The Roku story

What drives the business

• Roku leads TV streaming by hours streamed in the United States, Canada, and Mexico, using its TV operating system, licensed TVs, and its own devices to build audiences that generate advertising and subscription revenue.
• The FOX agreement announced in June 2026 values Roku at approximately $22 billion in enterprise value and would combine FOX’s live content and Tubi with Roku’s platform and The Roku Channel, with both companies committed to keeping Roku open to partners.
• Advertising revenue grew 25% to $673 million in the quarter to June 2026, supported by Home Screen advertising and integrations with platforms including Amazon DSP, The Trade Desk, Google DV360, and Yahoo.
• Subscriptions revenue grew 26% to $548 million in the quarter to June 2026, supported by Roku billing, Premium Subscriptions, and owned services including Howdy and Frndly TV, which Roku acquired in May 2025.
• Roku’s Home Screen reaches viewers before they choose content, and its redesign improved household retention in the United States, supporting a platform serving more than 100 million households worldwide as reported in August 2026.

What the price assumes

At $152.72, the reverse DCF implies free cash flow after stock pay grows 21.5% a year for ten years, using a 10.3% discount rate.

That compares with 4622.6% growth over the last twelve months and the TenQ check’s 2313.3% bar, which slows the record halfway toward 4%, so the check passes but rests on an unusually large recent growth rate.

This standalone cash flow calculation does not capture the pending cash and FOX stock transaction, which adds a separate consideration to interpreting Roku’s price.

Value ROKU on your own assumptions

What could change the story

• The FOX acquisition remains pending, leaving completion and the transition to combined ownership unresolved.
• Subscription growth carries a margin tradeoff: gross margin fell to 41.4% in the quarter to June 2026 as the revenue mix shifted toward Premium Subscriptions.
• The tariff refund obscures the underlying Devices gross loss, while tightening memory chip supply adds pricing pressure.
• Roku’s 5.2% operating margin trails the TenQ sector benchmark of 11.7%, and its 13.8% sales-to-cash conversion trails 26.9%, leaving profitability and cash conversion checks unmet.
• Stock-based pay of $328 million over the last twelve months is a substantial claim against free cash flow of $710 million, although cash and short-term investments of $2.6 billion and total debt of $0 provide financial flexibility.

What to watch next

• Roku withheld a financial outlook because of the pending FOX transaction, making further transaction disclosures an important part of the next updates.
• The next operating releases can show whether Advertising and Subscriptions sustain growth while preserving Platform gross margin, following 53.0% in the quarter to June 2026.
• Roku expects sales and marketing expense to rise in the second half of 2026 versus the first half as licensed TV shipments increase, making distribution spending and Devices margins excluding refunds important measures.
• Roku’s planned international Home Screen rollout, household retention, subscription signups, and free cash flow per share will help show whether improved content discovery translates into stronger economics.

Sources

• Roku's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The ROKU stock report, for every figure and check