What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-14 compared with 2024-02-16 · 252 added, 246 removed, 780 unchanged (39% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss )

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

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Content Assets

Strategic Investment

Strategic Investments

Fair Value Disclosure

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Retirement Plans

Net Income (Loss) Per Share

Net Loss Per Share

Segment Information

Restructuring

Restructuring Charges

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Roku, Inc.

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Variable Consideration Determination in Streaming Services Distribution – Refer to Note 2 to the financial statements

Revenue Recognition - Variable Consideration Determination of Streaming Services Distribution – Refer to Note 2 to the financial statements

Critical Audit Matter Description

As part of the Company’s revenue recognition for its arrangements with content partners, management is required to estimate variable consideration from transactional revenue sharing related to streaming services distribution.

As part of the Company’s revenue recognition for its arrangements with content partners, management is required to estimate variable consideration from revenue sharing related to streaming services distribution.

Variable consideration related to streaming services distribution (“content partner arrangements”) is included in the estimated transaction price based on the expected value for which a significant reversal of revenue is not expected to occur.

For streaming services distribution, the estimate of the variable consideration is based on management’s assessment of historical, current, and forecasted performance of the partner’s applications.

We identified the forecasts of variable consideration relating to streaming service distribution as a critical audit matter due to the significant judgment necessary to estimate variable consideration.

We identified the forecasts of variable consideration relating to streaming services distribution as a critical audit matter due to the significant judgment necessary to estimate variable consideration.

Such estimates required a high degree of auditor judgment and an increased extent of effort relative to evaluating the reasonableness of management’s estimates and assumptions related to the forecasts of variable consideration.

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Our audit procedures related to management’s forecast used in the determination of future variable consideration included the following, among others:

• We tested the effectiveness of controls over management’s forecasting process related to streaming services distribution.

• We tested the design and operating effectiveness of controls over management’s forecasting process related to streaming services distribution.

• We selected a sample of revenue arrangements with variable consideration and performed the following:

◦ Obtained contractual documents for each selection, including master agreements and other related documents.

◦ Analyzed the contractual documents to determine if all arrangement terms that may have an impact on revenue recognition were identified and properly considered in the evaluation of the accounting for the contract, including terms and conditions for transactional revenue sharing.

◦ Performed inquiries with applicable individuals in the Company’s finance, operations, and sales departments regarding the estimates for streaming services distribution.

◦ Performed inquiries with applicable individuals in the Company’s finance, operations, and sales departments regarding the estimates for variable consideration for streaming services distribution.

◦ Tested management’s accuracy of forecasting by comparing the historical forecasts of consideration to actual consideration received.

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◦ Tested the mathematical accuracy of the compilation of the forecasts.

◦ We considered the existence of contradictory evidence based on reading of internal communication to management, Company press releases, industry reports, publicly available information related to partners’ content applications as well as our observations and inquiries as to the changes within the business and considerations of macroeconomic and industry factors.

◦ We considered the existence of contradictory evidence based on reading of internal communication to management, Company press releases, industry reports, publicly available information related to partners’ content application as well as our observations and inquiries as to the changes within the business and considerations of macro-economic and industry factors.

/s/ DELOITTE & TOUCHE LLP

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Cash and cash equivalents $ 2,160,236 $ 2,025,891

Accounts receivable, net of allowances of $ 34,127 and $ 40,191 as of

Accounts receivable, net of allowances of $ 72,657 and $ 34,127 as of December 31, 2024 and 2023, respectively

812,510 816,337

December 31, 2023 and 2022, respectively

Inventories 158,271 92,129

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Accrued liabilities 852,799 788,040

Current portion of long-term debt — 79,985

Deferred revenue, current portion 105,718 102,157

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Total operating expenses 2,023,812 2,314,992 1,972,010

Income (Loss) from Operations ( 792,377 ) ( 530,888 ) 235,100

Loss from operations ( 218,167 ) ( 792,377 ) ( 530,888 )

Other income, net:

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Total other income, net 98,209 92,947 38,605

Income (Loss) Before Income Taxes ( 699,430 ) ( 492,283 ) 236,587

Income tax expense (benefit) 10,131 5,722 ( 5,798 )

Net Income (Loss) $ ( 709,561 ) $ ( 498,005 ) $ 242,385

Net income (loss) per share — basic $ ( 5.01 ) $ ( 3.62 ) $ 1.83

Net income (loss) per share — diluted $ ( 5.01 ) $ ( 3.62 ) $ 1.71

Weighted-average common shares outstanding — basic 141,572 137,668 132,710

Weighted-average common shares outstanding — diluted 141,572 137,668 141,668

Loss before income taxes ( 119,958 ) ( 699,430 ) ( 492,283 )

Income tax expense 9,428 10,131 5,722

Net loss $ ( 129,386 ) $ ( 709,561 ) $ ( 498,005 )

Net loss per share — basic and diluted $ ( 0.89 ) $ ( 5.01 ) $ ( 3.62 )

Weighted-average common shares outstanding — basic and diluted 144,630 141,572 137,668

See accompanying Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

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2024 2023 2022

Net Income (Loss) $ ( 709,561 ) $ ( 498,005 ) $ 242,385

Net loss $ ( 129,386 ) $ ( 709,561 ) $ ( 498,005 )

Other comprehensive gain (loss), net of tax:

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Other comprehensive gain (loss), net of tax ( 1,896 ) 451 ( 333 )

Comprehensive Income (Loss) $ ( 709,110 ) $ ( 498,338 ) $ 242,397

Comprehensive loss $ ( 131,282 ) $ ( 709,110 ) $ ( 498,338 )

See accompanying Notes to Consolidated Financial Statements

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Balance-December 31, 2021 135,137 $ 14 $ 2,856,572 $ 41 $ ( 90,021 ) $ 2,766,606

Vesting of early exercised stock options — — 4 — — 4

Issuance of common stock pursuant to equity incentive plans 4,890 — 18,357 — — 18,357

Issuance of common stock in connection with at-the-market offering, net of issuance costs of $ 10,400

2,637 — 989,615 — — 989,615

Stock-based compensation expense — — 359,931 — — 359,931

Foreign currency translation adjustment — — — ( 333 ) — ( 333 )

Net income — — — — 242,385 242,385

Net loss — — — — ( 498,005 ) ( 498,005 )

Balance-December 31, 2022 140,027 14 3,234,860 ( 292 ) ( 588,026 ) 2,646,556

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Stock-based compensation expense — — 384,662 — — 384,662

Shares withheld for taxes related to net share settlement of equity awards ( 1,498 ) — ( 96,356 ) — — ( 96,356 )

Foreign currency translation adjustment — — — ( 1,896 ) — ( 1,896 )

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Cash flows from operating activities:

Net income (loss) $ ( 709,561 ) $ ( 498,005 ) $ 242,385

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net loss $ ( 129,386 ) $ ( 709,561 ) $ ( 498,005 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 62,714 70,447 48,651

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Amortization of right-of-use assets 47,371 57,579 55,507

Amortization of content assets 207,852 234,355 95,570

Amortization and write-off of content assets 229,340 207,852 234,355

Foreign currency remeasurement (gains) losses 6,447 1,457 ( 8,230 )

Change in fair value of Strategic Investment ( 4,348 ) 532 —

Change in fair value of strategic investment in convertible promissory notes ( 1,409 ) ( 4,348 ) 532

Impairment of assets 29,118 269,402 7,500

Provision for (recoveries of) doubtful accounts 1,674 2,081 ( 904 )

Provision for doubtful accounts 790 1,674 2,081

Other items, net ( 2,845 ) ( 1,510 ) ( 190 )

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Purchases of property and equipment ( 5,061 ) ( 82,619 ) ( 161,696 )

Acquisition of businesses, net of cash acquired — — ( 136,778 )

Purchase of Strategic Investment ( 10,000 ) ( 40,000 ) —

Purchase of strategic investments ( 20,000 ) ( 10,000 ) ( 40,000 )

Net cash used in investing activities ( 25,061 ) ( 92,619 ) ( 201,696 )

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Repayments of borrowings — ( 80,000 ) ( 10,000 )

Issuance costs related to credit agreement ( 2,227 ) — —

Proceeds from equity issued under incentive plans 9,380 18,757 18,357

Proceeds from equity issued under at-the-market offerings, net of offering costs — — 989,615

Net cash (used in) provided by financing activities ( 61,243 ) 8,357 1,003,147

Taxes paid related to net share settlement of equity awards ( 96,356 ) — —

Net cash provided by (used in) financing activities ( 89,203 ) ( 61,243 ) 8,357

Net increase (decrease) in cash, cash equivalents and restricted cash 103,781 101,994 ( 181,544 )

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Restricted cash, current 403 40,713 —

Restricted cash, non-current — — 1,627

Cash, cash equivalents and restricted cash — End of period $ 2,160,639 $ 2,066,604 $ 1,961,956

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Supplemental disclosures of non-cash investing and financing activities:

Non-cash consideration for business combination $ — $ — $ 21,400

Services to be received as part of a business combination $ — $ — $ 6,500

Unpaid portion of property and equipment purchases $ 122 $ 429 $ 28,503

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On February 1, 2008, Roku LLC was converted into Roku, Inc., a Delaware corporation.

The Company operates in two reportable segments and generates platform revenue from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services) and streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls).

Streaming services distribution was previously referred to as content distribution services.

The Company generates devices revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories as well as revenue from licensing arrangements with service operators.

The Company operates in two reportable segments and generates platform revenue from the sale of digital advertising (including direct and programmatic video advertising, ads integrated into our UI, and related services) and streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls).

The Company generates devices revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories.

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

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determining the nature and timing of satisfaction of performance obligations, variable consideration, determining the stand-alone selling prices of performance obligations, gross versus net revenue recognition, and evaluation of customer versus vendor relationships;

• the impairment of intangible assets;

• amortization and the impairment of content assets;

• the impairment of operating lease right-of-use assets and property and equipment;

• valuation of the Strategic Investment (defined in Note 7);

• amortization and impairment of content assets;

• the impairment of long-lived assets;

• inventory reserves;

• valuation of strategic investments (see Note 7);

• useful lives of tangible and intangible assets;

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Actual results may differ from the Company’s estimates and assumptions.

Comprehensive Income (Loss)

Comprehensive income (loss) for the years ended December 31, 2023, 2022, and 2021 includes foreign currency translation adjustments.

Comprehensive Loss

Comprehensive loss for the years ended December 31, 2024, 2023, and 2022 includes foreign currency translation adjustments.

Foreign Currency

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dollars from the local currency at exchange rates in effect at period-end and non-monetary assets and liabilities are remeasured at historical exchange rates.

Revenue and expenses are remeasured at average exchange rates in effect during each period.

Foreign currency gains or losses from remeasurement and transaction gains or losses are recorded as Other income (expense), net in the consolidated statements of operations.

The Company recorded a foreign currency loss of $ 1.5 million, a gain of $ 8.2 million, and a loss of $ 1.2 million during the years ended December 31, 2023, 2022, and 2021, respectively.

Revenue and expenses are translated using rates that approximate those in effect during the period.

Foreign currency gains or losses from remeasurement are recorded as Other income, net in the consolidated statements of operations.

The Company recorded a foreign currency loss of $ 6.4 million, a loss of $ 1.5 million, and a gain of $ 8.2 million during the years ended December 31, 2024, 2023, and 2022, respectively.

The Company also has some foreign subsidiaries which use local currency as their functional currency.

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Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders' equity.

Cash and Cash Equivalents

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents.

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The Company’s restricted cash balance is included in Prepaid expenses and other current assets in the consolidated balance sheets and is used to secure outstanding letters of credit related to operating leases for office facilities.

The letters of credit were previously secured by the Credit Facility (defined in Note 10) which matured and was repaid in February 2023.

See Note 10 for additional details.

The Company maintains its cash, cash equivalent, and restricted cash balances with high credit financial institutions and continuously monitors the amount of exposure to any one institution and diversifies as necessary in order to minimize its concentration risk.

The Company maintains its cash, cash equivalent, and restricted cash balances with financial institutions of high credit quality and continuously monitors the amount of exposure to any one institution and diversifies as necessary in order to minimize its concentration risk.

Such balances often exceed regulated insured limits.

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Beginning balance $ 2,213 $ 3,498 $ 2,158

Provision for (recoveries of) doubtful accounts 1,674 2,081 ( 904 )

Provision for doubtful accounts 790 1,674 2,081

Adjustments for write-off ( 1,108 ) ( 2,959 ) ( 741 )

Ending balance $ 1,895 $ 2,213 $ 3,498

The Company did not have any customer that individually accounted for more than 10% of its accounts receivable, net balance as of December 31, 2023 and 2022.

Customers J and B accounted for 12 % and 10 % of the Company’s accounts receivable, net balance as of December 31, 2024 .

The Company did not have any customer that individually accounted for more than 10% of its accounts receivable, net balance as of December 31, 2023.

Intangible Assets

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Impairment Assessments

The Company evaluates goodwill and indefinite-lived intangible assets, for possible impairment at least annually during the fourth quarter of each fiscal year or more often, if and when circumstances indicate that goodwill or indefinite-lived intangible assets may be impaired.

indefinite-lived intangible assets may be impaired.

This includes but is not limited to significant adverse changes in the business climate, market conditions, or other events that indicate that it is more likely than not that the fair value of a reporting unit or indefinite lived-intangible asset is less than its carrying value.

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See Note 17 for additional details.

During the year ended December 31, 2024, the Company recognized an impairment charge of $ 22.6 million for operating lease right-of-use assets and an impairment charge of $ 7.0 million for property and equipment related to a decision to cease the use of certain office facilities and related property and equipment.

During the year ended December 31, 2023, the Company recognized an impairment charge of $ 131.6 million for operating lease right-of-use assets and an impairment charge of $ 72.3 million for property and equipment related to a decision to sub-lease and cease the use of certain office facilities and related property and equipment.

This action was taken as part of the restructuring announced in the third quarter of fiscal year 2023.

There were no impairments of property and equipment or operating lease right-of-use assets during the year ended December 31, 2022.

See Note 17 for additional details.

There were no impairments of property and equipment, right-of-use assets, and intangible assets with finite lives during the years ended December 31, 2022 and December 31, 2021.

Content Assets

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The Company reviews various qualitative factors and indicators to assess whether the film group is impaired.

In addition, unamortized costs for assets that have been, or are expected to be, abandoned are written off.

During the year ended December 31, 2023, the Company recognized an impairment charge of $ 65.5 million related to removing select licensed and produced content from The Roku Channel.

This action was taken as part of the restructuring announced in the third quarter of fiscal year 2023.

See Note 17 for additional details.

The Company did not recognize any impairment of content assets during the years ended December 31, 2024 and December 31, 2022.

During the year ended December 31, 2023, the Company recognized impairment charges of $ 65.5 million related to restructuring.

See Note 17 for additional details.

Revenue Recognition

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Platform segment:

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

The Company sells digital advertising to advertisers directly or through advertising agencies or third-party demand and supply-side platforms and to content partners for their media and entertainment promotions via various campaign tools.

Advertising arrangements include video and display advertising delivered through advertising impressions.

Advertising arrangements include multiple performance obligations as they contain distinct advertising products or services.

The Company generates platform revenue from the sale of digital advertising (including direct and programmatic video advertising, ads integrated into our UI, 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).

Advertising arrangements include video and display advertising delivered through advertising impressions which include multiple performance obligations that are distinct advertising products.

For such arrangements, the Company allocates revenue to each distinct performance obligation based on their relative SSP.

The Company also generates revenue from customers using its advertising platform.

