Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act) prior to the filing of this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were, in design and operation, effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework set forth in Internal Control — Integrated Framework (2013) , our management concluded that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its report which is included below.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our disclosure controls and procedures and our internal controls over financial reporting have been designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Roku, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Roku, Inc. and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph related to the Company’s change in method of accounting for leases in fiscal year 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842).
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
February 25, 2021
108
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2020.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2020.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2020.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2020.
Item 14. Principal Accounting Fees and Services
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2020 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2020.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements
See Index to Financial Statements in Item 8 of this Report.
(a)(2) Financial Statement Schedule
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the information required is already included in the financial statements or the notes to those financial statements.
109
(a) (3) Exhibits
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
Incorporated by Reference
Number
Exhibit Title
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
2.1
Agreement and Plan of Merger, dated October 22, 2019, by and among Roku, Inc., Delaware Acquisition Company, Inc., dataxu, Inc. and Shareholder Representative Services LLC, as Stockholder Representative and Amendment No. 1 to Agreement and Plan of Merger, dated November 8, 2019, by and among Roku, Inc., Delaware Acquisition Company, Inc., dataxu, Inc. and Shareholder Representative Services LLC, as Stockholder Representative .
8-K
001-38211
2.1
11/14/2019
3.1
Amended and Restated Certificate of Incorporation .
8-K
001-38211
3.1
10/3/2017
3.2
Amended and Restated Bylaws .
S-1/A
333-220318
3.4
9/18/2017
4.1
Reference is made to Exhibit 3.1 .
4.2
Form of Class A Common Stock Certificate.
S-1/A
333-220318
4.1
9/18/2017
4.3
Description of Securities.
10-K
001-38211
4.3
3/2/2020
10.1 +
Roku, Inc. 2008 Equity Incentive Plan .
S-1
333-220318
10.3
9/1/2017
10.2 +
Forms of Option Agreement and Option Grant Notice under 2008 Equity Incentive Plan .
S-1
333-220318
10.4
9/1/2017
10.3 +
Roku, Inc. 2017 Equity Incentive Plan .
S-1/A
333-220318
10.5
9/18/2017
10.4 +
Forms of Option Agreement and Option Grant Notice under 2017 Equity Incentive Plan .
S-1/A
333-220318
10.6
9/18/2017
10.5 +
Forms of Restricted Stock Unit Grant Notice and Award Agreement under 2017 Equity Incentive Plan .
S-1/A
333-220318
10.7
9/18/2017
10.6 +
Forms of Option Agreement and Option Grant Notice under 2017 Equity Incentive Plan.
10-Q
001-38211
10.24
8/10/2018
10.7 +
Forms of Restricted Stock Unit Grant Notice and Award Agreement under 2017 Equity Incentive Plan (Non-Employee Directors) .
10-Q
001-38211
10.7
8/9/2019
10.8 +
Forms of Option Grant Notice and Option Agreement under 2017 Equity Incentive Plan (Non-Employee Directors) .
10-Q
001-38211
10.8
8/9/2019
10.9 +
Forms of Restricted Stock Unit Grant Notice and Award Agreement under 2017 Equity Incentive Plan (Employees).
10-K
001-38211
10.7
3/2/2020
10.10 +
Forms of Restricted Stock Unit Grant Notice and Award Agreement under 2017 Equity Incentive Plan.
10-Q
001-38211
10.5
11/6/2020
10.11 +
Forms of Option Grant Notice and Award Agreement under 2017 Equity Incentive Plan.
10-Q
001-38211
10.6
11/6/2020
10.12 +
Forms of Stock Option Grant Notice and Option Agreement Under 2017 Equity Incentive Plan (Non-Employee Directors Initial Award) .
X
10.13 +
Forms of Stock Option Grant Notice and Option Agreement Under 2017 Equity Incentive Plan (Non-Employee Directors Annual Award) .
X
10.14 +
Forms of Restricted Stock Unit Grant Notice and Award Agreement Under 2017 Equity Incentive Plan (Non-Employee Directors) .
X
110
10.15 +
Executive Supplemental Stock Option Program 2021 Enrollment Form.
8-K
001-38211
10.1
10/6/2020
10.16 +
Forms of Option Grant Notice and Executive Supplemental Stock Option Agreement and Option Grant Notice under 2017 Equity Incentive Plan .
8-K
001-38211
10.2
12/7/2018
10.17 +
Roku, Inc. 2017 Employee Stock Purchase Plan .
