Roku, Inc. (ROKU) Business Profile

What it does

Roku operates a TV streaming platform that connects viewers with entertainment, content providers with audiences, and advertisers with viewers. It was founded in October 2002 and is headquartered in Los Gatos. Anthony Wood is its chief executive officer.

The platform is built around Roku TV OS, software designed for televisions. It powers Roku streaming players and Roku-made TVs, as well as TVs made by manufacturers that license the operating system. Through a broadband connection, viewers can use these devices to access streaming apps and find programs across the platform. Roku also sells projectors, audio equipment and smart home products.

Roku’s home screen helps viewers navigate among streaming options and recommends content from apps across the platform. The company also operates its own streaming services. The Roku Channel offers free, advertising-supported movies, shows and live channels, as well as access to paid subscriptions. Howdy is an ad-free subscription service, while Frndly TV offers live TV and on-demand video by subscription.

For content partners, Roku provides distribution, billing, promotion and audience analytics. Advertisers can buy video ads and placements within the Roku experience, including on the home screen. Roku’s stated business model is to grow the number of households using its platform, increase their engagement and generate revenue from that engagement.

How it makes money

Roku reports two segments: Platform and Devices. Platform revenue comes from digital advertising and the distribution of streaming services. Devices revenue comes from sales of streaming players, Roku-made TVs, smart home products and services, audio products and accessories.

On the platform, advertisers can buy video ads shown during content and display ads embedded in the user interface. Roku sells advertising directly and through automated buying channels. Its inventory includes ads on The Roku Channel, placements across the Roku experience and inventory obtained through agreements with content partners. Advertisers can also use Roku Ads Manager, a self-service buying platform.

Distribution revenue includes shares of subscription and transaction revenue, sales of Premium Subscriptions and Roku’s own subscription services, and payments for branded app buttons on remote controls. Roku’s billing service lets content partners manage subscriptions, payment methods and invoices. Subscribers can also manage subscriptions to participating services through The Roku Channel on a single monthly bill.

Some of Roku’s services are free to viewers and supported by advertising; others charge recurring subscription fees. Howdy, for example, launched in the United States at $2.99 per month. Frndly TV combines a subscription offering with live and on-demand content.

Roku manages device selling prices to encourage more households to join the platform. It expects that the trade-off in Devices gross profit or loss will lead to greater Platform revenue and gross profit over time. Devices recorded a gross loss in 2025. Platform revenue was $4.1 billion for the year ended December 31, 2025, up from $3.5 billion in 2024.

Customers and how it sells

Roku serves viewers, streaming content partners and advertisers. Viewers use its devices and platform to find free, subscription and transactional content. Content partners use Roku to distribute and promote apps, manage billing and study viewership. Advertisers range from small and medium-sized businesses to large enterprises.

Customer J accounted for 11.0% of revenue in FY2025. Roku sells devices through retailers and online channels, including Best Buy, Target, Walmart and Amazon. Those four retailers collectively accounted for 81% of Devices revenue for the year ended December 31, 2025. Roku also sells through its own website and through international distributors and retailers.

Roku streaming devices are available in 15+ countries. Roku says it is the leading TV streaming platform in the United States, Canada and Mexico by hours streamed. Most Platform and Devices revenue has been generated in the United States.

The Roku Channel is available on Roku-powered devices in the United States, United Kingdom, Canada and Mexico. In the United States, viewers can also access it online, through Roku’s mobile app and on certain other companies’ devices. Mexico is its largest market outside the United States by Streaming Households and Streaming Hours.

Suppliers and costs

Roku outsources product manufacturing to contract manufacturers, original design manufacturers and other vendors. Its products are manufactured in China, Southeast Asia, Brazil and Mexico. Manufacturers procure components and assemble products using Roku’s demand forecasts, then ship them to third-party warehouses for distribution to retailers, distributors and consumers. Roku’s contracts do not require those partners to supply a specified quantity or price.

Roku identifies access to key components from sole-source suppliers as a risk, but does not name those suppliers in the available business description. It also relies on licensed content for The Roku Channel and obtains advertising inventory through content partner agreements.