For such arrangements, it charges a platform fee, which is a percentage of a customer’s advertising inventory spend during the month, along with data and any add-on features purchased through the platform.

The Company recognizes revenue on either a gross or net basis for digital advertising based on its determination as to whether it is acting as the principal in the revenue generation process or as an agent.

The Company recognizes revenue either on a gross or net basis for digital advertising based on its determination as to whether it is acting as the principal in the revenue generation process or as an agent.

Where the Company is the principal, it controls the advertising inventory before it is transferred to its customers.

This is further supported by the Company being primarily responsible to its customers for the fulfillment and having a level of discretion in establishing pricing.

Advertising arrangements comprised of multiple performance obligations are recognized either at a point in time or over time depending on the nature of the distinct performance obligation.

The Company’s revenue sharing arrangements within its streaming services distribution include cash or non-cash consideration.

The revenue sharing arrangements generally apply to new subscriptions for accounts that sign up for new services and at the time of a movie rental or purchase.

The Company recognizes video and display advertising revenues primarily when the ad is delivered.

The Company’s content distribution arrangements within its streaming services distribution activities include cash or non-cash consideration.

The content distribution arrangements generally apply to new subscriptions for accounts that sign up for new services and at the time of a movie rental or purchase.

Revenue is recognized on a net basis as the Company is deemed to be the agent between content partners and end users.

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Devices segment:

The Company generates devices revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories.

The Company sells the majority of its devices in the U.S.

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Unspecified upgrades and updates are available to customers on a when-and-if available basis.

The Company records the allocated value of the unspecified upgrades and updates as deferred revenue and recognizes it as devices revenue ratably on a time elapsed basis over the estimated economic life of the associated products.

The Company records the allocated value of the

unspecified upgrades and updates as deferred revenue and recognizes it as devices revenue ratably on a time elapsed basis over the estimated economic life of the associated products.

The Company’s devices revenue includes allowances for sales returns and sales incentives in the estimated transaction price.

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Shipping charges billed to customers are included in devices revenue and the related shipping costs are included in Cost of revenue, devices.

The Company licenses the Roku OS, including updates and upgrades, to service operators.

The revenue allocated to unspecified upgrades and updates is recognized on a time elapsed basis, by day, over the service period.

Professional services revenue is recognized as services are provided or accepted.

Hosting fees are recognized on a time elapsed basis, by day, over the service period.

The Company determines if an arrangement contains a lease at its inception.

Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued liabilities, and operating lease liability in the consolidated balance sheets.

Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued liabilities, and operating lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

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The Company considers the options to extend or terminate the lease in determining the lease term when it is reasonably certain to exercise one of the options.

The Company has lease agreements with lease and non-lease components.

For its office building leases, the Company has elected to apply the practical expedient and account for the lease and non-lease components as a single lease component for all leases, where applicable.

Non-lease components included within the combined component typically represent common area maintenance and utilities, and are variable payments based on actual costs.

The Company also subleases a portion of its available office space in connection with its restructuring efforts.

The subleases are each classified as operating, consistent with their head lease classification.

The combined lease and non-lease components are accounted for under Accounting Standards Codification Topic 842, Leases .

Lease payments are recognized on a straight-line basis beginning after the commencement date of the sublease, and offset against the related head lease expense within operating expenses.

Fair Value of Financial Instruments

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The carrying amounts reported in the consolidated financial statements for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature.

The carrying amount of debt approximates fair value due to its variable interest rates.

The Company elected to apply the fair value option on its investment in convertible promissory notes and it is measured at fair value on a recurring basis using Level 3 inputs.

The Company’s inventories consist primarily of finished goods and are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis.

Provisions are made if the cost of the inventories exceeds their net realizable value.

The Company evaluates inventory levels and purchase commitments for excess and obsolete products, based on its assessment of future demand and market conditions.

The Company evaluates inventory levels for excess and obsolete products, based on its assessment of future demand and market conditions.

The Company recognized inventory provisions charged to the Cost of revenue, Devices, of $ 9.5 million and $ 1.7 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, the ending inventory reserve was $ 28.7 million and $ 17.7 million, respectively.

In addition, the Company records a liability for expected losses on firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers.

The Company recorded losses on purchase commitments, recorded in Cost of revenue, Devices, of $ 34.3 million and $ 19.7 million during the years ended December 31, 2024 and 2023, respectively.

The associated liabilities related to the anticipated losses on firm purchase commitments were immaterial as of December 31, 2024 and 2023.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of the assets, generally ranging between eighteen months and five years .

Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives, which range from one to eleven years .

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally ranging between 18 months and five years .

Leasehold improvements are amortized over the shorter of the lease term or their estimated useful lives, which range from one to 11 years.

The Company capitalizes costs to develop its internal-use software.

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Costs incurred for enhancements that are expected to result in additional material functionality are capitalized.

During the years ended December 31, 2023, and 2022, the Company did not capitalize any internal-use software development costs.

During the year ended December 31, 2021, the Company capitalized internal-use software development costs of $ 0.5 million.

Capitalized costs are amortized using the straight-line method over the estimated useful life of the asset, which is generally two to three years , beginning when the asset is ready for its intended use.

During the years ended December 31, 2023, 2022, and 2021, the Company amortized internal-use software development costs of $ 0.9 million, $ 1.0 million, and $ 1.0 million, respectively.

Software development costs and the related amortization expenses are not material for any of the periods presented.

Deferred Revenue

The Company’s deferred revenue reflects fees received in advance that will be recognized as revenue over time or as services are rendered.

Deferred revenue balances consist of the amount of devices revenue allocated to unspecified upgrades and updates on a when-and-if available basis, and advance payments from advertisers, content partners, and licensing or services fees received from service operators and TV brands, where performance obligations are not yet fulfilled.

Deferred revenue balances consist of the amount of devices revenue allocated to unspecified upgrades and updates on a when-and-if available basis, and advance payments from advertisers and content partners, where performance obligations are not yet fulfilled.

Deferred revenue expected to be realized within one year is classified as a current liability and the remaining is recorded as a non-current liability.

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The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding.

The Company uses the simplified calculation of the expected term, which reflects weighted-average time to vest and the contractual life of the stock options granted, in absence of its own historical exercise data.

The Company uses the simplified calculation of the expected term, which reflects weighted-average time to vest and the contractual life of the stock options granted.

• Volatility.

The expected volatility is derived from an average of the historical volatility of the Company’s Class A common stock price and the stock price volatilities of several peer companies which are similar in size and/or operational and economic activities.

The expected volatility is derived from a weighted average of the historical volatility of the Company’s Class A common stock price and the stock price volatilities of several peer companies which are similar in size and/or operational and economic activities.

• Risk-free Rate.

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The Company accounts for income taxes using an asset and liability approach.

Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not to be realized.

Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities using the enacted tax rates.

Valuation allowances are established when necessary to reduce deferred tax assets on a more likely than not basis, to the amount that is expected to be realized in the future.

The Company recognizes tax benefits from uncertain tax positions only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The Company recognizes interest and penalties related to uncertain tax positions as a component of the provision for income taxes.

Recently Adopted Accounting Pronouncements

On October 1, 2024, the Company adopted the guidance issued in Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

ASU 2023-07 requires companies to provide enhanced disclosures about significant segment expenses within its reportable segment disclosures on an annual and interim basis.

The guidance was applied retrospectively to all prior periods presented in financial statements and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The adoption did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures , that requires companies to provide enhanced disclosures about significant segment expenses within its reportable segment disclosures on an annual and interim basis.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The guidance applies retrospectively to all prior periods presented in the financial statements.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses , which requires additional disclosures of specific expense categories in the notes to the financial statements on an annual and interim basis.

The guidance is effective for fiscal years beginning after

December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 on a retrospective or prospective basis.

The Company is currently in the process of evaluating the effects of the new guidance.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures , that requires incremental disclosures within the income tax disclosures that increase the transparency and usefulness of income tax disclosures.

The updated disclosures primarily require specific categories and greater disaggregation within the rate reconciliation, disaggregation of income taxes paid, and modifying other income tax-related disclosures.

The guidance is effective either prospectively or retrospectively for fiscal years beginning after December 15, 2024.

The updated disclosures primarily require specific categories and greater disaggregation within the rate reconciliation, disaggregation of income taxes paid, and modifications of other income tax-related disclosures.

The guidance is effective for annual periods beginning after December 15, 2024.

Retrospective application is also permitted.

The Company is currently in the process of evaluating the effects of the new guidance.

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Contract assets (included in Prepaid expenses and other current assets) 1,687 17,964 42,617

Deferred revenue:

Deferred revenue, current portion 105,718 102,157 87,678

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The Company’s contract assets are current in nature and are included in Prepaid expenses and other current assets.

Contract assets decreased by $ 24.7 million during the year ended December 31, 2023 due to the timing of billing to customers and a slower growth rate in platform revenue.

Contract assets decreased by $ 4.3 million during the year ended December 31, 2022 due to the timing of billing to customers and a slower growth rate in platform revenue.

Contract assets decreased by $ 16.3 million and $ 24.7 million during the years ended December 31, 2024 and 2023, respectively, due to the timing of billing to customers.

Deferred revenue reflects consideration invoiced prior to the completion of performance obligations and revenue recognition.

Deferred revenue increased by approximately $ 10.8 million during the year ended December 31, 2023 due to an increase in subscription revenue related to Premium Subscriptions and smart home products, higher device revenue in the year ended December 31, 2023 as compared to the year ended December 31, 2022, and due to the billings in excess of revenue recognized and timing of fulfillment of performance obligations related to platform revenue arrangements.

Deferred revenue increased by approximately $ 41.4 million during the year ended December 31, 2022 primarily due to the billings in excess of revenue recognized and timing of fulfillment of performance obligations related to revenue arrangements.

Deferred revenue increased by approximately $ 4.0 million and $ 10.8 million during the years ended December 31, 2024 and 2023 , respectively, due to an increase in subscription revenue related to Premium Subscriptions and smart home products, higher devices revenue, and due to the billings in excess of revenue recognized and timing of fulfillment of performance obligations related to platform revenue arrangements.

Deferred revenue increased by approximately $ 41.4 million during the year ended December 31, 2022 primarily due to billings in excess of revenue recognized and timing of fulfillment of performance obligations related to revenue arrangements.

Revenue recognized during the year ended December 31, 2024 from amounts included in the total deferred revenue as of December 31, 2023 was $ 102.2 million.

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Revenue allocated to remaining performance obligations represents estimated contracted revenue that has not yet been recognized which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods.

Remaining performance obligations exclude contracts with original expected terms of one year or less.

Estimated contracted revenue for these remaining performance obligations was $ 923.3 million as of December 31, 2024, of which the Company expects to recognize approximately 64 % over the next 12 months and the remainder thereafter.

The Company recognized $ 45.5 million and reversed $ 3.2 million of revenue during the years ended December 31, 2023 and 2022, respectively, from performance obligations that were satisfied in previous periods due to the changes in the estimated transaction price of its revenue contracts .

Customer I accounted for 11 % of the total net revenue for the year ended December 31, 2023.

The Company did not have any customer that individually accounted for more than 10% of its total net revenue for the years ended December 31, 2022 and 2021.

The Company recognized $ 18.2 million and $ 45.5 million of revenue during the years ended December 31, 2024 and 2023, respectively, from performance obligations that were satisfied in previous periods due to the changes in the estimated transaction price of its revenue contracts .

Customer J and Customer I accounted for 10 % and 11 % of total net revenue for the years ended December 31, 2024 and 2023, respectively .

The Company did not have any customer that individually accounted for 10% or more of its total net revenue for the year ended December 31, 2022.

GOODWILL AND INTANGIBLE ASSETS

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All goodwill relates to the platform segment.

Goodwill is evaluated for impairment annually.

evaluated for impairment annually.

No impairment was recognized during the years ended December 31, 2024, 2023, and 2022.

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Total Intangible assets $ 111,943 $ ( 70,190 ) $ 41,753 6.7

The Company recognized an impairment charge of $ 7.5 million during the year ended December 31, 2022 as part of its restructuring efforts related to the abandonment of future development of certain technology assets.

See Note 17 for additional details.

The Company recorded expenses of $ 17.1 million, $ 17.7 million, and $ 17.3 million for amortization of intangible assets during the years ended December 31, 2023, 2022, and 2021, respectively.

The Company recorded most of the amortization of developed technology in Cost of revenue, platform for the year ended December 31, 2023, and in Cost of revenue, platform and Research and development expenses for the years ended December 31, 2022 and 2021.

Amortization expense related to intangible assets was approximately $ 14.2 million, $ 17.1 million, and $ 17.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The Company recorded the amortization of developed technology in Cost of revenue, platform for the year ended December 31, 2024.

The Company recorded the amortization of developed technology in Cost of revenue, platform and Research and development for the years ended December 31, 2023 and 2022.

The Company recorded amortization of customer relationships and tradename in Sales and marketing expenses, and recorded amortization of patents in General and administrative expenses in the consolidated statements of operations.

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Property and equipment, net $ 213,690 $ 264,556

Depreciation and amortization expense for property and equipment assets for the years ended December 31, 2023, 2022, and 2021 was $ 53.3 million, $ 31.0 million, and $ 25.4 million, respectively.

During the year ended December 31, 2023, the Company recognized an impairment charge of $ 72.3 million related to property and equipment associated with the leased office facilities that are part of its restructuring efforts.

Depreciation and amortization expense for property and equipment assets for the years ended December 31, 2024, 2023, and 2022 was approximately $ 48.5 million, $ 53.3 million, and $ 31.0 million, respectively.

During the years ended December 31, 2024 and 2023, the Company recognized impairment charges of $ 7.0 million and $ 72.3 million related to property and equipment associated with the leased office facilities that are part of its restructuring efforts.

See Note 17 for additional details.

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As of December 31,

Payments due to content partners

$ 239,196 $ 201,054

Revenue share payable $ 267,163 $ 239,196

Accrued cost of revenue 149,135 147,875

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CONTENT ASSETS

Content assets consisted of the following (in thousands):

Content assets, net consisted of the following (in thousands):

As of December 31,

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Total Content assets, net and advances $ 249,673 $ 276,238

Current portion $ 18,843 $ 39,506

Current portion (included in Prepaid expenses and other current assets) $ 12,352 $ 18,843

Non-current portion $ 237,321 $ 257,395

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Total amortization costs $ 206,375 $ 207,852 $ 234,355

During the year ended December 31, 2024, the Company wrote-off $ 23.0 million of unamortized costs related to content assets that were removed from the content library on The Roku Channel.

There were no write-offs for the years ended December 31, 2023 and 2022.

During the year ended December 31, 2023, the Company recognized an impairment charge of $ 65.5 million related to removing select licensed and produced content from The Roku Channel as part of its restructuring efforts.

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Total expected amortization costs $ 120,591 $ 56,114 $ 28,914

STRATEGIC INVESTMENT

STRATEGIC INVESTMENTS

Investment in Convertible Promissory Notes

In June 2022, the Company agreed to provide financing of up to $ 60.0 million in the aggregate to a counterparty with whom the Company has a commercial relationship.

The advances are in the form of convertible promissory notes (the “Strategic Investment”) and are recognized as Other non-current assets on the consolidated balance sheets.

The Strategic Investment accrues interest at 5 % per annum.

The convertible promissory notes have maturity dates as reflected in the table below, or are due upon a redemption event or in the event of a default.

The advances are in the form of convertible promissory notes and are included in Other non-current assets on the consolidated balance sheets.

The convertible promissory notes accrue interest at 5 % per annum, and have maturity dates as reflected in the table below or are due upon a redemption event or in the event of a default.

