Roku's advertising revenue rose 23% to $727.4 million in the third quarter of 2026, while the average price it earned for each video ad impression fell 7%, according to the shareholder letter and quarterly report the company published on November 2, 2026. Video impressions grew 33% over the same period. Roku held no earnings call and gave no financial outlook, as it has done since agreeing in June to be acquired by Fox Corporation.

In Short

Roku, the company whose software runs many TVs and streaming sticks, sold a lot more ads between July and September than a year earlier, but each ad, on average, earned it less money. It still made more profit from advertising, because more of what it sold was the kind of ad that costs it less to supply. For advertisers, Roku's TV ad space is plentiful, its average price is falling, and most of it is now bought through automated tools, with Google's buying tool next in line for a deeper connection.

Volume up, price down

The numbers in Roku's Form 10-Q, filed with the Securities and Exchange Commission on November 2, describe a business growing on volume. Advertising revenue increased by $136.2 million against the third quarter of 2025, "primarily due to an increase in video ad impressions delivered," according to the filing. "Video impressions increased by 33%, driven by higher user engagement and growth in streaming hours on our platform. This increase was partially offset by a decrease in the average price per impression of 7%, which was driven by changes in product and country mix."

Impressions have outrun revenue all year. In the second quarter, Roku's video ad impressions jumped 40% while the average price per impression fell 12%, on ad revenue of $672.8 million. Over the first nine months of 2026, according to the 10-Q, impressions rose 42% and the average price per impression fell 11%, on advertising revenue of $2.01 billion, up 25%.

Both trends moderated in the third quarter. Impression growth slowed from 40% to 33%, and the price decline eased from 12% to 7%. Roku does not say whether that reflects firmer demand, a change in the mix of inventory, or the arrival of political money, and the filing offers only the same phrase it used in the second quarter: "changes in product and country mix."

Cheaper impressions are not the same as cheaper advertising for every buyer. An average price per impression blends inventory from The Roku Channel, native units across the Roku interface and ad slots Roku receives from content partners under distribution agreements, the three sources the 10-Q lists. A shift toward lower-priced inventory, or toward markets outside the United States, lowers the average even if prices for any single product hold. Roku does not publish prices by product.

Why margins rose anyway

Advertising gross margin reached 63.2%, up about 470 basis points from a year earlier, according to the shareholder letter, "driven primarily by a mix shift toward higher margin ad products." Cost of revenue for advertising rose 9% to $268.0 million, while revenue rose 23%, so gross profit from advertising grew 33% to $459.4 million, according to the 10-Q.

The filing explains where the extra costs went. The increase "was primarily driven by a $17.8 million increase in the costs of acquiring and delivering licensed content for TRC due to an increase in user engagement and video ad impressions delivered, and an $8.8 million increase in content amortization."

Margins have climbed through the year. Advertising gross margin was 60.5% in the first quarter, when Roku reported $1.25 billion in first-quarter revenue, and 62.4% in the second quarter. Analysts at Cleveland Research Company, in a note dated November 3, attributed the improvement to "a greater mix of higher-margin ad products, including Home Screen advertising for both M&E and other verticals." Roku's letter does not name the products behind the mix shift. Home screen advertising, the native units sold on the first screen a viewer sees after switching on a Roku device, does not depend on licensed programming, which the 10-Q identifies as the main source of rising advertising costs at The Roku Channel. Whether that is the whole explanation, Roku does not say.

Programmatic: three quarters, three different measures

Roku said that in the third quarter "more than 80% of our in-stream video ad impressions were delivered programmatically." The company says it has integrations with every major demand-side platform and supply-side platform, so that advertisers can buy Roku inventory through the tools they already use. "We continue to deepen our integrations with third-party demand-side platforms, and will expand several, including, Google's DV360 in the coming months," according to the letter. No date or technical detail accompanies the DV360 statement.

Google already has a route into Roku's inventory. In March, Roku became the first publisher in Google's Confidential Publisher Match, a deterministic identity product that matches Google IDs to publisher IDs inside trusted execution environments and was designed to give Display & Video 360 advertisers access to encrypted identity matching for Roku Media.

