FULLTEXT DEL 1 AV 2
10-Q – 2026-05-01 – roku-20260331.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-38211
Roku, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 4841 26-2087865
(State or other jurisdiction of incorporation or organization) (Primary standard industrial code number) (I.R.S. employer identification no.)
1173 Coleman Avenue
San Jose , California 95110
( 408 ) 556-9040
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.0001 par value ROKU The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer ☑ Accelerated Filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
As of March 31, 2026, the registrant had outstanding 131,029,521 shares of Class A common stock, $0.0001 par value per share and 16,554,064 shares of Class B common stock, $0.0001 par value per share.
TABLE OF CONTENTS
Page
PART I
FINANCIAL INFORMATION
1
Item 1.
Financial Statements (Unaudited)
1
Condensed Consolidated Balance Sheets
1
Condensed Consolidated Statements of Operations
2
Condensed Consolidated Statements of Comprehensive Income (Loss)
3
Condensed Consolidated Statements of Stockholders’ Equity
4
Condensed Consolidated Statements of Cash Flows
5
Notes to Condensed Consolidated Financial Statements
7
1. The Company
7
2. S ummary of S ignificant Accounting Policies
7
3. Revenue
8
4. Business Combination
9
5. Goodwill and Intangible Assets
9
6. Balance Sheet Components
10
7. Content Assets
12
8. Strategic Investments
12
9. Fair Value Disclosure
13
10. Leases
14
11. Debt
15
12. Stockholders’ Equity
16
13. Commitments and Contingencies
18
14. Income Taxes
19
15. Net Income (Loss) Per Share
19
16. Segment Information
20
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
29
Item 4.
Controls and Procedures
30
PART II
OTHER INFORMATION
30
Item 1.
Legal Proceedings
30
Item 1A.
Risk Factors
30
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
61
Item 3
Defaults Upon Senior Securities
61
Item 4.
Mine Safety Disclosures
61
Item 5.
Other Information
61
Item 6.
Exhibits
63
Signatures
Table of Contents
GLOSSARY OF SELECTED TERMS
As used in this Quarterly Report on Form 10-Q (“Quarterly Report”), unless the context otherwise requires, references to the following terms have the respective meaning as defined below.
Ad-supported Video on Demand (AVOD) : Streaming on-demand content supported by advertising that does not charge a fee to the viewer.
Apps : Primarily refers to the direct-to-consumer streaming applications on the Roku platform (e.g., The Roku Channel or Netflix). We also use “apps” to refer to mobile applications (such as our Roku mobile app).
Average Revenue per User (ARPU): 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.
Demand-side platform (DSP): Programmatic advertising technology that allows advertisers and advertising agencies to buy advertising inventory across multiple platforms and publishers through one interface.
FAST: Free, ad-supported linear streaming TV, which does not include on-demand content.
Licensed Roku TV partners: TV original equipment manufacturers (“OEMs”) that license the Roku TV OS and leverage our smart TV reference designs to build TVs.
Linear TV: A TV format that provides programming at specifically scheduled times.
Premium Subscriptions: Subscription-based streaming services (e.g., Paramount+) from content partners offered through The Roku Channel.
Roku-made TVs: TVs powered by the Roku TV OS that are designed, made, and sold by Roku. Roku-made TVs include the Roku Select, Roku Plus, and Roku Pro Series TVs, as well as Hiro Roku TVs.
Roku Experience : The user experience on the Roku platform, representing all the features that Roku builds and operates to engage, delight, and help our viewers easily find great entertainment.
Roku Home Screen: The first screen the viewer sees when they begin streaming with a Roku streaming device. The viewer is also returned to the Roku Home Screen by pressing the home button on the Roku remote or when exiting apps.
Roku Home Screen Menu: The left-hand navigation bar on the Roku Home Screen.
Roku media : Ad inventory sold by Roku, either directly or indirectly, on our home screen, in our owned and operated streaming apps, or in third-party streaming apps.
Roku Originals: Original content programming created by Roku.
Roku TV OS (or Roku platform): Roku operating system that is purpose built for TV and powers Roku streaming devices.
Roku TV models: TVs powered by the Roku TV OS that are made and sold by our licensed Roku TV partners.
Supply-side platform (SSP): P rogrammatic advertising technology that enables publishers to sell their advertising inventory to multiple demand sources.
Streaming: The distribution of video, music, or other media content via the internet.
Streaming device : Any device that enables TV streaming. Roku streaming devices include Roku streaming players, Roku TV models, and Roku-made TVs.
Streaming Hours: The aggregate amount of time streaming devices stream on Roku’s platform in a given period. See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Key Performance Metrics and Non-GAAP Measures, elsewhere in this Quarterly Report for additional detail.
Streaming Households : The number of distinct user accounts that have streamed on our platform within the last 30 days of the period.
Streaming platform: The technology that delivers the viewer experience and streaming apps (e.g., The Roku Channel and Netflix) over an internet connection to a user’s TV.
Streaming players : A device that connects to a TV via an HDMI connection to enable TV streaming (such as the Roku Streaming Stick, Roku Ultra, and Roku Streambar SE).
Smart TV: A television that is connected to the internet through an operating system (e.g., the Roku TV OS).
Subscription Video on Demand (SVOD): Streaming content that is available on demand, requires a paid subscription, and can be ad-supported or ad-free.
TV streaming : The act of streaming content over the internet on a TV.
The Roku Channel (TRC): A Roku owned and operated streaming service. The Roku Channel aggregates three types of content—AVOD, FAST, and Premium Subscriptions—within The Roku Channel app and through viewing experiences integrated throughout the Roku platform (e.g., Live TV on the Roku Home Screen Menu).
Table of Contents
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts in this Quarterly Report, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “design,” “develop,” “estimate,” “expect,” “intend,” “maintain,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” “target,” or similar expressions and their negatives. The foregoing may not encompass all of the forward-looking statements made in this Quarterly Report.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. They are subject to a number of known and unknown risks, uncertainties, and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this Quarterly Report, regarding, among other things:
• our financial performance, including our revenue, cost of revenue, operating expenses, profitability, and key performance metrics;
• the impact of business and macroeconomic conditions and uncertainties, such as volatility in financial markets, tariffs, inflation, interest rates, recessions, geopolitical conflicts, and changes in economic and government policies, on our business, operations, and the markets and communities in which we and our advertisers, partners, licensees, manufacturers, suppliers, retailers, and viewers operate;
• our ability to attract and retain viewers and increase Streaming Hours;
• our ability to attract and retain advertisers to purchase advertising on our streaming platform;
• our ability to attract and retain TV brands and manufacturing partners to license and deploy our technology;
• our ability to produce or acquire rights to distribute popular content on our streaming platform on favorable terms, or at all, including the renewals of our existing agreements with content partners;
• changes in TV viewing habits and the growth of TV streaming;
• the growth of our relevant markets, including the growth in advertising spend on TV streaming platforms, and our ability to successfully grow our business in those markets;
• our ability to adapt to changing market conditions and technological developments, including our ability to successfully incorporate artificial intelligence into our operations, products, and services;
• our ability to develop and launch new products and provide ancillary services and support;
• our ability to integrate and realize the anticipated benefits of acquired businesses, products, and technologies;
• our ability to expand our products and services into adjacent markets and profitably scale our operations;
• our ability to compete effectively with existing competitors and new market entrants;
• our ability to successfully manage domestic and international expansion;
• our ability to attract and retain qualified employees and key personnel;
• our ability to address potential and actual cybersecurity incidents and system failures involving our products, systems, and operations;
• our ability to maintain, protect, and enhance our intellectual property;
• our ability to obtain financing on favorable terms, or at all;
• our ability to repurchase shares of our common stock;
• our ability to manage the selling prices of our products to increase Streaming Households, and, in turn, increase Platform revenue and Platform gross profit; and
• our ability to comply with laws and regulations that currently apply or may become applicable to our business both in the United States and internationally, such as privacy and data protection regulations, among others.
Other sections of this Quarterly Report may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report, and the documents referenced in and filed as exhibits to this Quarterly Report, with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (roku.com/investor), our blog (roku.com/blog), U.S. Securities and Exchange Commission (“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. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors, the media, and others interested in our company to review the information that we post on our investor relations website. Roku, the Roku logo, and other trade names, trademarks, or service marks of Roku appearing in this report are the property of Roku. Trade names, trademarks, and service marks of other companies appearing in this report are the property of their respective holders. Information contained on or accessible through the websites listed above is not incorporated by reference nor otherwise included in this Quarterly Report, and any references to these websites are intended to be inactive textual references only.
