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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38211
ROKU, INC.
(Exact name of registrant as specified in its charter)
Delaware26-2087865
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
1173 Coleman Avenue
San Jose, California 95110
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (408) 556-9040
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:Trading Symbol(s):Name of Exchange on Which Registered:
Class A Common Stock, $0.0001 par valueROKUThe Nasdaq Global Select Market
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 FilerAccelerated 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 Exchange Act). Yes No
As of September 30, 2023, the registrant had 125,086,434 shares of Class A common stock, $0.0001 par value per share, and 17,409,398 shares of Class B common stock, $0.0001 par value per share, outstanding.


Table of Contents
  Page
PART I.
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
i

NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“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 “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will,” “would,” “target,” or the negative of these terms or other similar expressions. We caution you that 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. These forward-looking statements 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, and profitability;
the impact of supply chain disruptions, inflationary pressures, recessionary fears, labor disputes, bank failures, the COVID-19 pandemic, and geopolitical conflicts on our business, operations, and the markets and communities in which we and our advertisers, content providers, licensed Roku TV partners, other device licensees, manufacturers, suppliers, retailers, and users operate;
our ability to attract and retain users and increase streaming hours;
our ability to attract and retain advertisers;
our ability to attract and retain TV brands, manufacturing partners, and service operators to license and deploy our technology;
our ability to produce or acquire rights to distribute popular content on our platform on favorable terms, or at all, including the renewals of our existing agreements with content publishers;
changes in consumer 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;
our ability to develop and launch new products and provide ancillary services and support;
our ability to integrate acquired businesses, products, and technologies;
our ability to expand our products and services into adjacent markets such as the smart home market, scale our operations in these markets, and do so profitably over time;
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 security breaches 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, including our ability to enter into new credit agreements; 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, including compliance with privacy and data protection regulations in various U.S. and international jurisdictions.
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.
ii

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), 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.
iii

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
ROKU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
(unaudited)
 As of
 September 30, 2023December 31, 2022
Assets
Current Assets:
Cash and cash equivalents$2,003,408 $1,961,956 
Restricted cash 40,713  
Accounts receivable, net of allowances of $25,080 and $40,191 as of
720,398 760,793 
September 30, 2023 and December 31, 2022, respectively
Inventories105,374 106,747 
Prepaid expenses and other current assets101,108 135,383 
Total current assets2,971,001 2,964,879 
Property and equipment, net278,723 335,031 
Operating lease right-of-use assets410,585 521,695 
Content assets, net238,015 292,766 
Intangible assets, net45,662 58,881 
Goodwill161,519 161,519 
Other non-current assets85,274 77,830 
Total Assets$4,190,779 $4,412,601 
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable$312,279 $164,800 
Accrued liabilities797,229 750,810 
Current portion of long-term debt 79,985 
Deferred revenue, current portion98,236 87,678 
Total current liabilities1,207,744 1,083,273 
Deferred revenue, non-current portion22,556 28,210 
Operating lease liability, non-current portion600,047 584,651 
Other long-term liabilities52,965 69,911 
Total Liabilities1,883,312 1,766,045 
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Common stock, $0.0001 par value
14 14 
Additional paid-in capital3,526,915 3,234,860 
Accumulated other comprehensive income (loss)(166)(292)
Accumulated deficit(1,219,296)(588,026)
Total stockholders’ equity2,307,467 2,646,556 
Total Liabilities and Stockholders’ Equity$4,190,779 $4,412,601 
See accompanying notes to condensed consolidated financial statements.
1

ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 Three Months Ended Nine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Net Revenue:
Platform$786,785 $667,217 $2,165,238 $1,980,180 
Devices125,233 94,156 334,956 279,298 
Total net revenue912,018 761,373 2,500,194 2,259,478 
Cost of Revenue:
Platform408,554 295,550 1,057,151 856,396 
Devices134,641 109,036 358,352 326,339 
Total cost of revenue543,195 404,586 1,415,503 1,182,735 
Gross Profit (Loss):
Platform378,231 371,667 1,108,087 1,123,784 
Devices(9,408)(14,880)(23,396)(47,041)
Total gross profit368,823 356,787 1,084,691 1,076,743 
Operating Expenses:
Research and development282,201 207,608 694,673 568,243 
Sales and marketing307,694 209,364 768,805 540,857 
General and administrative128,717 86,804 309,422 248,635 
Total operating expenses718,612 503,776 1,772,900 1,357,735 
Loss from Operations(349,789)(146,989)(688,209)(280,992)
Other Income (Expense), Net:
Interest expense(10)(1,157)(695)(3,273)
Other income, net22,912 27,914 66,012 30,152 
Total other income, net22,902 26,757 65,317 26,879 
Loss Before Income Taxes(326,887)(120,232)(622,892)(254,113)
Income tax expense3,184 1,951 8,378 6,697 
Net Loss$(330,071)$(122,183)$(631,270)$(260,810)
Net loss per share — basic and diluted$(2.33)$(0.88)$(4.47)$(1.90)
Weighted-average common shares outstanding — basic and diluted141,877138,571141,087 136,997 
See accompanying notes to condensed consolidated financial statements.
2

ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)

Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Net Loss$(330,071)$(122,183)$(631,270)$(260,810)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(237)(703)126 (1,115)
Comprehensive Loss$(330,308)$(122,886)$(631,144)$(261,925)




































See accompanying notes to condensed consolidated financial statements.
3

ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Stockholders’
Equity
Three Months Ended September 30, 2023SharesAmount
Balance—June 30, 2023141,508 $14 $3,422,415 $71 $(889,225)$2,533,275 
Issuance of common stock pursuant to equity incentive plans988 — 13,195 — — 13,195 
Stock-based compensation expense— — 91,305 — — 91,305 
Foreign currency translation adjustment— — — (237)— (237)
Net loss— — — — (330,071)(330,071)
Balance-September 30, 2023142,496 $14 $3,526,915 $(166)$(1,219,296)$2,307,467 
Nine Months Ended September 30, 2023
Balance-December 31, 2022140,027 $14 $3,234,860 $(292)$(588,026)$2,646,556 
Issuance of common stock pursuant to equity incentive plans2,469 — 14,699 — — 14,699 
Stock-based compensation expense— — 277,356 — — 277,356 
Foreign currency translation adjustment— — — 126 — 126 
Net loss— — — — (631,270)(631,270)
Balance-September 30, 2023142,496 $14 $3,526,915 $(166)$(1,219,296)$2,307,467 
 Common StockAdditional Paid-in CapitalAccumulated
Other Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Three Months Ended September 30, 2022SharesAmount
Balance—June 30, 2022137,929 $14 $3,024,897 $(371)$(228,648)$2,795,892 
Issuance of common stock pursuant to equity incentive plans1,341 — 5,899 — — 5,899 
Stock-based compensation expense— — 99,022 — — 99,022 
Foreign currency translation adjustment— — — (703)— (703)
Net loss— — — — (122,183)(122,183)
Balance-September 30, 2022139,270 $14 $3,129,818 $(1,074)$(350,831)$2,777,927 
Nine Months Ended September 30, 2022
Balance-December 31, 2021135,137 $14 $2,856,572 $41 $(90,021)$2,766,606 
Issuance of common stock pursuant to equity incentive plans4,133 — 17,592 — — 17,592 
Stock-based compensation expense— — 255,654 — — 255,654 
Foreign currency translation adjustment— — — (1,115)— (1,115)
Net loss— — — — (260,810)(260,810)
Balance-September 30, 2022139,270 $14 $3,129,818 $(1,074)$(350,831)$2,777,927 
See accompanying notes to condensed consolidated financial statements.
4

ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Nine Months Ended
 September 30, 2023September 30, 2022
Cash flows from operating activities:
Net Loss$(631,270)$(260,810)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization53,047 36,415 
Stock-based compensation expense277,356 255,654 
Amortization of right-of-use assets45,137 40,354 
Amortization of content assets154,801 163,121 
Foreign currency remeasurement (gains) losses3,469 (12,152)
Change in fair value of the Strategic Investment(3,734)(3,556)
Impairment of assets235,165  
Provision for doubtful accounts1,977 469 
Other items, net(872)(258)
Changes in operating assets and liabilities:
Accounts receivable38,416 32,186 
Inventories1,373 (68,976)
Prepaid expenses and other current assets16,003 5,221 
Content assets and liabilities, net(191,481)(229,745)
Other non-current assets5,448 (2,118)
Accounts payable174,784 29,550 
Accrued liabilities70,217 27,254 
Operating lease liabilities(14,301)(20,516)
Other long-term liabilities(910)465 
Deferred revenue4,904 11,884 
Net cash provided by operating activities239,529 4,442 
Cash flows from investing activities:
Purchases of property and equipment(79,099)(96,318)
Purchase of Strategic Investment(10,000)(40,000)
Net cash used in investing activities(89,099)(136,318)
Cash flows from financing activities:
Repayments of borrowings(80,000)(7,500)
Proceeds from equity issued under incentive plans14,699 17,592 
Net cash provided by (used in) financing activities(65,301)10,092 
Net increase (decrease) in cash, cash equivalents and restricted cash85,129 (121,784)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(2,964)(5,535)
Cash, cash equivalents and restricted cash —beginning of period1,961,956 2,147,670 
Cash, cash equivalents and restricted cash —end of period$2,044,121 $2,020,351 

