Roku's Ad Growth Outpaces OTT Market: Is Revenue Momentum Sustainable?

Roku’s ROKU advertising momentum remains a key driver of its business, positioning the stock firmly within the digital TV shift. In the second quarter of 2025, platform revenue jumped 18% year over year to $975 million, with advertising growth outpacing Roku’s overall platform segment and exceeding trends in the U.S. OTT and digital ad markets , highlighting market share gains in connected TV.Roku’s advertising revenue momentum is supported by a demand diversification strategy. Deeper integrations with demand-side platforms such as Amazon DSP and The Trade Desk are widening programmatic access to Roku’s inventory, with the Amazon DSP integration set for completion by the end of the third quarter and expected to expand advertiser reach. Roku Ads Manager is targeting performance advertisers, enabling small businesses to repurpose creative assets and driving early conversion rates above 30%, suggesting broader adoption potential in the quarters ahead. The Roku Channel remained the #2 app on the platform in the U.S. and accounted for 5.4% of total U.S. TV streaming time in June 2025, reinforcing its role as an engagement driver. Streaming hours climbed to 35.4 billion in the second quarter, up 5.2 billion from last year, driven by higher engagement on The Roku Channel, personalized content discovery features and live sports programming - factors that are likely to continue fueling viewership growth.The Zacks Consensus Estimate for third-quarter platform revenues is pegged at $1.05 billion, while the consensus mark for streaming hours is pegged at 37 billion. Roku also raised its full-year platform revenue outlook to $4.075 billion, implying 16% growth. This outlook reflects the company’s strengthening position in digital advertising as DSP integrations and self-service tools broaden its advertiser base and engagement scale.ROKU Faces Stiff Competition in Ad IndustryRoku faces mounting competition in connected TV advertising from Netflix NFLX and Disney DIS. Netflix has rapidly scaled its ad-supported tier, reaching tens of millions of users globally, giving Netflix strong leverage with advertisers compared to Roku’s third-party content model. Disney’s ad-supported services across Disney+, Hulu and ESPN+ provide premium inventory at scale, positioning Disney as a leading rival to Roku’s ad offerings.Both Netflix and Disney continue to invest in proprietary ad technology platforms, while Roku differentiates itself through its role as a neutral platform operator, a contrast to Netflix and Disney’s content-driven ecosystems.ROKU’s Share Price Performance, Valuation and EstimatesROKU shares have risen 26.7% year to date, underperforming the Zacks Broadcast Radio and Television industry’s growth of 27.3% but outperforming the Zacks Consumer Discretionary sector’s return of 11.5%.ROKU’s YTD Price PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, Roku stock is currently trading at a forward 12-month Price/Sales ratio of 2.78X compared with the industry’s 4.82X. ROKU has a Value Score of D.ROKU ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at 7 cents per share, which is up by 4 cents over the past 30 days, indicating a significant improvement over the year-ago quarter’s loss of 6 cents per share.Roku, Inc. Price and Consensus Roku, Inc. price-consensus-chart | Roku, Inc. QuoteRoku currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis Report Roku, Inc. (ROKU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks