ROKU INC

11. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has 10 million shares of undesignated preferred stock authorized but not issued with rights and preferences determined by the Company’s Board of Directors at the time of issuance of such shares. As of December 31, 2023 and 2022, there wereno shares of preferred stock issued and outstanding.

Common Stock

The Company hastwo classes of authorized common stock, Class A common stock and Class B common stock. Holders of Class A common stock are entitled toone vote for each share of Class A common stock held on all matters submitted to a vote of stockholders and holders of Class B common stock are entitled toten votes for each share of Class B common stock held on all matters submitted to a vote of stockholders. Except with respect to voting, the rights of the holders of Class A and Class B common stock are identical. Shares of Class B common stock are voluntarily convertible into shares of Class A common stock at the option of the holder and are generally automatically converted into shares of the Company’s Class A common stock upon sale or transfer. Shares issued in connection with exercises of stock options, vesting of restricted stock units, or shares purchased under the employee stock purchase plan are generally automatically converted into shares of the Company’s Class A common stock.

At-the-Market Offering

On March 2, 2021, the Company entered into an Equity Distribution Agreement with Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., and Evercore Group L.L.C., as its sales agents, pursuant to which the Company could offer and sell from time-to-time shares of its Class A common stock for aggregate gross proceeds of up to $1,000.0 million. In March 2021, the Company sold approximately 2.6 million shares of Class A common stock at an average selling price of $379.26 per share, for aggregate gross proceeds of $1,000.0 million and incurred issuance costs of $10.4 million.

Common Stock Reserved For Issuance

As of December 31, 2023, the Company’s common stock reserved for issuance in the future is as follows (in thousands):

• The Company has not issued any common stock pursuant to the 2017 Employee Stock Purchase Plan.

Equity Incentive Plans

The Company currently grants equity under the 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan became effective September 2017 in connection with the Company’s initial public offering (“IPO”). The 2017 Plan provides for the grant of incentive stock options to the Company’s employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of equity compensation to the Company’s employees, directors and consultants. The outstanding equity relates to the 2017 Plan and the 2008 Equity Incentive Plan (“2008 Plan”), a pre-IPO plan. No additional equity grants have been made pursuant to the 2008 Plan subsequent to the IPO.

The equity granted under the 2017 Plan is subject to continuous service. Stock options granted under the 2017 Plan generally are granted at a price per share equivalent to the fair market value on the date of grant. Recipients of option grants who possess more than 10% of the combined voting power of the Company are subject to certain limitations, and incentive stock options granted to such recipients are at a price no less than 110% of the fair market value at the date of grant.

Restricted Stock Units

Restricted stock unit activity for the year ended December 31, 2023 is as follows (in thousands, except per share data):

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

The fair value of restricted stock units that vested during the years ended December 31, 2023, 2022, and 2021 was $314.0 million, $282.6 million, and $135.6 million, respectively.

The unrecognized stock-based compensation expense related to restricted stock units awarded to employees as of December 31, 2023 was $692.9 million, which the Company expects to recognize over a weighted-average period of approximately 2.37 years.

Stock Options

Stock option activity for the year ended December 31, 2023 is as follows (in thousands, except years and per share data):

The weighted-average grant date fair value per share of options granted during the years ended December 31, 2023, 2022, and 2021 was $42.43, $36.66, and $139.76, respectively.

The intrinsic value for stock options exercised in the years ended December 31, 2023, 2022, and 2021 was $38.9 million, $210.0 million, and $997.6 million, respectively. Intrinsic value represents the difference between the fair values of the Company’s common stock and the stock options’ exercise price on the date of grant.

As of December 31, 2023, the Company had $69.4 million of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 2.2 years.

Stock-based Compensation

The Company measures the cost of employee services received in exchange for an equity award based on the grant date fair value of the award. Stock options granted to employees generally vest overone tofour years and have a term often years. Restricted stock units generally vest overone tofour years. No stock-based compensation was capitalized for the years ended December 31, 2023 and 2022. The amount of stock-based compensation capitalized as part of internal-use software for the year ended December 31, 2021 was not material.

The following table presents total stock-based compensation expense for the years ended December 31, 2023, 2022, and 2021 (in thousands):

The fair value of stock options granted is estimated on the grant date using the Black-Scholes option-valuation model. The assumptions used to value stock options granted during the years ended December 31, 2023, 2022, and 2021 are as follows: