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What changed in ROKU, INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ROKU, INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+541 added−574 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in ROKU, INC's 2024 10-K

541 paragraphs added · 574 removed · 401 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+39 added−40 removed28 unchanged
Biggest changePrivacy laws also may limit the ability of advertisers to fully utilize our platform, which could have a negative impact on our business. 9 Table of Contents In addition, the internet is a vital component of our business and is subject to a variety of laws and regulations in jurisdictions throughout the world.
Biggest changeGovernments in both the U.S. and other jurisdictions also have adopted, or are considering adoption, of laws and regulations intended to protect minors’ privacy and otherwise protect minors from perceived harms online. Privacy and other laws also may limit the ability of advertisers to fully utilize our platform, which could have a negative impact on our business.
We dedicate significant resources to build, maintain, and advance the Roku OS; to provide an industry-leading streaming platform for our viewers, content partners, and advertisers; to obtain content for our streaming platform that attracts viewers, including our own original programming (Roku Originals); and to extend Roku’s leadership as the global shift to TV streaming continues.
We dedicate significant resources to build, maintain, and advance the Roku TV OS; to provide an industry-leading streaming platform for our viewers, content partners, and advertisers; to obtain content for our streaming platform that attracts viewers, including our own original programming (Roku Originals); and to extend Roku’s leadership as the global shift to TV streaming continues.
Culture We want our employees to be proud to work at Roku. Our entrepreneurial, execution-focused culture emphasizes recruiting talented individuals, encouraging teamwork, and expecting our employees to perform at a high level. We also emphasize integrity, transparency, and honesty in our internal and external conduct of business.
We want our employees to be proud to work at Roku. Our entrepreneurial, execution-focused culture emphasizes recruiting talented individuals, encouraging teamwork, and expecting our employees to perform at a high level. We also emphasize integrity, transparency, and honesty in our internal and external conduct of business.
The shift of the TV ecosystem to streaming continues and is expanding TV’s capabilities for viewers, content partners, advertisers, and other industry participants. Nearly every major media company not only has a streaming service, but has also expanded beyond pure subscription streaming models to new ad-supported streaming options.
The shift of the TV ecosystem to streaming continues and is expanding TV’s capabilities for viewers, content partners, advertisers, and other industry participants. Nearly every major media company not only has a streaming service, but has also expanded beyond pure subscription streaming models to ad-supported streaming options.
Investors and others should note that we announce material financial information to our investors using our investor relations website (roku.com/investor), SEC filings, webcasts, press releases, and conference calls. We use these mediums to communicate with investors and the general public about our company, our products and services, and other issues.
Investors and others should note that we announce material financial information to our investors using our investor relations website (roku.com/investor), our blog (roku.com/blog), SEC filings, webcasts, press releases, and conference calls. We use these mediums to communicate with investors and the general public about our company, our products and services, and other issues.
We work closely with content partners, advertisers, licensed Roku TV partners, and service operators to understand their current and future needs. We have designed a product development process that seeks to take input from our partners into account when making decisions about our future product and service offerings.
We work closely with content partners, advertisers, and licensed Roku TV partners to understand their current and future needs. We have designed a product development process that seeks to take input from our partners into account when making decisions about our future product and service offerings.
We also compete with other entertainment providers, including other TV streaming companies and content publishers, in seeking high quality content to license for our platform and for talent and programming concepts for original content projects. Increasingly, we also compete with these same publishers in seeking to sell advertising to support the distribution of streaming content.
We also compete with other entertainment providers, including other TV streaming companies and content publishers, in seeking high quality content to license for our platform and for talent and programming concepts for original content projects. We also compete with these same publishers in seeking to sell advertising to support the distribution of streaming content.
We support retailers with an experienced sales management team and work closely with these retailers to assist with in-store marketing and product mix forecasting. We intend to continue to invest significant resources in our sales and marketing efforts. Seasonality We have historically seen seasonality in our business related to advertising and device sales.
We support retailers with an experienced sales management team and work closely with these retailers to assist with marketing and product mix forecasting. We intend to continue to invest significant resources in our sales and marketing efforts. Seasonality We have historically seen seasonality in our business related to advertising and device sales.
Our direct relationship with customers provides us with detailed insights about their behavior on our streaming platform, including certain content viewers search for, the apps viewers install and watch, and the types of content that viewers purchase or subscribe to on our platform.
Our direct relationship with customers provides us with insights about their behavior on our streaming platform, including certain content viewers search for, the apps viewers install and watch, and the types of content that viewers purchase or subscribe to on our streaming platform.
Today Roku streaming devices are available in 15+ countries. We are the leading TV streaming platform in the United States and Mexico by hours streamed. Internationally, we continue to grow our footprint and deepen our presence in key markets.
Today Roku streaming devices are available in 15+ countries. We are the leading TV streaming platform in the United States, Canada, and Mexico by hours streamed. Internationally, we continue to grow our footprint and deepen our presence in key markets.
Our data science team supports our sales and marketing efforts by analyzing data on our platform to increase effectiveness for our content partners and advertisers as well as for our consumer marketing campaigns. Our relationship with content partners is typically client-direct.
Our data science team supports our sales and marketing efforts by analyzing data on our streaming platform to increase effectiveness for our content partners and advertisers as well as for our consumer marketing campaigns. Our relationship with content partners is typically client-direct.
Through our dedicated content partner relationship management team, we enter into agreements with content partners to distribute their apps on our platform, or license their content for The Roku Channel, or both.
Through our dedicated content partner relationship management team, we enter into agreements with content partners to distribute their apps on our streaming platform, or license their content for The Roku Channel, or both.
Information contained on or accessible through the websites listed above is not incorporated by reference nor otherwise included in this Annual Report, and any references to these websites are intended to be inactive textual references only. 12 Table of Contents
Information contained on or accessible through the websites listed above is not incorporated by reference nor otherwise included in this Annual Report, and any references to these websites are intended to be inactive textual references only. 8 Table of Contents
As part of our distribution agreements with AVOD apps, we typically secure direct access to a portion of the content partners’ video ad inventory for our monetization, and our sales efforts are differentiated and complementary to that of our content partners.
As part of our distribution agreements with AVOD apps, we typically secure direct access to a portion of the content partners’ video advertising inventory for our monetization, and our sales efforts are differentiated and complementary to that of our content partners.
We believe our Roku-branded TVs will enable us to further grow our leadership position in TV streaming and expand into the higher-end range of performance TVs. Roku-branded TVs will also help us innovate more quickly in all aspects of hardware and software and test directly with viewers, improving the product and viewer experience and strengthening the entire Roku ecosystem.
We believe our Roku-branded TVs will enable us to further grow our leadership position in TV streaming and compete in the higher-end range of performance TVs. Roku-branded TVs will also help us innovate more quickly in all aspects of hardware and software and test directly with viewers, improving the product and viewer experience and strengthening the entire Roku ecosystem.
Our competitors include: • companies that offer TV streaming devices that compete with Roku streaming devices and companies that license their operating systems for integration into smart TVs and other streaming products; • TV brands that offer their own TV streaming solutions within their TVs as well as other devices such as game consoles, DVD players, Blu-ray players, and set-top boxes that leverage their own operating systems; • mobile streaming platforms that enable users to stream content on phones and tablets; • companies that produce and aggregate TV streaming content with the goal of attracting wide audiences; • companies that offer advertisers the opportunity to reach viewers on other content and advertising mediums, including on other ad-supported streaming services and social media apps; • companies that offer users other sources for news and entertainment, including broadcast and cable television networks, newspapers and magazines, social networks, and video games; • companies that offer products that compete with our audio products or our smart home products and services; and 10 Table of Contents • companies that operate in the same locations as our offices or offer remote work positions that may be better able to attract and retain top talent in engineering, research and development, sales and marketing, operations, and other organizations.
Our competitors include: • companies that offer TV streaming devices that compete with Roku streaming devices and companies that license their operating systems for integration into smart TVs and other streaming products; • TV brands that offer their own TV streaming solutions within their TVs as well as other devices such as game consoles, DVD players, Blu-ray players, and set-top boxes that leverage their own operating systems; 6 Table of Contents • streaming applications that enable users to stream content on phones, tablets, and laptop computers; • companies that produce and aggregate TV streaming content with the goal of attracting wide audiences; • companies that offer advertisers the opportunity to reach viewers on other content and advertising mediums, including on other ad-supported streaming services and social media applications; • companies that offer users other sources for news and entertainment, including broadcast and cable television networks, newspapers and magazines, social networks, and video games; • companies that offer products that compete with our audio products or our smart home products and services; and • companies that operate in the same locations as our offices or offer remote work positions that may be better able to attract and retain top talent in engineering, research and development, sales and marketing, operations, and other organizations.
Furthermore, in preparation for the fourth quarter holiday season, we recognize significant discounts in the average selling prices of our streaming device sales through retailers in an effort to grow our Active Accounts, which typically reduce our devices gross margin or results in a devices gross loss in the fourth quarter.
Furthermore, in preparation for the fourth quarter holiday season, we recognize significant discounts in the average selling prices of our streaming device sales through retailers in an effort to grow our Streaming Households, which typically reduce our devices gross margin or results in a devices gross loss in the fourth quarter.
As of December 31, 2023, we employed approximately 3,150 full-time employees located in 15 countries. Only our employees in Brazil are represented by a labor union with respect to their employment. The majority of our employees have adopted a hybrid work schedule (consisting of both in-person work and working from home).
As of December 31, 2024, we employed approximately 3,340 full-time employees located in 15 countries. Only our employees in Brazil are represented by a labor union with respect to their employment. The majority of our employees have adopted a hybrid work schedule (consisting of both in-person work and working from home).
Item 1: Business Overview Roku, Inc. (“Roku,” the “Company,” “we,” or “us”) is the leading TV streaming platform in the United States by hours streamed. We pioneered streaming to the TV. We believe that all TV will be streamed.
Item 1: Business Overview Roku, Inc. (“Roku,” the “Company,” “we,” or “us”) is the leading TV streaming platform in the United States, Canada, and Mexico by hours streamed. We pioneered streaming to the TV and believe that all TV will be streamed.
Our sales teams and products are organized into groups that specialize in the unique needs of each area: (i) agency holding companies and Fortune 500 brands, (ii) independent agency and mid-market clients, (iii) content partners and entertainment brands, (iv) performance and direct-to-consumer brands, (v) international markets, and (vi) local advertising.
Our ad sales teams and products are organized into groups that specialize in the unique needs of each area: (i) agency holding companies and Fortune 500 brands, (ii) independent agency and mid-market clients, (iii) content partners and entertainment brands, (iv) performance and direct-to-consumer brands, and (v) international markets.
As of December 31, 2023, we had approximately 1,300 issued patents and 500 pending applications in the United States and foreign countries. We also license technology from third parties when we believe it will facilitate our product offerings or business.
As of December 31, 2024, we had approximately 1,500 issued patents and 600 pending applications in the United States and foreign countries. We also license technology from third parties when we believe it will facilitate our product offerings or business.
In the face of this competition, we believe our success depends on building scale by growing our Active Accounts, growing engagement by increasing the hours of content streamed through our platform, and growing the monetization of the activities that viewers engage in through our platform.
In the face of this competition, we believe our success depends on building scale by growing our user base, growing engagement by increasing the hours of content streamed through our platform, and growing the monetization of the activities that viewers engage in through our platform.
Content partners can use a variety of ad placements, including native display ads on the Roku home screen or a screen saver to drive app downloads, promote an app’s content, and direct traffic to their apps in order to drive subscriptions or movie and TV show consumption.
Content partners can use a variety of ad types, such as native display ads on the Roku Home Screen to drive app downloads, promote an app’s content, or direct traffic to their apps in order to drive subscriptions or movie and TV show consumption.
A number of leading content publishers have launched new ad-supported subscription tiers, which offer consumers access to content either for free or for a lower subscription fee.
A number of leading content publishers have launched ad-supported subscription tiers and FAST channels, which offer consumers access to content either for free or for a lower subscription fee.
We also derive revenue from the sale of branded app buttons on streaming player and Roku TV remote controls that are intended to increase incremental usage of an app by allowing viewers to launch straight into the app from any screen.
We also derive revenue from the sale of branded app buttons on Roku remote controls that are intended to increase incremental usage of an app by enabling viewers to launch straight into the app from any screen.
We make it easy for content partners to distribute and monetize their streaming content through three primary business models: subscription video on demand (“SVOD”), which includes subscriptions to individual video on demand apps and so-called virtual multichannel video programming distribution (“vMVPD”) services; ad-supported video, which includes ad-supported video on demand (“AVOD”) apps with on demand content that do not charge a subscription fee to users, as well as free ad-supported streaming TV (“FAST”), which we define as free, ad-supported linear streaming TV; and transaction video on demand, which includes apps that offer a la carte content purchases or rentals.
We make it easy for content partners to distribute and monetize their streaming content through three primary business models: SVOD, which includes subscriptions to individual video on demand apps and so-called virtual multichannel video programming distribution (“vMVPD”) services; ad-supported video, which includes AVOD apps with on demand content that do not charge a subscription fee to users, as well as FAST; and transaction video on demand (“TVOD”), which includes apps that offer a la carte content purchases or rentals.
They can also reach and engage those viewers who no longer use or never used traditional TV services. As more viewers shift to TV streaming, content partners that publish apps on our platform are able to reach these streaming audiences at scale and engage viewers directly.
They can also reach and engage those viewers who do not use traditional TV services. As more viewers shift to TV streaming, content partners that publish apps on our platform are able to reach these streaming audiences at scale and engage viewers directly.
All of our products are manufactured in the People’s Republic of China, Southeast Asia, and Brazil. Our contracts do not obligate them to supply products to us in any specific quantity or at any specific price.
All of our products are manufactured in China, Southeast Asia, Brazil, and Mexico. Our contracts do not obligate our partners to supply products to us in any specific quantity or at any specific price.
We also sell products internationally through distributors and to retailers. Amazon, Best Buy, and Walmart collectively accounted for 71% of our devices revenue for the year ended December 31, 2023 and 67% of our devices revenue for the year ended December 31, 2022.
We also sell products internationally through distributors and to retailers. Amazon, Best Buy, Walmart, and Target collectively accounted for 81% of our devices revenue for the year ended December 31, 2024 and 76% of our devices revenue for the year ended December 31, 2023.
The Roku Channel aggregates a broad variety of entertainment into a unified streaming experience, through three distinct types of content: • AVOD (ad-supported video on demand): Users can stream a broad variety of 80,000+ movies and TV shows, including Roku Originals, for free. • Live TV : Users have access to watch 400+ FAST (free, ad-supported linear streaming TV) channels. • Premium Subscriptions : Users can easily sign up, view, and manage subscriptions to dozens of streaming services that require a subscription such as Paramount+ and AMC+ with a single, monthly bill.
The Roku Channel aggregates a broad variety of entertainment into a unified streaming experience, through three distinct types of content: • AVOD (ad-supported video on demand): Viewers can stream a broad variety of 80,000+ movies and TV shows, including Roku Originals, for free. • Live TV : Viewers have access to watch 500+ FAST (free, ad-supported linear streaming TV) channels in genres ranging from news to sports to entertainment to creator content. • Premium Subscriptions : Viewers can easily sign up, view, and manage subscriptions to dozens of SVOD apps, such as Max and Paramount+, with a single, monthly bill.
We must continue to innovate and invest in our advertising capabilities and technology so that we attract and encourage incremental advertising spend on our platform. We aim to balance our commitment to achieving positive Adjusted EBITDA for full year 2024 and our investments to further expand our scale, engagement, and monetization. Advertising Innovation We continue to innovate our advertising offerings.
We must continue to innovate and invest in our advertising capabilities and technology so that we attract and encourage incremental advertising spend on our streaming platform. We aim to balance our commitment to growing Adjusted EBITDA and Free Cash Flow with our investments to further expand our scale, engagement, and monetization. Advertising Innovation We continue to innovate our advertising offerings.
