ROKU, INC 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 55 Consolidated Balance Sheets 57 Consolidated Statements of Operations 58 Consolidated Statements of Comprehensive Loss 59 Consolidated Statements of Stockholders’ Equity 60 Consolidated Statements of Cash Flows 61 Notes to Consolidated Financial Statements 63 1. The Company 63 2. Significant Accounting Policies and Basis of Presentation 63 3. Revenue 69 4. Goodwill and Intangible Assets 69 5. Balance Sheet Components 71 6. Content Assets 72 7. Strategic Investments 73 8. Fair Value Disclosure 73 9. Leases 75 10. Debt 76 11. Stockholders’ Equity 76 12. Commitments and Contingencies 79 13. Income Taxes 79 14. Retirement Plans 82 15. Net Loss Per Share 82 16. Segment Information 83 17. Restructuring Charges 84 54 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Roku, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Roku, Inc. 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. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 14, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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) 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 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 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 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. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s forecast used in the determination of future variable consideration included the following, among others: 55 Table of Contents • 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 revenue sharing. ◦ 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. ◦ Evaluated changes from prior period forecasts to current period forecasts, when applicable. ◦ 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 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 San Jose, California February 14, 2025 We have served as the Company's auditor since 2008. 56 Table of Contents ROKU, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value data) As of December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 2,160,236 $ 2,025,891 Accounts receivable, net of allowances of $ 72,657 and $ 34,127 as of December 31, 2024 and 2023, respectively 812,510 816,337 Inventories 158,271 92,129 Prepaid expenses and other current assets 103,146 138,585 Total current assets 3,234,163 3,072,942 Property and equipment, net 213,690 264,556 Operating lease right-of-use assets 304,505 371,444 Content assets, net 237,321 257,395 Intangible assets, net 27,501 41,753 Goodwill 161,519 161,519 Other non-current assets 125,234 92,183 Total Assets $ 4,303,933 $ 4,261,792 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 273,985 $ 385,330 Accrued liabilities 852,799 788,040 Deferred revenue, current portion 105,718 102,157 Total current liabilities 1,232,502 1,275,527 Deferred revenue, non-current portion 25,050 24,572 Operating lease liability, non-current portion 512,706 586,174 Other long-term liabilities 40,938 49,186 Total Liabilities 1,811,196 1,935,459 Commitments and contingencies (Note 12) Stockholders’ Equity: Common stock, $ 0.0001 par value; 15 14 1,150,000 (Class A - 1,000,000 and Class B - 150,000 ) shares authorized as of December 31, 2024 and 2023; 145,910 (Class A - 128,681 and Class B - 17,229 ) shares and 143,502 (Class A - 126,118 and Class B - 17,384 ) shares issued and outstanding as of December 31, 2024 and 2023, respectively Additional paid-in capital 3,921,432 3,623,747 Accumulated other comprehensive income (loss) ( 1,737 ) 159 Accumulated deficit ( 1,426,973 ) ( 1,297,587 ) Total stockholders’ equity 2,492,737 2,326,333 Total Liabilities and Stockholders’ Equity $ 4,303,933 $ 4,261,792 See accompanying Notes to Consolidated Financial Statements 57 Table of Contents ROKU, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Years Ended December 31, 2024 2023 2022 Net revenue: Platform $ 3,522,776 $ 2,994,105 $ 2,711,441 Devices 590,122 490,514 415,093 Total net revenue 4,112,898 3,484,619 3,126,534 Cost of revenue: Platform 1,636,816 1,427,546 1,179,675 Devices 670,437 534,458 505,737 Total cost of revenue 2,307,253 1,962,004 1,685,412 Gross profit (loss): Platform 1,885,960 1,566,559 1,531,766 Devices ( 80,315 ) ( 43,944 ) ( 90,644 ) Total gross profit 1,805,645 1,522,615 1,441,122 Operating expenses: Research and development 720,145 878,474 788,913 Sales and marketing 932,712 1,033,359 838,419 General and administrative 370,955 403,159 344,678 Total operating expenses 2,023,812 2,314,992 1,972,010 Loss from operations ( 218,167 ) ( 792,377 ) ( 530,888 ) Other income, net: Interest expense ( 411 ) ( 730 ) ( 5,161 ) Other income, net 98,620 93,677 43,766 Total other income, net 98,209 92,947 38,605 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 58 Table of Contents ROKU, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Years Ended December 31, 2024 2023 2022 Net loss $ ( 129,386 ) $ ( 709,561 ) $ ( 498,005 ) Other comprehensive gain (loss), net of tax: Foreign currency translation adjustment ( 1,896 ) 451 ( 333 ) Other comprehensive gain (loss), net of tax ( 1,896 ) 451 ( 333 ) Comprehensive loss $ ( 131,282 ) $ ( 709,110 ) $ ( 498,338 ) See accompanying Notes to Consolidated Financial Statements 59 Table of Contents ROKU, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Balance-December 31, 2021 135,137 $ 14 $ 2,856,572 $ 41 $ ( 90,021 ) $ 2,766,606 Issuance of common stock pursuant to equity incentive plans 4,890 — 18,357 — — 18,357 Stock-based compensation expense — — 359,931 — — 359,931 Foreign currency translation adjustment — — — ( 333 ) — ( 333 ) Net loss — — — — ( 498,005 ) ( 498,005 ) Balance-December 31, 2022 140,027 14 3,234,860 ( 292 ) ( 588,026 ) 2,646,556 Issuance of common stock pursuant to equity incentive plans 3,475 — 18,757 — — 18,757 Stock-based compensation expense — — 370,130 — — 370,130 Foreign currency translation adjustment — — — 451 — 451 Net loss — — — — ( 709,561 ) ( 709,561 ) Balance-December 31, 2023 143,502 14 3,623,747 159 ( 1,297,587 ) 2,326,333 Issuance of common stock pursuant to equity incentive plans 3,906 1 9,379 — — 9,380 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 ) Net loss — — — — ( 129,386 ) ( 129,386 ) Balance-December 31, 2024 145,910 $ 15 $ 3,921,432 $ ( 1,737 ) $ ( 1,426,973 ) $ 2,492,737 See accompanying Notes to Consolidated Financial Statements 