Roku, Inc.

Roku, Inc. (Nasdaq: ROKU) operates a streaming television platform. It sells advertising, distributes subscription services and sells streaming players and televisions. Its owned services include The Roku Channel, Howdy and Frndly TV.

Since the first quarter of 2026, Roku has reported Advertising, Subscriptions and Devices as three segments, with earlier comparisons restated. The combined advertising and subscription businesses are also called Platform.

Third-quarter results

The table compares the three months ended September 30. Amounts are USD millions, except earnings per share.

Advertising revenue rose to $727.4 million from $591.2 million. Its gross margin increased to 63.2% from 58.4%. Subscription revenue rose to $580.9 million from $473.4 million, while its gross margin fell to 40.9% from 42.7%. Subscription gross profit still increased.

Device revenue was $193.7 million, versus $146.0 million. Its gross loss widened to $48.6 million from $22.9 million, mainly because of higher memory costs, according to Roku.

Items affecting the profit comparison

Q3 operating income includes a $22.3 million gain from ending an office lease. Roku had anticipated an approximately $22 million credit in its filing for the June quarter after reaching the agreement in July.

Adjusted EBITDA excludes interest, taxes, depreciation and amortization, stock compensation and certain other items. For Q3 2026, it removes the lease gain and adds back merger costs. Stock compensation was $79.3 million, versus $88.0 million a year earlier.

Q2 device gross margin was 20.1%, helped by a tariff refund. Roku said the margin would have been negative 7.6% without that refund. That benefit affects comparisons with Q3's hardware losses.

Cash flow and liquidity

For the trailing 12 months ended September 30, operating cash flow was $810.9 million, versus $455.4 million. Roku's free cash flow was $795.7 million, versus $443.0 million. Its definition deducts purchases of property and equipment and includes the effect of exchange-rate changes on cash.

For January through September alone, operating cash flow was $703.2 million, versus $376.1 million, and purchases of property and equipment were $8.3 million, versus $4.2 million.

At September 30, cash and equivalents were $2.519 billion and short-term investments were $201.8 million. At December 31, 2025, those balances were $1.587 billion and $730.2 million.

Roku's $300 million revolving credit facility matures September 16, 2029. It had no loans drawn under that agreement at September 30, with $32.2 million in outstanding letters of credit.

Spending expectations and the pending Fox deal

Roku expects distribution costs for licensed Roku TV models to be weighted toward Q4. Its August letter had said spending would be heavier in the second half than in the first. It is not providing a new formal financial outlook while the Fox transaction is pending.

The merger agreement was signed June 14 and announced June 15, 2026. It provides base consideration of $96 in cash and 0.9693 of a Fox Class A share for each Roku share. The cash and stock mix can adjust to account for shares subject to appraisal rights.

The acquisition remains subject to U.S. antitrust clearance and customary closing conditions. The Fox results analysis covers the buyer's latest earnings and cash position.