Our three-phased business model—grow scale, grow engagement, and grow monetization—drives our mission as a global streaming platform that connects and benefits the TV ecosystem of viewers, content partners, and advertisers. We leverage our ownership of our streaming platform to help our viewers find content across the streaming universe, while simultaneously growing monetization.
Our three-phased business model—grow scale, grow engagement, and grow monetization—drives our mission. We leverage our position as the TV streaming platform to help our viewers find content across the streaming universe, while simultaneously growing monetization.
Whereas our content partners typically feature their brand and content in their sale, we focus on delivering a large streaming audience across many apps and via other Roku branded experiences such as our home screen at once using our own data.
Whereas our content partners typically feature their brand and content in their sale, we focus on delivering a large streaming audience across many apps and via other Roku-branded experiences such as the Roku Home Screen at once using our own data. We sell advertising to a wide range of advertisers helping them reach their goals across numerous key performance indicators.
Roku streaming players enable users to easily turn (nearly) any TV into a smart TV. On a periodic basis, we launch new streaming player models with a focus on offering high performance at an affordable price.
Roku streaming players enable users to easily turn (nearly) any TV into a smart TV. We launch new streaming player models periodically with a focus on offering high performance at an affordable price. In September 2024, we launched our most powerful streaming player to date: the 2024 Roku Ultra.
Our employee development programs begin with a comprehensive new hire onboarding experience covering our culture, business, and the resources employees need to increase our new hires’ speed to productivity.
Our Learning and Talent Development team provides our employees with the training and development needed to support our strategic priorities and growth. Our employee development programs begin with a comprehensive new hire onboarding experience covering our culture, business, and the resources needed to increase our new hires’ speed to productivity.
Finally, our content business is subject to a wide range of government regulations that may vary by jurisdiction. Some nations highly regulate media, including TV streaming. Others have (or may consider) regulations that mandate certain local content quotas or production requirements, for cultural preservation or other reasons.
Some nations highly regulate media, including TV streaming. Others have (or may consider) regulations that mandate certain local content quotas or production requirements, for cultural preservation or other reasons.
Through our TV streaming platform, we connect viewers to the entertainment they love; enable content partners to build, engage, and monetize large audiences; and provide advertisers with unique capabilities to reach viewers.
Through our TV streaming platform, we connect viewers to the entertainment they love; enable content partners to build, engage, and monetize large audiences; and provide advertisers with unique capabilities to reach viewers. Our Strategy and Business Model The foundation of our platform is the Roku TV OS, which is purpose built for TVs and powers Roku streaming devices.
Government Regulation Our business and our products and platform are subject to numerous U.S. federal, U.S. state, and foreign laws and regulations covering a wide variety of subject matters. These laws and regulations include general business regulations and laws, as well as regulations and laws specific to providers of internet-delivered streaming services and internet-connected devices.
Government Regulation Our business and our products and platform are subject to numerous U.S. federal, U.S. state, and foreign laws and regulations covering a wide variety of subject matters.
Our manufacturers procure components and assemble our products to demand forecast we establish based upon historical trends and analysis from our sales, operations, and product management functions.
Our manufacturers procure components and assemble our products to demand forecasts we establish based upon historical trends and analysis from our sales, operations, and product management functions. The manufacturers ship our products to our third-party warehouses, from where we ship our products directly to retailers, wholesale distributors, and consumers.
Consumer privacy laws, and regulators’ interpretations of these laws, may become more diverse and restrictive over time, increasing the challenges and costs associated with complying with these laws in all jurisdictions.
Likewise, foreign jurisdictions in which we operate impose different, and sometimes more stringent, consumer and privacy protections, compared to the United States. Consumer privacy and consumer protection laws, and regulators’ interpretations of these laws, may become more diverse and restrictive over time, increasing the challenges and costs associated with complying with these laws in all jurisdictions.
We grew Streaming Hours from 87.4 billion hours in 2022 to 106.0 billion hours in 2023 through the increased distribution of Roku streaming devices, increasing our Active Accounts, and continuing to enhance our viewer experience.
Streaming Hours We grew Streaming Hours on the overall Roku platform from 106.0 billion hours in 2023 to 127.1 billion hours in 2024 through increasing the distribution of Roku streaming devices, increasing our Streaming Households, and continuing to enhance the Roku Experience.
Roku Pay allows content partners to enable a frictionless signup within their app, and we believe this key benefit simplifies user subscription signups and drives purchase and retention for our content partners.
Our billing service assists content partners with their billing needs, such as managing payment methods, subscriptions, and customer invoices. This service also allows content partners to enable a frictionless signup within their app, and we believe this key benefit simplifies user subscription signups and drives purchase and retention for our content partners.
Similar to our TV streaming business model, we build scale by selling Roku Smart Home devices and then monetize through smart home services. We offer subscription plans for our cameras, video doorbells, and home monitoring system.
The Roku ecosystem extends beyond TV streaming and audio to smart home devices that include cameras, video doorbells, lights, plugs, a home monitoring system, and our Roku Smart Home mobile application for iOS and Android. Similar to our TV streaming business model, we build scale by selling Roku Smart Home devices and then monetize through smart home services.
We intend to continue to review, refresh, purchase, and custom-build additional training materials to support our global employees’ performance and development needs. Compensation and Benefits Our total compensation program is designed to attract, retain, and reward talented professionals.
In addition, all employees have access to on-demand technical and non-technical skill development through LinkedIn Learning. We intend to continue to review, refresh, purchase, and custom-build additional training materials to support our global employees’ performance and development needs. 7 Table of Contents Our total compensation program is designed to attract, retain, and reward talented professionals.
We sell advertising to a wide range of advertisers helping them reach their goals across numerous key performance indicators. 8 Table of Contents We are developing relationships with more third-party ad-buying platforms (e.g., retail media networks, DSPs, and other strategic partners) to reach marketers buying programmatic advertising on such platforms and to create more demand opportunities for Roku ad inventory.
We are developing relationships with more third-party ad-buying platforms (e.g., retail media networks, DSPs, SSPs, and other strategic partners) to reach marketers buying programmatic advertising on such platforms and to create more demand opportunities for our advertising inventory.
The Roku OS connects viewers to our streaming platform via a broadband network, giving them access to a wide selection of content through a streaming experience that is both delightful and easy to use. We provide updates via the Roku OS to continuously deliver an exceptional TV streaming experience.
The Roku TV OS is designed to run on low-cost hardware, which enables Roku streaming devices to be sold to consumers at competitive prices. The Roku TV OS connects viewers to our streaming platform via a broadband network, giving them access to a wide selection of content through an experience that is both delightful and easy to use.
Additionally, Roku’s powerful universal search makes it fast and easy when viewers are looking for specific content. We also empower viewers to choose how much they want to spend on content by offering them a broad array of ad-supported, subscription, and transactional options.
We empower viewers to choose how much they want to spend on content by offering them a broad array of free, ad-supported, subscription, and transactional viewing options.
The Roku Channel benefits from its integration with our streaming platform, which has features such as Live TV, Sports, What to Watch, and more that can surface content from The Roku Channel to our viewers directly from our home screen and throughout a viewer’s streaming journey on our platform.
The Roku Channel benefits from its integration throughout the Roku Experience, which has features such as Live TV, Sports, What to Watch, and more that can surface content to our viewers directly. The Roku Channel is a core strategic asset in our monetization efforts that simultaneously benefits viewers, content partners, and advertisers, while generating platform revenue.
Owning and operating both The Roku Channel and the streaming platform creates unique value, making us a leader in free content, positioning us to be a valuable partner to content partners, and providing a large source of ad inventory. 7 Table of Contents Business Growth Investment in Growth We believe that our future performance will depend on the success of the investments in our business that we have made, and will continue to make, to further differentiate our streaming platform and increase the value we deliver to our viewers, content partners, and advertisers.
Business Growth Investment in Growth We believe that our future performance will depend on the success of the investments in our business that we have made, and will continue to make, to further differentiate our streaming platform and increase the value we deliver to our viewers, content partners, and advertisers.
Our sales and marketing activities are primarily focused on building and expanding relationships with content partners, advertisers, TV brands, retailers, and service operators, and driving sales of our products and our licensed Roku TV partners’ products to consumers through retail distribution channels.
Our sales and marketing activities are primarily focused on building and expanding relationships with content partners, advertisers, TV brands, and retailers, and driving sales of our products and our licensed Roku TV partners’ products to consumers through retail distribution channels. 4 Table of Contents We have dedicated business development teams that develop and maintain relationships to promote and build awareness of the features and advantages of our streaming platform among content partners, advertisers, and TV brands.
Sales and Marketing We engage in a wide variety of sales and marketing activities to continuously grow scale, engagement, and monetization and dedicate significant resources to this area.
Mexico remains the channel’s largest market outside of the United States by Streaming Households and Streaming Hours. With strong scale and engagement, we are working to grow monetization in Mexico. Sales and Marketing We engage in a wide variety of sales and marketing activities to continuously grow scale, engagement, and monetization and dedicate significant resources to this area.
Each user on our streaming platform creates multiple revenue opportunities for Roku through activities such as navigating through the Roku home screen, watching ad-supported content, or signing up for subscription services. We measure monetization of our platform by calculating the average revenue per user (“ARPU”), which we believe represents the inherent value of our business model, and gross profit.
Each user on our streaming platform creates multiple revenue opportunities for Roku through activities such as navigating through the Roku Experience, watching ad-supported content, or signing up for subscription services.
Just as ads evolved decades ago when TV replaced radio as the primary entertainment medium, ads on TV streaming offer new and more performant opportunities than traditional TV. We offer advertisers a unique and effective set of tools to reach viewers both on and off our streaming platform.
Just as ads evolved decades ago when TV replaced radio as the primary entertainment medium, ads on TV streaming offer new and more performant opportunities than traditional TV. Advertisers are able to leverage the combination of our significant scale, our direct relationship with viewers, and our innovative ad products and technology to reach consumers with relevant messages.
We historically have relied on the openness and accessibility of the internet to conduct our business, and government regulations that impede the preservation of the open internet could harm our business. Regulators in the United States and abroad continue to evaluate policy changes that could affect the openness of the internet.
In addition, the internet is a vital component of our business and is subject to a variety of laws and regulations in jurisdictions throughout the world. We historically have relied on the openness and accessibility of the internet to conduct our business, and government regulations that impede the preservation of the open internet could harm our business.
For example, in both the United States and abroad, the regulatory framework for privacy and data security issues is rapidly evolving. U.S. federal and state consumer protection regulators generally exercise oversight of consumer protections, often bringing enforcement actions for unfair acts or deceptive practices related to privacy and security.
U.S. federal and state consumer protection regulators generally exercise oversight of consumer protections, often bringing enforcement actions for unfair acts or deceptive practices related to privacy and security or other consumer protection matters. An increasing number of states have passed, or are considering, legislation to govern consumer privacy or consumer protection online.
Managers are provided with training on expectations for managers and have access to a 1:1 leadership coaching program to support new and newly promoted leaders in managing and leading effectively. In addition, all employees have access to on-demand technical and non-technical skill development through LinkedIn Learning.
In addition to required trainings, we offer employees a suite of highly encouraged offerings covering topics such as high-performance feedback, career development, change management, and communication skills. Managers are provided with training on expectations for managers and have access to a 1:1 leadership coaching program to support new and newly promoted leaders in managing and leading effectively.
In the United Kingdom, we announced Roku TV models with JVC (at Currys stores), Polaroid, and Sharp. And in Germany, we expanded our Roku TV program with our third TV OEM partner, Coocaa. In international markets, we will continue to focus on building scale first, increasing engagement, and ultimately driving monetization. We are successfully growing The Roku Channel internationally.
In international markets, we plan to continue to focus on building scale first, increasing engagement, and ultimately driving monetization. We are successfully growing The Roku Channel audience internationally. The Roku Channel is available on devices powered by the Roku TV OS in the United Kingdom, Canada, and Mexico.
From this position, we can help the viewer decide what to watch across the vast range of options available to them on our streaming platform. We innovate and build features to support this critical role in the viewer’s journey, and it is a key driver of our monetization.
The Roku Home Screen is the first thing our viewers see when they start streaming, and from this position, we can help the viewer decide what to watch every day across the vast range of options available to them on our streaming platform.
As we grow our business, our goal is to ensure that Roku continues to be a great place to work and thrive. Diversity, Equity, and Inclusion We are committed to being a diverse and inclusive organization.
As we grow our business, our goal is to ensure that Roku continues to be a great place to work and thrive. We are committed to fostering an inclusive workplace to spark innovation, strengthen teamwork, equip us to build exceptional products, and drive us to deliver the best TV streaming content.
In 2023, we launched Roku-branded TVs, which are designed, made, and sold by us. The Roku Select and Roku Plus Series TVs are available at Best Buy, Amazon, and Costco in the United States, and the Roku Pro Series TV is expected to be available in spring 2024. Roku-branded TVs complement our successful Roku TV licensing program.
This award-winning lineup includes the Roku Select and Roku Plus Series TVs, and the Roku Pro Series TVs, which are our higher-performing TVs that we launched in spring 2024. Roku-branded TVs complement our successful Roku TV licensing program.
In the United States, it is also available online at TheRokuChannel.Roku.com, and on Amazon Fire TVs, Samsung TVs, Google TV, and other Android TV OS devices. 6 Table of Contents Monetization: Growing our revenue and gross profit by monetizing user activity We generate platform revenue primarily from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services), as well as streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls).
We generate platform revenue primarily 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).
This first party data enables us to develop actionable insights such as content recommendations to improve our viewers’ experience. Our significant scale, ability to reach highly engaged viewers, tools that enable seamless sign ups, and marketing/discovery features make us an attractive platform to content partners.
This content row is designed to recommend TV shows and movies to viewers while simultaneously driving growth for Roku in areas such as Streaming Hours, SVOD signups, and ad reach. Our significant scale, ability to reach highly engaged viewers, tools that enable seamless signups, and marketing/discovery features make us an attractive platform to content partners.
Roku TV models are TVs made and sold by our Roku TV partners, which are TV original equipment manufacturers (“OEMs”) that license the Roku OS and leverage our smart TV reference designs. We have driven strong Active Account growth through our Roku TV licensing program, which we launched 10 years ago.
Our devices segment generates revenue from the sale of Roku streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories. Roku TV models are TVs made and sold by our Roku TV partners, which are TV original equipment manufacturers (“OEMs”) that license the Roku TV OS and leverage our smart TV reference designs.
Our content spend is intended to be commensurate with the growth trajectory of The Roku Channel and with the broader macroeconomic environment. The Roku Channel is available on devices powered by the Roku OS in the United States, the United Kingdom, Canada, and Mexico.
The foundation of our content strategy for The Roku Channel is third-party licensed content and, to a smaller extent, our original programming, Roku Originals. Our content spend is intended to be commensurate with the growth trajectory of The Roku Channel and with the broader macroeconomic environment.
Audio is an important part of the TV streaming experience, and we also offer Roku-branded wireless speakers and subwoofers that seamlessly connect to TVs powered by the Roku OS. Through our streaming devices and the Roku platform, we provide viewers tremendous choice, value, and an exceptional viewer experience.
Roku streaming devices are broadly distributed at popular national retailers such as Amazon, Best Buy, Costco, CVS, The Home Depot, Lowe’s, Sam’s Club, Target, Walgreens, and Walmart. 1 Table of Contents Audio is an important part of the TV streaming experience, and we offer Roku-branded wireless speakers and subwoofers that seamlessly connect to TVs powered by the Roku TV OS.
Scale: Increasing the number of Active Accounts We make access to TV streaming affordable through a broad lineup of devices, at a variety of competitive price points, including Roku TV models, Roku-branded TVs, and Roku streaming players.
