Cover
Cover | 9 Months Ended |
Sep. 30, 2022 shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Sep. 30, 2022 |
Document Transition Report | false |
Entity File Number | 001-38211 |
Entity Registrant Name | ROKU, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 26-2087865 |
Entity Address, Address Line One | 1155 Coleman Avenue |
Entity Address, City or Town | San Jose |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 95110 |
City Area Code | 408 |
Local Phone Number | 556-9040 |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value |
Trading Symbol | ROKU |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Amendment Flag | false |
Entity Central Index Key | 0001428439 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2022 |
Class A Common Stock | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 121,844,605 |
Class B Common Stock | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 17,424,911 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 2,018,616 | $ 2,146,043 |
Accounts receivable, net of allowances of $35,338 and $56,827 as of September 30, 2022 and December 31, 2021, respectively | 719,187 | 752,393 |
Inventories | 119,252 | 50,276 |
Prepaid expenses and other current assets | 113,889 | 105,795 |
Total current assets | 2,970,944 | 3,054,507 |
Property and equipment, net | 272,193 | 177,567 |
Operating lease right-of-use assets | 535,031 | 345,660 |
Intangible assets, net | 70,787 | 84,126 |
Goodwill | 161,519 | 161,519 |
Other non-current assets | 381,730 | 258,766 |
Total Assets | 4,392,204 | 4,082,145 |
Current Liabilities: | ||
Accounts payable | 175,026 | 124,921 |
Accrued liabilities | 625,836 | 549,055 |
Current portion of long-term debt | 82,457 | 9,883 |
Deferred revenue, current portion | 60,101 | 45,760 |
Total current liabilities | 943,420 | 729,619 |
Long-term debt, non-current portion | 0 | 79,985 |
Deferred revenue, non-current portion | 26,269 | 28,726 |
Operating lease liability, non-current portion | 568,193 | 394,724 |
Other long-term liabilities | 76,395 | 82,485 |
Total Liabilities | 1,614,277 | 1,315,539 |
Commitments and contingencies (Note 13) | ||
Stockholders’ Equity: | ||
Common stock, $0.0001 par value | 14 | 14 |
Additional paid-in capital | 3,129,818 | 2,856,572 |
Accumulated other comprehensive income (loss) | (1,074) | 41 |
Accumulated deficit | (350,831) | (90,021) |
Total stockholders’ equity | 2,777,927 | 2,766,606 |
Total Liabilities and Stockholders’ Equity | $ 4,392,204 | $ 4,082,145 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 25,633 | $ 56,827 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net Revenue: | ||||
Total net revenue | $ 761,373 | $ 679,953 | $ 2,259,478 | $ 1,899,255 |
Cost of Revenue: | ||||
Total cost of revenue | 404,586 | 316,034 | 1,182,735 | 870,299 |
Gross Profit (Loss): | ||||
Total gross profit | 356,787 | 363,919 | 1,076,743 | 1,028,956 |
Operating Expenses: | ||||
Research and development | 207,608 | 120,307 | 568,243 | 335,164 |
Sales and marketing | 209,364 | 109,700 | 540,857 | 292,251 |
General and administrative | 86,804 | 65,066 | 248,635 | 187,805 |
Total operating expenses | 503,776 | 295,073 | 1,357,735 | 815,220 |
Income (Loss) from Operations | (146,989) | 68,846 | (280,992) | 213,736 |
Other Income (Expense), Net: | ||||
Interest expense | (1,157) | (743) | (3,273) | (2,231) |
Other income (expense), net | 27,914 | 500 | 30,152 | 2,461 |
Total other income (expense), net | 26,757 | (243) | 26,879 | 230 |
Income (Loss) Before Income Taxes | (120,232) | 68,603 | (254,113) | 213,966 |
Income tax expense (benefit) | 1,951 | (332) | 6,697 | (4,732) |
Net Income (Loss) | $ (122,183) | $ 68,935 | $ (260,810) | $ 218,698 |
Net income (loss) per share — basic (in dollars per share) | $ (0.88) | $ 0.52 | $ (1.90) | $ 1.66 |
Net income (loss) per share — diluted (in dollars per share) | $ (0.88) | $ 0.48 | $ (1.90) | $ 1.54 |
Weighted-average common shares outstanding — basic (in shares) | 138,571 | 133,685 | 136,997 | 132,036 |
Weighted-average common shares outstanding — diluted (in shares) | 138,571 | 142,286 | 136,997 | 141,593 |
Platform | Services | ||||
Net Revenue: | ||||
Total net revenue | $ 670,401 | $ 582,514 | $ 1,990,468 | $ 1,581,343 |
Cost of Revenue: | ||||
Total cost of revenue | 296,158 | 203,989 | 859,197 | 545,907 |
Gross Profit (Loss): | ||||
Total gross profit | 374,243 | 378,525 | 1,131,271 | 1,035,436 |
Player | Goods | ||||
Net Revenue: | ||||
Total net revenue | 90,972 | 97,439 | 269,010 | 317,912 |
Cost of Revenue: | ||||
Total cost of revenue | 108,428 | 112,045 | 323,538 | 324,392 |
Gross Profit (Loss): | ||||
Total gross profit | $ (17,456) | $ (14,606) | $ (54,528) | $ (6,480) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) | $ (122,183) | $ 68,935 | $ (260,810) | $ 218,698 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | (703) | 0 | (1,115) | 0 |
Comprehensive Income (Loss) | $ (122,886) | $ 68,935 | $ (261,925) | $ 218,698 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance at Dec. 31, 2020 | $ 1,328,015 | $ 13 | $ 1,660,379 | $ 29 | $ (332,406) |
Beginning balance (in shares) at Dec. 31, 2020 | 128,004 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Vesting of early exercised stock options | 4 | 4 | |||
Issuance of common stock pursuant to equity incentive plans | 13,433 | 13,433 | |||
Issuance of common stock pursuant to equity incentive plans (in shares) | 3,515 | ||||
Issuance of common stock in connection with at-the-market offering, net of issuance costs of $10,400 | 989,615 | 989,615 | |||
Issuance of common stock pursuant in connection with at-the-market offerings, net of issuance costs (in shares) | 2,637 | ||||
Stock-based compensation expense | 133,866 | 133,866 | |||
Foreign currency translation adjustment | 0 | ||||
Net income (loss) | 218,698 | 218,698 | |||
Ending balance at Sep. 30, 2021 | 2,683,631 | $ 13 | 2,797,297 | 29 | (113,708) |
Ending balance (in shares) at Sep. 30, 2021 | 134,156 | ||||
Beginning balance at Jun. 30, 2021 | 2,561,028 | $ 13 | 2,743,629 | 29 | (182,643) |
Beginning balance (in shares) at Jun. 30, 2021 | 133,299 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock pursuant to equity incentive plans | 3,148 | 3,148 | |||
Issuance of common stock pursuant to equity incentive plans (in shares) | 857 | ||||
Stock-based compensation expense | 50,520 | 50,520 | |||
Foreign currency translation adjustment | 0 | ||||
Net income (loss) | 68,935 | 68,935 | |||
Ending balance at Sep. 30, 2021 | 2,683,631 | $ 13 | 2,797,297 | 29 | (113,708) |
Ending balance (in shares) at Sep. 30, 2021 | 134,156 | ||||
Beginning balance at Dec. 31, 2021 | 2,766,606 | $ 14 | 2,856,572 | 41 | (90,021) |
Beginning balance (in shares) at Dec. 31, 2021 | 135,137 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock pursuant to equity incentive plans | 17,592 | 17,592 | |||
Issuance of common stock pursuant to equity incentive plans (in shares) | 4,133 | ||||
Stock-based compensation expense | 255,654 | 255,654 | |||
Foreign currency translation adjustment | (1,115) | (1,115) | |||
Net income (loss) | (260,810) | (260,810) | |||
Ending balance at Sep. 30, 2022 | 2,777,927 | $ 14 | 3,129,818 | (1,074) | (350,831) |
Ending balance (in shares) at Sep. 30, 2022 | 139,270 | ||||
Beginning balance at Jun. 30, 2022 | 2,795,892 | $ 14 | 3,024,897 | (371) | (228,648) |
Beginning balance (in shares) at Jun. 30, 2022 | 137,929 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock pursuant to equity incentive plans | 5,899 | 5,899 | |||
Issuance of common stock pursuant to equity incentive plans (in shares) | 1,341 | ||||
Stock-based compensation expense | 99,022 | 99,022 | |||
Foreign currency translation adjustment | (703) | (703) | |||
Net income (loss) | (122,183) | (122,183) | |||
Ending balance at Sep. 30, 2022 | $ 2,777,927 | $ 14 | $ 3,129,818 | $ (1,074) | $ (350,831) |
Ending balance (in shares) at Sep. 30, 2022 | 139,270 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2021 USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
At the market offering issuance cost | $ 10,400 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (260,810) | $ 218,698 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 36,415 | 31,304 |
Stock-based compensation expense | 255,654 | 133,479 |
Amortization of right-of-use assets | 40,354 | 21,588 |
Amortization of content assets | 163,121 | 56,580 |
Foreign currency remeasurement (gains) losses | (12,152) | 0 |
Change in fair value of strategic investment | (3,556) | 0 |
Provision for (recoveries of) doubtful accounts | 469 | (1,480) |
Other items, net | (258) | (298) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 32,186 | (64,710) |
Inventories | (68,976) | (22,050) |
Prepaid expenses and other current assets | (15,177) | (63,402) |
Other non-current assets | (79,962) | (78,549) |
Accounts payable | 29,550 | 15,139 |
Accrued liabilities | (104,249) | 34,204 |
Operating lease liabilities | (20,516) | (14,465) |
Other long-term liabilities | 465 | 201 |
Deferred revenue | 11,884 | (12,731) |
Net cash provided by operating activities | 4,442 | 253,508 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (96,318) | (28,020) |
Acquisition of businesses, net of cash acquired | 0 | (136,778) |
Purchase of strategic investment | (40,000) | 0 |
Net cash used in investing activities | (136,318) | (164,798) |
Cash flows from financing activities: | ||
Proceeds from equity issued under at-the-market offering, net of issuance costs | 0 | 989,615 |
Repayments of borrowings | (7,500) | (3,750) |
Proceeds from equity issued under incentive plans | 17,592 | 13,433 |
Net cash provided by financing activities | 10,092 | 999,298 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (121,784) | 1,088,008 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (5,535) | 0 |
Cash, cash equivalents and restricted cash —beginning of period | 2,147,670 | 1,093,249 |
Cash, cash equivalents and restricted cash —end of period | 2,020,351 | 2,181,257 |
Cash, cash equivalents and restricted cash at end of period: | ||
Cash and cash equivalents | 2,018,616 | 2,179,745 |
Restricted cash, non-current | 1,735 | 1,512 |
Cash, cash equivalents and restricted cash —end of period | 2,020,351 | 2,181,257 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 2,537 | 1,932 |
Cash paid for income taxes | 6,644 | 956 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Non-cash consideration for business combination | 0 | 15,200 |
Services to be received as part of a business combination | 0 | 6,300 |
Unpaid portion of property and equipment purchases | 23,410 | 3,310 |