The convertible promissory notes and their date of investment and maturity are as follows (in thousands):

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May 23, 2023 $ 5,000 May 23, 2026

The Strategic Investment contains certain redemption features that meet the definition of embedded derivatives and require bifurcation.

The Company elected to apply the fair value option and account for the hybrid instrument containing the host contract and the embedded derivatives at fair value as a single instrument, with any subsequent changes in fair value included in Other income (expense), net in the consolidated statements of operations.

See Note 8 for additional details on the fair value of the Strategic Investment.

The convertible promissory notes contain certain redemption features that meet the definition of embedded derivatives and require bifurcation.

The Company elected to apply the fair value option and account for the hybrid instrument containing the host contract and the embedded derivatives at fair value as a single instrument, with any subsequent changes in fair value included in Other income, net in the consolidated statements of operations.

See Note 8 for additional details on the fair value of the convertible promissory notes.

Investment in Preferred Stock

In September 2024, the Company invested $ 20.0 million in cash in exchange for preferred stock in a privately-held company.

The Company elected to apply the measurement alternative for equity securities without readily determinable fair values as there are no quoted market prices for the preferred stock.

This investment is measured at cost and adjusted to fair value when there is an observable price change from orderly transactions of identical or similar investments, and assessed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable.

There were no adjustments recognized in the year ended December 31, 2024.

As of December 31, 2024, the carrying value of the investment was $ 20.0 million, and is included within Other non-current assets on the consolidated balance sheet.

FAIR VALUE DISCLOSURE

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As of December 31, 2024

Fair Value Level 1 Level 3

Cash and cash equivalents:

Cash $ 794,213 $ 794,213 $ —

Money market funds 1,366,023 1,366,023 —

Restricted cash, current 403 403 —

Other non-current assets:

Strategic investment - convertible promissory notes 55,225 — 55,225

Total assets measured and recorded at fair value $ 2,215,864 $ 2,160,639 $ 55,225

As of December 31, 2023

Fair Value Level 1 Level 3 Fair Value Level 1 Level 3

Fair Value Level 1 Level 3

Cash and cash equivalents:

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Restricted cash, current 40,713 40,713 —

Strategic Investment 53,816 — 53,816 39,468 — 39,468

Other non-current assets:

Strategic investment - convertible promissory notes 53,816 — 53,816

Total assets measured and recorded at fair value $ 2,120,420 $ 2,066,604 $ 53,816

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Beginning balance $ 53,816 $ 39,468

Purchase of Strategic Investment 10,000 40,000

Change in estimated fair value of Strategic Investment 4,348 ( 532 )

Purchase of strategic investment - convertible promissory notes — 10,000

Change in estimated fair value of strategic investment - convertible promissory notes 1,409 4,348

Ending balance $ 55,225 $ 53,816

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Level 1 —Quoted prices in active markets for identical assets or liabilities.

Financial assets and liabilities measured using Level 1 inputs include cash equivalents including restricted cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities.

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents.

The Company measured money market funds of $ 1,431.4 million and $ 608.4 million as cash equivalents as of December 31, 2023 and 2022, respectively, using Level 1 inputs.

Financial assets and liabilities measured using Level 1 inputs include cash, cash equivalents, restricted cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities.

Level 2 —Observable inputs other than quoted prices included within Level 1, including quoted prices for similar assets or liabilities in active markets;

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Level 3 —Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities and reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

As of December 31, 2023, the Company measured the Strategic Investment using Level 3 inputs.

The fair value of the Strategic Investment on the date of purchase was determined to be equal to its principal amount.

The Company recorded an unrealized gain of $ 4.3 million and an unrealized loss of $ 0.5 million in Other income, net related to the change in the fair value of the Strategic Investment for the years ended December 31, 2023 and 2022, respectively.

The Company classified the Strategic Investment as Level 3 due to the lack of relevant observable market data over fair value inputs.

The fair value of the Strategic Investment was estimated using a scenario-based probability weighted discounted cash flow model.

Significant assumptions include the discount rate, and the timing and probability weighting of the various redemption scenarios that impact the settlement of the Strategic Investment.

As of December 31, 2024, the Company measured its strategic investment in convertible promissory notes using Level 3 inputs.

The fair value of the strategic investment in convertible promissory notes on the date of purchase was determined to be equal to its principal amount.

The Company recorded an unrealized gain of $ 1.4 million and $ 4.3 million, and an unrealized loss of $ 0.5 million in Other income, net related to the change in the fair value of the strategic investment in convertible promissory notes for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company classified the strategic investment in convertible promissory notes as Level 3 due to the lack of relevant observable market data over fair value inputs.

The fair value of the strategic investment in convertible promissory notes was estimated using a scenario-based probability weighted discounted cash flow model.

Significant assumptions include the discount rate, and the timing and probability weighting of the various redemption scenarios that impact the settlement of the strategic investment in convertible promissory notes.

Assets and liabilities that are measured at fair value on a non-recurring basis

Non-financial assets such as goodwill, intangible assets, property and equipment, operating lease right-of-use assets, and content assets are evaluated for impairment and adjusted to fair value using Level 3 inputs, only when impairment is recognized.

During the year ended December 31, 2023, the Company recorded total impairment charges of $ 269.4 million that included $ 131.6 million of operating lease right-of-use assets impairment, $ 72.3 million of property and equipment impairment, and $ 65.5 million of content assets impairment related to removing select licensed and produced content from The Roku Channel.

During the year ended December 31, 2024, the Company recorded impairment charges of $ 22.6 million related to operating lease right-of-use assets, and $ 7.0 million related to property and equipment related to the associated leases.

During the year ended December 31, 2022, the Company recognized an impairment charge of $ 7.5 million related to the abandonment of future development of certain technology assets.

The Company did not record any impairment charges during the year ended December 31, 2021.

The fair value of the impaired operating lease right-of-use assets and property and equipment were estimated using discounted cash flow models, or the income approach, based on market participant assumptions with Level 3 inputs.

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Variable lease expense 22,562 23,331 18,991

Sublease income ( 12,578 ) ( 139 ) —

Total operating lease expense $ 80,511 $ 106,252 $ 95,350

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See Note 17 for additional details.

As of December 31, 2023, the Company had no commitments relating to operating leases that have not yet commenced.

The Company does not have any outstanding debt as of December 31, 2023.

In February 2023, the Company repaid the debt balance in full and satisfied all outstanding debt obligations under the Credit Facility (as defined below) when it matured.

The Company’s outstanding debt as of December 31, 2022 was as follows (in thousands):

Amount Effective

Interest Rate

Term Loan A Facility $ 80,000 4.4 %

Debt issuance costs ( 15 )

Net carrying amount of debt $ 79,985

The carrying amount of debt approximates fair value due to its variable interest rates.

The interest expense associated with the Credit Facility for the years ended December 31, 2023 and 2022 is $ 0.6 million and $ 3.6 million, respectively.

Senior Secured Term Loan A and Revolving Credit Facilities

On February 19, 2019, the Company entered into a Credit Agreement with Morgan Stanley Senior Funding, Inc.

(as amended on May 3, 2019, the “Credit Agreement”), which provides for (i) a four-year revolving credit facility in the aggregate principal amount of up to $ 100.0 million (the “Revolving Credit Facility”), (ii) a four-year delayed draw term loan A facility in the aggregate principal amount of up to $ 100.0 million (the “Term Loan A Facility”), and (iii) an uncommitted incremental facility, subject to the satisfaction of certain financial and other conditions, in the amount of up to (v) $ 50.0 million, plus (w) 1.0 x of the Company’s EBITDA for the most recently completed four fiscal quarter period, plus (x) an additional amount at the Company’s discretion, so long as, on a pro forma basis at the time of incurrence, the Company’s secured leverage ratio does not exceed 1.50 to 1.00 , plus (y) voluntary prepayments of the Revolving Credit Facility and Term Loan A Facility to the extent accompanied by concurrent reductions to the applicable Credit Facility (together with the Revolving Credit Facility and the Term Loan A Facility, collectively, the “Credit Facility”).

