What changed in this filing

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Item 1. Business

2024-02-16 compared with 2023-02-16 · 167 added, 186 removed, 115 unchanged (75% of the section changed)

(“Roku,” “the Company,” “we,” or “us”) is the leading TV streaming platform in the United States, Mexico, and Canada by hours streamed.

(“Roku,” the “Company,” “we,” or “us”) is the leading TV streaming platform in the United States by hours streamed.

We pioneered streaming to the TV.

We believe that all TV content and all TV advertising will be streamed.

The shift of the TV ecosystem to streaming continues and is expanding TV’s capabilities for consumers, content publishers, advertisers, and other industry participants.

TV streaming is now mainstream.

In 2022, for the first time viewers in the United States spent more TV time streaming than watching cable, and “cutting the cord” from traditional TV services has accelerated.

Essentially every major media company has entered TV streaming and launched a streaming service, with several expanding beyond pure subscription models to new ad-supported options.

Similarly, advertisers can use TV streaming to reach consumers that are increasingly unreachable on traditional TV while also benefiting from the digital advertising capabilities that TV streaming platforms deliver.

Our mission is to be the global TV streaming platform that connects and benefits the entire TV ecosystem of consumers, content publishers, and advertisers.

Through our TV streaming platform, we connect consumers to the entertainment they love, enable content publishers to build, engage, and monetize large audiences, and provide advertisers with unique capabilities to reach consumers.

The foundation of our platform is the Roku operating system (the “Roku OS”), which is purpose built for TV streaming.

The Roku OS powers our Roku streaming devices.

Roku streaming devices include Roku streaming players, Roku Streambars, and TVs powered by Roku OS (which include TVs that are manufactured and sold by our licensed Roku TV partners (“Roku TV models”) and our own TVs that will be available to purchase beginning in 2023 (“Roku-branded TVs”)).

We license the Roku OS to our licensed Roku TV partners who leverage our smart TV reference designs, and then manufacture and sell Roku TV models.

In January 2023, we announced the launch of Roku Select and Roku Plus Series TVs, a new line of Roku-branded TVs that will be designed, made, and sold by us, which will also be powered by the Roku OS.

The Roku OS is designed to run on low-cost hardware which enables us and our licensed Roku TV partners to sell streaming players and TVs at affordable prices.

Consumers connect their Roku streaming devices to our streaming platform via a broadband network and are able to access a wide selection of content through a streaming experience that is both delightful and easy to use.

The features and functionality of our platform, powered by the Roku OS, enable us to serve content publishers, advertisers, licensed Roku TV partners, and other industry participants.

Content publishers can reach our highly-engaged user base of 70.0 million active accounts and use our billing services and data insight tools.

Advertisers reach TV viewers at scale with targeted and measurable ads.

Licensed Roku TV partners can build market share by offering smart TVs in a range of sizes and price points, and retailers can offer customers Roku’s highly-rated streaming devices online and in stores.

We continue to focus significant resources to advance the Roku OS;

to provide an industry-leading platform for our consumers, content publishers, and advertisers;

to obtain content for our platform that attracts users, including our own original content;

and to extend Roku’s advantage as the global shift to TV streaming continues.

In 2022, we extended our ecosystem and launched new smart home products to build new service revenue streams.

Our smart home product offering includes cameras, video doorbells, plugs, light bulbs, and light strips, along with a Roku Smart Home mobile app for iOS and Android.

We offer subscription plans for our cameras and video doorbells that provide users with the ability to view cloud recordings of the videos and to receive AI-based alerts (e.g., person, package, vehicle, pet).

One of our smart home priorities is interoperability, and Roku Smart Home is compatible with Google Home, Alexa, and Roku Voice.

The Roku video doorbells and cameras also integrate with the Roku OS, allowing users to view live video streams and receive real-time notifications directly on their TVs.

The products are available on our website at Roku.com and in-store exclusively at Walmart, America’s #1 retailer, in nearly 3,500 locations where Roku is the #1 smart home brand by shelf space.

Similar to our TV streaming business model, we plan to build scale with these devices and then monetize through smart home services.

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Our Business Model

Three core areas of focus define our business model.

First, we grow scale by increasing our active accounts.

Second, we grow engagement by increasing the hours of content streamed through our platform.

And third, we grow monetization of the activities that consumers engage in through our platform.

Furthermore, our business model is designed to fulfill the needs of the participants in the TV streaming ecosystem:

consumers, content publishers, advertisers, licensed Roku TV partners, other device licensees, and retailers.

We believe that all TV will be streamed.

The shift of the TV ecosystem to streaming continues and is expanding TV’s capabilities for viewers, content partners, advertisers, and other industry participants.

Nearly every major media company not only has a streaming service, but has also expanded beyond pure subscription streaming models to new ad-supported streaming options.

Advertisers use TV streaming to reach viewers who are increasingly unreachable on traditional TV while also benefiting from the digital advertising capabilities that TV streaming platforms can deliver.

Our mission is to be the global TV streaming platform that connects and benefits the entire TV ecosystem of viewers, content partners, and advertisers.

Through our TV streaming platform, we connect viewers to the entertainment they love;

enable content partners to build, engage, and monetize large audiences;

and provide advertisers with unique capabilities to reach viewers.

Our Strategy and Business Model

The foundation of our platform is the Roku operating system (the “Roku OS”), which is purpose built for TV streaming, and powers Roku streaming devices.

The Roku OS is designed to run on low-cost hardware, which enables Roku streaming devices to be sold to customers at competitive prices.

The Roku OS connects viewers to our streaming platform via a broadband network, giving them access to a wide selection of content through a streaming experience that is both delightful and easy to use.

We provide updates via the Roku OS to continuously deliver an exceptional TV streaming experience.

We dedicate significant resources to build, maintain, and advance the Roku OS;

to provide an industry-leading streaming platform for our viewers, content partners, and advertisers;

to obtain content for our streaming platform that attracts viewers, including our own original programming (Roku Originals);

and to extend Roku’s leadership as the global shift to TV streaming continues.

Our three-phased business model—grow scale, grow engagement, and grow monetization—drives our mission as a global streaming platform that connects and benefits the TV ecosystem of viewers, content partners, and advertisers.

We leverage our ownership of our streaming platform to help our viewers find content across the streaming universe, while simultaneously growing monetization.

Increasing the number of Active Accounts

We make access to TV streaming affordable in part by offering a broad lineup of streaming players, at various price points, that customers can use to easily turn (nearly) any TV into a smart TV.

Audio is an important part of the TV streaming experience, and we also offer the Roku Streambar (a soundbar with a built-in streaming player), Roku wireless speakers that seamlessly connect to TVs powered by Roku OS, and Roku Wireless Subwoofers.

Additionally, we offer customers the choice to build an audio experience with third-party products through The Roku TV Ready program.

Through this partnership with audio companies, we enable their audio products to work seamlessly with TVs powered by Roku OS.

On a periodic basis, we launch new streaming players and provide updates via the Roku OS to continuously offer an exceptional TV streaming experience with the highest performance at an affordable price.

We also license the Roku OS to licensed Roku TV partners that manufacture and sell Roku TV models that integrate the Roku OS to enable basic TV functions and connect to our TV streaming platform.

We have driven strong active account growth through our Roku TV licensing program.

Using our reference designs results in relatively low hardware costs, enabling these TV brand licensees to manufacture and sell smart TVs that are competitively priced for consumers and that are automatically updated whenever we issue a Roku OS update.

We also recently announced the launch of a new line of Roku-branded TVs (the Roku Select and Roku Plus Series TVs) that will be designed, made, and sold by us in 2023.

These TVs will complement our successful Roku TV licensing program.

We believe our Roku-branded TVs will enable us to further grow our leadership position and expand into the higher-end spectrum of performance TVs.

Roku-branded TVs will also help us innovate more quickly in all aspects of hardware and software and test directly with consumers, improving the product and consumer experience and strengthening the entire Roku TV ecosystem.

We also license the Roku OS and our streaming player designs, as well as provide ongoing technology and support services, to certain international pay TV and telecommunications service operators that distribute co-branded players to their subscribers in their markets.

Through the Roku platform, we provide consumers tremendous choice, value, and an exceptional user experience.

We have been able to significantly scale our active account base over a multi-year period.

In 2022, we added 9.9 million net new active accounts, ending the year with 70.0 million active accounts.

We make access to TV streaming affordable through a broad lineup of devices, at a variety of competitive price points, including Roku TV models, Roku-branded TVs, and Roku streaming players.

Roku TV models are TVs made and sold by our Roku TV partners, which are TV original equipment manufacturers (“OEMs”) that license the Roku OS and leverage our smart TV reference designs.

We have driven strong Active Account growth through our Roku TV licensing program, which we launched 10 years ago.

In 2023, we launched Roku-branded TVs, which are designed, made, and sold by us.

The Roku Select and Roku Plus Series TVs are available at Best Buy, Amazon, and Costco in the United States, and the Roku Pro Series TV is expected to be available in spring 2024.

Roku-branded TVs complement our successful Roku TV licensing program.

We believe our Roku-branded TVs will enable us to further grow our leadership position in TV streaming and expand into the higher-end range of performance TVs.

Roku-branded TVs will also help us innovate more quickly in all aspects of hardware and software and test directly with viewers, improving the product and viewer experience and strengthening the entire Roku ecosystem.

Roku streaming players enable users to easily turn (nearly) any TV into a smart TV.

On a periodic basis, we launch new streaming player models with a focus on offering high performance at an affordable price.

The Roku ecosystem extends beyond TV streaming to smart home devices that include cameras, video doorbells, a home monitoring system, plugs, light bulbs, and light strips, along with our Roku Smart Home mobile application for iOS and Android.

Similar to our TV streaming business model, we build scale by selling Roku Smart Home devices and then monetize through smart home services.

We offer subscription plans for our cameras, video doorbells, and home monitoring system.

Audio is an important part of the TV streaming experience, and we also offer Roku-branded wireless speakers and subwoofers that seamlessly connect to TVs powered by the Roku OS.

Through our streaming devices and the Roku platform, we provide viewers tremendous choice, value, and an exceptional viewer experience.

In 2023, we added 10.0 million net Active Accounts, ending the year with 80.0 million Active Accounts.

Growing Streaming Hours

We believe that offering users a wide range of content and an easy-to-use interface drives increased engagement by delivering a better overall streaming experience.

Streaming hours on our platform grew from 73.2 billion hours in 2021 to 87.4 billion hours in 2022, as our active accounts grew through the distribution of Roku streaming devices.

Through our streaming platform, we make it easy for our users to watch their favorite TV shows and movies, as well as listen to their favorite music and podcasts.

Furthermore, we believe our platform offers users an exceptional TV streaming experience through a user interface that is delightful and easy to use.

From the Roku home screen, our users can easily find and access TV shows, movies, news, sports, and more across a wide variety of channels available on our streaming platform.

In 2022, we added Live TV and What to Watch features to the Roku Home Screen Menu to make it even easier for viewers to quickly find the content they want.

We also launched an all-new Sports experience that gives consumers easy access to live and upcoming sports across the Roku platform from a centralized location.

And Roku’s powerful universal search makes it fast and easy for users to find the content they are looking for — regardless of the channel it is on.

Additionally, users have choice in how much they want to spend on content through a broad array of options on an ad-supported, subscription, or transactional basis.

Our direct relationship with our users provides us with detailed insights about their behavior on our platform, including certain content they search for, the channels they install, the channels they watch, and certain content that they purchase or subscribe to on our platform.

This first party data enables us to develop actionable insights such as content recommendations to improve our users’ experience.

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Our significant scale, ability to reach highly engaged streamers, tools that enable seamless sign ups (like Roku Pay), and marketing/discovery features make us an attractive platform to content publishers.

