Streaming TV platform Roku (NASDAQ: ROKU) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 14.8% year on year to $1.11 billion. The company expects next quarter’s revenue to be around $1.2 billion, coming in 2.7% above analysts’ estimates. Its GAAP profit of $0.07 per share was significantly above analysts’ consensus estimates.
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Roku (ROKU) Q2 CY2025 Highlights:
- Revenue: $1.11 billion vs analyst estimates of $1.07 billion (14.8% year-on-year growth, 3.8% beat)
- EPS (GAAP): $0.07 vs analyst estimates of -$0.16 (significant beat)
- Adjusted EBITDA: $78.19 million vs analyst estimates of $70.9 million (7% margin, 10.3% beat)
- Revenue Guidance for the full year is $4.08 billion at the midpoint, below analyst estimates of $4.56 billion
- EBITDA guidance for the full year is $375 million at the midpoint, above analyst estimates of $353.8 million
- Operating Margin: -2.1%, up from -7.4% in the same quarter last year
- Free Cash Flow Margin: 35.3%, up from 13.4% in the previous quarter
- Total Hours Streamed: 35.4 billion, up 5.3 billion year on year
- Market Capitalization: $13.49 billion
Company Overview
Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Roku’s 13% annualized revenue growth over the last three years was decent. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Roku reported year-on-year revenue growth of 14.8%, and its $1.11 billion of revenue exceeded Wall Street’s estimates by 3.8%. Company management is currently guiding for a 13% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.1% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products and services will see some demand headwinds.
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Total Hours Streamed
User Growth
As a subscription-based app, Roku generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Roku’s total hours streamed, a key performance metric for the company, increased by 19.6% annually to 35.4 billion in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
In Q2, Roku added 5.3 billion total hours streamed, leading to 17.6% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Roku’s ARPU fell over the last two years, averaging 12.9% annual declines. This isn’t great, but the increase in total hours streamed is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Roku tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace. 
This quarter, Roku’s ARPU clocked in at $0.03. It declined 99.9% year on year, worse than the change in its total hours streamed.
Key Takeaways from Roku’s Q2 Results
We were impressed by how significantly Roku blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. On the other hand, its full-year revenue guidance missed, and this is weighing on shares. The stock traded down 1.6% to $92.74 immediately following the results.
So should you invest in Roku right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.