Fox adds Roku financials and integration risk factors
The amendment adds Roku historical financial statements, combined-company pro forma information and risk factors for the post-acquisition business.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Fox Corporation (FOX) completed its acquisition of Roku, Inc. on November 6, 2026, in a transaction involving a combination of cash and FOX Class A Common Stock. The amendment adds Roku’s audited consolidated financial statements as of December 31, 2025 and December 31, 2024, and for each of the three years in the period ended December 31, 2025. It also includes Roku’s unaudited interim consolidated financial statements as of and for the three and nine months ended September 30, 2026, plus pro forma combined financial information.
The pro forma information includes a combined balance sheet as of September 30, 2026 and statements of operations for the fiscal year ended June 30, 2026 and the three months ended September 30, 2026. Fox also added risk factors for the combined company and Roku’s historical business. Fox says integration is underway; anticipated synergies and other benefits may not be fully realized, or may take longer than expected, and integration could bring unanticipated costs, delays, or operational and financial challenges.
Filing Explained
After Fox’s completed acquisition of Roku, this amendment adds a specific historical Roku risk: its top three streaming services, excluding The Roku Channel, accounted for more than half of streaming hours in the quarter ended September 30, 2026; losing those apps could reduce streaming hours, users, or device sales.
8-K Event Classification
Key Terms
Rule 3-05 of Regulation S-X regulatory
unaudited pro forma condensed combined balance sheet financial
unaudited interim consolidated financial statements financial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
| (STATE OR OTHER JURISDICTION OF INCORPORATION) |
(COMMISSION FILE NO.) |
(IRS EMPLOYER IDENTIFICATION NO.) |
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading |
Name of Each Exchange | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Introductory Note
As reported in the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) by Fox Corporation (“FOX”) on November 6, 2026 (the “Original Filing”), on November 6, 2026 FOX completed the acquisition of Roku, Inc., a Delaware corporation (“Roku”). This Amendment No. 1 amends and supplements the Original Filing to provide the historical financial statements of Roku and the pro forma financial information required by Item 9.01 of Form 8-K that were omitted from the Original Filing as permitted by Item 9.01(a)(3). In addition, included as Exhibit 99.1 hereto are certain risk factors relating to FOX after the completion of the acquisition of Roku and risk factors relating to the historical business of Roku (the “Risk Factors”).
| Item 8.01. | Other Events. |
The Risk Factors are attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Financial Statements of Business Acquired |
Attached hereto and incorporated by reference herein are the following exhibits, which contain the financial statements required to be filed pursuant to Rule 3-05 of Regulation S-X:
| ● | 99.2 Audited consolidated financial statements of Roku as of December 31, 2025 and for each of the three years in the period ended December 31, 2025, and the related notes to such audited consolidated financial statements. |
| ● | 99.3 Unaudited interim consolidated financial statements of Roku for the three and nine months ended September 30, 2026, and the related notes to such unaudited interim consolidated financial statements. |
| (b) | Pro Forma Financial Information |
Attached hereto and incorporated by reference herein is the following exhibit, which contains the pro forma financial information of FOX required to be filed and is incorporated herein by reference:
| ● | 99.4 Unaudited pro forma condensed combined financial information for the fiscal year ended June 30, 2026 and for the three months ended September 30, 2026, and the related notes to such unaudited pro forma condensed combined financial statements. |
| (d) | Exhibits |
| Exhibit Number |
Description | |
| 23.1 | Consent of Deloitte & Touche LLP, independent registered public accounting firm of Roku. | |
| 99.1 | Risk Factors relating to Roku and the acquisition of Roku. | |
| 99.2 | Audited consolidated financial statements of Roku as of December 31, 2025 and December 31, 2024 and for each of the three years in the period ended December 31, 2025, and the related notes to such audited consolidated financial statements (incorporated by reference to Roku’s Current Report on Form 8-K filed with the SEC on June 18, 2026). | |
| 99.3 | Unaudited interim consolidated financial statements of Roku as of and for the three and nine months ended September 30, 2026, and the related notes to such unaudited interim consolidated financial statements (incorporated by reference to Roku’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2026, filed with the SEC on November 2, 2026). | |
| 99.4 | Unaudited pro forma condensed combined balance sheet as of September 30, 2026 and the unaudited pro forma condensed combined statements of operations for the fiscal year ended June 30, 2026 and for the three months ended September 30, 2026, and the related notes to such unaudited pro forma condensed combined financial information. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FOX CORPORATION
| By: | /s/ Adam G. Ciongoli | |
| Name: Adam G. Ciongoli | ||
| Title: Chief Legal & Policy Officer |
November 9, 2026
Exhibit 99.1
All references to the “Company” or “FOX” refer to the combined company post completion of the acquisition of Roku, Inc. by Fox Corporation for a combination of cash and FOX Class A Common Stock (the “Roku Transaction”). Except as set forth below, there have been no material changes to the risk factors described in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2026. The risk factor set forth below supplements, and should be read in conjunction with, the risk factors described in the Company’s Annual Report on Form 10-K. In addition, because the Roku Transaction has now been consummated, additional significant risks may apply to the combined business including the risks relating to Roku, Inc.’s business as set forth in Roku, Inc.’s Form 10-Q for the quarter ending September 30, 2026, filed with the Securities and Exchange Commission (the “SEC”) on November 2, 2026, and as set forth below in this Exhibit 99.4.
The Company may be unable to successfully integrate Roku’s business and realize the anticipated synergies and other benefits of the Roku Transaction, or do so within the anticipated time frame.
On November 6, 2026, the Company completed its previously announced acquisition of Roku, Inc. The Company expects to benefit from the Roku Transaction through anticipated synergies, cost savings, innovation and operational efficiencies. The Company is in the process of integrating Roku, Inc.’s business into FOX. Business integrations generally, and the Company’s integration of Roku, Inc. specifically, are complex, costly and time consuming, and the Company may experience unanticipated costs, charges, expenses, delays or other operational or financial challenges. The Company has significantly more systems, assets, investments, businesses, customers and employees than it did prior to the Roku Transaction. The anticipated synergies and benefits of the Roku Transaction may not be realized fully, or at all, or may take longer to realize than expected, which could have an adverse effect on the Company’s business, financial condition or results of operations. Following the Roku Transaction, the Company operates new lines of business it did not engage in previously. The Company’s ability to successfully manage this expanded business will depend in part on management’s ability to design and implement operational, managerial, financial and strategic initiatives that address not only the integration of two independent stand-alone companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity. Future results may be adversely impacted if the Company does not effectively manage its expanded operations.
There is a significant degree of difficulty and management involvement inherent in the integration process and in managing the scope of the combined business. These difficulties include:
| • | the diversion of management’s attention and resources from ongoing business concerns and performance shortfalls, which may disrupt FOX’s ongoing business; |
| • | managing a significantly larger company; |
| • | creating, implementing and executing a unified business strategy and operational, financial and managerial control with respect to the combined company; |
| • | the possibility of faulty assumptions underlying expectations regarding the integration process; |
| • | maintaining existing relationships and agreements with affiliates, advertisers, content partners, distributors, device partners, retailers, suppliers, vendors, customers, subscribers and other counterparties (collectively, the “counterparties”); addressing any counterparty’s non-performance of its obligations under such agreements; and avoiding delays in entering into new agreements with prospective counterparties and attracting new business and operational relationships; |
| • | addressing possible differences in business backgrounds, corporate cultures and management philosophies; |
| • | maintaining employee morale and attracting, motivating and retaining management personnel and other key employees; |
| • | integrating the companies’ operations and corporate functions; |
| • | integrating the companies’ technologies, networks and customer service platforms; |
| • | integrating and unifying the product offerings and services available to customers; |
| • | coordinating programming and marketing efforts; |
| • | coordinating geographically dispersed organizations; |
| • | integrating purchasing, provisioning, accounting, finance, sales, billing, payroll, reporting and regulatory compliance systems; |
| • | consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures and policies; and |
| • | addressing the Company’s significant combined indebtedness and associated obligations and/or restrictions and risks related to FOX’s ability to deleverage the business in accordance with management’s targets. |
Many of these factors will be outside of the Company’s control and any one of them could result in delays, increased costs, decreases in the amount of expected revenues, and diversion of management’s time and energy, which could adversely affect the Company’s business, financial condition or results of operations.
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In addition, the Company may be exposed to increased litigation from stockholders, counterparties or other third parties, including governmental entities or regulatory bodies, due to the combination of the FOX and Roku businesses following the Roku Transaction. Such litigation may have an adverse impact on the Company’s business, financial condition or results of operations or may cause disruptions to the Company’s operations.
For purposes of the remainder of this Exhibit 99.1, (i) all references to “Roku,” “we,” “our” and “us” henceforth refer to Roku, Inc. and its subsidiaries prior to the completion of its business combination with Fox Corporation and (ii) all terms used and not otherwise defined have the meanings ascribed to them in Roku’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 and filed with the SEC on November 2, 2026 (the “Roku 10-Q”). For the avoidance of doubt, the Roku 10-Q is not incorporated by reference into this Current Report on Form 8-K.
