The clock is ticking for Roku (NASDAQ: ROKU. The provider of North America's most popular operating system for streaming TVs will report its fourth-quarter results this week.
There's a lot at stake for Roku. Unlike some of the streaming service stocks that have meandered unless they're buyout fodder, Roku beat the market last year. The stock's 46% pop in 2025 roughly tripled the market average. This young year has been a different story. Roku stock has fallen 18% so far in 2026.
Can it get back on track? It has a shot to bounce back with the fresh financials it will deliver after the market close on Thursday. Let's go over a few things that have to happen.
Image source: Getty Images.
1. The quarterly results have to impress
Starting with the obvious: Roku needs to put up strong numbers. The guidance it issued in late October calls for a record $1.35 billion in revenue for the holiday-saddled quarter. This would be a 12.4% increase over where it landed a year earlier, stretching its streak of double-digit top-line growth to 10 quarters. However, it would also be the weakest year-over-year revenue increase since the spring of 2023.
Roku's bottom-line outlook is just $40 million. The modest profit translates to a mere 3% net margin, but it would be Roku's largest quarterly earnings since the summer of 2021. After a couple of years of losses, Roku is setting investors up to score its third consecutive quarterly profit.
The gross profit of $575 million that Roku is targeting for the quarter -- as well as the $145 million in adjusted EBITDA -- would represent a year-over-year improvement of 12% and 87%, respectively. Beyond that, this can't technically be a "beat and raise" performance. It hasn't initiated guidance for 2026. It should do so on Thursday. This still needs to be a better quarter than what Roku was modeling a third of the way through the period.
NASDAQ: ROKU
Key Data Points
2. Don't get ads, get even
One factor that sent Roku stock higher last year was a bar-raising ad tech partnership with Amazon (AMZN 1.54%). Leaning on Amazon's larger video advertising business should help improve the monetization of its growing platform.
Roku doesn't break out ad revenue. Like other leading streaming services, Roku no longer even puts out active accounts or average revenue per user metrics. A little color would be appreciated, but it's the new normal. Ad revenue is simply part of the platform revenue that makes up the lion's share of its business.
Roku did point out something interesting in the third quarter, its first financial update since announcing the deal with Amazon last summer. Roku noted that its video advertising business grew faster than the U.S. over the top and digital ad markets. This is where investors will want to see Roku's strongest growth on Thursday.
3. It can't be hard times for Roku's hardware
Platform revenue accounted for 87% of Roku's top-line results through the first nine months of last year, and more than 100% of its gross profit. Devices -- in the form of Roku sticks, TVs, and other hardware -- are means to an end. Roku is willing to take a hit on its devices, knowing it will provide a product lifetime of high-margin platform revenue.
The lumpy nature of device sales can dent fourth-quarter results. It's when devices typically spike as holiday gifts, potentially torpedoing overall margins. Roku didn't have a problem delivering a big earnings beat during the prior fourth quarter despite the gross margin drag of its devices business. However, it was aided by a surge in political ads in the final three months of 2024. With a tougher comparison this time around, it can't afford to have the likely negative margins on its devices weigh on its quarterly results.