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
ROKU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
(unaudited)
As of
March 31, 2026 December 31, 2025
Assets
Current assets:
Cash and cash equivalents $ 1,649,877 $ 1,587,068
Short-term investments 730,342 730,213
Accounts receivable, net of allowances of $ 57,152 and $ 80,448 as of March 31, 2026 and December 31, 2025, respectively
752,586 879,871
Inventories 101,289 114,642
Prepaid expenses and other current assets 136,532 89,716
Total current assets 3,370,626 3,401,510
Property and equipment, net 162,257 173,577
Operating lease right-of-use assets 243,701 260,341
Content assets, net 161,904 167,908
Intangible assets, net 46,202 50,207
Goodwill 309,406 309,406
Other non-current assets 58,538 70,534
Total Assets $ 4,352,634 $ 4,433,483
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 123,093 $ 158,640
Accrued liabilities 911,199 957,983
Deferred revenue, current portion 123,938 120,912
Total current liabilities 1,158,230 1,237,535
Deferred revenue, non-current portion 27,057 28,848
Operating lease liability, non-current portion 412,705 435,899
Other long-term liabilities 83,578 73,256
Total Liabilities 1,681,570 1,775,538
Commitments and contingencies (Note 13)
Stockholders’ Equity:
Common stock, $ 0.0001 par value
15 15
Additional paid-in capital 4,174,436 4,145,485
Accumulated other comprehensive income (loss) ( 493 ) 1,039
Accumulated deficit ( 1,502,894 ) ( 1,488,594 )
Total stockholders’ equity 2,671,064 2,657,945
Total Liabilities and Stockholders’ Equity $ 4,352,634 $ 4,433,483
See accompanying Notes to Condensed Consolidated Financial Statements
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, 2026 March 31, 2025
Net revenue:
Platform:
Advertising $ 612,705 $ 482,823
Subscriptions 518,525 397,994
Total Platform 1,131,230 880,817
Devices 117,649 139,855
Total net revenue 1,248,879 1,020,672
Cost of revenue:
Platform:
Advertising 241,736 212,424
Subscriptions 305,409 204,082
Total Platform 547,145 416,506
Devices 136,798 159,121
Total cost of revenue 683,943 575,627
Gross profit (loss):
Platform:
Advertising 370,969 270,399
Subscriptions 213,116 193,912
Total Platform 584,085 464,311
Devices ( 19,149 ) ( 19,266 )
Total gross profit 564,936 445,045
Operating expenses:
Research and development 189,492 184,579
Sales and marketing 221,221 223,693
General and administrative 102,451 94,503
Total operating expenses 513,164 502,775
Income (loss) from operations 51,772 ( 57,730 )
Other income, net:
Interest expense ( 624 ) ( 433 )
Other income, net 37,497 17,649
Total other income, net 36,873 17,216
Income (loss) before income taxes 88,645 ( 40,514 )
Income tax expense (benefit) 2,945 ( 13,083 )
Net income (loss) $ 85,700 $ ( 27,431 )
Net income (loss) per share — basic $ 0.58 $ ( 0.19 )
Net income (loss) per share — diluted $ 0.57 $ ( 0.19 )
Weighted-average common shares outstanding — basic 147,510 146,197
Weighted-average common shares outstanding — diluted 151,024 146,197
See accompanying Notes to Condensed Consolidated Financial Statements
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended
March 31, 2026 March 31, 2025
Net income (loss) $ 85,700 $ ( 27,431 )
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment ( 1,532 ) 981
Comprehensive income (loss) $ 84,168 $ ( 26,450 )
See accompanying Notes to Condensed Consolidated Financial Statements
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity
Three Months Ended March 31, 2026 Shares Amount
Balance-December 31, 2025 147,850 $ 15 $ 4,145,485 $ 1,039 $ ( 1,488,594 ) $ 2,657,945
Issuance of common stock pursuant to equity incentive plans 1,273 — 1,789 — — 1,789
Stock-based compensation expense — 78,682 — — 78,682
Shares withheld for taxes related to net share settlement of equity awards ( 524 ) — ( 51,520 ) — — ( 51,520 )
Repurchases and retirement of common stock ( 1,015 ) — — — ( 100,000 ) ( 100,000 )
Foreign currency translation adjustment — — — ( 1,532 ) — ( 1,532 )
Net income — — — — 85,700 85,700
Balance-March 31, 2026 147,584 $ 15 $ 4,174,436 $ ( 493 ) $ ( 1,502,894 ) $ 2,671,064
Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity
Three Months Ended March 31, 2025 Shares Amount
Balance-December 31, 2024 145,910 $ 15 $ 3,921,432 $ ( 1,737 ) $ ( 1,426,973 ) $ 2,492,737
Issuance of common stock pursuant to equity incentive plans 1,226 — 2,436 — — 2,436
Stock-based compensation expense — — 95,494 — — 95,494
Shares withheld for taxes related to net share settlement of equity awards ( 479 ) — ( 38,508 ) — — ( 38,508 )
Foreign currency translation adjustment — — — 981 — 981
Net loss — — — — ( 27,431 ) ( 27,431 )
Balance-March 31, 2025 146,657 $ 15 $ 3,980,854 $ ( 756 ) $ ( 1,454,404 ) $ 2,525,709
See accompanying Notes to Condensed Consolidated Financial Statements
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31, 2026 March 31, 2025
Cash flows from operating activities:
Net income (loss) $ 85,700 $ ( 27,431 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 17,928 15,192
Stock-based compensation expense 78,682 95,494
Amortization of right-of-use assets 12,343 11,575
Amortization and write-off of content assets 45,747 48,044
Foreign currency remeasurement (gains) losses ( 385 ) 243
Change in fair value of strategic investment in convertible promissory notes — 6,284
Impairment of assets 4,920 2,870
Provision for credit losses 71 1,285
Other items, net ( 1,913 ) ( 425 )
Changes in operating assets and liabilities:
Accounts receivable 126,890 161,122
Inventories 13,353 22,974
Prepaid expenses and other current assets ( 44,074 ) ( 12,381 )
Content assets and liabilities, net ( 47,856 ) ( 43,113 )
Other non-current assets 4,620 2,790
Accounts payable ( 35,029 ) ( 79,459 )
Accrued liabilities ( 41,340 ) ( 57,984 )
Operating lease liabilities ( 21,728 ) ( 18,783 )
Other long-term liabilities ( 24 ) 242
Deferred revenue 1,235 10,193
Net cash provided by operating activities 199,140 138,732
Cash flows from investing activities:
Purchases of property and equipment ( 3,134 ) ( 1,931 )
Sale (purchase) of strategic investment 18,399 ( 7,000 )
Purchases of short-term investments ( 350,000 ) —
Sales and maturities of short-term investments 350,000 —
Net cash provided by (used in) investing activities 15,265 ( 8,931 )
Cash flows from financing activities:
Proceeds from equity issued under incentive plans 1,789 2,436
Taxes paid related to net share settlement of equity awards ( 51,520 ) ( 38,508 )
Repurchases of common stock ( 100,000 ) —
Net cash used in financing activities ( 149,731 ) ( 36,072 )
Net increase in cash, cash equivalents and restricted cash 64,674 93,729
Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,865 ) 2,188
Cash, cash equivalents and restricted cash — beginning of period 1,587,068 2,160,639
Cash, cash equivalents and restricted cash — end of period $ 1,649,877 $ 2,256,556
See accompanying Notes to Condensed Consolidated Financial Statements
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(in thousands)
(unaudited)
Three Months Ended
March 31, 2026 March 31, 2025
Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents $ 1,649,877 $ 2,256,153
Restricted cash, current — 403
Cash, cash equivalents and restricted cash — end of period $ 1,649,877 $ 2,256,556
Supplemental disclosures of cash flow information:
Cash paid for interest $ 518 $ 28
Cash paid for (refunded from) income taxes, net $ ( 1,037 ) $ 2,162
Supplemental disclosures of non-cash investing and financing activities:
Unpaid portion of property and equipment purchases $ 381 $ 36
See accompanying Notes to Condensed Consolidated Financial Statements
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ROKU, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Organization and Description of Business
Roku, Inc. (the “Company,” or “Roku”), was formed in October 2002 as Roku LLC under the laws of the State of Delaware. On February 1, 2008, Roku LLC was converted into Roku, Inc., a Delaware corporation.
Effective in the first quarter of 2026, the Company’s reportable segments changed. The Company now manages and reports its operating results through three reportable segments defined by: Advertising, Subscriptions, and Devices. Previously, the Company reviewed and managed the new Advertising and Subscriptions segments as a combined Platform segment. This change was made to reflect the Company’s ongoing evaluation and monitoring of its business, including changes made to both internal reporting and the information reported to the Chief Executive Officer, who serves as Chief Operating Decision Maker (“CODM”). Segment financial information for the first quarter of 2025 has been retrospectively adjusted to reflect these changes.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The condensed consolidated financial statements, which include the accounts of Roku and its wholly-owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 13, 2026 (the “Annual Report”).
The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the operating results to be expected for the full year or any future periods.
All intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts reported in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.
There have been no material changes to the accounting policies disclosed in the audited consolidated financial statements and the related notes for the year ended December 31, 2025.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses. Significant items subject to such estimates and assumptions include:
• revenue recognition: determining the nature and timing of satisfaction of performance obligations, variable consideration, determining the stand-alone selling prices of performance obligations, and evaluation of customer versus vendor relationships;
• the impairment of long-lived assets;
• inventory reserves;
• valuation of consideration transferred, assets acquired, and liabilities assumed in connection with business combinations (see Note 4);
• valuation of strategic investments (see Note 9);
• useful lives of tangible and intangible assets;
• allowances for sales returns and sales incentives; and
• the valuation of deferred income tax assets.
The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates and assumptions.
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Inventories
The Company’s inventories consist primarily of finished goods and are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out basis. Provisions are made if the cost of the inventories exceeds their net realizable value. The Company evaluates inventory levels for excess and obsolete products, based on its assessment of future demand and market conditions. The Company recognized inventory provisions charged to the Cost of revenue, devices, of $ 20.7 million and $ 6.8 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026 and December 31, 2025, the ending inventory reserve was $ 28.2 million and $ 29.3 million, respectively.
Recently Adopted Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU") 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. The Company adopted this guidance prospectively effective January 1, 2026 and elected the practical expedient provided by ASU 2025-05. In accordance with this practical expedient, for current accounts receivable and contract assets, the Company assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The adoption did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , which simplifies the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The guidance is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years on a retrospective, modified, or prospective basis. The Company is currently in the process of evaluating the effects of the new guidance.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses , which requires additional disclosures of specific expense categories in the notes to the financial statements on an annual and interim basis. The guidance is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 on a retrospective or prospective basis. The Company is currently in the process of evaluating the effects of the new guidance.
3. REVENUE
The Company’s disaggregated revenue is represented by the three reportable segments discussed in Note 16.
The contract balances include the following (in thousands):
As of
March 31, 2026 December 31, 2025
Accounts receivable, net $ 752,586 $ 879,871
Contract assets (included in Prepaid expenses and other current assets) 5,193 995
Deferred revenue:
Deferred revenue, current portion 123,938 120,912
Deferred revenue, non-current portion 27,057 28,848
Total deferred revenue $ 150,995 $ 149,760
The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets are created when invoicing occurs subsequent to revenue recognition. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional. The Company’s contract assets are current in nature and are included in Prepaid expenses and other current assets. Contract assets increased by $ 4.2 million during the three months ended March 31, 2026 due to the timing of billing to customers.
Deferred revenue reflects consideration invoiced prior to the completion of performance obligations and revenue recognition. Deferred revenue increased by $ 1.2 million during the three months ended March 31, 2026 primarily due to timing of fulfillment of performance obligations related to advertising arrangements, and growth in Premium Subscriptions.
Revenue recognized during the three months ended March 31, 2026 from amounts included in total deferred revenue as of December 31, 2025 was $ 54.4 million. Revenue recognized during the three months ended March 31, 2025 from amounts included in total deferred revenue as of December 31, 2024 was $ 45.0 million.
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Revenue allocated to remaining performance obligations represents estimated contracted revenue that has not yet been recognized which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Remaining performance obligations exclude contracts with original expected terms of one year or less. Estimated contracted revenue for these remaining performance obligations was $ 800.5 million as of March 31, 2026, of which the Company expects to recognize approximately 55 % over the next 12 months and the remainder thereafter.
Revenue recognized from performance obligations that were satisfied in previous periods due to changes in the estimated transaction price of the Company’s revenue contracts was not significant during the three months ended March 31, 2026 and 2025.
Customer J accounted for 11 % of total net revenue for both the three months ended March 31, 2026 and 2025, which were primarily attributable to the Advertising segment.
Revenue by geography is determined based on the location where the Company’s products and services are delivered. Revenue in international markets was less than 10% in each of the periods presented.
4. BUSINESS COMBINATION
On May 9, 2025 (the “Acquisition Date”), the Company acquired all of the outstanding shares of Frndly TV, Inc. (“Frndly TV”), a subscription streaming service that offers live TV, on-demand video, and cloud-based DVR for an affordable price. The total purchase consideration (the “Purchase Consideration”) was $ 169.8 million, consisting primarily of cash of $ 103.6 million and the fair value of contingent consideration of $ 65.8 million. The acquisition supports the Company’s focus on growing Subscriptions revenue and Roku-billed subscriptions.
The Company will pay contingent consideration of up to $ 75.0 million in cash upon the achievement of certain performance metrics and milestones over the two years following the Acquisition Date. See Note 9 for details on the fair value of the contingent consideration.
The allocation of the Purchase Consideration primarily consisted of $ 147.9 million of goodwill, $ 46.0 million in intangible assets, and $ 24.1 million of other assets acquired and liabilities assumed. The operations of Frndly TV are included in the Company’s operating results beginning on the Acquisition Date. Historical and pro forma disclosures are not provided as the historical operating results of Frndly TV were not material.
5. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of purchase consideration in a business combination over the fair value of tangible and intangible assets acquired net of the liabilities assumed. As of March 31, 2026 and December 31, 2025 the Company has $ 188.8 million of goodwill related to the Advertising segment and $ 120.6 million of goodwill related to the Subscriptions segment.