Risk Factors Summary
Below is a summary of the principal factors that impact Roku’s business:
Risks Related to Our Business and Industry
| • | the highly competitive nature of the TV streaming industry that is rapidly evolving; |
| • | our ability to successfully grow revenues from advertising on our platform; |
| • | maintaining an appropriate supply of quality video advertising inventory on our platform and effectively selling the available supply; |
| • | irrelevant or unengaging advertising campaigns on our streaming platform; |
| • | our ability to successfully utilize programmatic advertising technology; |
| • | our ability to further monetize our streaming platform; |
| • | our ability to successfully operate and monetize our owned and operated streaming services; |
| • | our ability to establish and maintain relationships with important content partners; |
| • | popular or new content publishers not publishing their content on our streaming platform; |
| • | the non-renewal or early termination of our agreements with content partners; |
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| • | content partners electing not to participate in platform features that we develop; |
| • | users signing up for offerings and services outside of our platform; |
| • | our ability to develop, maintain, and expand relationships with licensed Roku TV partners and manufacturing partners; |
| • | our and our licensed Roku TV partners’ ability to develop, maintain, and expand relationships with important retail sales channels that we and they rely on to sell our streaming devices and other products; |
| • | our ability to build and maintain a strong brand and customer satisfaction and loyalty; |
| • | our and our licensed Roku TV partners’ reliance on contract manufacturers and ability to accurately forecast manufacturing requirements and manage supply chain and inventory levels; |
| • | decreased availability or increased costs for materials and components used in the manufacturing of our products and our licensed Roku TV partners’ products; |
| • | our ability to obtain key components from sole source suppliers; |
| • | interoperability of our products with content partners’ and other third parties’ offerings, technologies, and systems; |
| • | detecting hardware defects and software errors in our products before they are released to end users; |
| • | component manufacturing, design, or other defects that may render our products permanently inoperable; |
| • | our ability to obtain or maintain necessary or desirable licenses, certifications, or approvals related to our use or support of third-party technology, intellectual property, or services; |
| • | our introduction of new products and services; |
| • | our use of artificial intelligence (“AI”) technologies in our operations, products, and services; |
| • | maintaining adequate customer support levels; |
Risks Related to Operating and Growing Our Business
| • | our history of operating losses; |
| • | volatility of our quarterly operating results that could cause our stock price to decline; |
| • | our ability to manage our growth; |
| • | our ability to successfully expand our international operations; |
| • | seasonality and other potential fluctuations in our business and their impact on our revenue and gross profit; maintaining systems that can support our growth, business arrangements, and financial rules; |
| • | attracting and retaining key personnel; |
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| • | our ability to successfully complete acquisitions and strategic transactions and integrate acquired businesses; |
| • | our ability to secure funds to meet our financial obligations and support our planned business growth; |
| • | our uninsured cash deposits; |
| • | the impact of macroeconomic conditions, natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events on our business; |
Risks Related to Cybersecurity, Reliability, and Data Privacy
| • | data security incidents, including cybersecurity attacks, or other significant disruptions of our information technology systems that could adversely affect our business and subject us to liability; |
| • | legal obligations and potential liability or reputational harm related to our collection, processing, disclosure, and storage of personal information; |
| • | disruptions in information technology systems or other services that result in a degradation of our platform; |
| • | changes in how network operators manage data that travel across their networks; |
Risks Related to Intellectual Property
| • | intellectual property infringement claims and litigation resulting in significant costs or the loss of important intellectual property rights; |
| • | failure or inability to protect or enforce our intellectual property or proprietary rights; |
| • | our use of open-source software; |
| • | our agreements to indemnify certain of our partners if our technology is alleged to infringe on third parties’ intellectual property rights; |
Legal and Regulatory Risks
| • | lawsuits and other legal proceedings, disputes, claims, and government inquiries and investigations; |
| • | enactment of or changes to government regulation or laws related to our business; |
| • | changes in U.S. or foreign trade policies, geopolitical conditions, and general economic conditions that impact our business; |
| • | U.S. or international rules (or the absence of rules) that permit internet access network operators to degrade users’ internet service speeds or limit internet data consumption by users; |
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| • | liability for content that is distributed through or advertising that is served through our platform; |
| • | the impact of changes in accounting principles; |
| • | compliance with laws and regulations related to the payment of income taxes and collection of indirect taxes; and |
| • | changes to U.S. or foreign taxation laws or regulations. |
Risks Related to Our Business and Industry
If we fail to differentiate our streaming platform and compete successfully with our competitors, it will be difficult for us to attract and retain users and our business will be adversely impacted.
The global TV streaming industry-including the sale of TV streaming devices as well as the sale of advertising, subscription services, and other on-demand content on TV streaming platforms-is highly competitive. Our success depends in part on user acquisition and retention and the effective monetization of our streaming platform. To attract and retain users, we must respond efficiently to changes in user tastes and preferences and offer our users access to the content they demand on terms that they accept. Effective monetization requires us to continue to update the features and functionality of our streaming platform for users, content partners, and advertisers. We also must effectively support popular sources of streaming content that are available on our platform. And we must respond rapidly to actual and anticipated market trends in the TV streaming industry.
Large companies such as Amazon, Apple, and Google offer TV streaming devices that compete with Roku streaming devices and those of our licensed Roku TV partners and the Roku TV OS. Google licenses its Android operating system software for integration into smart TVs, including those of certain of our existing TV partners, and service provider set-top boxes, and Amazon licenses its operating system software for integration into smart TVs and sells Amazon-branded smart TVs. We also face increased competition from Walmart (which makes and sells Onn. branded streaming products, including co-branded Roku TV models), in light of its acquisition of Vizio (which makes and sells smart TVs with a proprietary operating system) and the integration of Vizio’s operating system into Walmart products instead of other third-party proprietary operating systems. These companies have greater financial resources than we do and can subsidize the cost of their streaming devices or licensing arrangements to promote their other products and services, which could make it harder for us to acquire new users, retain existing users, increase Streaming Hours, and monetize our streaming platform. These competitors could also implement standards or technology that are not compatible with our products or that provide a better streaming experience and have greater resources to more aggressively promote their brands through advertising than we do.
In addition, we compete for Streaming Hours with many TV brands, including certain of our existing TV partners, that offer their own TV streaming solutions within their TVs, mobile streaming applications on smartphones and tablets, and other devices and platforms, such as game consoles with TV streaming functionality. Similarly, some service operators, such as Comcast and Charter Communications (and their joint venture, Xumo, LLC), offer TV streaming applications and devices as part of their cable service plans and can leverage their existing user bases, installation networks, broadband delivery networks, and name recognition to gain traction in TV streaming. If viewers of TV streaming content prefer alternative products to Roku streaming devices, we may not be able to achieve our expected growth in our key performance metrics.
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To remain competitive and maintain our position as a leading TV streaming platform, we need to continuously invest in our platform, product development, marketing, service and support, and device distribution infrastructure. In addition, evolving TV standards and unknown future developments may require further investments in the development of Roku streaming devices, our streaming platform, and our other products and services. We may not have sufficient resources to continue to make the investments needed to maintain our competitive position. In addition, some of our competitors have longer operating histories, greater name recognition, larger customer bases, and significantly greater financial, technical, sales, marketing, and other resources than us, which provide them with advantages in developing, marketing, or servicing new products and offerings. Our competitors also may enter into business combinations or partnerships that strengthen their competitive positions. As a result, they may be able to respond more quickly to market demand, devote greater resources to the development, promotion, sales, and distribution of their products or their content, and influence market acceptance of their products better than we can. These competitors may also be able to adapt more quickly to new or emerging technologies or standards and may be able to deliver products and services at a lower cost. Sustained competition could reduce our sales volume, revenue, gross profit, and operating margins, result in pricing pressure, increase our operating costs, harm our competitive position, and otherwise harm our business.
To enhance our users’ experience, we also offer other Roku-branded products, including projectors, smart home products and services, and audio products, and we face additional competition in these product categories. If these products do not operate as designed or do not enhance the Roku Experience as we intend, our users’ overall experience may be diminished, which may harm our competitive position and otherwise harm our business.
Our competitors offer content and other advertising mediums that may be more attractive to advertisers than our streaming platform.
We operate in a highly competitive advertising industry and compete for revenue from advertising with other streaming platforms and services, social media platforms, and other digital platforms, as well as traditional media, such as radio, broadcast, cable and satellite TV, and satellite and internet radio. These competitors offer content and other advertising mediums that may be more attractive to advertisers than our streaming platform. These competitors are often very large and have more advertising experience and financial resources than we do, which may adversely affect our ability to compete for advertisers and may result in lower revenue and gross profit from advertising. Many major SVOD services now have ad-supported SVOD tiers, which has further increased competition for streaming TV advertising revenue. These services, as well as AVOD and FAST services, sell advertising inventory in their ad-supported content that is distributed on our streaming platform. Our business and growth prospects may be harmed if we are unable to increase our revenue from advertising by, among other things, continuing to improve our streaming platform’s capabilities to further optimize and measure advertisers’ campaigns; continuing to increase our streaming platform’s reach; increasing, differentiating, and selling our advertising inventory, including video advertising inventory we sell in The Roku Channel, video advertising inventory that we acquire through our streaming services distribution agreements, and display ads included throughout the Roku Experience; innovating our ad product offerings; and maintaining a strong advertising sales team and programmatic capabilities. See also “—If we are unable to maintain an appropriate supply of quality video advertising inventory on our streaming platform or generate sufficient demand to effectively sell our available video advertising inventory, our business may be harmed.”
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If advertisers continue to devote a substantial portion of their advertising budgets to advertising in traditional media or on other digital platforms rather than on advertising on our streaming platform, the future growth of our business may be negatively impacted.
Many advertisers continue to devote a substantial portion of their advertising budgets to advertising in traditional media or on other digital platforms, such as traditional TV, radio, print publications, and social media. The future growth of our business depends on the growth of advertising on TV streaming platforms and on advertisers increasing their spending on advertising on our TV streaming platform. Although traditional TV advertisers have shown growing interest in advertising on TV streaming platforms, we cannot be certain that their interest will continue to increase or that they will not revert to traditional TV advertising or shift their advertising spending to social media and other digital platforms. In addition, if we are unable to compete with social media and other digital platforms to win business from advertisers and advertising agencies who have traditionally advertised on these platforms, such as direct-to-consumer and small or medium-sized businesses, our ability to grow our business may be limited. If advertisers, or their agency relationships, do not perceive meaningful benefits of advertising on TV streaming platforms, our business may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business.
Finally, there is political or regulatory pressure in some countries to limit streaming TV advertising (including limiting the advertising that may be associated with children’s content) or impose local content or prominence requirements on streaming TV services, which could pose a threat to our operating results and our ability to grow our business.
If we are unable to maintain an appropriate supply of quality video advertising inventory on our streaming platform or generate sufficient demand to effectively sell our available video advertising inventory, our business may be harmed.
