Roku Q2 Earnings Beat Expectations, Raises Guidance Amid Market Skepticism

Roku reported Q2 revenues of $1.111 million, up 15% YoY, surpassing guidance. The company raised its 2025 revenue outlook by $100 million to $4.650 million and its 2025 adjusted EBITDA guidance by $25 million to $375M. Analysts praised Roku's strong results and raised their price targets, but the stock was down in early trading.

Roku reported its Q2 2025 earnings on July 02, 2025, with the streaming platform company exceeding Wall Street expectations. The company's revenue grew by 15% year-over-year (YoY) to $1.11 billion, surpassing the average analyst estimate of $1.07 billion [1]. This growth was driven by increased streaming sign-ups and higher subscription prices, with notable increases from Netflix and HBO [1].

Roku's Platform segment, which includes ad sales, content sales, and subscription-revenue sharing, saw a 18% growth in sales to $976 million. The company's gross profit in this segment increased by 15% to $498 million, while devices revenue decreased by 6% to $136 million, breaking even on an operating basis [2]. Streaming hours on Roku platforms for Q2 came in at 35.4 billion, up 5.2 billion hours YoY [2].

The company also announced a $185 million deal to buy Frndly TV, a low-cost subscription streaming service that offers live TV, on-demand video, and cloud-based DVR [2]. This acquisition is expected to further bolster Roku's platform revenue.

Roku's Q2 operating loss of $23.3 million was an improvement from the $71.2 million loss a year ago. The company reported a net profit of $10.5 million (or 7 cents per share), beating the average analyst estimate of a loss of 16 cents per share [1]. Roku's free cash flow (FCF) reached $392.0 million in the trailing twelve months, up 23% YoY, reflecting the company's robust financial health [1].

Roku raised its full-year 2025 revenue outlook by $100 million to $4.65 billion, representing a 13% YoY growth rate. The company also increased its 2025 adjusted EBITDA guidance by $25 million to $375 million [1]. These upward revisions highlight Roku's strong performance and growth prospects.

Analysts praised Roku's strong results, with several firms raising their price targets. Pivotal Research boosted its price objective on Roku from $100.00 to $120.00, reflecting a potential upside of 27.44% from the stock's current price [3]. Bank of America lifted their target price on Roku from $100.00 to $110.00, while Piper Sandler and JMP Securities also raised their price objectives [3].

Despite the positive earnings report, Roku's stock saw a modest decline in after-hours trading following the earnings release. Long-term investors view this dip as an opportunity to buy into the company's solid fundamentals. Roku's valuation multiples are currently at 2.5x enterprise value (EV) to FY25 revenue and 2.3x EV to FY26 revenue, with adjusted EBITDA multiples at 30.8x for FY25 and 24.8x for FY26 [1].

In conclusion, Roku's Q2 earnings demonstrate the company's ability to maintain its leadership position in the streaming industry. With continued growth in platform revenue, advertising, and margins, Roku is well-positioned to navigate market volatility and capitalize on future opportunities.

References:
[1] https://variety.com/2025/digital/news/roku-q2-2025-earnings-revenue-profit-1236475732/
[2] https://www.ainvest.com/news/roku-dominance-streaming-continues-robust-cash-flow-growth-2508/
[3] https://www.marketbeat.com/instant-alerts/pivotal-research-boosts-roku-nasdaqroku-price-target-to-12000-2025-08-01/