On November 18, 2019, the Company borrowed the Term Loan A facility in the aggregate principal amount of $ 100.0 million.

The Company elected an interest rate equal to the adjusted one-month LIBOR rate plus an applicable margin of 1.75 % based on the Company’s secured leverage ratio.

The Credit Facility matured on February 19, 2023 and the outstanding Term Loan A Facility was repaid in full.

As of December 31, 2022, the Company had outstanding letters of credit against the Revolving Credit Facility of $ 37.7 million.

Upon maturity of the Credit Facility on February 19, 2023, the outstanding letters of credit were secured by the Company’s existing cash balance, a portion of which is restricted for that purpose.

As of December 31, 2023 the Company had outstanding letters of credit of $ 37.5 million, which are secured by restricted cash of $ 40.7 million.

(2) Non-cancelable sublease proceeds for the fiscal years ending December 31, 2025, 2026, 2027, 2028, and 2029 of $ 15.2 million, $ 18.6 million, $ 18.8 million, $ 18.8 million, and $ 12.0 million, respectively, are not included in the table above.

As of December 31, 2024, the Company had $ 0.7 million in commitments relating to operating leases that have not yet commenced.

On September 16, 2024, the Company entered into a Credit Agreement, by and among the Company, as borrower, certain of our subsidiaries, as guarantors, the lenders and issuing banks party thereto, and with Citibank N.A., as administrative agent (the “Credit Agreement”), which provides for (i) a five-year revolving credit facility in an aggregate principal amount of up to $ 300.0 million, and (ii) an uncommitted increase option of up to an additional $ 300.0 million exercisable upon the satisfaction of certain customary conditions.

The Credit Agreement provides for a $ 100.0 million sub-facility for the issuance of letters of credit, and certain existing letters of credit were deemed outstanding under this facility.

The Credit Agreement will mature on September 16, 2029.

Proceeds from the Credit Agreement may be used for general corporate purposes, including to finance working capital requirements.

The Company’s obligations under the Credit Agreement are secured by substantially all the assets of the Company and its subsidiaries that are guarantors under the Credit Agreement.

The Company may prepay, and in certain circumstances, would be required to prepay, loans under the Credit Agreement without payment of a premium.

The Credit Agreement also contains customary representations and warranties, customary affirmative and negative covenants, financial covenants requiring the maintenance of a minimum interest coverage ratio and a maximum total net leverage ratio, as well as customary events of default, the occurrence of which could result in amounts borrowed under the Credit Agreement becoming due and payable and remaining commitments terminated prior to its scheduled September 16, 2029 termination date.

Debt issuance costs incurred in connection with the Company’s Credit Agreement, which are recorded in Prepaid expenses and other current assets and Other non-current assets, are amortized over the five-year term and recognized as a component of interest expense in the consolidated statements of operations.

The Company had outstanding letters of credit secured by the Credit Agreement of $ 36.4 million as of December 31, 2024.

As of December 31, 2024, the Company had not borrowed against the Credit Agreement, and the Company was in compliance with all of the covenants of the Credit Agreement.

STOCKHOLDERS’ EQUITY

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Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of stockholders and holders of Class B common stock are entitled to ten votes for each share of Class B common stock held on all matters submitted to a vote of stockholders.

Except with respect to voting, the rights of the holders of Class A and Class B common stock are identical.

Except with respect to voting, the rights of the

holders of Class A and Class B common stock are identical.

Shares of Class B common stock are voluntarily convertible into shares of Class A common stock at the option of the holder and are generally automatically converted into shares of the Company’s Class A common stock upon sale or transfer.

Shares issued in connection with exercises of stock options, vesting of restricted stock units, or shares purchased under the employee stock purchase plan are generally automatically converted into shares of the Company’s Class A common stock.

At-the-Market Offering

On March 2, 2021, the Company entered into an Equity Distribution Agreement with Morgan Stanley & Co.

LLC, Citigroup Global Markets Inc., and Evercore Group L.L.C., as its sales agents, pursuant to which the Company could offer and sell from time-to-time shares of its Class A common stock for aggregate gross proceeds of up to $ 1,000.0 million.

In March 2021, the Company sold approximately 2.6 million shares of Class A common stock at an average selling price of $ 379.26 per share, for aggregate gross proceeds of $ 1,000.0 million and incurred issuance costs of $ 10.4 million.

Common Stock Reserved For Issuance

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Equity Incentive Plans

The Company currently grants equity under the 2017 Equity Incentive Plan (the “2017 Plan”).

The Company currently grants equity under the Amended and Restated 2017 Equity Incentive Plan (the “2017 Plan”).

The 2017 Plan became effective September 2017 in connection with the Company’s initial public offering (“IPO”).

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Balance, December 31, 2024 - Outstanding 8,657 $ 74.80

The weighted-average grant date fair value of restricted stock units granted during the years ended December 31, 2023, 2022, and 2021 was $ 325.0 million, $ 916.8 million, and $ 342.6 million, respectively.

The aggregate grant date fair value of restricted stock units granted during the years ended December 31, 2024, 2023, and 2022 was $ 265.3 million, $ 325.0 million, and $ 916.8 million, respectively.

The fair value of restricted stock units that vested during the years ended December 31, 2024, 2023, and 2022 was $ 376.8 million, $ 314.0 million, and $ 282.6 million, respectively.

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Weighted-Average

Weighted-Average Remaining Contractual Life (Years) Weighted-Average

Weighted-Average Remaining Contractual Life (Years) Aggregate

Balance, December 31, 2023 5,310 $ 75.55 6.8

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No stock-based compensation was capitalized for the years ended December 31, 2024, 2023, and 2022.

The amount of stock-based compensation capitalized as part of internal-use software for the year ended December 31, 2021 was not material.

The following table presents total stock-based compensation expense for the years ended December 31, 2024, 2023, and 2022 (in thousands):

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3.48 - 4.72 %

1.37 - 4.33 %

Expected volatility 62 - 63 %

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COMMITMENTS AND CONTINGENCIES

Manufacturing Purchase Commitments

The Company has various manufacturing contracts with vendors in the conduct of the normal course of its business.

In order to manage future demand for its products, the Company enters into agreements with manufacturers and suppliers to procure inventory based upon certain criteria and timing.

Some of these commitments are non-cancelable.

As of December 31, 2023, the Company had $ 131.5 million of non-cancelable purchase commitments for inventory.

Content Commitments

The Company enters into contracts with content partners to license and produce content for streaming.

When a title becomes available, the Company records a content asset and liability on the consolidated balance sheets.

Certain licensing agreements, such as film output deals, include the obligation to license rights for unknown future titles for which the ultimate quantity and/or fees are not determinable as of the reporting date.

The Company does not include any estimated obligation for these future titles beyond the known minimum amount.

The unknown obligations could be material.

The Company also licenses content under arrangements where the payments are variable and based on the revenue earned by the Company.

Since those amounts cannot be determined, they are not included in the obligations below.

As of December 31, 2023, the Company’s total obligation for licensed and produced content is $ 286.1 million, of which the Company recorded $ 59.2 million in Current liabilities and $ 24.1 million in Other long-term liabilities in the consolidated balance sheets.

The remaining $ 202.8 million is not yet recognized on the consolidated balance sheets as the content does not meet the criteria for asset recognition.

The expected timing of payments for these content obligations are as follows (in thousands):

Year Ending December 31,

2024 $ 184,716

Thereafter 2,568

Total content liabilities $ 286,078

Letters of Credit

As of December 31, 2023 and 2022, the Company had irrevocable letters of credit outstanding in the amount of $ 37.5 million and $ 37.7 million, respectively, related to facilities leases.

The letters of credit have various expiration dates through 2030.

Purchase Commitments

The Company has non-cancelable purchase commitments with various parties to purchase products and services such as licensed intellectual property and content, manufacturing supplier agreements, and data center capacity and other goods and services.