Our business model depends on our ability to maintain an appropriate supply of video advertising inventory on our streaming platform and sell it to advertisers. While The Roku Channel has historically served as a valuable source of video advertising inventory for us to sell, there is no guarantee that it will continue to do so in the future. If The Roku Channel is unable to secure content that is appealing to our users and advertisers, or is unable to do so on terms that provide a sufficient supply of advertising inventory at reasonable cost, our supply of video advertising inventory will be negatively impacted. We are also dependent on our ability to monetize video advertising inventory within other ad-supported apps on our streaming platform and seek to sell such inventory from the content partners of such apps. We may fail to attract content partners that generate a sufficient quantity or quality of ad-supported content hours on our streaming platform or fail to obtain access to a sufficient supply of such advertising inventory from the publishers.
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Our access to video advertising inventory in ad-supported streaming apps on our streaming platform varies greatly among apps and the amount, quality, and cost of video advertising inventory available to us can change at any time. Accordingly, we may not have access to a significant portion of the video advertising inventory on our streaming platform. For certain apps, including YouTube, we have no access to video advertising inventory at this time, and we may not secure access in the future. Moreover, we have in the past been unable, and in the future may be unable, to obtain access to video advertising inventory on ad-supported tiers of SVOD services on mutually agreeable terms, or at all. If we cannot grow, maintain, and generate sufficient demand for an appropriate supply of quality video advertising inventory at reasonable costs to keep up with demand or sell such advertising inventory at our desired price, our business may be harmed.
If the advertising campaigns that run on our streaming platform decrease or are not relevant or not engaging to our users, our business may be harmed.
We have made, and are continuing to make, investments to engage with more advertisers and content partners, and enable them to deliver more relevant advertising campaigns to our viewers. Historically, a small number of advertisers and content partners have accounted for a significant portion of the spending on ads integrated into our UI, and we are making efforts to expand the number and categories of advertisers spending on these ads. If our advertisers and content partners decrease spending on ads integrated into our UI, or if our efforts to broaden the categories of advertisers spending on these ads are unsuccessful, our financial condition and operating results may suffer, and our business may be harmed. For example, consolidation among content partners has in the past resulted, and may in the future result, in decreased spending on ads integrated into our UI.
In addition, existing and prospective advertisers may not be successful in serving advertising campaigns that lead to and maintain viewer engagement. Those ads and campaigns may seem irrelevant, repetitive, or overly targeted and intrusive. For example, viewers may dislike the content and frequency of advertising that appears on the Roku Home Screen. We are continuously seeking to balance the objectives of our advertisers with our desire to provide an optimal viewer experience, but we may not be successful in achieving a balance that continues to attract and retain viewers, advertisers, and content partners. If the advertising campaigns that run on our streaming platform are not relevant, are overly intrusive or too frequent, or are an impediment to the use of our platform, our viewers may stop using our platform, resulting in a reduction of our user base and Streaming Hours, which will harm our business, financial condition, and operating results.
We are subject to various risks in connection with programmatic advertising.
Programmatic streaming TV ad buying is growing within the industry, and advertisers and advertising agencies can programmatically purchase and manage their streaming TV, desktop, and mobile advertising campaigns both off and on the Roku platform through third-party mechanisms (such as third-party DSPs and SSPs) and through our media buying channels. If we are unable to expand our programmatic demand by maintaining and developing third-party demand relationships in a way that is competitive with other advertising platforms, our business could be harmed. We also may not be able to adapt to changes or trends in programmatic streaming TV advertising, which would harm our ability to grow our Advertising revenue and harm our business.
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Furthermore, the programmatic advertising ecosystem is large, distributed, and complex, requiring us to integrate with several key third-party advertising partners. Our compliance with applicable laws and regulations therefore may depend in part on these partners’ commitment to handling user data with the care that we require or expect of them. Because integration of our respective systems is complex and rapidly evolving, we and our partners may be susceptible to breaches, failures, and other errors (whether inadvertent or intentional). We expect to encounter more of these challenges and issues as the number of partners we integrate with increases.
We may not be successful in our efforts to further monetize our expanding user base and streaming activity as we increase the amount of content offered and streamed across our platform, which may harm our business.
Our business model depends on our ability to generate Platform revenue from advertisers and content partners. We generate Advertising revenue from the sale of digital advertising (including direct and programmatic video advertising, ads integrated into our UI, and related services) and Subscriptions revenue primarily from the sale of subscriptions to end users (including subscription and transaction revenue shares from content partners, the sale of Premium Subscriptions, and the sale of owned and operated subscription services) and the sale of branded app buttons on remote controls. As such, we are seeking to expand our user base and increase Streaming Hours in an effort to create additional Platform revenue opportunities. As our user base grows and as we increase the amount of content offered and streamed across our platform, we must effectively monetize our expanding user base and streaming activity. The total number of Streaming Hours does not correlate with Platform revenue on a period-by-period basis, primarily because we do not monetize every hour streamed or every user on our platform. Moreover, Streaming Hours on our platform are measured whenever a Roku streaming device is streaming content, whether a viewer is actively watching or not. For example, if our streaming player is connected to a TV, and the viewer turns off the TV, steps away, or falls asleep without stopping or pausing the player, then a particular streaming app may continue to play content for a period of time determined by the streaming app. The Roku TV OS’s “Are you still watching?” feature, which prompts users to confirm they are still watching, does not resolve this lack of correlation.
Our ability to deliver advertisements relevant to our users and to increase our streaming platform’s value to advertisers and content partners depends on the collection of user engagement data, and the degree to which our users consent to, opt out of, or limit the collection or use of data for advertisements, including as a result of product changes and controls that we have implemented or may implement in the future related to new applicable laws, regulations, industry standards, regulatory actions, or litigation that impact our ability to use data for advertising purposes. Content partners may also refuse to allow us to collect data regarding user engagement or refuse to implement mechanisms we request to ensure compliance with our legal obligations or technical requirements. For example, we are not able to fully utilize program level viewing data from many of our most popular apps to improve the relevancy of advertisements provided to our users.
Certain apps available on our streaming platform are focused on increasing user engagement and time spent within their apps by allowing users to purchase additional content and streaming services within their apps. When users purchase these products and services in-app rather than from us, we may earn less revenue than when such products and services are purchased directly from us. Additionally, if our users spend most of their time within particular apps where we have limited or no ability to place advertisements or leverage user information, or our users opt out from our ability to collect data for use in providing more relevant advertisements, we may not be able to achieve our expected growth in Platform revenue, gross profit, or certain key performance metrics. Additionally, our distribution agreements with our most popular apps are renegotiated periodically, and changing commercial terms could affect our ability to monetize those apps.
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The monetization of our streaming platform may not continue to grow as we expect, and at times our Platform revenue growth has been, and may in the future be, lower than expected due to advertising inventory supply and demand imbalances; advertisers significantly curtailing or pausing advertising spending due to macroeconomic factors or other factors beyond our control; competitive pressures from video advertising offerings on other TV streaming platforms or services; the non-binding nature of advertisers’ spending commitments; fluctuations in streaming services subscription prices; or changes in consumer behaviors related to subscriptions for streaming services. To materially increase the monetization of our streaming platform through the sale of video advertising, we must generate significantly more advertising revenue on our streaming platform as well as deliver ad-supported content that results in our users streaming significantly more ad-supported content. We cannot assure you that we will be successful in monetizing our streaming platform through the distribution of ad-supported content.
We are subject to various risks in connection with the operation and monetization of our owned and operated streaming services.
We have three owned and operated streaming services: The Roku Channel, Howdy, and Frndly TV. We have incurred, and will continue to incur, costs and expenses in connection with the development, expansion, and operation of The Roku Channel, which we monetize primarily through advertising, and Howdy and Frndly TV, which we monetize primarily through subscription fees. From time to time, we may remove underperforming content from our owned and operated streaming services and record a charge related to such removal.
In order to attract users to our owned and operated streaming services, we must secure rights to stream content that is appealing to our users and advertisers. In part, we do this by directly licensing certain content from content owners, such as television and movie studios. Our agreements with these content owners have varying terms and provide us with rights to make specific content available during certain periods of time. Upon expiration of these agreements, we must re-negotiate and renew these agreements with the existing content owners, or enter into new agreements with other content owners, to obtain rights to distribute additional titles or to extend the duration of the rights previously granted. If we cannot enter into content license agreements to access content that enables us to attract and retain users to our owned and operated streaming services, or if the content we do secure rights to stream is ultimately not appealing to our users and advertisers, usage of our owned and operated streaming services may decline, and our business may be harmed. Further, even if we successfully monetize our owned and operated streaming services in the United States, we may not be successful in monetizing them in international markets. See also “—We may be unable to successfully expand our international operations, and our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business.”
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In addition, we produce original content for distribution on The Roku Channel and other platforms, but we may not succeed in doing so in a cost-effective manner that furthers the growth of The Roku Channel and increases its appeal to our users and advertisers. We also assume risks associated with content production, such as completion and key talent risks, and the risk of litigation and claims related to our content production.
Furthermore, if the advertisements on our ad-supported streaming services are not relevant to our users or are overly intrusive and impede our users’ enjoyment of the available content, our users may not stream content and view advertisements on our streaming services, and our streaming services may not generate sufficient revenue from advertising to be cost effective for us to operate. In addition, we distribute our streaming services on platforms other than our own streaming platform, and we may not be successful in attracting a large number of users or generating significant revenue from advertising or subscription fees on such other streaming platforms.
The sale of Premium Subscriptions on The Roku Channel also generates Subscription revenue and carries certain non-advertising related risks. See “—If our users sign up for offerings and services outside of our streaming platform or through other apps on our streaming platform, our business may be harmed.”
We depend on a small number of content partners for more than half of our Streaming Hours, and if we fail to maintain these relationships, our business could be harmed.
Historically, a small number of content partners have accounted for a significant portion of the hours streamed on our platform. In the three months ended September 30, 2026, the top three streaming services (excluding The Roku Channel) represented more than half of all hours streamed in the period. If, for any reason, we cease distributing apps that have historically streamed a large percentage of the aggregate Streaming Hours on our platform, our Streaming Hours, user base, or Roku streaming device sales may be adversely affected, and our business may be harmed.
