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."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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."
Related Content
-
The $33,000 Retirement: One Man's Surprising Path to Financial Freedom at 61Forget what society tells you, even with less than $1 million, you can be happy in retirement.
-
The Best Aerospace and Defense ETFs to BuyThe best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
The Best Aerospace and Defense ETFs to Buy
The best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet SpotConverting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on VacationHere are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Stock Market Today: It's 'Most Sectors Go' Ahead of Independence DayThe resilience trade continues to work, even for sectors and stocks with specific uncertainties.
-
June Jobs Report Dashes July Rate Cut Hopes: What the Experts Are SayingThe June jobs report shows that hiring remains strong and gives the Fed a little extra breathing room when it comes to interest rates.
-
Investing Professionals Agree: Discipline Beats Drama Right NowBig portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This InsteadYes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
