One-glance verdict
Overvalued
$71.10 our estimate vs market $153.81
Wall Street consensus: $162.33 (128.3% higher than our fair-value estimate)
116% above our estimate, beyond the bull case
Fundamentals snapshot
Roku, Inc.
ROKU · NMS · Communication Services · Entertainment
Current price
$153.81
52-week range
$78.53 - $159.89
Market cap
$22.84B
Balance sheet
Healthy
-2.95x Concerning
Net cash $2.08B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 10.0% last year.
- Reward Returns 13.1% on equity, ahead of 20% of its peers.
- Reward Free cash flow was positive in 6/10 years.
- Risk Insider ownership is only 0.7% (peer median: 3.3%).
What this company does
Roku, Inc.
Roku sells streaming players and smart TVs, but it makes most of its money from its software platform by selling ads and taking a cut of subscription sales. This creates a powerful ecosystem (a network of products and services that work together, making customers more likely to stay). The company's goal is to grow its base of active users, as this directly increases its more profitable advertising and platform revenue, rather than relying on one-time device sales.
How the company got here
Roku was started in 2002 by Anthony Wood, who had earlier invented the DVR (Digital Video Recorder) because he was tired of missing his favorite TV shows. The company's big break came in 2008 when it launched one of the first devices that could stream Netflix content directly to a TV. This simple box made it easy for people to watch internet video on their main screen, which was a new idea at the time. Over the years, Roku expanded from selling small streaming players to also providing the software that runs on smart TVs made by other companies, like TCL and Hisense. This shift turned Roku from just a hardware company into a platform, which is now the core of its business.
What it actually does
Roku provides a TV streaming platform that helps you watch movies, shows, and live TV over the internet. You can use Roku through one of their physical devices, like a small black box or a streaming stick that plugs into your TV, or on a smart TV that has the Roku software already built-in. The main screen, or home screen, organizes all your streaming apps like Netflix, Hulu, and Disney+ in one place. Roku also has its own free, ad-supported channel called The Roku Channel, which offers a library of movies and shows.
Platform
This is Roku's main business and where it makes most of its money and nearly all of its profit. This part of the company doesn't sell physical gadgets; instead, it earns money through advertising shown to viewers on the Roku platform, including on its own Roku Channel. It also takes a cut when you subscribe to a service like HBO Max through your Roku device or rent a movie. TV manufacturers also pay Roku licensing fees (a permission fee) to use the Roku operating system on the smart TVs they sell. This segment is the company's profit engine, making up the vast majority of total revenue.
Devices
This segment is the part of the business that sells physical hardware products to consumers. This includes Roku's well-known streaming players, streaming sticks, and audio products like soundbars. More recently, Roku has also started selling its own Roku-branded TVs and smart home products like cameras and doorbells. The company often sells these devices at a low price, sometimes even at a loss, because the main goal is to get more people onto its platform. While this segment brings in revenue, it's a much smaller piece of the business compared to the Platform segment.
What management is betting on now
Roku's leadership is focused on growing its higher-profit Platform business rather than just selling more devices. A key priority is to increase the number of active user accounts and keep those users engaged by making it easier to find content. The company is heavily invested in improving its advertising technology, allowing advertisers to better target specific audiences, which makes the ad space more valuable. They are also looking to expand internationally in a targeted way and are exploring how artificial intelligence (AI) can help personalize the viewing experience and improve ad effectiveness.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$67.61M
FY2024 Q4
$76.83M
FY2025 Q1
$136.80M
FY2025 Q2
$108.61M
FY2025 Q3
$126.47M
FY2025 Q4
$106.56M
FY2026 Q1
$196.01M
FY2026 Q2
$280.87M
Revenue
$1.35B
Net income
$164.22M
Diluted EPS
1.08
Operating cash flow
$284.64M
Free cash flow
$280.87M
Fetching…
Sources
Revenue
$1.25B
Net income
$85.70M
Diluted EPS
0.57
Operating cash flow
$199.14M
Free cash flow
$196.01M
Fetching…
Sources
Revenue
$1.39B
Net income
$80.48M
Diluted EPS
0.55
Operating cash flow
$107.65M
Free cash flow
$106.56M
Fetching…
Sources
Revenue
$1.21B
Net income
$24.81M
Diluted EPS
0.16
Operating cash flow
$127.60M
Free cash flow
$126.47M
Fetching…
Sources
Revenue
$1.11B
Net income
$10.50M
Diluted EPS
0.07
Operating cash flow
$109.73M
Free cash flow
$108.61M
Fetching…
Sources
Revenue
$1.02B
Net income
$-27.43M
Diluted EPS
-0.19
Operating cash flow
$138.73M
Free cash flow
$136.80M
Fetching…
Sources
Revenue
$1.20B
Net income
$-35.55M
Diluted EPS
-0.24
Operating cash flow
$79.29M
Free cash flow
$76.83M
Fetching…
Sources
Revenue
$1.06B
Net income
$-9.03M
Diluted EPS
-0.06
Operating cash flow
$68.66M
Free cash flow
$67.61M
Fetching…
Sources
Is it cheap or expensive?
Fair value $71.10 vs current price $153.81
Wall Street consensus is the average analyst price target: $162.33 (128.3% higher than our fair-value estimate).
Our most-likely fair value is $71.10 a share — about 53.8% below today's price of $153.81, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $2.1B - more cash than debt. Interest coverage -3.0x.
Net debt
$-2.08B
Interest coverage
-2.95x
Roku, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
ROKU
BASELINE
Roku, Inc.
Total debt $474.12M Interest coverage -2.95x This is the baseline the peer rows are being compared against.
Total debt $16.65B Interest coverage 17.16x This peer still has a real interest-payment cushion, while ROKU does not.
Total debt $523.42M Interest coverage 70.90x This peer still has a real interest-payment cushion, while ROKU does not.
Total debt $434.11M Interest coverage 8.58x This peer still has a real interest-payment cushion, while ROKU does not.
Total debt $402.74M Interest coverage -9.22x Neither company has much profit cushion over interest right now.
What you should know
The case for and against ROKU
3 Rewards
1 Risk
Rewards
-
Revenue grew 10.0% last year.
-
Returns 13.1% on equity, ahead of 20% of its peers.
-
Free cash flow was positive in 6/10 years.
Risks
-
Insider ownership is only 0.7% (peer median: 3.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
65.45x
Forward P/E
38.92x
P/B
8.08x
P/S
4.39x
EV/EBITDA
35.83x
PEG ratio
0.59x
Profitability
How much profit each dollar creates
Gross margin
45.5%
Operating margin
12.2%
Net margin
6.8%
ROE
13.1%
ROA
4.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.17x
Current ratio
2.87x
Quick ratio
2.65x
Total debt
$474.12M
Total cash
$2.56B
Growth
How the business has been compounding
Revenue TTM
$5.21B
Revenue 5Y CAGR
14.4%
EPS TTM
2.35
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$719.04M
Free CF TTM
$478.44M
FCF margin
9.2%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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