Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Thursday, February 12, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

  • Founder and Chief Executive Officer — Anthony Wood
  • Chief Financial Officer and Chief Operating Officer — Dan Jedda
  • President, Roku Media — Charlie Collier
  • President, Devices — Mustafa Ozgen
  • Vice President, Investor Relations — Conrad Grodd

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Platform revenue grew 18% for full year 2025, and in Q4 2025, platform revenue surpassed $1.2 billion.
  • Adjusted EBITDA -- $169 million in the fourth quarter and $421 million for the year, representing a margin expansion of 255 basis points.
  • Net Income -- Reached $80 million in the fourth quarter, a company record.
  • Free Cash Flow -- $484 million for the year, increasing over 100% year over year.
  • Share Buyback -- Repurchased $150 million of stock during the year, maintaining near 0% dilution in the fourth quarter.
  • Q1 2026 Platform Revenue Outlook -- Expected to grow more than 21%.
  • Full-Year 2026 Platform Revenue Guidance -- Projected growth of 18%.
  • 2026 Adjusted EBITDA Guidance -- $635 million, implying over 50% year-over-year growth and margin expansion to 11.6%.
  • Deferred Tax Assets -- Over $1 billion on the balance sheet, supporting low cash taxes for years.
  • Streaming Household Scale -- On track to surpass 100 million streaming households in the year.
  • Platform Gross Margin Outlook -- Management expects annual platform gross margins between 51%-52%, with limited variability throughout the year.
  • OEM Distribution Expansion -- Secured expanded agreements with major partners TCL and Hisense for Roku TV distribution.
  • First-Party TV Strategy -- Production shift to Mexico is intended to reduce costs and boost sales.
  • Advertising Partnerships -- Added dozens of ad tech partners, including integration with leading DSPs such as Amazon and The Trade Desk.
  • International Scale and Monetization -- Achieved strong scale in Mexico and Canada, with ARPU gains in Canada and increased focus on monetization in both markets; Mexico’s scale is approaching U.S. levels, though its digital ad market is less mature.
  • Owned and Operated Subscriptions -- Howdy and Friendly subscriber growth cited as "continuing to grow nicely"; impact expected to be incremental to overall revenue.
  • Political Ad Revenue -- Management noted high visibility for Q1 but less for the second half due to timing of political ad spend.
  • Self-Serve Ad Platform (Ads Manager) -- Ads Manager has enabled access to small and medium-sized business advertisers, supported by AI-driven performance tools.
  • Operating Expense Growth -- Increased 3% in 2025; management targets mid-single-digit OpEx growth going forward, aided by declining SBC (stock-based compensation).
  • Capital Return Plan -- $50 million remains on the share buyback authorization at year-end.

SUMMARY

Management communicated a clear multiyear strategic focus on sustaining platform revenue growth, expanding global scale, and monetization innovation, supported by internally developed technology and targeted capital investments. Integration of AI across the platform is unlocking new advertising products and performance measurement capabilities, particularly benefitting the Ads Manager offering and attracting a broader range of advertisers. Leadership expects international markets, especially Mexico and Canada, to represent a larger share of platform revenue as advertising and subscriptions mature globally. Planned changes to the home screen and new ad units are positioned as drivers for additional engagement and revenue diversification beyond media and entertainment. The company reiterated its long-term ambition of surpassing $1 billion in free cash flow by 2028, underpinned by substantial deferred tax assets that limit future cash tax obligations.

  • Dan Jedda pointed to "a path to over $1 billion in free cash flow by 2028, if not sooner," tied to continued margin improvement and disciplined CapEx.
  • Platform monetization is increasingly diversified, with cross-segment subscription launches, enhanced international ARPU, and acceleration in both third-party and proprietary ad solutions.
  • Charlie Collier referenced ongoing "testing several variations of home screen design," with intent to drive both greater user engagement and incremental advertising revenue.
  • The company indicated upcoming disclosure of granular margin data across platform activities in future quarters to provide greater transparency into unit economics.

INDUSTRY GLOSSARY

  • DSP (Demand-Side Platform): Technology platform that enables advertisers to buy digital advertising inventory across multiple sources and optimize campaigns in real time.
  • FAST (Free Ad-Supported Streaming Television): Streaming channels providing ad-supported video content delivered over the internet, accessible without a paid subscription.
  • M&E (Media & Entertainment): Advertising and content activity focused on traditional TV, film, and streaming entertainment sectors.
  • ARPU (Average Revenue Per User): Calculated revenue generated per active account or user, a key metric in evaluating monetization efficiency across geographies or products.
  • Ads Manager: Roku’s proprietary self-serve advertising tool, designed for small and medium-sized business (SMB) advertisers, offering campaign creation, management, and performance analytics directly integrated into the Roku platform.
  • ROAS (Return on Ad Spend): A performance metric evaluating the revenue generated for every dollar spent on advertising.
  • SBC (Stock-Based Compensation): Non-cash expense granting company equity to employees; closely monitored for its impact on share dilution and operating expense trends.

Full Conference Call Transcript

Operator: Hello. And thank you for standing by. Welcome to Roku, Inc. Fourth Quarter 2025 Earnings Conference Call. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. We ask that you limit yourself to one question only. I would now like to turn the call over to Conrad Grodd, Vice President of Investor Relations. Sir? You may begin.

Conrad Grodd: Good afternoon.

Conrad Grodd: Welcome to Roku, Inc.’s fourth quarter and year-end 2025 earnings call. Joining us on today's call are Anthony Wood, Roku, Inc.’s Founder and CEO; Dan Jedda, our CFO and COO; Charlie Collier, President, Roku Media; and Mustafa Ozgen, President, Devices. On this call, we will make forward-looking statements that are subject to risks and uncertainties. Please refer to our shareholder letter and periodic SEC filings for risk factors that could cause our actual results to differ materially from these forward-looking statements. We will also present GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most comparable GAAP financial measures are provided in our shareholder letter.

Unless otherwise stated, all comparisons will be against our results for the comparable 2024 period. With that, operator, our first question, please.

Operator: Thank you. To ask a question, please press 1 on your telephone, then wait for your name to be announced. To withdraw your question, please press 11 again. We ask that you limit yourself to one question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Shyam Vasant Patil with Susquehanna. Your line is open.

Shyam Vasant Patil: Hey, guys. Congrats on the strong 2025 and 2026 outlook. I have a couple of questions. The first one, can you help us bridge the 1Q revenue outlook of over 21% growth to the full-year outlook of about 18% growth? Then I have a follow-up question. Hey, Shyam. This is Anthony. I will kick this off and then turn it over to Dan. He can talk more about the outlook. So let me just start by taking a minute to reflect on our execution over the past several years. In 2023, our priority was to rightsize our cost structure and reach adjusted EBITDA breakeven in 2024, and we achieved that goal a full year ahead of schedule.

And this early progress positioned us to invest further in our platform monetization initiatives. As a result, in advertising, we deepened integration with leading demand-side platforms and scaled our measurement and performance capabilities. In subscriptions, Q4 was our biggest quarter ever for premium subscription net adds. We expect to add more tier-one partners and roll out bundles this year. And we plan to expand Howdy beyond Roku and take it to additional platforms. So these initiatives are paying off for us. We grew platform revenue 18% in 2025, and we accomplished all of this while growing our streaming households both in the U.S. and globally.

Looking ahead to 2026 and beyond, we are confident in our ability to sustain double-digit platform revenue growth while continuing to grow profitability. So with that introduction, let me turn it over to Dan. Thanks, Anthony, and thanks for the question. Let me just add a little bit to what Anthony said. Exactly two years ago, when we were entering 2024, we said that now that we right-sized our cost structure, we would relentlessly focus on growing our platform revenue, improving our monetization, and driving profitability, including free cash flow. In Q4, we grew platform revenue over 18%, surpassing $1.2 billion. We achieved adjusted EBITDA of $169 million and net income of $80 million. All were records for us.

For the full year, we also grew our platform revenue 18%, achieved adjusted EBITDA of $421 million, which represents a margin expansion of 255 basis points. And we generated free cash flow of $484 million, also a record for us and over 100% year-over-year growth. With our strong free cash flow, we purchased $150 million of Roku, Inc. stock through our share buyback program and achieved near 0% dilution for Q4, the lowest dilution we have ever reported. This year, our outlook for platform revenue growth is more than 21% in Q1 and 18% for the full year, as we continue to execute on our monetization initiatives.

Our full-year adjusted EBITDA guidance of $635 million represents over 50% year-over-year growth and margin expansion of 267 basis points to 11.6%.

Dan Jedda: I expect that free cash flow will again be above adjusted EBITDA as we remain CapEx light. And it is also worth noting that we have over $1 billion of a deferred tax asset, which will keep our cash taxes low for many years. I see our free cash flow continuing to be strong and outpacing EBITDA beyond this year. In fact, I see a path to over $1 billion in free cash flow by 2028, if not sooner, which will be a significant milestone for us. We have incredibly strong momentum going into 2026, and our focus is on sustaining growth.

So to get to your question specifically on Q1 versus full year, a few factors are shaping our Q1 outlook. First, Q1 last year was our easiest comp at just under 17% year over year. Second, Q1 of this year includes the full benefit of Friendly. As you recall, we closed that acquisition in Q2 of last year. And I guess finally, we have stronger visibility into Q1 versus the second half of the year. So as we gain better visibility into political and into H2, we will provide updated guidance. Thank you for all that color. It was really helpful. I did have a quick follow-up.

Can you comment on your retail distribution strategy in 2026 given that Walmart is switching its house TV to Vizio’s operating system? Hey, Shyam. This is Anthony again. Yep. Let me take that. So, as Walmart focuses more on VizioOS for their house brand, we are focused on broadening and diversifying our retail distribution. We remain extremely well positioned in the market. With hundreds of millions of dollars a year of investment in distribution, we have flexibility in how we invest this budget. We will continue to optimize this investment across both our retail and our OEM partners.

We are already widely distributed, obviously, including at Walmart, and I will share a few examples of how we are expanding our distribution. At Best Buy, we expanded with the addition of Pioneer Roku TVs, which we recently launched. At Target, we expanded with hero Roku-made TVs, and they are doing extremely well. At regional and national retailers like Amazon, we have expanded our presence. And in addition to retailers, TV OEMs are key strategic partners for us. And we have expanded our licensing and distribution agreements with two of our largest and longest-term Roku TV partners, TCL and Hisense, as well as several others.

We also have first-party TVs, and for our first-party TVs, we expect sales to increase after shifting our TV production to Mexico, which will help us lower our cost. And then, of course, we expect streaming players to continue to be a meaningful contributor to overall Roku OS distribution. These are some of the things we are doing in 2026. This work has started, but we expect to see the impact predominantly in the second half of the year, as these cycles take time to scale.

