Roku Q1 2023 Shareholder Leer
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Fellow Shareholders, April 26, 2023
We delivered solid rst quarter results in a challenging macro environment, growing both Acve Accounts and
Streaming Hours year over year. Roku connues to delight viewers and partner with some of the biggest brands
and global entertainment companies. With unmatched scale and engagement, we are creang new
monezaon opportunies to reaccelerate revenue growth as the ad market recovers. At the same me, we are
managing investments and costs and execung on our plan to deliver posive Adjusted EBITDA for full year 2024.
Q1 2023 Key Results
• Total net revenue was $741 million, up 1% year over year (YoY)
• Plaorm revenue was $635 million, down 1% YoY
• Gross prot was $338 million, down 7% YoY
• Acve Accounts were 71.6 million, a net increase of 1.6 million Acve Accounts from Q4 2022
• Streaming Hours were 25.1 billion, up 4.2 billion hours YoY
• Average Revenue Per User (ARPU) was $40.67 (trailing 12-month basis), down 5% YoY
• The Roku operang system was the #1 selling smart TV OS in the U.S. with 43% TV unit share
Roku Q1 2023 Shareholder Leer
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Market-Leading Scale
In Q1, Roku grew Acve Accounts to 71.6 million globally. Sequenal net adds of 1.6 million were above net adds
in Q1 2022. In the U.S., our Acve Accounts are approaching half of all broadband households. This unmatched
scale is the foundaon of our business model, leading to signicant engagement and growing monezaon
opportunies.
Overall, smart TV unit sales in the U.S. were resilient in Q1, driven in part by lower TV panel and freight costs
and consumer spend of income tax refunds. Roku beneted from these trends along with a consumer focus on
value, parcularly in a dicult macro environment. In Q1, the Roku operang system (OS) was once again the
#1 selling smart TV OS in the U.S., achieving a record-high 43% of TV unit share, which was more than the next
three largest TV operang systems combined (according to Circana). We achieved YoY share gains across the full
range of TV screen sizes, parcularly in the larger-screen segment.
In Mexico, the Roku OS was the #1 selling smart TV OS for the second quarter in a row. And in Germany, we
expanded our Roku TV program with our third TV OEM partner, Coocaa. With more than 20 licensed Roku TV
partners globally, we connue to drive great results across the program.
Roku-branded TVs
Earlier this year, we announced the rst TVs designed and made by Roku: the Roku Select and Roku Plus Series
TVs. In March, we launched these Roku-branded TVs exclusively at Best Buy, the leading consumer tech retailer.
We oer 11 models ranging in size from 24” to 75”, and key features of the Roku Plus Series TVs include QLED
Technology, 4K Dolby Vision® Picture, the Roku Voice Remote Pro, and of course our leading smart TV OS. Roku-
branded TVs also oer consumers the condence that comes with a product designed and built by Roku.
In creang Roku-branded TVs, we combined our extensive experse in TV hardware, easy-to-use TV soware,
and connecvity to deliver on our brand pillars of value, simplicity, and choice. Within consumer electronics,
third-party reviews can play a meaningful role in inuencing buyer decisions. Roku-branded TVs, like Roku TV
models and our streaming players, are receiving recognion within the industry.
• Tom’s Guide awarded its Editor’s Choice award to the Roku Plus Series 4K QLED TV, stang, “The fact
that the Roku Plus Series 4K QLED TV comes even remotely close to the best TVs for a fracon of the
price is remarkable.”
• TechHive noted the Roku Plus Series TV has “great color” and a “superior user interface.”
• Yahoo stated that the Roku Plus Series QLED 4K Smart TV’s “simplicity and rock-solid hardware create a
mid-er TV that's very close to perfect.”
Addionally, last month, Roku was recognized by Fast Company as one of its Most Innovave Companies for
2023, highlighng our work in both hardware and soware, including our Roku Voice Remote Pro and content
partnerships for The Roku Channel.