60 Table of Contents ROKU, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2024 2023 2022 Cash flows from 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 Stock-based compensation expense 384,662 370,130 359,931 Amortization of right-of-use assets 47,371 57,579 55,507 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 in convertible promissory notes ( 1,409 ) ( 4,348 ) 532 Impairment of assets 29,118 269,402 7,500 Provision for doubtful accounts 790 1,674 2,081 Other items, net ( 2,845 ) ( 1,510 ) ( 190 ) Changes in operating assets and liabilities: Accounts receivable 1,893 ( 56,937 ) ( 10,887 ) Inventories ( 66,142 ) 14,725 ( 56,471 ) Prepaid expenses and other current assets ( 11,299 ) 15,058 ( 15,941 ) Content assets and liabilities, net ( 193,046 ) ( 267,155 ) ( 313,204 ) Other non-current assets ( 11,769 ) ( 592 ) ( 7,304 ) Accounts payable ( 110,678 ) 248,175 14,190 Accrued liabilities 38,385 57,714 167,526 Operating lease liabilities ( 63,835 ) ( 27,786 ) ( 9,245 ) Other long-term liabilities 3,695 ( 1,309 ) ( 403 ) Deferred revenue 4,039 10,841 41,402 Net cash provided by operating activities 218,045 255,856 11,795 Cash flows from investing activities: Purchases of property and equipment ( 5,061 ) ( 82,619 ) ( 161,696 ) Purchase of strategic investments ( 20,000 ) ( 10,000 ) ( 40,000 ) Net cash used in investing activities ( 25,061 ) ( 92,619 ) ( 201,696 ) Cash flows from financing activities: 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 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 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 9,746 ) 2,654 ( 4,170 ) Cash, cash equivalents and restricted cash — Beginning of period 2,066,604 1,961,956 2,147,670 Cash, cash equivalents and restricted cash — End of period $ 2,160,639 $ 2,066,604 $ 1,961,956 Cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 2,160,236 $ 2,025,891 $ 1,961,956 Restricted cash, current 403 40,713 — Cash, cash equivalents and restricted cash — End of period $ 2,160,639 $ 2,066,604 $ 1,961,956 61 Table of Contents Years Ended December 31, 2024 2023 2022 Supplemental disclosures of cash flow information: Cash paid for interest $ 460 $ 915 $ 3,894 Cash paid for income taxes $ 19,406 $ 6,632 $ 7,016 Supplemental disclosures of non-cash investing and financing activities: Unpaid portion of property and equipment purchases $ 122 $ 429 $ 28,503 See accompanying Notes to Consolidated Financial Statements 62 Table of Contents ROKU, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. THE COMPANY Organization and Description of Business Roku, Inc. (the “Company” or “Roku”), was formed in October 2002 as Roku LLC under the laws of the State of Delaware. 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, 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. 2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION Basis of Presentation and Principles of Consolidation The consolidated financial statements, which include the accounts of Roku, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation. Use of Estimates The preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses. Significant items subject to such estimates and assumptions include: • revenue recognition: 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; • 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; • allowances for sales returns and sales incentives; and • the valuation of deferred income tax assets. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates and assumptions. Comprehensive Loss Comprehensive loss for the years ended December 31, 2024, 2023, and 2022 includes foreign currency translation adjustments. Foreign Currency The functional currency of some of the Company’s foreign subsidiaries is the U.S. dollar. Monetary assets and liabilities of these subsidiaries are remeasured into U.S. 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 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. The financial statements of these subsidiaries are translated to U.S. dollars using month-end exchange rates for assets and liabilities, and average exchange rates for revenue and expenses. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders' equity. 63 Table of Contents 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. Cash and cash equivalents consist primarily of bank deposit accounts and investments in money market funds. 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 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. Accounts Receivable, Net Accounts receivable are typically unsecured and are derived from revenue earned from customers. They are stated at invoice value less estimated allowances for sales returns, sales incentives, doubtful accounts, and other miscellaneous allowances. The Company performs ongoing credit evaluations of its customers to determine allowances for potential credit losses and doubtful accounts. The Company considers historical experience, ongoing promotional activities, historical claim rates, and other factors to determine the allowances for sales returns and sales incentives. Allowance for Sales Returns : Allowance for sales returns consisted of the following activities (in thousands): Years Ended December 31, 2024 2023 2022 Beginning balance $ 7,808 $ 7,417 $ 6,015 Add: Charged to revenue 16,502 16,560 19,068 Less: Utilization of sales return reserve ( 17,883 ) ( 16,169 ) ( 17,666 ) Ending balance $ 6,427 $ 7,808 $ 7,417 Allowance for Sales Incentives : Allowance for sales incentives consisted of the following activities (in thousands): Years Ended December 31, 2024 2023 2022 Beginning balance $ 23,024 $ 28,903 $ 48,411 Add: Charged to revenue 179,100 85,178 94,731 Less: Utilization of sales incentive reserve ( 138,757 ) ( 91,057 ) ( 114,239 ) Ending balance $ 63,367 $ 23,024 $ 28,903 Allowance for Doubtful Accounts : Allowance for doubtful accounts consisted of the following activities (in thousands): Years Ended December 31, 2024 2023 2022 Beginning balance $ 2,213 $ 3,498 $ 2,158 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 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 Intangible assets acquired through business combinations are recorded at their fair values as of the acquisition date. Intangible assets are amortized using the straight-line method over their estimated useful lives. The Company evaluates the estimated remaining useful lives of its intangible assets annually and when events or changes in circumstances warrant a revision to the remaining periods of amortization. 