Cleveland Research presented the programmatic figures as a single rising series. "DSP-sourced demand hit >80% of video ad revenues in 3Q, up from ~75% in 2Q and >50% in 1Q," the note said, under the heading "Programmatic now >80% of ad revenue."

Roku's own disclosures do not line up that neatly. In the first quarter, the majority of Roku's video delivery was routed through third-party programmatic partners, with no percentage given. In the second quarter, third-party DSPs bought nearly three-quarters of in-stream video ad spend. In the third quarter, the measure became the share of in-stream video ad impressions delivered programmatically. Delivery, spend and impressions are different quantities. With the average price per impression falling, a share of impressions and a share of revenue need not match, and "programmatically" in the third-quarter letter does not specify third-party platforms. Roku has not said whether the three figures are comparable.

What is clear is the direction. Roku's 10-Q lists programmatic advertising among its risks: "If we are unable to expand our programmatic demand by maintaining and developing third-party demand relationships in a way that is competitive with other advertising platforms, our business could be harmed." The same section warns that the programmatic ecosystem "is large, distributed, and complex," and that Roku's compliance with data rules "may depend in part on these partners' commitment to handling user data with the care that we require or expect of them."

Political money and entertainment marketers

Political advertising on the Roku platform in the third quarter "exceeded the comparable quarter from the 2024 U.S. presidential election cycle," according to the letter, as it had in the second quarter. A footnote says the comparison excludes OneView fees. Roku gives no dollar figure. The letter credits "our programmatic capabilities" with the result. Cleveland Research went further: political revenue beat 2024 levels "with most of the revenue coming through programmatic DSPs," according to its note. Roku's documents do not state that share.

The timing fits wider data. AdImpact projects $11.6 billion of political advertising in the 2026 cycle, with $2.6 billion of it on CTV by its June channel split, against $11.2 billion in the 2024 presidential cycle. Buyers reported in October that premium CTV CPMs that had been running at $34 to $35 had climbed to $43 as midterm demand rose, a claim from a single agency supervisor relayed by Digiday rather than a measured index. Roku's falling average price per impression sits alongside those reports, not against them: political demand can lift some prices while the blended average falls on mix.

The media and entertainment category, made up of studios and streaming services promoting their own shows, "also continued to strengthen, and Q3 was the highest YoY revenue growth in four years as media companies invested on the Roku platform to promote their content and services," according to the letter. Roku is beta testing "a new performance-based M&E ad unit on our Home Screen." The letter illustrates the category with a "Toy Story 5" home screen takeover. It does not say how the performance-based unit will be priced or measured.

Entertainment spending matters to Roku for a specific reason. The 10-Q says that "historically, a small number of advertisers and content partners have accounted for a significant portion of the spending on ads integrated into our UI," and that consolidation among content partners "has in the past resulted, and may in the future result, in decreased spending on ads integrated into our UI." Cleveland Research said this business "stabilized over the past few quarters and accelerated in 3Q to the best growth levels in ~4 years."

One customer, 11% of revenue

One unnamed customer, labelled Customer J, accounted for 11% of Roku's total net revenue in the third quarter and in the first nine months of 2026, the same share as in 2025, according to the 10-Q. The revenue "was primarily attributable to the Advertising segment." On third-quarter total net revenue of $1.50 billion, 11% is about $165 million, by PPC Land's calculation. The filing does not identify the customer.

Concentration also shows up on the viewing side. "In the three months ended September 30, 2026, the top three streaming services (excluding The Roku Channel) represented more than half of all hours streamed in the period," according to the risk factors. Roku has limited access to advertising inside some of those apps. "For certain apps, including YouTube, we have no access to video advertising inventory at this time, and we may not secure access in the future," the 10-Q says.

Subscriptions: price rises outpace sign-up growth

Subscriptions revenue rose 23% to $580.9 million, with a gross margin of 40.9%, down about 180 basis points, "with the largest factor being a strategic mix shift toward Premium Subscriptions," according to the letter. Premium Subscriptions are third-party services, such as Paramount+, that viewers buy through The Roku Channel and pay for with their Roku account. Cost of revenue for subscriptions, which consists primarily of costs for licensed Premium Subscriptions, revenue share payments and payment processing fees, rose 27% to $343.2 million, according to the 10-Q.