Our three key initiatives to grow platform revenue are to innovate the Roku Home Screen to expand monetization, grow advertising demand through deeper third-party platform integrations, and grow Roku-billed subscriptions. Devices Segment: Providing Easy Access to TV Streaming We make TV streaming accessible to consumers through a broad lineup of devices, at a variety of competitive price points.
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Our Strategy and Business Model The foundation of our platform is the Roku operating system (the “Roku OS”), which is purpose built for TV streaming, and powers Roku streaming devices. The Roku OS is designed to run on low-cost hardware, which enables Roku streaming devices to be sold to customers at competitive prices.
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We provide periodic updates via the Roku TV OS to continuously deliver an exceptional streaming experience.
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We also license the Roku OS and our streaming player designs, as well as provide ongoing technology and support services, to certain international pay TV and telecommunications service operators that distribute co-branded streaming players to their subscribers in their markets. 5 Table of Contents The Roku ecosystem extends beyond TV streaming to smart home devices that include cameras, video doorbells, a home monitoring system, plugs, light bulbs, and light strips, along with our Roku Smart Home mobile application for iOS and Android.
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We have driven strong Streaming Household growth through this Roku TV licensing program, which we launched more than 10 years ago. In 2023, we launched Roku-branded TVs, which are designed, made, and sold by us.
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In 2023, we added 10.0 million net Active Accounts, ending the year with 80.0 million Active Accounts. Engagement: Growing Streaming Hours We believe that offering viewers a wide range of content and an easy-to-use interface drives increased user engagement.
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This premium streaming player comes bundled with the Voice Remote Pro (2nd edition), our most advanced remote.
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One of the key competitive advantages driving our success is our position as a TV streaming platform that has achieved significant scale—our home screen is the first thing our viewers see when they start their TV streaming journey.
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Additionally, Roku TV Ready allows certified soundbars to quickly and easily connect to Roku TVs, enabling the use of one remote and having all the sound settings uploaded to the TV. This is another example of Roku’s innovative TV ecosystem.
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The Roku Home Screen Menu (left navigation bar) contains features such as Live TV, Sports, and What to Watch, and in 2023 we launched enhancements to make it even easier for viewers to find and discover great entertainment. For example, we are enabling more personalization through recommendations and features that allow viewers to track TV shows, movies, and sports teams.
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We offer subscription plans for our cameras, video doorbells, and home monitoring system. Through our streaming devices and the Roku platform, we provide viewers tremendous choice, value, and an exceptional viewer experience. In 2024, we added 9.8 million net Streaming Households, ending the year with 89.8 million Streaming Households.
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One of the key engagement drivers on our streaming platform is The Roku Channel, our owned and operated streaming app.
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Platform Segment: Growing and Monetizing User Engagement The Roku Experience We call the user experience on the Roku platform the “Roku Experience.” It represents all the features that Roku builds and operates to engage, delight, and help our viewers find great entertainment.
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In 2023, The Roku Channel was a top 5 app on our platform by both Active Account reach and Streaming Hours. The foundation of our content strategy for The Roku Channel is third party licensed content and, to a smaller extent, Roku Originals.
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A key competitive advantage that continues to drive our success is the combination of our significant scale and the Roku Experience, which begins with the Roku Home Screen.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky: Risks Related to Our Business and Industry • the highly competitive nature of the TV streaming industry that is rapidly evolving; • the acceptance and growth of streaming TV advertising and advertising platforms; • our ability to further monetize our streaming platform; • our ability to successfully run our demand-side platform and work with other third-party demand sources; • our ability to develop, maintain, and expand relationships with licensed Roku TV partners, manufacturing partners, and service operators; • our ability to establish and maintain relationships with important content partners; • popular or new content publishers not publishing their content on our streaming platform; • the non-renewal or early termination of our agreements with content partners; • maintaining an adequate supply of quality video advertising inventory on our platform and effectively selling the available supply; • content partners electing not to participate in platform features that we develop; • irrelevant or unengaging advertising or media and entertainment promotional spending campaigns on our platform; • our operation of The Roku Channel; • users signing up for offerings and services outside of our platform; • our and our licensed Roku TV partners’ ability to develop, maintain, and expand relationships with important retail sales channels that we and they rely on to sell our streaming devices and other products; • our ability to build a strong brand and maintain customer satisfaction and loyalty; • advertiser or advertising agency delayed payment or failure to pay; • maintaining adequate customer support levels; • our introduction of new products and services; • our and our licensed Roku TV partners’ reliance on contract manufacturers and limited manufacturing capabilities; • our reliance on licensed Roku TV partners’ operations for the supply of Roku TV models; • our ability to forecast manufacturing requirements and manage our supply chain and inventory levels; • decreased availability or increased costs for materials and components used in the manufacturing of our products and our licensed Roku TV partners’ products; • our ability to obtain key components from sole source suppliers; • interoperability of our products with content partners’ and other third parties’ offerings, technologies, and systems; • detecting hardware defects and software errors in our products before they are released to end users; • component manufacturing, design, or other defects that may render our products permanently inoperable; • our ability to obtain or maintain necessary or desirable third-party technology licenses; • our use of artificial intelligence (“AI”) technologies in some of our products and services; Risks Related to Operating and Growing Our Business • our history of operating losses; • volatility of our quarterly operating results that could cause our stock price to decline; 13 Table of Contents • our ability to manage our growth; • our ability to successfully expand our international operations; • seasonality of our business and its impact on our revenue and gross profit; • attracting and retaining key personnel and managing succession; • maintaining systems that can support our growth, business arrangements, and financial rules; • our ability to successfully complete acquisitions and investments and integrate acquired businesses; • our ability to secure funds to meet our financial obligations and support our planned business growth; • adverse developments affecting financial institutions, including bank failures; Risks Related to Cybersecurity, Reliability, and Data Privacy • significant disruptions of information technology systems or data security incidents; • legal obligations and potential liability or reputational harm related to our collection, storage, and use of personal and confidential information related to the users of our products and services; • disruptions in computer systems or other services that result in a degradation of our platform; • changes in how network operators manage data that travel across their networks; Risks Related to Intellectual Property • intellectual property infringement claims and litigation resulting in significant costs or the loss of important intellectual property rights; • failure or inability to protect or enforce our intellectual property or proprietary rights; • our use of open-source software; • our agreements to indemnify certain of our partners if our technology is alleged to infringe on third parties’ intellectual property rights; Risks Related to Macroeconomic Conditions • the impact of macroeconomic conditions, natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events on our business; Legal and Regulatory Risks • enactment of or changes to government regulation or laws related to our business; • changes in U.S. or foreign trade policies, geopolitical conditions, and general economic conditions that impact our business; • U.S. or international rules (or the absence of rules) that permit internet access network operators to degrade users’ internet service speeds or limit internet data consumption by users; • liability for content that is distributed through or advertising that is served through our platform; • our ability to maintain effective internal controls over financial reporting; • the impact of changes in accounting principles; • compliance with laws and regulations related to the payment of income taxes and collection of indirect taxes; • changes to U.S. or foreign taxation laws or regulations; • litigation, claims, regulatory inquiries, investigations, and other legal proceedings; Risks Related to Ownership of Our Class A Common Stock • the dual class structure of our common stock; • volatility in the market price of our Class A common stock; • potential dilution or a decline in our stock price caused by future sales or issuance of our capital stock or rights to purchase capital stock; • a decline in our stock price caused by future sales by existing stockholders; • dependency on favorable securities and industry analyst reports; • the significant legal, accounting, and other expenses associated with being a publicly traded company; • the absence of dividends on our Class A or Class B common stock; • anti-takeover provisions in our charter and bylaws; and • the limitations resulting from our selection of the Delaware Court of Chancery and the U.S. federal district courts as the exclusive forums for substantially all disputes between us and our stockholders. 14 Table of Contents Risks Related to Our Business and Industry The TV streaming industry is highly competitive and many companies, including large technology companies, content owners and aggregators, TV brands, and service operators, are actively focusing on this industry.
Biggest changeRisk Factors Summary Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky: Risks Related to Our Business and Industry • the highly competitive nature of the TV streaming industry that is rapidly evolving; • our ability to successfully grow revenues from advertising on our platform; • maintaining an adequate supply of quality video advertising inventory on our platform and effectively selling the available supply; • irrelevant or unengaging advertising campaigns on our streaming platform; • our ability to successfully utilize programmatic advertising technology; • advertiser or advertising agency delayed payment or failure to pay; • our ability to further monetize our streaming platform; • our ability to successfully operate and monetize The Roku Channel; • our ability to establish and maintain relationships with important content partners; • popular or new content publishers not publishing their content on our streaming platform; • the non-renewal or early termination of our agreements with content partners; • content partners electing not to participate in platform features that we develop; • users signing up for offerings and services outside of our platform; • our ability to develop, maintain, and expand relationships with licensed Roku TV partners and manufacturing partners; • our and our licensed Roku TV partners’ ability to develop, maintain, and expand relationships with important retail sales channels that we and they rely on to sell our streaming devices and other products; • our ability to build a strong brand and maintain customer satisfaction and loyalty; • our and our licensed Roku TV partners’ reliance on contract manufacturers and limited manufacturing capabilities; • our reliance on licensed Roku TV partners’ operations for the supply of Roku TV models; • our ability to accurately forecast manufacturing requirements and manage our supply chain and inventory levels; • decreased availability or increased costs for materials and components used in the manufacturing of our products and our licensed Roku TV partners’ products; • our ability to obtain key components from sole source suppliers; • interoperability of our products with content partners’ and other third parties’ offerings, technologies, and systems; • detecting hardware defects and software errors in our products before they are released to end users; • component manufacturing, design, or other defects that may render our products permanently inoperable; • our ability to obtain or maintain necessary or desirable licenses, certifications, or approvals related to our use or support of third-party technology, intellectual property, or services; • our introduction of new products and services; • our use of artificial intelligence (“AI”) technologies in some of our products and services; • maintaining adequate customer support levels; Risks Related to Operating and Growing Our Business • our history of operating losses; 9 Table of Contents • volatility of our quarterly operating results that could cause our stock price to decline; • our ability to manage our growth; • our ability to successfully expand our international operations; • seasonality and other potential fluctuations in our business and their impact on our revenue and gross profit; • attracting and retaining key personnel and managing succession; • maintaining systems that can support our growth, business arrangements, and financial rules; • our ability to successfully complete acquisitions and investments and integrate acquired businesses; • our ability to comply with the terms of our outstanding credit facility; • our ability to secure funds to meet our financial obligations and support our planned business growth; • adverse developments affecting financial institutions, including bank failures; • the impact of macroeconomic conditions, natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events on our business; Risks Related to Cybersecurity, Reliability, and Data Privacy • data security incidents, including cybersecurity attacks, or other significant disruptions of our information technology systems that could adversely affect our business and subject us to liability; • legal obligations and potential liability or reputational harm related to our collection, processing, disclosure, and storage of personal information; • disruptions in information technology systems or other services that result in a degradation of our platform; • changes in how network operators manage data that travel across their networks; Risks Related to Intellectual Property • intellectual property infringement claims and litigation resulting in significant costs or the loss of important intellectual property rights; • failure or inability to protect or enforce our intellectual property or proprietary rights; • our use of open-source software; • our agreements to indemnify certain of our partners if our technology is alleged to infringe on third parties’ intellectual property rights; Legal and Regulatory Risks • lawsuits and other legal proceedings, disputes, claims, and government inquiries and investigations; • enactment of or changes to government regulation or laws related to our business; • changes in U.S. or foreign trade policies, geopolitical conditions, and general economic conditions that impact our business; • U.S. or international rules (or the absence of rules) that permit internet access network operators to degrade users’ internet service speeds or limit internet data consumption by users; • liability for content that is distributed through or advertising that is served through our platform; • our ability to maintain effective internal controls over financial reporting; • the impact of changes in accounting principles; • compliance with laws and regulations related to the payment of income taxes and collection of indirect taxes; • changes to U.S. or foreign taxation laws or regulations; Risks Related to Ownership of Our Class A Common Stock • the dual class structure of our common stock; • volatility in the market price of our Class A common stock; • potential dilution or a decline in our stock price caused by future sales or issuance of our capital stock or rights to purchase capital stock; • a decline in our stock price caused by future sales by existing stockholders; • dependency on favorable securities and industry analyst reports; • the significant legal, accounting, and other expenses associated with being a publicly traded company; • the absence of dividends on our common stock; • anti-takeover provisions in our charter and bylaws; and • the limitations resulting from our selection of the Delaware Court of Chancery and the U.S. federal district courts as the exclusive forums for substantially all disputes between us and our stockholders. 10 Table of Contents Risks Related to Our Business and Industry If we fail to differentiate our streaming platform and compete successfully with our competitors, it will be difficult for us to attract and retain users and our business will be adversely impacted.
To remain competitive and maintain our position as a leading TV streaming platform, we need to continuously invest in our platform, product development, marketing, service and support, and device distribution infrastructure. In addition, evolving TV standards and unknown future developments may require further investments in the development of Roku streaming devices, our platform and our other products.
To remain competitive and maintain our position as a leading TV streaming platform, we need to continuously invest in our platform, product development, marketing, service and support, and device distribution infrastructure. In addition, evolving TV standards and unknown future developments may require further investments in the development of Roku streaming devices, our streaming platform, and our other products.
If popular or new content publishers do not publish content on our platform, we may fail to retain existing users and attract new users. We must continuously maintain existing relationships and identify and establish new relationships with content publishers to provide popular streaming apps, streaming app features, and content.
If popular or new content publishers do not publish content on our streaming platform, we may fail to retain existing users and attract new users. We must continuously maintain existing relationships and identify and establish new relationships with content publishers to provide popular streaming apps, streaming app features, and content on our platform.
If one or several retailers or distributors were to discontinue selling our products or our licensed Roku TV partners’ products, choose not to prominently display those products in their stores or on their websites, or close or severely limit access to their brick and mortar locations, the volume of our products or our licensed Roku TV partners’ products sold could decrease, which would harm our business.
If one or several retailers or distributors were to discontinue selling our or licensed Roku TV partners’ products, choose not to prominently display those products in their stores or on their websites, or close or severely limit access to their brick and mortar locations, the volume of our or our licensed Roku TV partners’ products sold could decrease, which would harm our business.
For example, we have in the past elected to develop and implement specific design changes to address potential risks that certain products could otherwise become subject to exclusion or cease and desist orders arising from patent infringement and other intellectual property claims brought in the U.S. International Trade Commission.
For example, we have in the past elected to develop and implement specific design changes to address potential risks that certain products could otherwise become subject to exclusion or cease and desist orders arising from patent infringement and other intellectual property claims brought to the U.S. International Trade Commission.
Furthermore, an adverse outcome of a dispute may require us to: pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property; cease making, licensing, or using technologies that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our products; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content, or materials; and indemnify our partners and other third parties.
Furthermore, an adverse outcome of a dispute may require us to: pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property; cease making, licensing, using, or importing technologies or products that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our products; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content, or materials; and indemnify our partners and other third parties.
We have outsourced certain elements of our operations (including elements of our information technology infrastructure) to third parties, or may have incorporated technology into our platform, that collects, processes, transmits, and stores our users’ or others’ personal information (such as payment card information and user video and audio recordings), and as a result, we manage a number of third-party vendors and other partners who may or could have access to our information technology systems (including our computer networks) or to our confidential information.
We have outsourced or may outsource certain elements of our operations (including elements of our information technology infrastructure) to third parties, or may have incorporated technology into our platform, that collects, processes, transmits, and stores our users’ or others’ personal information (such as payment card information and user video and audio recordings), and as a result, we manage a number of third-party vendors and other partners who may or could have access to our information technology systems (including our computer networks) or to our confidential information.
