ROKU, INC

Previous wording

Our business is subject to risks related to the evolving macroeconomic environment, including the effects of increased volatility in financial markets, higher inflation and interest rates, potential economic slowdown or recession, geopolitical developments, and changes in economic or government policies, including the unknown impact of tariffs. While we intend to remain vigilant in monitoring the impacts of these circumstances on our business and adapt accordingly, the effects of these macroeconomic factors on our business, results of operations, and financial condition remain uncertain. See Item 1A, Risk Factors, and the Note Regarding Forward Looking Statements elsewhere in this Quarterly Report for additional details.

Current wording

Our business is subject to risks related to the evolving macroeconomic environment, including the effects of increased volatility in financial markets, higher inflation and interest rates, potential economic slowdown or recession, geopolitical developments, changes in economic or government policies, including the unknown impact of tariffs, changing global regulations, and the overall uncertainty surrounding international trade relations. While we intend to remain vigilant in monitoring the impacts of these circumstances on our business and adapt accordingly, the effects of these macroeconomic factors on our business, results of operations, and financial condition remain largely uncertain; however, for the full year 2025, we expect our devices revenue and gross margin to be slightly down, mostly due to tariffs. See Item 1A, Risk Factors, and the Note Regarding Forward Looking Statements elsewhere in this Quarterly Report for additional details.

Previous wording

We streamed 35.8 billion and 30.8 billion hours during the three months ended March 31, 2025 and 2024, respectively, reflecting an increase of 16%.

Current wording

We streamed 35.4 billion and 30.1 billion hours during the three months ended June 30, 2025 and 2024, respectively, reflecting an increase of 17%.

Previous wording

We use Platform revenue as a primary metric to measure the performance of our business because it represents our ability to successfully monetize our platform. Platform revenue growth is one of our strategic priorities. Platform revenue was $880.8 million and $754.9 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

We use Platform revenue as a primary metric to measure the performance of our business because it represents our ability to successfully monetize our platform. Platform revenue growth is one of our strategic priorities. Platform revenue was $975.5 million and $824.3 million for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Adjusted EBITDA is a non-GAAP financial measure. The Adjusted EBITDA reconciliation excludes total other income, net, stock-based compensation expense, depreciation and amortization, restructuring charges, and income tax (benefit) expense from the net loss of the period. We believe Adjusted EBITDA 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 net loss. In addition, Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.

Current wording

Adjusted EBITDA is a non-GAAP financial measure. The Adjusted EBITDA reconciliation excludes total other income, net, stock-based compensation expense, depreciation and amortization, restructuring charges, and income tax benefit from the net income (loss) of the period. We believe Adjusted EBITDA 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 net income (loss). In addition, Adjusted EBITDA may not be comparable to similarly titled metrics of other companies due to differences in methods of calculation.

Previous wording

(1) Restructuring charges for the three months ended March 31, 2025 include asset impairment charges of $2.9 million and facilities exit costs of $0.2 million. Restructuring charges for the three months ended March 31, 2024 include severance and related charges of $0.9 million, asset impairment charges of $0.9 million, and facilities exit costs of less than $0.1 million.

Current wording

(1) The restructuring charges for the three months ended June 30, 2025 were not significant, and the restructuring charges for the six months ended June 30, 2025 primarily include asset impairment charges of $2.9 million and facilities exit costs of $0.2 million. Restructuring charges for the three and six months ended June 30, 2024 primarily include asset impairment charges of $10.7 million and $11.5 million, respectively.

Previous wording

Our Free Cash Flow was $298.4 million and $426.8 million for the TTM periods ended March 31, 2025 and 2024, respectively.

Current wording

Our Free Cash Flow was $392.0 million and $317.9 million for the TTM periods ended June 30, 2025 and 2024, respectively.

Previous wording

Our income tax (benefit) expense consists primarily of income tax expense in certain foreign jurisdictions where we conduct business and income tax (benefit) expense in the United States. We have a full valuation allowance against net deferred tax assets in the United States, and expect to maintain this valuation allowance for the foreseeable future.

Current wording

Our income tax expense (benefit) consists primarily of income tax expense (benefit) in certain foreign jurisdictions where we conduct business and income tax expense (benefit) in the United States. We have a full valuation allowance against net deferred tax assets in the United States. We expect to maintain this valuation allowance for the foreseeable future.

Previous wording

Comparison of the Three Months Ended March 31, 2025 and March 31, 2024

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and June 30, 2024

Previous wording

Platform revenue increased by $125.9 million, or 17%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily due to higher revenue from streaming services distribution, specifically increased revenue share on content subscriptions and higher Premium Subscriptions revenue, in addition to higher advertising revenue, despite continued weakness in the media and entertainment vertical.

Current wording

Platform revenue increased by $277.0 million, or 18%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increase was primarily due to higher revenue from streaming services distribution, specifically higher Premium Subscription revenue and subscription revenue from the acquisition of Frndly. In addition, advertising revenue increased despite continued weakness in the media and entertainment vertical.

