Roku's first quarter results for 2025 were met with a negative market reaction, as investors focused on the company's mixed performance versus Wall Street expectations. Management pointed to the ongoing shift from linear TV to streaming as a key driver, highlighting strong growth in total hours streamed and progress in diversifying revenue streams across advertising and subscriptions. CEO Anthony Wood explained that investments in programmatic advertising and deepening integrations with third-party demand-side platforms (DSPs) supported ad revenue growth, even as advertisers became more selective and sought higher returns on investment. The acquisition of Frndly, a streaming subscription bundle, was cited as a step toward expanding recurring revenue and strengthening the platform's competitive position.
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Roku (ROKU) Q1 CY2025 Highlights:
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Revenue: $1.02 billion vs analyst estimates of $1.01 billion (15.8% year-on-year growth, 1.5% beat)
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Adjusted EBITDA: $56.02 million vs analyst estimates of $60.43 million (5.5% margin, 7.3% miss)
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Revenue Guidance for Q2 CY2025 is $1.07 billion at the midpoint, below analyst estimates of $1.09 billion
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EBITDA guidance for the full year is $350 million at the midpoint, above analyst estimates of $337.7 million
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Operating Margin: -5.7%, up from -8.2% in the same quarter last year
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Total Hours Streamed: 35.8 billion, up 5 billion year on year
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Market Capitalization: $12.27 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Roku’s Q1 Earnings Call
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Cory Carpenter (JPMorgan) asked about Roku’s confidence in reiterating full-year guidance given macro uncertainty. CEO Anthony Wood and CFO Dan Jedda cited platform diversification and secular streaming trends as supporting factors.
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Brent Navon (Bank of America) inquired about Roku's ability to buffer against further macro deterioration. Jedda responded that ongoing advertising and subscription initiatives should help offset potential headwinds, but acknowledged the company is not immune to major downturns.
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Vasily Karasyov (Cannonball Research) questioned the incrementality of programmatic revenue. President Charlie Collier explained that while some revenue comes from shifting direct buyers, new partnerships and self-service tools are bringing in incremental demand.
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Laura Martin (Needham) probed the rationale behind the Frndly acquisition and the company’s use of first-party data. Wood and Collier detailed Frndly's growth potential and explained the focus on leveraging proprietary data to enhance advertising performance rather than selling it directly.
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Matt Thornton (FBN Securities) asked about the impact of tariffs on device margins and the inclusion of Frndly in guidance. Ozgen detailed the company’s manufacturing agility and Jedda confirmed Frndly’s contribution was assumed in guidance.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the pace of ad revenue growth as programmatic buying becomes a larger share of the mix, (2) the integration and growth trajectory of Frndly and its impact on recurring revenue, and (3) the effectiveness of Home Screen enhancements in driving engagement and monetization. Execution against tariff mitigation strategies and continued growth in streaming households will also be important signposts.
Roku currently trades at $86.08, up from $67.30 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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