ROKU

Roku reached a genuine inflection in FY2025: revenue grew +15.2% to $4.74B and the company swung to a $88.4M net profit (from a $129M loss in FY2024), with diluted EPS of $0.59. Just as important, operating cash flow more than doubled (+121.8%) to $484M against trivial capex of $5.28M, confirming the business is now self-funding. The strategic logic in the 10-K is clear: management deliberately runs the Devices segment at thin or negative gross profit to grow Streaming Households, monetizing them through higher-margin Platform advertising and distribution revenue. Blended gross margin sits at 43.8%, and the balance sheet is clean with $1.59B cash and effectively no debt (liabilities/equity 0.67x).

The problem is valuation, not quality. At $138.07 the stock trades at 234x trailing EPS — a multiple that assumes Platform monetization scales rapidly from a still-marginal earnings base. Operating income was still slightly negative (-$5.62M, -0.1% margin) and net margin is just 1.9%, so reported profitability remains fragile and partly below the operating line. Retained earnings are still -$1.49B, reflecting the accumulated losses of the FY2022-FY2024 period (-$498M, -$710M, -$129M).