Unpaid portion of acquisition-related expenses | $ 0 | $ 43 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | THE COMPANY Organization and Description of BusinessRoku, 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 and related services including the OneView ad platform, content distribution services (such as subscription and transaction revenue shares, media and entertainment promotional spending, the sale of Premium Subscriptions, and the sale of branded channel buttons on remote controls), and licensing arrangements with service operators and TV brands, and player revenue from the sale of streaming players and audio products. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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, 2021, filed with the SEC on February 18, 2022 (the “Annual Report”). The condensed consolidated balance sheet as of December 31, 2021 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, 2022 are not necessarily indicative of the operating results to be expected for the full year or any future periods. 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; • valuation of assets acquired and liabilities assumed in connection with business combinations; • valuation of strategic investments; • 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. 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 The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Two financial institutions managed 20% and 24% of the Company’s cash and cash equivalents balance as of September 30, 2022 and 30% and 27% of the Company’s cash and cash equivalents balance as of December 31, 2021, respectively. 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, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Beginning balance $ 4,670 $ 4,515 $ 6,015 $ 5,912 Add: Charged to revenue 4,187 3,082 12,997 10,133 Less: Utilization of sales return reserve (3,294) (3,554) (13,449) (12,002) Ending balance $ 5,563 $ 4,043 $ 5,563 $ 4,043 Allowance for Sales Incentives : Allowance for sales incentives consists of the following activities (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Beginning balance $ 24,893 $ 16,640 $ 48,411 $ 30,838 Add: Charged to revenue 15,661 17,379 47,211 44,953 Less: Utilization of sales incentive reserve (22,848) (14,184) (77,916) (55,956) Ending balance $ 17,706 $ 19,835 $ 17,706 $ 19,835 Allowance for Doubtful Accounts : Allowance for doubtful accounts consists of the following activities (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Beginning balance $ 2,278 $ 3,082 $ 2,158 $ 4,181 Provision for (recoveries of) doubtful accounts 2 (381) 469 (1,480) Adjustments for write-off (97) (1,119) (444) (1,119) Ending balance $ 2,183 $ 1,582 $ 2,183 $ 1,582 The Company did not have any customer that accounted for more than 10% of its accounts receivable, net balance as of September 30, 2022 and December 31, 2021. Recently Adopted Accounting Standards On January 1, 2022, the Company early adopted the guidance issued by the Financial Accounting Standards Board (“FASB”) in October 2021. The FASB issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to require companies to apply Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606) to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. The adoption did not have any impact on the Company's condensed consolidated financial statements. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | REVENUE The Company’s disaggregated revenue is represented by the two reportable segments discussed in Note 16. The contract balances include the following (in thousands): As of September 30, 2022 December 31, 2021 Accounts receivable, net $ 719,187 $ 752,393 Contract assets (included in Prepaid expenses and other current assets) 39,743 46,952 Deferred revenue, current portion $ 60,101 $ 45,760 Deferred revenue, non-current portion 26,269 28,726 Total deferred revenue $ 86,370 $ 74,486 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 $7.2 million during the nine months ended September 30, 2022 due to the timing of billing to customers as well as an overall decrease in the transaction prices in content arrangements. Deferred revenue reflects consideration invoiced prior to the completion of performance obligations and revenue recognition. Deferred revenue increased $11.9 million during the nine months ended September 30, 2022 primarily due to the timing of fulfillment of performance obligations related to platform revenue contracts, offset by lower deferral of player revenue. 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 recognized during the three and nine months ended September 30, 2021, from amounts included in total deferred revenue as of December 31, 2020, was $9.3 million and $49.0 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 $1,113.2 million as of September 30, 2022 of which the Company expects to recognize approximately 50% over the next 12 months and the remainder thereafter. The Company reversed revenue of $8.7 million and $0.5 million during the three and nine months ended September 30, 2022, respectively, and recognized revenue of $4.5 million and $29.3 million during the three and nine months ended September 30, 2021, respectively, from performance obligations that were satisfied in previous periods due to changes in the estimated transaction price of its revenue contracts. 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 and 2021. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | BUSINESS COMBINATIONS Nielsen’s Advanced Video Advertising Business On February 28, 2021, the Company entered into an Asset and Stock Purchase Agreement to purchase the Advanced Video Advertising (“AVA”) business from Nielsen Holdings PLC (“Nielsen”). The AVA business consists primarily of video automatic content recognition and dynamic ad insertion technologies. On April 15, 2021, the Company closed the transaction, acquiring from Nielsen the AVA business, consisting of certain assets and liabilities and all of the equity interests in a subsidiary associated with the AVA business (the “Acquisition”). In conjunction with the Acquisition, the Company and Nielsen entered into a strategic commercial arrangement under which the parties will provide certain advertising measurement solutions to each other. The Company acquired Nielsen’s AVA business to accelerate its launch of an end-to-end linear ad replacement solution and to further integrate Nielsen’s ad and content measurement products into the Company’s ad platform. The total purchase consideration for Nielsen’s AVA business was $53.4 million, which consisted of (i) $38.5 million paid in cash and (ii) $21.4 million of non-cash consideration related to obligations to deliver services to Nielsen, offset by (iii) $6.5 million of services to be received from Nielsen. The obligations to deliver services to Nielsen were recorded at fair value using the incremental cash flow method. The services to be delivered to Nielsen are recognized within Other income (expense), net in the condensed consolidated statements of operations over the six year service period. The services to be received from Nielsen represent contract terms that the Company entered into for future goods and services that were recorded at fair value using the incremental cash flow method. These services are recognized as Cost of revenue, platform in the condensed consolidated statements of operations over the six year service period. The Company incurred $3.9 million in acquisition-related expenses that were recorded in General and administrative expenses in the consolidated statements of operations during the year ended December 31, 2021. The allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed based on estimated fair values is as follows (in thousands): Fair Values Assets acquired Cash and cash equivalents $ 3,057 Prepaid expenses and other current assets 85 Property and equipment, net 584 Intangible assets: Developed technology 11,000 IPR&D technology 7,500 Goodwill 36,790 Operating lease right-of-use assets 1,235 Other non-current assets 1,905 Total assets acquired 62,156 Liabilities assumed Accounts payable and accrued liabilities (1,168) Operating lease liabilities, non-current portion (830) Other long-term liabilities (6,767) Total liabilities assumed (8,765) Total purchase consideration $ 53,391 The excess of the total consideration over the tangible assets, intangible assets, and liabilities assumed is recorded as goodwill. Goodwill is primarily attributable to expected synergies in advertising offerings and cross-selling opportunities. The majority of the goodwill recorded is deductible for tax purposes. The fair value of the developed technology is estimated using the relief-from-royalty method. The key valuation assumptions include the Company’s estimates of expected future earnings and royalty rate. The Company amortizes the fair value of the developed technology on a straight-line basis over its useful life. The fair value of the in-process research and development (“IPR&D”) technology is estimated using the multi-period-excess-earnings method. The key valuation assumptions include the Company’s estimates of expected future revenue and margin. Once the project reaches technological feasibility, the Company will amortize the fair value of the IPR&D technology on a straight-line basis over its useful life. The valuation of the intangible assets acquired from Nielsen’s AVA business along with their estimated useful lives, is as follows (in thousands, except years): Estimated Fair Value Estimated Weighted-Average Useful Lives Developed technology $ 11,000 5.9 IPR&D technology 7,500 — Estimated fair value of acquired intangible assets $ 18,500 5.9 This Old House On March 19, 2021, the Company acquired all outstanding shares of TOH Intermediate Holdings, LLC (“This Old House”), a home improvement media business, according to the terms and conditions of an Equity Purchase Agreement. The Company acquired the This Old House business because the Company believes the content aligns with The Roku Channel’s ad-supported growth strategy. The total purchase consideration for This Old House was $97.8 million, paid entirely in cash. The Company incurred $2.4 million in acquisition-related expenses that were recorded in General and administrative expenses in the consolidated statements of operations during the year ended December 31, 2021. The allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed based on estimated fair values is as follows (in thousands): Fair Values Assets acquired Cash and cash equivalents $ 7 Accounts receivable 5,830 Prepaid expenses and other current assets 7,310 Property and equipment, net 307 Intangible assets: Tradename 20,000 Customer relationships 700 Goodwill 46,671 Operating lease right-of-use assets 5,498 Other non-current assets 23,487 Total assets acquired 109,810 Liabilities assumed Accounts payable and accrued liabilities (2,747) Deferred revenue, current portion (4,146) Operating lease liabilities, non-current portion (4,262) Deferred revenue, non-current portion (816) Other long-term liabilities (28) Total liabilities assumed (11,999) Total purchase consideration $ 97,811 Other non-current assets include $22.5 million of content assets acquired. The fair value of the content assets is estimated using the income approach. Amortization expense related to the content assets is recorded on an accelerated basis according to the pattern of monetization. The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities is recorded as goodwill. Goodwill is primarily