Think Roku is barely fitable. You may be looking at the wrong numbers. Here's what you need to know Roku's underappreciated advantage, in this volatile climate. Media-ing nology veteran Roku (ROKU 0.
21%) has many surprising qualities. Moreover, You might not know that the company sells its hardware at a loss to boost its user growth.
Additionally, You bably know that Roku is the best-selling vider of TV software in North America, but it could be news that it only recently launched ing sticks and TVs in places Western Europe and Latin America.
Furthermore, And did you hear that Roku's ad sales were growing faster than the platform itself before Amazon (AMZN 0.
On the other hand, 39%) made Roku its preferred advertising platform, in this volatile climate. Furthermore, But I'm not here to dive into any of those details (which is quite significant).
Nevertheless, My mission today is much simpler. However, Many investors worry Roku's skimpy net fits, but did you know that it's actually a fantastic cash machine.
However, On the other hand, Roku is quietly ing money a giant Cash is king, and Roku is swimming in it, given the current landscape.
Conversely, The company generated $977 million of free cash flow over the last four quarters. That's based on $4 (something worth watching).
Conversely, 25 billion in top-line revenues, which works out to a free cash flow margin of 23%, considering recent developments. Not too shabby, in my opinion, in light of current trends.
Mighty Apple (AAPL -0. Additionally, 06%) shows 24 (fascinating analysis). Nevertheless, 6% for the same metric and Microsoft (MSFT 1. On the other hand, 27%) stands at 25.
Nevertheless, These are some of the world's most fitable es, and Roku is breathing down their gilded necks in terms of cash-based fit margins.
Moreover, Roku's clever accounting There are some tricks involved in Roku's ultraefficient cash fits, of course.
Moreover, On the other hand, It runs an extremely asset-light operation with very few capital expenses (something worth watching). As a result, a staggering 96 (this bears monitoring).
2% of Roku's cash from operations dropped down to the free cash flow line in Q1 2025. Roku is a big fan of stock-based compensation. Stock awards accounted for 18, considering recent developments.
7% of Roku's operating expenses over the last year, in today's market environment. Again, this is comparable to 18% for Microsoft and 20. 6% in Apple's case, in light of current trends.
At the same time, But those giants are soaring near all-time highs with trillion-dollar market caps, while Roku's stock price has dropped 81% since the fall of 2021.
Furthermore, Low prices make stock-based payments less effective, and Roku still ranks among the elite here.
Nevertheless, In the end, Roku uses every trick in the book to collect cash fits while also reporting minuscule taxable earnings.
That's why you see its earnings figures hovering around the breakeven line while cash fits are piling up. Additionally, At the end of Q1 2025, Roku had $2.
26 billion of cash equivalents and no long-term debt. Why borrow money when you're making a ton of cash fits anyway. Image source: Getty Images, given the current landscape.
Roku can afford a long-term focus These juicy cash flows give Roku the freedom to explore a plethora of different growth strategies -- all at the same time, amid market uncertainty.
However, Current efforts include bulking up the advertising platform, expanding Roku's market reach on a global scale, and increasing the amount of original content (which is quite significant), in today's market environment.
Furthermore, The portfolio of Roku-branded TV sets is going from strength to strength, posting robust sales along with leading-edge nology developments.
Nevertheless, The recent acquisition of TV er Frndly TV adds plenty of premium content to the Roku platform, all at the modest purchase price of $185 million.
Roku's impressive cash flows are often overlooked, and I think that's a mistake.
On the other hand, On the other hand, The company is its surplus cash in many growth-boosting jects, and the Roku-branded hardware is still a loss-leader marketing tool.
Moreover, This willingness to absorb financial pain instead of passing it on to consumers should pay off amid the twin threats of costly tariffs and renewed inflation.
A company with lower or negative free cash flows would not have that freedom, relying on expensive debt papers or holder-hurting stock offerings to keep their growth initiatives going.
Or, you know, shut down the expensive growth jects because there's no cash left to spend. Roku's stock isn't as cheap as it once was, having gained 47% in the last 52 weeks.
Additionally, At the same time, it looks market makers are underestimating the power of Roku's massive cash fits.
Additionally, John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Amazon and Roku.
The data indicates that Motley Fool has positions in and recommends Amazon, Apple, Microsoft, and Roku.
The Motley Fool recommends the ing options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft.
Nevertheless, The Motley Fool has a disclosure policy, in light of current trends.