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The call conveyed a predominantly positive operational and financial trajectory: strong platform, advertising, and subscription revenue growth; meaningful margin expansion in advertising; record-like free cash flow; broad DSP and AI-driven product momentum; and a major scale milestone of 100M streaming households. Offsetting risks include device revenue and margin pressure from falling ASPs and rising memory costs, subscription gross margin mix effects, and second-half visibility risks tied to political ad spending and tougher comparables. On balance, the positive growth, margin improvement in the core platform business, and strong cash generation outweigh the device and mix headwinds.
Roku guided Q2 platform revenue to about 20% year‑over‑year growth (with advertising and subscriptions each roughly at that pace) and raised full‑year platform revenue guidance by over $100 million (≈3 percentage points) to nearly 21%; management said EBITDA and EBITDA margins are being increased and free cash flow is expected to again exceed adjusted EBITDA for the full year. For context, Q1 included platform revenue +28%, advertising revenue +27%, subscription revenue +30% (23% ex‑Friendly), EBITDA margin nearly 12% (more than doubled YoY), $148 million of free cash flow (~16% FCF margin), ad gross margin just over 60% (up >400 bps YoY), subscription gross margin just north of 40% (expected ~41–42% for the year) and platform gross margin toward the high end of ~51–52%; device investment and unit assumptions (including expected elevated memory costs) remain unchanged from last quarter, and the company has greater visibility into Q2 than the more conservatively modeled back half.
Platform revenue grew 28% year-over-year; advertising revenue grew 27% year-over-year. Management expects Q2 platform revenue growth of ~20% and raised full-year platform revenue guidance by over $100 million to nearly 21% growth.
Subscription revenue grew 30% year-over-year (23% ex-Friendly acquisition), driven by premium subscription sign-ups and new tier-one launches including Apple TV (March) and Peacock.
EBITDA margins more than doubled year-over-year to nearly 12%. Free cash flow was $148 million (second-highest on record) with free cash flow margins of nearly 16%. Management expects free cash flow to again exceed adjusted EBITDA for the full year.
Advertising gross margin was just over 60% (up ~400 basis points year-over-year). Non-M&E advertisers reached an all-time high of ~30% of Roku Experience ad revenue, reflecting successful demand diversification and new higher-margin ad products (e.g., home screen video).
Roku surpassed 100 million streaming households and reports nearly half of streaming in the U.S. occurs on its platform, reinforcing scale for monetization and partner distribution.
Major third-party DSP integrations (Amazon, The Trade Desk, DV360/Campaign Manager 360, Yahoo, FreeWheel) are ramping and most video delivery is now via programmatic partners. Ads Manager adoption is growing and management emphasized broad generative AI adoption to improve discovery, ad performance, creative generation, engineer productivity, and new SMB-oriented ad products.
Large-scale home screen test shows encouraging results: increased engagement, higher viewer satisfaction, and improved monetization (marquee ad viewed earlier, higher click-through rates). Company plans broad rollout.
Hello, and thank you for standing by. Welcome to Roku, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
I would now like to hand the conference over to Conrad Grodd, Vice President, Investor Relations. You may begin. Good afternoon. Welcome to Roku, Inc.'s first quarter 2026 earnings call.
Joining us on today's call are Anthony J. Wood, Roku, Inc.'s founder and CEO; Dan Jedda, our CFO and COO; Charlie Collier, President, Roku Media; and Mustafa Ozgen, President, Devices. On this call, we will make forward-looking statements which are subject to risks and uncertainties. Please refer to our shareholder letter and periodic SEC filings for risk factors that could cause our actual results to differ materially from these forward-looking statements. We will also present GAAP and non-GAAP financial measures. Reconciliations of non-GAAP measures to the most comparable GAAP financial measures are provided in our shareholder letter. Unless otherwise stated, all comparisons will be against our results for the comparable 2025 period. With that, operator, our first question, please.
Thank you. Please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we co...
