Roku NASDAQ: ROKU executives highlighted what CEO Anthony Wood called an “outstanding quarter” on the company’s first-quarter 2026 earnings call, pointing to accelerating platform growth, expanding advertising capabilities, and continued momentum in subscriptions. Management also discussed product changes such as a revamped home screen, the company’s approach to original programming, and how rising memory costs are affecting the devices business.
Management cites strong platform growth and improved profitability
Wood said the company is “very happy” with Roku’s business trajectory and emphasized progress in monetization initiatives. He told analysts that advertising revenue grew 27% in the quarter and that adoption of Roku’s Ads Manager is increasing as the company works to build “a highly performant connected TV ad platform.”
Dan Jedda, Roku’s CFO and COO, added that platform revenue rose 28% and came in ahead of the company’s outlook, citing benefits from the Olympics and the Super Bowl. He also pointed to stronger profitability and cash generation, saying EBITDA margins “more than doubled year-over-year to nearly 12%.” Jedda said free cash flow was $148 million, which he described as the company’s second-highest free cash flow quarter on record and near a 16% free cash flow margin.
Wood also noted the company recently passed 100 million streaming households, calling it “a huge milestone.”
Guidance bridge: lapping comps, event-driven tailwinds, and limited H2 visibility
Asked to reconcile the strong first-quarter performance with guidance for the second quarter and full year, Jedda outlined several factors affecting year-over-year comparisons.
He said the company begins lapping its Frndly acquisition in the second quarter and noted that excluding Frndly in Q1, subscription revenue growth was 23%. He also emphasized that the first quarter benefited from easier advertising comparisons and from major live events.
- Lapping Frndly: The company begins lapping the acquisition in Q2; excluding Frndly in Q1, subscription growth was 23%.
- Tougher ad comps later: Jedda said Q1 of last year had advertising growth of 12%, while growth stepped up to 19% in Q2 of last year, making comparisons more challenging for the remainder of the year once political advertising in 2025 is backed out.
- Event impact: Q1 benefited from the Olympics and Super Bowl, which helped drive subscriptions and media and entertainment (M&E) spend.
Even with those dynamics, Jedda said Roku expects second-quarter platform revenue to grow about 20% year-over-year, with subscriptions and advertising “both to be around this level of growth rate.” For the full year, he said the company raised platform revenue guidance by “over $100 million,” representing roughly three points of growth to “nearly 21%.” He also said Roku is increasing its EBITDA and EBITDA margin outlook, and reiterated that free cash flow is expected to be above adjusted EBITDA for the full year.
However, Jedda cautioned that Roku has “much stronger visibility into Q2 versus H2,” citing the macro environment and saying the company is “being a little conservative” on the second half while it gains better visibility into political advertising and other initiatives.
Advertising: third-party DSP strategy expands reach; home screen monetization supports margins
Charlie Collier, President of Roku Media, said the company’s third-party demand-side platform (DSP) strategy is centered on being “open and interoperable” and deeply integrated with major buying platforms, so clients can transact through the DSPs they prefer. Collier said Roku extended its relationship with Google’s DV360 and described the first quarter as evidence the third-party programmatic approach is working.
“The majority of our video delivery is now through third-party programmatic partners,” Collier said, adding that Roku is growing quickly as these integrations ramp. He said advertisers can access Roku’s premium inventory through “virtually every major buying platform,” naming Amazon DSP, The Trade Desk, Yahoo, and FreeWheel among others.
Collier also discussed DV360’s importance, saying Roku is the first streamer to participate in a “publisher match.” He said the integration enables advertisers to activate Google first-party data and their own first-party data on Roku within DV360, and that Campaign Manager 360 measurement can help demonstrate Roku’s performance “up and down the marketing funnel.”
On profitability, Jedda said advertising gross margin was “just over 60%” in Q1, up more than 400 basis points year-over-year. He attributed gains to factors including higher-value ad products and home screen monetization, such as adding video to the home screen. Jedda said he believes the level is sustainable for the rest of the year and “could potentially even come up.”