If popular or new content publishers do not publish content on our streaming platform, we may fail to retain existing users and attract new users.
We must continuously maintain existing relationships and identify and establish new relationships with content publishers to provide popular streaming apps, streaming app features, and content on our platform. In order to remain competitive, we must consistently meet user demand for popular streaming apps, streaming app features, streaming app bundles, and content, particularly as we launch new streaming devices, introduce new TVs powered by the Roku TV OS, or enter new markets, including international markets. This may be challenging as the industry continues to evolve, including through consolidation of content publishers, joint ventures among content publishers, and licensing of content between content publishers. If we are not successful in helping our content publishers launch, maintain, and expand their streaming apps and streaming app features that attract and retain a significant number of users on our streaming platform or if we are not able to do so in a cost-effective manner, our business will be harmed. Our success in assisting our content publishers maintain and expand their app offerings on a cost-effective basis largely depends on our ability to effectively promote and market streaming apps, minimize launch delays or downtime of streaming apps, and minimize streaming platform downtime and other technical difficulties.
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In addition, if service operators, including traditional TV providers, refuse to grant our users access to stream certain apps or only make content available on devices they prefer, our ability to offer a broad selection of popular streaming apps or content may be limited, which could adversely affect our business.
The non-renewal or early termination of agreements with our content partners may result in the removal of certain apps or app features from our streaming platform and harm our streaming device sales, user base growth, engagement, and monetization.
Our agreements with content partners generally have terms of one to three years and can be terminated before the end of the term by the content partner under certain circumstances, including if we materially breach the agreement, become insolvent, enter bankruptcy, or commit fraud. Upon expiration of these agreements, we are required to re-negotiate and renew them in order to continue providing content from these content partners on our streaming platform. We have in the past been unable, and in the future may not be able, to reach a satisfactory agreement with certain content partners before our existing agreements have expired. If we are unable to renew such agreements on a timely basis on mutually agreeable terms, or if a content partner terminates an agreement with us before its expiration, we may be required to temporarily or permanently remove certain apps or app features from our streaming platform.
The loss of such apps or app features from our streaming platform for any period of time may harm our business. More broadly, if we fail to maintain our relationships with the content partners on terms favorable to us, or at all, or if these content partners face problems in delivering their content across our streaming platform, we may lose app partners or users, and our streaming device sales, user base growth, engagement, and platform monetization may be harmed.
If our content partners do not participate in new features that we may introduce from time to time or choose to develop their apps on alternative streaming platforms, our business may be harmed.
As our streaming platform and products evolve, we will continue to introduce new features, which may or may not be attractive to our content partners or meet their business or technical requirements. For example, some content partners have elected not to participate in new Roku Home Screen Menu features (such as “What to Watch”) or in our Roku Zones (collections of related content across our streaming platform) or have imposed limits on our data gathering for usage within their apps. See also “—We may not be successful in our efforts to further monetize our expanding user base and streaming activity as we increase the amount of content offered and streamed across our platform, which may harm our business.” In addition, our streaming platform utilizes our proprietary Brightscript scripting language to allow our content partners to develop and create apps on our streaming platform. Certain content partners may find other languages, such as HTML5, more attractive to develop for and shift their resources to developing their apps on other platforms. If key content partners do not find our streaming platform simple and attractive to develop apps for, do not value and participate in all of the features and functionality that our streaming platform offers, or determine that our software developer kit or new features of our platform do not meet their requirements, our business may be harmed.
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If our users sign up for offerings and services outside of our streaming platform or through other apps on our streaming platform, our business may be harmed.
We earn Subscriptions revenue by acquiring subscribers for certain of our content partners activated on or through our streaming platform, including Premium Subscriptions on The Roku Channel, which allow our users to pay for content from various content partners. If users reduce their use of our streaming platform for these purchases or subscriptions for any reason, including opting to pay for services directly with content partners or by other means for which we do not receive attribution, our business may be harmed.
In addition, certain apps available on our streaming platform allow users to purchase additional streaming services from within those apps. The revenue we earn from these transactions, if any, is not always equivalent to the revenue we earn from sales of such additional services on a stand-alone basis through our streaming platform. If users increase their spending on such in-app transactions at the expense of stand-alone purchases through our streaming platform, our business may be harmed.
Our growth depends in part on our ability to develop, maintain, and expand relationships with our licensed Roku TV partners and manufacturing partners.
We license the Roku TV OS and our smart TV reference designs to certain TV brand and manufacturing partners for the development, manufacture, and commercialization of licensed Roku TV models. For a number of years, the sale of Roku TV models by our licensed Roku TV partners has materially contributed to growth in our user base and Streaming Hours and supported our platform monetization efforts. As our Roku TV licensing program has expanded to certain markets outside the United States, international users are representing an increasing share of our user base. We have developed, and intend to continue to develop and expand, relationships with these TV brand and manufacturing partners as we continue to invest in the growth and expansion of our Roku TV program in both the United States and international markets. We typically do not receive or expect license revenue from these license arrangements but incur operating expenses to establish and support them. The economic benefits that we derive from these license arrangements are and will likely continue to be indirect-primarily, growing our user base, increasing Streaming Hours, and enabling us to generate more Platform revenue. If these arrangements do not continue to result in increased user base and Streaming Hours, and if that growth does not in turn lead to successfully monetizing that increased user activity, our business may be harmed. See also “—We may not be successful in our efforts to further monetize our expanding user base and streaming activity as we increase the amount of content offered and streamed across our platform, which may harm our business.”
The loss of a relationship with a licensed Roku TV partner (including as a result of our sales of Roku-made TVs that are designed, made, and sold by us) could harm our results of operations, damage our reputation, increase pricing and promotional pressures from other partners and retail distribution channels, increase our marketing costs, and result in the loss of revenue. If we are not successful in maintaining existing and creating new relationships with any of these licensed Roku TV partners, or if we encounter technological, content licensing, or other impediments to these relationships, our ability to grow or maintain our business could be adversely affected.
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Our Roku TV licensing arrangements are complex and time-consuming to negotiate and complete. Under these license arrangements, we generally have limited or no control over the amount and timing of resources our licensing partners may dedicate to the relationship. In the past, our licensed Roku TV partners have failed to meet their forecasts and anticipated market launch dates for distributing Roku TV models, and they may fail to do so in the future. If our licensed Roku TV partners fail to meet their forecasts or launch dates for distributing our streaming devices or choose to deploy competing streaming solutions within their product lines, our business may be harmed.
We and our licensed Roku TV partners depend on retail sales channels to effectively market and sell our respective products, and if we or our partners fail to maintain and expand effective retail sales channels, we or our partners could experience lower product sales.
To continue to grow our user base, we must maintain and expand retail sales channels for our products and for the Roku products sold by our partners or licensees. The majority of our products and our licensed Roku TV partners’ products are sold through brick and mortar retailers and their online sales platforms, as well as online-only retailers. We also sell certain products directly through our website and internationally through distributors and retailers. As we are still a relatively recent entrant in certain international markets, we may not have established a strong reputation or relationships with retailers for those markets as compared to our retail sales channels in the United States or our competitors in international markets. See also “—We may be unable to successfully expand our international operations, and our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business.”
Our retailers and distributors also sell products that compete with our products and our licensed Roku TV partners’ products, including house-branded televisions sold by such retailers that utilize TV operating systems other than the Roku TV OS. We have no minimum purchase commitments or long-term contracts with any of these retailers or distributors, and there can be no assurance that we will reach agreements with our retailers and distributors on terms we find acceptable or that will be consistent with our past practices.
We are reliant on certain retailers or distributors. Amazon, Best Buy, Target, and Walmart in total accounted for 84% and 73% of our Devices revenue for the three months ended September 30, 2026 and 2025, respectively. Furthermore, our licensed Roku TV partners may be reliant on the same or other retailers and distributors for a significant portion of their unit sales of Roku TV models. At times, certain retailers and distributors have reduced the number of our and our licensed Roku TV partners’ products available for sale, have chosen not to prominently display those products in their stores or on their websites, or have discontinued selling those products. Such actions have in the past decreased, and may in the future decrease, the volume of our or our licensed Roku TV partners’ products sold. These risks may be exacerbated by our reliance on certain retailers or distributors, or when a major retailer in a jurisdiction commercializes televisions under brands that the retailer controls.
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In addition, at times our existing licensed Roku TV partners have chosen to work exclusively with, or divert a significant portion of their business with us, to other operating system developers. This may adversely impact our ability to continue to license the Roku TV OS and our smart TV reference design to TV brands and to grow our user base and monetize the Roku TV OS. Traditional retailers have limited shelf and end cap space in their stores and limited promotional budgets, and online retailers have limited prime website product placement space. Competition is intense for these resources, and a competitor with more extensive product lines, stronger brand identity, and greater marketing resources, such as Amazon or Google, possesses greater bargaining power with retailers. In addition, our online retailers, which sell or may sell their own competitive streaming devices, smart TVs, and smart home devices, may market and promote their products more prominently on their websites, and could refuse to offer or promote our products on their websites. We also face increased competition with Walmart (which currently makes and sells Onn. branded streaming products, including co-branded Roku TV models), in light of Walmart’s acquisition of Vizio (which also makes and sells smart TVs with a proprietary operating system) and the integration of Vizio’s operating system into Walmart products instead of other third-party proprietary operating systems. See also “—If our efforts to build and maintain a strong brand and customer satisfaction and loyalty are not successful, we may not be able to attract or retain users, and our business may be harmed” and “—If we fail to differentiate our streaming platform and compete successfully with our competitors, it will be difficult for us to attract and retain users and our business will be adversely impacted.” Any reduction in our ability to place and promote our products, or increased competition for available shelf or website placement, could require us to increase our marketing or other expenditures to maintain our product visibility or could result in reduced visibility for our products, which may harm our business. In particular, the availability of product placement during peak retail periods, such as the holiday season, has in the past prevented, and may in the future prevent, us from effectively selling our products during these periods.