5

Nine Months Ended
September 30, 2023September 30, 2022
Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents$2,003,408 $2,018,616 
Restricted cash, current40,713  
Restricted cash, non-current 1,735 
Cash, cash equivalents and restricted cash —end of period$2,044,121 $2,020,351 
Supplemental disclosures of cash flow information:
Cash paid for interest$886 $2,537 
Cash paid for income taxes$5,027 $6,644 
Supplemental disclosures of non-cash investing and financing activities:
Unpaid portion of property and equipment purchases$1,129 $23,410 
See accompanying notes to condensed consolidated financial statements.
6

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. The Company operates in two reportable segments and generates platform revenue from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services) and content distribution services (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded channel buttons on remote controls). The Company generates devices revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories as well as revenue from licensing arrangements with service operators and licensed Roku TV partners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“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, 2022, filed with the SEC on February 16, 2023 (the “Annual Report”).
The condensed consolidated balance sheet as of December 31, 2022 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 and nine months ended September 30, 2023 are not necessarily indicative of the operating results to be expected for the full year or any future periods.
Certain prior period amounts reported in our condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.
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, gross versus net revenue recognition, and evaluation of customer versus vendor relationships;
the impairment of intangible assets;
amortization and the impairment of content assets;
the impairment of operating lease right-of-use assets and property and equipment;
valuation of assets acquired and liabilities assumed in connection with business combinations;
valuation of the Strategic Investment;
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.
7

Principles of Consolidation
The condensed consolidated financial statements, which include the accounts of Roku, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. The Company’s restricted cash balance is used to secure the outstanding letters of credit after the Credit Facility (defined in Note 10) matured and was repaid in February 2023.
The Company maintains its cash, cash equivalent and restricted cash balances with financial institutions which often exceed regulated insured limits. The table below reflects the percentage of cash, cash equivalent and restricted cash balances at financial institutions that individually held greater than 10% of the Company’s total cash, cash equivalent and restricted cash balance at each period reported.
As of
InstitutionsSeptember 30, 2023December 31, 2022
Institution A (1)
18%26%
Institution B (1)
14%n/a
Institution D*21%
Institution E (1)
13%n/a
(1) Institutions designated as global systemically important banks (G-SIBs) by the Financial Stability Board, in consultation with the Basel Committee on Banking Supervision (BCBS) and national authorities.
* Less than 10%
Accounts Receivable, net
Accounts receivable are typically unsecured and are derived from revenue earned from customers. They are stated at invoice value less estimated allowances for sales returns, sales incentives, doubtful accounts, and other miscellaneous allowances. The Company performs ongoing credit evaluations of its customers to determine allowances for potential credit losses and doubtful accounts. The Company considers historical experience, ongoing promotional activities, historical claim rates, and other factors to determine the allowances for sales returns and sales incentives.
Allowance for Sales Returns: Allowance for sales returns consists of the following activities (in thousands):
 Three Months Ended Nine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Beginning balance$7,392 $4,670 $7,417 $6,015 
Add: Charged to revenue3,881 4,187 12,045 12,997 
Less: Utilization of sales return reserve(4,058)(3,294)(12,247)(13,449)
Ending balance$7,215 $5,563 $7,215 $5,563 
Allowance for Sales Incentives: Allowance for sales incentives consists of the following activities (in thousands):
 Three Months Ended  Nine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Beginning balance$17,428 $24,893 $28,903 $48,411 
Add: Charged to revenue16,048 15,661 43,598 47,211 
Less: Utilization of sales incentive reserve(19,426)(22,848)(58,451)(77,916)
Ending balance$14,050 $17,706 $14,050 $17,706 
8