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 64 Table of Contents 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. In performing its annual assessment, the Company can opt to perform a qualitative assessment to test for impairment or it can directly perform a quantitative assessment. Based on the Company’s qualitative assessment, if it is determined that the fair value of the reporting unit or indefinite-lived intangible assets is, more likely than not, less than its carrying amount, then the quantitative assessment is performed. Any excess of the reporting unit’s carrying amount over its fair value is recorded as an impairment loss, limited to the total amount of goodwill allocated to the reporting unit. Any excess of an indefinite-lived intangible asset’s carrying amount over its fair value is recorded as an impairment loss. The Company reviews long-lived assets, including property and equipment, right-of-use assets, and intangible assets with finite lives for impairment when events or changes in business circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. The Company assesses the recoverability of an asset or asset group based on their estimated undiscounted future cash flows directly associated with their use and eventual disposition. If the asset or asset group is not recoverable, an impairment loss is recognized based on the excess of the carrying amount over the fair value of the asset or asset group. The Company did not recognize any impairment for goodwill in any of the periods reported. The Company recorded an impairment charge related to abandoned technology assets of $ 7.5 million for the year ended December 31, 2022. There were no impairments of intangible assets during the years ended December 31, 2024 and December 31, 2023. 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. 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. Content Assets The Company recognizes content assets (licensed and produced) as Content assets, net on the consolidated balance sheets. For licensed content, the cost per title is capitalized along with a corresponding liability when the license period begins, the content is available for streaming and when the fee is determinable. For produced content, all direct production costs are capitalized. Payment terms for certain licensed content require advanced payments which are reflected in Prepaid expenses and other current assets. The amortization expense for content assets (licensed and produced) is based on projected usage which results in accelerated or straight-lined patterns depending on the nature of the content. Projected usage is mainly based on historical and projected viewing patterns. Amortization of content assets is included in Cost of revenue, platform in the consolidated statements of operations. Content assets (licensed and produced) are primarily monetized together as a unit, referred to as a film group. The film group is evaluated for impairment whenever an event occurs, or circumstances change, indicating the fair value is less than the carrying value. The Company reviews various qualitative factors and indicators to assess whether the film group is impaired. 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 Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company’s contracts include various product or services or a combination of both, which are generally capable of being distinct and are accounted for as separate performance obligations. The Company’s contracts often contain multiple distinct performance obligations. The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract which may include fixed consideration or variable consideration. At the inception of each arrangement, the Company evaluates the likelihood that the payments will be collected. When arrangements have variable consideration, the Company utilizes the expected value method to estimate the amount expected to be received. The amount of variable consideration that is included in the transaction price is constrained to the extent that it is probable a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The estimate of the variable consideration is based on the assessment of historical, current, and forecasted performance noted and expected from the performance obligation. 65 Table of Contents In arrangements with multiple performance obligations, the estimated transaction price of each contract is allocated to each distinct performance obligation based on relative stand-alone selling price (“SSP”). For performance obligations routinely sold separately, the Company determines SSP based on prices charged to customers for individual products in consideration with historical and expected discounting practices, the size, and volume of transactions, geographic location, and go-to-market strategy. For those performance obligations that are not routinely sold separately, the Company determines SSP using information that may include market conditions and other observable inputs. When the Company’s arrangements involve third-party goods and services, it evaluates whether the Company is the principal, and reports revenue on a gross basis, or an agent, and reports revenue on a net basis. In this assessment, the Company considers if it obtains control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price. Revenue is recorded net of taxes collected from customers which are subsequently remitted to the relevant government authority. The Company does not capitalize any cost associated with contract acquisition because it applies a practical expedient and expenses commissions when incurred as most direct contract acquisition costs relate to contracts that are recognized over a period of one year or less. Sales commissions are included in Sales and marketing expenses in the consolidated statements of operations. The as-invoiced practical expedient is applied when the amount of consideration the Company has a right to invoice corresponds directly with the value to the customer of the entity’s performance completed to date. Nature of Products and Services Platform segment: 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). 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. 