If our products do not operate effectively with various offerings, technologies, and systems from content partners and other third parties that we do not control, our business may be harmed. The Roku OS is designed to perform using relatively low-cost hardware, which enables us to drive user growth via Roku streaming devices offered at a low cost to users.
If our products do not operate effectively with various offerings, technologies, and systems from content partners and other third parties that we do not control, our business may be harmed. The Roku TV OS is designed to perform using relatively low-cost hardware, which enables us to drive user growth via Roku streaming devices offered at a low cost to users.
The market price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition and operating results; • changes in projected operational and financial results; • our loss of key content partners; • changes in laws or regulations applicable to our products or platform; • the commencement or conclusion of legal proceedings that involve us; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of new products or services by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, or joint ventures; • capital-raising activities or commitments; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • the use by investors or analysts of third-party data regarding our business that may not reflect our financial performance; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • the perception that our environmental, social, and corporate governance performance is inadequate compared to that of our competitors; • sales of our Class A common stock, including short selling of our Class A common stock; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • general economic and market conditions; and • other events or factors, including those resulting from civil unrest, war, foreign invasions, terrorism, or public health crises, or responses to such events.
The market price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition, operating results, and key performance metrics; • changes in projected operational and financial results; • our loss of key content partners; • changes in laws or regulations applicable to our products or platform; • the commencement or conclusion of legal proceedings that involve us; • actual or anticipated changes in our growth rate relative to our competitors; • announcements of new products or services by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, or joint ventures; • capital-raising activities or commitments; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • the use by investors or analysts of third-party data regarding our business that may not reflect our financial performance; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • the perception that our environmental, social, and corporate governance performance is inadequate compared to that of our competitors; • sales of our Class A common stock, including short selling of our Class A common stock; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • general economic and market conditions; and • other events or factors, including those resulting from civil unrest, war, foreign invasions, geopolitical tensions, terrorism, or public health crises, or responses to such events.
For example, each of our streaming players and TVs powered by the Roku OS may utilize a specific system on chip (or SoC), Wi-Fi silicon product, and Wi-Fi front-end module, each of which may be available from only a single manufacturer and for which we do not have a second source.
For example, each of our streaming players and TVs powered by the Roku TV OS may utilize a specific system on chip (or SoC), Wi-Fi silicon product, and Wi-Fi front-end module, each of which may be available from only a single manufacturer and for which we do not have a second source.
If the Wi-Fi receiver or transmitter in a player fails and cannot detect a home network’s Wi-Fi access point, the player will not be able to display or deliver any content to the TV screen. As a result, we may have to recall and replace defective products, which could be at a considerable cost and expense.
If the Wi-Fi receiver or transmitter in a player fails and cannot detect a home network’s Wi-Fi access point, the player will not be able to display or deliver any content to the TV screen. As a result, we may have to recall and replace defective products, which could be at a considerable expense.
The total number of Streaming Hours, however, does not correlate with platform revenue on a period-by-period basis, primarily because we do not monetize every hour streamed or every user on our platform. Moreover, Streaming Hours on our platform are measured whenever a Roku streaming device is streaming content, whether a viewer is actively watching or not.
The total number of Streaming Hours does not correlate with platform revenue on a period-by-period basis, primarily because we do not monetize every hour streamed or every user on our platform. Moreover, Streaming Hours on our platform are measured whenever a Roku streaming device is streaming content, whether a viewer is actively watching or not.
Significant disruptions of our third-party vendors’ or commercial partners’ information technology systems or other similar data security incidents could adversely affect our business operations or result in the loss, misappropriation, or unauthorized access, use or disclosure of, or the prevention of access to, sensitive or personal information, which could harm our business.
Significant disruptions of our third-party vendors’ or commercial partners’ information technology systems or other similar data security incidents could also adversely affect our business operations or result in the loss, misappropriation, or unauthorized access, use or disclosure of, or the prevention of access to, sensitive or personal information, which could harm our business.
These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, elections, interest rate changes, or international currency fluctuations, may negatively impact the market price of our Class A common stock.
These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, elections, interest rate changes, tariffs, or international currency fluctuations, may negatively impact the market price of our Class A common stock.
We operate in a highly competitive advertising industry and compete for revenue from advertising with other streaming platforms and services, including social media and other digital platforms, as well as traditional media, such as radio, broadcast, cable and satellite TV, and satellite and internet radio.
We operate in a highly competitive advertising industry and compete for revenue from advertising with other streaming platforms and services, social media platforms, and other digital platforms, as well as traditional media, such as radio, broadcast, cable and satellite TV, and satellite and internet radio.
Any such potential violation by us, our retailers, or our partners could have negative consequences, including government investigations, enforcement actions, monetary fines, or civil and/or criminal penalties, and our reputation, brand, and revenue may be harmed.
Any such potential violation by us, our retailers, or our partners could have negative consequences, including government inquiries, investigations, enforcement actions, monetary fines, or civil and/or criminal penalties, and our reputation, brand, and revenue may be harmed.
We have developed, and intend to continue to develop and expand, relationships with these TV brand and manufacturing partners. We continue to invest in the growth and expansion of our Roku TV program both in the United States and international markets.
We have developed, and intend to continue to develop and expand, relationships with these TV brand and manufacturing partners as we continue to invest in the growth and expansion of our Roku TV program both in the United States and international markets.
We earn revenue by acquiring subscribers for certain of our content partners activated on or through our platform, including Premium Subscriptions on The Roku Channel, which allow our users to pay for content from various content partners.
We earn revenue by acquiring subscribers for certain of our content partners activated on or through our streaming platform, including Premium Subscriptions on The Roku Channel, which allow our users to pay for content from various content partners.
Additionally, we may also be exposed to material risks of theft or unauthorized reverse engineering of our proprietary information and other intellectual property, including technical data, manufacturing processes, data sets, or other sensitive information.
Additionally, we may also be exposed to material risks of theft, counterfeiting, or unauthorized reverse engineering of our proprietary information and other intellectual property, including technical data, manufacturing processes, data sets, or other sensitive information.
These companies have greater financial resources than we do and can subsidize the cost of their streaming devices or licensing arrangements in order to promote their other products and services, which could make it harder for us to acquire new users, retain existing users, increase Streaming Hours, and monetize our streaming platform.
These companies have greater financial resources than we do and can subsidize the cost of their streaming devices or licensing arrangements to promote their other products and services, which could make it harder for us to acquire new users, retain existing users, increase Streaming Hours, and monetize our streaming platform.
If our users sign up for offerings and services outside of our platform or through other apps on our platform, our business may be harmed.
If our users sign up for offerings and services outside of our streaming platform or through other apps on our streaming platform, our business may be harmed.
For example, AI technologies can create accuracy issues, unintended biases, and discriminatory outcomes, or may create content that appears correct but is inaccurate or flawed. If the recommendations, content, or analyses that AI applications produce are or are alleged to be deficient or inaccurate, we could be subjected to competitive harm, potential legal liability, and brand or reputational harm.
AI technologies can create accuracy issues, unintended biases, and discriminatory outcomes, or may create content that appears correct but is inaccurate or flawed. If the recommendations, content, or analyses that AI applications produce are or are alleged to be deficient or inaccurate, we could be subjected to competitive harm, potential legal liability, and brand or reputational harm.
In particular, our founder, President and Chief Executive Officer, Anthony Wood, is critical to our overall management, as well as the continued development of our products and streaming platform, our culture, and our strategic direction. We do not have long-term employment or non-competition agreements with any of our key personnel.
In particular, our founder, Chairman and Chief Executive Officer, Anthony Wood, is critical to our overall management, as well as the continued development of our products and streaming platform, our culture, and our strategic direction. We do not have long-term employment or non-competition agreements with any of our key personnel.
These obligations create potential legal liability to regulators, our business partners, our users, and other relevant stakeholders and impact the attractiveness of our services to existing and potential users.
These obligations create potential legal liability to regulators, our business partners, our users, and other stakeholders and impact the attractiveness of our services to existing and potential users.
These competitors may also be able to adapt more quickly to new or emerging technologies or standards and may be able to deliver products and services at a lower cost. Increased competition could reduce our sales volume, revenue, and operating margins, increase our operating costs, harm our competitive position, and otherwise harm our business.
These competitors may also be able to adapt more quickly to new or emerging technologies or standards and may be able to deliver products and services at a lower cost. Sustained competition could reduce our sales volume, revenue, and operating margins, increase our operating costs, harm our competitive position, and otherwise harm our business.
If we are not successful in helping our content publishers launch and maintain streaming apps and streaming app features that attract and retain a significant number of users on our streaming platform or if we are not able to do so in a cost-effective manner, our business will be harmed.
If we are not successful in helping our content publishers launch, maintain, and expand their streaming apps and streaming app features that attract and retain a significant number of users on our streaming platform or if we are not able to do so in a cost-effective manner, our business will be harmed.
If advertisers, or their agency relationships, do not perceive meaningful benefits of streaming TV advertising, the market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business.
If advertisers, or their agency relationships, do not perceive meaningful benefits of advertising on our TV streaming platform, the market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business.
In order to remain competitive, we must consistently meet user demand for popular streaming apps, streaming app features, and content, particularly as we launch new streaming devices, introduce new TVs powered by the Roku OS, or enter new markets, including international markets.
In order to remain competitive, we must consistently meet user demand for popular streaming apps, streaming app features, streaming app bundles, and content, particularly as we launch new streaming devices, introduce new TVs powered by the Roku TV OS, or enter new markets, including international markets.
In addition, certain apps available on our platform allow users to purchase additional streaming services from within those apps. The revenue we earn from these transactions is not always equivalent to the revenue we earn from sales of such additional services on a stand-alone basis through our platform.
In addition, certain apps available on our streaming platform allow users to purchase additional streaming services from within those apps. The revenue we earn from these transactions, if any, is not always equivalent to the revenue we earn from sales of such additional services on a stand-alone basis through our streaming platform.
If we are unable to maintain an adequate supply of quality video ad inventory on our platform or generate sufficient demand to effectively sell our available video ad inventory, our business may be harmed. Our business model depends on our ability to grow video ad inventory on our streaming platform and sell it to advertisers.
If we are unable to maintain an adequate supply of quality video advertising inventory on our streaming platform or generate sufficient demand to effectively sell our available video advertising inventory, our business may be harmed. Our business model depends on our ability to grow video advertising inventory on our streaming platform and sell it to advertisers.
If The Roku Channel is unable to secure content that is appealing to our users and advertisers, or is unable to do so on terms that provide a sufficient supply of ad inventory at reasonable cost, our supply of video ad inventory will be negatively impacted.
If The Roku Channel is unable to secure content that is appealing to our users and advertisers, or is unable to do so on terms that provide a sufficient supply of advertising inventory at reasonable cost, our supply of video advertising inventory will be negatively impacted.
Most of our employees now have a hybrid work schedule (consisting of both in-person work and working from home).
Most of our employees have a hybrid work schedule (consisting of both in-person work and working from home).
In addition, information technology system disruptions, whether from attacks on our technology environment or from computer viruses, natural disasters, terrorism, war, foreign invasions, and telecommunications and electrical failures, could result in a material disruption of our product development and our business operations.
Technology system disruptions, whether from attacks on our technology environment or from computer viruses, natural disasters, terrorism, war, foreign invasions, and telecommunications and electrical failures, could result in a material disruption of our product development and our business operations.
These defects and errors can manifest themselves in any number of ways in our products or our streaming platform, including through diminished performance, security vulnerabilities, data loss or poor quality, device malfunctions, or even permanently disabled products.
These defects and errors can manifest themselves in any number of ways in our products or our streaming platform, including through diminished performance, security vulnerabilities, data loss or poor quality, device malfunctions, account inactivity, or even permanently disabled products.
Our revenue, gross profit, and other operating results could vary significantly from quarter-to-quarter and year-to-year and may fail to match our past performance due to a variety of factors, including many factors that are outside of our control.
Our revenue, gross profit, key performance metrics, and other operating results could vary significantly from quarter-to-quarter and year-to-year and may fail to match our past performance due to a variety of factors, including many factors that are outside of our control.
While The Roku Channel has historically served as a valuable source of video ad inventory for us to sell, there is no guarantee that it will continue to do so in the future.
While The Roku Channel has historically served as a valuable source of video advertising inventory for us to sell, there is no guarantee that it will continue to do so in the future.
Unless otherwise indicated, references to our business being harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, and future prospects. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.
Unless otherwise indicated, references to our business being harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, key performance metrics, and future prospects. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.
In some circumstances, we may choose to not pursue enforcement because an infringer has a dominant intellectual property position or for other business reasons. Litigation may be necessary to enforce our intellectual property or proprietary rights, protect our trade secrets, or determine the validity and scope of proprietary rights claimed by others.
In some circumstances, we may choose to not pursue enforcement because an infringer has a dominant intellectual property position or for other business reasons. 32 Table of Contents Litigation may be necessary to enforce our intellectual property or proprietary rights, protect our trade secrets, or determine the validity and scope of proprietary rights claimed by others.
If we are unable to enter into content license agreements on acceptable terms to access content that enables us to attract and retain users of the ad-supported content on The Roku Channel, or if the content we do secure rights to stream is ultimately not appealing to our users and advertisers, usage of The Roku Channel may decline, and our business may be harmed.
If we cannot enter into content license agreements on acceptable terms to access content that enables us to attract and retain users of the ad-supported content on The Roku Channel, or if the content we do secure rights to stream is ultimately not appealing to our users and advertisers, usage of The Roku Channel may decline, and our business may be harmed.
Furthermore, any manufacturing, design, or other issues affecting the quality or performance of Roku TV models could harm our brand and our business. If we fail to accurately forecast our manufacturing requirements for our products and manage our inventory with our contract manufacturers, we could incur additional costs, experience manufacturing delays, and lose revenue.
Furthermore, any manufacturing, design, or other issues affecting the quality or performance of Roku TV models could harm our brand and our business. 18 Table of Contents If we fail to accurately forecast our manufacturing requirements for our products and manage our inventory with our contract manufacturers, we could incur additional costs, experience manufacturing delays, and lose revenue.
Such suppliers have experienced, and may in the future experience, production, shipping, or logistical constraints arising from macroeconomic conditions or other circumstances, such as inflationary pressures, geopolitical conflict, and supply chain disruptions.
Such suppliers have experienced, and may in the future experience, production, shipping, or logistical constraints arising from macroeconomic conditions or other circumstances, such as inflationary pressures, geopolitical conflicts, and supply chain disruptions.
Therefore, we could be subject to similar suits by parties claiming ownership of what we believe to be open-source software or our noncompliance with the open-source software license terms. 39 Table of Contents Although we have processes and procedures designed to help monitor our use of open-source software, these processes and procedures may not be followed appropriately or may fail to identify risks.
Therefore, we could be subject to similar suits by parties claiming ownership of what we believe to be open-source software or our noncompliance with the open-source software license terms. Although we have processes and procedures designed to help monitor our use of open-source software, these processes and procedures may not be followed appropriately or may fail to identify risks.
These laws, regulations, and standards are subject to varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
These laws, regulations, and standards are subject to varying interpretations, and their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel. If we fail to, or are unable to, protect or enforce our intellectual property or proprietary rights, our business and operating results could be harmed.
In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel. 31 Table of Contents If we fail to, or are unable to, protect or enforce our intellectual property or proprietary rights, our business and operating results could be harmed.
To attract top talent, we generally offer competitive compensation packages before we can validate the productivity of those employees. In addition, many companies now offer a remote or hybrid work environment, which may increase the competition for employees from employers outside of our traditional office locations.
To attract top talent, we generally offer competitive compensation packages before we can validate the productivity of those employees. In addition, some companies offer a remote or hybrid work environment, which may increase the competition for employees from employers outside of our traditional office locations.
If a court were to find either exclusive forum provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could harm our business. 48 Table of Contents
If a court were to find either exclusive forum provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could harm our business.
We have not elected to take advantage of the “controlled company” exemption to the corporate governance rules for companies listed on The Nasdaq Global Select Market. The market price of our Class A common stock has been, and may continue to be, volatile, and the value of our Class A common stock may decline.
We have not elected to take advantage of the “controlled company” exemption to the corporate governance rules for companies listed on The Nasdaq Global Select Market. 37 Table of Contents The market price of our Class A common stock has been, and may continue to be, volatile, and the value of our Class A common stock may decline.
We are subject to requirements to deduct or withhold income taxes on revenue sourced in various jurisdictions, pay income taxes on profits earned by any permanent establishment (or similar enterprise) of ours that carries on business in various jurisdictions, and collect indirect taxes from our sales in various jurisdictions.
We are subject to requirements to deduct or withhold income taxes on revenue sourced in various jurisdictions, pay income taxes on profits earned by any permanent establishment (or similar enterprise) of ours that carries on 36 Table of Contents business in various jurisdictions, and collect indirect taxes from our sales in various jurisdictions.
As such, we are seeking to expand the number of Active Accounts and increase Streaming Hours in an effort to create additional platform revenue opportunities. As our user base grows and as we increase the amount of content offered and streamed across our platform, we must effectively monetize our expanding user base and streaming activity.
As such, we are seeking to expand our user base and increase Streaming Hours in an effort to create additional platform revenue opportunities. As our user base grows and as we increase the amount of content offered and streamed across our platform, we must effectively monetize our expanding user base and streaming activity.
The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection. For example, there is uncertainty around the validity and enforceability of intellectual property rights related to the use, development, and deployment of AI technologies.
The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection. For example, there is uncertainty around the validity and enforceability of 21 Table of Contents intellectual property rights related to the use, development, and deployment of AI technologies.
Such litigation could result in substantial costs and divert our management’s attention from other business concerns. 46 Table of Contents Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline.
Such litigation could result in substantial costs and divert our management’s attention from other business concerns. Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline.
In addition, if any of our existing licensed Roku TV partners choose to work exclusively with, or divert a significant portion of their business with us to, other operating system developers, this may adversely impact our ability to continue to license the Roku OS and our smart TV reference design to TV brands and to grow Active Accounts and monetize the Roku OS.
In addition, if any of our existing licensed Roku TV partners choose to work exclusively with, or divert a significant portion of their business with us, to other operating system developers, this may adversely impact our ability to continue to license the Roku TV OS and our smart TV reference design to TV brands and to grow our user base and monetize the Roku TV OS.
Our contract manufacturers are vulnerable to, among other issues: • capacity constraints; • reduced component availability; • production, supply chain, or shipping disruptions or delays, including from labor disputes, strikes, mechanical issues, quality control issues, natural disasters, geopolitical conflicts, and public health crises; and • the impact of U.S. or foreign tariffs, trade, or sanctions restrictions on components, finished goods, software, other products, or data transfers.
Our contract manufacturers are vulnerable to, among other issues: • capacity constraints; • reduced component availability; 17 Table of Contents • production, supply chain, or shipping disruptions, delays, or increased costs, including from labor disputes, strikes, mechanical issues, quality control issues, natural disasters, geopolitical conflicts, and public health crises; and • the impact of U.S. or foreign tariffs, trade, or sanctions restrictions on components, finished goods, software, other products, or data transfers.
Future regulations or changes in laws and regulations (or their existing interpretations or applications) could also hinder our operational flexibility, raise compliance costs, and result in additional liabilities for us, which may harm our business. 43 Table of Contents If we are found liable for content that is distributed through or advertising that is served through our platform, our business could be harmed.
Future regulations or changes in laws and regulations (or their existing interpretations or applications) could also hinder our operational flexibility, raise compliance costs, and result in additional liabilities for us, which may harm our business. If we are found liable for content that is distributed through or advertising that is served through our platform, our business could be harmed.
For example, in California, increasing intensity of drought and annual periods of wildfire danger increase the probability of planned power outages. Further, acts of terrorism could cause disruptions to the internet or the economy as a whole.
For example, in California, increasing intensity of 27 Table of Contents drought and annual periods of wildfire danger increase the probability of planned power outages. Further, acts of terrorism could cause disruptions to the internet or the economy as a whole.
As a result, the growth of our business depends on our users’ ability to obtain and maintain high-speed access to the internet at reasonable cost, which relies in part on internet service network operators’ continuing willingness to upgrade and maintain their equipment as needed to sustain a robust internet infrastructure as well as their continued willingness to preserve the open and interconnected nature of the internet.
As a result, the growth of our business depends on our users’ ability to obtain and maintain high-speed access to the internet at reasonable cost, which relies in part on internet service network operators’ continuing willingness to upgrade and maintain their equipment as well as their continued willingness to preserve the open and interconnected nature of the internet.
In those markets where regulatory safeguards against unreasonable discrimination are nascent or non-existent and where local network operators possess substantial market power, we could experience anti-competitive practices that could impede our growth, cause us to incur additional expenses, or otherwise harm our business.
In those markets where regulatory safeguards against unreasonable 35 Table of Contents discrimination are nascent or non-existent and where local network operators possess substantial market power, we could experience anti-competitive practices that could impede our growth, cause us to incur additional expenses, or otherwise harm our business.
More broadly, if we fail to maintain our relationships with the content partners on terms favorable to us, or at all, or if these content partners face problems in delivering their content across our platform, we may lose app partners or users and our streaming device sales, Active Account growth, and engagement may be harmed.
More broadly, if we fail to maintain our relationships with the content partners on terms favorable to us, or at all, or if these content partners face problems in delivering their content across our streaming platform, we may lose app partners or users and our streaming device sales, user base growth, and engagement may be harmed.
If any aspect of our computer systems or those of third parties we utilize in our operations fails, it may lead to downtime or slow processing time, either of which may harm the experience of our users.
If any aspect of our information technology systems or those of third parties we utilize in our operations fails, it may lead to downtime or slow processing time, either of which may harm the experience of our users.
Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. Our President and Chief Executive Officer, Anthony Wood, holds and controls the vote of a significant number of shares of our outstanding common stock, and therefore Mr.
Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. Our founder, Chairman, and Chief Executive Officer, Anthony Wood, holds and controls the vote of a significant number of shares of our outstanding common stock, and therefore Mr.
We invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
We invest resources to comply with evolving laws, regulations, and standards, which may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
Our historical growth has placed, and any future growth will continue to place, significant demands on our management, as well as our financial and operational resources, to: • manage a larger organization; • hire more employees, including engineers with relevant skills and experience; • expand internationally; 27 Table of Contents • increase our sales and marketing efforts; • expand the capacity to manufacture and distribute our products; • broaden our customer support capabilities; • expand our product offerings; • support our licensed Roku TV partners and service operators; • expand and improve the content offering on our platform; • implement appropriate operational and financial systems; and • maintain effective financial disclosure controls and procedures.
Our historical growth has placed, and any future growth will continue to place, significant demands on our management, as well as our financial and operational resources, to: • manage a larger organization; • hire more employees, including engineers with relevant skills and experience; • expand internationally; • increase our sales and marketing efforts; • expand the capacity to manufacture and distribute our products; • broaden our customer support capabilities; • expand our product offerings; • support our licensed Roku TV partners; • expand and improve the content offering on our streaming platform; • implement appropriate operational and financial systems; and • maintain effective financial disclosure controls and procedures.
The majority of our products and our licensed Roku TV partners’ products are sold through traditional brick and mortar retailers, such as Best Buy, Target, and Walmart, including their online sales platforms, and online retailers such as Amazon.
The majority of our products and our licensed Roku TV partners’ products are sold through traditional brick and mortar retailers, such as Best Buy, Costco, Target, and Walmart, their respective online sales platforms, and traditional online retailers such as Amazon.
In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
Further, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
If our users spend most of their time within particular apps where we have limited or no ability to place advertisements or leverage user information, or our users opt out from our ability to collect data for use in providing more relevant advertisements, we may not be able to achieve our expected growth in platform revenue or gross profit.
Additionally, if our users spend most of their time within particular apps where we have limited or no ability to place advertisements or leverage user information, or our users opt out from our ability to collect data for use in providing more relevant advertisements, we may not be able to achieve our expected growth in platform revenue, gross profit, or certain key performance metrics.
If these arrangements do not continue to result in increased Active Accounts and Streaming Hours, and if that growth does not in turn lead to successfully monetizing that increased user activity, our business may be harmed.
If these arrangements do not continue to result in increased user base and Streaming Hours, and if that growth does not in turn lead to successfully monetizing that increased user activity, our business may be harmed.
We are also dependent on our ability to monetize video ad inventory within other ad-supported apps on our streaming platform. We seek to obtain the ability to sell such inventory from the content partners of such apps.
We are also dependent on our ability to monetize video advertising inventory within other ad-supported apps on our streaming platform and seek to sell such inventory from the content partners of such apps.
If, for any reason, we cease distributing apps that have historically streamed a large percentage of the aggregate Streaming Hours on our platform, our Streaming Hours, our Active Accounts, or Roku streaming device sales may be adversely affected, and our business may be harmed.
If, for any reason, we cease distributing apps that have historically streamed a large percentage of the aggregate Streaming Hours on our platform, our Streaming Hours, user base, or Roku streaming device sales may be adversely affected, and our business may be harmed.
Although traditional TV advertisers have shown growing interest in streaming TV advertising, we cannot be certain that their interest will continue to increase or that they will not revert to traditional TV advertising or shift their advertising spending to social media and other digital platforms (rather than to us).
Although traditional TV advertisers have shown growing interest in advertising on TV streaming platforms, we cannot be certain that their interest will continue to increase or that they will not revert to traditional TV advertising or shift their advertising spending to social media and other digital platforms.
As a result of such transfers, as of December 31, 2023, Mr. Wood controls a majority of the combined voting power of our Class A and Class B common stock even though he only owns 12.2% of the outstanding Class A and Class B common stock. As a member of our Board of Directors (our “Board”), Mr.
As a result of such transfers, as of December 31, 2024, Mr. Wood controls a majority of the combined voting power of our Class A and Class B common stock even though he only owns 12.0% of the outstanding Class A and Class B common stock. As a member of our Board of Directors (our “Board”), Mr.
We are continuously seeking to balance the objectives of our advertisers and content partners with our desire to provide an optimal user experience, but we may not be successful in achieving a balance that continues to attract and retain users, advertisers, and content partners.
We are continuously seeking to balance the objectives of our advertisers with our desire to provide an optimal viewer experience, but we may not be successful in achieving a balance that continues to attract and retain viewers, advertisers, and content partners.
Interruptions in the supply of Roku TV models to retailers and distributors or increases in the pricing of Roku TV models at times have negatively affected, and could adversely affect in the future, the volume of Roku TV models sold at retail, resulting in slower Active Accounts and Streaming Hours growth.
Interruptions in the supply of Roku TV models to retailers and distributors or increases in the pricing of Roku TV models at times have negatively affected, and could adversely affect in the future, the volume of Roku TV models sold at retail, resulting in slower user base and Streaming Hours growth.
In addition, if service operators, including traditional TV providers, refuse to grant our users access to stream certain apps or only make content available on devices they prefer, our ability to offer a broad selection of popular streaming apps or content may be limited.
In addition, if service operators, including traditional TV providers, refuse to grant our users access to stream certain apps or only make content available on devices they prefer, our ability to offer a broad selection of popular streaming apps or content may be limited, which could adversely affect our business.
We have no control over these offerings, technologies, and systems beyond our app certification requirements, and if Roku streaming devices do not provide our users with a high-quality experience on those offerings on a cost-effective basis or if changes are made to those offerings that are not compatible with Roku streaming devices, we may be unable to increase Active Account growth and user engagement or may be required to increase our hardware costs, and our business will be harmed.
We have no control over these offerings, technologies, and systems beyond our app certification requirements, and if Roku streaming devices do not provide our users with a high-quality experience on those offerings on a cost-effective basis or if changes are made to those offerings that are not compatible 19 Table of Contents with Roku streaming devices, we may be unable to increase user base growth and user engagement or may be required to increase our hardware costs, and our business will be harmed.
We anticipate that this seasonal impact on revenue and gross profit is likely to continue, and any shortfall in expected fourth quarter revenue due to a decline in the effectiveness of our promotional activities, actions by our competitors, reductions in consumer discretionary spending, curtailed advertising spending, disruptions in our supply or distribution chains, tariffs or other restrictions on trade, shipping or air freight delays, or for any other reason, would cause our full year results of operations to suffer significantly.
We anticipate that such impact on revenue and gross profit is likely to continue, and any shortfall in expected fourth quarter revenue due to a decline in the effectiveness of our promotional activities, actions by our competitors, reductions in consumer discretionary spending, curtailed advertising spending, disruptions in our supply or distribution chains, tariffs or other restrictions on trade, increased shipping costs, 24 Table of Contents shipping or air freight delays, or for any other reason, would cause our full year results of operations to suffer significantly.
We are subject to or affected by general business regulations and laws, as well as regulations and laws specific to the internet and online services, including laws and regulations related to data privacy and security, consumer protection, data localization, law enforcement access to data, encryption, telecommunications, social media, payment processing, taxation, trade, intellectual property, competition, electronic contracts, internet access, net neutrality, advertising, calling and texting, content restrictions, protection of children, and accessibility, among others.
We are subject to or affected by general business regulations and laws, as well as regulations and laws specific to the internet and online services, including laws and regulations related to data privacy and security, consumer protection, child and youth protection, data localization, encryption, telecommunications, social media, payment processing, subscriptions, taxation, trade, intellectual property, competition, electronic contracts, internet access, net neutrality, advertising, calling and texting, content restrictions, protection of minors, and accessibility, among others.
If a reduction in gross margin does not result in an increase in our Active Accounts or an increase in our platform revenue and gross profit, our financial results may suffer, and our business may be harmed. In addition, our platform segment has experienced in the past, and may experience in the future, lower gross margins than we anticipate.
If a reduction in devices gross margin does not result in an increase in our user base or an increase in our platform revenue and gross profit, our financial results may suffer, and our business may be harmed. In addition, our platform segment has experienced in the past, and may experience in the future, lower gross margins than we anticipate.
The non-renewal or early termination of agreements with our content partners may result in the removal of certain apps or app features from our streaming platform and may harm our streaming device sales, Active Account growth, and engagement.
The non-renewal or early termination of agreements with our content partners may result in the removal of certain apps or app features from our streaming platform and harm our streaming device sales, user base growth, and engagement.
We believe advertising budgets in a variety of industries have been pressured by factors such as inflation, rising interest rates, and related market uncertainty, which has led to reduced advertiser spending, which has adversely affected our platform revenue. Any continued pullback in consumer discretionary spending or advertising spending could adversely affect our future operating results.
At times, advertising budgets in a variety of industries have been pressured by factors such as inflation, rising interest rates, and market uncertainty, which has led to reduced advertiser spending and adversely affected our platform revenue. Any pullback in consumer discretionary spending or advertising spending could adversely affect our future operating results.
