What’s Next for Roku Stock After Q2 Earnings?

Roku’s Second-Quarter 2025 Performance Outlook

Roku is set to release its second-quarter 2025 financial results on July 31. The company has provided preliminary guidance, projecting total net revenues of approximately $1.07 billion for the quarter, representing an 11% year-over-year increase. Platform revenues are expected to rise by 14%, while Device revenues are anticipated to decline by 10%. Additionally, Roku anticipates a first-quarter gross profit of around $465 million and an adjusted EBITDA of approximately $70 million.

The Zacks Consensus Estimate for Roku’s second-quarter revenues aligns closely with this projection at $1.07 billion, indicating a year-over-year growth of 10.79%. Analysts also expect a loss of 16 cents per share, reflecting a 33.33% improvement compared to the previous year.

Earnings Expectations and Historical Performance

In the last reported quarter, Roku delivered an earnings surprise of 29.63%, surpassing the Zacks Consensus Estimate. Over the past four quarters, the company has consistently beaten expectations, with an average earnings surprise of 51.15%.

According to Earnings Whispers, which uses predictive models to forecast earnings outcomes, Roku is likely to beat expectations again. This prediction is supported by a positive Earnings ESP (Earnings Surprise Prediction) and a Zacks Rank of #2 (Buy). Investors can use tools like the Earnings ESP Filter to identify stocks with high potential for beating estimates before they are released.

Currently, Roku has an Earnings ESP of +7.41% and a Zacks Rank of #2. These metrics suggest a strong likelihood of exceeding analyst expectations in the upcoming quarter.

Strategic Collaborations and Business Developments

As Roku prepares to report its second-quarter results, several strategic developments may influence its performance. The company has formed partnerships with major brands such as Airbnb, Walmart, Amazon, and Adobe, which are expected to bolster its advertising and streaming business.

During the first quarter, Roku’s romantic comedy “This Time Next Year” was sponsored by Airbnb, while Walmart partnered on its first shoppable content, “Roku Recipes.” These initiatives were aimed at increasing advertiser interest in The Roku Channel. With continued collaboration from these partners and the introduction of AI-driven content recommendations, The Roku Channel experienced an 84% year-over-year increase in streaming hours. This trend is likely to continue, supporting revenue growth.

In terms of subscriptions, Roku has been steadily adding millions of new subscribers each month. User participation in subscription offers has grown, and this momentum is expected to carry over into the second quarter. The acquisition of Frndly TV in the first quarter further strengthens Roku’s subscription base, directly impacting Platform revenues.

Additionally, Roku’s partnership with Amazon Ads in June enabled access to 80 million U.S. Connected TV households through Amazon DSP. This collaboration is expected to enhance Roku’s advertising capabilities in the current quarter. Earlier partnerships with Adobe’s Real-Time CDP and INCRMNTAL have also contributed to improved ROI for advertisers, setting the stage for continued growth in Platform revenues.

Challenges in the Devices Segment

Despite the positive outlook for Platform revenues, the Devices segment is expected to remain a challenge. The segment’s margins are projected to stay negative in the second quarter. Although Roku launched new device line-ups in the U.S. and international markets, the company does not prioritize short-term revenue growth in this area due to its fluctuating nature.

Revenue Projections for Q2

According to the Zacks Consensus Estimate, Devices revenues for the second quarter are expected to reach $129 million, while Platform revenues are projected to be $943 million.

Stock Performance and Valuation

Roku’s stock has shown strong performance year-to-date, gaining 25.7%. This outperforms the Zacks Consumer Discretionary sector, which grew by 10%, and the S&P 500 index, which increased by 8.2%.

From a valuation standpoint, Roku currently trades at a price-to-cash flow ratio of 42.49X, significantly higher than the industry average of 32.84X. This premium valuation reflects investor confidence in Roku’s growth potential. As of March 31, 2025, the company generated $310.1 million in operating cash flow over the trailing 12 months, demonstrating its strong cash-generating ability. Despite its high valuation, Roku’s growing scale justifies the premium.

Investment Considerations

Roku continues to show strong platform fundamentals, including robust user engagement, innovative monetization strategies, and expanding partnerships across the advertising and streaming ecosystem. The company is expected to deliver double-digit growth in Platform revenues for the second quarter, supported by consistent earnings surprises and strategic collaborations.

With solid top-line growth, strong operating cash flow, and expanding monetization opportunities, Roku remains an attractive option for growth-focused investors.

Conclusion

Roku’s platform momentum remains strong, driven by double-digit growth in Platform revenues, consistent earnings surprises, and rising engagement fueled by AI-powered content discovery and strategic partnerships. Innovations in Home Screen monetization and successful collaborations with brands highlight the company’s ability to adapt and scale in the evolving streaming landscape. With solid financial performance and strong market position, Roku presents a compelling opportunity for long-term investors.