Roku's revenue mix has shifted dramatically from hardware to its platform segment. Hardware fell from 54% of revenue in Q2 2017 to about 12% recently, while the platform now generates most revenue through advertising and subscription sign-ups. The platform delivers a strong gross margin of about 51%, whereas hardware has often been sold at a loss. Hardware remains necessary to place devices in households to drive platform monetization. The stock traded about 80% below its peak but rose 27% in 2025. Intense competition from tech giants and growth in digital advertising will influence future top-line performance.
The growth in the platform segment is the catalyst. Roku makes most of its money these days from advertising and subscription arrangements. For instance, Roku might control certain ad inventory from other streamers. Or when a customer signs up for a streaming service on Roku, the company generates revenue. The beauty of this is that the platform segment commands a strong gross margin of 51%, while hardware has generally been sold at a loss in recent quarters.
Because of the potential to achieve strong returns, it makes sense that investors want to find companies benefiting from secular trends. (NASDAQ: ROKU) fits the bill, but long-term shareholders haven't been rewarded. As of Aug. 22, this streaming stock trades an alarming 80% below its peak, even though it has climbed 27% in 2025. This huge dip might prompt investors to want to add the business to their portfolios. However, it's important to know these three things about Roku first.
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