Intangible Assets
The following tables summarize the Company’s intangible assets for the periods presented (in thousands, except years):
As of March 31, 2026
Gross
Carrying
Amount Accumulated
Amortization
Net
Carrying
Amount Weighted-Average Useful Lives
(in years)
Developed technology $ 73,367 $ ( 71,584 ) $ 1,783 5.9
Customer relationships 46,100 ( 25,281 ) 20,819 6.3
Tradename 34,400 ( 13,032 ) 21,368 7.9
Patents 4,076 ( 1,844 ) 2,232 14.0
Total Intangible assets $ 157,943 $ ( 111,741 ) $ 46,202 6.7
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As of December 31, 2025
Gross
Carrying
Amount Accumulated
Amortization
Net
Carrying
Amount Weighted-Average Useful Lives
(in years)
Developed technology $ 73,367 $ ( 71,138 ) $ 2,229 5.9
Customer relationships 46,100 ( 22,995 ) 23,105 6.3
Tradename 34,400 ( 11,832 ) 22,568 7.9
Patents 4,076 ( 1,771 ) 2,305 14.0
Total Intangible assets $ 157,943 $ ( 107,736 ) $ 50,207 6.7
The Company amortizes the fair value of intangible assets over their estimated useful lives in proportion to the economic benefits received. Amortization expense related to intangible assets was approximately $ 4.0 million and $ 3.5 million for the three months ended March 31, 2026 and 2025, respectively.
The Company recorded amortization of developed technology in Cost of revenue, advertising, recorded amortization of customer relationships and tradename in Sales and marketing expenses, and recorded amortization of patents in General and administrative expenses in the condensed consolidated statements of operations for all periods presented.
As of March 31, 2026, the estimated future amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands):
Year Ending December 31,
2026 (remaining 9 months) $ 10,693
2027 10,507
2028 8,419
2029 7,257
2030 4,884
Thereafter 4,442
Total $ 46,202
6. BALANCE SHEET COMPONENTS
Accounts Receivable, net : Accounts receivable, net consisted of the following (in thousands):
As of
March 31, 2026 December 31, 2025
Accounts receivable, gross $ 809,738 $ 960,319
Less: Allowances
Allowance for sales returns 2,916 4,539
Allowance for sales incentives 51,552 70,839
Allowance for credit losses 2,574 3,073
Other allowances 110 1,997
Total allowances 57,152 80,448
Accounts receivable, net $ 752,586 $ 879,871
Customers J and B each accounted for 13 % of the Company’s accounts receivable, net balance as of March 31, 2026 and 11 % of the Company’s accounts receivable, net balance as of December 31, 2025, respectively .
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Property and Equipment, net : Property and equipment, net consisted of the following (in thousands):
As of
March 31, 2026 December 31, 2025
Computers and equipment $ 51,789 $ 51,699
Leasehold improvements 287,166 284,748
Internal-use software 5,904 5,904
Office equipment and furniture 36,151 36,075
Property and equipment, gross 381,010 378,426
Less: Accumulated depreciation and amortization ( 218,753 ) ( 204,849 )
Property and equipment, net $ 162,257 $ 173,577
Depreciation and amortization expense for property and equipment assets was approximately $ 13.9 million and $ 11.7 million for the three months ended March 31, 2026 and 2025, respectively.
Accrued Liabilities : Accrued liabilities consisted of the following (in thousands):
As of
March 31, 2026 December 31, 2025
Revenue share payable $ 319,682 $ 311,488
Accrued cost of revenue 167,573 173,171
Marketing, retail, and merchandising expenses
79,773 95,887
Operating lease liability, current 88,412 87,425
Accrued legal and licensing expenses 32,609 68,843
Content liability, current 35,301 42,158
Contingent consideration, current 28,810 28,110
Other accrued expenses 159,039 150,901
Total Accrued liabilities
$ 911,199 $ 957,983
Other Long-term Liabilities : Other Long-term liabilities consisted of the following (in thousands):
As of
March 31, 2026 December 31, 2025
Content liability, non-current $ 4,909 $ 5,078
Contingent consideration, non-current 40,995 40,006
Other long-term liabilities 37,674 28,172
Total Other long-term liabilities $ 83,578 $ 73,256
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7. CONTENT ASSETS
Content assets, net consisted of the following (in thousands):
As of
March 31, 2026 December 31, 2025
Licensed content, net and advances $ 91,113 $ 95,017
Produced content:
Released, less amortization 55,722 57,808
Completed, not released 10,701 9,109
In production 7,520 8,039
Total produced content, net 73,943 74,956
Total Content assets, net and advances $ 165,056 $ 169,973
Current portion (included in Prepaid expenses and other current assets) $ 3,152 $ 2,065
Non-current portion $ 161,904 $ 167,908
Amortization of content assets is primarily included in Cost of revenue, advertising in the condensed consolidated statements of operations and is as follows (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Licensed content $ 36,033 $ 37,661
Produced content 9,714 10,383
Total amortization costs $ 45,747 $ 48,044
8. STRATEGIC INVESTMENTS
Investment in Convertible Promissory Notes
In June 2022, the Company agreed to provide financing of up to $ 60.0 million in the aggregate in the form of an investment in the convertible promissory notes of a counterparty with whom the Company has a commercial relationship. The convertible promissory notes accrued interest at 5 % per annum. During the year ended December 31, 2025, the Company received repayment in full from the counterparty totaling $ 50.0 million plus interest.
The convertible promissory notes contained certain redemption features that met the definition of embedded derivatives and required bifurcation. The Company elected to apply the fair value option and account for the hybrid instrument containing the host contract and the embedded derivatives at fair value as a single instrument, with any subsequent changes in fair value included in Other income, net in the condensed consolidated statements of operations. See Note 9 for additional details on the fair value of the convertible promissory notes.
Investment in Preferred Stock
In September 2024, the Company invested $ 20.0 million in cash in exchange for preferred stock in a privately-held company. The Company elected to apply the measurement alternative for equity securities without readily determinable fair values as there are no quoted market prices for the preferred stock. The investment is measured at cost and adjusted to fair value when there is an observable price change from orderly transactions of identical or similar investments, and assessed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. There were no adjustments recognized in the three months ended March 31, 2026. As of March 31, 2026, the carrying value of the investment was $ 20.0 million, and is included within Other non-current assets on the condensed consolidated balance sheets.
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9. FAIR VALUE DISCLOSURE
The Company’s financial assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
As of March 31, 2026
Fair Value Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents:
Cash $ 967,877 $ 967,877 $ — $ —
Money market funds 682,000 682,000 — —
Short-term investments:
Time deposits 730,342 — 730,342 —
Total assets measured and recorded at fair value $ 2,380,219 $ 1,649,877 $ 730,342 $ —
Liabilities:
Accrued liabilities:
Contingent consideration $ 28,810 $ — $ — $ 28,810
Other long-term liabilities:
Contingent consideration 40,995 — — 40,995
Total liabilities measured and recorded at fair value $ 69,805 $ — $ — $ 69,805
As of December 31, 2025
Fair Value Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents:
Cash $ 1,007,068 $ 1,007,068 $ — $ —
Money market funds 580,000 580,000 — —
Short-term investments:
Time deposits 730,213 — 730,213 —
Total assets measured and recorded at fair value $ 2,317,281 $ 1,587,068 $ 730,213 $ —
Liabilities:
Accrued liabilities:
Contingent consideration $ 28,110 $ — $ — $ 28,110
Other long-term liabilities:
Contingent consideration 40,006 — — 40,006
Total liabilities measured and recorded at fair value $ 68,116 $ — $ — $ 68,116
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal market (or most advantageous market, in the absence of a principal market) for the asset or liability in an orderly transaction between market participants at the measurement date. Further, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs in measuring fair value, and utilizes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value.
The three levels of inputs used to measure fair value are as follows:
Level 1 —Quoted prices in active markets for identical assets or liabilities. Financial assets and liabilities measured using Level 1 inputs include cash, cash equivalents, restricted cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities.
Level 2 —Observable inputs other than quoted prices included within Level 1, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by,
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observable market data by correlation or other means. Financial assets measured using Level 2 inputs include time deposits as of March 31, 2026 and December 31, 2025.
Level 3 —Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities and reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The Company measured its strategic investment in convertible promissory notes using Level 3 inputs. The fair value of the strategic investment in convertible promissory notes on the date of purchase was determined to be equal to its principal amount. The Company recorded an unrealized loss of $ 6.3 million in Other income, net related to the change in the fair value of the strategic investment in convertible promissory notes for the three months ended March 31, 2025.
The Company classified the strategic investment in convertible promissory notes as Level 3 due to the lack of relevant observable market data over fair value inputs. The fair value of the strategic investment in convertible promissory notes was estimated using a scenario-based probability weighted discounted cash flow model. Significant assumptions include the discount rate, and the timing and probability weighting of the various redemption scenarios that impact the settlement of the strategic investment in convertible promissory notes.
The contingent consideration is related to the Company’s acquisition of Frndly TV in May 2025 (refer to Note 4). As of the Acquisition Date, the Company measured its contingent consideration using Level 3 inputs. The fair value of the contingent consideration on the Acquisition Date was determined to be $ 65.8 million. The contingent consideration is subsequently remeasured to fair value at each reporting date until the contingency is resolved, with any changes in fair value included in General and administrative expenses in the condensed consolidated statements of operations. The Company recorded an expense of $ 1.7 million in General and administrative expenses related to the change in the fair value of the contingent consideration during the three months ended March 31, 2026.
The Company classified the contingent consideration as Level 3 due to the lack of relevant observable market data over fair value inputs. The fair value of the contingent consideration was estimated using a probability weighted discounted cash flow model. Significant assumptions include the probability of achieving certain performance metrics and milestones and the discount rate. The estimated fair value is based upon assumptions believed to be reasonable but which are uncertain and involve significant judgment by management. Favorable or unfavorable changes in expectations of achieving the performance metrics and milestones would result in corresponding increases or decreases in the fair value measurement, while increases or decreases in discount rates would have inverse impacts on the fair value measurement.
Assets and liabilities that are measured at fair value on a non-recurring basis
Non-financial assets such as goodwill, intangible assets, property and equipment, operating lease right-of-use assets, and content assets are evaluated for impairment and adjusted to fair value using Level 3 inputs, only when impairment is recognized.
The Company measured the intangible assets acquired from the Frndly TV acquisition at fair value using Level 3 inputs. The fair value of the customer relationships has been estimated using the multi-period-excess-earnings method. The key valuation assumptions include the Company’s estimates of customer attrition rates, expected future revenue, profit margins, and discount rate. The fair value of the tradename has been estimated using the relief-from-royalty method. The key valuation assumptions include the Company’s estimates of expected future revenue, royalty rate, and discount rate.
The fair value of the impaired operating lease right-of-use assets and property and equipment were estimated using discounted cash flow models, or the income approach, based on market participant assumptions with Level 3 inputs. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods, and discount rates that reflect the level of risk associated with the expected future cash flows.
10. LEASES
The Company has entered into operating leases primarily for office real estate. The leases have remaining terms ranging from less than one year to eight years and may include options to extend or terminate the lease. The depreciable life of operating lease right-of-use assets is limited by the expected lease term.
The components of lease expense are as follows (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Operating lease expense $ 17,907 $ 17,797
Variable lease expense 6,088 6,086
Sublease income ( 6,037 ) ( 5,114 )
Total operating lease expense $ 17,958 $ 18,769
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Supplemental cash flow information related to leases is as follows (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases $ 26,961 $ 24,688
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 963 $ 2,260
Decrease in operating lease right-of-use assets due to impairment
$ 4,920 $ 2,870
The Company recorded operating lease right-of-use asset impairment charges of $ 4.9 million and $ 2.9 million related to the ceased use of certain of its corporate facilities during the three months ended March 31, 2026 and 2025, respectively. These impairment charges are included within operating expense on the condensed consolidated statements of operations and comprehensive income (loss).
Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):
As of
March 31, 2026 December 31, 2025
Operating lease right-of-use assets $ 243,701 $ 260,341
Operating lease liability, current (included in Accrued liabilities) 88,412 87,425
Operating lease liability, non-current 412,705 435,899
Total operating lease liability $ 501,117 $ 523,324
Weighted-average remaining term for operating leases (in years) 5.90 6.11
Weighted-average discount rate for operating leases 3.99 % 3.99 %
Future lease payments under operating leases as of March 31, 2026 are as follows (in thousands):
Year Ending December 31, Operating Leases (1)
2026 (remaining 9 months) $ 79,896
2027 103,437
2028 100,231
2029 96,615
2030 76,217
Thereafter 109,876
Total future lease payments 566,272
Less: imputed interest ( 61,896 )
Less: expected tenant improvement allowance ( 3,259 )
Total
$ 501,117
(1) Non-cancelable sublease proceeds for the fiscal years ending December 31, 2026 (remaining 9 months), 2027, 2028, and 2029 of $ 14.0 million, $ 18.8 million, $ 18.8 million, and $ 12.0 million, respectively, are not included in the table above.
11. DEBT
On September 16, 2024, the Company entered into a Credit Agreement, by and among the Company, as borrower, certain of the Company’s 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.
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The Company’s obligations under the Credit Agreement are secured by substantially all the assets of the Company and its subsidiaries that are guarantors under the Credit Agreement. The Company may prepay, and in certain circumstances, would be required to prepay, loans under the Credit Agreement without payment of a premium. The Credit Agreement also contains customary representations and warranties, customary affirmative and negative covenants, financial covenants requiring the maintenance of a minimum interest coverage ratio and a maximum total net leverage ratio, as well as customary events of default, the occurrence of which could result in amounts borrowed under the Credit Agreement becoming due and payable and remaining commitments terminated prior to its scheduled September 16, 2029 termination date.
Debt issuance costs incurred in connection with the Company’s Credit Agreement, which are recorded in Prepaid expenses and other current assets and Other non-current assets, are amortized over the five-year term and recognized as a component of interest expense in the condensed consolidated statements of operations.
The Company had outstanding letters of credit secured by the Credit Agreement of $ 39.5 million as of March 31, 2026. As of March 31, 2026, the Company had not borrowed against the Credit Agreement, and the Company was in compliance with all of the covenants of the Credit Agreement.
12. 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 (the “Board”) at the time of issuance of such shares. As of March 31, 2026 and December 31, 2025, there were no shares of preferred stock issued and outstanding.
Common Stock
The Company has two classes of authorized common stock, Class A common stock and Class B common stock. Holders of Class A common stock are entitled to one 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 to ten 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 or vesting of restricted stock units are generally automatically converted into shares of the Company’s Class A common stock.
Stock Repurchase Program
In August 2025, the Company began repurchasing shares of the Company’s Class A common stock under a stock repurchase program approved by the Board pursuant to which the Company is authorized to repurchase up to $ 400 million of the Company’s Class A common stock through December 31, 2026. The program does not obligate the Company to acquire any amount of Class A common stock, and the timing and total amount of share repurchases will depend on general market conditions, the trading price of the Company’s Class A common stock, corporate and regulatory requirements, the availability of funds, other investment opportunities, and other considerations. Repurchases may be executed through open market transactions at prevailing market prices, including pursuant to trading plans that comply with the requirements of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or through other means.
The following table summarizes the share repurchase activity under the Company’s stock repurchase program during the three months ended March 31, 2026 (in thousands, except share and per share data):
Total Number of Shares Purchased Average Price Per Share Amount
First Quarter 2026 1,014,873 $ 98.53 $ 100,000
All repurchases were made using cash resources, and shares purchased were immediately retired. As of March 31, 2026, $ 150 million remained available and authorized for repurchases under the stock repurchase program.
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Common Stock Reserved for Issuance
As of March 31, 2026, the Company’s common stock reserved for issuance in the future is as follows (in thousands):
Common stock awards granted under equity incentive plans 10,130
Common stock awards available for issuance under the 2017 Employee Stock Purchase Plan * 5,089
Common stock awards available for issuance under the 2017 Amended and Restated Equity Incentive Plan 39,583
Total reserved shares of common stock 54,802
* The Company has not issued any common stock pursuant to the 2017 Employee Stock Purchase Plan.
Equity Incentive Plans
The Company currently grants equity awards under the Amended and Restated 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 awards granted under the 2017 Plan vest 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 incentive stock 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 three months ended March 31, 2026 is as follows (in thousands, except per share data):
Number of
Shares
Weighted-Average
Grant Date Fair
Value per Share
Balance as of December 31, 2025 6,329 $ 75.70
Awarded 131 102.77
Released ( 1,180 ) 74.50
Forfeited ( 156 ) 75.44
Balance as of March 31, 2026 5,124 $ 76.68
As of March 31, 2026, the Company had $ 344.3 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 1.6 years.
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Stock Options
Stock option activity for the three months ended March 31, 2026 is as follows (in thousands, except per share data and years):
Number of
Shares
Weighted-Average
Exercise
Price
Weighted-Average Remaining Contractual Life (Years) Aggregate
Intrinsic
Value
Balance as of December 31, 2025 5,100 $ 82.85 6.0
Granted — —
Exercised ( 93 ) 19.23
Forfeited and expired ( 1 ) 52.18
Balance as of March 31, 2026 5,006 $ 84.04 5.9 $ 135,597
Options exercisable as of March 31, 2026 4,163 $ 87.41 5.4 $ 112,507
As of March 31, 2026, the Company had $ 31.0 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 1.4 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 over one to four years and have a term of ten years . Restricted stock units generally vest over one to four years .
The following table presents the total stock-based compensation expense for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Cost of revenue, platform $ 194 $ 384
Cost of revenue, devices — 70
Research and development 29,495 35,858
Sales and marketing 27,384 34,786
General and administrative 21,609 24,396
Total stock-based compensation $ 78,682 $ 95,494
13. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
The Company has purchase commitments with various parties to purchase products and services such as licensed intellectual property and content, manufacturing supplier agreements, and data center capacity and other goods and services.
The following table presents details of the aggregate future purchase commitments as of March 31, 2026 (in
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thousands):
Years Ended December 31,
Total Remaining 2026 2027 2028 2029 2030 Thereafter
Content $ 157,475 $ 82,162 $ 48,690 $ 21,844 $ 3,648 $ 850 $ 281
Manufacturing 353,441 353,441 — — — — —
Other obligations 375,258 146,691 174,734 44,688 9,070 75 —
Total commitments $ 886,174 $ 582,294 $ 223,424 $ 66,532 $ 12,718 $ 925 $ 281
Contingencies
The Company accounts for loss contingencies, including liabilities for intellectual property licensing and other claims, when it believes such losses are probable and reasonably estimable. These contingencies are reviewed at least quarterly and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events. The resolution of these contingencies and of other legal proceedings can be, however, inherently unpredictable and subject to significant uncertainties.
The Company is, and may become, subject to various lawsuits, stockholder derivative actions, class action lawsuits, individual or mass arbitration proceedings, and other types of legal proceedings, as well as other disputes, claims, and regulatory or governmental inquiries and investigations in the ordinary course of business, relating to commercial, contract, consumer protection, privacy, data protection, intellectual property, tax, employment, corporate governance, and other matters. Although the results of these legal proceedings, disputes, claims, and inquiries and investigations cannot be predicted with certainty, the Company does not believe that the final outcome of any matters that it is currently involved in is reasonably likely to have a material adverse effect on its business, financial condition, or results of operations. Regardless of the outcome, such legal proceedings, disputes, claims, and inquiries and investigations can have an adverse impact on the Company because of legal fees, other litigation costs, and settlement costs, diversion of management resources, reputational harm, and other factors. During the three months ended March 31, 2026 and 2025, the Company did not have any loss contingencies that were material.
Indemnification
In the ordinary course of business, the Company has entered into contractual arrangements which provide indemnification provisions of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. The Company’s obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.
It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each agreement. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the condensed consolidated financial statements.
14. INCOME TAXES
Income tax expense was $ 2.9 million and income tax benefit was $ 13.1 million for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax expense for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 is primarily due to increases in pre-tax book income, partially offset by decreases due to a reduction in U.S. federal and certain state taxes due to the 2025 enactment of the One Big Beautiful Bill Act.
A valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. As of March 31, 2026, the Company has a full valuation allowance against its net deferred tax assets in the United States. Given the Company's current and anticipated future earnings, the Company believes that there is a reasonable possibility that the valuation allowance against these net deferred tax assets may be reversed within the next twelve months. The exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that the Company actually achieves.
15. NET INCOME (LOSS) PER SHARE
The Company’s basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding for the period. The Company uses the two-class method to calculate net income (loss) per share. Except with respect to certain voting, conversion, and transfer rights and as
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otherwise expressly provided in the Company’s amended and restated certificate of incorporation or required by applicable law, shares of the Company’s Class A common stock and Class B common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects as to all matters. Accordingly, basic and diluted net income (loss) per share are the same for both classes.
For purposes of the calculation of diluted net income (loss) per share, options to purchase common stock and restricted stock units are considered common stock equivalents. Dilutive shares of common stock are determined by applying the treasury stock method. The dilutive shares are excluded from the calculation of diluted net loss per share in the period of net loss, as their effect is antidilutive.
The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data):
Three Months Ended
March 31, 2026 March 31, 2025
Numerator:
Net income (loss) $ 85,700 $ ( 27,431 )
Denominator:
Weighted-average common shares outstanding — basic 147,510 146,197
Dilutive effect of common stock equivalents 3,514 —
Weighted-average common shares outstanding — diluted 151,024 146,197
Net income (loss) per share — basic $ 0.58 $ ( 0.19 )
Net income (loss) per share — diluted $ 0.57 $ ( 0.19 )
Common stock equivalents (comprised of stock options and restricted stock units) excluded from the calculation of diluted net income (loss) per share because of their anti-dilutive effect were 1.5 million and 13.2 million shares for the three months ended March 31, 2026 and 2025, respectively.
16. SEGMENT INFORMATION
An operating segment is defined as a component of an entity for which discrete financial information is available that is evaluated regularly by the CODM for purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Chief Executive Officer. The CODM evaluates performance and makes decisions about allocating resources to its operating segments based on financial information presented on a consolidated basis and on gross profit for each operating segment.
Beginning in the first quarter of 2026, the Company changed its internal reporting structure and the CODM began receiving disaggregated financial information that allows him to allocate resources and evaluate performance between three operating segments: Advertising, Subscriptions, and Devices. As such, the Company now has three reportable segments. The Company’s prior period amounts for the first quarter of 2025 have been retrospectively adjusted to reflect the disaggregation of the Company’s previous Platform operating segment into the Advertising and Subscriptions operating segments. There are no changes to the consolidated financial statements for any prior periods.
Descriptions of the Company’s three reportable segments are as follows:
Advertising
Advertising revenue is generated from the sale of digital advertising, including direct and programmatic video advertising, ads integrated into the Company’s user interface (“UI”), and related services.
Subscriptions
Subscriptions revenue is generated from the sale of subscriptions to end users, including subscription revenue shares from content partners, the sale of Premium Subscriptions and the sale of owned and operated subscription services. Subscriptions revenue also includes the sale of branded app buttons on remote controls.
Devices
Devices revenue is generated from the sale of streaming players, Roku-made TVs, smart home products and services, audio products, and related accessories.
For all reportable segments, Cost of revenue is the significant segment expense that is regularly provided to the CODM. The Company reports its financial results consistent with the manner in which financial information is viewed by management for decision-making purposes. The Company does not manage operating expenses such as research and
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development, sales and marketing, and general and administrative expenses at the segment level. The Company does not allocate property and equipment or any other assets or capital expenditures to reportable segments.
The following table presents financial information for each of the Company’s reportable segments (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Advertising
Net revenue $ 612,705 $ 482,823
Cost of revenue 241,736 212,424
Gross profit 370,969 270,399
Subscriptions
Net revenue 518,525 397,994
Cost of revenue 305,409 204,082
Gross profit 213,116 193,912
Devices
Net revenue 117,649 139,855
Cost of revenue 136,798 159,121
Gross loss ( 19,149 ) ( 19,266 )
Total
Net revenue 1,248,879 1,020,672
Cost of revenue 683,943 575,627
Gross profit $ 564,936 $ 445,045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our audited consolidated financial statements included in our Annual Report for the year ended December 31, 2025, filed on February 13, 2026 with the SEC (the “Annual Report”). In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs, and expectations, and involve risks and uncertainties. Factors that could cause or contribute to these differences include those discussed below and in our Annual Report.
Overview
Effective in the first quarter of 2026, our reportable segments changed. We now manage and report our operating results through three reportable segments: Advertising, Subscriptions, and Devices. Previously, we reviewed and managed the new Advertising and Subscriptions segments as a combined Platform segment. This change was made to reflect our ongoing evaluation and monitoring of our business, including changes made to both our internal reporting and the information reported to the CODM. Segment financial information for the first quarter of 2025 has been retrospectively adjusted to reflect these changes.
Advertising revenue is generated from the sale of digital advertising, including direct and programmatic video advertising, ads integrated into our user interface (“UI”), and related services.
Subscriptions revenue is generated from the sale of subscriptions to end users, including subscription revenue shares from content partners, the sale of Premium Subscriptions, and the sale of owned and operated subscription services. Subscriptions revenue also includes the sale of branded app buttons on remote controls.
“Platform” revenue, cost of revenue, and gross profit reflect the combined revenue, cost of revenue, and gross profit attributable to our Advertising and Subscriptions segments.
Devices revenue is generated from the sale of streaming players, Roku-made 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. We expect that this trade off from Devices gross profit or loss to grow Streaming Households should result in increased total Platform revenue and total Platform gross profit over time.
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Business Conditions and Macroeconomic Factors
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, such as the conflict in the Middle East, changes in economic or government policies, including the unknown impact of tariffs, changing global regulations, global supply chain constraints, including the scarcity of, or increased prices for, key components such as memory chips, 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. See Item 1A, Risk Factors, and the Note Regarding Forward Looking Statements elsewhere in this Quarterly Report for additional details.
Key Performance Metrics and Non-GAAP Measures
Since our IPO in 2017, the streaming TV industry has evolved meaningfully, with Americans now spending significantly more TV time streaming than watching traditional TV. Our business has also grown and evolved, and we are now primarily focused on growing Platform revenue and profitability.
The key performance metrics (“KPMs”) we use to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions are Streaming Hours, Platform revenue, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), and Free Cash Flow.
Streaming Hours
We believe the number of Streaming Hours on our platform is an effective measure of user engagement and that the growth in the number of hours of content streamed across our platform reflects our success in addressing the growing user demand for TV streaming. 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.
Additionally, we believe that over time, increasing user engagement on our streaming platform increases our platform monetization because we earn Platform revenue from various forms of user engagement, including advertising, as well as revenue shares from subscriptions and transactional video on-demand. However, our revenue from content partners is not tied to the hours streamed on their streaming apps, and the number of Streaming Hours does not correlate to revenue earned from such content partners or ARPU on a period-by-period basis. Moreover, Streaming Hours on our platform are measured whenever a Roku streaming device is streaming content, whether a viewer is actively watching or not. 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. 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. This feature, which we refer to as “Are you still watching,” periodically prompts the user to confirm that they are still watching the selected app and closes the app if the user does not respond affirmatively. We believe that the implementation of this feature across the Roku platform benefits us, our customers, content partners, and advertisers. 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.
We streamed 38.7 billion and 35.8 billion hours during the three months ended March 31, 2026 and 2025, respectively, reflecting an increase of 8%.
Platform Revenue
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 includes revenue from both our Advertising and Subscriptions segments and its growth is one of our strategic priorities. Platform revenue was $1,131.2 million and $880.8 million for the three months ended March 31, 2026 and 2025, respectively.
Adjusted EBITDA (Non-GAAP Measure)
We use Adjusted EBITDA as a primary metric to measure the performance of our business because it represents our ability to successfully manage profitability. Our goal is to grow Adjusted EBITDA over time, driving continued growth in stockholder value.
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 expense (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
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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.
The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure for each of the periods indicated (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Net income (loss) $ 85,700 $ (27,431)
Total other income, net (36,873) (17,216)
Stock-based compensation 78,682 95,494
Depreciation and amortization 17,928 15,192
Restructuring charges — 3,064
Income tax expense (benefit) 2,945 (13,083)
Adjusted EBITDA $ 148,382 $ 56,020
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. 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.
Our Free Cash Flow was $538.8 million and $298.4 million for the TTM periods ended March 31, 2026 and 2025, 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. 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. 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.
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
March 31, 2026 March 31, 2025
Net cash provided by operating activities $ 544,126 $ 310,094
Less: Purchases of property and equipment (6,483) (6,320)
Add/(Less): Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,126 (5,328)
Free cash flow (TTM) $ 538,769 $ 298,446
Components of Results of Operations
Revenue
Advertising Revenue
We generate Advertising revenue from the sale of digital advertising including direct and programmatic video advertising, ads integrated into our UI, and related services. Our ad inventory primarily includes video ad inventory from AVOD content in The Roku Channel, native ads throughout the Roku Experience, as well as ad inventory we obtain as consideration from our streaming services distribution agreements with our content partners.
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Subscriptions Revenue
We generate Subscriptions revenue from the sale of subscriptions to end users, including subscription revenue shares from content partners, the sale of Premium Subscriptions, and the sale of owned and operated subscription services. Subscriptions revenue also includes the sale of branded app buttons on remote controls.
The aggregate of both our Advertising and Subscriptions revenue is collectively referred to as our Platform revenue and represents our ability to monetize our platform. 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-made TVs, smart home products and services, audio products, and related accessories. We generate most of our Devices revenue in the United States. In our international markets, we primarily sell our devices through wholesale distributors which, in turn, sell to retailers.
Cost of Revenue
Cost of Revenue, Advertising
Cost of revenue, advertising primarily consists of costs associated with acquiring advertising inventory, content amortization costs for both licensed and produced content, and costs associated with the delivery of our services that primarily include costs of third-party cloud services.
Cost of Revenue, Subscriptions
Cost of revenue, subscriptions primarily consists of costs for licensed Premium Subscriptions, revenue share payments on licensed content, and payment processing fees.
The aggregate of both our Advertising and Subscriptions cost of revenue is collectively referred to as our Cost of revenue, platform and represents the cost to monetize our platform.
Cost of Revenue, Devices
Cost of revenue, devices is comprised mostly of manufacturing costs payable to third-party manufacturers for devices we sell which include streaming players, Roku-made TVs, audio products and smart home products. 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.
Operating and Other Expenses
Research and Development
Research and development expenses consist primarily of salaries, benefits, and stock-based compensation for our development teams as well as outsourced development expenses. In addition, research and development expenses include allocated facilities and overhead expenses.
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.
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.
Other Income, Net
Other income, net primarily consists of interest income on cash and cash equivalents and short-term investments, foreign currency remeasurement, transaction gains and losses, and net change in the fair value of our strategic investments.
Income Tax Expense (Benefit)
Our income tax expense (benefit) consists primarily of income tax expense 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 as of March 31, 2026. Given our current and anticipated future earnings, we believe that there is a reasonable possibility that the valuation allowance against these net deferred tax assets may be
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reversed within the next twelve months. The exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that the Company actually achieves.
Results of Operations
The following table sets forth selected condensed consolidated statements of operations data as a percentage of total revenue for each of the periods indicated.
Three Months Ended
March 31, 2026 March 31, 2025
Net revenue:
Platform:
Advertising 49 % 47 %
Subscriptions 42 % 39 %
Total Platform 91 % 86 %
Devices 9 % 14 %
Total net revenue 100 % 100 %
Cost of revenue:
Platform:
Advertising 19 % 21 %
Subscriptions 25 % 20 %
Total Platform 44 % 41 %
Devices 11 % 16 %
Total cost of revenue 55 % 57 %
Gross profit (loss):
Platform:
Advertising 30 % 26 %
Subscriptions 17 % 19 %
Total Platform 47 % 45 %
Devices (2) % (2) %
Total gross profit 45 % 43 %
Operating expenses:
Research and development 15 % 18 %
Sales and marketing 18 % 22 %
General and administrative 8 % 9 %
Total operating expenses 41 % 49 %
Income (loss) from operations 4 % (6) %
Other income, net:
Interest expense — % — %
Other income, net 3 % 2 %
Total other income, net 3 % 2 %
Income (loss) before income taxes 7 % (4) %
Income tax expense (benefit) — % (1) %
Net income (loss) 7 % (3) %
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Comparison of the Three Months Ended March 31, 2026 and 2025
Net Revenue
Three Months Ended
March 31, 2026 March 31, 2025 Change $ Change %
(in thousands, except percentages)
Platform:
Advertising $ 612,705 $ 482,823 $ 129,882 27 %
Subscriptions 518,525 397,994 120,531 30 %
Total Platform 1,131,230 880,817 250,413 28 %
Devices 117,649 139,855 (22,206) (16) %
Total net revenue $ 1,248,879 $ 1,020,672 $ 228,207 22 %
Advertising
Advertising revenue increased by $129.9 million, or 27%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily driven by an increase in video ad impressions delivered. Video impressions increased by 59%, reflecting greater engagement and growth in video consumption on our platform as well as benefits from various monetization initiatives. This increase was partially offset by lower average price per impression of 14%, which was driven primarily from changes in product and country mix.
Subscriptions
Subscriptions revenue increased by $120.5 million, or 30%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to a 12% increase in the number of subscriptions and a 22% increase in the average price per subscription. Included within these increases was the addition of our owned and operated subscription services, including both the acquisition of Frndly TV in May 2025 and the launch of Howdy in August 2025.
Devices
Devices revenue decreased by $22.2 million, or 16%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease in revenue is primarily due to lower sales of streaming players. During the three months ended March 31, 2026, the average selling price of all devices shipped decreased by 3% and the volume of all devices shipped decreased by 15% as compared to the three months ended March 31, 2025.
Cost of Revenue and Gross Profit (Loss)
Three Months Ended
March 31, 2026 March 31, 2025 Change $ Change %
(in thousands, except percentages)
Cost of revenue:
Platform:
Advertising $ 241,736 $ 212,424 $ 29,312 14 %
Subscriptions 305,409 204,082 101,327 50 %
Total Platform 547,145 416,506 130,639 31 %
Devices 136,798 159,121 (22,323) (14) %
Total cost of revenue $ 683,943 $ 575,627 $ 108,316 19 %
Gross profit (loss):
Platform:
Advertising $ 370,969 $ 270,399 $ 100,570 37 %
Subscriptions 213,116 193,912 19,204 10 %
Total Platform 584,085 464,311 119,774 26 %
Devices (19,149) (19,266) 117 (1) %
Total gross profit $ 564,936 $ 445,045 $ 119,891 27 %
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Advertising
Cost of revenue, advertising increased by $29.3 million, or 14%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily driven by a $39.8 million increase in the costs of acquiring and delivering licensed content for TRC due to an increase in user engagement and video ad impressions delivered, partially offset by a $6.8 million decrease in content amortization.
Subscriptions
Cost of revenue, subscriptions increased by $101.3 million, or 50%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily driven by higher licensing and content costs of $67.4 million, which included costs related to our owned and operated subscription services, Frndly TV (beginning in May 2025) and Howdy (which launched in August 2025), and a growth in streaming hours.
Devices
Cost of revenue, devices decreased by $22.3 million, or 14%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was primarily driven by lower manufacturing and freight costs of $24.3 million and $3.6 million, respectively, and a $7.6 million decrease in personnel costs. These decreases were partially offset by a $8.2 million increase in inventory reserves.
Operating Expenses
Three Months Ended
March 31, 2026 March 31, 2025 Change $ Change %
(in thousands, except percentages)
Research and development $ 189,492 $ 184,579 $ 4,913 3 %
Sales and marketing 221,221 223,693 (2,472) (1) %
General and administrative 102,451 94,503 7,948 8 %
Total operating expenses $ 513,164 $ 502,775 $ 10,389 2 %
Research and development
Research and development expenses increased by $4.9 million, or 3%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily driven by higher facilities and IT expenses of $5.2 million and higher cloud hosting and consulting expenses of $3.7 million. The increase was partially offset by $2.3 million of non-recurring restructuring costs in the prior year.
Sales and marketing
Sales and marketing expenses decreased by $2.5 million, or 1%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The decrease was primarily driven by lower marketing expenses of $8.8 million, partially offset by a $3.0 million increase in intangible amortization from our Frndly TV acquisition, and a $1.8 million increase in cloud hosting and consulting expenses.
General and administrative
General and administrative expenses increased by $7.9 million, or 8%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase is primarily due to an increase of $9.8 million in non-income based taxes, partially offset by lower legal and consulting expenses of $3.1 million.
Other Income, Net
Three Months Ended
March 31, 2026 March 31, 2025 Change $ Change %
(in thousands, except percentages)
Interest expense $ (624) $ (433) $ (191) 44 %
Other income, net 37,497 17,649 19,848 112 %
Total other income, net $ 36,873 $ 17,216 $ 19,657 114 %
Total other income, net, increased by $19.7 million, or 114%, during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily due to a gain on the sale of strategic investments of $13.4 million.
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Income Tax Expense (Benefit)
Three Months Ended
March 31, 2026 March 31, 2025 Change $ Change %
(in thousands, except percentages)
Income tax expense (benefit) $ 2,945 $ (13,083) $ 16,028 (123) %
Income tax expense increased by $16.0 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase was primarily driven by an increase in pre-tax book income, partially offset by decreases due to a reduction in U.S income taxes due to the 2025 enactment of the One Big Beautiful Bill Act.
Liquidity and Capital Resources
As of March 31, 2026, we had cash and cash equivalents of $1,649.9 million and short-term investments of $730.3 million. Approximately 6% of our cash was held outside the United States in accounts held by our foreign subsidiaries, which are used to fund foreign operations, and all short-term investments were held in the United States.
Our primary sources of cash are receipts from Advertising, Subscriptions, and Devices revenue. 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, mergers and acquisitions, and share repurchases.
We have pursued merger and acquisition activities, such as the acquisition of Frndly TV, 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 we have 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.
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. Our future capital requirements, the adequacy of available funds, and cash flows from operations could be affected by various risks, uncertainties, including, but not limited to, those detailed in Part II, Item 1A, Risk Factors in this Quarterly Report and the effects of the current macroeconomic environment. While the current macroeconomic environment has not severely impacted our liquidity and capital resources to date, it has contributed to disruption and volatility in local economies and in capital and credit markets, which could adversely affect our liquidity and capital resources in the future.
We may attempt to raise additional capital through the sale of equity securities or other financing arrangements. If we raise additional funds by issuing equity, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of indebtedness, we may be subject to fixed payment obligations and also to restrictive covenants. Additionally, we may be unable to obtain debt or equity financing on terms that are acceptable to us.
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. 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.
Our obligations under the Credit Agreement are secured by substantially all the assets of the Company and our subsidiaries that are guarantors under the Credit Agreement. We may prepay, and in certain circumstances, would be required to prepay, loans under the Credit Agreement without payment of a premium. The Credit Agreement also contains customary representations and warranties, customary affirmative and negative covenants, financial covenants requiring the maintenance of a minimum interest coverage ratio and a maximum total net leverage ratio, as well as customary events of default, the occurrence of which could result in amounts borrowed under the Credit Agreement becoming due and payable and remaining commitments terminated prior to its scheduled September 16, 2029 termination date.
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We had outstanding letters of credit secured by the Credit Agreement of $39.5 million as of March 31, 2026. As of March 31, 2026, we had not borrowed against the Credit Agreement, and we were in compliance with all of the covenants of the Credit Agreement. See Note 11 to our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for additional details.
Share Repurchases
During the three months ended March 31, 2026, we repurchased 1.0 million shares of our Class A common stock through our stock repurchase program. All share repurchases were made using cash resources. As of March 31, 2026, $150.0 million remained of our $400 million stock repurchase program. See Note 12 to our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for additional details.
Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
Three Months Ended
March 31, 2026 March 31, 2025
Consolidated Statements of Cash Flows Data:
Cash flows provided by operating activities $ 199,140 $ 138,732
Cash flows provided by (used in) investing activities $ 15,265 $ (8,931)
Cash flows used in financing activities $ (149,731) $ (36,072)
Cash Flows from Operating Activities
Cash provided by operating activities increased in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to net income of $85.7 million in the current year, compared to a net loss of $27.4 million in the prior year, which was partially offset by lower non-cash charges primarily due to lower stock-based compensation and a decrease in other operating assets and liabilities due to an increase in collections and payments made.
Cash Flows from Investing Activities
Net cash provided by investing activities increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due primarily to sale of strategic investments of $18.4 million and partially offset by purchases of property and equipment of $3.1 million.
Cash Flows from Financing Activities
Net cash used in financing activities increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to tax payments of $51.5 million to net settle equity awards vested during the period and $100.0 million in repurchases of our common stock, partially offset by proceeds from the exercise of employee stock options of $1.8 million.
Material Cash Requirements from Known Contractual Obligations
For a description of our purchase obligations and operating lease obligations, refer to Note 13 and Note 10 to our Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report, respectively.
Critical Accounting Estimates
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. Our actual results could differ from these estimates. There have been no material changes to our critical accounting policies and estimates as compared to critical accounting policies and estimates described in our Annual Report.
Item 3. 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, cash equivalents and short-term investments. The primary objective of our investment policy is to preserve principal while maximizing income without significantly increasing risk. We 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 $16.5 million.
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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. Our results of current and future operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
We have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains or losses related to revaluing monetary asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. 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.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) prior to the filing of this Quarterly Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were, in design and operation, effective at the reasonable assurance level.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to this item may be found in Note 13 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference.
Item 1A. Risk Factors
Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all the other information in this Quarterly Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the condensed consolidated financial statements and the related notes. If any of the following risks actually occur, our business, reputation, financial condition, results of operations, revenue, key performance metrics, and future prospects could be seriously harmed. In addition, you should consider the interrelationship and compounding effects of two or more risks occurring simultaneously. 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. You should not interpret our disclosure of any of the following risks to imply that such risks have not already materialized. The risks facing our business have not changed substantively from those discussed in our Annual Report, filed with the SEC on February 13, 2026, except for those risks marked with an asterisk (*).
Risk 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 appropriate supply of quality video advertising inventory on our platform and effectively selling the available supply;
• irrelevant or unengaging advertising campaigns on our streaming platform;
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• our ability to successfully utilize programmatic advertising technology;
• our ability to further monetize our streaming platform;
• our ability to successfully operate and monetize our owned and operated streaming services;
• 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 and maintain a strong brand and customer satisfaction and loyalty;
• our and our licensed Roku TV partners’ reliance on contract manufacturers and ability to accurately forecast manufacturing requirements and manage 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 our operations, products, and services;
• maintaining adequate customer support levels;
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;
• 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 strategic transactions 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;
• our uninsured cash deposits;
• 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;
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• 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;
• the impact of our stock repurchase program;
• 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.
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.
The global TV streaming industry—including the sale of TV streaming devices as well as the sale of advertising, subscription services, and other on-demand content on TV streaming platforms—is highly competitive. Our success depends in part on user acquisition and retention and the effective monetization of our streaming platform. To attract and retain users, we must respond efficiently to changes in user tastes and preferences and offer our users access to the content they demand on terms that they accept. Effective monetization requires us to continue to update the features and functionality of our streaming platform for users, content partners, and advertisers. We also must effectively support popular sources of streaming content that are available on our platform. And we must respond rapidly to actual and anticipated market trends in the TV streaming industry.
Large companies such as Amazon, Apple, and Google offer TV streaming devices that compete with Roku streaming devices and those of our licensed Roku TV partners and the Roku TV OS. Google licenses its Android operating system software for integration into smart TVs, including those of certain of our existing TV partners, and service provider set-top boxes, and Amazon licenses its operating system software for integration into smart TVs and sells Amazon-branded smart TVs. We also face increased competition from Walmart (which makes and sells Onn. branded streaming products, including co-branded Roku TV models), in light of its acquisition of Vizio (which makes and sells smart TVs with a proprietary operating system) and the integration of Vizio’s operating system into Walmart products instead of other third-party proprietary operating systems. 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. These competitors could also implement standards or technology that are not compatible with our products or that provide a better streaming experience and have greater resources to more aggressively promote their brands through advertising than we do.
In addition, we compete for Streaming Hours with many TV brands, including certain of our existing TV partners, that offer their own TV streaming solutions within their TVs, mobile streaming applications on smartphones and tablets, and other devices and platforms, such as game consoles with TV streaming functionality. Similarly, some service
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operators, such as Comcast and Charter Communications (and their joint venture, Xumo, LLC), offer TV streaming applications and devices as part of their cable service plans and can leverage their existing user bases, installation networks, broadband delivery networks, and name recognition to gain traction in TV streaming. If viewers of TV streaming content prefer alternative products to Roku streaming devices, we may not be able to achieve our expected growth in our key performance metrics.
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 and services. We may not have sufficient resources to continue to make the investments needed to maintain our competitive position. In addition, some of our competitors have longer operating histories, greater name recognition, larger customer bases, and significantly greater financial, technical, sales, marketing, and other resources than us, which provide them with advantages in developing, marketing, or servicing new products and offerings. Our competitors also may enter into business combinations or partnerships that strengthen their competitive positions. As a result, they may be able to respond more quickly to market demand, devote greater resources to the development, promotion, sales, and distribution of their products or their content, and influence market acceptance of their products better than we can. 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, gross profit, and operating margins, result in pricing pressure, increase our operating costs, harm our competitive position, and otherwise harm our business.
To enhance our users’ experience, we also offer other Roku-branded products, including projectors, smart home products and services, and audio products, and we face additional competition in these product categories. If these products do not operate as designed or do not enhance the Roku Experience as we intend, our users’ overall experience may be diminished, which may harm our competitive position and otherwise harm our business.
Our competitors offer content and other advertising mediums that may be more attractive to advertisers than our streaming platform.
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. These competitors offer content and other advertising mediums that may be more attractive to advertisers than our streaming platform. These competitors are often very large and have more advertising experience and financial resources than we do, which may adversely affect our ability to compete for advertisers and may result in lower revenue and gross profit from advertising. Many major SVOD services now have ad-supported SVOD tiers, which has further increased competition for streaming TV advertising revenue. These services, as well as AVOD and FAST services, sell advertising inventory in their ad-supported content that is distributed on our streaming platform. Our business and growth prospects may be harmed if we are unable to increase our revenue from advertising by, among other things, continuing to improve our streaming platform’s capabilities to further optimize and measure advertisers’ campaigns; continuing to increase our streaming platform’s reach; increasing, differentiating, and selling our advertising inventory, including video advertising inventory we sell in The Roku Channel, video advertising inventory that we acquire through our streaming services distribution agreements, and display ads included throughout the Roku Experience; innovating our ad product offerings; and maintaining a strong advertising sales team and programmatic capabilities. See also “— If we are unable to maintain an appropriate 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 .”
