Roku's revenue mix has shifted from hardware toward its platform segment, which now drives the majority of sales through advertising and subscription arrangements. Hardware revenue fell from 54% in Q2 2017 to about 12% recently, and hardware units have often been sold at a loss. The platform segment carries a strong gross margin of about 51% and monetizes viewership by controlling ad inventory and earning fees when customers sign up for streaming services. Roku faces intense competition from large, well-funded technology companies, while growth in digital advertising should help lift revenue. The stock remains far below its peak despite recent gains.
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.
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%,
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