Previous wording

Devices revenue increased by $13.3 million, or 11%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily due to higher revenue from Roku-branded TVs. This was partially offset by lower revenue from streaming players. During the three months ended March 31, 2025, the average selling price of all devices shipped decreased by 2% and the volume of all devices shipped increased by 13% as compared to the three months ended March 31, 2024. The decrease in average selling price was due to higher promotions on Roku-branded TVs and streaming players. The increase in the volume of devices shipped was mainly due to higher sales of Roku-branded TVs, and to a lesser extent higher sales of streaming players.

Current wording

Devices revenue increased by $5.0 million, or 2%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increase was primarily due to higher revenue from Roku-branded TVs, partially offset by lower revenue from streaming players. During the six months ended June 30, 2025, the average selling price of all devices shipped increased by 3% and the volume of all devices shipped increased by 1% as compared to the six months ended June 30, 2024. The increase in average selling price was primarily due to a higher proportion of sales from Roku-branded TVs, which generally sell at higher prices compared to streaming players. The increase in the volume of devices shipped was mainly due to higher sales of Roku-branded TVs.

Previous wording

The Cost of revenue, platform increased by $55.9 million, or 16%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily driven by higher costs of acquiring content and higher costs of Premium Subscriptions.

Current wording

The Cost of revenue, platform increased by $93.3 million, or 24%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The increase was primarily driven by higher costs of Premium Subscriptions, acquiring content, and acquiring advertising inventory.

Previous wording

Gross profit for the platform segment increased by $69.9 million, or 18%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily driven by the overall growth in our platform revenue.

Current wording

Gross profit for the platform segment increased by $57.8 million, or 13%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily driven by the overall growth in our platform revenue.

Previous wording

The Cost of revenue, devices increased by $26.5 million, or 20%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily driven by higher manufacturing costs of $17.4 million, driven by the higher cost of manufacturing Roku-branded TVs, and higher freight costs of $13.0 million.

Current wording

The Cost of revenue, devices increased by $3.1 million, or 1%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increase was primarily driven by higher freight costs of $10.7 million and higher manufacturing costs of $9.6 million mainly due to a higher proportion of sales from Roku-branded TVs. The increases were partially offset by lower inventory provisions of $11.7 million, and lower royalty costs of $2.1 million.

Previous wording

Households, which we expect should result in increased platform revenue and platform gross profit over time.

Current wording

Gross loss for the devices segment decreased by $15.2 million, or 100%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily driven by lower inventory provisions. We manage the average selling prices of our products to grow our Streaming Households, which we expect should result in increased platform revenue and platform gross profit over time.

Previous wording

Gross loss for the devices segment increased by $13.2 million, or 217%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily driven by Roku-branded TVs representing a higher proportion of device sales. We manage the average selling prices of our products to grow our Streaming

Current wording

Gross loss for the devices segment decreased by $2.0 million, or 9%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily driven by lower inventory provisions, partially offset by a higher proportion of sales from Roku-branded TVs. We manage the average selling prices of our products to grow our Streaming Households, which we expect should result in increased platform revenue and platform gross profit over time.

Previous wording

Research and development expenses increased by $4.1 million, or 2%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily driven by higher consulting expenses of $5.2 million.

Current wording

Research and development expenses increased by $2.5 million, or 1%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The increase was driven by higher consulting expenses of $2.5 million.

Previous wording

Sales and marketing expenses increased by $21.6 million, or 11%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily driven by higher marketing, retail, and merchandising expenses of $11.1 million and higher personnel-related expenses of $8.2 million.

Current wording

Sales and marketing expenses increased by $43.2 million, or 10%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The increase was primarily driven by higher marketing, retail, and merchandising expenses of $34.4 million and higher personnel-related expenses of $11.8 million.

Previous wording

General and administrative expenses increased by $16.8 million, or 22%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase was primarily driven by higher legal and consulting expenses of $10.1 million and higher personnel-related expenses of $4.7 million.

Current wording

General and administrative expenses increased by $0.9 million, or 1%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The increase was primarily driven by higher legal and consulting expenses of $6.6 million, partially offset by lower bad debt expense of $4.4 million.

Previous wording

Income tax expense decreased by $17.8 million, to reflect an income tax benefit during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to U.S. current income tax benefit expected to be realized during the year as a result of year-to-date losses.

Current wording

Income tax benefit increased by $14.5 million during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to U.S. current income tax benefit expected to be realized during the year from year-to-date losses and the differences in tax benefit from the release of jurisdictional valuation allowances in each period.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $2,256.2 million. 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.

Current wording

As of June 30, 2025, we had cash and cash equivalents of $2,253.3 million. 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.

Previous wording

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. Though we do not expect to incur expenses for facilities and building related costs at the same level as the last few fiscal years, we will continue to incur expenses on the maintenance of our facilities and purchases of computer systems, and other property and equipment, in order to support future growth in our business. These activities may materially impact our liquidity and capital resources.

