Roku, Inc.
Roku, Inc., together with its subsidiaries, operates a TV streaming platform in the United States and internationally. The company operates in two segments, Platform and Devices. Its streaming platform allows users to find and access TV shows, movies, news, sports, and others, as well as offers digital advertising services. The company also sells streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.
What does it do?
Roku makes the software and hardware that turns any TV into a smart TV. When you plug a Roku stick into your TV or buy a Roku-built TV, you get a simple home screen that pulls together Netflix, Disney+, YouTube, and hundreds of other streaming apps in one place. Think of Roku as the operating system for your television — like Android is to your phone, but for your TV. They sell the devices cheaply, or license their software to TV brands like TCL and Hisense, to get as many screens running Roku as possible.
Roku sits at a critical junction: traditional TV advertising is shrinking fast as viewers cut cable, and that money is flowing toward streaming platforms. Roku is one of the largest streaming platforms in the US by active users, meaning it has real leverage to capture a growing slice of that ad budget shift. With over 80 million active accounts, it has become a gatekeeper that TV advertisers cannot easily ignore.
How does it make money?
Roku makes money in two main ways. The bigger piece — called the Platform segment — earns revenue from advertising shown on its home screen and free channels, plus taking a cut of subscription fees and purchases made through Roku's app store. This segment drove the majority of the $4.7 billion in annual revenue. The smaller piece — Devices — sells physical streaming sticks and Roku-branded TVs, often at or near cost, because the real prize is getting more users onto the platform where the ad money lives.
Why do investors care?
The growth story is about advertising dollars catching up to where people actually watch TV. Roku's active user base keeps growing, and each user watches more hours per year — which means more ad inventory Roku can sell. If Roku can prove to big brands like Procter & Gamble or Ford that its targeted streaming ads outperform old-school TV commercials, ad rates and revenues should climb. What has to go right: the US economy stays healthy enough for ad spending to grow, Roku holds its platform share against Amazon Fire TV and Google TV, and it eventually turns that $0.1 billion net profit into something more substantial.
Deep Dive
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