Roku also highlighted demand diversification. Collier said non-M&E brands represented “nearly 30%” of Roku experience advertising revenue in Q1, calling it an all-time high and a deliberate effort to reduce reliance on any single category.
Subscriptions: premium partner launches drive growth; margins pressured by mix
Wood said subscription revenue grew 30% and was driven by premium subscription signups. Management cited recent additions and expansions in the company’s premium subscription ecosystem, including Apple TV in March and Peacock, as well as premium subscription launches in Mexico.
Asked about subscription revenue forecasting and seasonality, Jedda said there is seasonality—such as increases during sports seasons like the NFL—but noted Roku monetizes “tens of millions of subscriptions,” making quarter-to-quarter seasonality less impactful overall. He emphasized that adding premium subscription partners across “Tier 1, Tier 2, Tier 3” is a key driver of incremental subscribers and revenue, and he said the current growth rate is “sustainable” given continued partner launches and feature additions.
On subscription gross margin, Jedda said it was “just north of 40%” in Q1 and down due to mix, with some faster-growing activities carrying lower margins. He said he expects subscription gross margin to remain in the “41%-42% level” for the rest of the year.
Home screen rollout, AI adoption, and device economics
Wood addressed testing of a new Roku home screen, describing it as a “big change” that will ultimately roll out to all customers. He said Roku is focused on ensuring viewers are satisfied, preserving Roku’s “iconic look,” and improving engagement and monetization through subscriptions and advertising.
Wood said results in testing show higher engagement, strong viewer satisfaction, and increased monetization. He gave one example: with the new design, the marquee ad is visible immediately when the home screen launches rather than requiring a scroll, which he said is increasing click-through rates and making the unit more valuable.
On AI, Wood called it a “very big opportunity” and said Roku is integrating it across its technology stack to improve discovery, engagement, and advertising performance. He said the company is moving algorithms to “modern generative AI algorithms,” and described AI as accelerating engineering productivity. Wood also said Ads Manager is “only possible because of generative AI,” enabling video creation and expanding Roku’s addressable market to performance advertisers and small and medium-sized businesses. On costs, he said Roku is monitoring token and other AI-related costs, calling them “very manageable” at present.
In devices, executives discussed the effect of rising memory prices and shifts in device economics. Wood said Roku’s TV operating system requires less memory and storage than competing platforms, which he said is an advantage as memory prices rise—particularly for Roku’s third-party OEM ecosystem, where a bill-of-materials advantage can help Roku win more accounts and retail placements.
Jedda said Roku remains confident it can expand EBITDA margins in 2026 and beyond, citing expectations for double-digit platform revenue growth and “strategic flexibility” in managing device investment across device gross profit and distribution costs. He said the company’s full-year outlook already accounted for higher memory costs and that expected overall device investment and unit sales assumptions have not changed from the prior quarter.
Addressing device revenue and margin pressure, Jedda said average selling prices for streaming players “continue to come down,” while memory costs are higher, affecting device margins. He added that Roku is “on track” for total device unit expectations and rejected the notion that Roku was pushed out of Walmart, saying the company continues to sell “a lot of units” there and that first-party TVs are “growing quite well” year-over-year.
Mustafa Ozgen, President of Devices, said Roku is diversifying retail distribution, with growth at Target, Best Buy, Amazon, and regional retailers, and expects to add more retailers in the second half of the year. He also said Roku is expanding and diversifying TV OEM licensing agreements, including with TCL and Hisense, and expects updated partnerships to show impact in second-half product sales.
Closing the call, Wood again characterized the period as an “outstanding quarter” and thanked employees, customers, advertisers, and content partners.
About Roku NASDAQ: ROKU
Roku, Inc NASDAQ: ROKU is a technology company that develops and operates a proprietary streaming platform designed to deliver entertainment content to consumers via internet-connected devices and smart televisions. Since its inception in 2002 in California, Roku has focused on simplifying access to streaming services for viewers worldwide. The company's platform enables users to discover, access and manage a wide array of over-the-top content from major streaming services, free ad-supported channels and niche providers.
At the core of Roku's product lineup are a range of streaming players and sticks, which connect to televisions via HDMI and deliver the Roku OS experience.
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