Should You Buy, Sell or Hold Roku Stock Ahead of Q2 Earnings?
For the second quarter of 2025, Roku expects total net revenues of approximately $1.07 billion, indicating an increase of 11% year over year. The company anticipates Platform revenues to grow 14% year over year, and Devices revenues are expected to decline 10% year over year. It expects first-quarter total gross profit of approximately $465 million and adjusted EBITDA of approximately $70 million.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.07 billion, suggesting year-over-year growth of 10.79%. The consensus mark for loss is pinned at 16 cents per share. The estimate indicates year-over-year growth of 33.33%.
ROKU's Estimate Movement
ROKU's Earnings Surprise History
In the last reported quarter, the company delivered an earnings surprise of 29.63%. The company's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 51.15%.
Earnings Whispers for ROKU
Our proven model predicts an earnings beat for Roku this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
ROKU has an Earnings ESP of +7.41% and carries a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results of Roku
As Roku gears up to report second-quarter 2025 earnings, investors should consider buying the stock. It is expected to deliver positive revenue growth and earnings beat. Roku formed various partnerships and got sponsorships during and after its first quarter, with companies such as Airbnb ABNB, Walmart WMT, Amazon AMZN, and Adobe, all of which are expected to have aided its advertising and streaming business in the quarter to be reported.
In the first quarter, Roku's romantic comedy This Time Next Year was sponsored by Airbnb, while Walmart partnered on its first shoppable content, Roku Recipes. These initiatives were designed to boost advertiser interest in The Roku Channel. With Airbnb and Walmart both reinforcing their collaboration, and the launch of an AI-driven content row enhancing personalized recommendations, The Roku Channel saw 84% year-over-year growth in streaming hours in the prior quarter, a trend likely to be sustained in the quarter under review, benefiting Roku's top line.
Coming to subscriptions, Roku reported building tens of millions of subscriptions each month, with growing user participation in subscription offers. This is expected to have continued into the quarter to be reported. In the first quarter, it acquired Frndly TV, a subscription streaming service. This move is expected to have helped Roku in gaining more subscriptions, directly impacting Platform revenues in the quarter to be reported.
In June, Roku partnered with Amazon Ads to access 80 million U.S. Connected TV households through Amazon DSP. This recent partnership with Amazon is likely to have strengthened Roku's advertising business in the quarter under review. Earlier partnerships, such as with Adobe's Real-Time CDP and INCRMNTAL, helped drive ROI for advertisers and capture more budget in the first quarter, setting the stage for continued Platform revenue growth in the second quarter.
However, the Devices segment is expected to have remained a drag on Roku's profitability. The segment's margins are projected by the company to have remained negative in the second quarter. Although Roku launched new device line-ups in the United States and markets outside, it does not focus on growing the segment's revenues in the short term, as it varies quarter to quarter.
Top-Line Growth Estimates for Q2
The Zacks Consensus Estimate for second-quarter 2025 Devices revenues is pegged at $129 million, and for Platform revenues, it is pinned at $943 million.
ROKU Price Performance & Stock Valuation
Shares of Roku have gained 25.7% in the year-to-date period, outperforming the Zacks Consumer Discretionary sector and the S&P 500 index's growth of 10% and 8.2%, respectively.
ROKU's YTD Price Performance
From a valuation perspective, Roku currently trades at a price-to-cash flow ratio of 42.49X, which is at a significant premium compared to the Zacks Broadcast Radio and Television industry average of 32.84X. This valuation gap suggests that investors have high growth expectations for this stock. As of March 31, 2025, Roku generated $310.1 million in operating cash flow over the trailing 12 months, highlighting strong cash-generating ability. Roku's growing scale justifies this premium valuation. ROKU has a Value Score of D.
Price-to-Cash Flow Ratio
Investment Considerations
Roku continues to demonstrate strong platform fundamentals with robust user engagement, innovative Home Screen monetization, and expanding partnerships across the advertising and streaming ecosystem. With expected double-digit growth in Platform revenues for the second quarter of 2025 and consistent earnings surprises in recent quarters, the company is poised to deliver another solid performance. Strategic collaborations with brands have strengthened its advertising capabilities, while the success of AI-powered content discovery and the acquisition of Frndly TV support ongoing subscription growth. Backed by strong cash flow and year-to-date stock gains, Roku remains an attractive opportunity for growth-focused investors.
Conclusion
Roku's platform momentum remains strong, supported by double-digit growth in Platform revenues, consistent earnings surprises, and rising engagement fueled by AI-powered content discovery and strategic partnerships. Innovations in Home Screen monetization and successful collaborations with brands highlight the company's ability to scale and adapt in the evolving streaming landscape. With solid top-line growth, strong operating cash flow, and expanding monetization opportunities, Roku presents a compelling entry point for long-term investors.
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