Roku operates as a leading streaming platform company with a three-phased business model focused on growing scale (active accounts), engagement, and monetization [1]. The company generates revenue through hardware sales, licensing its operating system to TV manufacturers, advertising (particularly on The Roku Channel), and subscription marketplace fees [4]. With over 83 million streaming households globally and annual revenue exceeding $4.11 billion, Roku has established itself as the dominant streaming platform in North America [2][4].

• Q4 2024 earnings reported on February 13, 2025, with EPS of -$0.24, beating the consensus estimate of -$0.44 by $0.20 [2]
• Total net revenue for Q2 2024 was $968 million, up 14% year-over-year (YoY) [3]
• Platform revenue (the higher-margin segment) was $824 million, up 11% YoY [3]
• Streaming households reached 83.6 million, a net increase of 2.0 million from the previous quarter [3]

• Roku has demonstrated strong historical revenue growth, with a 29.51% annual growth rate over the past five years [1]
• Revenue has increased dramatically from $320 million in 2015 to $4.11 billion in 2024, showing consistent expansion [4]
• Q3 2024 showed accelerating growth with total revenue of $1.062 billion, up 16% YoY, and platform revenue of $908 million, up 15% YoY [4]
• Average Revenue Per User (ARPU) was $40.68 on a trailing 12-month basis as of Q2 2024, remaining flat YoY [3]
• The company is executing on initiatives to accelerate Platform revenue growth, including maximizing ad demand, leveraging its Home Screen, and growing Roku-billed subscriptions [3]

• Total debt stands at $1.647 billion as of Q4 2023, with a debt-to-equity ratio of 1.83 [3]
• The company has no short-term debt obligations, reducing immediate financial pressure [1]
• Roku's total debt to total assets ratio was 13.8% in the last quarter, below its 5-year average of 15.5% [5]
• The company maintains a strong cash position of $2.16 billion, providing significant operational runway [1]
• Roku has achieved four consecutive quarters of positive Adjusted EBITDA and Free Cash Flow (TTM) as of Q1 2024, showing improving financial discipline [3]

Anthony Wood, Roku's founder and CEO, continues to lead the company with a focus on expanding the platform's reach and monetization capabilities [2]. The leadership team includes experienced executives such as Mustafa Ozgen (President of Devices, Product, and Technology) and Dan Jedda (CFO, who previously served at Amazon for 15 years in several leadership positions) [5]. This blend of founder-led vision and experienced management provides stability and strategic direction.

Roku's current stock price of $55.28 is trading significantly below its estimated fair value of $137.05 based on Discounted Cash Flow (DCF) analysis, suggesting a potential upside of over 148% [2]. The company's price-to-sales ratio stands at 1.94, which is relatively modest for a growth-oriented technology company [2]. Despite recent volatility in the stock price, with a 14.14% gain following the February 2025 earnings report but a 17.33% drop after October 2024 results, the fundamental valuation metrics indicate the stock may be undervalued [5].

Roku faces intense competition from major tech giants including Amazon, Apple, and Alphabet, all of which offer competing streaming platforms and services [2]. This competitive landscape could pressure advertising pricing and platform revenue growth, potentially impacting Roku's medium-term gross profit expectations [1]. Additionally, as more streaming services aim to bypass app store fees to enhance their margins, there's a risk to Roku's revenue from streaming service distribution [1].

Based on the analysis, Roku presents a compelling investment opportunity with its strong market position, consistent revenue growth, and improving financial metrics. The stock appears significantly undervalued according to DCF analysis, despite facing competitive pressures. A BUY recommendation is warranted for investors with a medium to long-term horizon who can tolerate some volatility as Roku continues to execute on its growth initiatives.