Allowance for Doubtful Accounts: Allowance for doubtful accounts consists of the following activities (in thousands):
Three Months Ended  Nine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Beginning balance$5,578 $2,278 $3,498 $2,158 
Provision for (recoveries of) doubtful accounts(984)2 1,977 469 
Adjustments for write-off(2,046)(97)(2,927)(444)
Ending balance$2,548 $2,183 $2,548 $2,183 
The Company did not have any customer that accounted for more than 10% of its accounts receivable, net balance as of September 30, 2023 and December 31, 2022.
3. REVENUE
The Company’s disaggregated revenue is represented by the two reportable segments discussed in Note 15.
The contract balances include the following (in thousands):
 As of
 September 30, 2023December 31, 2022
Accounts receivable, net$720,398 $760,793 
Contract assets (included in Prepaid expenses and other current assets)37,344 42,617 
Deferred revenue, current portion$98,236 $87,678 
Deferred revenue, non-current portion22,556 28,210 
Total deferred revenue$120,792 $115,888 
Accounts receivable are recorded at the amount invoiced, net of allowances for sales returns, sales incentives, and doubtful accounts. Payment terms can vary by customer and contract.
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 decreased by $5.3 million during the nine months ended September 30, 2023 due to the timing of billing to customers.
Deferred revenue reflects consideration invoiced prior to the satisfaction of performance obligations and revenue recognition. Deferred revenue increased by $4.9 million during the nine months ended September 30, 2023 primarily due to the timing of fulfillment of performance obligations and increases in subscription arrangements.
Revenue recognized during the three and nine months ended September 30, 2023, from amounts included in total deferred revenue as of December 31, 2022, was $10.8 million and $77.7 million, respectively. Revenue recognized during the three and nine months ended September 30, 2022, from amounts included in total deferred revenue as of December 31, 2021, was $7.9 million and $41.6 million, respectively.
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. Estimated contracted revenue for these remaining performance obligations was $1,292.0 million as of September 30, 2023 of which the Company expects to recognize approximately 45% over the next 12 months and the remainder thereafter.
The Company recognized revenue of $15.8 million and $41.8 million during the three and nine months ended September 30, 2023, respectively from performance obligations that were satisfied in previous periods due to changes in the estimated transaction price of its revenue contracts. The Company reversed revenue of $8.7 million and $0.5 million
9

during the three and nine months ended September 30, 2022, respectively, from performance obligations that were satisfied in previous periods due to changes in the estimated transaction price of its revenue contracts.
Customer I accounted for 11% and 11% of the Company’s total net revenue during the three and nine months ended September 30, 2023, respectively. The Company did not have any customer that accounted for more than 10% of its total net revenue during the three and nine months ended September 30, 2022.
4. 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. All goodwill relates to the Company’s platform segment.
Intangible Assets
The following table is the summary of the Company’s intangible assets (in thousands, except years):
As of September 30, 2023
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted-Average Useful Lives
(in years)
Developed technology$73,367 $(46,135)$27,232 5.9
Customer relationships14,100 (13,564)536 4.0
Tradename20,400 (5,466)14,934 9.8
Patents4,076 (1,116)2,960 14.0
Total intangible assets$111,943 $(66,281)$45,662 6.7
As of December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Weighted-Average Useful Lives
(in years)
Developed technology$73,367 $(37,278)$36,089 5.9
Customer relationships14,100 (10,920)3,180 4.0
Tradename20,400 (3,966)16,434 9.8
Patents4,076 (898)3,178 14.0
Total intangible assets$111,943 $(53,062)$58,881 6.7
The Company recorded amortization expense of $4.4 million and $4.4 million for intangible assets during the three months ended September 30, 2023 and 2022, respectively. The Company recorded amortization expense of $13.2 million and $13.3 million for intangible assets during the nine months ended September 30, 2023 and 2022, respectively.
The Company recorded amortization of developed technology in Cost of revenue, platform for the three months ended September 30, 2023 and in Cost of revenue, platform and Research and development expenses for the three months ended September 30, 2022 as well as in the nine months ended September 30, 2023 and 2022. The Company recorded amortization of customer relationships and tradename in Sales and marketing expenses and amortization of patents in General and administrative expenses in the condensed consolidated statements of operations for all periods presented.
10