The following table presents details of the aggregate future non-cancelable purchase commitments as of December 31, 2024 (in thousands):

Years Ended December 31,

Total 2025 2026 2027 2028 2029 Thereafter

Content $ 220,195 $ 144,762 $ 45,903 $ 16,310 $ 8,418 $ 2,657 $ 2,145

Manufacturing 165,495 165,495 — — — — —

Other obligations 167,532 104,344 63,146 42 — — —

Total commitments $ 553,222 $ 414,601 $ 109,049 $ 16,352 $ 8,418 $ 2,657 $ 2,145

Contingencies

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The resolution of these contingencies and of other legal proceedings can be, however, inherently unpredictable and subject to significant uncertainties.

From time to time, the Company is subject to legal proceedings, claims, and investigations in the ordinary course of business, including claims relating to employee relations, business practices, and patent infringement.

The Company is involved in proceedings, claims and investigations not listed herein.

Although the results of these proceedings, claims, and investigations cannot be predicted with certainty, the Company does not believe that the final outcome of any matters that it is currently involved in are reasonably likely to have a material adverse effect on its business, financial condition, or results of operations.

The Company is, and may become, subject to various lawsuits, stockholder derivative actions, class action lawsuits, individual or mass arbitration proceedings, and other types of legal proceedings, as well as other disputes, claims, and regulatory or governmental inquiries and investigations in the ordinary course of business, relating to commercial, contract, consumer protection, privacy, data protection, intellectual property, tax, employment, corporate governance, and other matters.

Although the results of these legal proceedings, disputes, claims, and inquiries and investigations cannot be predicted with certainty, the Company does not believe that the final outcome of any matters that it is currently involved in is reasonably likely to have a material adverse effect on its business, financial condition, or results of operations.

Regardless of the outcome, such legal proceedings, disputes, claims, and inquiries and investigations can have an adverse impact on the Company because of legal fees, other litigation costs, and settlement costs, diversion of management resources, reputational harm, and other factors.

During the years ended December 31, 2024, 2023, and 2022, the Company did not have any loss contingencies that were material.

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To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements.

The components of income (loss) before income taxes consist of the following (in thousands):

The components of loss before income taxes consisted of the following (in thousands):

Years Ended December 31,

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Foreign 5,712 ( 316 ) ( 5,397 )

Net income (loss) before income taxes $ ( 699,430 ) $ ( 492,283 ) $ 236,587

The income tax expense (benefit) consisted of the following (in thousands):

Loss before income taxes $ ( 119,958 ) $ ( 699,430 ) $ ( 492,283 )

The income tax expense consisted of the following (in thousands):

Years Ended December 31,

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( 11,430 ) 1,271 582

Total income tax expense (benefit) $ 10,131 $ 5,722 $ ( 5,798 )

Total income tax expense $ 9,428 $ 10,131 $ 5,722

The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate:

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federal income tax at statutory rate 21.0 % 21.0 % 21.0 %

state and local income taxes ( 0.4 ) ( 0.5 ) 0.2

state and local income taxes, net of federal tax benefit ( 4.8 ) ( 0.4 ) ( 0.5 )

Change in valuation allowance ( 12.0 ) ( 23.6 ) ( 39.1 )

1 unchanged sentence

Stock-based compensation ( 26.2 ) ( 2.8 ) 4.0

Discrete tax benefit due to intellectual property transfer — — ( 19.1 )

Meals and entertainment ( 1.0 ) ( 0.2 ) ( 0.1 )

Foreign-Derived Intangible Income Deduction 1.8 0.3 0.2

Foreign rate differential ( 0.5 ) — 0.2

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State apportionment change — — 0.1

Tax rate change — — ( 0.7 )

Provision to return true-up 0.2 0.1 ( 0.1 )

Change in unrecognized tax benefits 9.4 — 0.1

Discrete tax expense due to intellectual property transfer ( 10.7 ) — —

Other ( 2.2 ) ( 0.5 ) ( 1.1 )

Effective tax rate ( 7.9 ) % ( 1.4 ) % ( 1.2 ) %

Significant components of the Company’s deferred income tax assets and liabilities consist of the following (in thousands):

Significant components of the Company’s deferred income tax assets and liabilities consisted of the following (in thousands):

As of December 31,

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current income tax expense of $ 13.2 million for the year ended December 31, 2024.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized through future operations.

As a result of the Company’s analysis of all available objective evidence, both positive and negative, as of December 31, 2023, the Company believes it is more likely than not that the U.S.

and Netherlands deferred tax assets will not be fully realizable.

Accordingly, the Company has provided a full valuation allowance against its U.S.

and Netherlands deferred tax assets.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized.

As of December 31, 2024, the Company analyzed all available objective evidence, both positive and negative, and believes it is more-likely-than-not that some deferred tax assets will not be realizable.

Accordingly, the Company has provided a valuation allowance against its U.S.

deferred tax assets.

As of each reporting date, the Company considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.

During the year ended December 31, 2024, the Company recognized a tax benefit of $ 11.1 million related to the release of its valuation allowance against certain foreign deferred tax assets, which are expected to be utilized based on future forecasted income.

The Company’s U.S.

federal and state valuation allowance increased by $ 166.0 million and $ 199.2 million during the years ended December 31, 2023 and 2022, respectively.

The change in the valuation allowance during the years ended December 31, 2023 and December 31, 2022 is primarily attributable to an increase in deferred tax assets generated through capitalization of section 174 research and development expenses for U.S.

federal and state valuation allowance increased by $ 61.3 million, $ 166.0 million, and $ 199.2 million during the years ended December 31, 2024, 2023, and 2022, respectively.

The change in the valuation allowance during the years ended December 31, 2024, 2023, and 2022 is primarily attributable to an increase in deferred tax assets generated through capitalization of section 174 research and development expenses for U.S.

federal and conforming state purposes.

The Company’s foreign valuation allowance decreased by $ 51.9 million and increased by $ 3.5 million and $ 2.2 million during the years ended December 31, 2024, 2023, and 2022, respectively.

The change in the valuation allowance during the year ended December 31, 2024 is primarily attributable to an increase in deferred tax assets as a result of the valuation allowance release in the Netherlands.

The change in the valuation allowance during the years ended December 31, 2023 and 2022 is primarily attributable to an increase in net operating losses.

The change in valuation allowance for all years is a charge or benefit to income tax expense.

For federal and state income tax reporting purposes, respective net operating loss carryforwards of $ 1,283.4 million and $ 1,380.4 million are available to reduce future taxable income.

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The Company will continue to indefinitely reinvest earnings from its foreign subsidiaries, which are not significant.

While federal income tax expense has been recognized as a result of the Tax Act, the Company has not provided any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss.

It is not practicable for the Company to determine the amount of unrecognized tax expense on these reinvested international earnings.

While federal income tax expense has been recognized and distributions are generally exempt as a result of the Tax Act, the Company has not provided any additional deferred taxes with respect to items such as foreign withholding taxes and state income tax.

RETIREMENT PLANS

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No Company contributions were made for the years ended December 31, 2024, 2023, and 2022.

The Company has defined contribution plans in the U.K.

and Korea for the employees in those countries.

The Company contributed $ 3.2 million, $ 2.3 million, and $ 1.3 million in total to these plans for the years ended December 31, 2023, 2022, and 2021, respectively.

NET INCOME (LOSS) PER SHARE

The Company’s basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding for the period.

The Company uses the two-class method to calculate net income (loss) per share.

The Company has defined contribution plans for employees in certain of its international locations.

The Company contributed $ 4.1 million, $ 3.2 million, and $ 2.3 million to these plans for the years ended December 31, 2024, 2023, and 2022, respectively.

NET LOSS PER SHARE

The Company’s basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period.

The Company uses the two-class method to calculate net loss per share.