They can also reach those users who no longer use or never used traditional TV services.

As consumers shift to TV streaming, content publishers that use our platform are able to reach these streaming audiences at scale and engage users directly.

The Roku Channel is our owned and operated streaming channel that drives engagement on our platform by providing users with free, ad-supported access to a large and broad library of content.

This content is available both on demand and through more than 350 linear channels — all accessible from a single app on our platform.

The Roku Channel also offers paid, subscription-based content from dozens of content partners through Premium Subscriptions, which gives users the ability to browse content before signing up, obtain free trials for subscriptions, sign up in one-click, and enjoy simple subscription management with a single monthly bill.

In 2022, The Roku Channel was a top 5 channel on our platform in the U.S.

by both Active Account Reach and Streaming Hour engagement.

The Roku Channel is a core strategic asset that simultaneously benefits consumers, content partners, and advertisers, while generating increasing platform revenue.

For viewers, The Roku Channel is a compelling destination for a diverse selection of free and paid entertainment, providing content through linear channels and on demand offerings.

For content owners, The Roku Channel provides a variety of options to distribute and monetize content through both licensing agreements and Premium Subscriptions.

And for both content owners and advertisers, The Roku Channel delivers a large and engaged audience at scale that we believe will continue to grow.

Owning and operating both The Roku Channel and the Roku platform creates unique value, making us a leader in free content, positioning us to be a valuable partner to content owners, and providing a large source of ad inventory.

Our strategy for The Roku Channel is to drive engagement through a broad portfolio of quality content consisting of TV shows, movies, news, sports, lifestyle, and more in both on demand and linear channel formats.

The foundation of our content strategy is revenue share and fixed licensing agreements and, to a smaller extent, original programming.

We launched our original programming, “Roku Originals” on The Roku Channel in 2021 and have continued to build upon this library as it offers compelling, exclusive value to both consumers and advertisers.

Our content spend is intended to be commensurate with the growth trajectory of The Roku Channel and also the broader macro environment.

The Roku Channel is available in the United States, the United Kingdom, and Canada, and in 2022, we launched The Roku Channel in Mexico.

In the United States, The Roku Channel features a diverse lineup of more than 80,000 free movies and TV shows, including original and exclusive content, 350+ free linear television channels, free ad-supported entertainment for kids and family with more than 10,000 titles, and more than 50 premium subscription channels.

We believe that offering viewers a wide range of content and an easy-to-use interface drives increased user engagement.

We grew Streaming Hours from 87.4 billion hours in 2022 to 106.0 billion hours in 2023 through the increased distribution of Roku streaming devices, increasing our Active Accounts, and continuing to enhance our viewer experience.

One of the key competitive advantages driving our success is our position as a TV streaming platform that has achieved significant scale—our home screen is the first thing our viewers see when they start their TV streaming journey.

From this position, we can help the viewer decide what to watch across the vast range of options available to them on our streaming platform.

We innovate and build features to support this critical role in the viewer’s journey, and it is a key driver of our monetization.

The Roku Home Screen Menu (left navigation bar) contains features such as Live TV, Sports, and What to Watch, and in 2023 we launched enhancements to make it even easier for viewers to find and discover great entertainment.

For example, we are enabling more personalization through recommendations and features that allow viewers to track TV shows, movies, and sports teams.

Additionally, Roku’s powerful universal search makes it fast and easy when viewers are looking for specific content.

We also empower viewers to choose how much they want to spend on content by offering them a broad array of ad-supported, subscription, and transactional options.

Our direct relationship with customers provides us with detailed insights about their behavior on our streaming platform, including certain content viewers search for, the apps viewers install and watch, and the types of content that viewers purchase or subscribe to on our platform.

This first party data enables us to develop actionable insights such as content recommendations to improve our viewers’ experience.

Our significant scale, ability to reach highly engaged viewers, tools that enable seamless sign ups, and marketing/discovery features make us an attractive platform to content partners.

They can also reach and engage those viewers who no longer use or never used traditional TV services.

As more viewers shift to TV streaming, content partners that publish apps on our platform are able to reach these streaming audiences at scale and engage viewers directly.

One of the key engagement drivers on our streaming platform is The Roku Channel, our owned and operated streaming app.

The Roku Channel aggregates a broad variety of entertainment into a unified streaming experience, through three distinct types of content:

• AVOD (ad-supported video on demand):

Users can stream a broad variety of 80,000+ movies and TV shows, including Roku Originals, for free.

Users have access to watch 400+ FAST (free, ad-supported linear streaming TV) channels.

• Premium Subscriptions :

Users can easily sign up, view, and manage subscriptions to dozens of streaming services that require a subscription such as Paramount+ and AMC+ with a single, monthly bill.

The Roku Channel benefits from its integration with our streaming platform, which has features such as Live TV, Sports, What to Watch, and more that can surface content from The Roku Channel to our viewers directly from our home screen and throughout a viewer’s streaming journey on our platform.

In 2023, The Roku Channel was a top 5 app on our platform by both Active Account reach and Streaming Hours.

The foundation of our content strategy for The Roku Channel is third party licensed content and, to a smaller extent, Roku Originals.

Our content spend is intended to be commensurate with the growth trajectory of The Roku Channel and with the broader macroeconomic environment.

The Roku Channel is available on devices powered by the Roku OS in the United States, the United Kingdom, Canada, and Mexico.

In the United States, it is also available online at TheRokuChannel.Roku.com, and on Amazon Fire TVs, Samsung TVs, Google TV, and other Android TV OS devices.

Monetization:

Growing our revenue and gross profit by monetizing user activity

We generate platform revenue primarily through advertising and content distribution services.

Our sophisticated and leading TV streaming platform enables advertisers and content publishers to reach audiences that are increasingly unreachable on traditional TV.

Each user on our platform creates multiple revenue opportunities for Roku, whether they are opening the Roku home page, enjoying ad-supported content, purchasing content, or simply using a Roku remote.