As of September 30, 2023, the estimated future amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands):
Year Ending December 31, 
2023 (remaining 3 months)$3,847 
202414,275 
202512,571 
20264,074 
20272,737 
Thereafter8,158 
Total$45,662 
5. BALANCE SHEET COMPONENTS
Accounts Receivable, net: Accounts receivable, net consisted of the following (in thousands):
 As of
 September 30, 2023December 31, 2022
Accounts receivable, gross$745,478 $800,984 
Less: Allowances
Allowance for sales returns7,215 7,417 
Allowance for sales incentives14,050 28,903 
Allowance for doubtful accounts2,548 3,498 
Other allowances1,267 373 
Total allowances25,080 40,191 
Accounts receivable, net$720,398 $760,793 
Property and Equipment, net: Property and equipment, net consisted of the following (in thousands):
 As of
 September 30, 2023December 31, 2022
Computers and equipment$51,470 $45,989 
Leasehold improvements264,939 353,245 
Internal-use software7,274 7,274 
Office equipment and furniture34,297 28,614 
Property and equipment, gross357,980 435,122 
Less: Accumulated depreciation and amortization(79,257)(100,091)
Property and equipment, net$278,723 $335,031 
Depreciation and amortization expense, for property and equipment assets, for the three months ended September 30, 2023 and 2022 was $14.5 million and $9.0 million, respectively. Depreciation and amortization expense, for property and equipment assets, for the nine months ended September 30, 2023 and 2022 was $39.8 million and $23.0 million, respectively.
During the three and nine months ended September 30, 2023, the Company recorded impairment charges of $68.1 million and $68.7 million, respectively, related to property and equipment assets associated with the leased office facilities that are part of its restructuring efforts. See Note 16 for further details on restructuring.
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Accrued Liabilities: Accrued liabilities consisted of the following (in thousands):
As of
September 30, 2023December 31, 2022
Payments due to content publishers$216,303 $201,054 
Accrued cost of revenue137,120 105,347 
Marketing, retail, and merchandising costs153,892 163,367 
Accrued payroll and related expenses87,443 46,529 
Operating lease liability, current63,838 54,689 
Content liability, current55,708 88,717 
Other accrued expenses82,925 91,107 
Total accrued liabilities$797,229 $750,810 
Deferred Revenue: Deferred revenue consisted of the following (in thousands):
 As of
 September 30, 2023December 31, 2022
Platform, current$63,254 $59,276 
Devices, current34,982 28,402 
Total deferred revenue, current98,236 87,678 
Platform, non-current733 969 
Devices, non-current21,823 27,241 
Total deferred revenue, non-current22,556 28,210 
Total deferred revenue$120,792 $115,888 
Other Long-term Liabilities: Other Long-term liabilities consisted of the following (in thousands):
As of
September 30, 2023December 31, 2022
Content liability, non-current$26,472 $39,587 
Other long-term liabilities26,493 30,324 
Total other long-term liabilities$52,965 $69,911 
6. CONTENT ASSETS
Content assets, net consisted of the following (in thousands):
 As of
 September 30, 2023December 31, 2022
Licensed content, net and advances$137,224 $243,226 
Produced content:
Released, less amortization75,899 42,605
Completed, not released13,548 3,537
In production34,551 42,904
Total produced content, net123,998 89,046
Total content assets, net and advances$261,222 $332,272 
Current portion (included in Prepaid expenses and other current assets)$23,207 $39,506 
Non-current portion$238,015 $292,766 
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Amortization of content assets is included in Cost of revenue, platform in the condensed consolidated statements of operations and is reflected in the table below (in thousands). The amortization expense excludes impairment of content assets that is recorded as restructuring charges.
 Three Months EndedNine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Licensed content$37,454 $59,604 $124,690 $154,394 
Produced content15,033 3,020 30,111 8,727 
Total amortization costs$52,487 $62,624 $154,801 $163,121 
Impairment: During the three and nine months ended September 30, 2023, the Company recorded impairment charges of $61.6 million related to removing select licensed and produced content from The Roku Channel as part of its restructuring efforts. See Note 16 for further details on restructuring.
7. STRATEGIC INVESTMENT
In June 2022, the Company agreed to provide financing of up to $60.0 million in the aggregate to a counterparty with whom the Company has a commercial relationship. The advances are in the form of convertible promissory notes (the “Strategic Investment”) and are recognized as Other non-current assets on the condensed consolidated balance sheets. The Strategic Investment accrues interest at 5% per annum. The convertible promissory notes have maturity dates as reflected in the table below, or are due upon a redemption event or in the event of a default.
The convertible promissory notes and their date of investment and maturity are as follows (in thousands):
As of September 30, 2023
Date of InvestmentAmount of InvestmentDate of Maturity
June 15, 2022$40,000June 15, 2025
March 23, 2023$5,000March 23, 2026
May 23, 2023$5,000May 23, 2026
The Strategic Investment contains certain redemption features that meet the definition of embedded derivatives and require 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 (expense), net in the condensed consolidated statements of operations. See Note 8 for additional details on the fair value of the Strategic Investment.