attributable to expected synergies in the advertising offerings as the Company brings more free ad-supported content to the users. The goodwill recorded is deductible for tax purposes. The fair value of the tradename is estimated using the relief-from-royalty method. The key valuation assumptions include the Company's estimates of expected future revenue and royalty rate. The Company amortizes the fair value of the tradename on a straight-line basis over its useful life. The valuation of the intangible assets acquired from This Old House along with their estimated useful lives, is as follows (in thousands, except years): Estimated Fair Value Estimated Weighted-Average Useful Lives Tradename $ 20,000 10.0 Customer relationships 700 4.0 Estimated fair value of acquired intangible assets $ 20,700 9.8 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 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, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Useful Lives Developed technology $ 73,367 $ (34,326) $ 39,041 5.9 Customer relationships 14,100 (10,039) 4,061 4.0 Tradename 20,400 (3,466) 16,934 9.8 Patents 4,076 (825) 3,251 14.0 Intangible assets subject to amortization 111,943 (48,656) 63,287 6.7 IPR&D technology 7,500 — 7,500 Total Intangible assets $ 119,443 $ (48,656) $ 70,787 As of December 31, 2021 Gross Accumulated Net Weighted-Average Useful Lives Developed technology $ 73,367 $ (25,350) $ 48,017 5.9 Customer relationships 14,100 (7,395) 6,705 4.0 Tradename 20,400 (1,966) 18,434 9.8 Patents 4,076 (606) 3,470 14.0 Intangible assets subject to amortization 111,943 (35,317) 76,626 6.7 IPR&D technology 7,500 — 7,500 Total Intangible assets $ 119,443 $ (35,317) $ 84,126 The Company recorded $4.4 million and $4.7 million for amortization of intangible assets during the three months ended September 30, 2022 and 2021, respectively. The Company recorded $13.3 million and $13.0 million for amortization of intangible assets during the nine months ended September 30, 2022 and 2021, respectively. During the three and nine months ended September 30, 2022 and 2021, the Company recorded amortization of developed technology in Cost of revenue, platform and Research and development expenses. The Company recorded amortization of customer relationships and tradename in Sales and marketing expenses, and recorded amortization of patents in General and administrative expenses in the condensed consolidated statements of operations. As of September 30, 2022, the estimated future amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands): Year Ending December 31, 2022 (remaining 3 months) $ 4,406 2023 17,066 2024 14,275 2025 12,571 2026 4,074 Thereafter 10,895 Total $ 63,287 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | BALANCE SHEET COMPONENTS Accounts Receivable, net : Accounts receivable, net consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Accounts receivable, gross $ 744,820 $ 809,220 Less: Allowances Allowance for sales returns 5,563 6,015 Allowance for sales incentives 17,706 48,411 Allowance for doubtful accounts 2,183 2,158 Other allowances 181 243 Total allowances 25,633 56,827 Accounts receivable, net $ 719,187 $ 752,393 Property and Equipment, net : Property and equipment, net consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Computers and equipment $ 43,972 $ 38,473 Leasehold improvements 288,168 182,229 Internal-use software 7,274 7,274 Office equipment and furniture 27,045 20,829 Property and equipment, gross 366,459 248,805 Less: Accumulated depreciation and amortization (94,266) (71,238) Property and equipment, net $ 272,193 $ 177,567 Depreciation and amortization expense, for property and equipment assets, for the three months ended September 30, 2022 and 2021 was $9.0 million and $6.2 million, respectively. Depreciation and amortization expense, for property and equipment assets, for the nine months ended September 30, 2022 and 2021 was $23.0 million and $18.3 million, respectively. Accrued Liabilities : Accrued liabilities consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Payments due to content publishers $ 180,673 $ 165,894 Accrued cost of revenue 107,300 142,014 Marketing, retail, and merchandising costs 56,015 47,428 Operating lease liability, current 51,345 37,116 Content liability, current 106,341 70,462 Other accrued expenses 124,162 86,141 Total accrued liabilities $ 625,836 $ 549,055 Deferred Revenue : Deferred revenue consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Platform, current $ 40,453 $ 22,240 Player, current 19,648 23,520 Total deferred revenue, current 60,101 45,760 Platform, non-current 4,931 9,324 Player, non-current 21,338 19,402 Total deferred revenue, non-current 26,269 28,726 Total deferred revenue $ 86,370 $ 74,486 Other Long-term Liabilities : Other Long-term liabilities consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Content liability, non-current $ 44,619 $ 51,211 Other long-term liabilities 31,776 31,274 Total other long-term liabilities $ 76,395 $ 82,485 |
Content Assets
Content Assets | 9 Months Ended |
Sep. 30, 2022 | |
Capitalized Content Costs [Abstract] | |
Content Assets | CONTENT ASSETS Content assets, net recorded as part of Other non-current assets consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Licensed content, net $ 235,500 $ 199,290 Produced content: Released, less amortization 22,775 20,030 Completed, not released 12,853 881 In production 32,011 3,512 Total produced content, net 67,639 24,423 Total content assets, net $ 303,139 $ 223,713 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): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Licensed content $ 59,604 $ 23,454 $ 154,394 $ 48,925 Produced content 3,020 5,034 8,727 7,655 Total amortization costs $ 62,624 $ 28,488 $ 163,121 $ 56,580 |
Strategic Investment
Strategic Investment | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Strategic Investment | STRATEGIC INVESTMENT In June 2022, the Company agreed to provide financing of up to $60.0 million in the aggregate to a counterparty with which the Company has a commercial relationship, of which $40.0 million was advanced during the three months ended June 30, 2022. The counterparty issued the Company convertible promissory notes for $40.0 million (“Investment”), and the Investment is part of Other non-current assets on the condensed consolidated balance sheets. The Investment accrues interest at 5% per annum and has a maturity date of June 15, 2025, or is due upon a redemption event or in the event of a default. The 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 Investment 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 9 for additional details on the fair value of the Investment. |
Fair Value Disclosure
Fair Value Disclosure | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosure | FAIR VALUE DISCLOSURE The Company’s financial assets measured at fair value are as follows (in thousands): As of September 30, 2022 As of December 31, 2021 Fair Value Level 1 Level 3 Fair Value Level 1 Level 3 Assets: Cash and cash equivalents: Cash $ 1,415,038 $ 1,415,038 $ — $ 1,130,172 $ 1,130,172 $ — Money market funds 603,578 603,578 — 1,015,871 1,015,871 — Other non-current assets: Restricted cash, non-current 1,735 1,735 — 1,627 1,627 — Strategic investment 43,556 — 43,556 — — — Total assets measured and recorded at fair value $ 2,063,907 $ 2,020,351 $ 43,556 $ 2,147,670 $ 2,147,670 $ — 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 maturity of three months or less at the date of purchase to be cash equivalents. The Company measured money market funds of $603.6 million and $1,015.9 million as cash equivalents as of September 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021. 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, 2022, the Company measured the Investment using Level 3 inputs. The fair value of the Investment on the date of purchase was determined to be equal to its principal amount. The Company recorded an unrealized gain of $3.6 million in Other income (expense), net related to the adjustment to fair value of the Investment for the three months ended September 30, 2022. The Company did not have Level 3 instruments as of December 31, 2021. The Company classifies the Investment as Level 3 due to the lack of relevant observable market data over fair value inputs. The fair value of the Investment was estimated using a scenario-based probability weighted discounted cash flow model. Significant assumptions include timing of subsequent redemption events, once converted into equity, the timing of any liquidity event, and probability weighting of the various redemption scenarios that can impact the settlement of the 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. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | LEASES The Company's operating leases are primarily for office facilities. The leases have remaining terms ranging from one The components of lease expense are as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Operating lease cost $ 20,719 $ 11,291 $ 55,453 $ 32,938 Variable lease cost 4,548 3,555 13,679 11,048 Total operating lease cost $ 25,267 $ 14,846 $ 69,132 $ 43,986 Supplemental cash flow information related to leases is as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 14,211 $ 11,663 $ 40,952 $ 39,642 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 5,799 $ 55,350 $ 230,119 $ 101,886 Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate): As of September 30, 2022 December 31, 2021 Operating lease right-of-use assets $ 535,031 $ 345,660 Operating lease liability, current (included in Accrued liabilities) $ 51,345 $ 37,116 Operating lease liability, non-current 568,193 394,724 Total operating lease liability $ 619,538 $ 431,840 Weighted-average remaining term for operating leases (in years) 8.85 8.38 Weighted-average discount rate for operating leases 3.81 % 3.98 % Future lease payments under operating leases as of September 30, 2022 are as follows (in thousands): Year Ending December 31, Operating Leases 2022 (remaining 3 months) $ 15,079 2023 71,894 2024 84,291 2025 92,553 2026 93,754 Thereafter 431,156 Total future lease payments 788,727 Less: imputed interest (124,584) Less: expected tenant improvement allowance (44,605) Total $ 619,538 As of September 30, 2022, the Company’s commitment relating to operating leases that have not yet commenced was $37.0 million. These operating leases will |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The Company’s outstanding debt as of September 30, 2022 and December 31, 2021 is as follows (in thousands, except interest rates): As of September 30, 2022 December 31, 2021 Amount Effective Interest Rate Amount Effective Interest Rate Term Loan A Facility $ 82,500 4.3% $ 90,000 2.0% Less: Debt issuance costs (43) (132) Net carrying amount of debt $ 82,457 $ 89,868 The carrying amount of debt approximates fair value due to its variable interest rates. The interest expense for the three months ended September 30, 2022 and 2021 was $0.9 million and $0.5 million, respectively, and for the nine months ended September 30, 2022 and 2021 was $2.6 million and $1.6 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 provides 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. See Note 10 to the consolidated financial statements in our Annual Report for additional details regarding the Credit Agreement. 