The 10-Q splits the growth. Revenue rose "primarily due to a 7% increase in the number of subscriptions and a 27% increase in the average price per subscription," helped by Howdy, the low-cost service Roku launched in August 2025. Frndly TV, the live TV service Roku acquired in May 2025, contributed to growth over nine months. In the second quarter, the subscription count had risen 11% and the average price 25%, so the number of subscriptions is growing more slowly while the price paid per subscription rises faster. The two third-quarter figures, multiplied, would imply growth well above 23%. The segment also includes revenue shares from content partners and the sale of branded app buttons on remote controls, and the filing does not reconcile the components.

Roku added Premium Subscription bundles in September, "giving viewers more than 35 combinations of services to choose from, with savings of up to 30% compared to a la carte subscriptions," according to the letter. It also cited the FIFA World Cup, which it called "our first truly global sports experience, reaching viewers across seven international markets and driving more than one million subscription sign-ups across services including Peacock, Paramount+, FOX One, and ViX." FOX One, the streaming service of Roku's prospective owner, joined The Roku Channel as a Premium Subscription in May, weeks before the tournament. FOX One has since received full cloud DVR features, Lookback and Record, inside Premium Subscriptions, after Live Pause and Resume launched for Peacock, Apple TV and FOX One in the second quarter.

Two claims in the letter rest on outside data. "Approximately 95% of Premium Subscription sign-ups are from customers who had never subscribed to that service directly," the letter says, citing a "Roku-commissioned study by Antenna." The letter also says that "despite a sequential decline in the overall market in Q3, Roku grew its share of U.S. SVOD subscriptions," citing Antenna subscriber estimates that exclude cable and telecom billing. Cleveland Research rendered the first figure as "More than 95% of Roku-billed subscriptions were said to be new/incremental users," which overstates both the number and its scope: Roku's figure is approximate and covers Premium Subscription sign-ups, not all Roku-billed subscriptions.

Streaming hours and the new home screen

Viewers streamed 39.9 billion hours on Roku devices in the third quarter, up 9% from 36.5 billion, according to the 10-Q, against 7% growth to 37.9 billion hours in the second quarter. The 10-Q is explicit about how loosely the metric tracks attention. Streaming hours "are measured whenever a Roku streaming device is streaming content, whether a viewer is actively watching or not," for example when a viewer "turns off the TV, steps away, or falls asleep." Cleveland Research added its own caveat: the total includes growth from new devices, "which means it's possible that per-user engagement is much slower given Roku's growth of its install base of TVs." Streaming households, the number of accounts that streamed in the last 30 days, are not among the key performance metrics the 10-Q lists. The letter says only that "more than 100 million households worldwide choose Roku."

Roku completed the US rollout of its redesigned home screen in July. The rollout of the biggest home screen change in a decade began in late May, and the letter says one early result is "a reduction in Premium Subscription cancellations." The new screen is now rolling out internationally. Roku's search and recommendations now use AI to write "Reasons to Watch," prioritise SVOD services the viewer already pays for and keep search history across devices, according to the letter.

The Roku Channel was the second-largest app on the platform by engagement in the US and globally, according to Roku. Nielsen had already ranked it the second-largest streaming app by share of ad-supported TV time in October 2025. Cleveland Research noted that Roku called the channel a "Top 5" app from 2022 to 2024 and a "Top 3" app entering 2025, and that the third quarter was the first time the second-place ranking was also applied to international markets. The 10-Q describes The Roku Channel as a service that aggregates on-demand ad-supported content, FAST channels and Premium Subscriptions, a broader mix than the "FAST app" label Cleveland Research's note uses. Roku says it works with more than 250 content partners on the channel and recently added titles including "CSI," "The Good Wife" and "Elementary" from Paramount, "How to Get Away with Murder," "Reba" and "Empire" from Disney, and "Minions," "Erin Brockovich" and a Law & Order FAST channel from NBCUniversal.

Independent measurement gives the channel a smaller footprint than app rankings suggest. Comscore found that The Roku Channel held 6.6% of measured streaming ad exposure time in August 2026, and 1.5% of all TV ad exposure time, while Nielsen's August Gauge put The Roku Channel at 2.9% of US TV time, against YouTube's 15.8%.

