ROKU Q2 Earnings and Revenues Beat Estimates, Both Increase Y/Y

Revenues increased 22% year over year to $1.35 billion and beat the consensus mark by 4.23%.

Roku shares have appreciated 38.3% year to date, outperforming the Zacks Consumer Discretionary sector’s 9.3% decline.

Roku's Platform Business Drives Q2 Growth

The company posted strong second-quarter 2026 results, supported by continued momentum across Advertising and Subscriptions, with Platform revenues increasing 25% year over year. Roku also continued rolling out its redesigned Home Screen, aimed at improving content discovery, personalization and household retention.

Advertising performance was driven by deeper programmatic capabilities, with third-party demand-side platforms accounting for nearly three-fourths of in-stream video ad spend during the quarter. The Roku Experience continued to diversify its advertiser base, with non-Media and Entertainment brands representing more than one-third of advertising revenue. Political advertising exceeded the comparable quarter from the 2024 election cycle, with spending expected to build through the second half of 2026.

Subscriptions benefited from the launches of FOX One and Peacock within Premium Subscriptions, which brought World Cup coverage to The Roku Channel. Roku also continued expanding its owned-and-operated SVOD service, Howdy, through its Mexico launch and standalone mobile app rollout.

Devices performance reflected the continued ramp of the Hiro TV lineup at Target and strength at Amazon and Best Buy, with Roku-made TVs reaching approximately 5% of total U.S. TV unit sales volume. Expanded OEM partnerships with Hisense and TCL are expected to support unit growth in the second half of 2026.

Q2 Segment Details of ROKU

Platform revenues (90.1% of revenues) increased 25.2% year over year to $1.22 billion.

Advertising revenues grew 24.8% year over year to $672.8 million, driven by continued programmatic demand strength and a mix shift toward higher-margin ad products.

Subscriptions revenues grew 25.6% year over year to $548.2 million, driven by growth in Premium Subscriptions during a seasonally softer period for the category.

Devices revenues (9.9% of revenues) declined 1.4% from the year-ago quarter's level to $133.7 million.

ROKU's Operating Details

Gross margin expanded 490 basis points (bps) from the year-ago quarter's level to 49.7%.

Platform gross margin expanded 200 bps to 53%. Within the segment, Advertising gross margin increased 650 basis points to 62.4%, driven by a favorable mix toward higher-margin advertising products. Subscriptions gross margin contracted 360 basis points to 41.4%, primarily due to a mix shift toward Premium Subscriptions. Devices gross margin improved to 20.1%, aided by the IEEPA refund. 

Operating expenses increased 1% year over year to $527.5 million. Research and development expenses rose 1% to $179.7 million, while general and administrative expenses increased 25% to $124.6 million. Sales and marketing expenses declined 8% to $223.2 million. 

Adjusted EBITDA increased 225% year over year to a record $254.3 million, with the adjusted EBITDA margin expanding 1,170 basis points to 18.8%. Operating income increased to $146.2 million from an operating loss of $23.3 million in the year-ago quarter, while net income surged to $164.2 million from $10.5 million.

Balance Sheet of Roku

As of June 30, 2026, cash and cash equivalents were $2 billion compared with $1.65 billion as of March 31, 2026. As of June 30, 2026, Roku had no long-term debt.

Free cash flow on a trailing-twelve-month basis reached a record high of $704.1 million, up approximately 80% year over year.

Roku Withholds Guidance Amid Pending FOX Acquisition

On June 15, 2026, Fox Corporation and Roku entered into a definitive agreement under which Fox will acquire Roku. In light of the pending transaction, the company did not provide financial guidance for the third quarter or 2026.

Zacks Rank & Stocks to Consider

Roku currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader sector are American Public Education APEI, Newsmax NMAX and Target Hospitality TH. Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Public Education is set to report second-quarter 2026 results on Aug. 10. The Zacks Consensus Estimate for American Public Education’s second-quarter EPS is pegged at 36 cents, unchanged over the past 30 days and indicating an improvement of 1900% year over year.

Newsmax is slated to report second-quarter 2026 results on Aug. 13. The Zacks Consensus Estimate for Newsmax’s second-quarter loss is pegged at 2 cents per share, unchanged over the past 30 days and indicating an improvement of 96.61% year over year.

Target Hospitality is slated to report second-quarter 2026 results on Aug. 10. The Zacks Consensus Estimate for Target Hospitality’s second-quarter loss is pegged at 10 cents per share, unchanged over the past 30 days and indicating an improvement of 33.33% year over year.

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