Driving Engagement
Globally, our users streamed 25.1 billion hours in Q1, represenng a record high of 3.9 Streaming Hours per
Acve Account per day. Cord-cung connues in the U.S., where more than half of households have eliminated
tradional pay TV (eMarketer, March 2023). In Q1, viewing hours on tradional TV in the U.S. were down 10%
YoY (Nielsen), while global Streaming Hours on the Roku plaorm grew 20% YoY.
Consumer Experience
There is more entertainment on streaming than ever before, and nding and discovering content is a challenge
for consumers. This challenge connues to grow as more live sports and news move to streaming, and TV shows
and movies switch from one streaming service to another. We are leaning into our unique role as the plaorm
to help viewers nd entertainment across the huge number of opons available in the streaming ecosystem.
Roku Q1 2023 Shareholder Leer
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We added Sports to our Home Screen Menu (le-hand navigaon) in Q4 to aggregate sports programming across
the plaorm in a centralized locaon. For this year’s Super Bowl, Roku was the most popular streaming plaorm
with approximately half of all streams
1
. Of those viewers, 12% started the game through either our Sports
experience or a game-related ad.
For this year’s Super Bowl, Roku was the most popular streaming plaorm
with approximately half of all streams.
Within our Live TV feature (also located on our Home Screen Menu), we recently created a new Local News
category. Viewers can now select news channels from major cies across the U.S. in a centralized locaon. Using
machine learning, we are personalizing not only the order of the channels in the Local News category but also
the order of the top menu items on the Home Screen Menu.
It is even dicult for viewers to keep track of content they have already started watching. In a recent Roku survey,
50% of streamers said that they have abandoned a show or movie because they forgot what service it was on or
it was too dicult to nd. Our Connue Watching feature aggregates recently viewed content — not just from
a single service, but from nearly a dozen popular streaming services across our plaorm — into a centralized
locaon.
Our ongoing enhancements connue to increase the value that our Home Screen Menu provides to our viewers.
In Q1, the share of total Streaming Hours originang from the Home Screen Menu doubled YoY, as we connue
to expand our role in helping viewers nd content across our plaorm.
1
Roku viewers based on internal Roku data; total number of viewers that streamed the game from nScreenMedia
Roku Q1 2023 Shareholder Leer
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The Roku Channel
The Roku Channel benets from its integraon with our plaorm, which has massive scale, deep engagement,
and the ability to surface content to viewers throughout the Roku OS experience. These unique advantages have
helped drive The Roku Channel’s incredible growth across the plaorm in the U.S., Canada, Mexico, and the U.K.,
with Q1 Streaming Hours up 65% YoY. The Roku Channel remains a top-ve channel on the plaorm by both
Acve Account reach and Streaming Hour engagement, connuing its strong posion among the most popular
services in streaming.
We are successfully growing The Roku Channel internaonally. In Mexico, we are driving strong growth in
engagement through improvements such as combining over-the-air and streaming channels in the channel guide
(EPG, or electronic programming guide) to create a more seamless live TV experience. Within just six months of
launch, The Roku Channel is a top-ve channel in Mexico by Acve Account reach.
Monezaon
Plaorm revenue was $635 million in Q1, down 1% YoY, and ARPU was $40.67 (on a trailing 12-month basis),
down 5% YoY. We generate Plaorm revenue through adversing sales, the distribuon of streaming services,
the distribuon of FAST channels, Roku Pay, and our Media & Entertainment (M&E) promoonal capabilies.
The macro environment remained challenged in Q1 with the total U.S. adversing market down 7.4% YoY. Ad
spend decline was even more pronounced on tradional TV at 12.7% YoY, and tradional TV ad scaer was down
20% YoY (according to SMI). While ad spend on the Roku plaorm in vercals including nancial services and
M&E remained pressured, vercals such as travel and health and wellness improved.
We connue to innovate and create dierenated monezaon opportunies in areas such as Roku Originals
and the Sports experience, with premier brands such as TurboTax, GNC, and Hyundai. We are also expanding
our retail partnerships with industry leaders that include Best Buy, DoorDash, Walmart, and Kroger. Our recent
partnership with Best Buy illustrates how our whole business can provide unique benets to partners: Best Buy
Ads data for ad targeng and measurement on the Roku plaorm, the launch of Roku-branded TVs at Best Buy,
and an interacve Roku City experience featuring Best Buy at 2023 South by Southwest (SXSW).
Roku and Instacart announced a new partnership to help consumer-packaged goods (CPG) adversers measure
whether consumers are purchasing products on Instacart aer seeing an ad on the Roku plaorm. Across select
pilot partners, results showed that on average, people who saw an ad on the Roku plaorm purchased more of
the adversed products on Instacart versus the average customer. These partnerships allow us to enhance
targeng, aribuon, and measurement for our shared ad customers, which further dierenates our ad
oering from those without a direct relaonship with the consumer. In Q1, adverser spend leveraging rst- and
third-party data connued to grow YoY.
Roku Originals create exclusive value for brands and enable them to connect with consumers in authenc and
relevant environments. Coca-Cola is a new season-long sponsor of “Emeril Tailgates,” during which this premier
brand will reach consumers who are passionate about food, sports, and culture. Addionally, Roku will create
unique markeng integraons for Coca-Cola, such as on-screen ads with QR codes that consumers can scan to
access recipes throughout the show. Lawn-care brand Scos is sponsoring “Martha Gardens,” providing viewers
an inmate look at Martha Stewart’s home garden in Bedford, New York. The markeng acvaon includes
Scos custom vignees, home screen banners, and tune-in reminders when new episodes are available.
Roku Q1 2023 Shareholder Leer
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Lawn-care brand Scos sponsored Roku Original “Martha Gardens”
to connect with consumers in a relevant environment.
As noted last quarter, we are developing more and deeper relaonships with third-party plaorms, including
retail media networks, demand-side plaorms, and other partners. We have begun to access new parts of
adverser budgets with several large clients that have specic DSP needs by making certain ad inventory more
accessible. We are seeing posive early results with Q1 programmac sales represenng its highest share of
revenue of all me. Our rst-party and ACR data, along with our specialized ad products, will connue to remain
accessible only on the Roku adversing plaorm, allowing us to manage both demand and disncon.
Execuve Talent Update
We’re excited to welcome Dan Jedda to Roku as Chief Financial Ocer (CFO) on May 1. He is extremely familiar
with the power of technology to transform legacy business models. Dan previously served as CFO at Stch Fix
since 2020. Before that, he worked at Amazon for 15 years predominantly as Vice President and CFO for Digital
Video (including Amazon Studios), Digital Music, and the Adversing and Corporate Development organizaons.
Dan will report to Anthony Wood and will work closely with Steve Louden, who will provide advisory services to
the Company as an execuve advisor unl August 2023, to ensure a smooth transion. We deeply appreciate
Steve’s leadership and contribuons over the past eight years.
Outlook
Similar to our viewpoint during our last earnings call, we expect macro uncertaines to persist throughout 2023.
Consumers remain pressured by inaon and recessionary fears, and thus discreonary spend is likely to remain
muted. Accordingly, we expect the adversing market in Q2 to look much the same as it did in Q1, with ad spend
from certain vercals improving (travel and health and wellness), while others remain pressured (M&E and
nancial services).
Against this backdrop, our outlook for Q2 is for total net revenue of roughly $770 million, total gross prot of
roughly $335 million, and Adjusted EBITDA of negave $75 million. We are execung against our plan to focus
investments on high-priority projects while slowing YoY operang expense growth. Given our ongoing work to
reaccelerate revenue growth and improve operaonal eciencies, we are commied to delivering posive
Adjusted EBITDA for full year 2024.
Conclusion
With the launch of the rst streaming player in 2008, we pioneered TV streaming on the belief that all TV will be
streamed. While the current economic cycle is challenging, we are not waing idly for recovery. We connue to
grow our signicant scale and engagement. And we are innovang and invesng in our plaorm to grow our
monezaon opportunies, while focusing on operang discipline. The combinaon of our scale, engagement,
and innovaon posions us — and our shareholders — to benet from the signicant opportunity ahead.
Roku Q1 2023 Shareholder Leer
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Thank you for your support, and Happy Streaming™!
Anthony Wood, Founder and CEO; and Steve Louden, CFO
Conference Call Webcast – April 26, 2023, at 2 p.m. PT
Roku will host a webcast of its conference call to discuss the Q1 2023 results at 2 p.m. Pacic Time / 5 p.m.
Eastern Time on April 26, 2023. Parcipants may access the live webcast in listen-only mode on the Roku investor
relaons website at www.roku.com/investor. An archived webcast of the conference call will also be available at
www.roku.com/investor aer the call.
Segment Reporng Change
Eecve as of the fourth quarter of scal 2022, we reorganized reportable segments to beer align with
management’s reporng of informaon reviewed by our Chief Operang Decision Maker, our CEO, for each
segment. Our segment and related nancial informaon is recast to reect the following changes; we renamed
the Player segment to the Devices segment, which now includes licensing arrangements with service operators
and TV brands in addion to sales of streaming players, audio products, smart home products, and starng in
2023, Roku-branded TV sales. All nancial informaon, current and historical, is recast based on the reorganized
segments.
About Roku, Inc.
Roku pioneered streaming on TV. We connect users to the content they love, enable content publishers to build
and moneze large audiences, and provide adversers with unique capabilies to engage consumers. Roku TV™
models, Roku streaming players and TV-related audio devices, are available in various countries around the world
through direct retail sales and/or licensing arrangements with TV OEM brands. Roku-branded TVs and Roku
Smart Home products are sold exclusively in the United States. Roku also operates The Roku Channel, the home
of free and premium entertainment with exclusive access to Roku Originals. The Roku Channel is available in the
United States, Canada, Mexico, and the United Kingdom. Roku is headquartered in San Jose, Calif., U.S.A.
Roku, the Roku logo and other trade names, trademarks or service marks of Roku appearing in this shareholder
leer are the property of Roku. Trade names, trademarks and service marks of other companies appearing in
this shareholder leer are the property of their respecve holders.
Investor Relations
Conrad Grodd
cgrodd@roku.com
Roku Q1 2023 Shareholder Leer
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Use of Non-GAAP Measures
In addion to nancial informaon prepared in accordance with generally accepted accounng principles in the
United States (GAAP), this shareholder leer includes certain non-GAAP nancial measures. These non-GAAP
measures include Adjusted EBITDA. In order for our investors to be beer able to compare our current results
with those of previous periods, we have included a reconciliaon of GAAP to non-GAAP nancial measures in
the tables at the end of this leer. The Adjusted EBITDA reconciliaon adjusts the related GAAP nancial measure
to exclude other income (expense), net, stock-based compensaon expense, depreciaon and amorzaon,
restructuring charges, and income tax (benet)/expense where applicable. We believe these non-GAAP nancial
measures are useful as a supplement in evaluang our ongoing operaonal performance and enhancing an
overall understanding of our past nancial performance. However, these non-GAAP nancial measures have
limitaons, and should not be considered in isolaon or as a substute for our GAAP nancial informaon.