Foreign Corrupt Practices Act, UK Bribery Act, and other anti-corruption laws, U.S. or foreign export controls and sanctions, and local laws prohibiting improper payments to government officials and requiring the maintenance of accurate books and records and a system of sufficient internal controls; • slower consumer adoption and acceptance of streaming devices and services in other countries; • different or unique competitive pressures as a result of, among other things, competition with other devices that consumers may use to stream TV or existing local traditional TV services and products, including those provided by incumbent TV service providers and local consumer electronics companies; 28 Table of Contents • greater difficulty supporting and localizing Roku streaming devices and our streaming platform, including delivering support and training documentation in languages other than English; • our ability to deliver or provide access to popular streaming apps or content to users in certain international markets; • availability of reliable broadband connectivity in areas targeted for expansion; • challenges and costs associated with staffing and managing foreign operations; • differing legal and court systems, including limited or unfavorable intellectual property protection; • unstable political and economic conditions, social unrest, or economic instability, whatever the cause, including due to pandemics, natural disasters, wars, terrorist activity, foreign invasions (such as the Russian invasion of Ukraine and the Israel-Hamas war), tariffs, trade disputes, local or global recessions, diplomatic or economic tensions (such as the tension between China and Taiwan), long-term environmental risks, or climate change; • adverse tax consequences, such as those related to changes in tax laws (including increased tax rates, the imposition of digital services taxes, and the adoption of global corporate minimum taxes and anti-base-erosion rules), changes in the interpretation of existing tax laws, and the heightened scrutiny by tax administrators of companies that have cross-border business activities; • the imposition of customs duties on cross-border data flows for streaming services, in the event that the World Trade Organization fails to extend the current moratorium on such duties; • any pandemics or epidemics, which could result in decreased economic activity in certain markets, changes in the use of our products or platform, or decreased ability to import, export, ship, or sell our products to supply such services to existing or new customers in international markets; • inflationary pressures, such as those the global market is currently experiencing, which may increase costs for materials, supplies, and services; • fluctuations in currency exchange rates, which could impact the revenue and expenses of our international operations and expose us to foreign currency exchange rate risk (see the section titled “Foreign Currency Exchange Rate Risk” in Item 7A of this Annual Report for additional information); • restrictions on the repatriation of earnings from certain jurisdictions; and • working capital constraints.
Foreign Corrupt Practices Act, UK Bribery Act, and other anti-corruption laws, U.S. or foreign export controls and sanctions, and local laws requiring the maintenance of accurate books and records and a system of sufficient internal controls; • slower consumer adoption and acceptance of streaming devices and services in other countries; • different or unique competitive pressures, including as a result of competition with other devices that consumers may use to stream TV or existing local traditional TV services and products, including those provided by incumbent TV service providers and local consumer electronics companies; • greater difficulty supporting and localizing Roku streaming devices and our streaming platform, including delivering support and training documentation in languages other than English; • our ability to deliver or provide access to popular streaming apps or content to users in certain international markets; • availability of reliable broadband connectivity in areas targeted for expansion; • challenges and costs associated with staffing and managing foreign operations; • differing legal and court systems, including limited or unfavorable intellectual property protection; • unstable political and economic conditions, social unrest, or economic instability, including due to pandemics, natural disasters, wars, terrorist activity, foreign invasions (such as the Russian invasion of Ukraine), tariffs, trade disputes, local or global recessions, diplomatic or economic tensions (such as the tension between China and Taiwan and the tension in the Middle East), long-term environmental risks, or climate change; • adverse tax consequences, such as those related to changes in tax laws (including increased tax rates, the imposition of digital services taxes, and the adoption of global corporate minimum taxes and anti-base-erosion rules), changes in the interpretation of existing tax laws, and the heightened scrutiny by tax administrators of companies that have cross-border business activities; • the imposition of customs duties on cross-border data flows for streaming services, such as in the event that the World Trade Organization (WTO) fails to extend the current moratorium on such duties or the moratorium is applied only among WTO member states that support a new e-commerce agreement; • pandemics or epidemics, which could result in decreased economic activity in certain markets, changes in the use of our products or platform, or decreased ability to import, export, ship, or sell our products to supply such services to existing or new customers in international markets; • inflationary pressures, which may increase costs for materials, supplies, and services; • fluctuations in currency exchange rates, which could impact the revenue and expenses of our international operations and expose us to foreign currency exchange rate risk (see the section titled “Foreign Currency Exchange Rate Risk” in Part II, Item 7A of this Annual Report); • restrictions on the repatriation of earnings from certain jurisdictions; and • working capital constraints.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCybersecurity incidents are escalated to our Vice President of Trust Engineering, the EIMT, and the Chair of our Audit Committee in accordance with our cybersecurity incident management procedures, so that decisions can be made regarding incident reporting and disclosure in a timely manner. 49 Table of Contents Notwithstanding our cybersecurity risk management and governance, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.
Biggest changeCybersecurity incidents are escalated to our Vice President of Product and Enterprise Security, the EIMT, and the Chair of our Audit Committee in accordance with our cybersecurity incident management procedures, so that decisions can be made regarding incident reporting and disclosure in a timely manner.
In addition, our Executive Incident Management Team (“EIMT”) is a cross-functional management committee focused on providing executive guidance on the cybersecurity incident response process to facilitate an appropriate and timely response, make decisions related to cybersecurity incidents, and notify appropriate parties with relevant cross-functional expertise in the event of a cybersecurity incident.
In addition, our Executive Incident Management Team (“EIMT”) is a cross-functional management committee dedicated to providing executive-level guidance on the cybersecurity incident response process to facilitate an appropriate and timely response, make decisions related to cybersecurity incidents, and notify appropriate parties with relevant cross-functional expertise in the event of a cybersecurity incident.
Key components of our cybersecurity program include: • managing cybersecurity threats by deploying technical safeguards that are designed to protect our information systems from cybersecurity threats, which we evaluate and seek to improve, including through vulnerability assessments and cybersecurity threat intelligence; • maintaining cybersecurity incident management procedures to address incident reporting, classification, escalation, response, and recovery, and facilitate efficient and consistent management of cybersecurity incidents involving our information systems; • assessing and testing our cybersecurity policies and practices via internal efforts (such as assessments, vulnerability testing, threat modeling, tabletop exercises, and other exercises focused on evaluating the effectiveness of our cybersecurity measures) and by engaging third parties (including cybersecurity consulting firms) to perform assessments of our cybersecurity measures; • a third-party cybersecurity risk management process, including, among other things, a security assessment and contracting process for vendor applications and implementing contractual security measures with third-party vendors; and • cybersecurity awareness training for all employees and enhanced training for certain employees.
Key components of our cybersecurity program include: • managing cybersecurity threats by deploying technical safeguards that are designed to protect our information systems from cybersecurity threats, which we evaluate and seek to improve, including through vulnerability assessments and cybersecurity threat intelligence; • maintaining cybersecurity incident management procedures to address incident reporting, classification, escalation, response, and recovery, and facilitate efficient and consistent management of cybersecurity incidents involving our information systems; • assessing and testing our cybersecurity policies and practices via internal efforts (such as assessments, vulnerability testing, threat modeling, tabletop exercises, and other exercises focused on evaluating the effectiveness of our cybersecurity measures) and by engaging third parties (including cybersecurity consulting firms) to perform assessments of our cybersecurity measures and manage our bug bounty program; 40 Table of Contents • a cybersecurity risk management process for third-party vendors, including, among other things, a security assessment and contracting process for vendor applications and implementing contractual security measures with third-party vendors; and • cybersecurity awareness training is available for all employees and enhanced training is provided for certain employees.
Our Trust Engineering team is responsible for the day-to-day identification, assessment, and management of information security risks and provides regular updates to our Vice President of Trust Engineering regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Our Product and Enterprise Security team is responsible for the day-to-day identification, assessment, and management of information security risks and provides regular updates to our Vice President of Product and Enterprise Security regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents.
For more information regarding the cybersecurity risks we face, see Item 1A, Risk Factors, elsewhere in this Annual Report, under the caption “Significant disruptions of our information technology systems or data security incidents could harm our reputation, cause us to modify our business practices, and otherwise adversely affect our business and subject us to liability.”
For more information regarding the cybersecurity risks we face, see Item 1A, Risk Factors, elsewhere in this Annual Report, under the caption “Data security incidents, including cybersecurity attacks, or other significant disruptions of our information technology systems could harm our reputation, cause us to modify our business practices, and otherwise adversely affect our business and subject us to liability.”
The Audit Committee engages on cybersecurity matters with our management team, including our Vice President of Trust Engineering, who regularly provides presentations to the Audit Committee on our cybersecurity program and cybersecurity risks.
The Audit Committee engages on cybersecurity matters with our management team, including our Vice President of Product and Enterprise Security, who regularly provides presentations to the Audit Committee on our cybersecurity governance and compliance programs.
Our Vice President of Trust Engineering is principally responsible for overseeing our cybersecurity risk management program, in partnership with other members of management.
Our Vice President of Product and Enterprise Security is principally responsible for overseeing our cybersecurity risk management program, in partnership with other members of management. Our Vice President of Product and Enterprise Security has over 30 years of experience in cybersecurity and information technology roles, including executive leadership positions at public and private companies.
Removed
Our Vice President of Trust Engineering has served in various roles in cybersecurity and information technology for over 30 years, including as Vice President and Chief Security Architect of Intertrust Technologies Corporation and Java Security Architect at Sun Microsystems, Inc.
Added
Notwithstanding our cybersecurity risk management and governance, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our facilities are suitable to meet our current needs.
Biggest changeWe believe that our facilities are suitable to meet our current needs. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends, however no dividends have been declared on our Class A common stock or Class B common stock to date.
Biggest changeVizio Holding Corp was acquired in fiscal year 2024 and is included in the graph below through the last trade date. Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends, however no dividends have been declared on our Class A common stock or Class B common stock to date.
The actual number of stockholders of our Class A common stock is greater than the number of record holders and includes stockholders who are beneficial owners but whose shares of Class A common stock are held in street name by banks, brokers, and other nominees.
The ac tual number of stockholders of our Class A common stock is greater than the number of record holders and includes stockholders who are beneficial owners but whose shares of Class A common stock are held in street name by banks, brokers, and other nominees.
Stock Performance Graphs and Cumulative Total Return The following graph shows the cumulative total stockholder return of an investment of $100 in cash from December 31, 2018 through December 31, 2023, for (i) our Class A common stock, (ii) the Nasdaq Composite Index, and (iii) the Peer Group of companies described below.
Stock Performance Graphs and Cumulative Total Return The following graph shows the cumulative total stockholder return of an investment of $100 in cash from December 31, 2019 through December 31, 2024, for (i) our Class A common stock, (ii) the Nasdaq Composite Index, and (iii) the Peer Group of companies described below.
Used with permission. All rights reserved. Copyright 1980-2022. Index Data: Copyright NASDAQ OMX, Inc. Used with permission. All rights reserved.
Used with permission. All rights reserved. Copyright 1980-2025. Index Data: Copyright NASDAQ OMX, Inc. Used with permission. All rights reserved.
Holders of Record As of December 31, 2023, there were approximately 70 stockholders of record of our Class A common stock and 15 stockholders of record of our Class B common stock.
Holders of Record As of December 31, 2024, there were approximately 64 stockholders of record of our Class A common stock and 13 stockholders of record of our Class B common stock.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 51 Table of Contents Company / Index Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Roku, Inc. $100 $437 $1,084 $745 $133 $299 Nasdaq Composite Index $100 $137 $198 $242 $163 $236 Peer Group $100 $136 $186 $247 $129 $227 Source: Prepared by Zacks Investment Research, Inc.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 42 Table of Contents Company / Index Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Roku, Inc. $100 $248 $170 $30 $68 $56 Nasdaq Composite Index $100 $145 $177 $119 $173 $224 Peer Group $100 $136 $181 $95 $167 $243 Source: Prepared by Zacks Investment Research, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended December 31, 2023 2022 2021 Net Revenue: Platform 86 % 87 % 82 % Devices 14 % 13 % 18 % Total net revenue 100 % 100 % 100 % Cost of Revenue: Platform 41 % 38 % 30 % Devices 15 % 16 % 19 % Total cost of revenue 56 % 54 % 49 % Gross Profit (Loss): Platform 45 % 49 % 52 % Devices (1) % (3) % (1) % Total gross profit 44 % 46 % 51 % Operating Expenses: Research and development 25 % 25 % 17 % Sales and marketing 30 % 27 % 16 % General and administrative 12 % 11 % 9 % Total operating expenses 67 % 63 % 42 % Income (Loss) from Operations (23) % (17) % 9 % Other Income, Net: Interest expense — % — % — % Other income, net 3 % 1 % — % Total other income, net 3 % 1 % — % Income (Loss) Before Income Taxes (20) % (16) % 9 % Income tax expense (benefit) — % — % — % Net Income (Loss) (20) % (16) % 9 % Comparison of Years Ended December 31, 2023 and 2022 Net Revenue Years Ended December 31, 2023 2022 Change $ Change % (in thousands, except percentages) Platform $ 2,994,105 $ 2,711,441 $ 282,664 10 % Devices 490,514 415,093 75,421 18 % Total net revenue $ 3,484,619 $ 3,126,534 $ 358,085 11 % Platform Platform revenue increased by $282.7 million, or 10%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to an increase in revenue from streaming services distribution, such as revenue share on content subscriptions and Premium Subscriptions through The Roku Channel, which was offset by slightly lower revenue from advertising driven primarily by weakness in media and entertainment promotional spending. 57 Table of Contents Devices Devices revenue increased by $75.4 million, or 18%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022. $10.0 million of the increase was due to a change in estimated transaction price for a licensing arrangement with a service operator for which performance obligations were satisfied in prior periods and was recognized as revenue during the three months ended March 31, 2023.
Biggest changeYears Ended December 31, 2024 2023 2022 Net revenue: Platform 86 % 86 % 87 % Devices 14 % 14 % 13 % Total net revenue 100 % 100 % 100 % Cost of revenue: Platform 40 % 41 % 38 % Devices 16 % 15 % 16 % Total cost of revenue 56 % 56 % 54 % Gross profit (loss): Platform 46 % 45 % 49 % Devices (2) % (1) % (3) % Total gross profit 44 % 44 % 46 % Operating expenses: Research and development 18 % 25 % 25 % Sales and marketing 23 % 30 % 27 % General and administrative 8 % 12 % 11 % Total operating expenses 49 % 67 % 63 % Loss from operations (5) % (23) % (17) % Other income, net: Interest expense — % — % — % Other income, net 2 % 3 % 1 % Total other income, net 2 % 3 % 1 % Loss before income taxes (3) % (20) % (16) % Income tax expense — % — % — % Net loss (3) % (20) % (16) % Comparison of Years Ended December 31, 2024 and 2023 Net Revenue Years Ended December 31, 2024 2023 Change $ Change % (in thousands, except percentages) Platform $ 3,522,776 $ 2,994,105 $ 528,671 18 % Devices 590,122 490,514 99,608 20 % Total net revenue $ 4,112,898 $ 3,484,619 $ 628,279 18 % Platform Platform revenue increased by $528.7 million, or 18%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to higher revenue from streaming services distribution, such as revenue share on content subscriptions and Premium Subscriptions through The Roku Channel, in addition to higher advertising revenue, despite continued weakness in the media and entertainment vertical. 47 Table of Contents Devices Devices revenue increased by $99.6 million, or 20%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The estimate of the variable consideration is based on the assessment of historical, current, and forecasted performance noted and expected from the performance obligation. The transaction price in some of our arrangements include non-cash consideration. We determine the fair value of non-cash consideration at contract inception by using historical internal and observable third-party data.
The estimate of the variable consideration is based on the assessment of historical, current, and forecasted performance noted and expected from the performance obligation. The transaction price in some of our arrangements include non-cash consideration. We determine the fair value of non-cash consideration at contract inception by using historical internal and current observable third-party data.
Discussions of fiscal year 2021 and year-to-year comparisons between fiscal years 2022 and 2021 that are not included in this Annual Report can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report for the fiscal year ended December 31, 2022 filed with the SEC on February 16, 2023.
Discussions of fiscal year 2022 and year-to-year comparisons between fiscal years 2023 and 2022 that are not included in this Annual Report can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report for the fiscal year ended December 31, 2023 filed with the SEC on February 16, 2024.
Cost of revenue, devices also includes technology licenses or royalty fees on devices we sell, inbound and outbound freight, duty and logistics costs, third-party packaging, inventory provisions, and allocated overhead costs related to facilities, third-party cloud services, customer support, and salaries, benefits, and stock-based compensation for operations personnel.