If our efforts to build and maintain a strong brand and customer satisfaction and loyalty are not successful, we may not be able to attract or retain users, and our business may be harmed.
Building and maintaining a strong brand is important to attract and retain users, as potential users have many TV streaming choices. Successfully building a brand is a time-consuming and comprehensive endeavor, and our brand may be negatively impacted by factors, some of which are beyond our control, such as the quality and reliability of the Roku TV models made by our licensed Roku TV partners and the quality of the content provided by our content partners. Our competitors may be able to achieve and maintain brand awareness and consumer demand for their products more quickly and effectively than we can. Many of our competitors are larger companies and may have greater resources to devote to the promotion of their brands through traditional advertising, digital advertising, or website product placement. See also “—If we fail to differentiate our streaming platform and compete successfully with our competitors, it will be difficult for us to attract and retain users and our business will be adversely impacted.” If we are unable to execute on building a strong brand, it may be difficult to differentiate our business and streaming platform from our competitors in the marketplace, which may adversely affect our ability to attract and retain users and harm our business.
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Our streaming platform allows our users to choose from a wide variety of apps, representing a variety of content from a wide range of content partners. While we have policies that prohibit the publication of content that is unlawful, incites illegal activities, or violates third-party rights, among other things, we may distribute apps that include controversial content. Controversies related to the content included on certain apps that we distribute have resulted in, and could in the future result in, negative publicity, cause harm to our reputation and brand, or subject us to claims and may harm our business.
If we or our licensed Roku TV partners encounter problems with contract manufacturers or fail to accurately forecast inventory needs, our business may be harmed.
We do not have any internal manufacturing capabilities and rely on a limited number of contract manufacturers to build our players, smart home products, and Roku-made TVs. Similarly, while some of our licensed Roku TV partners have internal manufacturing capabilities, others rely primarily or exclusively upon contract manufacturers to build the Roku TV models that our licensed Roku TV partners sell to retailers. If we or our Roku TV partners have difficulties with contract manufacturers, our business may be harmed.
Contract manufacturers are vulnerable to, among other issues: capacity constraints; reduced component availability; production, supply chain, or shipping disruptions, delays, or increased costs, including from labor disputes, strikes, mechanical issues, quality control issues, natural disasters, geopolitical conflicts, and public health crises; and the impact of existing and evolving U.S. or foreign tariffs, trade policies and regulations, or sanctions restrictions on components, finished goods, software, other products, or data transfers. As a result, we and our Roku TV partners have limited control over delivery schedules, manufacturing yields, and costs, particularly when components (such as memory chips) are in short supply or new products are introduced.
We and our Roku TV partners also have limited control over contract manufacturers’ quality systems and controls, and must rely on contract manufacturers to manufacture products to requisite quality and performance standards and specifications. Delays, component shortages, quality issues, and other manufacturing and supply problems in the past have impaired, and could in the future impair, the retail distribution of our products (including Roku TV models) and ultimately our brand. Any adverse change in contract manufacturers’ financial or business condition also could disrupt the supply of products to retailers and distributors.
We also rely on our contract manufacturers and other contractors to perform some of the development work on our products. The contract manufacturers or other contractors may be unwilling or unable to successfully complete desired development or fix defects or errors in a timely manner. Delays in development work by contract manufacturers or contractors could delay launch of new or improved products.
Our contracts with our contract manufacturers generally may not contain terms that protect us against development, manufacturing, inventory, and supply disruptions or risks. For example, such contracts may not obligate our contract manufacturers to supply our products in any specific quantity or at any specific price. If our contract manufacturers are unable to fulfill our production requirements in a timely manner, if their costs increase because of supply issues (such as a memory chip shortage), inflationary pressures, U.S. or international tariffs, sanctions, export or import restrictions, geopolitical conflicts, or if they decide to terminate their relationship with us, we may not be able to meet the demand for our products, we may have to increase our prices, our order fulfillment may be delayed or terminated, and we would have to attempt to identify, select, and qualify acceptable alternative contract manufacturers. Some of our contracts may require us to reimburse our contract manufacturers for any excess materials and components they purchase in advance in an effort to meet our projected needs or that were not used as a result of our decision to discontinue a certain model or the use of particular components. If we fail to accurately forecast our manufacturing requirements for our products and manage our inventory with our contract manufacturers, we could incur additional costs, experience manufacturing delays, and lose revenue.
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Alternative contract manufacturers may not be available when needed or may not be in a position to satisfy production requirements at commercially reasonable prices, to requisite quality and performance standards on a timely basis, or at all. Any significant interruption in contract manufacturing for any reason could require the reduction of the supply of products to retailers and distributors. Any of these circumstances could reduce our revenue, or cause us to incur higher costs than anticipated, which would negatively impact our Devices gross margin.
In addition, contract manufacturers’ facilities, and the facilities of contract manufacturers’ suppliers, are located in various geographic areas that may be subject to political, economic, labor, trade, public health, social, and legal uncertainties, including Brazil, China, Mexico, Taiwan, Thailand, and Vietnam, and such uncertainties may harm or disrupt our relationships with these parties or their ability to perform. For example, if the tensions between Taiwan and China escalate and impact the operations of contract manufacturers and their Taiwanese suppliers, our supply chain and our business could be adversely affected. We believe that the international location of these facilities increases supply risk, including the risk of supply interruptions, tariffs, and trade restrictions on exports or imports.
Our products incorporate key components from sole source suppliers, and if our contract manufacturers are unable to obtain sufficient quantities of these components on a timely basis, we will not be able to deliver our products to our retailers and distributors.
We depend on sole source suppliers for key components in our products. For example, each of our streaming players and TVs powered by the Roku TV OS may utilize a specific system on chip (or SoC), Wi-Fi silicon product, and Wi-Fi front-end module, each of which may be available from only a single manufacturer and for which we do not have a second source.
Although this approach allows us to maximize product performance on lower cost hardware, reduce engineering development and qualification costs, and develop stronger relationships with our strategic suppliers, this also creates supply chain and pricing risks. These sole-source suppliers could be constrained by fabrication capacity issues or material supply issues, such as U.S. or foreign tariffs, war or other government or trade relations issues, other export or import restrictions, as well as any retaliatory actions, on parts or components for finished products that are used in final assembly of their components (or on the finished products themselves), or shortages of key components.
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In addition, a strategic supplier may stop producing such components, cease operations, be acquired by or enter into exclusive arrangements with our competitors or other companies, put contract manufacturers on allocation because of component shortages, decide to allocate manufacturing resources to other products (such as memory chips), or become subject to U.S. or foreign sanctions or export control restrictions or penalties. Such suppliers have experienced, and may in the future experience, production, shipping, or logistical constraints arising from macroeconomic conditions or other circumstances, such as inflationary pressures, geopolitical conflicts, and supply chain disruptions. Such interruptions and delays have in the past and may in the future force us to seek similar components from alternative sources, which may not always be available, and which may cause us to delay product introductions and incur air freight expense. Switching from a sole-source supplier may require that we adapt our software and redesign our products to accommodate new chips and components, and may require us to re-qualify our products with regulatory bodies, such as the U.S. Federal Communications Commission (“FCC”), which would be costly and time-consuming. Any interruption in the supply of sole-source components for our products could adversely affect our ability to meet scheduled product deliveries to our retailers and distributors, result in lost sales and higher expenses, and harm our business.
If our products do not operate effectively with various offerings, technologies, and systems from content partners and other third parties that we do not control, our business may be harmed.
The Roku TV OS is designed to perform using relatively low-cost hardware, which enables us to drive user growth via Roku streaming devices offered at a low cost to users. However, this hardware must be interoperable with all apps and other offerings, technologies, and systems from our content partners, including virtual multi-channel video programming distributors, and other third parties. We have no control over these offerings, technologies, and systems beyond our app certification requirements, and if Roku streaming devices do not provide our users with a high-quality experience on those offerings on a cost-effective basis or if changes are made to those offerings that are not compatible with Roku streaming devices, we may be unable to increase user base growth and user engagement or may be required to increase our hardware costs, and our business will be harmed.
We plan to continue to introduce new products regularly, including, for example, the new Roku streaming devices and product enhancements we announced in 2026, and we have experienced that it takes time to optimize such products to function well with these offerings, technologies and systems. In addition, many of our largest content partners have the right to test and certify our new products before we can publish their apps. The certification processes can be time-consuming and introduce third-party dependencies into our product release cycles. If our content partners do not certify new products on a timely basis or require us to make changes in order to obtain certifications, our product release plans may be adversely impacted, we may not be able to offer certain products to all licensed Roku TV partners or we may not continue to offer certain apps. To continue to grow our user base and user engagement, we will need to prioritize development of Roku streaming devices to work better with new offerings, technologies, and systems. If we are unable to maintain consistent operability of Roku streaming devices that is on parity with or better than other platforms, our business could be harmed.
In addition, any future changes to offerings, technologies, and systems from our content partners may impact the accessibility, speed, functionality, and other performance aspects of Roku streaming devices. We may not successfully develop Roku streaming devices that operate effectively with these offerings, technologies, or systems. If it becomes more difficult for our users to access and use these offerings, technologies, or systems, our business could be harmed.
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Our products are complex and may contain hardware defects and software errors, which could manifest themselves in ways that could harm our reputation and our business.
Our products and the products of our licensed Roku TV partners are complex and have in the past contained, and may in the future contain, hardware defects or software errors. These defects and errors can manifest themselves in any number of ways in our products or our streaming platform, including through diminished performance, security vulnerabilities, data loss or poor quality, device malfunctions, account inactivity, or even permanently disabled products. Some errors may only be discovered after a product has been shipped and used by users and may in some cases only be detected under certain circumstances or after extended use. We update our software on a regular basis, and, despite our quality assurance processes, we have in the past introduced, and may in the future introduce, software errors in the process of any such updates.
