Roku Q3 Profit, Revenue Soar on Higher Media & Entertainment Ad Spending, Subscription Growth

Roku reported revenue of $1.5 billion and a profit of $1.20 per share, compared to revenue of $1.41 billion and a profit of 55 cents per share expected by analysts, per Yahoo Finance. The Media & Entertainment vertical saw its highest year over year growth in four years as media companies invested on Roku’s platform to promote their content and services The company did not host an earnings call due to Fox’s pending $22 billion acquisition, which is on track to close in the first half of 2027 Roku smashed Wall Street expectations for its third quarter on Monday, with profit soaring 639% to $183.3 million and revenue climbing 24% to $1.5 billion, driven by strength in its advertising and subscription businesses. Ad revenue grew 23% to $727.4 million, driven by the highest year over year spending growth for the media & entertainment vertical in four years as companies invested on Roku’s platform to promote their content and services. It was also fueled by higher political advertising, which exceeded the comparable quarter from the 2024 U.S. presidential election cycle. Meanwhile, subscriptions revenue grew 23% to $581 million boosted by the World Cup, which drove over one million sign-ups across services including Peacock, Paramount+, Fox One and ViX. Overall platform revenue increased 23% to $1.3 billion, while its gross profit rose 27% to $697.1 million. Total streaming hours grew 9% to 39.9 billion. “We are building a diversified and durable business by focusingon monetization initiatives: deepening integrations with third-party advertising platforms, growing Roku-billed subscriptions, and enhancing the Roku Experience,” Roku CEO Anthony Wood said in the company’s quarterly letter to shareholders. “With our open platform, we help our content partners attract and retain audiences, and we offer advertisers the ability to reach viewers at scale, all while providing viewers with an outstanding streaming experience.” The strength in advertising and subscriptions was weighed down by Roku’s devices business, which grew revenue 33% to $193.7 million, but posted a widened loss of $48.6 million due to elevated memory costs. The devices unit includes revenue generated from the sale of its players and branded TVs, but does not include Roku TV models that are made and sold by its original equipment manufacturer (OEM) licensing partners, which exceeded expectations in the third quarter and approached 8% of total TV unit sales volume in the U.S. Shares of Roku slipped 0.3% in after-hours trading despite the better than expected results. The latest quarterly results come after Fox and Roku shareholders approved the former’s $22 billion acquisition of the latter. The deal, which remains subject to regulatory approval, is expected to close in the first half of 2027. Roku did not host an earnings call due to the pending transaction, but reiterated its previous guidance that platform revenue would grow 21% to $5 billion for the full year, while devices revenue would come in at approximately $535 million, resulting in total revenue of $5.5 billion. It also anticipates mid-single-digit year-over-year operating expense growth for 2026 and is on track to drive double-digit platform growth and achieve $1 billion in free cash flow by 2028. “Our pending acquisition by FOX is an extraordinary opportunity to accelerate our vision, allowing us to scale faster and innovate more aggressively for viewers, partners, and advertisers,” Wood added. More to come….