UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
Delaware |
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26-2087865 |
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class: |
Trading Symbol(s): |
Name of Exchange on Which Registered: |
Class A Common Stock, $0.0001 par value |
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The 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.
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, 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 |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of July 31, 2019, the registrant had
Table of Contents
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PART I. |
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1 |
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Item 1. |
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1 |
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1 |
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2 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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3 |
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4 |
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5 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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20 |
Item 3. |
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29 |
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Item 4. |
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29 |
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PART II. |
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30 |
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Item 1. |
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30 |
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Item 1A. |
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30 |
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Item 2. |
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58 |
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Item 3. |
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58 |
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Item 4. |
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58 |
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Item 5. |
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58 |
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Item 6. |
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59 |
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60 |
i
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“the Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”) about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this 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” or the negative of these terms or other similar expressions.
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 on Form 10-Q, regarding, among other things:
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our financial performance, including our revenue, cost of revenue, operating expenses and our ability to attain and sustain profitability; |
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our ability to attract and retain users and increase hours streamed; |
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our ability to attract and retain advertisers; |
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our ability to attract and retain additional TV brands to deploy our technology; |
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our ability to 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; |
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changes in consumer viewing habits or the growth of TV streaming; |
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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; |
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our ability to adapt to changing market conditions and technological developments, including developing integrations with our platform partners; |
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our ability to develop and launch new streaming products and provide ancillary services and support; |
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our ability to compete effectively with existing competitors and new market entrants; |
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our ability to successfully manage domestic and international expansion; |
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our ability to attract and retain qualified employees and key personnel; |
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security breaches and system failures; |
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our ability to maintain, protect and enhance our intellectual property; and |
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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 the EU General Data Protection Regulation. |
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
Other sections of this Quarterly Report on Form 10-Q 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 report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this 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 (ir.roku.com/investor-relations), our filings with the Securities and Exchange Commission, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with investors and the general public about our company, our products, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
ROKU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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As of |
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June 30, 2019 |
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December 31, 2018 |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Restricted cash |
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— |
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Accounts receivable, net of allowances |
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Inventories |
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Prepaid expenses and other current assets |
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Deferred cost of revenue, current |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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— |
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Intangible assets, net |
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Goodwill |
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Other non-current assets |
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Total Assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Deferred revenue, current |
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Total current liabilities |
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Deferred revenue, non-current |
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Operating lease liability, non-current |
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— |
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Other long-term liabilities |
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Total Liabilities |
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Stockholders’ Equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, 2019 |
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June 30, 2018 |
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June 30, 2019 |
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June 30, 2018 |
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Net Revenue: |
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Platform |
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$ |
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$ |
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$ |
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$ |
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Player |
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Total net revenue |
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Cost of Revenue: |
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Platform |
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Player |
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Total cost of revenue |
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Gross Profit: |
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Platform |
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Player |
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Total gross profit |
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Operating Expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expenses |
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Loss from Operations |
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( |
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( |
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( |
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( |
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Other Income, Net: |
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Interest expense |
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( |
) |
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( |
) |
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( |
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( |
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Other income, net |
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Total other income, net |
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Income (Loss) Before Income Taxes |
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( |
) |
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( |
) |
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( |
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Income tax (benefit) expense |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net Income (Loss) |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
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Net income (loss) per share —basic |
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$ |
( |
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$ |
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$ |
( |
) |
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$ |
( |
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Net income (loss) per share —diluted |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
( |
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Weighted-average shares used in computing net income (loss) per share —basic |
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Weighted-average shares used in computing net income (loss) per share —diluted |
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See accompanying notes to condensed consolidated financial statements.
2
ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, 2019 |
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June 30, 2018 |
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June 30, 2019 |
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June 30, 2018 |
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Net Income (Loss) |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
( |
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Other comprehensive income, net of tax: |
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Unrealized gain on short-term investments, net of tax |
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— |
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— |
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Comprehensive Net Income (Loss) |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
See accompanying notes to condensed consolidated financial statements.
3
ROKU, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
|
Three and Six Months Ended June 30, 2019 |
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Common Stock |
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Additional Paid-in |
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Treasury |
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Accumulated Other Comprehensive |
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Accumulated |
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Total Stockholders’ |
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Shares |
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Amount |
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Capital |
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Stock |
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Income / (Loss) |
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Deficit |
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Equity |
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Balance—March 31, 2019 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Vesting of early exercised stock options |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock pursuant to equity incentive plans, net of taxes |
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— |
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— |
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— |
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Issuance of common stock in connection with at-the-market offering, net of issuance costs of $ |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain on short-term investments |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance—June 30, 2019 |
|
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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Balance—December 31, 2018 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Vesting of early exercised stock options |
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— |
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— |
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— |
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— |
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— |
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Share repurchases |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock pursuant to equity incentive plans, net of taxes |
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— |
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— |
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— |
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Issuance of common stock in connection with at-the-market offering, net of issuance costs of $ |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain on short-term investments |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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|
|
( |
) |
|
|
( |
) |
Balance—June 30, 2019 |
|
|
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|
|
$ |
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$ |
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$ |
( |
) |
|
$ |
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$ |
( |
) |
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$ |
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Three and Six Months Ended June 30, 2018 |
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Common Stock |
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Additional Paid-in |
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Treasury |
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|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders’ |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Stock |
|
|
Income / (Loss) |
|
|
Deficit |
|
|
Equity |
|
|||||||
Balance—March 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
Vesting of early exercised stock options |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of common stock pursuant to equity incentive plans, net of taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |