Roku Inc. (NASDAQ:ROKU) shares dropped 6% in premarket trading Friday, as investors focused on the company’s softer revenue growth forecast, overshadowing its stronger-than-expected third-quarter results and first quarterly operating profit since 2021.
The streaming platform reported adjusted earnings per share of $0.16, surpassing analyst estimates of $0.09, while revenue reached $1.21 billion, in line with consensus expectations and up 14% year-over-year.
Platform revenue — which includes advertising and content distribution — climbed 17% year-over-year to $1.065 billion, while device revenue slipped 5% to $146 million. Excluding the effects of ASC606 accounting adjustments, political ad revenue, and the Frndly TV acquisition, Roku’s core platform revenue rose roughly 20% during the quarter.
“Roku is delivering modest sequential acceleration in core Platform revenue growth in 2H25, which is benefiting from stronger streaming subscription uptake,” said Morgan Stanley analysts led by Thomas Yeh. “We acknowledge both ad/SSD tailwinds into ’26, but we see competitive risks not priced in shares,” they added.
Despite the share decline, Roku achieved a positive operating income ahead of schedule, marking a key milestone in its turnaround. The company’s device segment continued to face pressure, however, posting a gross margin of -16%, reflecting persistent hardware profitability challenges.
“We delivered strong Q3 results, achieving positive operating income ahead of schedule and for the first time since 2021,” Roku said in its shareholder letter, noting that The Roku Channel remained the #2 app on its U.S. platform by engagement.
For the fourth quarter, Roku expects revenue of around $1.35 billion, slightly above the analyst consensus of $1.324 billion, but projected growth of 12% represents a slowdown from 14% in Q3 and 15% in Q2. Platform revenue growth is also forecast to ease to 15% in Q4.
The company raised its full-year 2025 revenue guidance to $4.69 billion, above the $4.661 billion expected by analysts.
Wolfe Research analysts said Roku’s “underlying growth is robust and should stay that way.”
User engagement remained strong, with streaming hours hitting 36.5 billion, up 4.5 billion hours year-over-year. Roku maintained its position as the top-selling TV operating system in the U.S., Canada, and Mexico — with its U.S. market share exceeding that of the second- and third-place competitors combined.
The company also announced a $50 million share repurchase as part of its ongoing $400 million stock buyback program, underscoring its “commitment to delivering long-term shareholder value by growing free cash flow per share.”