Platform costs include acquiring advertising inventory, amortizing licensed and produced content, licensing Premium Subscriptions and sharing revenue on licensed content. Payment processing, cloud services and personnel are also costs. Devices costs consist mostly of payments to manufacturers, plus technology royalties, freight, duties, logistics and inventory provisions.

Roku also spends on product development, sales, marketing and administration. In 2025, higher Premium Subscription licensing and content acquisition costs contributed to an increase in Platform cost of revenue.

Competitive position

Roku competes across streaming devices and operating systems, content, advertising and other entertainment. It faces companies that make streaming devices or license TV operating systems, TV brands with their own streaming solutions, streaming apps and content producers. It also competes with other media and entertainment providers for viewers, advertising, content rights and creative talent.

Amazon, Samsung and Google offer TV platforms on which The Roku Channel is available in the United States. These platforms compete with Roku for streaming access while also distributing Roku’s service. Amazon is also one of the retailers selling Roku devices.

Roku says its home-screen experience and scale of more than 90 million Streaming Households globally are a competitive advantage. Its recommendations draw on content across streaming apps, and its direct viewer relationships provide data used for recommendations and advertising measurement. Roku TV OS is also licensed to TV manufacturers, extending the number of devices through which viewers can reach the platform.

Our reading: Roku’s household reach and prominent home screen give it a meaningful distribution advantage, because partners can use them to reach viewers and promote content. Our reading: That advantage is contested rather than exclusive; viewers and advertisers have other streaming platforms and entertainment options, and Roku must maintain relationships with content and TV partners. Roku also competes with larger companies that have substantial resources and brand recognition.

Growth opportunities

Roku’s growth strategy has three stages: increase its scale, grow engagement and expand monetization. Its initiatives for Platform revenue include developing the home screen, deepening integrations with third-party advertising platforms and growing subscriptions billed through Roku.

Streaming Hours on the Roku platform rose from 127.1 billion hours in 2024 to 145.6 billion hours in 2025. Platform revenue increased by 18% during the year ended December 31, 2025 compared with 2024. The increase came primarily from streaming services distribution, including higher Premium Subscription revenue and subscription revenue from third-party and Roku-owned services. Advertising revenue also increased, although media and entertainment advertising was weaker.

Roku expanded its owned streaming services in 2025, acquiring Frndly TV and launching Howdy. It believes its platform and content recommendations can help these services attract subscribers and increase engagement. The company is also investing in advertising integrations and measurement tools to reach more advertisers.

Internationally, Roku plans to build scale first, increase engagement and then grow monetization. It expanded its streaming player lineup in several markets in 2025, added TV partners and launched its advertising platform in Brazil. In Mexico, it introduced Premium Subscriptions and the Roku Sports Experience.

Roku also intends to continue investing in research and development, including AI and machine learning capabilities for products, services and internal processes.

Structural risks

• Competition and monetization: TV streaming is highly competitive and rapidly evolving. Roku faces risks in growing advertising revenue, maintaining a supply of video advertising inventory, selling that inventory and using programmatic advertising technology.

• Content relationships: Popular publishers may choose not to put their content on Roku, and agreements with content partners may end or fail to renew. Partners may also decline to participate in platform features, while users may sign up for services outside Roku’s platform.

• Devices and supply: Roku and its TV partners rely on contract manufacturers and retail channels. Component availability, higher material costs, sole-source components and inaccurate manufacturing forecasts could affect the supply of products.

• Regulation and data: Privacy and consumer protection laws may become more restrictive, increase compliance costs or limit advertisers’ use of the platform. Cyberattacks, personal-information liabilities or disruptions to technology systems could also harm the business.

• Operating results and seasonality: Roku has a history of operating losses and faces quarterly fluctuations. Revenue and gross profit have traditionally been strongest in the fourth quarter, while holiday device discounts typically reduce Devices gross margin or result in a quarterly Devices gross loss.

Bottom line

Our reading

Our reading: Roku is a streaming distribution and advertising business that uses devices to bring households onto its platform, then earns revenue from their viewing and subscription activity. Its reach and home-screen position support that model, but its results depend on monetization, content partnerships and competition for viewers and advertisers. The Devices business also carries manufacturing and retail exposure, even as Roku manages device pricing to support platform growth.