Fox to Acquire Roku for $22 Billion as Platform Revenue Surges 28%
The streaming-platform operator posted $86 million in net income, swinging from a year-earlier loss, on the same day Fox Corporation agreed to buy it for $160 a share.
Fox Corporation agreed to acquire streaming-platform operator Roku (ROKU) for $160.00 per share in cash and stock, valuing the company at roughly $22 billion in enterprise value, the companies said Monday. The deal, expected to close in the first half of 2027, carries approximately $400 million in targeted run-rate cost synergies and shifts the investment narrative from Roku's standalone operating trajectory to a merger-arbitrage framework.
The announcement arrived alongside first-quarter results that showed Roku's Platform business accelerating meaningfully. Platform revenue rose 28% year over year to $1.13 billion, the fastest pace in at least five quarters and well ahead of the 18% growth recorded in the fourth quarter of 2025. Total net revenue reached $1.25 billion, and the company swung to net income of $86 million from a net loss of $27 million a year earlier, marking its third consecutive profitable quarter.
Starting this quarter, Roku broke Platform revenue into two new segments for the first time: Advertising, which generated $613 million, up 27% year over year, and Subscriptions, which contributed $519 million, up 30%. Subscriptions excluding the recently acquired Frndly TV service grew 23%, indicating the legacy business is expanding at a healthy clip even as Frndly adds incremental revenue. The faster growth rate of Subscriptions, however, carried a margin cost: Subscriptions gross margin narrowed to 41.1% from 48.7% a year ago, reflecting the dilutive mix effect of the lower-margin Frndly business.
Advertising margins moved in the opposite direction, expanding to 60.5% from 56.0% a year earlier, the highest level in five quarters. Roku attributed part of the advertising strength to diversification of its advertiser base: non-media-and-entertainment brands accounted for nearly 30% of total RX advertising revenue, an all-time high, while ad spend through third-party programmatic partners climbed more than 40%. The Roku Channel, the company's free ad-supported streaming service, captured 6.3% of all U.S. TV streaming in December 2025, up from 4.6% a year earlier, according to Nielsen data.
The mix shift toward lower-margin Subscriptions revenue weighed on overall Platform gross margin, which slipped to 51.6% from 52.7% a year ago. Devices revenue fell 16% to $118 million, and the segment's gross margin deepened to negative 16.3%, with Roku warning that tightening memory-chip supply would pressure hardware margins in the second half of the year. Adjusted EBITDA nonetheless more than doubled to $148 million, producing an 11.9% margin, up 6.4 percentage points year over year, though it declined sequentially from the fourth quarter's $169 million peak.
Roku raised its full-year 2026 outlook, now projecting Platform revenue of roughly $5.0 billion, representing nearly 21% growth, up from its prior forecast of $4.89 billion. Adjusted EBITDA guidance moved to $675 million from $635 million previously, implying approximately 330 basis points of margin expansion year over year. For the second quarter, the company guided to Platform revenue growth of about 20% and Adjusted EBITDA of $170 million, a sequential step-up from the first quarter.
The company surpassed 100 million Streaming Households globally during the quarter, clearing a milestone it had previously targeted for sometime in 2026. Streaming Hours grew 8% year over year to 38.7 billion, a deceleration from the 15% pace logged for full-year 2025, suggesting engagement growth is moderating even as monetization accelerates. Free cash flow on a trailing-twelve-month basis reached a record $539 million, up 81% from a year earlier, as Roku continued to buy back stock — $100 million in the quarter — and reduce stock-based compensation, which fell to $79 million from $95 million a year ago.