Roku, Inc. Q1 FY2026 earnings call

• Advertising revenue grew 27%, adoption of ads manager is growing, building a highly performant connected TV ad platform. • Subscription revenue grew 30% driven by premium subscription signups, with recent additions like Apple TV in March and Peacock. • Roku recently passed 100 million streaming households. • Confident in expanding EBITDA margins in 2026 and beyond, with strong platform revenue growth and device operational flexibility. • Third-party DSP strategies are working, majority of video delivery through third-party programmatic partners. • Roku Originals have four pillars: complimenting hits, programming against sports, seasonal programming, and UI programming. • AI is a big opportunity for Roku, integrated across technology stack to improve discovery, engagement, monetization, etc.

Platform revenue grew 28% in Q1, ahead of outlook, benefiting from Olympics and Super Bowl. Advertising revenue grew 27%, subscription revenue grew 30% driven by premium subscription signups. EBITDA margins more than doubled year on year to nearly 12%. Device revenue is generated from sale of players and one PTV, with memory prices affecting device segment but third-party products benefiting from bill of materials cost advantage.

• Expect Q2 platform to grow at a strong 20% year over year, with subscriptions and advertising both around this growth rate. • Increased full year platform revenue guidance by over $100 million or approximately three points of growth to nearly 21%, and increasing EBITDA and EBITDA margins. • Have stronger visibility into Q2 versus H2 due to macro environment, will provide updated guidance for H2 as visibility improves.

• Memory prices are increasing, which is something to manage in the device segment. • Uncertainty around future memory prices and how the CTV market will react to higher memory prices. • Macro environment impacts visibility into H2 guidance.

Q: Explain drivers for strong 1Q results and bridge to Q2 and full year guidance, and impact of memory prices on devices segment.

A: Anthony and Dan discussed that Q1 was outstanding with platform revenue growth, advertising and subscription growth. For Q2, expect strong growth, full year platform revenue guidance increased. Memory prices are a factor but third-party products benefit from bill of materials cost advantage.

Q: Talk about third-party DSP strategy and Amazon.

A: Charlie said DSP partnerships are important, strategy is open and interoperable, majority of video delivery through third-party programmatic partners, feel good about Amazon and other partnerships.

Q: Role of Roku Originals and AI.

A: Charlie talked about Roku Originals in four pillars, Anthony discussed AI integrated across technology stack for various benefits.

Q: Subscription revenue forecasting and factors.

A: Vasili asked about subscription revenue forecasting, Dan said there is some seasonality but most important is adding tier one, tier two, tier three premium subscription partners.

Q: Advertising gross margin and first party vs third party.

A: Dan said advertising gross margin was strong, sustainable, and Anthony talked about first party and third party TVs for distribution flexibility.

Q: New home screen and Howdy.

A: Anthony talked about new home screen rolling out, seeing improved engagement and monetization, Howdy is an own and operate streaming service doing well.

Q: DSP relationships growth contributions.

A: Charlie discussed different DSP relationships, importance of being open and interoperable, expansion with DV360 has benefits.

Q: Subscription revenue gross margin and non-M&E ad spending.

A: Dan talked about subscription gross margin level, Charlie talked about non-M&E ad spending on home screen growing.

Q: Content aggregation and device downdraft.

A: Anthony talked about content aggregation including lower cost content, Dan and Mustafa talked about device revenue downdraft due to ASPs and memory costs but overall on track.

Q: DSP integrations impact on advertising gross margin.

A: Dan said how we integrate with DSPs doesn't have a margin impact, margins impacted by how we fulfill ad units and optimize campaigns.