We monetize our users’ engagement on our platform through a variety of services and capabilities, including sales of subscription or transaction-based content, billing services, brand sponsorship and promotions, and video advertising in ad-supported channels.

We believe that running relevant display and video ads enhances the user experience on our platform.

We generate platform revenue primarily from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services), as well as streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls).

Previously, we referred to streaming services distribution as content distribution services.

Our TV streaming platform enables content partners and advertisers to reach audiences that are increasingly unreachable on traditional TV.

Each user on our streaming platform creates multiple revenue opportunities for Roku through activities such as navigating through the Roku home screen, watching ad-supported content, or signing up for subscription services.

We measure monetization of our platform by calculating the average revenue per user (“ARPU”), which we believe represents the inherent value of our business model, and gross profit.

ARPU (which we measure on a trailing 12-month basis) was $41.68 as of December 31, 2022 compared to $40.67 as of December 31, 2021.

Our gross profit was $1,441.1 million and $1,408.6 million for the years ended December 31, 2022 and December 31, 2021, respectively.

We make it easy for content publishers to distribute and monetize their streaming content through three primary business models:

subscription video on demand (“SVOD”) that includes subscriptions to individual video on demand channels and so-called virtual multichannel video programming distribution (“vMVPD”) services;

ad-supported, which includes advertising video on demand (“AVOD”) channels with on demand content that do not charge a subscription fee to users, as well as free ad-supported streaming TV (“FAST”), which we define as free, ad-supported linear streaming TV;

and transaction video on demand (“TVOD”) that includes channels that offer a la carte content purchases or rentals.

Through Roku Pay, our proprietary platform billing solution, we are also able to assist content partners with billing services, including billing users for in-channel purchases like content rentals, managing subscriptions, and customer invoices.

Roku Pay allows publishers to enable a frictionless, “one-click” signup within the app, and we believe this key benefit simplifies user subscription signups and drives purchase and retention for our content publishers.

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Content publishers also have access to our media and entertainment promotional capabilities and tools to help them attract, engage, and retain viewers by investing in promoting their content to our users on our platform.

Content publishers can use a variety of ad placements, including native display ads on the Roku home screen or a screen saver to drive channel downloads, promote a channel’s content, and direct traffic to their channels in order to drive subscriptions or movie and TV show consumption.

We also derive revenue from the sale of branded channel buttons on streaming player and Roku TV remote controls that are intended to increase incremental usage of the channel by allowing users to launch straight into the channel from any screen.

Our analytics and reporting assist content publishers with analyzing viewership trends and metrics for specific titles.

Using machine learning, we also can help content publishers target new audiences that are more likely to subscribe to their services.

We make it easy for content partners to distribute and monetize their streaming content through three primary business models:

subscription video on demand (“SVOD”), which includes subscriptions to individual video on demand apps and so-called virtual multichannel video programming distribution (“vMVPD”) services;

ad-supported video, which includes ad-supported video on demand (“AVOD”) apps with on demand content that do not charge a subscription fee to users, as well as free ad-supported streaming TV (“FAST”), which we define as free, ad-supported linear streaming TV;

and transaction video on demand, which includes apps that offer a la carte content purchases or rentals.

Through Roku Pay, our proprietary billing solution, we are also able to assist content partners with billing services, including billing users for in-app purchases like content rentals, managing subscriptions, and customer invoices.

Roku Pay allows content partners to enable a frictionless signup within their app, and we believe this key benefit simplifies user subscription signups and drives purchase and retention for our content partners.

Content partners also have access to our media and entertainment tools to help them attract, engage, and retain viewers by investing in promoting their content on our streaming platform.

Content partners can use a variety of ad placements, including native display ads on the Roku home screen or a screen saver to drive app downloads, promote an app’s content, and direct traffic to their apps in order to drive subscriptions or movie and TV show consumption.

We also derive revenue from the sale of branded app buttons on streaming player and Roku TV remote controls that are intended to increase incremental usage of an app by allowing viewers to launch straight into the app from any screen.

Our analytics and reporting assist content partners with analyzing viewership trends and metrics for specific titles, and we also can help content partners target new audiences that are more likely to subscribe to their services.

Just as ads evolved decades ago when TV replaced radio as the primary entertainment medium, ads on TV streaming offer new and more performant opportunities than traditional TV.

We offer advertisers a unique and effective set of tools to reach consumers both on and off the Roku platform.

Advertisers are able to leverage the combination of our significant scale, our direct relationship with our users, and our advertising capabilities to serve relevant advertisements.

We offer advertisers a unique and effective set of tools to reach viewers both on and off our streaming platform.

Advertisers are able to leverage the combination of our significant scale, our direct relationship with viewers, and our advertising capabilities to serve relevant advertisements.

Advertisers on our platform also can measure both the effectiveness of the ads served and their return on investment.

OneView is our ad buying platform built for TV streaming.

Advertisers use OneView to set up, make changes, and measure ad campaigns entirely on their own.

In a world where all TV ads will be automated and streamed, our software and machine learning provide the best way to reach a Roku user wherever they are — on the Roku platform, other TV streaming devices, desktop, mobile, and more.

Advertisers choose OneView because it is the only ad buying platform with Roku data, ad inventory from The Roku Channel, and new Roku ad experiences that go beyond the traditional TV ad spot.

We are developing new and deeper relationships with third-party ad-buying platforms (retail media networks, demand-side platforms (“DSPs”), and other strategic partners) to meet marketers where they currently are buying programmatic advertising.

At the same time, our specialized ad products (such as Shoppable Ads, the Kroger Shopper Program, native ad formats, and our audience guarantees) are accessible only on our advertising platform.

This overall approach protects our strategic assets, while creating additional demand opportunities for our ad inventory.

Advertisers can use third-party DSPs or OneView (our ad-buying platform) to set up, make changes, and measure ad campaigns entirely on their own.

We offer engagement analytics such as ad impressions served, click-through rates, and video completion rates.

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Furthermore, we have relationships with third-party providers that focus on transactional or point of sale data, which enables our advertisers to compare the effectiveness of ads served on our platform to advertising on traditional TV.

