As the countdown begins for the $22 billion acquisition by Fox, Roku (ROKU.US) experiences explosive growth! Q2 net profit skyrockets over 15 times, with both advertising and subscriptions increasing by more than 25%.

The latest earnings report released by Roku (ROKU.US), the leader in the U.S. streaming set-top box market, after the U.S. stock market close on Thursday, shows that the company continued to maintain strong growth momentum in its streaming business in the second quarter of 2026, with earnings far exceeding Wall Street analysts' consensus expectations. In the second quarter, Roku's advertising and subscription businesses both saw significant growth of over 25%, driven by major live events such as the World Cup, highlighting that Roku is evolving from merely capturing the vast streaming television traffic brought by "cord-cutters" to controlling high-margin platforms that manage television search, discovery, payment, and advertising budget allocation. The company reported second-quarter revenue of $1.35 billion, representing a year-over-year increase of 22%, exceeding Wall Street analysts' average expectation of $1.3 billion. Roku's net profit reached a record $164.2 million, compared to only about $10.5 million in the same period last year, indicating that net profit skyrocketed to over 15 times that of the previous year; the diluted earnings per share for the second quarter was $1.08, double what analysts anticipated. After years of losses, this marks Roku's fifth consecutive quarter of achieving net profit. Roku's free cash flow over the past 12 months reached $704 million, also a historic high. Roku's main business is not focused on selling streaming boxes but rather on operating its television operating system, exclusive content distribution channels, and programmatic advertising trading platform. The low-margin or even loss-making players and television hardware are responsible for expanding the installed base of Roku OS; after over 100 million households entered the company's streaming platform, Roku continued to monetize through main screen recommendations, video ads, The Roku Channel, subscription distribution, and revenue sharing. The new main screen focuses on enhancing content discovery and household retention, with first-party viewing data improving ad targeting and effectiveness measurement, thereby forming a "more installations and viewing durationmore ad inventory and subscription transactionshigher platform revenuecontinued subsidy for hardware expansion" dual-sided network effect. Both the advertising and subscription businesses grew by over 25%! Roku has achieved profitability for five consecutive quarters, and Fox bets on a "content + distribution" super synergy. This earnings report is the first financial statement released by Roku after Fox announced its $22 billion acquisition of the company in mid-June. The transaction is expected to be completed in the first half of 2027. Roku stated that it will not hold an earnings call and will not provide financial guidance for the future due to the pending nature of the Fox transaction. Roku's founder, chairman, and CEO Anthony Wood, along with CFO and COO Dan Jedda, wrote in the company's second-quarter letter to shareholders: "We believe that Rokus scale, platform strategy, and financial strength enable the company to continue leading the evolution of the television streaming industry while achieving sustainable long-term growth. Foxs proposed acquisition presents an extraordinary opportunity that will accelerate the realization of our vision, allowing us to scale faster and foster more robust innovation for our viewers, partners, and advertisers." After the Fox acquisition deal closes, Wood will continue to hold a significant position in the merged company and will join the Fox board of directors. Fox stated at the time of announcing the transaction that the company "is committed to continuing to operate Roku as an open and partner-friendly platform," while also promoting the widespread distribution of Fox content "everywhere." In the second quarter, Rokus platform business revenue grew 25% year-over-year to $1.22 billion, with a gross margin of 53.0%. This includes $673 million in advertising revenue, a year-over-year increase of 25%, while subscription revenue was about $548 million, marking a 26% increase. During the second quarter, the total streaming playback duration across all Roku platforms reached 37.9 billion hours, a year-over-year increase of 7%; its user base covers over 100 million households. In late May, the company began rolling out a new version of the Roku main screen, which it described as the largest update in over a decade. Roku executives stated that this main screen is "one of the most valuable gateways to streaming traffic in the television sector," with more than half of broadband households in the U.S. using it. According to reports, Wood and Jedda wrote in the letter: "Our new main screen is designed to maximize viewers content discovery capabilities and personalized experiences while actively creating revenue for content partners and advertisers, driving platform monetization growth. The company has completed a full rollout of the new Roku main screen in the U.S. at the beginning of the third quarter and stated that "the preliminary results are encouraging." For example, as both executives noted, the new main screen "enhanced our strong ability to retain household users in the U.S., thereby increasing the number of users we can serve long-term and reducing the overall