Roku Inc (NASDAQ:ROKU) reported third-quarter results that beat Wall Street expectations on both revenue and profit, as the streaming platform’s advertising and content business continued to grow and the company achieved positive operating income for the first time since 2021.
Revenue rose 14% from a year earlier to $1.21 billion, matching analysts’ estimates, while diluted earnings per share came in at $0.16, well ahead of the $0.09 expected. Platform revenue, which includes advertising and content distribution, climbed 17% to $1.07 billion.
Gross profit increased 9% year over year to $525 million, while streaming hours grew by 4.5 billion to 36.5 billion during the quarter. Roku also said its flagship service, The Roku Channel, ranked as the second most popular app on its US platform by engagement and captured about 6.2% of US TV streaming time in September, making it the most-viewed free ad-supported streaming television service.
Looking ahead, Roku expects fourth-quarter revenue of about $1.35 billion, above analysts’ estimates of $1.32 billion, with adjusted EBITDA of roughly $145 million. For the full year, the company raised its revenue forecast to $4.69 billion and expects adjusted EBITDA of about $395 million, up from its prior outlook of $375 million.
Wedbush analysts said Roku “is playing chess, not checkers,” maintaining an Outperform rating and lifting the price target to $115 from $110.
“Roku is setting the chessboard for meaningful growth in its advertising business,” Wedbush wrote, citing the company’s expanding DSP partnerships, integration of AI-driven content discovery, and the launch of its Ads Manager tool for small and medium-sized businesses.
While device revenue fell 5% to $146 million, in line with expectations, the company said it continues to prioritize platform engagement over hardware profitability. Roku’s platform gross margin stood at about 52%.
Analysts at Wedbush expect Roku to continue gaining market share as advertising budgets shift from traditional linear TV to connected TV. The firm also pointed to Roku’s partnerships with Amazon, AppsFlyer and FreeWheel as key to expanding ad inventory and measurement capabilities.
Shares of Roku fell 3.2% in premarket trading on Friday.