Forward-Looking Statements
This shareholder leer contains “forward-looking” statements that are based on our beliefs and assumpons
and on informaon currently available to us. Forward-looking statements include all statements that are not
historical facts and can be idened by terms such as “ancipate,” “believe,” “connue,” “could,” “design,”
“esmate,” “expect,” “may,” ‘plan,” “seek,” “should,” “will,” “would” or similar expressions and the negaves of
those terms. Forward-looking statements involve known and unknown risks, uncertaines and other factors that
may cause our actual results, performance or achievements to be materially dierent from any future results,
performance or achievements expressed or implied by the forward-looking statements. Forward-looking
statements represent our beliefs and assumpons only as of the date of this leer. These statements include
those related to our ability to create and grow monezaon opportunies; the connued success of our Roku
TV program; our ability to innovate; changes in the ad market; the shi of TV and TV adversing to streaming;
our scale and ability increase market share; the funconality and benets of ongoing enhancements to our Home
Screen Menu, including by using machine learning; our ability to grow engagement; the advantages and
capabilies of, and content oering in, The Roku Channel; the growth and improvements of The Roku Channel
in Mexico; the expansion of our retail partnerships; the success and value of Roku Originals; the unique benets
we can provide to adversing partners, such as our partnership with Instacart; our relaonships with third-party
adversing plaorms; the benets of our rst-party and ACR data and specialized ad products; our CFO
transion; macro uncertaines and pressure on consumers; our belief that the current macro environment is
temporary; our nancial outlook for the second quarter of 2023; our ability to manage investments and costs
and achieve posive Adjusted EBITDA for full year 2024; our qualitave color on our business in 2023 and
beyond; and our overall business trajectory. Except as required by law, we assume no obligaon to update these
forward-looking statements publicly, or to update the reasons actual results could dier materially from those
ancipated in the forward-looking statements, even if new informaon becomes available in the future. Further
informaon on factors that could cause actual results to dier materially from the results ancipated by our
forward-looking statements is included in the reports we have led with the Securies and Exchange
Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. Addional
informaon also will be available in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
All informaon provided in this shareholder leer and in the tables aached hereto is as of April 26, 2023, and
we undertake no duty to update this informaon unless required by law.
Roku Q1 2023 Shareholder Leer
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Net Revenue:
Platform
$ 634,618
$ 643,707
Devices
106,372
89,992
Total net revenue
740,990
733,699
Cost of Revenue:
Platform (1)
300,587
265,788
Devices (1)
102,806
103,104
Total cost of revenue
403,393
368,892
Gross Profit (Loss):
Platform
334,031
377,919
Devices
3,566
(13,112)
Total gross profit
337,597
364,807
Operating Expenses:
Research and development (1)
220,085
163,998
Sales and marketing (1)
233,919
146,522
General and administrative (1)
96,053
77,777
Total operating expenses
550,057
388,297
Loss from Operations
(212,460)
(23,490)
Other Income (Expense), Net:
Interest expense
(681)
(1,057)
Other income (expense), net
23,101
409
Total other income (expense), net
22,420
(648)
Loss Before Income Taxes
(190,040)
(24,138)
Income tax expense
3,564
2,168
Net Loss
$ (193,604)
$ (26,306)
Net loss per share — basic and diluted
$ (1.38)
$ (0.19)
Weighted-average common shares outstanding — basic and diluted
140,333
135,539
(1) Stock-based compensation was allocated as follows:
Cost of revenue, platform
$ 339
$ 236
Cost of revenue, devices
804
569
Research and development
38,663
28,390
Sales and marketing
34,139
23,911
General and administrative
22,527
16,474
Total stock-based compensation
$ 96,472
$ 69,580
Roku Q1 2023 Shareholder Leer
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ROKU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value data)
(unaudited)
As of
March 31, 2023
December 31, 2022
Assets