If advertisers continue to devote a substantial portion of their advertising budgets to advertising in traditional media or on other digital platforms rather than on advertising on our streaming platform, the future growth of our business may be negatively impacted.
Many advertisers continue to devote a substantial portion of their advertising budgets to advertising in traditional media or on other digital platforms, such as traditional TV, radio, print publications, and social media. The future growth of our business depends on the growth of advertising on TV streaming platforms and on advertisers increasing their spending on advertising on our TV streaming platform. 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. In addition, if we are unable to compete with social media and other digital platforms to win business from advertisers and advertising agencies who have traditionally advertised on these platforms, such as direct-to-consumer and small or medium-sized businesses, our ability to grow our business may be limited. If advertisers, or their agency relationships, do not perceive meaningful benefits of advertising on TV streaming platforms, our business may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business.
Finally, there is political or regulatory pressure in some countries to limit streaming TV advertising (including limiting the advertising that may be associated with children’s content) or impose local content or prominence requirements on streaming TV services, which could pose a threat to our operating results and our ability to grow our business.
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If we are unable to maintain an appropriate 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 maintain an appropriate supply of video advertising inventory on our streaming platform and sell it to advertisers. 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. 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. 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. We may fail to attract content partners that generate a sufficient quantity or quality of ad-supported content hours on our streaming platform or fail to obtain access to a sufficient supply of such advertising inventory from the publishers.
Our access to video advertising inventory in ad-supported streaming apps on our streaming platform varies greatly among apps and the amount, quality, and cost of video advertising inventory available to us can change at any time. Accordingly, we may not have access to a significant portion of the video advertising inventory on our streaming platform. For certain apps, including YouTube, we have no access to video advertising inventory at this time, and we may not secure access in the future. Moreover, we have in the past been unable, and in the future may be unable, to obtain access to video advertising inventory on ad-supported tiers of SVOD services on mutually agreeable terms, or at all. If we cannot grow, maintain, and generate sufficient demand for an appropriate supply of quality video advertising inventory at reasonable costs to keep up with demand or sell such advertising inventory at our desired price, our business may be harmed.
If the advertising campaigns that run on our streaming platform decrease or are not relevant or not engaging to our users, our business may be harmed.
We have made, and are continuing to make, investments to engage with more advertisers and content partners, and enable them to deliver more relevant advertising campaigns to our viewers. Historically, a small number of advertisers and content partners have accounted for a significant portion of the spending on ads integrated into our UI, and we are making efforts to expand the number and categories of advertisers spending on these ads. If our advertisers and content partners decrease spending on ads integrated into our UI, or if our efforts to broaden the categories of advertisers spending on these ads are unsuccessful, our financial condition and operating results may suffer, and our business may be harmed. For example, consolidation among content partners has in the past resulted, and may in the future result, in decreased spending on ads integrated into our UI.
In addition, existing and prospective advertisers may not be successful in serving advertising campaigns that lead to and maintain viewer engagement. Those ads and campaigns may seem irrelevant, repetitive, or overly targeted and intrusive. For example, viewers may dislike the content and frequency of advertising that appears on the Roku Home Screen. 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. If the advertising campaigns that run on our streaming platform are not relevant, are overly intrusive or too frequent, or are an impediment to the use of our platform, our viewers may stop using our platform, resulting in a reduction of our user base and Streaming Hours, which will harm our business, financial condition, and operating results.
We are subject to various risks in connection with programmatic advertising.
Programmatic streaming TV ad buying is growing within the industry, and advertisers and advertising agencies can programmatically purchase and manage their streaming TV, desktop, and mobile advertising campaigns both off and on the Roku platform through third-party mechanisms (such as third-party DSPs and SSPs) and through our media buying channels. If we are unable to expand our programmatic demand by maintaining and developing third-party demand relationships in a way that is competitive with other advertising platforms, our business could be harmed. We also may not be able to adapt to changes or trends in programmatic streaming TV advertising, which would harm our ability to grow our Advertising revenue and harm our business.
Furthermore, the programmatic advertising ecosystem is large, distributed, and complex, requiring us to integrate with several key third-party advertising partners. Our compliance with applicable laws and regulations therefore may depend in part on these partners’ commitment to handling user data with the care that we require or expect of them. Because integration of our respective systems is complex and rapidly evolving, we and our partners may be susceptible to breaches, failures, and other errors (whether inadvertent or intentional). We expect to encounter more of these challenges and issues as the number of partners we integrate with increases.
We may not be successful in our efforts to further monetize our expanding user base and streaming activity as we increase the amount of content offered and streamed across our platform, which may harm our business.*
Our business model depends on our ability to generate Platform revenue from advertisers and content partners. We generate Advertising revenue from the sale of digital advertising (including direct and programmatic video advertising, ads integrated into our UI, and related services) and Subscriptions revenue primarily from the sale of subscriptions to end users (including subscription and transaction revenue shares from content partners, the sale of
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Premium Subscriptions, and the sale of owned and operated subscription services) and the sale of branded app buttons on remote controls. 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 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. For example, if our streaming player is connected to a TV, and the viewer turns off the TV, steps away, or falls asleep without stopping or pausing the player, then a particular streaming app may continue to play content for a period of time determined by the streaming app. The Roku TV OS’s “Are you still watching?” feature, which prompts users to confirm they are still watching, does not resolve this lack of correlation.
Our ability to deliver advertisements relevant to our users and to increase our streaming platform’s value to advertisers and content partners depends on the collection of user engagement data, and the degree to which our users consent to, opt out of, or limit the collection or use of data for advertisements, including as a result of product changes and controls that we have implemented or may implement in the future related to new applicable laws, regulations, industry standards, regulatory actions, or litigation that impact our ability to use data for advertising purposes. Content partners may also refuse to allow us to collect data regarding user engagement or refuse to implement mechanisms we request to ensure compliance with our legal obligations or technical requirements. For example, we are not able to fully utilize program level viewing data from many of our most popular apps to improve the relevancy of advertisements provided to our users.
Certain apps available on our streaming platform are focused on increasing user engagement and time spent within their apps by allowing users to purchase additional content and streaming services within their apps. When users purchase these products and services in-app rather than from us, we may earn less revenue than when such products and services are purchased directly from us. 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. Additionally, our distribution agreements with our most popular apps are renegotiated periodically, and changing commercial terms could affect our ability to monetize those apps.
The monetization of our streaming platform may not continue to grow as we expect, and at times our Platform revenue growth has been, and may in the future be, lower than expected due to advertising inventory supply and demand imbalances; advertisers significantly curtailing or pausing advertising spending due to macroeconomic factors or other factors beyond our control; competitive pressures from video advertising offerings on other TV streaming platforms or services; the non-binding nature of advertisers’ spending commitments; fluctuations in streaming services subscription prices; or changes in consumer behaviors related to subscriptions for streaming services. To materially increase the monetization of our streaming platform through the sale of video advertising, we must generate significantly more advertising revenue on our streaming platform as well as deliver ad-supported content that results in our users streaming significantly more ad-supported content. We cannot assure you that we will be successful in monetizing our streaming platform through the distribution of ad-supported content.
We are subject to various risks in connection with the operation and monetization of our owned and operated streaming services.*
We have three owned and operated streaming services: The Roku Channel, Howdy, and Frndly TV. We have incurred, and will continue to incur, costs and expenses in connection with the development, expansion, and operation of The Roku Channel, which we monetize primarily through advertising, and Howdy and Frndly TV, which we monetize primarily through subscription fees. From time to time, we may remove underperforming content from our owned and operated streaming services and record a charge related to such removal.
In order to attract users to our owned and operated streaming services, we must secure rights to stream content that is appealing to our users and advertisers. In part, we do this by directly licensing certain content from content owners, such as television and movie studios. Our agreements with these content owners have varying terms and provide us with rights to make specific content available during certain periods of time. Upon expiration of these agreements, we must re-negotiate and renew these agreements with the existing content owners, or enter into new agreements with other content owners, to obtain rights to distribute additional titles or to extend the duration of the rights previously granted. If we cannot enter into content license agreements to access content that enables us to attract and retain users to our owned and operated streaming services, or if the content we do secure rights to stream is ultimately not appealing to our users and advertisers, usage of our owned and operated streaming services may decline, and our business may be harmed. Further, even if we successfully monetize our owned and operated streaming services in the United States, we may not be successful in monetizing them in international markets. See also “ —We may be unable to successfully expand our international operations, and our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business. ”
In addition, we produce original content for distribution on The Roku Channel and other platforms, but we may not succeed in doing so in a cost-effective manner that furthers the growth of The Roku Channel and increases its appeal to
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our users and advertisers. We also assume risks associated with content production, such as completion and key talent risks, and the risk of litigation and claims related to our content production.
Furthermore, if the advertisements on our ad-supported streaming services are not relevant to our users or are overly intrusive and impede our users’ enjoyment of the available content, our users may not stream content and view advertisements on our streaming services, and our streaming services may not generate sufficient revenue from advertising to be cost effective for us to operate. In addition, we distribute our streaming services on platforms other than our own streaming platform, and we may not be successful in attracting a large number of users or generating significant revenue from advertising or subscription fees on such other streaming platforms.
The sale of Premium Subscriptions on The Roku Channel also generates Subscription revenue and carries certain non-advertising related risks. See “ —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. ”
We depend on a small number of content partners for nearly half of our Streaming Hours, and if we fail to maintain these relationships, our business could be harmed.*
Historically, a small number of content partners have accounted for a significant portion of the hours streamed on our platform. In the three months ended March 31, 2026, the top three streaming services (excluding The Roku Channel) represented nearly half of all hours streamed in the period. 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.
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. 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. This may be challenging as the industry continues to evolve, including through consolidation of content publishers, joint ventures among content publishers, and licensing of content between content publishers. 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. Our success in assisting our content publishers maintain and expand their app offerings on a cost-effective basis largely depends on our ability to effectively promote and market streaming apps, minimize launch delays or downtime of streaming apps, and minimize streaming platform downtime and other technical difficulties.
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.
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, engagement, and monetization.
Our agreements with content partners generally have terms of one to three years and can be terminated before the end of the term by the content partner under certain circumstances, including if we materially breach the agreement, become insolvent, enter bankruptcy, or commit fraud. Upon expiration of these agreements, we are required to re-negotiate and renew them in order to continue providing content from these content partners on our streaming platform. We have in the past been unable, and in the future may not be able, to reach a satisfactory agreement with certain content partners before our existing agreements have expired. If we are unable to renew such agreements on a timely basis on mutually agreeable terms, or if a content partner terminates an agreement with us before its expiration, we may be required to temporarily or permanently remove certain apps or app features from our streaming platform.
The loss of such apps or app features from our streaming platform for any period of time may 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 streaming platform, we may lose app partners or users, and our streaming device sales, user base growth, engagement, and platform monetization may be harmed.
If our content partners do not participate in new features that we may introduce from time to time or choose to develop their apps on alternative streaming platforms, our business may be harmed.
As our streaming platform and products evolve, we will continue to introduce new features, which may or may not be attractive to our content partners or meet their business or technical requirements. For example, some content partners have elected not to participate in new Roku Home Screen Menu features (such as “What to Watch”) or in our Roku Zones (collections of related content across our streaming platform) or have imposed limits on our data gathering for usage within their apps. See also “ —We may not be successful in our efforts to further monetize our expanding user base and streaming activity as we increase the amount of content offered and streamed across our platform, which may
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harm our business. ” In addition, our streaming platform utilizes our proprietary Brightscript scripting language to allow our content partners to develop and create apps on our streaming platform. Certain content partners may find other languages, such as HTML5, more attractive to develop for and shift their resources to developing their apps on other platforms. If key content partners do not find our streaming platform simple and attractive to develop apps for, do not value and participate in all of the features and functionality that our streaming platform offers, or determine that our software developer kit or new features of our platform do not meet their requirements, 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.*
We earn Subscriptions 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. If users reduce their use of our streaming platform for these purchases or subscriptions for any reason, including opting to pay for services directly with content partners or by other means for which we do not receive attribution, our business may be harmed.