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 borrowings under the Credit Agreement mature or have to be repaid in full by February 2023. The Company had outstanding letters of credit against the Revolving Credit Facility of $38.0 million as of September 30, 2022 and December 31, 2021. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | 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, 2022 and December 31, 2021, 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. At-the-Market Offering On March 2, 2021, the Company entered into an Equity Distribution Agreement with Morgan Stanley & Co. LLC, Citigroup Global Markets Inc. and Evercore Group L.L.C., as its sales agents, pursuant to which the Company could offer and sell from time-to-time shares of its Class A common stock for aggregate gross proceeds of up to $1,000.0 million. In March 2021, the Company sold approximately 2.6 million shares of Class A common stock at an average selling price of $379.26 per share, for aggregate gross proceeds of $1,000.0 million and incurred issuance costs of $10.4 million. Common Stock Reserved for Future Issuance At September 30, 2022, the Company’s common stock reserved for issuance in the future is as follows (in thousands): As of September 30, 2022 Common stock awards granted under equity incentive plans 13,802 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 Plan 25,291 Total reserved shares of common stock 44,182 (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 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. 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. Restricted Stock Units Restricted stock unit activity for the nine months ended September 30, 2022 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, 2021 3,286 $ 169.76 Awarded 7,968 109.40 Released (1,789) 115.44 Forfeited (552) 153.06 Balance as of September 30, 2022 8,913 $ 127.72 As of September 30, 2022, the Company had $1,015.7 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 2.93 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, 2022 (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, 2021 6,174 $ 51.87 5.8 Granted 1,180 75.62 — Exercised (2,344) 7.50 — Forfeited and expired (121) 167.00 — Balance as of September 30, 2022 4,889 $ 76.03 6.7 $ 83,178 Options exercisable as of September 30, 2022 2,665 $ 32.70 4.9 $ 83,177 As of September 30, 2022, the Company had $90.2 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 2.23 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 The following table shows the total stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Cost of revenue, platform $ 280 $ 199 $ 882 $ 564 Cost of revenue, player 815 618 1,819 1,348 Research and development 40,511 20,893 107,130 56,024 Sales and marketing 34,480 16,591 86,308 44,229 General and administrative 22,964 12,095 59,515 31,314 Total stock-based compensation $ 99,050 $ 50,396 $ 255,654 $ 133,479 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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, 2022, the Company had $220.4 million of non-cancelable purchase commitments for inventory. Content Commitments The Company enters into contracts with content publishers to acquire content for streaming. When a title becomes available, the Company records an asset and a liability on the condensed consolidated balance sheets. As of September 30, 2022, the Company's total obligation for content was $420.1 million, of which the Company recorded $127.6 million in Current liabilities and $44.6 million in Other long-term liabilities in the condensed consolidated balance sheets. The remaining $247.9 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, 2022 (remaining 3 months) $ 108,092 2023 161,290 2024 96,604 2025 39,359 2026 9,772 Thereafter 4,956 Total content obligations $ 420,073 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 above. Letters of Credit As of September 30, 2022 and December 31, 2021, the Company had irrevocable letters of credit outstanding in the amount of $38.0 million related to operating leases. The letters of credit have various expiration dates through 2029. 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, 2022 and 2021, the Company did not have any loss contingencies that were material. Indemnification In the ordinary course of business, the Company has entered into contractual arrangements which provide indemnification provisions of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. The Company’s obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Income tax expense was $2.0 million and $6.7 million for the three and nine months ended September 30, 2022 and was primarily attributable to changes in the Company’s year over year taxable earnings mix in the U.S. and state operations, and earnings in non-U.S. operations. Income tax benefit was $0.3 million and $4.7 million for the three and nine months ended September 30, 2021 and was primarily attributable to non-U.S. tax benefit associated with the Company's non-U.S. 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, 2022, 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 U.S. 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 there is no impact to the Company’s tax provision for the three and nine months ended September 30, 2022. The Company will continue to evaluate the impact of these tax law changes on future periods. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | NET INCOME (LOSS) PER SHARE The Company’s basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding for the period. The Company uses the two-class method to calculate net income (loss) per share. Except with respect to certain voting, conversion, and transfer rights and as otherwise expressly provided in the Company’s amended and restated certificate of incorporation or required by applicable law, shares of the Company’s Class A common stock and Class B common stock have the same rights and privileges and rank equally, share ratably, and are identical in all respects as to all matters. Accordingly, basic and diluted net income (loss) per share are the same for both classes. For purposes of the calculation of diluted net income (loss) per share, options to purchase common stock and restricted stock units are considered common stock equivalents. Dilutive shares of common stock are determined by applying the treasury stock method. The dilutive shares are excluded from the calculation of diluted net loss per share in the period of net loss, as their effect is antidilutive. The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Numerator: Net income (loss) $ (122,183) $ 68,935 $ (260,810) $ 218,698 Denominator: Basic net income (loss) per share: Weighted-average common shares outstanding — basic 138,571 133,685 136,997 132,036 Net income (loss) per share — basic $ (0.88) $ 0.52 $ (1.90) $ 1.66 Diluted net income (loss) per share: Weighted-average common shares outstanding — basic 138,571 133,685 136,997 132,036 Effect of potentially dilutive securities: Restricted stock units — 2,641 — 3,007 Stock options — 5,960 — 6,550 Weighted-average common shares outstanding — diluted 138,571 142,286 136,997 141,593 Net income (loss) per share — diluted $ (0.88) $ 0.48 $ (1.90) $ 1.54 For the three and nine months ended September 30, 2022, equity awards to purchase 13.8 million shares of common stock are excluded from the calculation of diluted net income (loss) per share because of their anti-dilutive effect during the period of net loss. For the three and nine months ended September 30, 2021, equity awards to purchase 0.1 million shares of common stock are excluded from the calculation of diluted net income (loss) per share because of their anti-dilutive effect. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION The Company is organized into two reportable segments as follows: Platform Consists of revenue generated from the sale of digital advertising and related services including the demand-side platform, content distribution services (such as subscription and transaction revenue shares, media and entertainment promotional spending, the sale of Premium Subscriptions, and the sale of branded channel buttons on remote controls), and licensing arrangements with service operators and TV brands. Player Consists of revenue generated from sale of streaming players, audio products and accessories through retailers and distributors, as well as directly to customers through the Company’s website. Customers accounting for 10% or more of segment revenue, net, were as follows: Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Platform segment revenue: Customer H * 10 % * 11 % Player segment revenue: Customer A * 11 % * 10 % Customer B 18 % 21 % 21 % 21 % Customer C 35 % 33 % 36 % 36 % |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, 2021, filed with the SEC on February 18, 2022 (the “Annual Report”). |
Use of Estimates | 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; • valuation of assets acquired and liabilities assumed in connection with business combinations; • valuation of strategic investments; • 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. |
Principles of Consolidation | 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 | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Two financial institutions managed 20% and 24% of the Company’s cash and cash equivalents balance as of September 30, 2022 and 30% and 27% of the Company’s cash and cash equivalents balance as of December 31, 2021, respectively. |
Accounts Receivable, net | 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. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards On January 1, 2022, the Company early adopted the guidance issued by the Financial Accounting Standards Board (“FASB”) in October 2021. The FASB issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to require companies to apply Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606) to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. The adoption did not have any impact on the Company's condensed consolidated financial statements. |