Additional promotional advertising opportunities include shoppable ads that allow consumers to buy products right from the TV screen and content sponsorships that give users the opportunity to experience a free movie or show and sponsored themes in our user experience.

Additional promotional advertising opportunities include content sponsorships that give viewers the opportunity to experience a free movie or show and sponsored themes in our viewer experience and shoppable ads that allow viewers to buy products directly from the TV screen.

With shoppable ads, we are adding more performant tools and more partnerships to expand the capabilities we can offer advertisers.

The Roku Channel is also a core strategic asset in our monetization efforts that simultaneously benefits viewers, content partners, and advertisers, while generating increasing platform revenue.

For viewers, The Roku Channel is a compelling destination for a diverse selection of free and paid entertainment.

For content partners, The Roku Channel provides a variety of options to distribute and monetize content through both licensing agreements and Premium Subscriptions.

And for both content partners and advertisers, The Roku Channel delivers a large and engaged audience at scale that we believe will continue to grow.

Owning and operating both The Roku Channel and the streaming platform creates unique value, making us a leader in free content, positioning us to be a valuable partner to content partners, and providing a large source of ad inventory.

Business Growth

Investment in Growth

We believe that our future performance will depend on the success of the investments in our business that we have made, and will continue to make, to further differentiate our platform and increase the value we deliver to our users, content publishers, and advertisers.

We must regularly update and enhance our platform to meet evolving consumer behavior and provide a best-in-class content delivery and advertising platform.

We must provide content publishers with best-in-class publishing tools and actionable audience insights.

We believe that our future performance will depend on the success of the investments in our business that we have made, and will continue to make, to further differentiate our streaming platform and increase the value we deliver to our viewers, content partners, and advertisers.

We must regularly update and enhance our streaming platform to meet evolving viewer behavior and provide a best-in-class content delivery and advertising platform.

We must provide content partners with best-in-class publishing tools and actionable audience insights.

We must continue to innovate and invest in our advertising capabilities and technology so that we attract and encourage incremental advertising spend on our platform.

Accordingly, we plan to continue investing in our business to enhance our competitive differentiation and drive future growth, but we also plan to continue to improve our operations and operating expense profile to better manage through the challenging macroeconomic environment.

As a result, we expect our operating expense year-over-year growth to significantly decline over the course of 2023.

In particular, these investments will include research and development initiatives to bring new features and technology to our platform;

sales and marketing efforts to drive increased scale and engagement of our user base;

continued investment in both licensed and original content to drive scale and engagement of The Roku Channel;

and building out our general and administrative infrastructure to support a global business.

We aim to balance our commitment to achieving positive Adjusted EBITDA for full year 2024 and our investments to further expand our scale, engagement, and monetization.

Advertising Innovation

We continue to innovate and launch new ad products.

In 2022, we launched Roku’s Advertising Watermark, an industry-first capability which enables content publishers, advertisers, and technology providers to validate the authenticity of videos ads on the Roku platform.

In partnership with Walmart, we launched a product called Shoppable Ads, which make shopping on TV streaming as easy as it is on social media.

Viewers simply press “OK” with their Roku remote on a shoppable ad and proceed to checkout with their shipping and payment details pre-populated from Roku Pay.

We also announced an industry-first collaboration with Microsoft that will quantify how TV advertising on both traditional TV and TV streaming affects online searches to help marketers measure performance.

We launched Nielsen Total Ad Ratings, which provides media measurement across TV streaming, traditional TV, desktop, and mobile.

OneView was the first demand-side ad platform to directly integrate with Nielsen’s measurement solution.

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We continue to innovate our advertising offerings.

In 2023, for the first time, Roku City (our dynamic screen saver) was opened for major advertisers in a broader range of verticals, such as McDonald’s, Mattel, and Carnival Cruise Line, which have integrated brand-specific visuals into our iconic screen saver.

We also announced a number of partnerships to expand the value we can deliver to marketers.

For example, we partnered with DoorDash to allow their merchants to place click-to-order offers within their Roku ads, and with Instacart to help consumer-packaged goods (CPG) advertisers measure whether users are purchasing products on Instacart after seeing an ad on our streaming platform.

Building on the Shoppable Ad technology that we launched with Walmart in 2022, we partnered with Shopify to enable users to purchase products from Shopify merchants directly from Roku devices.

And Spotify partnered with Roku as its first TV streaming partner to introduce video ads in the Spotify app on Roku devices.

International Markets

The shift from traditional TV to TV streaming is a global phenomenon, as it offers consumers better choice and greater control over their entertainment.

We believe that the value our business delivers to consumers, content publishers, advertisers, licensed Roku TV partners, other device licensees, and retailers is as compelling in international markets as it is in the United States.

The shift from traditional TV to TV streaming is a global phenomenon, as it offers viewers better choice and greater control over their entertainment.

We believe that the value our business delivers to viewers, content partners, and advertisers is as compelling in international markets as it is in the United States.

Today Roku streaming devices are available in 15+ countries.

We are the leading TV streaming platform in the United States, Mexico, and Canada by hours streamed.

We continue to build our foundation for international expansion by establishing teams and offices around the world and investing in systems and processes that will support international expansion going forward.

In 2022, licensed Roku TV partners launched new Roku TV models in Mexico, Canada, and Germany, and we expanded into Australia with Roku TV models.

In international markets, we will continue to focus on building scale first, increasing customer engagement, and ultimately driving monetization.

We are the leading TV streaming platform in the United States and Mexico by hours streamed.

Internationally, we continue to grow our footprint and deepen our presence in key markets.

In Mexico, we announced RCA as a new Roku TV partner, an 8K Roku TV model with TCL, and new Roku TV models with Philips.

Building on our expansion in Latin America, we announced Roku TV models with Caixun in Chile and the launch of RCA Roku TV models in Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

In the United Kingdom, we announced Roku TV models with JVC (at Currys stores), Polaroid, and Sharp.

And in Germany, we expanded our Roku TV program with our third TV OEM partner, Coocaa.

In international markets, we will continue to focus on building scale first, increasing engagement, and ultimately driving monetization.

We are successfully growing The Roku Channel internationally.

The Roku Channel is available on devices powered by the Roku OS in the United Kingdom, Canada, and Mexico.

Mexico has become the channel’s largest international market.

With strong scale and engagement, and the launch of our digital advertising business in 2022, we have begun to monetize in Mexico.

Sales and Marketing

We engage in a wide variety of sales and marketing activities to continuously drive active account growth, engagement, and monetization and dedicate significant resources to this area.

Our sales and marketing activities are primarily focused on building and expanding relationships with content publishers, advertisers, TV brands, retailers, and service operators, and driving sales of our products and our licensed Roku TV partners’ products to consumers through retail distribution channels.

We have dedicated business development teams that develop and maintain relationships to promote and build awareness of the features and advantages of the Roku platform among content publishers, advertisers, TV brands, and service operators.

Our data science team supports our sales and marketing efforts by analyzing data on our platform to increase effectiveness for our content publishers and advertisers as well as for our consumer marketing campaigns.

Our relationship with content publishers is typically client-direct.

Through our dedicated content relationship management team, we enter into agreements with content publishers to distribute their app(s) on our platform, or license their content for The Roku Channel, or both.

As part of our distribution agreements with AVOD channels, we typically secure direct access to the content publishers’ video ad inventory for our monetization, and our sales efforts are differentiated and complementary to that of our content publishers.

Whereas our publishers typically feature their brand and content in their sale, we focus on delivering a large streaming audience across many channels at once using our own data.

We engage in a wide variety of sales and marketing activities to continuously grow scale, engagement, and monetization and dedicate significant resources to this area.

Our sales and marketing activities are primarily focused on building and expanding relationships with content partners, advertisers, TV brands, retailers, and service operators, and driving sales of our products and our licensed Roku TV partners’ products to consumers through retail distribution channels.

We have dedicated business development teams that develop and maintain relationships to promote and build awareness of the features and advantages of our streaming platform among content partners, advertisers, TV brands, and service operators.

Our data science team supports our sales and marketing efforts by analyzing data on our platform to increase effectiveness for our content partners and advertisers as well as for our consumer marketing campaigns.

Our relationship with content partners is typically client-direct.

Through our dedicated content partner relationship management team, we enter into agreements with content partners to distribute their apps on our platform, or license their content for The Roku Channel, or both.

As part of our distribution agreements with AVOD apps, we typically secure direct access to a portion of the content partners’ video ad inventory for our monetization, and our sales efforts are differentiated and complementary to that of our content partners.

Whereas our content partners typically feature their brand and content in their sale, we focus on delivering a large streaming audience across many apps and via other Roku branded experiences such as our home screen at once using our own data.

We sell advertising to a wide range of advertisers helping them reach their goals across numerous key performance indicators.

We are also developing relationships with more third-party platforms (e.g., retail media networks, demand side platforms, and other strategic partners) to reach marketers buying programmatic advertising on such platforms and to create demand opportunities for Roku ad inventory.

We are developing relationships with more third-party ad-buying platforms (e.g., retail media networks, DSPs, and other strategic partners) to reach marketers buying programmatic advertising on such platforms and to create more demand opportunities for Roku ad inventory.

Our sales teams and products are organized into groups that specialize in the unique needs of each area:

(i) agency holding companies and Fortune 500 brands, (ii) independent agency and mid-market clients, (iii) content publishers and entertainment brands, (iv) performance and direct to consumer brands, (v) international markets, and (vi) local advertising.

In addition, we work with our licensed Roku TV partners to assist in all phases of the development of Roku TV models, including development, planning, manufacturing, and marketing.

(i) agency holding companies and Fortune 500 brands, (ii) independent agency and mid-market clients, (iii) content partners and entertainment brands, (iv) performance and direct-to-consumer brands, (v) international markets, and (vi) local advertising.

We work with our licensed Roku TV partners to assist in all phases of the development of Roku TV models, including planning, manufacturing, and marketing.

In the United States, the majority of our products and our licensed Roku TV partners’ products are sold through traditional brick and mortar retailers, such as Best Buy, Target, and Walmart, including their online sales platforms, and online retailers such as Amazon, and to a lesser extent our website (excluding Roku TV models).

We also sell products internationally through distributors and to retailers.

Amazon and Walmart collectively accounted for 59% of our devices revenue for the year ended December 31, 2022 and 57% of our devices revenue for the year ended December 31, 2021.

Amazon, Best Buy, and Walmart collectively accounted for 71% of our devices revenue for the year ended December 31, 2023 and 67% of our devices revenue for the year ended December 31, 2022.

We support retailers with an experienced sales management team and work closely with these retailers to assist with in-store marketing and product mix forecasting.

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We have historically seen seasonality in our business related to advertising and device sales.

Our revenue and gross profit are traditionally strongest in the fourth quarter of each fiscal year and represent a high percentage of the total net revenue for such fiscal year due to higher consumer purchases and increased advertising during holiday seasons.

Our revenue and gross profit are traditionally strongest in the fourth quarter of each fiscal year and represent a higher percentage of the total net revenue for such fiscal year due to higher consumer purchases and increased advertising during holiday seasons.

Furthermore, in preparation for the fourth quarter holiday season, we recognize significant discounts in the average selling prices of our streaming device sales through retailers in an effort to grow our Active Accounts, which typically reduce our devices gross margin or results in a devices gross loss in the fourth quarter.

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Research and Development

Our research and development model relies on a combination of in-house staff and out-sourced design and manufacturing partners to cost-effectively improve and enhance our platform, and to develop new players, audio products, TVs, smart home devices, features, and functionality.

We work closely with content publishers, advertisers, licensed Roku TV partners, and service operators to understand their current and future needs.

We have designed a product development process that captures and integrates their feedback.