8. FAIR VALUE DISCLOSURE
The Company’s financial assets measured at fair value on a recurring basis are as follows (in thousands):
As of September 30, 2023As of December 31, 2022
Fair ValueLevel 1Level 3Fair ValueLevel 1Level 3
Assets:
Cash and cash equivalents:
Cash$866,248 $866,248 $ $1,353,547 $1,353,547 $ 
Money market funds1,137,160 1,137,160  608,409 608,409  
Restricted cash, current40,713 40,713     
Other non-current assets:
Strategic Investment53,202  53,202 39,468  39,468 
Total assets measured and recorded at fair value$2,097,323 $2,044,121 $53,202 $2,001,424 $1,961,956 $39,468 
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The following table reflects the changes in the fair value of the Company’s Level 3 financial assets (in thousands):
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Beginning balance$52,558 $40,000 $39,468 $ 
Purchase of Strategic Investment  10,000 40,000 
Change in estimated fair value of the Strategic Investment644 3,556 3,734 3,556 
Ending balance$53,202 $43,556 $53,202 $43,556 
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.
The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. The Company measured money market funds of $1,137.2 million and $608.4 million as cash equivalents as of September 30, 2023 and December 31, 2022, respectively, using Level 1 inputs.
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, observable market data by correlation or other means.
The Company did not have Level 2 instruments as of September 30, 2023 and December 31, 2022.
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.
As of September 30, 2023, the Company measured the Strategic Investment using Level 3 inputs. The fair value of the Strategic Investment on the date of purchase was determined to be equal to its principal amount. The Company recorded an unrealized gain of $0.6 million and $3.7 million, respectively, in Other income (expense), net related to the adjustment to fair value of the Strategic Investment for the three and nine months ended September 30, 2023. The Company recorded an unrealized gain of $3.6 million for the three and nine months ended September 30, 2022.
The Company classified the Strategic Investment as Level 3 due to the lack of relevant observable market data over fair value inputs. The fair value of the Strategic Investment 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.
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.
During the three months ended September 30, 2023, the Company recorded total impairment charges of $230.8 million that include $101.1 million of operating lease right-of-use assets impairment, $68.1 million of property and equipment impairment, and $61.6 million of content assets impairment. During the nine months ended September 30, 2023, the Company recorded total impairment charges of $235.2 million that include $104.9 million of operating lease right-of-use assets impairment, $68.7 million of property and equipment impairment, and $61.6 million of content assets
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impairment. The Company did not record any impairment charges during the three and nine months ended September 30, 2022.
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. For the licensed and produced content that was removed from The Roku Channel, the net carrying amount of the content assets was written off.
9. LEASES
The Company's operating leases are primarily for office facilities. The leases have remaining terms ranging from one to ten years and may include options to extend or terminate the lease. The depreciable life of right-of-use assets is limited by the expected lease term.
The components of lease expense are as follows (in thousands):
 Three Months EndedNine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Operating lease cost
$21,097 $20,719 $64,243 $55,453 
Variable lease cost5,623 4,548 17,995 13,679 
Total operating lease cost$26,720 $25,267 $82,238 $69,132 
Supplemental cash flow information related to leases is as follows (in thousands):
 Three Months EndedNine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases$19,097 $14,211 $54,417 $40,952 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$28,795 $5,799 $40,704 $230,119 
Decrease in operating lease right-of-use assets due to impairment (See Note 16 for restructuring details) $101,077 $ $104,867 $ 
Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):
 As of
 September 30, 2023December 31, 2022
Operating lease right-of-use assets$410,585 $521,695
Operating lease liability, current (included in Accrued liabilities)$63,838 $54,689
Operating lease liability, non-current600,047 584,651
Total operating lease liability$663,885 $639,340
Weighted-average remaining term for operating leases (in years)8.168.62
Weighted-average discount rate for operating leases3.95 %3.80 %
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Future lease payments under operating leases as of September 30, 2023 are as follows (in thousands):
Year Ending December 31,Operating Leases
2023 (remaining 3 months)$19,411 
202489,679 
202598,026 
202699,637 
202799,170 
Thereafter380,961 
Total future lease payments786,884 
Less: imputed interest(116,149)
Less: expected tenant improvement allowance(6,850)
Total (1)
$663,885 
(1) Total lease liabilities include liabilities related to operating leases right-of-use assets which were included in the impairment charge as part of the Company’s restructuring efforts reflected in Note 16.