Fair Value | 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 maturity of three months or less at the date of purchase to be cash equivalents. The Company measured money market funds of $603.6 million and $1,015.9 million as cash equivalents as of September 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021. 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, 2022, the Company measured the Investment using Level 3 inputs. The fair value of the Investment on the date of purchase was determined to be equal to its principal amount. The Company recorded an unrealized gain of $3.6 million in Other income (expense), net related to the adjustment to fair value of the Investment for the three months ended September 30, 2022. The Company did not have Level 3 instruments as of December 31, 2021. The Company classifies the Investment as Level 3 due to the lack of relevant observable market data over fair value inputs. The fair value of the Investment was estimated using a scenario-based probability weighted discounted cash flow model. Significant assumptions include timing of subsequent redemption events, once converted into equity, the timing of any liquidity event, and probability weighting of the various redemption scenarios that can impact the settlement of the 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Allowance for Sales Returns | Allowance for sales returns consists of the following activities (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Beginning balance $ 4,670 $ 4,515 $ 6,015 $ 5,912 Add: Charged to revenue 4,187 3,082 12,997 10,133 Less: Utilization of sales return reserve (3,294) (3,554) (13,449) (12,002) Ending balance $ 5,563 $ 4,043 $ 5,563 $ 4,043 |
Schedule of Allowance for Sales Incentives | Allowance for sales incentives consists of the following activities (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Beginning balance $ 24,893 $ 16,640 $ 48,411 $ 30,838 Add: Charged to revenue 15,661 17,379 47,211 44,953 Less: Utilization of sales incentive reserve (22,848) (14,184) (77,916) (55,956) Ending balance $ 17,706 $ 19,835 $ 17,706 $ 19,835 |
Schedule of Allowance for Doubtful Accounts | Allowance for doubtful accounts consists of the following activities (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Beginning balance $ 2,278 $ 3,082 $ 2,158 $ 4,181 Provision for (recoveries of) doubtful accounts 2 (381) 469 (1,480) Adjustments for write-off (97) (1,119) (444) (1,119) Ending balance $ 2,183 $ 1,582 $ 2,183 $ 1,582 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Balances | The contract balances include the following (in thousands): As of September 30, 2022 December 31, 2021 Accounts receivable, net $ 719,187 $ 752,393 Contract assets (included in Prepaid expenses and other current assets) 39,743 46,952 Deferred revenue, current portion $ 60,101 $ 45,760 Deferred revenue, non-current portion 26,269 28,726 Total deferred revenue $ 86,370 $ 74,486 As of September 30, 2022 December 31, 2021 Platform, current $ 40,453 $ 22,240 Player, current 19,648 23,520 Total deferred revenue, current 60,101 45,760 Platform, non-current 4,931 9,324 Player, non-current 21,338 19,402 Total deferred revenue, non-current 26,269 28,726 Total deferred revenue $ 86,370 $ 74,486 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Preliminary Allocation of Purchase Consideration to Tangible and Intangible Assets Acquired and Liabilities Assumed | The allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed based on estimated fair values is as follows (in thousands): Fair Values Assets acquired Cash and cash equivalents $ 3,057 Prepaid expenses and other current assets 85 Property and equipment, net 584 Intangible assets: Developed technology 11,000 IPR&D technology 7,500 Goodwill 36,790 Operating lease right-of-use assets 1,235 Other non-current assets 1,905 Total assets acquired 62,156 Liabilities assumed Accounts payable and accrued liabilities (1,168) Operating lease liabilities, non-current portion (830) Other long-term liabilities (6,767) Total liabilities assumed (8,765) Total purchase consideration $ 53,391 The allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed based on estimated fair values is as follows (in thousands): Fair Values Assets acquired Cash and cash equivalents $ 7 Accounts receivable 5,830 Prepaid expenses and other current assets 7,310 Property and equipment, net 307 Intangible assets: Tradename 20,000 Customer relationships 700 Goodwill 46,671 Operating lease right-of-use assets 5,498 Other non-current assets 23,487 Total assets acquired 109,810 Liabilities assumed Accounts payable and accrued liabilities (2,747) Deferred revenue, current portion (4,146) Operating lease liabilities, non-current portion (4,262) Deferred revenue, non-current portion (816) Other long-term liabilities (28) Total liabilities assumed (11,999) Total purchase consideration $ 97,811 |
Summary of Preliminary Valuation of Intangible Assets Acquired | The valuation of the intangible assets acquired from Nielsen’s AVA business along with their estimated useful lives, is as follows (in thousands, except years): Estimated Fair Value Estimated Weighted-Average Useful Lives Developed technology $ 11,000 5.9 IPR&D technology 7,500 — Estimated fair value of acquired intangible assets $ 18,500 5.9 The valuation of the intangible assets acquired from This Old House along with their estimated useful lives, is as follows (in thousands, except years): Estimated Fair Value Estimated Weighted-Average Useful Lives Tradename $ 20,000 10.0 Customer relationships 700 4.0 Estimated fair value of acquired intangible assets $ 20,700 9.8 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | The following table is the summary of the Company’s intangible assets (in thousands, except years): As of September 30, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-Average Useful Lives Developed technology $ 73,367 $ (34,326) $ 39,041 5.9 Customer relationships 14,100 (10,039) 4,061 4.0 Tradename 20,400 (3,466) 16,934 9.8 Patents 4,076 (825) 3,251 14.0 Intangible assets subject to amortization 111,943 (48,656) 63,287 6.7 IPR&D technology 7,500 — 7,500 Total Intangible assets $ 119,443 $ (48,656) $ 70,787 As of December 31, 2021 Gross Accumulated Net Weighted-Average Useful Lives Developed technology $ 73,367 $ (25,350) $ 48,017 5.9 Customer relationships 14,100 (7,395) 6,705 4.0 Tradename 20,400 (1,966) 18,434 9.8 Patents 4,076 (606) 3,470 14.0 Intangible assets subject to amortization 111,943 (35,317) 76,626 6.7 IPR&D technology 7,500 — 7,500 Total Intangible assets $ 119,443 $ (35,317) $ 84,126 |
Schedule of Estimated Future Amortization Expense for Intangible Assets | As of September 30, 2022, the estimated future amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands): Year Ending December 31, 2022 (remaining 3 months) $ 4,406 2023 17,066 2024 14,275 2025 12,571 2026 4,074 Thereafter 10,895 Total $ 63,287 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Accounts Receivable, Net | Accounts receivable, net consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Accounts receivable, gross $ 744,820 $ 809,220 Less: Allowances Allowance for sales returns 5,563 6,015 Allowance for sales incentives 17,706 48,411 Allowance for doubtful accounts 2,183 2,158 Other allowances 181 243 Total allowances 25,633 56,827 Accounts receivable, net $ 719,187 $ 752,393 |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Computers and equipment $ 43,972 $ 38,473 Leasehold improvements 288,168 182,229 Internal-use software 7,274 7,274 Office equipment and furniture 27,045 20,829 Property and equipment, gross 366,459 248,805 Less: Accumulated depreciation and amortization (94,266) (71,238) Property and equipment, net $ 272,193 $ 177,567 |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Payments due to content publishers $ 180,673 $ 165,894 Accrued cost of revenue 107,300 142,014 Marketing, retail, and merchandising costs 56,015 47,428 Operating lease liability, current 51,345 37,116 Content liability, current 106,341 70,462 Other accrued expenses 124,162 86,141 Total accrued liabilities $ 625,836 $ 549,055 |
Schedule of Deferred Revenue | The contract balances include the following (in thousands): As of September 30, 2022 December 31, 2021 Accounts receivable, net $ 719,187 $ 752,393 Contract assets (included in Prepaid expenses and other current assets) 39,743 46,952 Deferred revenue, current portion $ 60,101 $ 45,760 Deferred revenue, non-current portion 26,269 28,726 Total deferred revenue $ 86,370 $ 74,486 As of September 30, 2022 December 31, 2021 Platform, current $ 40,453 $ 22,240 Player, current 19,648 23,520 Total deferred revenue, current 60,101 45,760 Platform, non-current 4,931 9,324 Player, non-current 21,338 19,402 Total deferred revenue, non-current 26,269 28,726 Total deferred revenue $ 86,370 $ 74,486 |
Schedule of Other Long Term Liabilities | Other Long-term liabilities consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Content liability, non-current $ 44,619 $ 51,211 Other long-term liabilities 31,776 31,274 Total other long-term liabilities $ 76,395 $ 82,485 |
Content Assets (Tables)
Content Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Capitalized Content Costs [Abstract] | |
Schedule of Content Assets, Net | Content assets, net recorded as part of Other non-current assets consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Licensed content, net $ 235,500 $ 199,290 Produced content: Released, less amortization 22,775 20,030 Completed, not released 12,853 881 In production 32,011 3,512 Total produced content, net 67,639 24,423 Total content assets, net $ 303,139 $ 223,713 |
Schedule of Amortization of Content Assets Included in Cost of Revenue in Condensed Consolidated Statement of Operations | 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): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Licensed content $ 59,604 $ 23,454 $ 154,394 $ 48,925 Produced content 3,020 5,034 8,727 7,655 Total amortization costs $ 62,624 $ 28,488 $ 163,121 $ 56,580 |
Fair Value Disclosure (Tables)
Fair Value Disclosure (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets Measured at Fair Value | The Company’s financial assets measured at fair value are as follows (in thousands): As of September 30, 2022 As of December 31, 2021 Fair Value Level 1 Level 3 Fair Value Level 1 Level 3 Assets: Cash and cash equivalents: Cash $ 1,415,038 $ 1,415,038 $ — $ 1,130,172 $ 1,130,172 $ — Money market funds 603,578 603,578 — 1,015,871 1,015,871 — Other non-current assets: Restricted cash, non-current 1,735 1,735 — 1,627 1,627 — Strategic investment 43,556 — 43,556 — — — Total assets measured and recorded at fair value $ 2,063,907 $ 2,020,351 $ 43,556 $ 2,147,670 $ 2,147,670 $ — |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense | The components of lease expense are as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Operating lease cost $ 20,719 $ 11,291 $ 55,453 $ 32,938 Variable lease cost 4,548 3,555 13,679 11,048 Total operating lease cost $ 25,267 $ 14,846 $ 69,132 $ 43,986 |
Schedule of Supplemental Cash Flow Information Related To Leases | Supplemental cash flow information related to leases is as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 14,211 $ 11,663 $ 40,952 $ 39,642 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 5,799 $ 55,350 $ 230,119 $ 101,886 |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate): As of September 30, 2022 December 31, 2021 Operating lease right-of-use assets $ 535,031 $ 345,660 Operating lease liability, current (included in Accrued liabilities) $ 51,345 $ 37,116 Operating lease liability, non-current 568,193 394,724 Total operating lease liability $ 619,538 $ 431,840 Weighted-average remaining term for operating leases (in years) 8.85 8.38 Weighted-average discount rate for operating leases 3.81 % 3.98 % |
Schedule of Future Lease Payments under Operating Leases | Future lease payments under operating leases as of September 30, 2022 are as follows (in thousands): Year Ending December 31, Operating Leases 2022 (remaining 3 months) $ 15,079 2023 71,894 2024 84,291 2025 92,553 2026 93,754 Thereafter 431,156 Total future lease payments 788,727 Less: imputed interest (124,584) Less: expected tenant improvement allowance (44,605) Total $ 619,538 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The Company’s outstanding debt as of September 30, 2022 and December 31, 2021 is as follows (in thousands, except interest rates): As of September 30, 2022 December 31, 2021 Amount Effective Interest Rate Amount Effective Interest Rate Term Loan A Facility $ 82,500 4.3% $ 90,000 2.0% Less: Debt issuance costs (43) (132) Net carrying amount of debt $ 82,457 $ 89,868 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Reserved Shares of Common Stock for Issuance | At September 30, 2022, the Company’s common stock reserved for issuance in the future is as follows (in thousands): As of September 30, 2022 Common stock awards granted under equity incentive plans 13,802 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 Plan 25,291 Total reserved shares of common stock 44,182 (1) The Company has not issued any common stock pursuant to the 2017 Employee Stock Purchase Plan. |
Summary of Restricted Stock Unit Activity | Restricted stock unit activity for the nine months ended September 30, 2022 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, 2021 3,286 $ 169.76 Awarded 7,968 109.40 Released (1,789) 115.44 Forfeited (552) 153.06 Balance as of September 30, 2022 8,913 $ 127.72 |
Schedule of Stock Option Activity | The following table summarizes the Company’s stock option activities under the 2008 Plan and 2017 Plan for the nine months ended September 30, 2022 (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, 2021 6,174 $ 51.87 5.8 Granted 1,180 75.62 — Exercised (2,344) 7.50 — Forfeited and expired (121) 167.00 — Balance as of September 30, 2022 4,889 $ 76.03 6.7 $ 83,178 Options exercisable as of September 30, 2022 2,665 $ 32.70 4.9 $ 83,177 |
Schedule of Stock-based Compensation Expense | The following table shows the total stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Cost of revenue, platform $ 280 $ 199 $ 882 $ 564 Cost of revenue, player 815 618 1,819 1,348 Research and development 40,511 20,893 107,130 56,024 Sales and marketing 34,480 16,591 86,308 44,229 General and administrative 22,964 12,095 59,515 31,314 Total stock-based compensation $ 99,050 $ 50,396 $ 255,654 $ 133,479 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Payments for Content Liabilities | The expected timing of payments for these content obligations are as follows (in thousands): Year Ending December 31, 2022 (remaining 3 months) $ 108,092 2023 161,290 2024 96,604 2025 39,359 2026 9,772 Thereafter 4,956 Total content obligations $ 420,073 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Summary of Calculation of Basic and Diluted Net Income (Loss) Per Share | The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Numerator: Net income (loss) $ (122,183) $ 68,935 $ (260,810) $ 218,698 Denominator: Basic net income (loss) per share: Weighted-average common shares outstanding — basic 138,571 133,685 136,997 132,036 Net income (loss) per share — basic $ (0.88) $ 0.52 $ (1.90) $ 1.66 Diluted net income (loss) per share: Weighted-average common shares outstanding — basic 138,571 133,685 136,997 132,036 Effect of potentially dilutive securities: Restricted stock units — 2,641 — 3,007 Stock options — 5,960 — 6,550 Weighted-average common shares outstanding — diluted 138,571 142,286 136,997 141,593 Net income (loss) per share — diluted $ (0.88) $ 0.48 $ (1.90) $ 1.54 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Customer Accounting for 10% or More of Segment Revenue | Customers accounting for 10% or more of segment revenue, net, were as follows: Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Platform segment revenue: Customer H * 10 % * 11 % Player segment revenue: Customer A * 11 % * 10 % Customer B 18 % 21 % 21 % 21 % Customer C 35 % 33 % 36 % 36 % |
The Company (Details)
The Company (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Number of operating segments | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - institution | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Financial Institution Risk | Cash And Cash Equivalents Benchmark | Financial Institution One | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Concentration risk | 20% | 30% |
Financial Institution Risk | Cash And Cash Equivalents Benchmark | Financial Institution Two | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Concentration risk | 24% | 27% |
Customer 1 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Number of financial institutions which manage cash balances | 2 | |
Customer 2 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Number of financial institutions which manage cash balances | 2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Allowance for Sales Returns (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Beginning balance | $ 56,827 | |||
Ending balance | $ 25,633 | 25,633 | ||
Allowance for sales returns | ||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Beginning balance | 4,670 | $ 4,515 | 6,015 | $ 5,912 |
Add: Charged to revenue | 4,187 | 3,082 | 12,997 | 10,133 |
Less: Utilization of sales return reserve | (3,294) | (3,554) | (13,449) | (12,002) |
Ending balance | $ 5,563 | $ 4,043 | $ 5,563 | $ 4,043 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Allowance for Sales Incentives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Beginning balance | $ 56,827 | |||
Ending balance | $ 25,633 | 25,633 | ||
Allowance for sales incentives | ||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Beginning balance | 24,893 | $ 16,640 | 48,411 | $ 30,838 |
Add: Charged to revenue | 15,661 | 17,379 | 47,211 | 44,953 |
Less: Utilization of sales incentive reserve | (22,848) | (14,184) | (77,916) | (55,956) |
Ending balance | $ 17,706 | $ 19,835 | $ 17,706 | $ 19,835 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Beginning balance | $ 56,827 | |||
Ending balance | $ 25,633 | 25,633 | ||
Allowance for doubtful accounts | ||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Beginning balance | 2,278 | $ 3,082 | 2,158 | $ 4,181 |
Provision for (recoveries of) doubtful accounts | 2 | (381) | 469 | (1,480) |
Less: Utilization of sales return reserve | (97) | (1,119) | (444) | (1,119) |
Ending balance | $ 2,183 | $ 1,582 | $ 2,183 | $ 1,582 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Schedule Of Contract Balances [Line Items] | ||||
Number of reportable segments | segment | 2 | |||
Contract with customer assets increase (decrease) | $ (7,200) | |||
Deferred revenue | 11,884 | $ (12,731) | ||
Deferred revenue recognized | $ 7,900 | $ 9,300 | 41,600 | 49,000 |
Estimated contracted revenue | 1,113,200 | 1,113,200 | ||
Revenue recognized from performance obligation satisfied in previous period | $ (8,700) | $ 4,500 | $ (500) | $ 29,300 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||||
Schedule Of Contract Balances [Line Items] | ||||
Revenue remaining performance obligation percentage of revenue expected to be recognized | 50% | 50% | ||
Remaining performance period | 12 months | 12 months |
Revenue - Schedule of Contract
Revenue - Schedule of Contract Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule Of Contract Balances [Line Items] | ||
Accounts receivable, net | $ 719,187 | $ 752,393 |
Deferred revenue, current portion | 60,101 | 45,760 |
Deferred revenue, non-current portion | 26,269 | 28,726 |
Total deferred revenue | 86,370 | 74,486 |
Prepaid Expenses and Other Current Assets | ||
Schedule Of Contract Balances [Line Items] | ||
Contract assets (included in Prepaid expenses and other current assets) | $ 39,743 | $ 46,952 |
Business Combinations - Additio
Business Combinations - Additional Information (Details) - USD ($) $ in Millions | Apr. 15, 2021 | Mar. 19, 2021 |
Other Non-current Assets | ||
Business Acquisition [Line Items] | ||
Content assets acquired | $ 22.5 | |
Nielsen's Advanced Video Advertising Business | ||
Business Acquisition [Line Items] | ||
Preliminary purchase consideration | $ 53.4 | |
Business combination, aggregate cash consideration | 38.5 | |
Business combination, noncash consideration | 21.4 | |
Business combination, service agreements | $ 6.5 | |
Business combination, obligation to deliver services period | 6 years | |
Business combination, contract terms for goods and services to be received period | 6 years | |
Nielsen's Advanced Video Advertising Business | General and Administrative Expenses | ||
Business Acquisition [Line Items] | ||
Acquisition related cost | $ 3.9 | |
TOH Intermediate Holdings, LLC | ||
Business Acquisition [Line Items] | ||
Preliminary purchase consideration | 97.8 | |
TOH Intermediate Holdings, LLC | General and Administrative Expenses | ||
Business Acquisition [Line Items] | ||
Acquisition related cost | $ 2.4 |
Business Combinations - Schedul
Business Combinations - Schedule of Preliminary Allocation of Purchase Consideration to Tangible and Intangible Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Apr. 15, 2021 | Mar. 19, 2021 |
Assets acquired | ||||
Goodwill | $ 161,519 | $ 161,519 | ||
Nielsen's Advanced Video Advertising Business | ||||
Assets acquired | ||||
Cash and cash equivalents | $ 3,057 | |||
Prepaid expenses and other current assets | 85 | |||
Property and equipment, net | 584 | |||
Intangible assets | 18,500 | |||
Goodwill | 36,790 | |||
Operating lease right-of-use assets | 1,235 | |||
Other non-current assets | 1,905 | |||
Total assets acquired | 62,156 | |||
Liabilities assumed | ||||
Accounts payable and accrued liabilities | (1,168) | |||
Operating lease liabilities, non-current portion | (830) | |||
Other long-term liabilities | (6,767) | |||
Total liabilities assumed | (8,765) | |||
Total purchase consideration | 53,391 | |||
TOH Intermediate Holdings, LLC | ||||
Assets acquired | ||||
Cash and cash equivalents | $ 7 | |||
Accounts receivable | 5,830 | |||
Prepaid expenses and other current assets | 7,310 | |||
Property and equipment, net | 307 | |||
Intangible assets | 20,700 | |||
Goodwill | 46,671 | |||
Operating lease right-of-use assets | 5,498 | |||
Other non-current assets | 23,487 | |||
Total assets acquired | 109,810 | |||
Liabilities assumed | ||||
Accounts payable and accrued liabilities | (2,747) | |||
Deferred revenue, current portion | (4,146) | |||
Operating lease liabilities, non-current portion | (4,262) | |||
Deferred revenue, non-current portion | (816) | |||
Other long-term liabilities | (28) | |||
Total liabilities assumed | (11,999) | |||
Total purchase consideration | 97,811 | |||
Developed technology | Nielsen's Advanced Video Advertising Business | ||||
Assets acquired | ||||
