Roku Inc (NASDAQ:ROKU) is expected to report strong financial results for the third quarter, with analysts at Wedbush pointing to the company’s profitable expansion, growing ad inventory, and platform diversification as key growth drivers.
“We expect Roku to report another solid quarter, emphasizing its focus on profitable expansion,” the analysts wrote, noting that the company’s increasing connected TV (CTV) market share and expanding DSP partnerships could more than offset potential headwinds from tariffs.
Wedbush emphasized that Roku is well-positioned to capture advertising dollars shifting from linear TV to CTV.
“Despite macro pressures, Roku continues to perform as it enhances its platform capabilities and improves ad inventory and targeting for its platform and The Roku Channel, all while maintaining expense discipline to drive free cash flow,” they wrote.
The analysts also highlighted the company’s data-driven approach. “We remain confident in Roku’s ability to create opportunities in this environment, counter competitive threats through cooperative efforts, and capitalize on its position as one of the leading smart TV brands domestically, leveraging a treasure trove of user data,” they wrote.
The firm expects Roku to report Q3 revenue of $1.205 billion, up 14% year-over-year and roughly in line with consensus, with Platform revenue of $1.056 billion, up 16% year-over-year, and Devices revenue of $149 million, down 3% year-over-year.
Wedbush modeled adjusted EBITDA of $110 million, consistent with the company’s guidance, versus the $112 million consensus estimate.
“Roku’s consistent results should underscore again its increasingly diversified business model, with significantly more advertising opportunities crossed with its burgeoning recommendation functions,” Wedbush wrote.
The analysts highlighted Roku’s Ads Manager for SMBs as a key growth driver, noting that it could capture the ongoing shift of social media advertising to CTV for digital-first advertisers using embedded AI technology.
Looking ahead, Roku’s new partnership with Amazon, set to take effect in Q4, is expected to drive incremental demand and ad inventory.
Wedbush maintained its $110 price target on Roku, pointing to “expanding DSP partnerships, high-quality inventory, improved targeting, and various price points across its platform, enabling it to meet advertisers’ needs.”
Shares of Roku traded hands at about $98 in the early afternoon on Monday.
Roku will hand down its Q3 earnings on October 30 after markets close.