Roku ROKU reported fourth-quarter 2024 loss of 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 44 cents. The company had incurred a loss of 55 cents per share in the year-ago quarter.

Revenues increased 22% from the year-ago quarter’s level to $1.2 billion and beat the consensus mark by 4.48%. 

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Roku continued to expand penetration in the United States, which has surpassed half of broadband households. Globally, Roku ended 2024 with 89.8 million streaming households and surpassed 90 million in the first week of January 2025. Fourth-quarter 2024 net adds were 4.3 million, and full-year 2024 net adds were 9.8 million.

The average revenue per user increased 4% year over year at $41.49 (on a trailing 12-month basis).

Notably, Roku will no longer report quarterly updates on streaming households and, by extension, ARPU, beginning with first-quarter 2025 earnings results. The company expects to continue to grow streaming households in all operating locations, including the United States where penetration has already surpassed half of broadband households.

Strength in The Roku Channel, Roku TV Aids Top Line

In the fourth quarter, The Roku Channel reached U.S. households with approximately 145 million people and remained the #3 app on its platform by both reach and engagement, with Streaming Hours up 82% year over year. This tremendous growth is a result of Roku’s ability to recommend relevant content throughout the Roku Experience, as well as its broad content offering.

In December, more than 80% of streaming hours on The Roku Channel originated from the Roku Experience (not a Roku Channel app tile), a 15-point increase from a year ago. In the fourth quarter, Roku expanded its live sports offering with a new NBA G League partnership. The Roku Sports Channel will now be the exclusive streaming home to the first of more than 40 live games, available for free. 

Also, The Roku Channel recently became the U.S. streaming home to the X Games, the world's premier action sports competition. Prominent brands, including Neutrogena owned by Johnson & Johnson JNJ partnered with Roku to leverage its original programming and the significant reach of The Roku Channel, to keep their products top of mind for consumers this past holiday season. Pepsi PEP presented the micro series Epic Holiday Eats and Coca-Cola COKE sponsored Roku Originals Roku Rewind and Honest Renovations: A Holiday Makeover.

In the fourth quarter, advertising activities grew faster than Platform revenues and outperformed both the overall ad market and the OTT ad market in the United States. The year-over-year growth of the Political, Auto and Retail ad verticals was up on the Roku platform.

This Zacks Rank #2 (Buy) company continues to make progress, growing ad demand through deeper third-party platform integrations, improving the Roku Experience to expand monetization, and growing Roku-billed subscriptions. The Roku Experience begins with the Home Screen (which is the interface of viewers’ streaming experience), the lead-in to TV for U.S. households with more than 125 million people every day. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the United States, the Roku TV operating system (OS) has been the #1 selling TV OS for six consecutive years. In the fourth quarter and 2024, sales of TV units powered by the Roku TV OS were once again greater than those of the #2 and #3 selling TV operating systems combined.

Quarter Details of ROKU

Platform revenues (86.2% of revenues) increased 24.9% year over year to $1.03 billion, driven by advertising activities, particularly from the political vertical.

Devices revenues (13.8% of revenues) rose 6.5% from the year-ago quarter’s level to $165.7 million.

ROKU Operating Details

Gross margin, as a percentage of total revenues, contracted 180 basis points from the year-ago quarter’s level to 42.7%.

Operating expenses increased 1.8% year over year to $551.7 million. As a percentage of total revenues, the metric contracted to 910% from 45.9% reported in the year-ago quarter.

Research & development and sales & marketing expenses increased 0.9% and 2.8% on a year-over-year basis to $185.4 million and $271.9 million, respectively. General & administrative expenses increased 0.7% to $94.4 million.

In the fourth quarter, adjusted EBITDA was $77.5 million, up 62.3% year over year. 

Operating loss was $39.1 million in the reported quarter compared with an operating loss of $104.2 million in the year-ago quarter.

Balance Sheet of Roku

As of Dec. 31, 2024, cash and cash equivalents were $2.16 billion compared with $2.12 billion as of Sept. 30, 2024. As of Dec. 31, 2024, Roku had no long-term debt.

Roku Provides Guidance for Q1 & 2025

For the first quarter, Roku estimates total net revenues of $1.005 billion, up 14% year over year. Platform revenues are expected to grow 16% year over year, while Devices revenues are likely to remain largely flat year over year due to elevated inventory from lower holiday sales. Roku expects first-quarter total gross profit of $450 million and adjusted EBITDA of $55 million. 

For 2025, Roku expects total net revenues of $4.61 billion, total gross profit of $2.005 billion and adjusted EBITDA of $350 million. Platform revenues are expected to grow 12% year over year to $3.95 billion. Excluding political, this represents year-over-year growth of 15%, slightly above the growth in 2024.

Roku anticipates Devices revenues to be $660 million, growing 12% year over year. Platform gross margin is expected to be between 52% and 53%. Roku is maintaining its focus on operational discipline, while continuing to invest in Platform growth. The company anticipates mid-single-digit year-over-year growth in operating expenses with a path to operating income positive in 2026.

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