In addition, we solicit user feedback in the development of new features and enhancements to the Roku platform.

We intend to continue to significantly invest in research and development to bring new devices to market and enhance our platform and capabilities.

Our research and development model relies on a combination of in-house staff and outsourced development and manufacturing partners to cost-effectively improve and enhance our platform, and to develop new TVs, players, audio products, smart home devices, features, and functionality.

We work closely with content partners, advertisers, licensed Roku TV partners, and service operators to understand their current and future needs.

We have designed a product development process that seeks to take input from our partners into account when making decisions about our future product and service offerings.

In addition, we solicit user feedback in the development of new features and enhancements to our platform.

We intend to continue to invest significantly in research and development to bring new or improved products and services to market.

Manufacturing

We outsource the manufacturing of our products to our contract manufacturers and original design manufacturers.

We outsource the manufacturing of our products to our contract manufacturers, original design manufacturers, and other contractors and vendors.

All of our products are manufactured in the People’s Republic of China, Southeast Asia, and Brazil.

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Our manufacturers procure components and assemble our products to demand forecast we establish based upon historical trends and analysis from our sales, operations, and product management functions.

The manufacturers ship our products to our third-party warehouses in the United States, the United Kingdom, Germany, and Brazil where we ship our products directly to retailers, wholesale distributors, and consumers.

The manufacturers ship our products to our third-party warehouses in the United States and to our distributors in the United Kingdom and Brazil where we ship our products directly to retailers, wholesale distributors, and consumers.

Government Regulation

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For example, in both the United States and abroad, the regulatory framework for privacy and data security issues is rapidly evolving.

federal and state consumer protection regulators generally exercise oversight of consumer privacy protections and the security of online services.

federal and state consumer protection regulators generally exercise oversight of consumer protections, often bringing enforcement actions for unfair acts or deceptive practices related to privacy and security.

And an increasing number of states have passed, or are considering, legislation to govern consumer privacy.

Congress also is considering comprehensive federal privacy legislation.

Likewise, foreign jurisdictions in which we operate impose different, and sometimes more stringent, consumer and privacy protections, compared to the United States.

Consumer privacy laws are constantly changing and may become more diverse and restrictive over time, increasing the challenges and costs associated with complying with these laws in all jurisdictions.

Consumer privacy laws, and regulators’ interpretations of these laws, may become more diverse and restrictive over time, increasing the challenges and costs associated with complying with these laws in all jurisdictions.

Privacy laws also may limit the ability of advertisers to fully utilize our platform, which could have a negative impact on our business.

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Regulators in the United States and abroad continue to evaluate policy changes that could affect the openness of the internet.

To the extent regulators allow network operators to restrict the flow of content over the internet, such operators may seek to extract fees from us or our content publishers to deliver our traffic or may otherwise engage in blocking, throttling, or other discriminatory practices with respect to our traffic, which could adversely impact our business.

To the extent regulators allow network operators to restrict the flow of content over the internet, such operators may seek to extract fees from us or our content partners to deliver our traffic or may otherwise engage in blocking, throttling, or other discriminatory practices with respect to our traffic, which could adversely impact our business.

Finally, our content business is subject to a wide range of government regulations that may vary by jurisdiction.

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For additional information about government regulation applicable to our business and associated risks, see Item 1A, Risk Factors, elsewhere in this Annual Report.

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Intellectual Property

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We compete with much larger companies which have resources and brand recognition that pose significant competitive challenges.

In the face of this competition, we believe our success depends on building scale by growing our active accounts, growing engagement by increasing the hours of content streamed through our platform, and growing the monetization of the activities that consumers engage in through our platform.

In the face of this competition, we believe our success depends on building scale by growing our Active Accounts, growing engagement by increasing the hours of content streamed through our platform, and growing the monetization of the activities that viewers engage in through our platform.

Our competitors include:

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• companies that produce and aggregate TV streaming content with the goal of attracting wide audiences;

• companies that offer advertisers the opportunity to reach consumers on other content and advertising mediums;

• companies that offer advertisers the opportunity to reach viewers on other content and advertising mediums, including on other ad-supported streaming services and social media apps;

• companies that offer users other sources for news and entertainment, including broadcast and cable television networks, newspapers and magazines, social networks, and video games;

• companies that offer smart home products that compete with our new smart home products and services;

• companies that operate in the same locations as our offices that may be better able attract and retain top talent in engineering, research and development, sales and marketing, operations, and other organizations.

• companies that offer products that compete with our audio products or our smart home products and services;

• companies that operate in the same locations as our offices or offer remote work positions that may be better able to attract and retain top talent in engineering, research and development, sales and marketing, operations, and other organizations.

We also compete with other entertainment providers, including other TV streaming companies and content publishers, in seeking high quality content to license for our platform and for talent and programming concepts for original content projects.

Increasingly, we also compete with these same publishers in seeking to sell advertising to support the distribution of streaming content.

A number of leading content publishers have launched new ad-supported subscription tiers, which offer consumers access to content either for free or for a lower subscription fee.

As the TV streaming market continues to develop, we may become subject to additional competition as we introduce or develop new products and services, as our existing products and services evolve, or as other companies introduce competing products and services.

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Our entrepreneurial, execution-focused culture emphasizes recruiting talented individuals, encouraging teamwork, and expecting our employees to perform at a high level.

We also emphasize integrity, transparency, and honesty in our internal and external conduct of business.

All employees are required to comply fully with our Code of Conduct and Business Ethics, which sets forth our values, business culture, and practices.

Across Roku, teams are expected to communicate clearly, in real time.

Because our employees are trusted and encouraged to make decisions, our leadership communicates plans, milestones, and strategic context broadly, and our employees are trusted to maintain the confidentiality of such information.

Our employees are encouraged to use our broad talent base for diverse points of view when making decisions.

Our employees are encouraged to leverage our broad talent base for diverse points of view when making decisions.

As we grow our business, our goal is to ensure that Roku continues to be a great place to work and thrive.

