Roku (ROKU) stock is red-hot on Friday after the streaming platform beat top- and bottom-line expectations for its fourth quarter and said it expects to be profitable in 2026.
In the three months ending December 31, Roku's revenue increased 22% year over year to $1.2 billion, driven by a 24.9% increase in platform revenue to $1 billion. Its net loss per share narrowed to 24 cents from 55 cents in the year-ago period.
"We delivered outstanding Platform results in Q4 – our first quarter with more than $1 billion in Platform revenue,” Roku said. "In Q4, streaming hours on The Roku Channel grew 82% YoY, and in the U.S. it reached households with approximately 145 million people."
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The company added that it continues to "make progress growing ad demand through deeper third-party platform integrations, improving the Roku Experience (which starts at our Home Screen) to expand monetization, and growing Roku-billed subscriptions."
The results beat analysts' expectations. Wall Street was anticipating revenue of $1.15 billion and a net loss of 41 cents per share, according to Barron's.
Roku also said streaming households rose 12.3% year over year to 89.8 million, streaming hours increased 17.2% year over year to 34.1 billion and average revenue per user was up 3.9% year over year to $41.49.
For its first quarter, Roku said it expects to achieve revenue of approximately $1.005 billion, just about in-line with the $1.006 billion in revenue analysts are anticipating. For the full fiscal year, the company is calling for revenue of roughly $4.61 billion.
"As we look ahead, we see clear paths to growing our key performance metrics of Streaming Hours, Platform revenue, Adjusted EBITDA [earnings before interest, taxes, depreciation and amortization], and Free Cash Flow," Roku said. "In addition, we expect to be operating income positive for full year 2026."
Is ROKU stock a buy, sell or hold?
Roku has been gaining ground since its mid-summer lows, gaining 83% in the past six months or so. And Wall Street is bullish on the communication services stock. According to S&P Global Market Intelligence, the consensus recommendation among the 32 covering analysts it tracks is a Buy.
However, analysts' price targets have not been able to keep up with the surging stock price. The average price target currently stands at $100.06, which is right around where ROKU currently trades.
But some on Wall Street have started adjusting their price targets, including Wedbush, which lifted its target price to $125 from $100 following the strong quarter. The financial services firm also maintained its Outperform rating (equivalent to a Buy) on the large-cap stock.
"Roku handily beat 2024 EBITDA expectations, set solid 2025 EBITDA guidance, and guided to positive operating income in 2026," says Wedbush analyst Alicia Reese. "We think investors will reward the company for taking a balanced approach as it expands internationally, expands its platform capabilities, and expands The Roku Channel's ad capabilities, all while maintaining expense discipline to drive free cash flow."
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