So in addition to this work that I just outlined, I also want to take a second and just talk about some of the strategic assets that we have that create a strong foundational competitive advantage for Roku, Inc. that are really important. One is, of course, the Roku brand, a brand that consumers love and ask for by name, and it has resulted in Roku, Inc. being used in over half of U.S. broadband households. Nearly half of all TV streaming in the U.S. happens on the Roku, Inc. platform. And, importantly, we are best in class at monetization, which gives us a lot of flexibility to invest in building scale and distribution.

We are also globally scaled, and we have successful Roku TV partnerships with dozens of TV partners, factories, and retailers. And then, one of the main ways we have achieved our success is with the Roku OS, a purpose-built operating system designed specifically for TV. It is the only purpose-built OS for TV. It has a lot of intrinsic advantages. One of those is the lowest BOM cost in the industry, and one of the reasons for that is we have the lowest memory footprint in the industry. And as everyone knows, memory prices are going up right now.

And so as memory prices continue to go up, that is a cost advantage that accrues to us and keeps growing as memory prices increase. So the number of Roku TV units sold may go up or down from quarter to quarter, but overall, we expect to continue to grow our scale of streaming households in the U.S. and globally, and we are on track to surpass 100 million streaming households this year.

Shyam Vasant Patil: Great. Thank you, Anthony. Thank you, Dan.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Cory Carpenter with JPMorgan. Your line is open.

Cory Carpenter: Hey, good afternoon. So generative video, the advancements have really caught investors' attention of late. You saw Sora yesterday, Google Genie, both recent examples. I think one interpretation from this we are hearing is that it is likely to significantly increase the amount of content available, perhaps shift time spent more to short-form videos. So, Anthony, the question for you really is, I thought it would be helpful to hear how do you think AI could impact the streaming landscape and what do you think it means for Roku, Inc.?

Cory Carpenter: Thank you.

Anthony Wood: Sure. Yeah. I mean, personally, I am super excited about AI and how it is going to impact content, content specifically. I think to answer your—let me, I will answer your question directly, and then let me talk about some of the kind of bigger-picture ways that we think about AI generally. So just in terms of content, it is very clear to me that AI is going to reduce the cost of content significantly over time, including long-form content. And as long-form content costs come down, that is going to grow engagement on our platform. And we monetize engagement. That is basically our business model, monetizing engagement. So I view it as all very positive for our business.

But if I just take it a level up and think about how we think about AI generally and its impact on our business, let me start by saying that I think AI is a significant opportunity for Roku, Inc. We view it as a powerful tailwind to our business. It is not a disrupter for us. We are integrating it across our entire technology stack. We are applying AI across our platform to improve discovery, increase engagement, and unlock major new monetization opportunities. Let me just talk about a few of those. On the viewer experience, AI helps personalize and simplify how people find what to watch, which increases engagement.

For example, on our content row, we are improving recommendations and introducing new features that surface trending content. On our content details page, we are using AI to generate “why watch” summaries to go beyond just plot overviews. We have updated Roku Voice recently. Now viewers can ask more conversational entertainment-based questions and get contextual answers directly on their TV screen. So that is just some examples in the viewer experience. But I would say also, equally important for us is on the advertising side, if not more important. AI is a major driver of opportunity on the advertising side of our business. AI helps us build the most performant connected TV ad platform.

AI is opening the entire new market of small and medium-sized businesses, which we are addressing with Ads Manager. I mean, that is a new segment in the ad business that was not accessible to TV platforms before but is now because of AI. AI allows products like Ads Manager to exist. And AI tools make it easier for advertisers to create high-quality video ads. And the easier it is to create video ads, the larger the number of advertisers that can advertise on a TV platform. And then AI is automating workflows that were previously manual, such as reviewing and adapting ad formats. Then finally, we are using AI internally across the company to drive operational efficiency and productivity.

So overall, AI strengthens our platform. It improves monetization. It enhances the performance of our business overall.

Cory Carpenter: Great. Thank you. Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of Michael C. Morris with Guggenheim Securities. Your line is open.

Michael C. Morris: Thank you. Good afternoon. Wanted to ask about how the third-party ad demand that you have with Amazon is impacting the business so far and how you expect it to progress throughout the year. Is it additive to growth yet, or has it cannibalized revenue in any way as it has come online? And then if I could just briefly on the platform gross margin, you provided the 51% to 52% range for 2026, which is very helpful. What are you expecting for the first quarter, and how much variability do you expect in this, quarter to quarter, throughout the year? Thank you.

Anthony Wood: Hey, Michael. Charlie will take your first question on third-party ad demand partnerships. Great. Thanks, Anthony.

Charlie Collier: Hey, Michael. Look. Just stepping back for a second. Our strategy has been to be open and interoperable and be deeply integrated with all the DSPs, so really that we can meet clients anywhere they want to transact. So the Amazon partnership was natural in that context. And, really, overall, we strive to be the most performant CTV ad platform in the industry. So I would say to your question of impact this year, it is early innings. Amazon is working hard to bring new clients over to its DSP. And the combination of our TV OS footprints makes an impressive offering.

