Roku Stock Jumps 8% After Q1 Earnings Beat and Raised Guidance

TLDR

• Roku stock jumped 7.8% to $125.63 in premarket trading after beating Q1 earnings expectations.
• Q1 revenue came in at $1.25 billion, up 22% year-over-year, beating the $1.20 billion estimate.
• Adjusted EBITDA hit $148 million, topping Wall Street’s $131 million forecast.
• Full-year guidance raised to $675 million EBITDA and $5.54 billion revenue, both above estimates.
• Pivotal Research raised its price target to $160, while Morningstar lifted its target to $95 from $85.

Roku stock jumped 7.8% to $125.63 in premarket trading on Friday after the company delivered a strong first-quarter earnings report and raised its full-year outlook.

Roku, Inc., ROKU

Futures tracking the S&P 500 were up 0.1% at the same time.

Q1 revenue came in at $1.25 billion, a 22% increase from a year ago. That beat the analyst consensus of $1.20 billion, according to FactSet.

Adjusted EBITDA for the quarter was $148 million, also ahead of the $131 million Wall Street had expected.

Deals with major streaming platforms including Apple TV and Peacock helped drive subscription revenue higher during the quarter. Morningstar analyst Matthew Dolgin flagged those partnerships as a key driver of the results.

Dolgin raised his price target on Roku to $95 from $85 following the results.

Full-Year Guidance Tops Estimates

For the full year, Roku now expects EBITDA of $675 million on revenue of $5.54 billion. Both figures came in ahead of Wall Street’s forecasts of $644 million in EBITDA and $5.51 billion in revenue.

Analyst Jeffrey Wlodarczak at Pivotal Research reiterated a Buy rating and lifted his price target to $160 from $140.

Wlodarczak pointed to strong growth across revenue, profitability, and free cash flow as reasons for his increased target.

He also noted rising streaming hours and described the full-year guidance as deliberately cautious, leaving room for further upside.

Platform and Monetization in Focus

Wlodarczak highlighted Roku’s role as a gateway in the connected TV space as a core part of his thesis. He sees the company’s large and growing user base as a long-term monetization opportunity.

He also pointed to Roku’s position as a neutral platform as an advantage as the TV industry moves further toward ad-supported and AI-enabled content.

Roku makes streaming devices and licenses its operating system to TV manufacturers, giving it exposure across a wide range of hardware.

That business model means Roku earns revenue whether users are watching on a Roku-branded device or a third-party TV running its software.

The combination of a hardware-agnostic approach and growing content partnerships has helped Roku build what analysts describe as a difficult-to-displace position in the market.

Q1 results showed that dynamic playing out, with both revenue and profitability coming in ahead of expectations.

The full-year guidance raise, even if viewed as cautious by analysts, added to the positive tone of the report.

Pivotal Research’s updated price target of $160 represents the highest analyst target mentioned following the results.

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