Current wording

We have pursued merger and acquisition activities, such as the acquisition of Frndly, and we may pursue additional merger and acquisition activities in the future, including the acquisition of rights to programming and content assets. Though we do not expect to incur expenses for facilities and building related costs at the same level as in the last few fiscal years, we will continue to incur expenses on the maintenance of our facilities and purchases of computer systems, and other property and equipment, in order to support future growth in our business. These activities may materially impact our liquidity and capital resources.

Previous wording

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. The Credit Agreement provides for a $100.0 million sub-facility for the issuance of letters of credit, and certain existing letters of credit were deemed outstanding under this facility. The Credit Agreement will mature on September 16, 2029. Proceeds from the Credit Agreement may be used for general corporate purposes, including to finance working capital requirements.

Current wording

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 Citibank N.A., as administrative agent (the “Credit Agreement”), which provides for (i) a five-year revolving credit facility in an aggregate principal amount of up to $300.0 million, and (ii) an uncommitted increase option of up to an additional $300.0 million exercisable upon the satisfaction of certain customary conditions. The Credit Agreement provides for a $100.0 million sub-facility for the issuance of letters of credit, and certain existing letters of credit were deemed outstanding under this facility. The Credit Agreement will mature on September 16, 2029. Proceeds from the Credit Agreement may be used for general corporate purposes, including to finance working capital requirements.

Previous wording

We had outstanding letters of credit secured by the Credit Agreement of $39.7 million as of March 31, 2025. As of March 31, 2025, we had not borrowed against the Credit Agreement, and we were in compliance with all of the covenants of the Credit Agreement.

Current wording

We had outstanding letters of credit secured by the Credit Agreement of $39.5 million as of June 30, 2025. As of June 30, 2025, we had not borrowed against the Credit Agreement, and we were in compliance with all of the covenants of the Credit Agreement.

Previous wording

Our operating activities provided cash of $138.7 million for the three months ended March 31, 2025. Our net loss of $27.4 million for the three months ended March 31, 2025 was adjusted by non-cash charges of $180.6 million comprised primarily of stock-based compensation, amortization of content assets, depreciation and amortization of property and equipment and intangible assets, amortization of operating lease right-of-use assets, fair value change of strategic investment in convertible promissory notes, and impairment of assets as part of restructuring charges. The negative impact from changes in our operating assets and liabilities of $14.4 million was primarily due to decreases in accounts payable and accrued liabilities due to timing of payments, payments made to acquire content, and payments made for operating lease liabilities, as well as an increase in prepaid expenses and other current assets. This was partially offset by a decrease in accounts receivable, a decrease in inventories, and an increase in deferred revenue.

Current wording

Our operating activities provided cash of $248.5 million for the six months ended June 30, 2025. Our net loss of $16.9 million for the six months ended June 30, 2025 was adjusted by non-cash charges of $345.2 million composed primarily of stock-based compensation, amortization of content assets, depreciation and amortization of property and equipment and intangible assets, amortization of operating lease right-of-use assets, fair value change of strategic investment in convertible promissory notes, and impairment of assets as part of restructuring charges. The negative impact from changes in our operating assets and liabilities of $79.8 million was primarily due to decreases in accounts payable and accrued liabilities due to timing of payments, payments made to acquire content, and payments made for operating lease liabilities and other longer-term liabilities, as well as an increase in prepaid expenses and other current assets. This was partially offset by a decrease in accounts receivable, a decrease in inventories, a decrease in other non-current assets, and an increase in deferred revenue.

Previous wording

Net cash used in investing activities of $8.9 million for the three months ended March 31, 2025 included purchases of property and equipment of $1.9 million and a purchase of a strategic investment of $7.0 million.

Current wording

Net cash used in investing activities of $95.1 million for the six months ended June 30, 2025 included purchases of property and equipment of $3.1 million, a purchase of business, net of cash acquired of $95.1 million, and a purchase of a strategic investment of $7.0 million, partially offset by a repayment received from an investment of $10.0 million.

Previous wording

Net cash used in financing activities of $36.1 million for the three months ended March 31, 2025 was primarily due to tax payments of $38.5 million to net settle equity awards vested during the period, partially offset by proceeds from employee stock option exercises.

Current wording

Net cash used in financing activities of $68.6 million for the six months ended June 30, 2025 was primarily due to tax payments of $71.5 million to net settle equity awards vested during the period, partially offset by proceeds from employee stock option exercises.

Previous wording

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. These estimates and assumptions are based on historical experience, current trends, and other factors that we believe to be reasonable at the time our condensed consolidated financial statements are prepared. We evaluate our estimates and assumptions on an ongoing basis. There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report.

Current wording

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. These estimates and assumptions are based on historical experience, current trends, and other factors that we believe to be reasonable at the time our condensed consolidated financial statements are prepared. We evaluate our estimates and assumptions on an ongoing basis. Except for the accounting policy related to Business Combinations, as discussed below, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report.