To put it in context, over the last year, we have added dozens of ad tech partners, Michael, from the Yahoo DSP to AppLovin and URL Media, to Magnite. And then once they are onboarded, just like with Amazon, we begin deepening our relationships with each of them and they start to ramp, and that will continue. And that is the case for all of them. So our goal with all these partnerships is to drive greater outcomes and greater performance for our marketing partners. And we are bullish about our position, not just as the open interoperable partner in a marketplace with so many walled gardens, but the ability of this to grow as we deepen the integrations.

Dan, do you want to—

Dan Jedda: Yeah. Let me just add that in terms of how it will affect the business this year, I will add to that, and then I will answer your gross margin question. As Charlie said, the ramp of Amazon DSP will take time. Obviously, we are fully integrated. We are ramping. It is going as expected. And I think across all the DSPs, we feel very good about how we are performing. On that specific to Amazon, as the Amazon DSP grows and it is a success, which we think it will be, we will be successful along with it. It does take time for these to ramp, though.

And we do not obviously break it out, but again, it is tracking as we would expect, and we expect it to be more of a contribution over time. With respect to platform gross margins, the guide was 51% to 52% for the full year of 2025. We did end at 52%. I will say that I do not expect a lot of variability from quarter to quarter. It does depend to some extent on the mix of our different activities in the platform business. We saw some stabilization in M&E in Q4, which was great, which helped margins. We are tracking that stability is happening in Q1 as well. We will see how M&E goes forward.

We are liking what we see there. But, specifically, I do not expect a lot of variability. I will say again, we have a lot of mix, different activities growing at different rates, and it is not lost on me and us that we do not break out a lot of detail. One thing we are working on is some more detail on our different activities and giving you a bit more color into the margin profile in the different activities in platform. And I hope to share some more data on that next quarter. It is something we are working on.

Michael C. Morris: Thank you. It is very helpful.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Jason Stuart Helfstein with Oppenheimer. Your line is open.

Jason Stuart Helfstein: So in the prepared remarks, alluded to the success you are seeing with the international viewership and how it is early days of monetization. I guess, is there a way that as we think about what the opportunity is relative to the platform business today, back in the early days of Netflix, we would be like, oh, international is, you know, X times potentially bigger than the U.S. opportunity. And then I guess just you want to take a step back, where does that fit in with where you think the kind of biggest opportunity is in the business? You know?

So comparing, let us say, the international revenue opportunity, advertising, to other opportunities that you are looking at right now. Thank you. Hey, Jason. Dan will take that question.

Dan Jedda: Yeah. So we have talked about international in our focus countries, and we are at different stages depending on the country. So let me just give you some examples of this. For example, in Canada and in Mexico, we actually have scale, and we are starting to monetize that more. In Brazil and Mexico, we have incredible scale. And we are really starting to focus on the monetization side of our strategy. In Brazil, where the ad market is not quite there yet, we are still building scale. That is a little bit farther off in terms of focus on the monetization.

So we are very focused on building scale and making great progress into Brazil and the rest of Latin America. We are making progress in the UK. But the monetization is really starting to take hold in Mexico and Canada for slightly different reasons. In Canada, the market is very good from a digital perspective. Our ARPU is actually quite strong in Canada. We are growing our streaming households and our ARPU along with it. And so we like what we see there. In Mexico, the ad market has not shifted to digital like it has in the U.S., although we expect that to happen over time. So we have incredible scale in Mexico.

It actually rivals the U.S. in terms of scale in Mexico, which is great. We are really starting to focus on monetization of subscriptions and advertising across all our international locations. So, for example, we launched premium subscriptions in Mexico recently, and we will likely launch more countries over time. So we are very focused not just on advertising, but on leveraging our amazing subscription business in our international countries, and we like what we see there. That is also an opportunity. And over time, I do believe that international will become a larger percent of our overall platform revenue. It is still pretty early on. So there is a lot of room to grow in these international locations.

And how would you rank that relative to the opportunities you are looking at now for growth?

Jason Stuart Helfstein: Like, is it the number one? You mean relative to the U.S.?

Dan Jedda: No. Relative to U.S. or just other things you are looking at?

Jason Stuart Helfstein: From here.

Dan Jedda: The international is an incredible opportunity for us. I mean, like I said, subscriptions alone is a big opportunity. The Roku Channel is doing very well in our international locations. We are having engagement that is growing very well. In Brazil, where we have scale, we recently launched FAST, which is doing very well. So I think it is a big opportunity. The question is how do the digital ad markets migrate over? And that is a country-by-country specific situation. But subscriptions, including, for example, Howdy, can grow really well in these locations, and that is a really big opportunity for us.

Jason Stuart Helfstein: Thank you.

Operator: Please standby for our next question. Our next question comes from the line of Steven Lee Cahall with Wells Fargo. Your line is open.

Steven Lee Cahall: Thanks. Dan, just following up on the platform guide in the first quarter. I do not know how much kind of political or Friendly is in both the current Q1 and the prior Q1, but it seems like there is a little bit of a deceleration in kind of same-store sales in platform from Q4 to Q1, and the comp is slightly easier. Wanted to know if that is conservatism. Is there some natural deceleration because you have gotten to such big scale? Or am I doing the math wrong there? And then also, if we just think about your revenue and platform outlook for 2026, just curious how you are thinking about the contribution of political dollars in there.

I think you did about $90 million in 2024. That kind of came out of nowhere. So wondering what you are thinking for 2026.

Steven Lee Cahall: Thanks. Yeah.

Dan Jedda: Thanks for the question, Steven. To the point, first of all, Q1 does not have a lot of political in it in general. So I would not say that is an impact for Q1, although it will be impactful in H2. Yes, Friendly is impactful for Q1, and that does add a couple of points. With respect to Q1 versus H2 or Q1 versus the full year, to the answer I gave in my first question, we just have a lot more visibility into Q1. And so we are waiting to see how political shapes up, how the spending shapes up.

I do believe that if the market is similar in the midterms versus the general, we will do well in that market. Charlie and team have built out a very strong political sales funnel. We are very good at targeting. We are a great platform on which to advertise. So, again, it is just a question of having more visibility right now in Q1 versus H2 and how political will transpire. And we will update you as we go forward. So, yes, I would agree with the comment that the back half is a little bit more conservative just given how much visibility we have into Q1.

Steven Lee Cahall: Thanks. Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of Laura Anne Martin with Needham. Hey, congratulations on really great numbers. I want to follow up on one of the Gen AI questions asked earlier. So Netflix is telling us that they are going to put short-form video and user-generated content on their platform because they think engagement is what they are solving for. Anthony, you just said something similar in an earlier question, that engagement is your north star. However, I think one of the reasons you get so many really high-quality brand advertisers is that you are top-of-funnel premium-only video.

So how do you think from a judgment point of view of balancing and driving engagement, which would mean vertical video and adding user-generated content, even short form, compared with protecting your ad environment so that you continue to get high-quality advertisers? That is my first question.

Anthony Wood: Yeah. Let me, I will give you my opinion, then I will turn to see if Charlie has anything to add. We do have short-form content on our platform. We are always experimenting with different kinds of short form and how to place it in our UI. There are lots of ways we drive engagement on our platform, mostly around our user interface and the personalization of the experience, but also around the content that is on the platform. I think that, as a platform, we are a big-screen TV platform primarily, and that does mean generally long-form content. That is generally what gets consumed.

So, although we do have some shorter-form video, and I am sure that will grow, our focus really is on long-form video. That is what people generally look for when they turn on their TV. And I strongly believe that as content costs come down, that is going to—you know, anytime you lower the cost of something, people consume more of it. And so we will see more engagement in long-form video, and that is a big opportunity for us as a platform. In terms of advertisers, I will ask Charlie to take that question. Sure.

Charlie Collier: Hey, Laura. It is a good question. One thing, I think we have a few real advantages. One is our FAST channel environment has been really powerful. And so, for example, MrBeast launched his own FAST channel, and it premiered on Roku, Inc. And because of our scale, of course, that did really well, and we got to see the type of viewers who consume that content. And that last point is really one of our advantages. We really do understand the cohorts of viewers, and one of the things we have been able to do is create content around different interests.

And I think, as we get more into short form, when we do, as Anthony said, we do it against specific cohorts and really try to super-serve audiences that we understand. We are known for premium content, and in the foreseeable future, it is going to be the majority of what we do and do well. But I very much like the ability of our platform to sort of figure out what the viewer wants to watch and how. Some of the examples of that beyond just the content creators you might be thinking about are even in places like our Sports Zone where we will do shoulder content. They will go in to watch the game.

They will get short-form clips. They will get short-form commentary and other information, and we do that with the leagues. So there are all sorts of ways you can do it, and Roku, Inc. is really good at putting it in context.

Laura Anne Martin: Super helpful. My second question is on upfronts/SMB. This is a similar judgment question, which is a lot of the letter is talking about your investments in Ads Manager and your focus on SMBs because it is a large market. But what we hear from Mountain, which is 100% performance CTV, is that those types of advertisers are really 100% focused on performance, like, within three days—like super short-term performance. And my recollection is you guys do more than a billion dollars in upfront guarantees, which is like a quarter of your revenue.

So as you think about investing in this bottom of funnel, making yourself a full-funnel CTV auction for advertising over time, do you think you are going to pivot towards the more performance oriented, which I would think would have lower margin than top of funnel, but correct me if you think I am wrong on that thinking. Thank you.

Charlie Collier: Laura, this is Charlie again. I think it is sort of different horses for different courses. So let me tell you what I mean by that. We do a lot of guaranteed business at the top of the funnel with enterprise clients. And they, by the way, and I believe they are performing too. They measure perhaps different things than, as you said, conversion in a few days. But the shift to performance marketing and the opening of our platform to small and medium-sized businesses is absolutely a tailwind, but we can manage it in a very different way.

We have talked a lot in past calls about how unique our situation is as a platform, which is that we can price up and down the pricing curve and the demand curve. And I think in that context, you will see us manage very well the opportunity to both perform and to serve the high-end clients. One way to break this out for you is the way we price our inventory. You will have specific units and opportunities at the high end of the pricing curve—our sponsorships, our Roku Originals, our sports, our home screen units, or anytime we do a deep digital integration—that comes with a price tag because of exactly what those are.

And then on the other end of the business, and this might be some of the business that you are picturing when you ask the question, you have some advertisers who have different needs who are priced at a much lower price point. But they certainly do not get inventory with the same quality signal. They do not get, certainly, any of the unique units or sponsorships that I was talking about on the other end. So, look, we are the largest CTV footprint, and we have real ways to expand our inventory thoughtfully as we grow.