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Diversity, Equity, and Inclusion

We are committed to being a diverse and inclusive organization.

Since 2020, the launch of our formal diversity, equity, and inclusion (“DEI”) strategy, we have made considerable progress on elevating awareness of DEI, promoting dialogue and empathy, implementing employee resource groups, and expanding representation on The Roku Channel and the Roku platform.

Our Vice President of Global Talent Management and Inclusion leads our growing Inclusion Strategy team with a director of DEI and two program managers.

We also have full-time resources embedded in our Talent Acquisition team.

They partner across Roku to advance DEI across our employee experience, recruiting, and customer experience.

These areas comprise our three-part DEI framework:

Inclusive Employee Experience, Inclusive Recruiting, and Inclusive Customer Experience.

Inclusive Employee Experience :

Since the launch of our formal diversity, equity, and inclusion (“DEI”) strategy in 2020, we have made considerable progress on elevating awareness of DEI, promoting dialogue and empathy, implementing employee resource groups, and expanding representation on The Roku Channel and the Roku platform.

Our dedicated Inclusion Strategy team partners across Roku’s global footprint to develop strategies and lead coordinated initiatives that advance inclusive employee and viewer experiences.

Our four-part DEI framework includes four pillars:

Employee Experience, Attract and Source, Leading Inclusively, and Customer Experience.

Employee Experience :

We facilitate an inclusive employee experience through our pay equity analysis, learning and development offerings, internal and external communications, employee resource groups (“ERG”), and mentoring.

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Our six voluntary and employee-led ERGs are highly engaged and foster a diverse and inclusive workplace, build internal community, encourage career growth and networking, and support social impact partnerships.

In 2022, we delivered a significant rollout of DEI offerings in the areas of bias, inclusive conversations, allyship, and subtle acts of exclusion.

In 2023, we delivered DEI offerings in the areas of bias, inclusive conversations, bridging gaps across differences, and allyship.

Our DEI Talks series featured a diverse group of tech and entertainment and media leaders.

We also increased the frequency of DEI communications to amplify our commitment, both internally and externally.

Inclusive Recruiting :

Attract and Source :

Our Inclusive Recruiting Program Manager and DEI specialists embedded within our Talent Acquisition team directly contribute to our efforts to be inclusive.

In addition, every member of our Talent Acquisition team is trained on how to source, engage, and recruit candidates from different backgrounds.

To that end, all recruiters are equipped to discuss DEI best practices with hiring managers to ensure we continue to widen the candidate pipeline for all roles and create inclusive recruiting experiences.

To that end, our recruiters are equipped to discuss DEI best practices with hiring managers to ensure we continue to widen the candidate pipeline for all roles and create inclusive recruiting experiences.

Furthermore, our U.S.

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Our external relationships are also focused on organizations that reflect underrepresented communities, including technical and non-technical women and underrepresented minority organizations, to enable our hiring managers and recruiters to attend or speak at related conferences, share our job descriptions, and tell our employer brand story to a wider audience.

Inclusive Customer Experience :

Leading Inclusively :

Our leaders are instrumental in sustaining inclusive employee and customer experiences.

We seek to increase opportunities for leaders to demonstrate inclusive leadership.

Members of our executive management team volunteer to serve as executive sponsors for our ERGs, while additional leaders volunteer to be executive advocates or chairs.

We are also building inclusive leadership awareness into our training and people manager resources and communications.

Customer Experience :

As a TV streaming platform with both U.S.

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Our employee development programs begin with a comprehensive new hire onboarding experience covering our culture, business, and the resources employees need to increase our new hires’ speed to productivity.

In addition to mandatory training covering anti-harassment, anti-discrimination, and privacy, we offer employees a suite of highly encouraged training offerings covering topics such as high-performance feedback, active listening, and communication and presentation skills.

Managers are provided with training on expectations for managers, interviewing and hiring, and performance management to support new and newly promoted leaders in managing and leading effectively.

In addition to mandatory training covering anti-harassment, anti-discrimination, and privacy, we offer employees a suite of highly encouraged training offerings covering topics such as high-performance feedback, career development, change management, and communication skills.

Managers are provided with training on expectations for managers and have access to a 1:1 leadership coaching program to support new and newly promoted leaders in managing and leading effectively.

In addition, all employees have access to on-demand technical and non-technical skill development through LinkedIn Learning.

We intend to continue to review, refresh, purchase, and custom-build additional training materials to support our global employees’ performance and development needs.

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Compensation and Benefits

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As a result, we endeavor to pay competitive total compensation that is guided by market rates and tailored to account for the specific needs and responsibilities of a particular position as well as the unique qualifications of the individual employee.

In determining each employee’s total compensation, we consider what they would be paid by another employer, what we would have to pay to replace them if they leave Roku, and the amount we would pay to retain them.

In determining each employee’s total compensation opportunity, we consider what that employee would be paid by another employer, what we would have to pay to replace that employee if the employee leaves Roku, and the amount we would pay to retain that employee.

Generally, we pay employees total compensation that is comprised of salary and equity awards rather than offering specific benefits or perks that might be valued differently by different employees.

We generally do not pay cash bonuses (other than to employees eligible for sales commissions) or have performance-based equity awards because our employees are expected to work at the highest level regardless of possible bonus payouts or awards.

We generally do not pay cash bonuses (other than to employees eligible for sales commissions) or have performance-based equity awards because our employees are expected to work at the highest level.

We recognize that our employees are most likely to thrive when they have the resources to meet their needs and the time and support to succeed in their professional and personal lives.

In support of this, we offer a variety of benefits and wellness offerings to employees around the world.

In support of this, we offer a variety of benefits and wellness offerings to our employees around the world.

Available Information

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We therefore encourage investors, the media, and others interested in our company to review the information we post on our investor relations website.

The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding companies (including Roku) that file electronically with the SEC.

Information contained on or accessible through the websites listed above is not incorporated by reference nor otherwise included in this Annual Report, and any references to these websites are intended to be inactive textual references only.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business