Streaming TV platform Roku (NASDAQ: ROKU) met Wall Streets revenue expectations in Q3 CY2025, with sales up 14% year on year to $1.21 billion. The company expects next quarter’s revenue to be around $1.35 billion, coming in 2% above analysts’ estimates. Its GAAP profit of $0.16 per share was 96.9% above analysts’ consensus estimates.
Is now the time to buy Roku? Find out by accessing our full research report, it’s free for active Edge members.
Roku (ROKU) Q3 CY2025 Highlights:
- Revenue: $1.21 billion vs analyst estimates of $1.21 billion (14% year-on-year growth, in line)
- EPS (GAAP): $0.16 vs analyst estimates of $0.08 (beat)
- Adjusted EBITDA: $116.9 million vs analyst estimates of $111.7 million (9.7% margin, 4.7% beat)
- Revenue Guidance for Q4 CY2025 is $1.35 billion at the midpoint, above analyst estimates of $1.32 billion
- EBITDA guidance for the full year is $395 million at the midpoint, above analyst estimates of $377.3 million
- Operating Margin: 0.8%, up from -3.4% in the same quarter last year
- Free Cash Flow Margin: 36.6%, up from 9.8% in the previous quarter
- Total Hours Streamed: 36.5 billion, up 4.5 billion year on year
- Market Capitalization: $14.53 billion
Company Overview
With a name meaning six in Japanese because it was the founder's sixth company that he started, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Roku’s 13.3% annualized revenue growth over the last three years was decent. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Roku’s year-on-year revenue growth was 14%, and its $1.21 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 12.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 11.1% over the next 12 months, a slight deceleration versus the last three years. Still, this projection is above the sector average and suggests the market is forecasting some success for its newer products and services.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.
Total Hours Streamed
User Growth
As a subscription-based app, Roku generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Roku’s total hours streamed, a key performance metric for the company, increased by 18.7% annually to 36.5 billion in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
In Q3, Roku added 4.5 billion total hours streamed, leading to 14.1% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Roku’s ARPU fell over the last two years, averaging 11.4% annual declines. This isn’t great, but the increase in total hours streamed is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Roku tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace. 
This quarter, Roku’s ARPU clocked in at $0.03. It declined 99.9% year on year, worse than the change in its total hours streamed.
Key Takeaways from Roku’s Q3 Results
We were impressed by Roku’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. On the other hand, its number of total hours streamed missed. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 5.9% to $94.08 immediately following the results.
Big picture, is Roku a buy here and now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