S-1/A
333-220318
10.8
9/18/2017
10.18 +
Form of Indemnification Agreement, by and between Roku, Inc. and each of its directors and executive officers .
S-1A
333-220318
10.9
9/18/2017
10.19 +
Employment Terms Agreement, by and between Roku, Inc. and Stephen Kay, dated November 15, 2013 .
S-1
333-220318
10.9
9/1/2017
10.20 +
Employment Terms Agreement, by and between Roku, Inc. and Steve Louden, dated June 11, 2015 .
S-1
333-220318
10.11
9/1/2017
10.21 +
Employment Terms Agreement, by and between Roku, Inc. and Scott Rosenberg, dated October 30, 2012 .
S-1
333-220318
10.13
9/1/2017
10.22 +
Employment Terms Agreement, by and between Roku, Inc. and Mustafa Ozgen, dated January 17, 2019.
10-K
001-38211
10.18
3/2/2020
10.23 +
Independent Contractor Services Agreement by and between Roku, Inc. and Neil Hunt, dated September 10, 2017 .
S-1/A
333-220318
10.30
9/18/2017
10.24 +
Roku, Inc. Amended and Restated Severance Benefit Plan .
8-K
001-38211
99.1
7/16/2019
10.25
Coleman Highline Office Lease by and between Roku, Inc. and Cap Phase 1, LLC dated August 1, 2018 (1155 Coleman Ave) .
10-Q
001-38211
10.26
8/10/2018
10.26
Coleman Highline Office Lease by and between Roku, Inc. and Cap Oz 34, LLC dated August 1, 2018 (1173/1167/1161 Coleman Ave) .
10-Q
001-38211
10.27
8/10/2018
10.27
First Amendment to Coleman Highline Office Lease by and between Roku, Inc. and Cap Phase 1, LLC dated November 12, 2018 (1155 Coleman Ave) .
10-K
001-38211
10.30
3/1/2019
10.28
First Amendment to Coleman Highline Office Lease by and between Roku, Inc. and Cap Oz 34, LLC dated November 18, 2018 (1173/1167/1161 Coleman Ave) .
10-K
001-38211
10.31
3/1/2019
10.29
Credit Agreement, dated as of February 19, 2019, by and among Roku, Inc., Morgan Stanley Senior Funding, Inc., as lender, issuing bank, administrative agent and collateral agent, and the other issuing banks and lenders party thereto from time to time .
10-K
001-38211
10.32
3/1/2019
10.30
Assignment and Assumption of Lease, Landlord’s Consent and First Amendment of Lease, dated as of April 30, 2019, by and among Roku, Inc., 8x8, Inc. and CAP Phase I, LLC .
10-Q
001-38211
10.1
8/9/2019
10.31
Second Amendment to Coleman Highline Office Lease by and between Roku, Inc. and Cap Phase 1, LLC dated April 30, 2019 (1155 Coleman Ave).
10-Q
001-38211
10.2
8/9/2019
10.32
Second Amendment to Coleman Highline Office Lease by and between Roku, Inc. and Cap Oz 34, LLC dated April 30, 2019 (1173/1167/1161 Coleman Ave) .
10-Q
001-38211
10.3
8/9/2019
10.33
Incremental Assumption and Amendment No. 1 to Credit Agreement, dated as of May 3, 2019, by and among Roku, Inc., Morgan Stanley Senior Funding, Inc., as administrative agent and issuing bank, and the other issuing banks and lenders party thereto from time to time .
10-Q
001-38211
10.4
8/9/2019
10.34
Equity Distribution Agreement, dated May 13, 2020, by and among Roku, Inc., Morgan Stanley & Co. LLC and Citigroup Global Markets Inc.
10-Q
001-38211
1.1
5/13/2020
21.1
List of Subsidiaries of Roku, Inc.
X
111
23.1
Consent of Independent Registered Public Accounting Firm.
X
24.1
Power of Attorney
X
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 .
X
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 .
X
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
X
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 . *
X
101.INS
Inline XBRL Instance Document.
X
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
X
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
X
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
X
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document.
X
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
X
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* These exhibits are furnished with this Annual Report on Form 10-K and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Roku, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filings.
+ Indicates a management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
112
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 25 th day of February 2021.
Roku, Inc.
By:
/s/ Anthony Wood
Anthony Wood
President and Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Steve Louden
Steve Louden
Chief Financial Officer
(Principal Financial Officer)
113