Actually, it's slightly north of 20% just ex-six of ex-political and friendly. For Q4, it would be closer to 21% on an ex-606 basis. And yes, you would still see that slight step up on a 606 basis. And, again, that's 606 just to be clear, that's 606 from 2024 we have not booked any 606, in 2025 nor do I expect to.
Anthony Wood: Thanks, Sam.
Operator: That concludes today's question and answer session. I'd like to turn the call back to Anthony Wood for closing remarks.
Anthony Wood: Alright. Well, I wanna say thank you to our employees, customers, advertisers, and content partners. And thank you for listening.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.