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 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. 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. Revenue is recognized on a time elapsed basis, by day, as the services are delivered over the contractual distribution term. Non-cash consideration is usually in the form of advertising inventory, the fair value of which is determined based on relevant internal and third-party data. The Company sells Premium Subscriptions for premium content on The Roku Channel for varying fees for different content. Revenue from such Premium Subscription fees is recognized on a gross basis over the service period as the Company is deemed to be the principal in the relationship with the end user. The Company obtains control of the content before transferring to the end user and has latitude in establishing pricing. The Company pays fixed fees per subscriber or fixed percentage of revenue share to the providers of premium content on The Roku Channel based on the contractual arrangement and recognizes that in Cost of revenue, platform. The Company sells branded app buttons on remote controls of streaming devices that provide one-touch access to a content partner’s content. The Company typically receives a fixed fee per button for each unit sold over a defined distribution period. Revenue is recognized on a time elapsed basis, by day, over the distribution term. 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. through retailers and distributors as well as through the Company’s website. Devices revenue primarily consists of hardware, embedded software, and unspecified upgrades and updates on a when-and-if available basis. The hardware and embedded software are considered as one performance obligation and revenue is recognized at a point in time when the control transfers to the customer. Unspecified upgrades and updates are available to customers on a when-and-if available basis. The Company records the allocated value of the 66 Table of Contents 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. These estimates are based on historical experience and anticipated performance. Shipping charges billed to customers are included in devices revenue and the related shipping costs are included in Cost of revenue, devices. Leases 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 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. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future lease payments. The Company takes into consideration its credit rating and the length of the lease when calculating the incremental borrowing rate. 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 The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements. 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 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. Inventories 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 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 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. Costs that relate to the planning and post-implementation phases of development are expensed as incurred. Costs are capitalized when preliminary efforts are successfully completed, management has authorized and committed to funding the project, and it is probable that the project will be completed and will be used as intended. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized. Software development costs and the related amortization expenses are not material for any of the periods presented. 67 Table of Contents 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 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. Advertising Expenses Advertising expenses are recognized when incurred and are included in Sales and marketing expense in the consolidated statements of operations. The Company incurred advertising expenses of $ 9.7 million, $ 3.7 million, and $ 10.0 million for the years ended December 31, 2024, 2023, and 2022, respectively. Stock-Based Compensation The Company measures compensation expense for all stock-based awards, including restricted stock units and stock options granted to employees, based on the estimated fair value of the award on the date of grant. For restricted stock units, the grant date fair value is based on the closing market price of the Company’s Class A common stock on the date of grant. The fair value of each stock option is estimated using the Black-Scholes option pricing model. The Company accounts for forfeitures as they occur. Stock-based compensation is recognized on a straight-line basis over the requisite vesting period. The Black-Scholes option pricing model used to fair value stock options include the following assumptions: • Fair Value of Our Common Stock . The Company uses the closing market price of its Class A common stock as reported on The Nasdaq Global Select Market on the date of grant. • Expected Term. 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. • Volatility. 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. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term for each of the Company’s stock options. • Dividend Yield. The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Income Taxes The Company accounts for income taxes using an asset and liability approach. 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 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 68 Table of Contents 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 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. 3. REVENUE The Company’s disaggregated revenue is represented by the two reportable segments discussed in Note 16. The contract balances include the following (in thousands): As of December 31, 2024 2023 2022 Accounts receivable, net $ 812,510 $ 816,337 $ 760,793 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 Deferred revenue, non-current portion 25,050 24,572 28,210 Total deferred revenue $ 130,768 $ 126,729 $ 115,888 Accounts receivable are recorded at the amount invoiced, net of an allowance for sales returns, sales incentives, and doubtful accounts. Payment terms can vary by customer and contract. The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets are created when invoicing occurs subsequent to revenue recognition. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional. The Company’s contract assets are current in nature and are included in Prepaid expenses and other current assets. 