Devices: more TVs, more memory costs

Devices revenue rose 33% to $193.7 million, but the segment's gross margin fell to minus 25.1%, "driven primarily by elevated memory costs," according to the letter. Cost of revenue for devices rose 43% to $242.3 million. The volume of all devices shipped fell 21%, driven by lower sales of streaming players, while the average selling price rose 71% because Roku sold more of its own TVs, according to the 10-Q. Inventory provisions charged to device costs reached $41.1 million in the quarter, against $17.0 million a year earlier.

Roku-made TVs "approached 8% of total TV unit sales volume in the U.S., a position built in roughly three years," according to the letter, citing Circana retail tracking for July to September 2026. In the second quarter the figure was approximately 5%. Roku launched its first OLED televisions, the Pro Series OLED and Pro Series LX OLED, in September, sold only on Amazon.

The memory squeeze cuts both ways. Roku argues that its TV operating system "requires significantly less DRAM and Flash than competing platforms, which lowers our partners' costs as memory prices continue to rise." TCL has expanded its Roku TV range at Target and Hisense is moving its value TVs to Roku at Best Buy, according to the letter, which expects both to add Roku TV unit volume in the fourth quarter and says distribution costs for Roku TV models, a large part of sales and marketing expense, will be weighted toward the fourth quarter. Four retailers, Amazon, Best Buy, Target and Walmart, accounted for 84% of devices revenue in the quarter, up from 73% a year earlier, according to the 10-Q. The same filing lists Walmart as a competitor, citing its acquisition of Vizio, agreed in February 2024 for $2.3 billion, and "the integration of Vizio's operating system into Walmart products instead of other third-party proprietary operating systems."

The device business exists to feed the advertising one. Roku says in the 10-Q that it expects "this trade off from Devices gross profit or loss to grow Streaming Households should result in increased total Platform revenue and total Platform gross profit over time." Each Roku-made or licensed Roku TV adds a home screen Roku can sell.

Profit, cash and an outlook that is no longer published

Total net revenue rose 24% to $1.50 billion and platform revenue, the sum of advertising and subscriptions, rose 23% to $1.31 billion, with a platform gross margin of 53.3%. Income from operations was $164.1 million, against $9.5 million a year earlier, and net income was $183.3 million, or $1.20 per diluted share, against $24.8 million. Adjusted EBITDA more than doubled to $248.8 million. Free cash flow over the trailing twelve months reached $795.7 million.

Part of the profit came from one-off items. Restructuring charges include a credit of $22.3 million for terminating part of a previously impaired corporate office lease. Sales and marketing expenses fell 21% to $190.9 million, driven by $42.1 million of lower marketing spending and a $19.2 million credit related to the buyout of previously impaired office floors, according to the 10-Q. General and administrative costs rose 17%, mainly because of $13.4 million of merger-related costs. Roku ended September with $2.52 billion in cash and $201.8 million in short-term investments, and had not borrowed under its $300 million credit facility.

Roku set full-year targets in February and raised them in April. In February, when it reported $1.22 billion in fourth-quarter platform revenue, it forecast 2026 platform revenue of $4.890 billion and adjusted EBITDA of $635 million. With its first-quarter results on April 30, it raised the platform revenue outlook to about $5.0 billion and adjusted EBITDA to $675 million, with total net revenue of $5.5 billion. After nine months, platform revenue stands at $3.66 billion, about 73% of the April figure, and adjusted EBITDA at $651.5 million, about 97% of it, by PPC Land's calculation. Since signing with FOX, the company has published no outlook. It says only that it remains "on track for the second half 2026 forecast we provided in the proxy statement," and the letter does not restate that forecast.

The FOX deal: a Second Request and three deadlines

Roku signed its merger agreement with FOX on June 14, 2026, and FOX announced the acquisition the next day at about $22 billion in enterprise value, days after Reuters reported that Roku was exploring a sale. Each Roku share will be converted into $96.00 in cash and 0.9693 of a FOX Class A share, and former Roku stockholders would own about 27% of the combined company, according to the 10-Q.