Cost of revenue, devices also includes technology licenses or royalty fees on devices we sell, inbound and outbound freight, duty and logistics costs, third-party packaging, inventory provisions, and allocated overhead costs related to facilities, third-party cloud services, and salaries, benefits, and stock-based compensation for operations personnel.
Cost of revenue, platform also includes other costs such as payment processing fees, allocated expenses associated with the delivery of our services that primarily include costs of third-party cloud services and salaries, benefits, and stock-based compensation for our customer support and platform operations personnel, and amortization of acquired developed technology.
Cost of revenue, platform also includes other costs such as payment processing fees, allocated expenses associated with the delivery of our services that primarily include costs of third-party cloud services and salaries, benefits, and stock-based compensation for our platform operations personnel, and amortization of acquired developed technology.
Some of our leading content partners, including Netflix, also have implemented similar features within their apps. This Roku OS feature supplements these app features. This feature has not had and is not expected to have a material impact on our future financial performance.
Some of our leading content partners, including Netflix, also have implemented similar features within their apps. This Roku TV OS feature supplements these app features. This feature has not had and is not expected to have a material impact on our financial performance.
Amortization of Content Assets The amortization expense for content assets (licensed and produced) is based on projected monetization of such content which results in accelerated or straight-lined patterns depending on the nature of the content. Judgment is required to determine the amortization patterns of our content assets which are monetized as a group.
Amortization of Content Assets The amortization expense for content assets (licensed and produced) is based on projected usage of such content which results in accelerated or straight-lined patterns depending on the nature of the content. Judgment is required to determine the amortization patterns of our content assets which are monetized as a group.
We expect to maintain this valuation allowance for the foreseeable future. 56 Table of Contents Results of Operations The following table sets forth selected consolidated statements of operations data as a percentage of total revenue for each of the periods indicated.
We expect to maintain this valuation allowance for the foreseeable future. 46 Table of Contents Results of Operations The following table sets forth selected consolidated statements of operations data as a percentage of total revenue for each of the periods indicated.
Approximately 4% of our cash was held outside the United States in accounts held by our foreign subsidiaries, which are used to fund foreign operations. Our primary sources of cash are receipts from platform and devices revenue.
Approximately 5% of our cash was held outside the United States in accounts held by our foreign subsidiaries, which are used to fund foreign operations. Our primary sources of cash are receipts from platform and devices revenue.
Although we believe we have adequately provided for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be materially different. 61 Table of Contents Critical Accounting Estimates Our financial statements are prepared in accordance with generally accepted accounting principles in the United States.
Although we believe we have adequately provided for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be materially different. Critical Accounting Estimates Our financial statements are prepared in accordance with generally accepted accounting principles in the United States.
We define Streaming Hours as the aggregate amount of time Roku streaming devices stream content on our platform in a given period. Hours streamed from The Roku Channel on non-Roku platforms are not included in this metric. Additionally, smart home products do not contribute to our Streaming Hours. We report Streaming Hours on a calendar basis.
We define Streaming Hours as the aggregate amount of time Roku streaming devices stream content on our platform in a given period. Hours streamed from The Roku Channel on non-Roku platforms are not included in this metric. Additionally, smart home products do not contribute to our Streaming Hours.
For example, if a Roku player is connected to a TV, and the viewer turns off the TV, steps away, or falls asleep and does not stop or pause the player, then the particular streaming app may continue to play content for a period of time determined by the streaming app.
For example, if a Roku player is connected to a TV, and the viewer turns off the TV, steps away, or falls asleep and does not stop or pause the player, then the particular streaming app may continue to play content for 44 Table of Contents a period of time determined by the streaming app.
Critical judgments include: (i) the predominant monetization strategy of content, (ii) the grouping of content with similar characteristics, and (iii) the application of historical viewership model and projected decay. These judgments and underlying analysis are reviewed regularly and adjusted as needed on a prospective basis.
Critical judgments include: (i) 51 Table of Contents the predominant monetization strategy of content, (ii) the grouping of content with similar characteristics, and (iii) the application of historical viewership model and projected decay. These judgments and underlying analysis are reviewed regularly and adjusted as needed on a prospective basis.
We believe that this also occurs across a wide variety of non-Roku streaming devices and other set-top boxes. Since the first quarter of 2020, all of our Roku streaming devices include a Roku OS feature that is designed to identify when content has been continuously streaming on an app for an extended period of time without user interaction.
We believe that this also occurs across a wide variety of non-Roku streaming devices and other set-top boxes. Since 2020, all of our Roku streaming devices include a Roku TV OS feature that is designed to identify when content has been continuously streaming on an app for an extended period of time without user interaction.
We define ARPU as our platform revenue for the trailing four quarters divided by the average of the number of Active Accounts at the end of the current period and the end of the corresponding period in the prior year. ARPU measures the rate at which we are monetizing our Active Accounts base and the progress of our platform business.
We define ARPU as our platform revenue for the trailing four quarters divided by the average of the number of Streaming Households at the end of the current period and the end of the corresponding period in the prior year. ARPU measures the rate at which we are monetizing our Streaming Households base and the progress of our platform business.
This section of this Annual Report generally discusses fiscal years 2023 and 2022 and year-to-year comparisons between those years.
This section of this Annual Report generally discusses fiscal years 2024 and 2023 and year-to-year comparisons between those years.
In our international markets, we primarily sell our devices through wholesale distributors which, in turn, sell to retailers. Cost of Revenue Cost of Revenue, Platform Cost of revenue, platform primarily consists of costs associated with acquiring advertising inventory and amortization costs of content, both licensed and produced, and revenue share with content partners .
In our international markets, we primarily sell our devices through wholesale distributors which, in turn, sell to retailers. Cost of Revenue Cost of Revenue, Platform Cost of revenue, platform primarily consists of costs associated with acquiring advertising inventory, content amortization costs for both licensed and produced content, costs for licensed premium subscriptions, and revenue share payments on licensed content.
To date, we have generated most of our platform revenue in the United States. Devices Revenue We generate devices revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories. Our devices revenue also includes licensing arrangements with service operators. We generate most of our devices revenue in the United States.
To date, we have generated most of our platform revenue in the United States. Devices Revenue We generate devices revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories. We generate most of our devices revenue in the United States.
Our ad inventory includes video ad inventory from AVOD content in The Roku Channel, native display ads on our home screen and screen saver, as well as ad inventory we obtain through our streaming services distribution agreements with our content partners. To supplement supply, we purchase advertising inventory from our content partners, on an as needed basis.
Our ad inventory includes video ad inventory from AVOD content in The Roku Channel, native display ads throughout the Roku Experience, as well as ad inventory we obtain through our streaming services distribution 45 Table of Contents agreements with our content partners. To supplement supply, we purchase advertising inventory from our content partners, on an as needed basis.
The primary uses of cash are costs of revenue including costs to acquire advertising inventory, costs to license and produce content, third-party manufacturing costs for our products, as well as operating expenses such as personnel-related expenses including employee termination payments, consulting and professional service expenses, facility expenses, and marketing expenses.
The primary uses of cash are costs of revenue including costs to acquire advertising inventory, costs to license and produce content, third-party manufacturing costs for our products, as well as operating expenses such as personnel-related expenses, consulting and professional service expenses, facility expenses, and marketing expenses. Other uses of cash include purchases of property and equipment and mergers and acquisitions.
Gross profit for the platform segment increased by $34.8 million, or 2%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily driven by the overall growth in our platform revenue.
Gross profit for the platform segment increased by $319.4 million, or 20%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily driven by the overall growth in our platform revenue.
Gross loss for the devices segment decreased by $46.7 million, or 52%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The gross loss was driven by a higher cost of manufacturing of products in the devices segment as compared to the revenue generated from them.
Gross loss for the devices segment increased by $36.4 million, or 83%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023. The gross loss was driven by a higher cost of manufacturing of products in the devices segment as compared to the revenue generated from them.
These activities may materially impact our liquidity and capital resources. We believe our existing cash and cash equivalents balance will be sufficient to meet our working capital, capital expenditures, and material cash requirements from known contractual obligations for the next twelve months and beyond.
These activities may materially impact our liquidity and capital resources. 49 Table of Contents We believe our existing cash and cash equivalents balance, and our undrawn available balance under our Credit Agreement (as discussed below), will be sufficient to meet our working capital, capital expenditures, and material cash requirements from known contractual obligations for the next twelve months and beyond.
Sales and Marketing Sales and marketing expenses consist primarily of salaries, benefits, commissions, and stock-based compensation for our employees engaged in sales and sales support, marketing, communications, data science and analytics, business development, product management, and partner support functions.
Sales and Marketing Sales and marketing expenses consist primarily of salaries, benefits, commissions, and stock-based compensation for our employees engaged in sales and sales support, marketing, communications, data science and analytics, business development, product management, and partner support functions. Sales and marketing expenses also include marketing, retail and merchandising expenses, consulting and outside services, and allocated facilities and overhead expenses.
Other uses of cash include purchases of property and equipment and mergers and acquisitions. We have pursued merger and acquisition activities in the past, and we may pursue additional merger and acquisition activities in the future, including the acquisition of rights to programming and content assets.
We have pursued merger and acquisition activities in the past, and we may pursue additional merger and acquisition activities in the future, including the acquisition of rights to programming and content assets.
Platform revenue is generated from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services) and streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls). Streaming services distribution was previously referred to as content distribution services.
Platform revenue is generated 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).
Sales and marketing expenses also include marketing, retail and merchandising expenses, and allocated facilities and overhead expenses. 55 Table of Contents General and Administrative General and administrative expenses consist primarily of salaries, benefits, and stock-based compensation for our finance, legal, information technology, human resources, and other administrative personnel.
General and Administrative General and administrative expenses consist primarily of salaries, benefits, and stock-based compensation for our finance, legal, information technology, human resources, and other administrative personnel. General and administrative expenses also include outside legal, accounting, and other professional service fees as well as allocated facilities and overhead expenses.
Our net loss of $709.6 million for the year ended December 31, 2023 was adjusted by non-cash charges of $972.7 million comprised mainly of stock-based compensation, amortization of content assets, depreciation and amortization of property and equipment and intangible assets, amortization of operating right-of-use assets, impairment of assets as part of restructuring charges, and change in fair value of the Strategic Investment.
Our net loss of $129.4 million for the year ended December 31, 2024 was adjusted by non-cash charges of $756.2 million comprised mainly of stock-based compensation, amortization and write-off of content assets, depreciation and amortization of property and equipment and intangible assets, amortization of operating right-of-use assets, impairment of assets as part of restructuring charges, foreign currency remeasurement losses, and fair value changes of strategic investments.
We expect that the trade off from devices gross profit or loss to grow Active Accounts will result in increased platform revenue and platform gross profit.
We expect that this trade off from devices gross profit or loss to grow Streaming Households should result in increased platform revenue and platform gross profit over time.
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. 62 Table of Contents During the year ended December 31, 2023, we 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.
During the year ended December 31, 2023, we 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.
We streamed 106.0 billion and 87.4 billion h ours during the years ended December 31, 2023 and 2022, respectively, reflecting an increase of 21%. 54 Table of Contents Average Revenue per User We measure our platform monetization progress with ARPU, which we believe represents the inherent value of our business.
We streamed 127.1 billion and 106.0 billion h ours during the years ended December 31, 2024 and 2023, respectively, reflecting an increase of 20%. Average Revenue per User We measure our platform monetization progress with ARPU.
Income Tax Expense Our income tax expense consists primarily of income taxes in certain foreign jurisdictions where we conduct business and income taxes in the United States. We have a full valuation allowance for deferred tax assets, including net operating losses primarily for the U.S. and any jurisdiction where we do not expect to realize their benefits in the future.
Income Tax Expense Our income tax expense consists primarily of income taxes in certain foreign jurisdictions where we conduct business and income taxes in the United States. We have a full valuation allowance against net deferred tax assets in the United States.
Devices revenue is generated from the sale of streaming players, Roku-branded TVs (beginning in March 2023), smart home products and services, audio products, and related accessories as well as revenue from licensing arrangements with service operators. We expect to continue to manage the average selling prices of Roku streaming devices to increase our Active Accounts.
Devices revenue is generated from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories. We expect to continue to manage the average selling prices of Roku streaming devices in an effort to sell more devices, which we believe will increase our Streaming Households.
Other Income, Net Years Ended December 31, 2023 2022 Change $ Change % (in thousands, except percentages) Interest expense $ (730) $ (5,161) $ 4,431 (86) % Other income, net 93,677 43,766 49,911 114 % Total other income, net $ 92,947 $ 38,605 $ 54,342 141 % Other income, net Total other income, net, increased by $54.3 million, or 141%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Other Income, Net Years Ended December 31, 2024 2023 Change $ Change % (in thousands, except percentages) Interest expense $ (411) $ (730) $ 319 (44) % Other income, net 98,620 93,677 4,943 5 % Total other income, net $ 98,209 $ 92,947 $ 5,262 6 % Other income, net Total other income, net, increased by $5.3 million, or 6%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
In determining the need for a valuation allowance, we assess both positive and negative evidence in the various jurisdictions to determine whether it is more likely than not that our deferred tax assets are recoverable. We regularly assess all available evidence, including cumulative historic losses and forecasted earnings.
The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance when it is more likely than not they will not be realized. In determining the need for a valuation allowance, we assess all available positive and negative evidence, including cumulative historic losses and forecasted earnings.
The volume of streaming players sold decreased by 8% and the average selling price of streaming players increased by 1% during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
During the year ended December 31, 2024, the average selling price of all devices shipped increased by 18% and the volume of all devices shipped increased by 5% as compared to the year ended December 31, 2023.
The remaining increase was driven primarily by the sales of Roku-branded TVs introduced in March 2023 and to a lesser extent by the sales of smart home products, partially offset by lower revenue from sales of streaming players.
The increase was primarily due to higher revenue from Roku-branded TVs. This was partially offset by lower revenue from streaming players, audio and smart home products.
See Note 10 to the consolidated financial statements in Item 8 of this Annual Report for additional details. 60 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Years Ended December 31, 2023 2022 Consolidated Statements of Cash Flows Data: Cash flows provided by operating activities $ 255,856 $ 11,795 Cash flows used in investing activities $ (92,619) $ (201,696) Cash flows (used in) provided by financing activities $ (61,243) $ 8,357 Cash Flows from Operating Activities Our operating activities provided cash of $255.9 million for the year ended December 31, 2023.
Cash Flows The following table summarizes our cash flows for the periods presented (in thousands): Years Ended December 31, 2024 2023 Consolidated Statements of Cash Flows Data: Cash flows provided by operating activities $ 218,045 $ 255,856 Cash flows used in investing activities $ (25,061) $ (92,619) Cash flows used in financing activities $ (89,203) $ (61,243) Cash Flows from Operating Activities Our operating activities provided cash of $218.0 million for the year ended December 31, 2024.
The cost of revenue, platform also includes restructuring charges of $67.0 million of which $65.5 million consisted of impairment charges related to removing selected content assets from The Roku Channel.
The increase was primarily driven by higher costs of acquiring content and higher credit card processing fees. During the year ended December 31, 2023, cost of revenue, platform also included restructuring charges of $67.0 million of which $65.5 million consisted of impairment charges related to removing selected content assets from The Roku Channel.
The increase was driven by the increases in foreign taxes primarily due to the increase of taxable earnings in our foreign operations. Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $2,025.9 million.
The decrease was primarily due to a tax benefit from the release of a valuation allowance on certain foreign deferred tax assets, partially offset by increases in U.S. and foreign current taxes due to the increase of taxable earnings. Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $2,160.2 million.
In addition, the increase includes higher marketing, retail, and merchandising expenses of $89.7 million, and higher office facilities and IT infrastructure expenses of $11.3 million, offset by lower consulting expenses of $4.8 million, lower other sales and marketing expenses of $2.7 million, and lower personnel-related expenses of $1.5 million.