Intangible assets | 11,000 | |||
IPR&D technology | Nielsen's Advanced Video Advertising Business | ||||
Assets acquired | ||||
Intangible assets | $ 7,500 | |||
Tradename | TOH Intermediate Holdings, LLC | ||||
Assets acquired | ||||
Intangible assets | 20,000 | |||
Customer relationships | TOH Intermediate Holdings, LLC | ||||
Assets acquired | ||||
Intangible assets | $ 700 |
Business Combinations - Summary
Business Combinations - Summary of Preliminary Valuation of Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Apr. 15, 2021 | Mar. 19, 2021 |
Nielsen's Advanced Video Advertising Business | ||
Business Acquisition [Line Items] | ||
Estimated Fair Value | $ 18,500 | |
Estimated Weighted-Average Useful Lives (in years) | 5 years 10 months 24 days | |
TOH Intermediate Holdings, LLC | ||
Business Acquisition [Line Items] | ||
Estimated Fair Value | $ 20,700 | |
Estimated Weighted-Average Useful Lives (in years) | 9 years 9 months 18 days | |
Developed technology | Nielsen's Advanced Video Advertising Business | ||
Business Acquisition [Line Items] | ||
Estimated Fair Value | $ 11,000 | |
Estimated Weighted-Average Useful Lives (in years) | 5 years 10 months 24 days | |
IPR&D technology | Nielsen's Advanced Video Advertising Business | ||
Business Acquisition [Line Items] | ||
Estimated Fair Value | $ 7,500 | |
Estimated Weighted-Average Useful Lives (in years) | 0 years | |
Tradename | TOH Intermediate Holdings, LLC | ||
Business Acquisition [Line Items] | ||
Estimated Fair Value | $ 20,000 | |
Estimated Weighted-Average Useful Lives (in years) | 10 years | |
Customer relationships | TOH Intermediate Holdings, LLC | ||
Business Acquisition [Line Items] | ||
Estimated Fair Value | $ 700 | |
Estimated Weighted-Average Useful Lives (in years) | 4 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 111,943 | $ 111,943 |
Total Intangible assets, Gross Carrying Amount | 119,443 | 119,443 |
Accumulated Amortization | (48,656) | (35,317) |
Total | 63,287 | 76,626 |
Net Carrying Amount | $ 70,787 | $ 84,126 |
Weighted-Average Useful Lives (in years) | 6 years 8 months 12 days | 6 years 8 months 12 days |
Developed technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 73,367 | $ 73,367 |
Accumulated Amortization | (34,326) | (25,350) |
Total | $ 39,041 | $ 48,017 |
Weighted-Average Useful Lives (in years) | 5 years 10 months 24 days | 5 years 10 months 24 days |
Customer relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 14,100 | $ 14,100 |
Accumulated Amortization | (10,039) | (7,395) |
Total | $ 4,061 | $ 6,705 |
Weighted-Average Useful Lives (in years) | 4 years | 4 years |
Tradename | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 20,400 | $ 20,400 |
Accumulated Amortization | (3,466) | (1,966) |
Total | $ 16,934 | $ 18,434 |
Weighted-Average Useful Lives (in years) | 9 years 9 months 18 days | 9 years 9 months 18 days |
Patents | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,076 | $ 4,076 |
Accumulated Amortization | (825) | (606) |
Total | $ 3,251 | $ 3,470 |
Weighted-Average Useful Lives (in years) | 14 years | 14 years |
IPR&D technology | ||
Finite Lived Intangible Assets [Line Items] | ||
IPR&D technology | $ 7,500 | $ 7,500 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 4.4 | $ 4.7 | $ 13.3 | $ 13 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense for Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (remaining 3 months) | $ 4,406 | |
2023 | 17,066 | |
2024 | 14,275 | |
2025 | 12,571 | |
2026 | 4,074 | |
Thereafter | 10,895 | |
Total | $ 63,287 | $ 76,626 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||||
Accounts receivable, gross | $ 744,820 | $ 809,220 | ||||
Allowances | 25,633 | 56,827 | ||||
Accounts receivable, net | 719,187 | 752,393 | ||||
Allowance for sales returns | ||||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||||
Allowances | 5,563 | $ 4,670 | 6,015 | $ 4,043 | $ 4,515 | $ 5,912 |
Allowance for sales incentives | ||||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||||
Allowances | 17,706 | 24,893 | 48,411 | 19,835 | 16,640 | 30,838 |
Allowance for doubtful accounts | ||||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||||
Allowances | 2,183 | $ 2,278 | 2,158 | $ 1,582 | $ 3,082 | $ 4,181 |
Other allowances | ||||||
Valuation And Qualifying Accounts Disclosure [Line Items] | ||||||
Allowances | $ 181 | $ 243 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 366,459 | $ 248,805 |
Less: Accumulated depreciation and amortization | (94,266) | (71,238) |
Property and equipment, net | 272,193 | 177,567 |
Computers and equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 43,972 | 38,473 |
Leasehold improvements | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 288,168 | 182,229 |
Internal-use software | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 7,274 | 7,274 |
Office equipment and furniture | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 27,045 | $ 20,829 |
Balance Sheet Components - Addi
Balance Sheet Components - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Balance Sheet Related Disclosures [Abstract] | ||||
Depreciation and amortization | $ 9 | $ 6.2 | $ 23 | $ 18.3 |
Balance Sheet Components - Sc_3
Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Liabilities, Current [Abstract] | ||
Payments due to content publishers | $ 180,673 | $ 165,894 |
Accrued cost of revenue | 107,300 | 142,014 |
Marketing, retail, and merchandising costs | 56,015 | 47,428 |
Operating lease liability, current | 51,345 | 37,116 |
Content liability, current | 106,341 | 70,462 |
Other accrued expenses | 124,162 | 86,141 |
Total accrued liabilities | $ 625,836 | $ 549,055 |
Balance Sheet Components - Sc_4
Balance Sheet Components - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue, current portion | $ 60,101 | $ 45,760 |
Deferred revenue, non-current portion | 26,269 | 28,726 |
Total deferred revenue | 86,370 | 74,486 |
Platform | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue, current portion | 40,453 | 22,240 |
Deferred revenue, non-current portion | 4,931 | 9,324 |
Player | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred revenue, current portion | 19,648 | 23,520 |
Deferred revenue, non-current portion | $ 21,338 | $ 19,402 |
Balance Sheet Components - Sc_5
Balance Sheet Components - Schedule of Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Offsetting [Abstract] | ||
Content liability, non-current | $ 44,619 | $ 51,211 |
Other long-term liabilities | 31,776 | 31,274 |
Other long-term liabilities | $ 76,395 | $ 82,485 |
Content Assets - Schedule of Co
Content Assets - Schedule of Content Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Content Assets [Line Items] | ||
Total content assets, net | $ 303,139 | $ 223,713 |
Licensed content, net | ||
Content Assets [Line Items] | ||
Total produced content, net | 235,500 | 199,290 |
Released, less amortization | ||
Content Assets [Line Items] | ||
Total produced content, net | 22,775 | 20,030 |
Completed, not released | ||
Content Assets [Line Items] | ||
Total produced content, net | 12,853 | 881 |
In production | ||
Content Assets [Line Items] | ||
Total produced content, net | 32,011 | 3,512 |
Total produced content, net | ||
Content Assets [Line Items] | ||
Total produced content, net | $ 67,639 | $ 24,423 |
Content Assets - Schedule of Am
Content Assets - Schedule of Amortization of Content Assets Included in Cost of Revenue in Condensed Consolidated Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Capitalized Content Costs [Abstract] | ||||
Licensed content | $ 59,604 | $ 23,454 | $ 154,394 | $ 48,925 |
Produced content | 3,020 | 5,034 | 8,727 | 7,655 |
Total amortization costs | $ 62,624 | $ 28,488 | $ 163,121 | $ 56,580 |
Strategic Investment (Details)
Strategic Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Debt securities, available-for-sale | $ 60,000 | $ 60,000 | ||
Purchase of strategic investment | $ 40,000 | $ 40,000 | $ 0 | |
Debt securities, stated interest rate | 5% |
Fair Value Disclosure - Schedul
Fair Value Disclosure - Schedule of Financial Assets Measured at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Assets: | |||
Restricted cash, non-current | $ 1,735 | $ 1,627 | $ 1,512 |
Purchase of strategic investment | 43,556 | 0 | |
Total assets measured and recorded at fair value | 2,063,907 | 2,147,670 | |
Level 1 | |||
Assets: | |||
Restricted cash, non-current | 1,735 | 1,627 | |
Purchase of strategic investment | 0 | 0 | |
Total assets measured and recorded at fair value | 2,020,351 | 2,147,670 | |
Level 3 | |||
Assets: | |||
Restricted cash, non-current | 0 | 0 | |
Purchase of strategic investment | 43,556 | 0 | |
Total assets measured and recorded at fair value | 43,556 | 0 | |
Cash | |||
Assets: | |||
Cash and cash equivalents | 1,415,038 | 1,130,172 | |
Cash | Level 1 | |||
Assets: | |||
Cash and cash equivalents | 1,415,038 | 1,130,172 | |
Cash | Level 3 | |||
Assets: | |||
Cash and cash equivalents | 0 | 0 | |
Money market funds | |||
Assets: | |||
Cash and cash equivalents | 603,578 | 1,015,871 | |
Money market funds | Level 1 | |||
Assets: | |||
Cash and cash equivalents | 603,578 | 1,015,871 | |
Money market funds | Level 3 | |||
Assets: | |||
Cash and cash equivalents | $ 0 | $ 0 |
Fair Value Disclosure - Additio
Fair Value Disclosure - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Unrealized gain on investment | $ 3,600 | $ 3,556 | $ 0 | |
Money market funds | Level 1 | ||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||||
Cash equivalents | $ 603,600 | $ 603,600 | $ 1,015,900 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Lessee Lease Description [Line Items] | |
Commitment relating to operating lease, that have not yet commenced | $ 37 |
Minimum | |
Lessee Lease Description [Line Items] | |
Remaining lease term, operating lease | 1 year |
Operating leases that have not yet commenced, lease terms | 4 years |
Maximum | |
Lessee Lease Description [Line Items] | |
Remaining lease term, operating lease | 11 years |
Operating leases that have not yet commenced, lease terms | 11 years |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 20,719 | $ 11,291 | $ 55,453 | $ 32,938 |
Variable lease cost | 4,548 | 3,555 | 13,679 | 11,048 |
Total operating lease cost | $ 25,267 | $ 14,846 | $ 69,132 | $ 43,986 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash outflows from operating leases | $ 14,211 | $ 11,663 | $ 40,952 | $ 39,642 |
Right-of-use assets obtained in exchange for lease obligations: | ||||
Operating leases | $ 5,799 | $ 55,350 | $ 230,119 | $ 101,886 |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 535,031 | $ 345,660 |
Operating lease liability, current | $ 51,345 | $ 37,116 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued liabilities | Accrued liabilities |
Operating lease liability, non-current | $ 568,193 | $ 394,724 |
Total operating lease liability | $ 619,538 | $ 431,840 |
Weighted-average remaining term for operating leases (in years) | 8 years 10 months 6 days | 8 years 4 months 17 days |
Weighted-average discount rate for operating leases | 3.81% | 3.98% |