As of September 30, 2023, the Company did not have any operating leases that were expected to commence in the future.
10. DEBT
The Company does not have any outstanding debt as of September 30, 2023. In February 2023, the Company repaid the debt balance in full and satisfied all outstanding debt obligations under the Credit Facility (as defined below) when it matured.
The Company’s outstanding debt as of December 31, 2022 was as follows (in thousands, except interest rate):
 As of
 December 31, 2022
 Amount  
Effective Interest Rate
Term Loan A Facility$80,000 4.4%
Less: Debt issuance costs(15)
Net carrying amount of debt$79,985 
The carrying amount of debt as of December 31, 2022 approximated its fair value due to variable interest rates. There was no interest expense associated with the Credit Facility for the three months ended September 30, 2023. The interest expense for the three months ended September 30, 2022 was $0.9 million. The interest expense for the nine months ended September 30, 2023 and 2022 was $0.6 million and $2.6 million, respectively.
Senior Secured Term Loan A and Revolving Credit Facilities
On February 19, 2019, the Company entered into a Credit Agreement with Morgan Stanley Senior Funding, Inc. (as amended on May 3, 2019, the “Credit Agreement”), which provided for (i) a four-year revolving credit facility in the aggregate principal amount of up to $100.0 million (the “Revolving Credit Facility”), (ii) a four-year delayed draw term loan A facility in the aggregate principal amount of up to $100.0 million (the “Term Loan A Facility”) and (iii) an uncommitted incremental facility subject to certain conditions (together with the Revolving Credit Facility and the Term Loan A Facility, collectively, the “Credit Facility”). See Note 11 to the consolidated financial statements in our Annual Report for additional details regarding the Credit Facility.
On November 18, 2019, the Company borrowed an aggregate principal amount of $100.0 million from the Term Loan A Facility. The Company elected an interest rate equal to the adjusted one-month LIBOR rate plus an applicable margin of 1.75% based on the Company’s secured leverage ratio.
The Credit Facility matured on February 19, 2023 and the outstanding Term Loan A Facility was repaid in full.
As of December 31, 2022, the Company had outstanding letters of credit against the Revolving Credit Facility of $37.7 million. Upon maturity of the Credit Facility on February 19, 2023, the outstanding letters of credit were secured by
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the Company’s existing cash balance, a portion of which is restricted for that purpose. As of September 30, 2023, the Company had outstanding letters of credit of $37.5 million, which are secured by restricted cash of $40.7 million.
11. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has 10 million shares of undesignated preferred stock authorized but not issued with rights and preferences determined by the Company’s Board of Directors at the time of issuance of such shares. As of September 30, 2023 and December 31, 2022, 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, vesting of restricted stock units, or shares purchased under the employee stock purchase plan are generally automatically converted into shares of the Company’s Class A common stock.
Common Stock Reserved for Future Issuance
As of September 30, 2023, the Company’s common stock reserved for issuance in the future is as follows (in thousands):
As of
 September 30, 2023
Common stock awards granted under equity incentive plans15,844 
Common stock awards available for issuance under the 2017 Employee Stock Purchase Plan (1)
5,089 
Common stock awards available for issuance under the 2017 Equity Incentive Plan27,025 
Total reserved shares of common stock47,958 
(1) The Company has not issued any common stock pursuant to the 2017 Employee Stock Purchase Plan.
Equity Incentive Plans
The Company has two equity incentive plans, the 2008 Equity Incentive Plan (the “2008 Plan”) and the 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan became effective in September 2017 in connection with the Company’s initial public offering (“IPO”). No additional equity grants have been made pursuant to the 2008 Plan subsequent to the 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.
Restricted stock units granted under the 2017 Plan are subject to continuous service. Stock options granted under the 2017 Plan generally are granted at a price per share equivalent to the fair market value on the date of grant. Recipients of option grants who possess more than 10% of the combined voting power of the Company are subject to certain limitations, and incentive stock options granted to such recipients are at a price per share no less than 110% of the fair market value on the date of grant.
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Restricted Stock Units
Restricted stock unit activity for the nine months ended September 30, 2023 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, 2022
8,577 $120.82 
Awarded4,523 70.66 
Released(1,869)119.40 
Forfeited(851)128.16 
Balance as of September 30, 2023
10,380 $98.62 
As of September 30, 2023, the Company had $863.8 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 2.6 years.
Stock Options
The following table summarizes the Company’s stock option activities under the 2008 Plan and 2017 Plan for the nine months ended September 30, 2023 (in thousands, except years and per share data):
 