The filing records a step that lengthens the review. "On September 8, 2026, we and Fox each received a request for additional information and documentary material (the 'Second Request') from the U.S. Department of Justice," the 10-Q says. The waiting period under the Hart-Scott-Rodino Act now runs until 30 days after both companies have substantially complied, unless ended earlier. Either party can walk away if the deal is not completed by June 14, 2027, a date that can be extended to December 14, 2027, and then to March 14, 2028. Each side would owe the other a termination fee of $866.1 million in certain circumstances, and FOX would pay Roku $1.2 billion in others, including an antitrust injunction or a failure to obtain certain regulatory approvals by the termination date.

Until then, Roku operates under limits. "While the Merger Agreement is in effect, we are generally required to conduct our business in the ordinary course consistent with past practice," the 10-Q says, with restrictions on acquisitions, investments, share repurchases and "certain contracts" without FOX's consent. Roku suspended its buyback programme in the second quarter, after repurchasing $162.7 million of stock in 2026. The filing also warns that partners "may be more cautious in their arrangements with us or attempt to negotiate changes in existing business relationships" while the deal is pending.

The letter closes on the opposite note. "Our pending acquisition by FOX is an extraordinary opportunity to accelerate our vision, allowing us to scale faster and innovate more aggressively for viewers, partners, and advertisers," Anthony Wood, founder and chief executive, and Dan Jedda, chief financial officer and chief operating officer, wrote.

Why the quarter matters for advertisers

Roku's results describe a connected TV platform selling far more impressions at a lower average price. The pattern is not unique to Roku. DataBeat measured programmatic CTV CPMs averaging $4.68 in April 2026, down 25.8% year on year, and attributed the decline to new entrants expanding supply faster than demand. Streaming took 48.7% of estimated US national TV ad spend on 21.9% of impressions in the third quarter, according to iSpot. On those estimates, a streaming impression cost about 3.4 times a linear one, by PPC Land's calculation, even as Roku's average price per impression fell.

For buyers, Roku's programmatic disclosure is the operational point. If more than 80% of in-stream video impressions already run programmatically and a wider DV360 link is coming, Roku inventory sits in the same auctions and planning tools as every other CTV seller, which makes its prices easier to compare with rivals'. Roku has also built its own packaged products on top of that plumbing, such as Roku Curate, which bundles retail purchase data from six partners with Roku inventory, and has opened its Ads API to campaign tools, including Smartly's integration in June.

The open question is what happens after the deal closes. Roku's letter leans hard on neutrality: "we work with every major buyer of advertising, and we have built our business on interoperability with partners rather than exclusivity." When the deal was announced, FOX executives said they did not want to upset Roku's existing relationships and planned to keep Tubi and The Roku Channel separate. A broadcaster with its own free streaming service would then own an operating system whose Roku-made TVs alone approached 8% of US TV unit sales, before counting the licensed Roku TV models that make up most of its volume. The Justice Department's Second Request means that combination faces a more detailed review before it can close.

Timeline

Summary

Who: Roku, Inc., the US TV streaming platform and operating system company, which Fox Corporation agreed to acquire in June 2026; analysts at Cleveland Research Company commented on the results.

What: Advertising revenue rose 23% to $727.4 million in the third quarter of 2026 as video ad impressions grew 33% and the average price per impression fell 7%. Advertising gross margin reached 63.2%, more than 80% of in-stream video ad impressions were delivered programmatically, political advertising exceeded the 2024 presidential cycle and Roku said it will expand its DV360 integration. Subscriptions revenue rose 23% to $580.9 million, devices revenue rose 33% with a minus 25.1% margin on memory costs, and net income reached $183.3 million.

When: Roku published the shareholder letter and filed its Form 10-Q on November 2, 2026, covering the quarter ended September 30, 2026. Cleveland Research's note is dated November 3, 2026.

Where: Most of the revenue comes from the United States; international markets were less than 10% of revenue. The results appeared in Roku's shareholder letter and its filing with the US Securities and Exchange Commission.

Why: The quarter shows a connected TV platform growing ad revenue through volume while average prices fall, shifting most of its video inventory into programmatic channels, and doing so under the constraints of a pending acquisition by a broadcaster that the Justice Department is reviewing in depth.