Should Roku Stock Be in Your Portfolio Before the Q3 Earnings Release?

Core Insights - Roku is expected to report third-quarter 2025 results on October 30, with projected total net revenues of approximately $1.2 billion, reflecting a 13% year-over-year increase [1][9] - The company anticipates Platform revenues to grow by 16% year-over-year, while Devices revenues are expected to decline by 3% [1][9] - Total gross profit for the third quarter is estimated to be around $520 million, with adjusted EBITDA expected to be approximately $110 million [1] Revenue Expectations - The Zacks Consensus Estimate for third-quarter revenues is set at $1.21 billion, indicating a year-over-year growth of 13.46% [2] - The consensus estimate for earnings is 7 cents per share, showing a significant improvement from a loss of 6 cents per share in the previous year [2] Performance Indicators - In the last reported quarter, Roku achieved an earnings surprise of 143.75%, consistently beating the Zacks Consensus Estimate in the past four quarters with an average surprise of 75.42% [3] - The upcoming results are expected to benefit from strong growth in video advertising and demand diversification, with platform revenues growing 18% year-over-year in the previous quarter [4] Advertising and Integration Developments - Roku's integration with Amazon's demand-side platform (DSP) is expected to enhance programmatic access and optimize ad pricing, contributing to improved monetization efficiency [5] - The Roku Channel (TRC) has been a significant growth driver, ranking 2 in the U.S. by engagement and 3 globally by reach, with continued audience engagement expected [6] Challenges in Devices Segment - The Devices segment is anticipated to face a 3% year-over-year decline, with negative gross margins in the mid-teens due to increased material costs and tariffs [7] - Despite a favorable shift towards higher-margin platform revenues, the softness in the Devices segment is likely to impact overall gross margin performance [7] Earnings Prediction Model - The current model does not predict a conclusive earnings beat for Roku, with an Earnings ESP of 0.00% and a Zacks Rank of 3 [8][10]