Number of
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Balance as of December 31, 2022
5,807 $72.79 7.1
Granted532 72.42 — 
Exercised(600)24.49 — 
Forfeited and expired(275)150.60 — 
Balance as of September 30, 2023
5,464 $74.16 6.9$104,959 
 
Options exercisable as of September 30, 2023
3,189 $55.67 5.6$88,535 
As of September 30, 2023, the Company had $80.0 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 2.4 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 shows the total stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 (in thousands):
 Three Months EndedNine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Cost of revenue, platform$368 $280 $1,056 $882 
Cost of revenue, devices810 815 2,426 1,819 
Research and development37,314 40,511 110,801 107,130 
Sales and marketing34,421 34,480 99,785 86,308 
General and administrative18,392 22,964 63,288 59,515 
Total stock-based compensation$91,305 $99,050 $277,356 $255,654 
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12. COMMITMENTS AND CONTINGENCIES
Manufacturing Purchase Commitments
The Company has various manufacturing contracts with vendors in the conduct of the normal course of its business. In order to manage future demand for its products, the Company enters into agreements with manufacturers and suppliers to procure inventory based upon certain criteria and timing. Some of these commitments are non-cancelable. As of September 30, 2023, the Company had $137.0 million of non-cancelable purchase commitments for inventory.
Content Commitments
The Company enters into contracts with content publishers to license and produce content for streaming. When a title becomes available, the Company records a content asset and liability on the condensed consolidated balance sheets. Certain licensing agreements, such as film output deals, include the obligation to license rights for unknown future titles for which the ultimate quantity and/or fees are not determinable as of the reporting date. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. The unknown obligations could be material. The Company also licenses content under arrangements where the payments are variable and based on the revenue earned by the Company. Since those amounts cannot be determined, they are not included in the obligations below.
As of September 30, 2023, the Company's total obligation for content was $320.2 million, of which the Company recorded $56.9 million in Current liabilities and $26.5 million in Other long-term liabilities in the condensed consolidated balance sheets. The remaining $236.8 million is not yet recognized on the condensed consolidated balance sheets as the content does not meet the criteria for asset recognition.
The expected timing of payments for these content obligations are as follows (in thousands):
Year Ending December 31,
2023 (remaining 3 months)$73,951 
2024149,997
202560,442
202622,815
20279,455
Thereafter3,587
Total content obligations$320,247 
Letters of Credit
As of September 30, 2023 and December 31, 2022, the Company had irrevocable letters of credit outstanding in the amount of $37.5 million and $37.7 million, respectively related to operating leases. The letters of credit have various expiration dates through 2030.
Contingencies
The Company accrues for loss contingencies, including liabilities for intellectual property licensing 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.
From time to time, the Company is subject to legal proceedings, claims, and investigations in the ordinary course of business, including claims relating to employee relations, business practices and patent infringement. The Company is involved in litigation matters not listed herein. Although the results of these proceedings, claims, 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 are reasonably likely to have a material adverse effect on its business, financial condition, or results of operations. During the three and nine months ended September 30, 2023 and 2022, the Company did not have any loss contingencies that were material.
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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.
13. INCOME TAXES
Income tax expense was $3.2 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively. Income tax expense was $8.4 million and $6.7 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in income tax expense during the respective periods is primarily attributable to the changes in the mix of taxable earnings in the Company's domestic and foreign operations.
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized through future operations. As a result of the Company’s analysis of all available objective evidence, both positive and negative, as of September 30, 2023, management believes it is more likely than not that some deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuation allowance against its U.S. and certain foreign deferred tax assets.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted in the United States. The IRA introduces a 15% alternative minimum tax based on the financial statement income of certain large corporations, effective for tax years beginning after December 31, 2022. The IRA also includes a 1% excise tax on the net fair market value of stock repurchases made after December 31, 2022. The Company considered the applicable tax law changes, and concluded that there was no impact to the Company’s tax provision for the three and nine months ended September 30, 2023. The Company will continue to evaluate the impact of these tax law changes on future periods.
14. NET LOSS PER SHARE
The Company’s basic net loss per share is calculated by dividing the net 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 loss per share. Except with respect to certain voting, conversion, and transfer rights and as 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 loss per share are the same for both classes.
For purposes of the calculation of diluted net 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.
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The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
Three Months EndedNine Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Numerator:
Net Loss$(330,071)$(122,183)$(631,270)$(260,810)
Denominator:
Weighted-average common shares outstanding — basic and diluted141,877138,571141,087136,997
Net loss per share — basic and diluted$(2.33)$(0.88)$(4.47)$(1.90)
For the three and nine months ended September 30, 2023, outstanding equity awards of 15.8 million shares of common stock are excluded from the calculation of diluted net loss per share because of their anti-dilutive effect.
For the three and nine months ended September 30, 2022, outstanding equity awards of 13.8 million shares of common stock are excluded from the calculation of diluted net loss per share because of their anti-dilutive effect.
15. SEGMENT INFORMATION
The Company is organized into two reportable segments as follows:
Platform
The platform segment generates revenue from the sale of digital advertising (including direct and programmatic video advertising, media and entertainment promotional spending, and related services) and content distribution services (including subscription and transaction revenue shares, the sale of Premium Subscriptions, and the sale of branded channel buttons on remote controls).
Devices
The devices segment generates revenue from the sale of streaming players, Roku-branded TVs, smart home products and services, audio products, and related accessories that are sold through retailers and distributors, as well as directly to customers through the Company’s website. In addition, revenue from licensing arrangements with service operators and licensed Roku TV partners is included in the devices segment.
Customers accounting for 10% or more of segment revenue, net, were as follows:
 Three Months EndedNine Months Ended
 September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Platform segment revenue:
Customer I13 %*13 %*
Devices segment revenue:
Customer A21 %*12 %*
Customer B16 %17 %15 %20 %
Customer C37 %34 %40 %34 %
* Less than 10%
Revenue in international markets was less than 10% in each of the periods presented.
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Long-lived assets, net
The following table presents long-lived assets, net, which consist primarily of property and equipment and operating lease right-of-use assets, by geographic area (in thousands):
As of
September 30, 2023December 31, 2022
United States$542,854$686,902
United Kingdom114,512127,538
Other countries31,94242,286
Total