The decrease was primarily driven by lower restructuring charges of $87.7 million, lower office facilities and IT infrastructure expenses of $13.8 million, and lower personnel-related expenses of $12.1 million, partially offset by higher consulting expenses of $6.1 million and higher marketing, retail, and merchandising expenses of $5.9 million.
Cash Flows from Financing Activities Our financing activities used cash of $61.2 million for the year ended December 31, 2023. The cash outflow related primarily to the repayment of $80.0 million of our Credit Facility that became due in February 2023 offset by $18.8 million received from proceeds from the exercise of employee stock options.
Cash Flows from Financing Activities Net cash used in financing activities of $89.2 million for the year ended December 31, 2024 was primarily due to tax payments of $96.4 million to net settle equity awards vested during the period and the payment of $2.2 million in issuance costs related to our Credit Agreement, offset by $9.4 million received from proceeds from the exercise of employee stock options.
Devices The cost of revenue, devices increased by $28.7 million, or 6%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Sales and marketing Sales and marketing expenses decreased by $100.6 million, or 10%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
General and administrative General and administrative expenses increased by $58.5 million, or 17%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase was primarily driven by higher restructuring charges of $53.9 million comprised of asset impairments, facilities exit costs, and employee severance.
General and administrative General and administrative expenses decreased by $32.2 million, or 8%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease was primarily driven by lower restructuring charges of $56.5 million, partially offset by higher legal, consulting, and professional services of $17.6 million and higher personnel-related expenses of $5.6 million.
We are unable to accurately predict when these amounts will be realized or released.
We adjust these positions when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. We are unable to accurately predict when these amounts will be realized or released.
The increase was primarily driven by higher restructuring charges of $90.9 million comprised of asset impairments, facilities exit costs, and employee severance. In addition, the increase includes higher office facilities and IT infrastructure expenses of $7.9 million, offset by lower consulting expenses of $6.6 million and lower personnel-related expenses of $3.0 million.
The decrease was primarily driven by lower restructuring 48 Table of Contents charges of $110.6 million, lower personnel-related expenses of $25.2 million, lower office facilities and IT infrastructure expenses of $17.5 million, and lower consulting expenses of $3.3 million.
Sales and marketing Sales and marketing expenses increased by $194.9 million, or 23%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase was primarily driven by higher restructuring charges of $102.8 million comprised of asset impairments, facilities exit costs, and employee severance.
Devices The cost of revenue, devices increased by $136.0 million, or 25%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increase was primarily driven by higher manufacturing costs of $115.0 million, driven by the higher cost of manufacturing Roku-branded TVs, and higher freight costs of $31.8 million.
We define Active Accounts as the number of distinct user accounts that have streamed content on our platform within the last 30 days of the period. Users who streamed content from The Roku Channel only on non-Roku platforms are not included in this metric.
We define Streaming Households as the number of distinct user accounts that have streamed content on our platform within the last 30 days of the period. We refer to such accounts as “Streaming Households” because a given user account does not necessarily represent a single viewer or a single Roku streaming device.
Release of the valuation allowance would result in the recognition of U.S. federal and state deferred tax assets and a corresponding decrease to income tax expense in the period the release is recorded. Recent Accounting Pronouncements The recent accounting pronouncements are discussed and included in Note 2 to the consolidated financial statements in Item 8 of this Annual Report.
Recent Accounting Pronouncements The recent accounting pronouncements are discussed and included in Note 2 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report. They are incorporated herein by reference.
For additional information regarding manufacturing purchase commitments, see Note 12 to the consolidated financial statements in Item 8 of this Annual Report. • Commitments to license content from content partners and produce content under contractual arrangements.
See Note 10 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report for additional details.
Cost of Revenue and Gross Profit Years Ended December 31, 2023 2022 Change $ Change % (in thousands, except percentages) Cost of Revenue: Platform $ 1,427,546 $ 1,179,675 $ 247,871 21 % Devices 534,458 505,737 28,721 6 % Total cost of revenue $ 1,962,004 $ 1,685,412 $ 276,592 16 % Gross Profit (Loss): Platform $ 1,566,559 $ 1,531,766 $ 34,793 2 % Devices (43,944) (90,644) 46,700 (52) % Total gross profit $ 1,522,615 $ 1,441,122 $ 81,493 6 % Platform The cost of revenue, platform increased by $247.9 million, or 21%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Cost of Revenue and Gross Profit Years Ended December 31, 2024 2023 Change $ Change % (in thousands, except percentages) Cost of Revenue: Platform $ 1,636,816 $ 1,427,546 $ 209,270 15 % Devices 670,437 534,458 135,979 25 % Total cost of revenue $ 2,307,253 $ 1,962,004 $ 345,249 18 % Gross Profit (Loss): Platform $ 1,885,960 $ 1,566,559 $ 319,401 20 % Devices (80,315) (43,944) (36,371) 83 % Total gross profit $ 1,805,645 $ 1,522,615 $ 283,030 19 % Platform The cost of revenue, platform increased by $209.3 million, or 15%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
ARPU was $39.92 as of December 31, 2023 as compared to $41.68 as of December 31, 2022, reflecting a decrease of 4%. The decrease in ARPU is due to an increasing share of Active Accounts in international markets where we are currently focused on growing scale and engagement, rather than monetization of our streaming platform.
The increase in ARPU was driven by platform revenue growth in the United States, partially offset by an increasing share of Streaming Households in international markets where we are currently focused more on scale and engagement than monetization.
The changes in our operating assets and liabilities used cash totaling $7.3 million mainly due to payments made to acquire content, payments made for operating leases liabilities, and an increase in the accounts receivable balance at the end of the year due to higher revenue, offset by an increase in accounts payable and accrued liabilities due to timing of payments, an increase in deferred revenue, a decrease in prepaid expenses, and a decrease in inventory balances at the end of fiscal 2023.
The negative impact from changes in operating assets and liabilities of $408.8 million was primarily due to payments made to acquire content, a decrease in accounts payable, payments made for operating leases liabilities, an increase in inventory, an increase in other long-term assets, and an increase in prepaid expenses and other current assets, partially offset by an increase in accrued liabilities due to timing of payments and an increase in deferred revenue. 50 Table of Contents Cash Flows from Investing Activities Net cash used in investing activities of $25.1 million for the year ended December 31, 2024 included purchases of property and equipment and expenditures related to the expansion of our office facilities of $5.1 million and an additional strategic investment of $20.0 million.
Additionally, due to the current macroeconomic environment, we may be unable to obtain debt or equity financing on terms that are acceptable to us. Senior Secured Term Loan A and Revolving Credit Facilities On February 19, 2019, we entered into a Credit Agreement with Morgan Stanley Senior Funding, Inc.
Additionally, we may be unable to obtain debt or equity financing on terms that are acceptable to us.
We manage the average selling prices of our products to increase our Active Accounts. 58 Table of Contents Operating Expenses Years Ended December 31, 2023 2022 Change $ Change % (in thousands, except percentages) Research and development $ 878,474 $ 788,913 $ 89,561 11 % Sales and marketing 1,033,359 838,419 194,940 23 % General and administrative 403,159 344,678 58,481 17 % Total operating expenses $ 2,314,992 $ 1,972,010 $ 342,982 17 % Research and development Research and development expenses increased by $89.6 million, or 11%, during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Operating Expenses Years Ended December 31, 2024 2023 Change $ Change % (in thousands, except percentages) Research and development $ 720,145 $ 878,474 $ (158,329) (18) % Sales and marketing 932,712 1,033,359 (100,647) (10) % General and administrative 370,955 403,159 (32,204) (8) % Total operating expenses $ 2,023,812 $ 2,314,992 $ (291,180) (13) % Research and development Research and development expenses decreased by $158.3 million, or 18%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The impairment was a result of the restructuring efforts announced in the third quarter of fiscal year 2023. See Note 17 for additional details. There were no impairments of property and equipment, right-of-use assets, and intangible assets with finite lives during the years ended December 31, 2022 and December 31, 2021.
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 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report.
Under this method, deferred income tax assets and liabilities are determined based upon the difference between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.
Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, 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.
Additionally, users who only register an account for use of one of our smart home products are not included in our reported number of Active Accounts. The number of Active Accounts also does not correspond to the number of unique individuals who actively utilize our platform, or the number of devices associated with an account.
Additionally, users who only register an account for use of one of our smart home products are not included in our reported number of Streaming Households. We had 89.8 million and 80.0 million Streaming Households as of December 31, 2024 and 2023 , respectively, reflecting an increase of 12%.
See Item 1A, Risk Factors, and the Note Regarding Forward Looking Statements elsewhere in this Annual Report for additional details. 53 Table of Contents Key Performance Metrics The key performance metrics we use to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions are gross profit, Active Accounts, Streaming Hours, and ARPU.
Key Performance Metrics and Non-GAAP Measure The key performance metrics we use to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions are Streaming Households, Streaming Hours, ARPU, and Free Cash Flow. Beginning with our results for the first quarter of 2025, we will no longer report quarterly updates on Streaming Households, and by extension, ARPU.
(as amended on May 3, 2019, the “Credit Agreement”), which provided for (i) a four-year revolving credit facility in the aggregate principal amount of up to $100.0 million (the “Revolving Credit Facility”), (ii) a four-year delayed draw term loan A facility in the aggregate principal amount of up to $100.0 million (the “Term Loan A Facility”), and (iii) an uncommitted incremental facility subject to certain conditions (together with the Revolving Credit Facility and the Term Loan A Facility, collectively, the “Credit Facility”).
Credit Agreement On September 16, 2024, we 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.
Removed
During the fiscal year ended December 31, 2023, as part of our continuing evaluation of our operations, we determined to implement additional measures to continue to bring down our year-over-year operating expense growth rate by consolidating our office space utilization, performing a strategic review of our content portfolio, reducing outside services expenses, and slowing our year-over-year headcount expense growth rate through a series of workforce reductions and limiting new hires, among other measures.
Added
Since we first reported our key performance metrics in connection with our initial public offering in 2017, our business and the streaming industry have evolved significantly. Now, we are primarily focused on the growth of revenue of our platform segment and Adjusted earnings before interest, tax, depreciation and amortization (Adjusted EBITDA).
Removed
We recorded a total restructuring charge of $356.1 million during the fiscal year ended December 31, 2023 as a result of these actions. See Note 17 to the consolidated financial statements in Item 8 of this Annual Report for additional details.
Added
As a result, effective as of the first quarter of 2025, our key performance metrics will be Streaming Hours, Platform Revenue, Adjusted EBITDA, and Free Cash Flow. Streaming Households We believe that the number of Streaming Households is a relevant measure to gauge the size of our user base.
Removed
Business Conditions and Macroeconomic Factors Macroeconomic factors, such as increased inflation and interest rates, recessionary fears, financial and credit market fluctuations, changes in economic policy, global supply chain constraints, and geopolitical developments (such as the war in Ukraine and the unrest in the Middle East), have had, and we believe may continue to have, an impact on our business and results of operations.
Added
Rather, a single account may be used by multiple viewers and linked to multiple devices. As a result, we may identify more than one Streaming Household within a single dwelling, and more than one dwelling may constitute a Streaming Household. Users who streamed content from The Roku Channel only on non-Roku platforms are not included in this metric.
Removed
We believe that advertisers in a variety of industries reduce their overall advertising spend when they are impacted by these factors, which in turn adversely affects our platform revenue. Higher inflation and economic uncertainty also lead to a reduction in consumer discretionary spending, which impacts our devices revenue.
Added
ARPU was $41.49 as of December 31, 2024 as compared to $39.92 as of December 31, 2023, reflecting an increase of 4% .
Removed
We believe that the direct and indirect impacts of these business conditions and macroeconomic factors are difficult to isolate or quantify.
Added
Free Cash Flow (Non-GAAP Measure) We use Free Cash Flow as a primary metric to measure the performance of our business because we believe maximizing Free Cash Flow helps indicate the financial strength of our business, as well as provide an indication of cash generated or (used) by the business.
Removed
Gross Profit We use gross profit as the primary metric to measure the performance of our business because we have two revenue segments that have different margin profiles, and we aim to maximize our higher margin platform revenue from our Active Accounts as they stream content on our platform. All of our gross profit is generated from our platform segment.
Added
Our goal is to continuously increase Free Cash Flow over time. We define Free Cash Flow as our trailing 12-month (“TTM”) cash flows from operating activities excluding purchases of property and equipment and the effects of exchange rates on cash.
Removed
Our gross profit was $1,522.6 million and $1,441.1 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of 6%. Active Accounts We believe that the number of Active Accounts is a relevant measure to gauge the size of our user base.
Added
Our Free Cash Flow was $203.2 million and $175.9 million for the TTM periods ended December 31, 2024 and 2023, respectively. Free Cash Flow is a non-GAAP financial measure. The Free Cash Flow reconciliation excludes purchases of property and equipment and effects of exchange rates on cash from the cash flows from operating activities, in each case where applicable.
Removed
For example, an Active Account may include more than one individual, such as a family, and one Active Account may include use of multiple Roku streaming devices. We had 80.0 million and 70.0 million Active Accounts as of December 31, 2023 and 2022, respectively, reflecting an increase of 14%.
Added
We believe Free Cash Flow is useful as a supplement in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance. However, this non-GAAP financial measure has limitations, and should not be considered in isolation or as a substitute for our GAAP financial information, such as GAAP cash flows from operating activities.
Removed
Components of Results of Operations Revenue Platform Revenue We generate platform revenue from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services) and streaming services distribution (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded app buttons on remote controls).
Added
For additional information about cash flows from operating activities, see “Liquidity and Capital Resources” below. In addition, Free Cash Flow may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.
Removed
General and administrative expenses also include outside legal, accounting, and other professional service fees as well as allocated facility and overhead expenses.
Added
The following table presents a reconciliation of Free Cash Flow to the most directly comparable GAAP financial measure for each of the periods indicated (in thousands): Trailing Twelve Months Ended December 31, 2024 December 31, 2023 Net cash provided by operating activities $ 218,045 $ 255,856 Less: Purchases of property and equipment (5,061) (82,619) Add/(Less): Effect of exchange rate changes on cash, cash equivalents and restricted cash (9,746) 2,654 Free cash flow (TTM) $ 203,238 $ 175,891 Components of Results of Operations Revenue Platform Revenue We generate 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).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe believe that an increase or decrease in interest rates of 100 basis points on our cash and cash equivalents balance would impact our interest income by an additional increase or decrease of $20.7 million.
Biggest changeWe believe that an increase or decrease in interest rates of 100 basis points on our cash and cash equivalents balance would increase or decrease our interest income by approximately $21.6 million. Foreign Currency Exchange Rate Risk Most of our revenue is generated within the United States and as such we have minimal foreign currency risk related to our revenue.
We have not entered into any derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk, but we may do so in the future. 63 Table of Contents
We have not entered into any derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk, but we may do so in the future. 53 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Fluctuation Risk Our exposure to interest rate risk relates to the interest income generated by cash and cash equivalents. The primary objective of our investment policy is to preserve principal while maximizing income without significantly increasing risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Fluctuation Risk Our exposure to interest rate risk relates to the interest income generated by cash and cash equivalents. The primary objective of our investment policy is to preserve principal while maximizing income without significantly 52 Table of Contents increasing risk.
Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
Our foreign currency risk primarily relates to operating expenses, cash balances and lease liabilities denominated in currencies other than U.S. dollars, primarily British pounds and Euros. Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
Removed
Foreign Currency Exchange Rate Risk Most of our revenue is generated within the United States and as such we have minimal foreign currency risk related to our revenue. Our foreign currency risk primarily relates to operating expenses, cash balances and lease liabilities denominated in currencies other than U.S. dollars, primarily British pounds and Euros.

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