Leases - Schedule of Future Lea
Leases - Schedule of Future Lease Payments under Operating Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2022 (remaining 3 months) | $ 15,079 | |
2023 | 71,894 | |
2024 | 84,291 | |
2025 | 92,553 | |
2026 | 93,754 | |
Thereafter | 431,156 | |
Total future lease payments | 788,727 | |
Less: imputed interest | (124,584) | |
Less: expected tenant improvement allowance | (44,605) | |
Total | $ 619,538 | $ 431,840 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt (Details) - Term Loan A Facility - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Term Loan A Facility | $ 82,500 | $ 90,000 |
Less: Debt issuance costs | (43) | (132) |
Net carrying amount of debt | $ 82,457 | $ 89,868 |
Effective Interest Rate | 4.30% | 2% |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Nov. 18, 2019 | May 03, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||||
Letters of credit outstanding | $ 38,000,000 | $ 38,000,000 | $ 38,000,000 | ||||
Term Loan A Facility | |||||||
Debt Instrument [Line Items] | |||||||
Interest expense | 900,000 | $ 500,000 | 2,600,000 | $ 1,600,000 | |||
Term Loan A Facility | Morgan Stanley Senior Funding, Inc | Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument term, years | 4 years | ||||||
Debt instrument, aggregate principal amount | $ 100,000,000 | ||||||
Amount borrowed under debt facility | $ 100,000,000 | ||||||
Term Loan A Facility | Morgan Stanley Senior Funding, Inc | Credit Agreement | Adjusted One-Month LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, applicable margin on variable rate | 1.75% | ||||||
Revolving Credit Facility | Morgan Stanley Senior Funding, Inc | Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument term, years | 4 years | ||||||
Maximum borrowing capacity | $ 100,000,000 | ||||||
Letters of credit outstanding | $ 38,000,000 | $ 38,000,000 | $ 38,000,000 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock - Additional Information (Details) - shares | Sep. 30, 2022 | Dec. 31, 2021 |
Equity [Abstract] | ||
Preferred stock, shares authorized | 10,000,000 | |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 vote Class | |
Class Of Stock [Line Items] | |
Number of classes | Class | 2 |
Class A Common Stock | |
Class Of Stock [Line Items] | |
Number of votes for each share held | 1 |
Class B Common Stock | |
Class Of Stock [Line Items] | |
Number of votes for each share held | 10 |
Stockholders' Equity - At-the-M
Stockholders' Equity - At-the-Market Offering - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Mar. 02, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Class Of Stock [Line Items] | ||||
Gross proceeds from issuance of common stock | $ 0 | $ 989,615 | ||
Class A Common Stock | At-the-Market Offerings | ||||
Class Of Stock [Line Items] | ||||
Gross proceeds from issuance of common stock | $ 1,000,000 | $ 1,000,000 | ||
Aggregate shares of common stock, sold | 2,600,000 | |||
Average selling price ( us dollars per share) | $ 379.26 | |||
Stock issuance costs | $ 10,400 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Reserved Shares of Common Stock for Issuance (Details) shares in Thousands | Sep. 30, 2022 shares |
Class Of Stock [Line Items] | |
Total reserved shares of common stock | 44,182 |
Equity Incentive Plan | |
Class Of Stock [Line Items] | |
Common stock awards granted under equity incentive plans | 13,802 |
2017 Employee Stock Purchase Plan | |
Class Of Stock [Line Items] | |
Common stock awards available for issuance | 5,089 |
2017 Plan | |
Class Of Stock [Line Items] | |
Common stock awards available for issuance | 25,291 |
Stockholders' Equity - Equity I
Stockholders' Equity - Equity Incentive Plans - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 Plan | |
Class Of Stock [Line Items] | |
Number of equity incentive plans | 2 |
2017 Plan | Employee Stock Option | |
Class Of Stock [Line Items] | |
Percentage of voting rights | 10% |
2017 Plan | Employee Stock Option | Minimum | 10% Shareholder | |
Class Of Stock [Line Items] | |
Stock option fair market value at the date of grant, percent | 110% |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units shares in Thousands | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Number of Shares | |
Beginning balance (in shares) | shares | 3,286 |
Awarded (in shares) | shares | 7,968 |
Released (in shares) | shares | (1,789) |
Forfeited (in shares) | shares | (552) |
Ending balance (in shares) | shares | 8,913 |
Weighted-Average Grant Date Fair Value per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 169.76 |
Awarded (in dollars per share) | $ / shares | 109.40 |
Released (in dollars per share) | $ / shares | 115.44 |
Forfeited (in dollars per share) | $ / shares | 153.06 |
Ending balance (in dollars per share) | $ / shares | $ 127.72 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Units - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Expected weighted average period to recognize unrecognized stock compensation expense | 2 years 2 months 23 days |
Restricted Stock Units | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unrecognized stock compensation expense | $ 1,015.7 |
Expected weighted average period to recognize unrecognized stock compensation expense | 2 years 11 months 4 days |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Number of Shares | ||
Beginning balance (in shares) | 6,174 | |
Granted (in shares) | 1,180 | |
Exercised (in shares) | (2,344) | |
Forfeited and expired (in shares) | (121) | |
Ending balance (in shares) | 4,889 | 6,174 |
Options exercisable, Number of Shares (in shares) | 2,665 | |
Weighted- Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 51.87 | |
Granted (in dollars per share) | 75.62 | |
Exercised (in dollars per share) | 7.50 | |
Forfeited and expired (in dollars per share) | 167 | |
Ending balance (in dollars per share) | 76.03 | $ 51.87 |
Options exercisable, Weighted Average Exercise Price (in dollars per share) | $ 32.70 | |
Stock Options Additional Disclosures | ||
Balance, Weighted Average Remaining Contractual Life (Years) | 6 years 8 months 12 days | 5 years 9 months 18 days |
Outstanding, Aggregate Intrinsic Value | $ 83,178 | |
Options exercisable, Weighted Average Remaining Contractual Life (Years) | 4 years 10 months 24 days | |
Options exercisable, Aggregate Intrinsic Value | $ 83,177 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Plan - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Share-based Payment Arrangement [Abstract] | |
Unrecognized stock-based compensation expense | $ 90.2 |
Expected weighted average period to recognize unrecognized stock compensation expense | 2 years 2 months 23 days |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Class Of Stock [Line Items] | ||||
Share-based payment arrangement, amount capitalized | $ 0 | $ 0 | $ 0 | $ 0 |
Employee Stock Option | 2017 Plan | ||||
Class Of Stock [Line Items] | ||||
Stock option term | 10 years | |||
Employee Stock Option | 2017 Plan | Minimum | ||||
Class Of Stock [Line Items] | ||||
Share-based compensation arrangement by share-based payment vesting period | 1 year | |||
Employee Stock Option | 2017 Plan | Maximum | ||||
Class Of Stock [Line Items] | ||||
Share-based compensation arrangement by share-based payment vesting period | 4 years | |||
Restricted Stock Units | ||||
Class Of Stock [Line Items] | ||||
Share-based compensation arrangement by share-based payment vesting period | 4 years |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 99,050 | $ 50,396 | $ 255,654 | $ 133,479 |
Cost of Revenue | Platform | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 280 | 199 | 882 | 564 |
Cost of Revenue | Player | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 815 | 618 | 1,819 | 1,348 |
Research and development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 40,511 | 20,893 | 107,130 | 56,024 |
Sales and marketing | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 34,480 | 16,591 | 86,308 | 44,229 |
General and administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 22,964 | $ 12,095 | $ 59,515 | $ 31,314 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Commitments And Contingencies [Line Items] | ||
Unrecorded purchase commitment | $ 247,900 | |
Letters of credit outstanding | 38,000 | $ 38,000 |
Manufacturing | ||
Commitments And Contingencies [Line Items] | ||
Purchase commitments for inventory and license | 220,400 | |
Content Publishers | ||
Commitments And Contingencies [Line Items] | ||
Purchase commitments for inventory and license | 420,073 | |
Content Publishers | Current Liabilities | ||
Commitments And Contingencies [Line Items] | ||
Purchase commitments for inventory and license | 127,600 | |
Content Publishers | Other Long-Term Liabilities | ||
Commitments And Contingencies [Line Items] | ||
Purchase commitments for inventory and license | $ 44,600 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Payments for Content Obligations (Details) - Content Publishers $ in Thousands | Sep. 30, 2022 USD ($) |
Commitments And Contingencies [Line Items] | |
2022 (remaining 3 months) | $ 108,092 |
2023 | 161,290 |
2024 | 96,604 |
2025 | 39,359 |
2026 | 9,772 |
Thereafter | 4,956 |
Total content obligations | $ 420,073 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 1,951 | $ (332) | $ 6,697 | $ (4,732) |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Summary of Calculation of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net income (loss) | $ (122,183) | $ 68,935 | $ (260,810) | $ 218,698 |
Denominator: | ||||
Weighted-average common shares outstanding — basic (in shares) | 138,571 | 133,685 | 136,997 | 132,036 |
Net income (loss) per share — basic (in dollars per share) | $ (0.88) | $ 0.52 | $ (1.90) | $ 1.66 |
Weighted-average common shares outstanding — diluted (in shares) | 138,571 | 142,286 | 136,997 | 141,593 |
Net income (loss) per share — diluted (in dollars per share) | $ (0.88) | $ 0.48 | $ (1.90) | $ 1.54 |
Restricted Stock Units | ||||
Denominator: | ||||
Potentially dilutive securities (in shares) | 0 | 2,641 | 0 | 3,007 |
Employee Stock Option | ||||
Denominator: | ||||
Potentially dilutive securities (in shares) | 0 | 5,960 | 0 | 6,550 |
Net Income (Loss) Per Share - N
Net Income (Loss) Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from calculation of diluted net loss per share | 13,800,000 | 100,000 | 13,800,000 | 100,000 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Schedule
Segment Information - Schedule of Customer Accounting for 10% or More of Segment Revenue (Details) - Net Revenue - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Platform | Customer H | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Concentration risk | 10% | 11% | ||
Player | Customer A | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Concentration risk | 11% | 10% | ||
Player | Customer B | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Concentration risk | 18% | 21% | 21% | 21% |
Player | Customer C | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Concentration risk | 35% | 33% | 36% | 36% |