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 users increase their spending on such in-app transactions at the expense of stand-alone purchases through our streaming platform, our business may be harmed.
Our growth depends in part on our ability to develop, maintain, and expand relationships with our licensed Roku TV partners and manufacturing partners.*
We license the Roku TV OS and our smart TV reference designs to certain TV brand and manufacturing partners for the development, manufacture, and commercialization of licensed Roku TV models. For a number of years, the sale of Roku TV models by our licensed Roku TV partners has materially contributed to growth in our user base and Streaming Hours and supported our platform monetization efforts. As our Roku TV licensing program has expanded to certain markets outside the United States, international users are representing an increasing share of our user base. 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 in both the United States and international markets. We typically do not receive or expect license revenue from these license arrangements but incur operating expenses to establish and support them. The economic benefits that we derive from these license arrangements are and will likely continue to be indirect — primarily, growing our user base, increasing Streaming Hours, and enabling us to generate more Platform revenue. 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. See also “ —We may not be successful in our efforts to further monetize our expanding user base and streaming activity as we increase the amount of content offered and streamed across our platform, which may harm our business. ”
The loss of a relationship with a licensed Roku TV partner (including as a result of our sales of Roku-made TVs that are designed, made, and sold by us) could harm our results of operations, damage our reputation, increase pricing and promotional pressures from other partners and retail distribution channels, increase our marketing costs, and result in the loss of revenue. If we are not successful in maintaining existing and creating new relationships with any of these licensed Roku TV partners, or if we encounter technological, content licensing, or other impediments to these relationships, our ability to grow or maintain our business could be adversely affected.
Our Roku TV licensing arrangements are complex and time-consuming to negotiate and complete. Under these license arrangements, we generally have limited or no control over the amount and timing of resources our licensing partners may dedicate to the relationship. In the past, our licensed Roku TV partners have failed to meet their forecasts and anticipated market launch dates for distributing Roku TV models, and they may fail to do so in the future. If our licensed Roku TV partners fail to meet their forecasts or launch dates for distributing our streaming devices or choose to deploy competing streaming solutions within their product lines, our business may be harmed.
We and our licensed Roku TV partners depend on retail sales channels to effectively market and sell our respective products, and if we or our partners fail to maintain and expand effective retail sales channels, we or our partners could experience lower product sales.*
To continue to grow our user base, we must maintain and expand retail sales channels for our products and for the Roku products sold by our partners or licensees. The majority of our products and our licensed Roku TV partners’ products are sold through brick and mortar retailers and their online sales platforms, as well as online-only retailers. We also sell certain products directly through our website and internationally through distributors and retailers. As we are still a relatively recent entrant in certain international markets, we may not have established a strong reputation or relationships with retailers for those markets as compared to our retail sales channels in the United States or our competitors in international markets. See also “ —We may be unable to successfully expand our international operations, and our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business .”
Our retailers and distributors also sell products that compete with our products and our licensed Roku TV partners’ products, including house-branded televisions sold by such retailers that utilize TV operating systems other than the Roku
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TV OS. We have no minimum purchase commitments or long-term contracts with any of these retailers or distributors, and there can be no assurance that we will reach agreements with our retailers and distributors on terms we find acceptable or that will be consistent with our past practices.
We are reliant on certain retailers or distributors. Amazon, Best Buy, Target, and Walmart in total accounted for 86% of our Devices revenue for each of the three months ended March 31, 2026 and 2025. Furthermore, our licensed Roku TV partners may be reliant on the same or other retailers and distributors for a significant portion of their unit sales of Roku TV models. At times, certain retailers and distributors have reduced the number of our and our licensed Roku TV partners’ products available for sale, have chosen not to prominently display those products in their stores or on their websites, or have discontinued selling those products. Such actions have in the past decreased, and may in the future decrease, the volume of our or our licensed Roku TV partners’ products sold. These risks may be exacerbated by our reliance on certain retailers or distributors, or when a major retailer in a jurisdiction commercializes televisions under brands that the retailer controls.
In addition, at times our existing licensed Roku TV partners have chosen 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. Traditional retailers have limited shelf and end cap space in their stores and limited promotional budgets, and online retailers have limited prime website product placement space. Competition is intense for these resources, and a competitor with more extensive product lines, stronger brand identity, and greater marketing resources, such as Amazon or Google, possesses greater bargaining power with retailers. In addition, our online retailers, which sell or may sell their own competitive streaming devices, smart TVs, and smart home devices, may market and promote their products more prominently on their websites, and could refuse to offer or promote our products on their websites. We also face increased competition with Walmart (which currently makes and sells Onn. branded streaming products, including co-branded Roku TV models), in light of Walmart’s acquisition of Vizio (which also makes and sells smart TVs with a proprietary operating system) and the integration of Vizio’s operating system into Walmart products instead of other third-party proprietary operating systems. See also “ —If our efforts to build and maintain a strong brand and customer satisfaction and loyalty are not successful, we may not be able to attract or retain users, and our business may be harmed ” and “ —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. ” Any reduction in our ability to place and promote our products, or increased competition for available shelf or website placement, could require us to increase our marketing or other expenditures to maintain our product visibility or could result in reduced visibility for our products, which may harm our business. In particular, the availability of product placement during peak retail periods, such as the holiday season, has in the past prevented, and may in the future prevent, us from effectively selling our products during these periods.
If our efforts to build and maintain a strong brand and customer satisfaction and loyalty are not successful, we may not be able to attract or retain users, and our business may be harmed.
Building and maintaining a strong brand is important to attract and retain users, as potential users have many TV streaming choices. Successfully building a brand is a time-consuming and comprehensive endeavor, and our brand may be negatively impacted by factors, some of which are beyond our control, such as the quality and reliability of the Roku TV models made by our licensed Roku TV partners and the quality of the content provided by our content partners. Our competitors may be able to achieve and maintain brand awareness and consumer demand for their products more quickly and effectively than we can. Many of our competitors are larger companies and may have greater resources to devote to the promotion of their brands through traditional advertising, digital advertising, or website product placement. See also “ —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.” If we are unable to execute on building a strong brand, it may be difficult to differentiate our business and streaming platform from our competitors in the marketplace, which may adversely affect our ability to attract and retain users and harm our business.
Our streaming platform allows our users to choose from a wide variety of apps, representing a variety of content from a wide range of content partners. While we have policies that prohibit the publication of content that is unlawful, incites illegal activities, or violates third-party rights, among other things, we may distribute apps that include controversial content. Controversies related to the content included on certain apps that we distribute have resulted in, and could in the future result in, negative publicity, cause harm to our reputation and brand, or subject us to claims and may harm our business.
If we or our licensed Roku TV partners encounter problems with contract manufacturers or fail to accurately forecast inventory needs, our business may be harmed.*
We do not have any internal manufacturing capabilities and rely on a limited number of contract manufacturers to build our players, smart home products, and Roku-made TVs. Similarly, while some of our licensed Roku TV partners have internal manufacturing capabilities, others rely primarily or exclusively upon contract manufacturers to build the Roku TV models that our licensed Roku TV partners sell to retailers. If we or our Roku TV partners have difficulties with contract manufacturers, our business may be harmed.
Contract manufacturers are vulnerable to, among other issues: capacity constraints; reduced component availability; production, supply chain, or shipping disruptions, delays, or increased costs, including from labor disputes,
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strikes, mechanical issues, quality control issues, natural disasters, geopolitical conflicts, and public health crises; and the impact of existing and evolving U.S. or foreign tariffs, trade policies and regulations, or sanctions restrictions on components, finished goods, software, other products, or data transfers. As a result, we and our Roku TV partners have limited control over delivery schedules, manufacturing yields, and costs, particularly when components (such as memory chips) are in short supply or new products are introduced.
We and our Roku TV partners also have limited control over contract manufacturers’ quality systems and controls, and must rely on contract manufacturers to manufacture products to requisite quality and performance standards and specifications. Delays, component shortages, quality issues, and other manufacturing and supply problems in the past have impaired, and could in the future impair, the retail distribution of our products (including Roku TV models) and ultimately our brand. Any adverse change in contract manufacturers’ financial or business condition also could disrupt the supply of products to retailers and distributors.
We also rely on our contract manufacturers and other contractors to perform some of the development work on our products. The contract manufacturers or other contractors may be unwilling or unable to successfully complete desired development or fix defects or errors in a timely manner. Delays in development work by contract manufacturers or contractors could delay launch of new or improved products.
Our contracts with our contract manufacturers generally may not contain terms that protect us against development, manufacturing, inventory, and supply disruptions or risks. For example, such contracts may not obligate our contract manufacturers to supply our products in any specific quantity or at any specific price. If our contract manufacturers are unable to fulfill our production requirements in a timely manner, if their costs increase because of supply issues (such as a memory chip shortage), inflationary pressures, U.S. or international tariffs, sanctions, export or import restrictions, geopolitical conflicts, or if they decide to terminate their relationship with us, we may not be able to meet the demand for our products, we may have to increase our prices, our order fulfillment may be delayed or terminated, and we would have to attempt to identify, select, and qualify acceptable alternative contract manufacturers. Some of our contracts may require us to reimburse our contract manufacturers for any excess materials and components they purchase in advance in an effort to meet our projected needs or that were not used as a result of our decision to discontinue a certain model or the use of particular components. 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.
Alternative contract manufacturers may not be available when needed or may not be in a position to satisfy production requirements at commercially reasonable prices, to requisite quality and performance standards on a timely basis, or at all. Any significant interruption in contract manufacturing for any reason could require the reduction of the supply of products to retailers and distributors. Any of these circumstances could reduce our revenue, or cause us to incur higher costs than anticipated, which would negatively impact our Devices gross margin.
In addition, contract manufacturers’ facilities, and the facilities of contract manufacturers’ suppliers, are located in various geographic areas that may be subject to political, economic, labor, trade, public health, social, and legal uncertainties, including Brazil, China, Mexico, Taiwan, Thailand, and Vietnam, and such uncertainties may harm or disrupt our relationships with these parties or their ability to perform. For example, if the tensions between Taiwan and China escalate and impact the operations of contract manufacturers and their Taiwanese suppliers, our supply chain and our business could be adversely affected. We believe that the international location of these facilities increases supply risk, including the risk of supply interruptions, tariffs, and trade restrictions on exports or imports.
Our products incorporate key components from sole source suppliers, and if our contract manufacturers are unable to obtain sufficient quantities of these components on a timely basis, we will not be able to deliver our products to our retailers and distributors.
We depend on sole source suppliers for key components in our products. 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.
Although this approach allows us to maximize product performance on lower cost hardware, reduce engineering development and qualification costs, and develop stronger relationships with our strategic suppliers, this also creates supply chain and pricing risks. These sole-source suppliers could be constrained by fabrication capacity issues or material supply issues, such as U.S. or foreign tariffs, war or other government or trade relations issues, other export or import restrictions, as well as any retaliatory actions, on parts or components for finished products that are used in final assembly of their components (or on the finished products themselves), or shortages of key components.
In addition, a strategic supplier may stop producing such components, cease operations, be acquired by or enter into exclusive arrangements with our competitors or other companies, put contract manufacturers on allocation because of component shortages, decide to allocate manufacturing resources to other products (such as memory chips), or become subject to U.S. or foreign sanctions or export control restrictions or penalties. 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. Such interruptions and delays have in the past and may in the future force us to seek similar components from alternative
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