Current Assets:
Cash and cash equivalents
$ 1,630,052
$ 1,961,956
Restricted cash
40,713
—
Accounts receivable, net of allowances of $22,436 and $40,191 as of
703,422
760,793
March 31, 2023 and December 31, 2022, respectively
Inventories
109,238
106,747
Prepaid expenses and other current assets
111,928
135,383
Total current assets
2,595,353
2,964,879
Property and equipment, net
359,543
335,031
Operating lease right-of-use assets
504,693
521,695
Content assets, net
297,849
292,766
Intangible assets, net
54,475
58,881
Goodwill
161,519
161,519
Other non-current assets
81,972
77,830
Total Assets
$ 4,055,404
$ 4,412,601
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable
$ 86,879
$ 164,800
Accrued liabilities
646,360
750,810
Current portion of long-term debt
—
79,985
Deferred revenue, current portion
98,058
87,678
Total current liabilities
831,297
1,083,273
Deferred revenue, non-current portion
24,519
28,210
Operating lease liability, non-current portion
585,648
584,651
Other long-term liabilities
63,298
69,911
Total Liabilities
1,504,762
1,766,045
Stockholders’ Equity:
Common stock, $0.0001 par value
14
14
Additional paid-in capital
3,332,223
3,234,860
Accumulated other comprehensive income (loss)
35
(292)
Accumulated deficit
(781,630)
(588,026)
Total stockholders’ equity
2,550,642
2,646,556
Total Liabilities and Stockholders’ Equity
$ 4,055,404
$ 4,412,601
Roku Q1 2023 Shareholder Leer
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ROKU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Cash flows from operating activities:
Net Loss
$ (193,604)
$ (26,306)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization
15,636
11,486
Stock-based compensation expense
96,472
69,580
Amortization of right-of-use assets
15,301
11,143
Amortization of content assets
49,402
44,452
Foreign currency remeasurement (gains) losses
1,395
—
Change in fair value of Strategic Investment
(3,210)
—
Impairment of assets
4,338
—
Provision for doubtful accounts
1,890
1,013
Other items, net
(24)
(264)
Changes in operating assets and liabilities:
Accounts receivable
55,608
75,675
Inventories
(2,491)
(22,587)
Prepaid expenses and other current assets
4,964
(16,202)
Content assets and liabilities, net
(55,539)
(67,642)
Other non-current assets
4,008
1,634
Accounts payable
(60,055)
12,307
Accrued liabilities
(92,504)
11,182
Operating lease liabilities
(1,597)
(9,193)
Other long-term liabilities
(91)
(49)
Deferred revenue
6,689
5,569
Net cash provided by (used in) operating activities
(153,412)
101,798
Cash flows from investing activities:
Purchases of property and equipment
(54,243)
(14,764)
Purchase of Strategic Investment
(5,000)
—
Net cash used by investing activities
(59,243)
(14,764)
Cash flows from financing activities:
Repayments of borrowings
(80,000)
(1,250)
Proceeds from equity issued under incentive plans
891
3,352
Net cash provided by (used in) financing activities
(79,109)
2,102
Net increase (decrease) in cash, cash equivalents and restricted cash
(291,764)
89,136
Effect of exchange rate changes on cash, cash equivalents and restricted cash
573
(82)
Cash, cash equivalents and restricted cash —beginning of period
1,961,956
2,147,670
Cash, cash equivalents and restricted cash —end of period
$ 1,670,765
$ 2,236,724
Roku Q1 2023 Shareholder Leer
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Three Months Ended
March 31, 2023
March 31, 2022
Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents
$ 1,630,052
$ 2,235,092
Restricted cash, current
40,713
—
Restricted cash, non-current
—
1,632
Cash, cash equivalents and restricted cash —end of period
$ 1,670,765
$ 2,236,724
Supplemental disclosures of cash flow information:
Cash paid for interest
$ 867
$ 656
Cash paid for income taxes
$ 1,452
$ 511
Supplemental disclosures of non-cash investing and financing activities:
Unpaid portion of property and equipment purchases
$ 10,492
$ 3,413
NON-GAAP INFORMATION (in thousands)
(unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss
$ (193,604)
$ (26,306)
Other (income) expense, net
(22,420)
648
Stock-based compensation
96,472
69,580
Depreciation and amortization
15,636
11,486
Restructuring charges
(1)
31,270
—
Income tax expense
3,564
2,168
Adjusted EBITDA
$ (69,082)
$ 57,576
(1)
Restructuring charges of $31.3 million include severance and related charges of $25.2 million, assets impairment charge of $4.3
million, and facilities exit costs of $1.7 million.