And so I think our ability to price up and down the demand curve allows us to not just do well in the current CTV landscape, but as we push to be the most performant CTV platform and welcome in small and medium-sized businesses. They will spend $600 billion on advertising this year, small and medium-sized businesses. And if the enterprise trend is any indication, you combine the visual impact of television with the performance of digital, and Roku Ads Manager, I think, is uniquely positioned to lead in that transition, and we will price it properly at both ends of the curve.

Anthony Wood: This is Anthony. Let me just add. I will just—yeah, I will just add a few comments. I think, just generally, we are hearing from all of our advertisers, both traditional high top-of-the-funnel brand advertisers all the way to lower-funnel advertisers, which we have a whole range, that they are all focused on performance. And it is a key strategy for us to be the most performant connected TV platform in the industry, and we are putting a lot of effort into that, and we are integrating a lot of generative AI technology to help us achieve that. And it is going well.

And you can see—I mean, in early days—but the Roku Ads Manager is doing extremely well, and we are seeing strong growth. And so that strategy is working for us.

Dan Jedda: So the whole advertising business is moving to performance. Different advertisers have different definitions of how they are measuring performance and what they are looking for. It is not all the same as a traditional social media advertiser-type performance, but it is moving more and more into performance. Results are being measured. And we are seeing it. It is working. We are seeing those advertisers start to move over. Yeah. I think—I will just add on one more thing.

Laura Anne Martin: Great.

Dan Jedda: Laura, to your point, I do think it is important to understand that I agree with everything Charlie and Anthony said, but your comment on the pivot towards lower margin, more performing ads, they are not lower margin for us. It is not where a performance-based ad that is focused on a site visit, that is focused on ROAS, that is focused on a click—they are not lower margin for us in this area. So you should not think that as we focus on the SMBs that it drags down margins. It does not.

Laura Anne Martin: Thanks, guys. Very helpful. Thank you.

Operator: Thank you. Please stand by for our next question. Next question comes from the line of Rob Sanderson with Loop Capital. Your line is open.

Rob Sanderson: Thank you for the opportunity. I wanted to ask a little bit about just expanding your advertising opportunity on the home screen outside of M&E and into the much larger advertising landscape. I am sure there are lots of interesting things you can do here, but any color on the types of ad formats you might be thinking about is something that we are likely to learn more about through 2026? And then just thoughts on go-to-market. These would be completely unique and probably require some education of advertisers, maybe not something your third-party demand partners could help you with. Is that something that you think you would have to take on a direct basis?

Or anything you can sort of share on go-to-market?

Charlie Collier: Hey, Rob. Charlie will take that question. Sure. Well, it is happening already, Rob. It is a great question, and we have expanded well beyond M&E over the last couple years. Actually, I think if you saw the home screen or you are looking at the home screen right now, Roku City, which is our beloved interactive world that is living inside your television—right now, you look at it, it has the Olympics on it, and some of our sponsors, actually, I think most of which are not M&E at all. We also added video to the home screen inside of our marquee unit, which is a big unit on the right-hand side of the screen.

And that is really performing well for all sorts of categories beyond M&E. So we are testing several variations of home screen design, and we are obviously proving that it drives more engagement and viewer satisfaction, which is good. But you are going to see us do a lot of it. And as to your question about whether it is programmatic, to date, it is not. There are lots of reasons. We got a question earlier about upfront versus SMB. Obviously, with our enterprise clients and our advertising agencies, they are very focused on these unique units and these performing units, and you will see more of it moving forward.

Anthony Wood: And hey, Rob. This is Anthony again. I will just—in terms of new ad units, we have mentioned before that we have a new home screen design that we are working on. It is one of our major initiatives. It is in testing right now. And we are testing several different variations of the home screen. It is going well. We are driving more engagement and viewer satisfaction. We believe it will increase monetization over time.

Charlie Collier: Whether that is getting viewers to sign up for subscriptions or watch more ad-supported content—

Anthony Wood: And we hope to roll it out sometime this year. But the new home—I will just say that the new home screen, one, it has a lot of improvements. One of the changes that we are testing is new types of ad units, and we are also looking hard at how we can, and we are testing different ways to, increase impressions of current ad units and also increase click-through of current ad units as well. Thank you, Anthony. Thank you, Charlie.

Operator: Thank you. Thank you. Please stand by for our next question.

Operator: Our next question comes from the line of Vikram with Baird. Your line is open.

Vikram: Wanted to ask about the Howdy launch as well as the Friendly acquisition. Could you talk more about how each of those integrations is going so far? And what are your plans for those businesses in 2026? Thanks.

Anthony Wood: Hey, Vikram. This is Anthony. Both of those are going well. We have not broken out numbers, but I am extremely happy with how the Howdy launch is going. Subscribers are continuing to grow nicely. And I will just say that for those who do not know, Howdy and Friendly, they are part of Roku, Inc.’s portfolio of owned and operated services, which started with The Roku Channel. And adding Howdy and Friendly is a strategic expansion into subscriptions.

Anthony Wood: That is going to add incremental revenue.

Anthony Wood: We are using the power of our platform, our user experience, to drive engagement in both of those. We are seeing increased engagement on both of them. We are definitely increasing engagement and sign-ups for Friendly since we took over that service. And, of course, that platform is how we are launching and growing the Howdy business. We have plans—Friendly is already available on platforms outside of Roku, Inc. We have plans to launch Howdy on platforms off of Roku, Inc. as well. So I am very excited about both of them, and Howdy, in particular, I think, has the opportunity, the potential, over time to become a very large service for us.

Vikram: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of Matt Condon with Citizens Bank. Your line is open.

Matthew Dorrian Condon: Thank you so much for taking my question. I just wanted to ask—if Netflix is pending the acquisition of Warner Bros., and this is changing potentially the broader streaming landscape, can you just talk about if they become more guarded about how to distribute their content, how this could potentially impact Roku, Inc. both on the advertising side and the subscription side? Then maybe just a quick follow-up, Dan, just mid-single-digit OpEx growth going forward, is that the right way to continue to think about this? And if revenue growth comes in above expectations, how do you think about reinvesting some of that growth back into the business? Thank you so much. Hey, Matt. This is Anthony.

I will just say, in the U.S., as we have said before, we are in more than half of broadband households.

Anthony Wood: And half of all TV streaming happens on the Roku, Inc. platform.

Anthony Wood: I mean, that is a lot of scale. This makes us an essential partner to every content owner and streaming service. And we do not anticipate that changing regardless of how the industry consolidates.

Anthony Wood: Consolidates or how that consolidation plays out.

Anthony Wood: In any scenario, the streaming sector remains extremely robust. It is continuing to grow quite nicely. And we remain well positioned to help our streaming and content partners drive engagement, find viewers, and sign up customers. And I will let Dan take the question on that. Thanks.

Dan Jedda: For the question, Matt. With respect to OpEx, we remain focused on execution and operational discipline, ensuring we invest where we see the highest returns. We grew our OpEx 3% in 2025, a little bit lower than I expected, which is fine because we are investing well in these initiatives that we have laid out here both in the shareholder letter and what we have talked about on this Q&A. I do expect our OpEx to grow in that mid-single digits. We have said many times we expect our platform revenue to grow double digits. I think I gave some pretty concise guidance on gross margin, where we do not expect any major decel in gross margin.

In fact, we expect it to stay in this 51% to 52%, and that will translate into improved EBITDA margins over time. It is also one of the reasons why I feel like we are on a good path to achieving $1 billion in free cash flow by 2028. And all this is to say we are absolutely investing. We are adding headcount mostly on the engineering side to invest in these incredible initiatives that we have in front of us. So a lot of good things are happening. I think it is also one thing I will say that is helping our OpEx growth is our SBC continues to come down.

We have done a lot of work in SBC, and that is actually trending going backwards. From 2025 into 2026, our guide contemplates that, and that is one of the things that is helping our OpEx stay in that mid-single-digit range.

Matthew Dorrian Condon: Thank you.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Tom Champion with Piper Sandler. Your line is open.

Tom Champion: Hi. Good afternoon, guys. We can see from your discussion around 2026 expectations pretty solid top-line revenue guidance. But I think you have been indicating that you see a path for a very solid multiyear CAGR in revenue growth. And you have talked about some of the near-term drivers, but I am just wondering if you could talk a little bit about maybe more intermediate or longer-term dynamics in the business that give you confidence in a solid growth trajectory beyond this year in 2026? Any thoughts would be welcome. And then maybe for Dan, just clarification, is it $250 million that remains on the buyback? Thank you.

Anthony Wood: This is Anthony. I will start and then turn it over to Dan. In terms of what is driving our growth, our two big businesses are advertising and subscriptions, and they are both doing nicely. So on the advertising side, we have talked about deepening our relationship with third-party DSPs and partners. There is still room to continue to do that. There is still a lot of ad dollars that are in the traditional linear ecosystem that is still moving to streaming. We are taking, I would say, more than our fair share of those dollars, so we are continuing to see growth there.

Anthony Wood: We are—

Anthony Wood: We are having initiatives in place like our new home screen that we are launching, which I think will grow monetization over time based on the testing results I am seeing. So, and then on subscriptions, one of the big trends in the industry that we are seeing is aggregation of streaming services. I think, increasingly over time, there is only going to be a small number of services that can maintain a profitable app.

And a much more profitable way to distribute the streaming service will be through something like Roku’s premium subscriptions, and that is one of the reasons we are seeing every major streaming service other than the top few sign up to be a participant in premium subscriptions, because it is just good economics. It drives more subscribers on a more economical basis. And I think that premium subscriptions are going to be a big growth driver and a big secular trend in the industry for quite some time. Things like Ads Manager are opening up huge new ad markets for us that just were not available to TVs before.

Those new markets are now accessible because of AI, essentially, AI that can create video very quickly or instantaneously at very low cost and then provide the targeting and then provide the granular self-serve capabilities that open up to a large number of advertisers. So those are some of the areas we are working on, and there are other activities and research projects that we have in place that we have not disclosed yet. So there is just a lot of opportunity in the streaming space.

And there is a lot of ways to continue to grow monetization on our platform as well as, obviously, we are going to continue to grow scale of our platform both outside the U.S. and inside the U.S. I do not know, Dan. Did you have any—

Dan Jedda: Yeah. I will answer the second part of your question. We purchased $50 million in Q3 and $100 million in Q4. So, yes, there is $50 million remaining on the buyback. I will say, as we noted in the shareholder letter, we see the path to offsetting dilution for FY 2026, and we have very strong free cash flow as our guide contemplates the $635 million of adjusted EBITDA and my comments with respect to, we believe, free cash flow will be above adjusted EBITDA for the year.

Tom Champion: Thanks a lot, guys.

Operator: Thank you. Our next question comes from the line of Robert James Coolbrith with Evercore ISI.

Robert James Coolbrith: Great. Thank you very much for taking our questions. Just wanted to go back to Ads Manager maybe for another follow-up. Can you talk about maybe their performance orientation or some of the ways the product is different from OneView, or did you use OneView as a base and try to bake more performance into the platform? Just anything you could tell us about the starting point for Ads Manager and how you are attempting to serve the needs of performance-based advertisers.

And then secondly there, if you could talk a little bit more about maybe the go-to-market for how you identify a high-value SMB prospect, how you reach out to them, how you onboard them, or get them into the funnel and then onboard them into platform. Anything more you could tell us about that would be really helpful. Thank you. Hey, Robert. This is Anthony. I will take the first part and then turn it over to Charlie for the second part. I will just say, well, first of all, OneView was a technology platform, but it was also a business strategy. I would say the business strategy is what has changed.

So the OneView technology is still integrated throughout our platform, and pieces of it are in Roku Ad Manager, for example, as well as a lot of homegrown technology as well. Our ad stack was not just OneView, but that was a piece of it. But OneView was really a strategy around us making that essentially our exclusive DSP on our platform. And that changed a few years ago to—we are not going to have OneView be the DSP on our platform. We are going to work with all the large DSPs that are out there that customers are using and want to continue using. So that is when we completely switched strategy to working with third-party partners.

That is when we started integration with The Trade Desk, with Amazon, with all the other partners that are out there that we work with, third-party platforms. So that was really a strategy change, I would say. That strategy change has been extremely effective. That is working well for us.

Anthony Wood: And I do not know. Charlie, do you want to take the second part or add to that?

Charlie Collier: Well, it is a very different sales funnel, obviously, than going to the agencies and clients the way we do with enterprise. I will say for my career, it is such a joy to be able to serve top of the funnel, middle of the funnel, and bottom of the funnel. And it is really the bottom of the funnel that we are working on with the Ads Manager product.

Charlie Collier: Driving it all, to your point about outcomes—driving it all is really trying to improve performance. And Anthony said earlier in the call that it is spot on. Really, people define performance in very different ways. And so we have announced a bunch of partnerships—for example, iSpot, AppsFlyer, Incremental. And each of them, in one way or another, is about measurement of performance. And so, I will not go deep into how we identify the high-value SMB prospects except to say we created a very different sales force and sales approach. We do a lot of lead gen. We market into this group. And then the best advertising for this is actually the performance itself.

Because unlike our enterprise clients who come in with budgets, when this works, people will leave it on and continue to come back to Ads Manager for more. So in the letter and in the recording right before the call, you heard about a client with specific objectives who came in, saw the return on ad spend, and then not only do they continue to come back, but we see a lot of performance lead to other advertisers in the category doing the same. So really in many ways, it is the purest form of advertising because you invest, we tweak and optimize results and outcomes, and then improve performance, and then we become good partners.

And so I am very excited about the ramp of this. I think we can move from going hundreds to thousands to tens of thousands of advertisers. This is Anthony. I will just say one other—

Anthony Wood: One other point, which is that although Ads Manager is doing well for us, it is not exclusive. We are working with other third-party partners that are targeting the same target customers, the same SMBs. TVScientific, for example, is just one. But I do think that there are some significant competitive advantages to building our own self-serve platform in terms of integrating it more deeply into our platform that will result in better performance. And so I think that one of the reasons we are doing it ourselves is we think we can build a better product by integrating it ourselves into our platform.

Robert James Coolbrith: Got it. Thank you very much.

Operator: Thank you. Ladies and gentlemen, due to the interest of time, we would now like to turn the call back to CEO Anthony Wood for closing remarks.

Anthony Wood: I would just like to thank our employees, customers, advertisers, and content partners. And thank you for listening.

Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Unknown Speaker: Jin, we are so excited to show you what we made for LolaVie. When LolaVie, Jennifer Aniston's hair care brand, known for its glossing detangler and perfecting leave-in, needed to launch their latest campaign, they turned to the hair people.

Unknown Speaker: And we turned to Roku Ads Manager.

Unknown Speaker: A key part of their 360-degree marketing approach that helped drive a 40% lift in sales. Were those hair people? But they are not just hair people.

Unknown Speaker: We are hair people who know that CTV gets your brand in front of the right customers on the biggest screen in the home. So easy, even their hair people can do it.

Unknown Speaker: And they are made of hair. We worked together to align on three key objectives: continue to accelerate brand awareness, keep boosting web traffic, drive in-store sales momentum at Ulta Beauty. LolaVie’s campaign had it all: social buzz, headline-worthy press, and stocked shelves. LolaVie tested and optimized creative for reach and performance within Roku Ads Manager, connecting LolaVie with millions of potential customers. Okay. These hair people really know what they are doing. To boost online sales, they activated Action Ads, letting viewers shop straight from their screens with the click of OK on the Roku remote. It worked, bringing in new customers from the TV. As LolaVie’s retail partner, Ulta Beauty was the key focus of the campaign.

Using geotargeting, LolaVie reached viewers near stores, ensuring the right message was in the right place. All of this was part of the brand's bigger campaign, and the results were almost as flawless as Jen's signature blowout: a 40% lift in overall sales, a 53% increase in new customers year over year, a 43% increase in conversion rate. LolaVie trusted the hair people to build a campaign that drove real results.

Unknown Speaker: And we used Roku Ads Manager to do just that.