The introduction of a serious software error could result in products becoming permanently disabled. We offer a limited warranty for our products, in accordance with applicable law, however, providing software updates, product support, and other activities could cause us to be responsible for issues with products for an extended period of time. Any defects discovered in our products after commercial release could result in loss of revenue or delay in revenue recognition, loss of customer goodwill and users, and increased service costs, any of which could harm our business, operating results, and financial condition. We could also face claims for product or information liability, tort or breach of warranty, or other violations of laws or regulations. In addition, our contracts with our end users contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld. Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of Roku and our products. In addition, if our insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business could be harmed.
Components used in our products may fail as a result of manufacturing, design, or other defects that were unknown to us or over which we have no control and may render our products permanently inoperable.
We rely on third-party component suppliers to provide certain functionalities needed for the operation and use of our products. Any errors or defects in such third-party technology could result in errors or defects in our products that could harm our business. If these components have a manufacturing, design, or other defect, they could cause our products to fail and could render them permanently inoperable. For example, the typical means by which our users connect their home networks to our players is by way of a Wi-Fi access point in the home network router. If the Wi-Fi receiver or transmitter in a player fails and cannot detect a home network’s Wi-Fi access point, the player will not be able to display or deliver any content to the TV screen. As a result, we may have to recall and replace defective products, which could be at a considerable expense. In addition, if our insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business could be harmed. Should we have a widespread problem of this kind, our reputation in the market could also be adversely affected.
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If we are unable to obtain or maintain necessary or desirable licenses, certifications, or approvals related to our use or support of third-party technology, intellectual property, or services then our ability to develop and introduce new products and services, and continue to manufacture, update, and commercialize existing products and services, may be impaired.
We use or enable in our products and services certain industry standard and other technology, intellectual property, and services that are obtained from third parties. In order to continue to make, distribute, update, and commercialize existing products and services and introduce and commercialize new products and services that use a third-party technology, we may be required to maintain certain licenses, certifications, and approvals from the relevant third parties. The licenses, certifications, and approvals we need to obtain may be or become unavailable to us on commercially reasonable terms, if at all. If we are unable to obtain or maintain necessary third-party licenses, certifications, or approvals, we may have to obtain substitute technologies, intellectual property, or services with lower quality or performance standards, or at a greater cost, or remove desired functions and features from our products and services, any of which could harm customer and partner relationships, as well as the competitiveness of our products, services, and business.
Our products and services are designed to be compatible with numerous industry standards. In many cases, these industry standards have numerous associated patents known generally as standard essential patents (“SEPs”). Traditionally, SEP patents have been licensed through large patent pools allowing licensees, such as Roku, to take a single license for the majority or even all of the patents relevant to a particular technology. Over time, this model has shifted to smaller pools and individual licensors, increasing the time, cost, and difficulty of SEP licensing. If we are unable to obtain a license to a necessary SEP on commercially reasonable terms, or at all, or find a suitable substitute technology that complies with the industry standard, our customer and partner relationships, as well as the competitiveness of our products and services, and our business may be harmed. See also “—We must continue to innovate and develop new and existing products and services to remain competitive, and new products and services expose our business to new risks.”
We must continue to innovate and develop new and existing products and services to remain competitive, and new products and services expose our business to new risks.
We must continually innovate and improve our products and services and develop new products and services to meet changing consumer demands. The introduction of a new product or service is a complex process, involving significant expenditures in research and development, promotion, and sales channel development, and can expose our business to new risks. For example, in 2025, we acquired Frndly TV and launched Howdy, both of which are owned and operated subscription streaming services. The introduction of new products and services or changes to our existing products and services may require us to comply with new laws and regulations and result in new or enhanced governmental or regulatory scrutiny, new litigation or claims, or other complications that could adversely affect our business, reputation, or financial results. In addition, our entrance into entirely new lines of business beyond our historical core business of TV streaming and advertising, such as our smart home products, may change our risk profile and subject us to risks that differ from the risks we face as a result of our historical TV streaming business.
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Whether users will broadly adopt our new products or services is not certain. Our future success will depend on our ability to develop new and competitively priced products and services and add new desirable content and features to our streaming platform. Moreover, we must introduce new products and services in a timely and cost-effective manner, and we must secure production orders for new products from our contract manufacturers. See also “—If popular or new content publishers do not publish content on our streaming platform, we may fail to retain existing users and attract new users.”
The successful development and introduction of new products and services depends on a number of factors, including:
| • | the accuracy of our forecasts for market requirements beyond near-term visibility; |
| • | our ability to anticipate and react to new technologies and evolving consumer trends; |
| • | our development, licensing, or acquisition of new technologies; |
| • | our timely completion of new designs and development; |
| • | our ability to timely and adequately redesign or resolve design or manufacturing or security issues; |
| • | our ability to identify and contract with appropriate manufacturers; |
| • | the ability of our contract manufacturers to cost-effectively manufacture our products, produce quality products, and minimize defects, manufacturing mishaps, shipping costs, and delays; |
| • | the availability of materials and key components used in manufacturing; |
| • | tariffs, trade, sanctions, and export restrictions by the U.S. or foreign governments; |
| • | our ability to comply with regulatory requirements; and |
| • | our ability to attract and retain high quality research and development personnel. |
If any of these or other factors materializes, we may not be able to develop and introduce new products or services in a timely or cost-effective manner, and our business may be harmed. We do not expect that all of our new products and services will be successful.
We are using AI technologies in our operations, products, and services, which may present operational, legal, and reputational risks.
We have incorporated and intend to continue to incorporate AI technologies, such as machine learning and generative AI, into our operations, products, and services. For example, we use AI technologies to power our content recommendation engine and our content row on the Roku Home Screen to provide more personalized recommendations. We also use AI technologies to improve measurement and performance in Roku Ads Manager and drive internal operational productivity and efficiency.
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As with many innovations, AI presents risks and challenges that could adversely impact our business. AI technologies may create errors, inaccuracies, unintended biases, and discriminatory outcomes, or may create content that appears correct but is inaccurate or flawed. If the recommendations, content, or analyses that AI applications produce are or are alleged to be deficient or inaccurate, we could be subjected to competitive harm, legal liability, regulatory action, or reputational harm. The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection. For example, there is uncertainty around the validity and enforceability of intellectual property rights related to the use, development, and deployment of AI technologies in many jurisdictions. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit our ability to develop or deploy AI technologies in our products or services. See also “—If government regulations or laws relating to the internet, video, advertising, or other areas of our business change, we may need to alter the manner in which we conduct our business, or our business could be harmed.” There can be no assurance that the measures we have taken to mitigate the potential risks related to AI technologies will be sufficient. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.
If we fail to provide adequate levels of quality customer support, we could lose users, advertisers, content partners, and licensed Roku TV partners, which could harm our business.
A high level of support is critical for the success of our business, and our users depend on this support to resolve issues relating to our products and our streaming platform. We currently outsource the majority of our customer support operation to a third-party customer support organization which provides support to end users and licensees. If we do not effectively train, update, and manage our third-party customer support organization to assist our users and licensees, and if that support organization does not succeed in helping them quickly resolve issues or provide effective ongoing support, it could adversely affect our ability to monetize our streaming platform, to sell our products to users and could harm our reputation with potential new customers and our licensees.
Risks Related to Operating and Growing Our Business
We have incurred operating losses in the past, may incur operating losses in the future, and may not be able to maintain profitability.
We have incurred operating losses in the past, and we may incur operating losses in the future. Although we achieved profitability in certain quarters, we may not be able to maintain profitability in the future. As of September 30, 2026, we had an accumulated deficit of $1,218.0 million. Our operating expenses have increased in the past and may increase again in the future as we expand our operations and invest in growth and new areas. If our revenue and gross profit do not grow at a greater rate than our operating expenses, we may not be able to maintain profitability in the future. We expect our profitability to fluctuate in the future for a number of reasons, including without limitation the other risks and uncertainties described herein. We may also encounter unforeseen operating or legal expenses, difficulties, complications, delays, and other factors that may result in losses in future periods.
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Our quarterly operating results may be volatile and are difficult to predict, and our stock price may decline if we fail to meet the expectations of securities analysts or investors.
Our revenue, gross profit, key performance metrics, and other operating results could vary significantly from quarter-to-quarter and year-to-year and may fail to match our past performance due to a variety of factors, including many factors that are outside of our control. Factors that may contribute to the variability of our operating results include:
| • | the entrance of new competitors or competitive products or services; |
| • | our ability to retain and grow our user base, increase engagement among new and existing users, and monetize our streaming platform; |
| • | our ability to maintain effective pricing practices in response to competitive market conditions or other macroeconomic factors, such as increased or changing taxes, inflation, or tariffs, and our ability to control costs, including our operating expenses; |
| • | our revenue mix, which drives gross profit; |
| • | supply of advertising inventory on our platform and advertiser demand for such inventory; |
| • | seasonal, cyclical, or other shifts in revenue from advertising or product sales; |
| • | the timing of the launch of new or updated products, apps, or features; |
| • | the addition or removal of content or apps from our streaming platform; |
| • | the expense and availability of content to license or produce for our owned and operated streaming services; |
| • | the ability of retailers to anticipate consumer demand; |
| • | an increase in the cost of manufacturing or components (such as memory chips) of our products or partner-branded products; |
| • | delays in delivery of our products or partner-branded products, or disruptions in our or our partners’ supply or distribution chains; and |
| • | an increase in legal costs, including costs associated with protecting our intellectual property, defending against intellectual property infringement allegations, or procuring rights to intellectual property. |
Our gross margins vary across our devices and platform offerings. In particular, gross margins on our streaming devices vary across models and can change over time as a result of product transitions, pricing and configuration changes, component costs, device returns, and other cost fluctuations (including due to the impact of tariffs or other trade restrictions). Gross margins for our segments have been negative in the past and may be negative in the future. Although our Advertising and Subscription segments had positive gross margins for the three and nine months ended September 30, 2026, our Devices gross margins were negative for the three and nine months ended September 30, 2026.
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In addition, our gross margin and operating margin percentages, as well as overall profitability, may be adversely affected as a result of a shift in device, geographic, or retail sales channel mix, component cost increases, price competition, or the introduction of new products, including those that have higher cost structures with flat or reduced pricing. We have in the past and may in the future strategically reduce our Devices gross margin or record negative gross margin on devices in an effort to grow our user base and gross profit.
As a result, our Devices segment revenue may not increase as rapidly as it has in the past, or at all, and, unless we are able to continue to increase our Platform revenue and grow our user base, we may be unable to grow gross profit and our business will be harmed. For example, from time to time, global supply chain disruptions have resulted in shipping delays, increased shipping costs, component shortages (such as the memory chip shortage), and increases in component prices, which negatively affected our Devices gross margin. If a reduction in Devices gross margin does not result in an increase in our user base or an increase in our Platform revenue and gross profit, our financial results may suffer, and our business may be harmed. In addition, our Advertising and Subscription segments have experienced in the past, and may experience in the future, lower gross margins than we anticipate. If our Advertising and Subscription gross margins are lower than we anticipate, our financial results may suffer, and our business may be harmed.
If we have difficulty managing our growth in operating expenses, our business could be harmed.
From time to time, we have experienced significant growth in our research and development, sales and marketing, support services, operations, and general and administrative functions, and we may expand certain of these activities in the future. Our historical growth has placed, and any future growth will continue to place, significant demands on our management, as well as our financial and operational resources, to:
| • | manage a larger organization; |
| • | hire more employees, including engineers with relevant skills and experience; |
| • | expand internationally; |
| • | increase our sales and marketing efforts; |
| • | expand the capacity to manufacture and distribute our products; |
| • | broaden our customer support capabilities; |
| • | expand our product offerings; |
| • | support our licensed Roku TV partners; |
| • | expand and improve the content offering on our streaming platform; |
| • | implement appropriate operational and financial systems; and |
| • | maintain effective financial disclosure controls and procedures. |
If we fail to manage our growth effectively, including if we grow our business too rapidly, we may not be able to execute our business strategies, which could harm our business and adversely affect our financial condition, results of operations, or cash flows.
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We have previously undertaken restructuring plans to adjust our investment priorities and manage our operating expenses, and we may do so again in the future. We have incurred, and may in the future incur, material costs and charges in connection with restructuring plans and initiatives, and there can be no assurance that any restructuring plans and initiatives will be successful. Any restructuring plans may adversely affect our internal programs and our ability to recruit and retain skilled and motivated personnel, may result in a loss of continuity, loss of accumulated knowledge, or inefficiency during transitional periods, may require a significant amount of employees’ time and focus, and may be distracting to employees, which may divert attention from operating and growing our business.
If we fail to achieve some or all of the expected benefits of any restructuring plans or are unable to manage our growth and expansion plans effectively, which may be affected by factors outside of our control, our business, operating results, and financial condition could be adversely affected.
We may be unable to successfully expand our international operations, and our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business.
We currently generate the vast majority of our revenue in the United States and have limited experience marketing, selling, licensing, and supporting our products and running or monetizing our streaming platform outside the United States. In addition, we have limited experience managing the administrative aspects of a global organization. While we intend to continue to explore opportunities to expand our business in international markets in which we see compelling opportunities, we may not be able to create or maintain international market demand for our products and streaming platform services. Moreover, we face intense competition in international markets, especially because some of our competitors have already successfully introduced their products into new markets we are entering and have greater resources and experience managing a global organization.
In the course of expanding our international operations, we are subject to a variety of risks that could adversely affect our business, including:
| • | differing and evolving legal and regulatory requirements in foreign jurisdictions, including laws and regulations pertaining to data privacy and security, consumer protection, tax, telecommunications, trade (including tariffs, quotas, and sanctions), labor, environmental protection, censorship and other content restrictions, AI technologies, intellectual property, and local content and advertising requirements, among others; |
| • | exposure to increased corruption risk and compliance with laws such as the U.S. Foreign Corrupt Practices Act, UK Bribery Act, and other anti-corruption laws, U.S. or foreign export controls and sanctions, and local laws requiring the maintenance of accurate books and records and a system of sufficient internal controls; |
| • | slower consumer adoption and acceptance of streaming devices and services in other countries; |
| • | different or unique competitive pressures, including as a result of competition with other devices that consumers may use to stream TV or existing local traditional TV services and products, including those provided by incumbent TV service providers and local consumer electronics companies; |
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| • | greater difficulty supporting and localizing Roku streaming devices and our streaming platform, including delivering support and training documentation in languages other than English; |
| • | our ability to deliver or provide access to popular streaming apps or content to users in certain international markets; |
| • | availability of reliable broadband connectivity in areas targeted for expansion; |
| • | challenges and costs associated with staffing and managing foreign operations; |
| • | differing legal and court systems, including limited or unfavorable intellectual property protection; |
| • | unstable political and economic conditions, social unrest, or economic instability, including due to pandemics, natural disasters, wars, terrorist activity, foreign invasions, tariffs, trade disputes, local or global recessions, diplomatic or economic tensions (such as the tension between China and Taiwan and the conflicts in the Middle East), long-term environmental risks, or climate change; |
| • | adverse tax consequences, such as those related to changes in tax laws (including increased tax rates, the imposition of digital services taxes, and the adoption of global corporate minimum taxes and anti-base-erosion rules), changes in the interpretation of existing tax laws, and the heightened scrutiny by tax administrators of companies that have cross-border business activities; |
| • | the imposition of customs duties on cross-border data flows for streaming services, such as in the event that the World Trade Organization (“WTO”) fails to extend the current moratorium on such duties or the moratorium is applied only among WTO member states that support a new e-commerce agreement; |
| • | inflationary pressures, which may increase costs for materials, supplies, and services; |
| • | fluctuations in currency exchange rates, which could impact the revenue and expenses of our international operations and expose us to foreign currency exchange rate risk |
| • | restrictions on the repatriation of earnings from certain jurisdictions; and |
| • | working capital constraints. |
In addition, we may face challenges in successfully deploying our business model-scale, engagement, and monetization-in international markets. Even if we successfully grow our user base in international markets, we may be unable to effectively grow our Streaming Hours or monetize user activity in those markets. If we invest substantial time and resources into international expansion and fail to achieve a timely return on that investment, our business and financial condition may be harmed.
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Our revenue and gross profit are subject to seasonality and other potential fluctuations, and if our sales during the affected periods fall below our expectations, our business may be harmed.
Seasonality and certain one-time events significantly affect our business. For example, our revenue and gross profit are traditionally strongest in the fourth quarter of each fiscal year due to higher consumer purchases and increased advertising during holiday seasons. Furthermore, in preparation for the fourth quarter holiday season, we recognize significant discounts in the average selling prices of our products through retailers in an effort to grow our user base, which typically reduce our Devices gross margin in the fourth quarter. From time to time, our sales and marketing expenses may fluctuate or be weighted towards part of the year. Additionally, certain other events have in the past, and may in the future, impact the amount of advertising spending on our platform.
Given the seasonal and often irregular nature of advertising and our product sales, as well as other potential fluctuations, accurate forecasting is critical to our operations. We anticipate that such impact on revenue and gross profit is likely to continue, and any shortfall in expected fourth quarter revenue due to a decline in the effectiveness of our promotional activities, actions by our competitors, reductions in consumer discretionary spending, curtailed advertising spending, disruptions in our supply or distribution chains, tariffs or other restrictions on trade, increased shipping costs, shipping or air freight delays, or for any other reason, would cause our full year results of operations to suffer significantly. For example, delays or disruptions at U.S. ports of entry have in the past, and may in the future, adversely affect our or our licensed Roku TV partners’ ability to timely deliver products to retailers during holiday seasons.
A substantial portion of our expenses are personnel-related (including salaries, stock-based compensation, and benefits) and facilities-related, none of which are seasonal in nature. Accordingly, in the event of a revenue shortfall, we would be unable to mitigate the negative impact on gross profit and operating margins, at least in the short term, and our business would be harmed.
If we fail to attract and retain key personnel or hire, develop, and motivate our employees, we may not be able to execute our business strategy or continue to grow our business.
Our success depends in large part on our ability to attract and retain key personnel in our engineering, research and development, sales and marketing, operations, and other organizations. We do not have long-term employment or non-competition agreements with any of our key personnel. The loss of one or more of our key personnel or the inability to promptly identify a suitable successor to a key role could have an adverse effect on our business.
Our ability to compete and grow depends in large part on the efforts and talents of our employees. Labor is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation, workforce participation rates, immigration policies, and unstable political conditions. Our employees, particularly engineers and other product developers, are in demand, and we devote significant resources to identifying, hiring, training, successfully integrating, and retaining these employees. To attract top talent, we generally offer competitive compensation packages before we can validate the productivity of those employees. In addition, some companies offer a remote or hybrid work environment, which may increase the competition for employees from employers outside of our traditional office locations. To retain employees, we have in the past and may in the future need to increase our employee compensation levels or other benefits in response to competition and other business and macroeconomic factors. The loss of employees or the inability to hire additional skilled employees necessary to support our growth could result in significant disruptions to our business, and the integration of replacement personnel could be time-consuming and expensive and cause disruptions.
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We believe a critical component to our success and our ability to retain our best people is our culture. As we continue to grow, we may find it difficult to maintain our entrepreneurial, execution-focused culture. In addition, past or any additional workforce reductions could harm employee morale and negatively impact employee recruiting and retention.
We need to maintain operational and financial systems that can support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition, and any inability or failure to do so could adversely affect our financial reporting, billing, and payment services.
We have a complex business that is growing in size and complexity both in the United States and in international jurisdictions. To manage our growth and our increasingly complex business operations, especially as we move into new markets internationally or acquire new businesses, we will need to maintain and may need to upgrade our operational and financial systems and procedures, which requires management time and may result in significant additional expense. Our business arrangements with our content partners, advertisers, licensed Roku TV partners, and other licensees, and the rules that govern revenue and expense recognition in our business, are increasingly complex.
To manage the expected growth of our operations and increasing complexity, we must maintain operational and financial systems, procedures, and controls and continue to increase systems automation to reduce reliance on manual operations. An inability to do so will negatively affect our financial reporting, billing, and payment services. Our current and planned systems, procedures, and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our users, content partners, advertisers, advertisement agencies, licensed Roku TV partners, or other licensees; cause harm to our reputation and brand; and result in errors in our financial and other reporting.
