Roku, Inc. Class A Common StockROKU

Stakeholder relations · Customer satisfaction and loyalty

If we fail to provide adequate levels of quality customer support, we could lose users, advertisers, content partners, and licensed Roku TV partners, which could harm our business. We currently outsource the majority of our customer support operation to a third-party customer support organization.

Corporate governance · Shareholder rights and activism

The dual class structure of our common stock concentrates voting control with those stockholders who held our stock before our initial public offering. Our founder, Chairman, and Chief Executive Officer, Anthony Wood, holds and controls the vote of a significant number of shares of our outstanding common stock, and therefore Mr. Wood will have significant influence over our management and all matters requiring stockholder approval.

Corporate governance · Internal controls and risk management

If we fail to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and our stock price may be adversely affected. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we furnish a report by management on the effectiveness of our internal control over financial reporting.

Stakeholder relations · Employee engagement and culture

We believe a critical component to our success and our ability to retain our best people is our culture. As we continue to grow, we may find it difficult to maintain our entrepreneurial, execution-focused culture. Past or any additional workforce reductions could harm employee morale and negatively impact employee recruiting and retention.

Tax and financial reporting · Transfer pricing and international tax

We and our subsidiaries are engaged in intercompany transactions across multiple tax jurisdictions. Although we believe we have clearly reflected the economics of these transactions and that the proper local transfer pricing is in place, tax authorities may propose and sustain adjustments that could result in changes that may impact our mix of earnings in countries with differing statutory tax rates.

Industry regulation · Regulatory compliance and changes

We are subject to or affected by general business regulations and laws, as well as regulations and laws specific to the internet and online services, including laws and regulations related to data privacy and security, consumer protection, child and youth protection, data localization, encryption, telecommunications, social media, payment processing, subscriptions, taxation, trade, intellectual property, competition, electronic contracts, internet access, net neutrality, advertising, calling and texting, content restrictions, AI, and accessibility, among others.

Data and privacy · Cross border data transfer regulations

Our ability to continue to transfer personal information outside of the EU may become significantly more costly and may subject us to increased scrutiny and liability under the GDPR or other legal frameworks, and we may experience operating disruptions if we are unable to conduct these transfers in the future.

Cybersecurity and data protection · Insider threats and access controls

Most of our employees have a hybrid work schedule (consisting of both in-person work and working from home). The actions of our employees while working from home may have a greater effect on the security of our systems and the data we process, including by increasing the risk of compromise to our systems, intellectual property, or data arising from employees' combined use of personal and private devices.

Digital transformation and innovation · Integration and interoperability

If our products do not operate effectively with various offerings, technologies, and systems from content partners and other third parties that we do not control, our business may be harmed. The Roku TV OS is designed to perform using relatively low-cost hardware, which enables us to drive user growth via Roku streaming devices offered at a low cost to users. However, this hardware must be interoperable with all apps and other offerings, technologies, and systems from our content partners.

Digital transformation and innovation · Artificial intelligence and automation

We are incorporating AI technologies into some of our products and services, which may present operational, legal, and reputational risks. AI technologies may create errors, inaccuracies, unintended biases, and discriminatory outcomes, or may create content that appears correct but is inaccurate or flawed.

Customer and revenue · Customer retention and subscription renewal

Our success depends in part on user acquisition and retention and the effective monetization of our streaming platform. To attract and retain users, we must respond efficiently to changes in user tastes and preferences and offer our users access to the content they demand on terms that they accept.

Innovation and product development · Time to market and commercialization risks

We plan to continue to introduce new products regularly. The successful development and introduction of new products and services depends on a number of factors, including the accuracy of our forecasts for market requirements beyond near-term visibility and our timely completion of new designs and development.

Innovation and product development · Product development and randd investment risks

We must continually innovate and improve our products and services and develop new products and services to meet changing consumer demands. The introduction of a new product or service is a complex process, involving significant expenditures in research and development, promotion, and sales channel development, and can expose our business to new risks.

Market and investment · Market volatility and economic cycles

Our business is dependent on consumer discretionary spending and advertising spending, both of which are susceptible to changes in macroeconomic conditions and uncertainties. Sustained inflation, an economic downturn, the impact of tariffs, or even the public perception that changes to the cost of buying goods are imminent or could occur in the future, have in the past resulted, and may in the future result in fewer consumer purchases of our products.

International and currency · International operations and emerging markets

We may be unable to successfully expand our international operations, and our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business. We currently generate the vast majority of our revenue in the United States and have limited experience marketing, selling, licensing, and supporting our products and running or monetizing our streaming platform outside the United States.

Credit and liquidity · Debt service and covenant compliance

The Credit Agreement contains financial covenants requiring the maintenance of a minimum interest coverage ratio and a maximum total net leverage ratio, as well as customary events of default, the occurrence of which could result in amounts borrowed under the Credit Agreement becoming due and payable.

Geopolitical and trade · International conflicts and tensions

Following Russia's invasion of Ukraine, the United States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus. The geopolitical conflicts stemming from the Russian invasion of Ukraine and the current unrest in the Middle East have increased the risk of malicious attacks on information technology operations globally.

Natural and catastrophic events · Climate change and environmental impact

Our offices and facilities, and those of our contract manufacturers, suppliers, and licensed Roku TV partners, could be vulnerable to the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity) that could disrupt our business operations. In California, increasing intensity of drought and annual periods of wildfire danger increase the probability of planned power outages.

Natural and catastrophic events · Pandemic and public health crises

Medical epidemic or pandemic (such as the COVID-19 pandemic) could disrupt our, our business partners' and customers' business operations or result in disruptions in the broader global economic environment.

Supply chain and procurement · Supplier operation and dependance

We do not have any internal manufacturing capabilities and rely on a limited number of contract manufacturers to build our players, smart home products, and Roku-made TVs. If we or our Roku TV partners have difficulties with contract manufacturers, our business may be harmed.