growth cost of streaming household users." In April of this year, Roku raised its full-year adjusted EBITDA profit expectation for 2026 from the previous $635 million to $675 million and estimated a net profit of about $360 million. The company forecasts that platform business revenue is expected to grow nearly 21% to $5 billion, with device business revenue around $535 million, and total net revenue expected to be about $5.5 billion, a 16% increase compared to 2025. Earlier on Thursday, during Fox's earnings call, CEO Lachlan Murdoch reiterated the rationale for pushing the deal. Murdoch stated, "Roku, through its open and partner-friendly platform, has delivered scalable streaming capabilities, making it one of the leading television streaming platforms in the U.S. After the merger with Roku, Fox will combine top-quality live content, strong market relationships, scalable distribution capabilities, and leading platform capabilities, including subscription businesses, to respond to the changing demands of consumers and advertisers." Fox CFO Steve Tomczak pointed out that Fox expects the anticipated net leverage ratio of the merged company to be around 2.8 times, meaning net debt divided by EBITDA. Therefore, Tomczak stated, "The structure of this transaction provides us with significant capital allocation flexibility, so everyone should expect that our stock repurchase plan will continue to accelerate unaffected during the waiting period for the transaction to close and after the deal is completed." According to the terms of the deal, Fox will pay approximately $14.2 billion in cash at $96.00 per share and will provide 0.9693 shares of Fox Class A common stock for each share of Roku Class A and Class B common stock outstanding. Upon completion of the transaction, existing Fox shareholders are expected to hold about 73% of the merged company's shares, while former Roku shareholders will own about 27% of the shares. As of Thursday's U.S. stock market close, Roku's stock price was around $150, with a market capitalization of about $22.2 billion. Previously, Fox held a 5% stake in Roku but sold that portion when it acquired Tubi for $440 million in 2020. From selling hardware to imposing a "television traffic tax": Roku's net profit skyrocketed over 15 times, and the value of the billions of household screen entrances is being reassessed. In the second quarter, the company not only surpassed revenue expectations but also saw a leap in profit quality and operational leverage: revenue of $1.35 billion was a year-over-year increase of 21.6%, about 3.8% higher than the LSEG consensus of $1.3 billion, and about 4.2% above the company's previous guidance of $1.295 billion; net profit increased from $10.5 million in the same period last year to $164.2 million, while diluted EPS rose from $0.07 to $1.08, approximately 77% higher than FactSets forecast of $0.61. Among these, Rokus overall platform revenue grew 25% to $1.22 billion, with a platform gross margin of 53%; advertising revenue was $673 million and subscription revenue was $548 million, increasing by 25% and 26%, respectively, while playback duration of 37.9 billion hours increased only by 7%, indicating that the companys revenue growth significantly outpaced usage time, reflecting the simultaneous improvement in unit traffic monetization capabilities, advertising prices, and subscription conversion rates. The company initially expected second-quarter net profit to be about $90 million, but the actual result exceeded expectations by about 82%. Over the past 12 months, free cash flow reached a record $704 million, with the profit turning point evolving from short-term cost compression to sustainable cash creation. With both advertising and subscription businesses achieving over 25% growth, and driven by major live content events like the World Cup, it is evident that Roku is transitioning from merely absorbing "cord-cutter" traffic to controlling high-margin platforms that manage television search, discovery, payment, and advertising budget allocation. This latest quarterly report is a significant boon for Roku's fundamental prospects, but the incremental impact on the stock price needs to be viewed with some distinction. Foxs last formal full-year outlook for 2026 prior to initiating the acquisition still forecasts total revenue of about $5.535 billion, platform revenue of approximately $5 billion, adjusted EBITDA of about $675 million, and net profit of about $360 million, with a target of achieving $1 billion free cash flow by 2028 at the latest. Since the $10 billion acquisition initiated by Fox is still pending completion, Roku has not updated its performance outlook range. The terms of the deal include $96 in cash per share plus 0.9693 shares of Fox Class A stock; based on Fox A shares trading at approximately $61.79, the current implied consideration is about $155.89, whereas Rokus stock price at Thursday's close was approximately $150.07, leaving a remaining price gap of about $3.9. This also implies that the strong earnings report enhanced the fundamental safety net before the transaction's completion and reduced the downside risk under independent operations, but Roku's short-term stock price is now primarily determined by Fox's stock price, regulatory approvals, and the probability of transaction completion, rather than traditional earnings upgrades and valuation expansions; the real target for achieving long-term operational synergy and valuation flexibility will gradually shift to the merged Fox-Roku platform.