Streaming TV platform Roku (NASDAQ: ROKU) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 16.1% year on year to $1.39 billion. Guidance for next quarter’s revenue was optimistic at $1.2 billion at the midpoint, 3% above analysts’ estimates. Its GAAP profit of $0.53 per share was 88.8% above analysts’ consensus estimates.

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Revenue: $1.39 billion vs analyst estimates of $1.35 billion (16.1% year-on-year growth, 3% beat)

EPS (GAAP): $0.53 vs analyst estimates of $0.28 (88.8% beat)

Adjusted EBITDA: $169.4 million vs analyst estimates of $146 million (12.1% margin, 16% beat)

Revenue Guidance for Q1 CY2026 is $1.2 billion at the midpoint, above analyst estimates of $1.17 billion

EBITDA guidance for the upcoming financial year 2026 is $635 million at the midpoint, above analyst estimates of $581 million

Operating Margin: 4.7%, up from -3.3% in the same quarter last year

Free Cash Flow Margin: 34.7%, up from 10.4% in the previous quarter

Market Capitalization: $12.99 billion

With a name meaning six in Japanese because it was the founder's sixth company that he started, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Roku’s sales grew at a solid 14.9% compounded annual growth rate over the last three years. Its growth beat the average consumer internet company and shows its offerings resonate with customers, a helpful starting point for our analysis.

This quarter, Roku reported year-on-year revenue growth of 16.1%, and its $1.39 billion of revenue exceeded Wall Street’s estimates by 3%. Company management is currently guiding for a 17.6% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 12.9% over the next 12 months, a slight deceleration versus the last three years. Still, this projection is above average for the sector and implies the market is baking in some success for its newer products and services.

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Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Roku has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 12.1% over the last two years, better than the broader consumer internet sector.

Taking a step back, we can see that Roku’s margin expanded by 22.9 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Roku’s free cash flow clocked in at $483.6 million in Q4, equivalent to a 34.7% margin. This result was good as its margin was 28.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.

We were impressed by Roku’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 7.5% to $88.99 immediately after reporting.

Roku had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.