Hi there! My name is Janko Roettgers, and this is Lowpass. In this issue: Roku’s latest earnings show how the RAM shortage impacts streaming device makers.
Roku’s hardware losses double despite price increases
The ongoing AI-induced memory chip shortage continues to have a significant impact on consumer hardware makers, including companies in the streaming space. This week, Roku revealed just how massive the problem has become: In its most recent quarter, Roku’s hardware losses more than doubled, jumping from $22.9 million in Q3 of 2025 to $48.6 million.
The company’s hardware gross profit margin was negative 25.1 percent in Q3, which essentially means that the company lost $10 for every $40 streaming stick it sold to consumers.
Granted, that’s oversimplified math not accounting for wholesale revenue cuts as well as a diversified hardware portfolio, but it’s a good rough estimate for how much the company lost selling streaming devices and other hardware through its own website. And it once again shows that RAMageddon has some real consequences for the streaming video industry.
To fully grasp how bad things are, consider this: Roku hiked the prices of its hardware products by up to 60 percent in July, with the price tag of its Roku Ultra streaming box jumping from $100 to a whopping $150. That price increase also showed up in Roku’s Q3 earnings this week, with hardware revenue increasing by 33 percent. In other words: If Roku hadn’t raised its prices, hardware losses would be even more dramatic.
Now, this doesn’t mean that Roku is in trouble. The company has long used hardware as a loss leader, and sold streaming devices at or below cost to increase its user base that then gets monetized through ads and subscriptions. The margin for this part of its business actually increased, and far outweigh any hardware losses. The company’s net income for the quarter was $183.3 million, compared to just $24.8 million a year ago. Total net revenue for the quarter was $1.5 billion.
Roku stopped doing earnings calls ever since Fox announced its intent to acquire the company, but its letter to investors did touch on the chip shortages: