Roku Platform Drives Earnings Beat

Here's our initial take on Roku's (NASDAQ: ROKU) fourth-quarter financial report.

Key Metrics

Platform Revenue Shines for Roku

Roku's quest to prove to the market that it is more than just a streaming device company got a giant boost in the fourth quarter as platform revenue grew by 25% year over year and surpassed the $1 billion threshold in a quarter for the first time.

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The U.S. presidential election helped drive some of those gains, but Roku expects the momentum to continue into the quarters ahead. The company said that excluding political ad spending, platform revenue in the quarter was still up 15% year over year. Roku is forecasting 16% platform revenue growth in the first quarter of 2025.

The strong performance on the services side helped fuel a better-than-expected quarter, with Roku losing less money than expected on revenue up 22% from a year ago. Platform gross profit also surged 22% to $559.9 million, helping to offset a $47.4 million gross loss on the device side.

Roku remains the top choice among streaming devices, and the company is increasingly showing it is able to continue making money from consumers long after the initial device purchase is recorded.

Roku said it is now in more than half of U.S. streaming households, helping to drive Roku Channel streaming hours up 82%. Average revenue per user, which has been sluggish in recent quarters, grew to $41.49, up from $41.10 in the last quarter and $39.92 in the final three months of 2023.

Immediate Market Reaction

Roku shares were flat over the past year, but investors are excited by management's optimism. Roku stock was up about 15% in after-market trading following the release but ahead of the company's post-earnings call with investors.

What to Watch

Roku expects total net revenue of $4.6 billion in 2025, up from $4.1 billion in 2024, and total gross profit of more than $2 billion. The company also expects to inch closer to profitability, forecasting a net loss for the year of $40 million.

In his letter to shareholders, founder and CEO Anthony Wood said, "we see clear paths" to grow revenue and free cash flow and "we expect to be operating income positive for full year 2026."

Investors will be eager to hear more about that path to profitability. They'll also be eyeing new initiatives from Roku, including team-ups with retail partners to allow for instant shopping while viewing content.

This is the quarter and the outlook that Roku shareholders had been patiently waiting for. Investors will be eager to see evidence in the months to come that the strategy is progressing as planned.

Helpful Resources

• Full earnings report [PDF]
• Investor relations page

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.