Except with respect to certain voting, conversion, and transfer rights and as otherwise expressly provided in the Company’s amended and restated certificate of incorporation or required by applicable law, shares of the Company’s Class A common stock and Class B common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects as to all matters.

Accordingly, basic and diluted net income (loss) per share are the same for both classes.

For purposes of the calculation of diluted net income (loss) per share, options to purchase common stock and restricted stock units are considered common stock equivalents.

Accordingly, basic and diluted net loss per share are the same for both classes.

For purposes of the calculation of diluted net loss per share, options to purchase common stock and restricted stock units are considered common stock equivalents.

Dilutive shares of common stock are determined by applying the treasury stock method.

The dilutive shares are excluded from the calculation of diluted net loss per share in the period of net loss, as their effect is antidilutive.

The following table presents the calculation of basic and diluted net income (loss) per share as follows (in thousands, except per share data):

The following table presents the calculation of basic and diluted net loss per share as follows (in thousands, except per share data):

Years Ended December 31,

2024 2023 2022

Net income (loss) $ ( 709,561 ) $ ( 498,005 ) $ 242,385

Basic net income (loss) per share:

Weighted-average common shares outstanding — basic 141,572 137,668 132,710

Net income (loss) per share — basic $ ( 5.01 ) $ ( 3.62 ) $ 1.83

Diluted net income (loss) per share:

Weighted-average common shares outstanding — basic 141,572 137,668 132,710

Effect of potentially dilutive securities:

Restricted stock units — — 2,744

Stock options — — 6,214

Weighted-average common shares outstanding — diluted 141,572 137,668 141,668

Net income (loss) per share — diluted $ ( 5.01 ) $ ( 3.62 ) $ 1.71

Common stock equivalents excluded from the calculation of diluted net income (loss) per share because of their anti-dilutive effect were 14.0 million, 14.4 million and 1.1 million units of equity awards to purchase common stock granted under the Company’s equity plans for the years ended December 31, 2023, 2022, and 2021, respectively.

Net loss $ ( 129,386 ) $ ( 709,561 ) $ ( 498,005 )

Weighted-average common shares outstanding — basic and diluted 144,630 141,572 137,668

Net loss per share — basic and diluted $ ( 0.89 ) $ ( 5.01 ) $ ( 3.62 )

Common stock equivalents excluded from the calculation of diluted net loss per share because of their anti-dilutive effect were 14.4 million, 14.0 million and 14.4 million units of equity awards to purchase common stock granted under the Company’s equity plans for the years ended December 31, 2024, 2023, and 2022, respectively.

SEGMENT INFORMATION

An operating segment is defined as a component of an entity for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) for purposes of allocating resources and evaluating financial performance.

The Company’s CODM is its Chief Executive Officer, and the CODM evaluates performance and makes decisions about allocating resources to its operating segments based on financial information presented on a consolidated basis and on revenue and gross profit for each operating segment.

The CODM uses segment gross profit to allocate resources to each segment predominantly in the annual budgeting process.

On a quarterly basis, the CODM uses gross profit budget-to-actual variances to evaluate segment performance.

For both the Platform and Devices reportable segments, Cost of revenue is the significant segment expense that is regularly provided to the CODM.

The Company uses the management approach to determine the segment financial information that should be disaggregated and presented separately in the Company’s notes to its consolidated financial statements.

The management approach is based on the manner by which management has organized the segments within the Company for making operating decisions, allocating resources, and assessing performance.

While not considered significant segment expenses, the Company has separately disclosed content amortization (refer to Note 6) and stock-based compensation expense (refer to Note 11) charged to Cost of revenue, Platform.

The Company disclosed charges related to the inventory provision and inventory losses on purchase commitments (refer to Note 2) and stock-based compensation expense (refer to Note 11) included within Cost of revenue, Devices.

The Company reports its financial results consistent with the manner in which financial information is viewed by management for decision-making purposes.

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Descriptions of the Company’s two reportable segments are as follows:

Platform revenue is generated from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services) and streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls).

Devices revenue is generated from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories as well as revenue from licensing arrangements with service operators.

Platform revenue is generated from the sale of digital advertising (including direct and programmatic video advertising, ads integrated into our UI, 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).

Devices revenue is generated from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories.

Customers accounting for 10% or more of segment revenue, net, were as follows:

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Platform segment revenue

Customer H * * 10 %

Customer I * 13 % *

Customer J 12 % * *

Devices segment revenue

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Customer C 28 % 41 % 38 %

Customer K 10 % * *

* Less than 10%

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During the year ended December 31, 2023, the Company implemented additional measures including consolidating its office space utilization, performing a strategic review of its content portfolio, reducing outside services expenses, and slowing its year-over-year headcount expense growth rate through a workforce reduction and limiting new hires, among other measures.

As a result of these measures, the Company recorded restructuring charges associated with employee termination expenses consisting primarily of severance payments, employee benefits contributions, payroll taxes and related costs, impairment charges related to decisions to sub-lease and cease the use of certain office facilities and related property and equipment, and impairment charges related to removing select licensed and produced content from The Roku Channel.

The restructuring charges for the years ended December 31, 2023 and 2022 are recorded as follows (in thousands):

During the year ended December 31, 2024, the Company recorded restructuring charges associated with employee termination expenses consisting primarily of severance payments, employee benefits contributions, payroll taxes and related costs, and impairment charges related to decisions to sub-lease and cease the use of certain office facilities and related property and equipment.

Restructuring charges are recorded as follows (in thousands):

Year Ended December 31, 2024

Employee Terminations Facilities Exit Costs Asset Impairment Charges

Cost of revenue, platform $ ( 3 ) $ — $ — $ ( 3 )

Cost of revenue, devices 1 — 5 6

Research and development 368 98 ( 603 ) ( 137 )

Sales and marketing 697 719 24,641 26,057

General and administrative ( 116 ) 117 5,075 5,076

Total restructuring charges $ 947 $ 934 $ 29,118 $ 30,999

Year Ended December 31, 2023

Employee Terminations Facilities Exit Costs Asset Impairment Charges

Total Employee Terminations Asset Impairment Charges

Cost of revenue, platform $ 1,164 $ 1 $ 65,867 $ 67,032

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Total restructuring charges $ 83,165 $ 3,527 $ 269,402 $ 356,094

The asset impairment charges for the year ended December 31, 2023 include $ 131.6 million of operating lease right-of-use assets impairment, $ 72.3 million of property and equipment impairment, and $ 65.5 million of content assets impairment.

Year Ended December 31, 2022

Employee Terminations Facilities Exit Costs Assets Impairment Charges Total

Cost of revenue, platform $ — $ — $ — $ —

Cost of revenue, devices — — — —

Research and development 12,092 — 7,500 19,592

Sales and marketing 10,904 — — 10,904

General and administrative 7,644 — — 7,644

Total restructuring charges $ 30,640 $ — $ 7,500 $ 38,140

The asset impairment charges for the year ended December 31, 2024 include $ 22.6 million of operating lease right-of-use assets impairment and $ 7.0 million of property and equipment impairment, offset by $ 0.5 million of adjustments to other long-term liabilities and assets.

The asset impairment charge for the year ended December 31, 2023 include $ 131.6 million of operating lease right-of-use assets impairment, $ 72.3 million of property and equipment impairment, and $ 65.5 million of content assets impairment .

The asset impairment charge for the year ended December 31, 2022 includes a $ 7.5 million impairment charge related to abandoned technology assets.

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Year Ended December 31, 2023

Employee Terminations Facilities Exit Costs Total Employee Terminations Total

Employee Terminations Facilities Exit Costs Total Employee Terminations Facilities Exit Costs Total

Beginning balance $ 12,661 $ 1,198 $ 13,859 $ 22,093 $ — $ 22,093

Restructuring charges incurred 947 934 1,881 83,165 3,527 86,692

83,165 3,527 86,692 30,640 30,640

Payments made

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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 8. Financial Statements and Supplementary Data