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 $ 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. Revenue recognized during the year ended December 31, 2023 from amounts included in the total deferred revenue as of December 31, 2022 was $ 88.4 million. 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 $ 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. 4. GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill represents the excess of purchase consideration in a business combination over the fair value of tangible and intangible assets acquired net of the liabilities assumed. All goodwill relates to the platform segment. Goodwill is 69 Table of Contents evaluated for impairment annually. No impairment was recognized during the years ended December 31, 2024, 2023, and 2022. Intangible Assets The following tables summarize the Company’s intangible assets for the periods presented (in thousands, except years): As of December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Useful Lives (in years) Developed technology $ 73,367 $ ( 60,896 ) $ 12,471 5.9 Customer relationships 14,100 ( 14,100 ) — 4.0 Tradename 20,400 ( 7,966 ) 12,434 9.8 Patents 4,076 ( 1,480 ) 2,596 14.0 Total Intangible assets $ 111,943 $ ( 84,442 ) $ 27,501 6.7 As of December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Useful Lives (in years) Developed technology $ 73,367 $ ( 49,087 ) $ 24,280 5.9 Customer relationships 14,100 ( 13,948 ) 152 4.0 Tradename 20,400 ( 5,966 ) 14,434 9.8 Patents 4,076 ( 1,189 ) 2,887 14.0 Total Intangible assets $ 111,943 $ ( 70,190 ) $ 41,753 6.7 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. As of December 31, 2024, the estimated future amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands): Year Ending December 31, 2025 $ 12,533 2026 4,074 2027 2,737 2028 2,291 2029 2,291 Thereafter 3,575 Total $ 27,501 70 Table of Contents 5. BALANCE SHEET COMPONENTS Accounts Receivable, net : Accounts receivable, net consisted of the following (in thousands): As of December 31, 2024 2023 Accounts receivable, gross $ 885,167 $ 850,464 Less: Allowances Allowance for sales returns 6,427 7,808 Allowance for sales incentives 63,367 23,024 Allowance for doubtful accounts 1,895 2,213 Other allowances 968 1,082 Total allowances 72,657 34,127 Accounts receivable, net $ 812,510 $ 816,337 Property and Equipment, net : Property and equipment, net consisted of the following (in thousands): As of December 31, 2024 2023 Computers and equipment $ 51,741 $ 51,320 Leasehold improvements 286,585 292,418 Internal-use software 5,916 6,980 Office equipment and furniture 35,691 36,900 Property and equipment, gross 379,933 387,618 Less: Accumulated depreciation and amortization ( 166,243 ) ( 123,062 ) Property and equipment, net $ 213,690 $ 264,556 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. Accrued Liabilities : Accrued liabilities consisted of the following (in thousands): As of December 31, 2024 2023 Revenue share payable $ 267,163 $ 239,196 Accrued cost of revenue 149,135 147,875 Marketing, retail and merchandising expenses 112,001 147,853 Operating lease liability, current 79,221 68,099 Content liability, current 69,710 54,319 Other accrued expenses 175,569 130,698 Total Accrued liabilities $ 852,799 $ 788,040 71 Table of Contents Deferred Revenue : Deferred revenue consisted of the following (in thousands): As of December 31, 2024 2023 Platform, current $ 75,026 $ 66,636 Devices, current 30,692 35,521 Total deferred revenue, current 105,718 102,157 Platform, non-current — 625 Devices, non-current 25,050 23,947 Total deferred revenue, non-current 25,050 24,572 Total Deferred revenue $ 130,768 $ 126,729 Other Long-term Liabilities : Other Long-term liabilities consisted of the following (in thousands): As of December 31, 2024 2023 Content liability, non-current $ 18,453 $ 24,115 Other long-term liabilities 22,485 25,071 Total Other long-term liabilities $ 40,938 $ 49,186 6. CONTENT ASSETS Content assets, net consisted of the following (in thousands): As of December 31, 2024 2023 Licensed content, net and advances $ 152,851 $ 148,777 Produced content: Released, less amortization 65,990 77,951 Completed, not released 23,267 11,235 In production 7,565 38,275 Total produced content, net 96,822 127,461 Total Content assets, net and advances $ 249,673 $ 276,238 Current portion (included in Prepaid expenses and other current assets) $ 12,352 $ 18,843 Non-current portion $ 237,321 $ 257,395 Amortization of content assets is included in Cost of revenue, platform in the consolidated statements of operations and is as follows (in thousands): Years Ended December 31, 2024 2023 2022 Licensed content $ 161,194 $ 161,633 $ 216,393 Produced content 45,181 46,219 17,962 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. 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. 72 Table of Contents The following table reflects the expected amortization costs of released licensed and produced content assets, net for the next three years (in thousands): Years Ended December 31, 2025 2026 2027 Licensed content $ 86,962 $ 33,890 $ 13,020 Produced content 33,629 22,224 15,894 Total expected amortization costs $ 120,591 $ 56,114 $ 28,914 7. 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 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): As of December 31, 2024 Date of Investment Amount of Investment Date of Maturity June 15, 2022 $ 40,000 June 15, 2025 March 23, 2023 $ 5,000 March 23, 2026 May 23, 2023 $ 5,000 May 23, 2026 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. 8. FAIR VALUE DISCLOSURE The Company’s financial assets measured at fair value on a recurring basis are as follows (in thousands): As of December 31, 2024 Fair Value Level 1 Level 3 Assets: 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 73 Table of Contents As of December 31, 2023 Fair Value Level 1 Level 3 Assets: Cash and cash equivalents: Cash $ 594,493 $ 594,493 $ — Money market funds 1,431,398 1,431,398 — Restricted cash, current 40,713 40,713 — 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 The following table reflects the changes in the fair value of the Company’s Level 3 financial assets (in thousands): Years Ended December 31, 2024 2023 Beginning balance $ 53,816 $ 39,468 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 Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal market (or most advantageous market, in the absence of a principal market) for the asset or liability in an orderly transaction between market participants at the measurement date. Further, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs in measuring fair value, and utilizes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows: Level 1 —Quoted prices in active markets for identical assets or liabilities. 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; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by, observable market data by correlation or other means. The Company did not have any Level 2 instruments as of December 31, 2024 and 2023. 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, 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, 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. 74 Table of Contents 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 the Company’s restructuring efforts. 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 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. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods, and discount rates that reflect the level of risk associated with the expected future cash flows. For the licensed and produced content that was removed from The Roku Channel, the net carrying amount of the content assets was written off. For the abandoned technology assets, the net carrying amount of the technology assets was written off. 9. LEASES The Company has entered into operating leases primarily for office real estate. The leases have remaining terms ranging from less than 1 year to 9 years and may include options to extend or terminate the lease. The depreciable life of ROU assets is limited by the expected lease term. The components of lease expense are as follows (in thousands): Years Ended December 31, 2024 2023 2022 Operating lease expense $ 70,527 $ 83,060 $ 76,359 Variable lease expense 22,562 23,331 18,991 Sublease income ( 12,578 ) ( 139 ) — Total operating lease expense $ 80,511 $ 106,252 $ 95,350 Supplemental cash flow information related to leases is as follows (in thousands): Years Ended December 31, 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 92,076 $ 74,278 $ 56,370 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 10,462 $ 40,866 $ 231,728 Decrease in operating lease right-of-use assets due to impairment (See Note 17) $ 22,618 $ 131,646 $ — Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate): As of December 31, 2024 2023 Operating lease right-of-use assets $ 304,505 $ 371,444 Operating lease liability, current (included in Accrued liabilities) 79,221 68,099 Operating lease liability, non-current 512,706 586,174 Total operating lease liability $ 591,927 $ 654,273 Weighted-average remaining term for operating leases (in years) 7.02 7.94 Weighted-average discount rate for operating leases 3.98 % 3.94 % 75 Table of Contents Future lease payments under operating leases as of December 31, 2024 are as follows (in thousands): Year Ending December 31, Operating Leases (2) 2025 $ 101,265 2026 102,037 2027 100,002 2028 99,653 2029 96,037 Thereafter 185,173 Total future lease payments 684,167 Less: imputed interest ( 88,981 ) Less: expected tenant improvement allowance ( 3,259 ) Total (1) $ 591,927 (1) Total lease liabilities include liabilities related to operating lease right-of-use assets which were included in the impairment charges as part of the Company’s restructuring efforts. See Note 17 for additional details. (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. 10. DEBT 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. 11. STOCKHOLDERS’ EQUITY Preferred Stock The Company has 10 million shares of undesignated preferred stock authorized but not issued with rights and preferences determined by the Company’s Board of Directors at the time of issuance of such shares. As of December 31, 2024 and 2023, there were no shares of preferred stock issued and outstanding. Common Stock The Company has two classes of authorized common stock, Class A common stock and Class B common stock. 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 76 Table of Contents 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. Common Stock Reserved For Issuance As of December 31, 2024, the Company’s common stock reserved for issuance in the future is as follows (in thousands): Common stock awards granted under equity incentive plans 14,416 Common stock awards available for issuance under the 2017 Employee Stock Purchase Plan * 5,089 Common stock awards available for issuance under the 2017 Equity Incentive Plan 32,205 Total reserved shares of common stock 51,710 * The Company has not issued any common stock pursuant to the 2017 Employee Stock Purchase Plan. Equity Incentive Plans 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”). The 2017 Plan provides for the grant of incentive stock options to the Company’s employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of equity compensation to the Company’s employees, directors and consultants. The outstanding equity relates to the 2017 Plan and the 2008 Equity Incentive Plan (“2008 Plan”), a pre-IPO plan. No additional equity grants have been made pursuant to the 2008 Plan subsequent to the IPO. The equity granted under the 2017 Plan is subject to continuous service. Stock options granted under the 2017 Plan generally are granted at a price per share equivalent to the fair market value on the date of grant. Recipients of option grants who possess more than 10 % of the combined voting power of the Company are subject to certain limitations, and incentive stock options granted to such recipients are at a price no less than 110 % of the fair market value at the date of grant. Restricted Stock Units Restricted stock unit activity for the year ended December 31, 2024 is as follows (in thousands, except per share data): Number of Shares Weighted-Average Grant Date Fair Value Per Share Balance, December 31, 2023 8,674 $ 97.33 Awarded 4,452 59.59 Released ( 3,519 ) 107.03 Forfeited ( 950 ) 89.84 Balance, December 31, 2024 - Outstanding 8,657 $ 74.80 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. The unrecognized stock-based compensation expense related to restricted stock units awarded to employees as of December 31, 2024 was $ 520.0 million, which the Company expects to recognize over a weighted-average period of approximately 1.9 years. 77 Table of Contents Stock Options Stock option activity for the year ended December 31, 2024 is as follows (in thousands, except years and per share data): Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Balance, December 31, 2023 5,310 $ 75.55 6.8 Granted 956 59.28 — Exercised ( 387 ) 24.22 — Forfeited and expired ( 120 ) 126.71 — Balance, December 31, 2024 - Outstanding 5,759 $ 75.24 6.6 $ 103,159 Balance, December 31, 2024 - Exercisable 4,012 $ 75.23 5.7 $ 79,662 The weighted-average grant date fair value per share of options granted during the years ended December 31, 2024, 2023, and 2022 was $ 34.92 , $ 42.43 , and $ 36.66 , respectively. The intrinsic value for stock options exercised in the years ended December 31, 2024, 2023, and 2022 was $ 16.4 million, $ 38.9 million, and $ 210.0 million, respectively. Intrinsic value represents the difference between the fair values of the Company’s common stock and the stock options’ exercise price on the date of grant. As of December 31, 2024, the Company had $ 63.8 million of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 1.9 years. Stock-based Compensation The Company measures the cost of employee services received in exchange for an equity award based on the grant date fair value of the award. Stock options granted to employees generally vest over one to four years and have a term of ten years . Restricted stock units generally vest over one to four years . No stock-based compensation was capitalized for the years ended December 31, 2024, 2023, and 2022. The following table presents total stock-based compensation expense for the years ended December 31, 2024, 2023, and 2022 (in thousands): Years Ended December 31, 2024 2023 2022 Cost of revenue, platform $ 1,455 $ 1,478 $ 1,229 Cost of revenue, devices 1,373 3,761 2,440 Research and development 146,673 147,989 147,653 Sales and marketing 137,556 130,362 123,946 General and administrative 97,605 86,540 84,663 Total stock-based compensation $ 384,662 $ 370,130 $ 359,931 The fair value of stock options granted is estimated on the grant date using the Black-Scholes option-valuation model. The assumptions used to value stock options granted during the years ended December 31, 2024, 2023, and 2022 are as follows: Years Ended December 31, 2024 2023 2022 Expected term (in years) 5.0 - 6.3 5.0 - 5.8 5.0 - 6.8 Risk-free interest rate 3.51 - 4.64 % 3.48 - 4.72 % 1.37 - 4.33 % Expected volatility 62 - 63 % 61 - 63 % 57 - 61 % Dividend rate — — — 78 Table of Contents 12. COMMITMENTS AND CONTINGENCIES 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 The Company accounts for loss contingencies, including liabilities for intellectual property licensing and other claims, when it believes such losses are probable and reasonably estimable. These contingencies are reviewed at least quarterly and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events. The resolution of these contingencies and of other legal proceedings can be, however, inherently unpredictable and subject to significant uncertainties. 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. Indemnification In the ordinary course of business, the Company has entered into contractual arrangements which provide indemnification provisions of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. The Company’s obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each agreement. 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. 13. INCOME TAXES The components of loss before income taxes consisted of the following (in thousands): Years Ended December 31, 2024 2023 2022 United States $ ( 125,670 ) $ ( 699,114 ) $ ( 486,886 ) Foreign 5,712 ( 316 ) ( 5,397 ) Loss before income taxes $ ( 119,958 ) $ ( 699,430 ) $ ( 492,283 ) 79 Table of Contents The income tax expense consisted of the following (in thousands): Years Ended December 31, 2024 2023 2022 Current: Federal $ 5,445 $ 697 $ 694 State 7,746 2,715 2,444 Foreign 7,667 5,448 2,002 20,858 8,860 5,140 Deferred: Federal 233 233 448 State 225 222 220 Foreign ( 11,888 ) 816 ( 86 ) ( 11,430 ) 1,271 582 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: Years Ended December 31, 2024 2023 2022 U.S. federal income tax at statutory rate 21.0 % 21.0 % 21.0 % U.S. 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 ) Research and development tax credit 28.2 6.8 14.6 Stock-based compensation ( 26.2 ) ( 2.8 ) 4.0 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 Section 162(m) limitation ( 11.1 ) ( 2.1 ) ( 0.5 ) State apportionment change — — 0.1 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 ) % 80 Table of Contents Significant components of the Company’s deferred income tax assets and liabilities consisted of the following (in thousands): As of December 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 376,122 $ 484,136 Reserves and accruals 44,818 23,677 Research and development credits 258,201 248,381 Operating lease liabilities 148,126 183,359 Stock-based compensation 48,585 55,785 Depreciation and amortization 40,527 51,700 Section 174 capitalization 393,020 280,906 Other 9,170 6,190 Total deferred tax assets 1,318,569 1,334,134 Deferred tax liabilities: Operating lease right-of-use assets ( 75,966 ) ( 111,164 ) Other ( 4,249 ) ( 4,357 ) Total deferred tax liabilities ( 80,215 ) ( 115,521 ) Valuation allowance ( 1,219,225 ) ( 1,209,822 ) Net deferred tax assets $ 19,129 $ 8,791 Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) eliminated the right to deduct research and development expenses for tax purposes in the period the expenses were incurred and instead requires all U.S. and foreign research and development expenses to be amortized over five and fifteen tax years, respectively. Due to this required capitalization of research and development expenses, the Company has recorded U.S. 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. 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 $ 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. The federal net operating loss carryforwards will begin to expire in 2037, and certain state net operating losses have expired in 2024. For Brazil, Netherlands, and U.K. income tax reporting purposes, the net operating loss carryforwards of $ 6.9 million, $ 53.4 million, and $ 27.7 million, respectively, are available to reduce future taxable income, if any. Brazil and U.K. net operating losses can be carried forward indefinitely. Netherlands net operating losses can be carried back one year and carried forward indefinitely. 81 Table of Contents As of December 31, 2024, the Company has research and development tax credit carryforwards of $ 199.7 million and $ 174.6 million for federal and state income tax purposes, respectively. If not utilized, the federal and state carryforwards will begin to expire in 2030 and 2039, respectively. The total amount of unrecognized tax benefits as of December 31, 2024 is $ 92.1 million of which $ 88.0 million is composed of research and development credits and $ 4.1 million is related to international activities. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands): As of December 31, 2024 2023 Unrecognized tax benefits at beginning of year $ 88,548 $ 88,028 Gross increase for tax positions of current year 11,743 13,166 Gross decrease due to statute expiration — ( 54 ) Gross increase for tax positions of prior years 4,393 140 Gross decrease for tax positions of prior years ( 12,634 ) ( 12,689 ) Decrease relating to settlements with taxing authorities — ( 43 ) Unrecognized tax benefits balance at end of year $ 92,050 $ 88,548 As of December 31, 2024, $ 3.9 million of the Company's gross unrecognized tax benefits, if recognized, would affect the effective tax rate and $ 88.2 million would result in an adjustment to deferred tax assets with corresponding adjustments to the valuation allowance. The Company does not expect its gross unrecognized tax benefits to change significantly within the next 12 months. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of its income tax expense. The Company recorded $ 0.9 million and $ 1.0 million of accrued interest and penalties related to uncertain tax positions as of December 31, 2024 and December 31, 2023, respectively. The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and certain foreign jurisdictions. All tax years remain subject to examination by federal and state authorities. These audits include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and local tax laws. The Company will continue to indefinitely reinvest earnings from its foreign subsidiaries, which are not significant. 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. 14. RETIREMENT PLANS The Company maintains a 401(k) tax deferred saving plan (the “Savings Plan”) for the benefit of qualified employees. Qualified employees may elect to make contributions to the Savings Plan on a biweekly basis, subject to certain limitations. The Company may make contributions to the Savings Plan at the discretion of the Board of Directors. No Company contributions were made for the years ended December 31, 2024, 2023, and 2022. 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. 15. 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 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. 82 Table of Contents 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 Numerator: Net loss $ ( 129,386 ) $ ( 709,561 ) $ ( 498,005 ) Denominator: 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. 16. 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 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. The Company does not manage operating expenses such as research and development, sales and marketing, and general and administrative expenses at the segment level. The Company does not allocate property and equipment or any other assets or capital expenditures to reportable segments. Descriptions of the Company’s two reportable segments are as follows: Platform 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 Devices revenue is generated from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories. 83 Table of Contents Customers accounting for 10% or more of segment revenue, net, were as follows: Years Ended December 31, 2024 2023 2022 Platform segment revenue Customer I * 13 % * Customer J 12 % * * Devices segment revenue Customer A 22 % 15 % * Customer B 21 % 15 % 21 % Customer C 28 % 41 % 38 % Customer K 10 % * * * Less than 10% Revenue in international markets was less than 10% in each of the periods presented. Long-lived assets, net The following table presents long-lived assets, net, which consist primarily of property and equipment and operating lease right-of-use assets, by geographic area (in thousands): As of December 31, 2024 2023 United States $ 401,464 $ 497,024 United Kingdom 92,110 109,315 Other countries 24,621 29,661 Total $ 518,195 $ 636,000 17. RESTRUCTURING CHARGES The Company began efforts to reduce its operating expense growth rate due to economic conditions in the fourth quarter of fiscal 2022. The Company recorded employee termination expenses, and an impairment charge related to abandoned technology assets during the year ended December 31, 2022. 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 during that period. 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. 84 Table of Contents Restructuring charges are recorded as follows (in thousands): Year Ended December 31, 2024 Employee Terminations Facilities Exit Costs Asset Impairment Charges Total 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 Cost of revenue, platform $ 1,164 $ 1 $ 65,867 $ 67,032 Cost of revenue, devices 524 6 2,793 3,323 Research and development 31,160 1,320 78,011 110,491 Sales and marketing 29,786 517 83,411 113,714 General and administrative 20,531 1,683 39,320 61,534 Total restructuring charges $ 83,165 $ 3,527 $ 269,402 $ 356,094 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. A reconciliation of the beginning and ending balance of employee termination restructuring charges and facility exit costs, which are included in Accrued liabilities in the consolidated balance sheets, is as follows (in thousands): Year Ended December 31, 2024 Year Ended December 31, 2023 Employee Terminations Facilities Exit Costs Total Employee Terminations Facilities Exit Costs Total Beginning balance $ 12,661 $ 1,198 $ 13,859 $ 22,093 $ — $ 22,093 Add: Restructuring charges incurred 947 934 1,881 83,165 3,527 86,692 Less: Payments made ( 13,608 ) ( 751 ) ( 14,359 ) ( 92,597 ) ( 2,329 ) ( 94,926 ) Ending balance $ — $ 1,381 $ 1,381 $ 12,661 $ 1,198 $ 13,859 85 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.