Shares of Roku, Inc. surged in extended trading on Wednesday after the streaming platform provider issued a robust revenue forecast for the 2026 fiscal year that exceeded analyst expectations. The company projected total revenue of $5.50 billion, notably surpassing the Wall Street consensus estimate of $5.34 billion. This optimistic outlook, coupled with strong fourth-quarter 2025 results, propelled the stock approximately 8% higher after the market closed.
Detailed Financial Guidance and Market Reaction
In its shareholder letter filed with the U.S. Securities and Exchange Commission, Roku provided specific financial targets. For the full year 2026, the company anticipates platform revenue to reach $4.89 billion, representing an 18% year-over-year increase and exceeding the $4.66 billion analysts had forecast. Net income is projected at $325 million, with adjusted EBITDA expected to hit $635 million and total gross profit estimated at $2.435 billion. For the first quarter of 2026, management guided for revenue of $1.2 billion and net income of $50 million.
The positive investor sentiment stems from a perceived rebound in the digital advertising market and Roku's record performance in subscription services. The company reported its largest-ever quarter for net additions to its Premium Subscriptions service in Q4 2025, attributing the growth to holiday promotions, product enhancements, and a distribution partnership with Frndly TV. Roku is preparing to launch subscription bundles later this year and has expanded its Premium Subscriptions service into Mexico, with plans to add more "tier-one" partners in 2026.
Fourth Quarter and Full Year 2025 Performance
Roku's latest earnings report demonstrated significant momentum. Fourth-quarter revenue rose 16% year-over-year to $1.3949 billion. The company swung to a net income of $80.5 million, reversing a loss from the prior-year period. Platform revenue, which includes advertising and content distribution fees, increased 18% to $1.224 billion. For the full 2025 fiscal year, revenue grew 15% to $4.737 billion, with net income of $88.4 million marking a substantial improvement from a loss in 2024.
Founder and CEO Anthony Wood and CFO/COO Dan Jedda stated in the shareholder letter, "We delivered excellent results in 2025, driven by consistent execution and the differentiation of our leading TV streaming platform." The company's active account base surpassed 90 million global streaming households, with a goal of reaching 100 million by 2026. Total streaming hours climbed 15% in 2025 to 145.6 billion.
Advertising Momentum and Competitive Landscape
Advertising remains the core engine of Roku's business model. The company highlighted the ongoing shift of television advertising budgets from linear TV to connected TV (CTV), although it acknowledged the transition has been uneven. To capitalize on this trend and compete with larger platform ecosystems, Roku is deepening integrations with major demand-side platforms (DSPs) like The Trade Desk and Amazon DSP to facilitate programmatic ad buying.
According to Nielsen's "The Gauge" report, The Roku Channel captured 6.3% of U.S. TV streaming viewership in December 2025, up from 4.6% a year prior, solidifying its position as the second-largest free ad-supported streaming television (FAST) app behind YouTube. The company also cited the upcoming 2026 FIFA World Cup as a potential catalyst for subscriber growth in key international markets like Mexico.
Hardware Segment Challenges and Forward Strategy
Despite the overall strength, Roku's devices segment continues to present margin challenges. Devices revenue grew a modest 3% in Q4 to $170.9 million, but the segment posted a negative 23% gross margin. Looking ahead to 2026, the company expects device margins to remain in the negative mid-teens range, even as it expands its lineup of Roku-branded TVs and its retail footprint. This underscores the company's strategic focus on its higher-margin platform business over hardware sales.
The company's results and guidance for both Q1 and the full year 2026 handily beat analyst projections. Prior to the report, analysts had estimated Q4 revenue around $1.35 billion and adjusted earnings per share of $0.29. Roku plans to host a conference call at 2 p.m. Pacific Time to discuss the quarterly results and its future trajectory in greater detail.
