ROKU INC

10. 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 June 30, 2024 and December 31, 2023, 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.

Common Stock Reserved for Future Issuance

As of June 30, 2024, the Company’s common stock reserved for issuance in the future is as follows (in thousands):

(1)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 per share no less than 110% of the fair market value on the date of grant.

Restricted Stock Units

Restricted stock unit activity for the six months ended June 30, 2024 is as follows (in thousands, except per share data):

As of June 30, 2024, the Company had $507.9 million of unrecognized stock-based compensation expense related to unvested restricted stock units that is expected to be recognized over a weighted-average period of approximately 1.9 years.

Stock Options

Stock option activity for the six months ended June 30, 2024 is as follows (in thousands, except years and per share data):

As of June 30, 2024, the Company had $50.7 million of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 1.8 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.

The following table shows the total stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 (in thousands):