We may pursue acquisitions and other strategic transactions involving a number of risks, which could harm our business if not successfully addressed.
We have acquired, and may in the future acquire, businesses, products, technologies, or other assets to expand our offerings and capabilities, user base, and business. For example, in May 2025, we acquired Frndly TV, a subscription streaming service that offers live TV, on-demand video and cloud-based DVR, to support our focus on growing Platform revenue and Roku-billed subscriptions. We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions, including acquisitions; however, these acquisitions and other strategic transactions may not ultimately be successful. Certain acquisitions and other strategic transactions could be material to our financial condition and results of operations, and any anticipated benefits from an acquisition or other strategic transaction may never materialize.
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Acquisitions and other strategic transactions may require the expenditure of cash, dilutive issuances of equity securities, or the incurrence of debt, which could adversely affect our operating results, and result in unfavorable accounting treatment. In addition, acquisitions have in the past, and may in the future, expose us to claims and disputes by third parties, including intellectual property claims. Acquisitions and other strategic transactions may not generate sufficient financial returns to offset related costs and expenses.
In addition, the process of integrating acquired businesses, products, or technologies has created, and may in the future create, unforeseen operating difficulties and expenditures, in particular when the acquired businesses, products, or technologies involve areas of operation in which we have limited or no prior experience. Acquisitions of businesses, products, or technologies in international markets would involve additional risks, including those related to integration of operations across different cultures and languages, currency risks, and the particular economic, political, and regulatory risks associated with specific countries. We may not be able to address these risks successfully, or at all, without incurring significant costs, delays, or other operational problems, and if we were unable to address such risks successfully, our business could be harmed.
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We may require additional capital to meet our financial obligations and support planned business growth, and this capital might not be available on acceptable terms or at all.
We intend to continue to make significant investments to support planned business growth and may require additional funds to respond to business challenges, including the need to develop new products and enhance our streaming platform, continue to expand the content on our platform, maintain adequate levels of inventory to support our retail partners’ demand requirements, improve our operating infrastructure, or acquire complementary businesses, personnel, and technologies. Our primary uses of cash include operating costs such as personnel-related expenses and capital spending. Our future capital requirements may vary materially from those currently planned and will depend on many factors including our growth rate and the continuing market acceptance of our products and streaming platform, along with the timing and effort related to the introduction of new platform features, products, the hiring of experienced personnel, the expansion of sales and marketing activities, as well as overall economic conditions.
We may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our then existing stockholders could suffer significant dilution. Any debt financing we secure could involve additional restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we were to violate such restrictive covenants, we could incur penalties, increased expenses, and an acceleration of the payment terms of our outstanding debt, which could in turn harm our business.
Any future credit agreements we may enter into could require a lien on our assets or contain financial covenants and other restrictions that may limit our operational flexibility or otherwise adversely affect our financial condition. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.
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Our liquidity and financial performance could be adversely affected by uninsured cash deposits.
We maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks that exceed the FDIC insurance limits. We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or similar agencies. Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints. For example, in 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.
Macroeconomic uncertainties can adversely impact our business, results of operations, and financial condition.
Macroeconomic uncertainties, such as volatility in financial markets, higher inflation and interest rates, potential economic slowdown or recession, geopolitical developments, changes in economic or government policies (including the unknown impact of tariffs and status of potential tariff refunds), and global supply chain constraints (including scarcity or increased prices of components (including memory chips) or increased shipping costs) have in the past adversely affected, and may in the future adversely affect, our business, results of operations, and financial condition.
Tariffs and other trade barriers or restrictions could increase our costs, as well as the costs of our contract manufacturers and our licensed Roku TV partners, and decrease our Devices gross margins. See also “—Changes in U.S. or foreign trade policies, geopolitical conditions, general economic conditions, and other factors beyond our control may adversely impact our business and operating results.” Our business is dependent on consumer discretionary spending and advertising spending, both of which are susceptible to changes in macroeconomic conditions and uncertainties. Sustained inflation, an economic downturn, the impact of tariffs, or even the public perception that changes to the cost of buying goods are imminent or could occur in the future, have in the past resulted, and may in the future result in fewer consumer purchases of our products or the products of our licensed Roku TV partners and reduced advertising spending. At times, advertising budgets in a variety of industries have been pressured by factors such as inflation, rising interest rates, and market uncertainty, which has led to reduced advertiser spending and adversely affected our Platform revenue. Any pullback in consumer discretionary spending or advertising spending could adversely affect our future operating results.
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The extent to which macroeconomic uncertainties may impact our operational and financial performance is largely uncertain and will depend on many factors outside our control. These direct and indirect impacts may negatively affect our business and operating results.
Natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events could disrupt and impact our business.
Occurrence of any catastrophic event, including an earthquake, flood, tsunami, or other weather event, power loss, internet failure, software or hardware malfunctions, cybersecurity attack, war or foreign invasion (such as the Russian invasion of Ukraine and the conflicts in the Middle East), terrorist attack and other geopolitical conflicts (such as Yemen’s Houthi attacks in the Red Sea, or potential retaliatory actions from foreign governments in response to the current U.S. Administration’s actions), medical epidemic or pandemic (such as the COVID-19 pandemic), government shutdown orders, other man-made disasters, or other catastrophic events could disrupt our, our business partners’ and customers’ business operations or result in disruptions in the broader global economic environment. Any of these business disruptions could require substantial expenditures and recovery time in order to fully resume operations.
In particular, the ongoing conflict in the Middle East involving Iran and other actors has resulted in significant disruptions to international shipping routes and energy markets. These developments have led to, and may continue to result in, increased freight and operating costs, as well as price volatility for components for our and our licensed Roku TV partners’ products. Continued instability in the region could further strain our supply chain and impact our margins and results of operations.
Additionally, our principal offices are located in California, and our contract manufacturers and some of our suppliers are located in Asia, both of which are regions known for seismic activity, making our operations in these areas vulnerable to natural disasters or other business disruptions in these areas. Our insurance coverage may not compensate us for losses that may occur in the event of an earthquake or other significant natural disaster. For example, a recent earthquake damaged equipment in our Taiwan office, and the losses, while relatively minor, were not covered by our insurance.
Our offices and facilities, and those of our contract manufacturers, suppliers, and licensed Roku TV partners, could be vulnerable to the effects of climate change (such as sea level rise, drought, flooding, wildfires, and increased storm severity) that could disrupt our business operations. For example, in California, increasing intensity of drought and annual periods of wildfire danger increase the probability of planned power outages. Further, acts of terrorism could cause disruptions to the internet or the economy as a whole.
If our streaming platform were to fail or be negatively affected as a result of a natural disaster or other event, our ability to deliver streaming content, including advertising, to our users would be impaired. Disruptions in the operations of our contract manufacturers, suppliers, or licensed Roku TV partners as a result of a disaster or other catastrophic event could delay the manufacture and shipment of our products or the products of our licensed Roku TV partners, which could impact our business. If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a natural disaster or other catastrophic event and to execute successfully on those plans in the event of a disaster or catastrophic event, our business would be harmed.
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Risks Related to Cybersecurity, Reliability, and Data Privacy
Data security incidents, including cybersecurity attacks, or other significant disruptions of our information technology systems could harm our reputation, cause us to modify our business practices, and otherwise adversely affect our business and subject us to liability.
We depend on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, store, process, and transmit large amounts of sensitive corporate, personal, and other information, including intellectual property, proprietary business information, user payment information, user video and audio recordings, other user information, employee information, and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity, and availability of such information. Our obligations under applicable laws, regulations, contracts, industry standards, self-certifications, and other documentation may include maintaining the confidentiality, integrity, and availability of personal information in our possession or control, maintaining reasonable and appropriate security safeguards as part of an information security program, and complying with requirements regarding the use or cross-border transfer of such personal information. These obligations create potential legal liability to regulators, our business partners, our users, and other stakeholders and impact the attractiveness of our services to existing and potential users. Data protection laws around the world often require “reasonable,” “appropriate,” or “adequate” technical and organizational security measures, and the interpretation and application of those laws are often uncertain and evolving, and there can be no assurance that our security measures will be deemed adequate, appropriate, or reasonable by a regulator or court. Moreover, even security measures that are deemed appropriate, reasonable, or in accordance with applicable legal requirements may not be able to protect the information we maintain.
In addition, each U.S. state and most U.S. territories, each EU member state, and the United Kingdom, as well as many other foreign nations, have passed laws requiring notification to regulatory authorities, affected users, or others within a specific timeframe when there has been a security breach involving, or other unauthorized access to or acquisition or disclosure of, certain personal information and impose additional obligations on companies. In addition to potential fines, we could be subject to mandatory corrective action due to a data security incident, and any failure to maintain performance, reliability, security, and availability of our network infrastructure to the satisfaction of our users, business partners, regulators, or other relevant stakeholders may harm our reputation and our ability to retain existing users and attract new users, as well as adversely affect our business operations and result in substantial costs. These obligations create potential legal liability to regulators, our business partners, our users, and other stakeholders and impact the attractiveness of our services to existing and potential users.
We have outsourced or may outsource certain elements of our operations (including elements of our information technology infrastructure) to third parties, or may have incorporated technology into our platform, that collects, processes, transmits, and stores our users’ or others’ personal information (such as payment card information and user video and audio recordings), and as a result, we manage a number of third-party vendors and other partners who may or could have access to our information technology systems (including our computer networks) or to our confidential information. In addition, many of those third parties in turn subcontract or outsource some of their responsibilities to other parties. As a result, our information technology systems, including the functions of other parties that are involved in or have access to those systems, are very large and complex. Technology system disruptions, whether from attacks on our technology environment or from computer viruses, natural disasters, terrorism, war, foreign invasions, and telecommunications and electrical failures, could result in a material disruption of our product development and our business operations. Significant disruptions of our vendors’ or commercial partners’ information technology systems or other similar data security incidents could also adversely affect our business operations or result in the loss, misappropriation, or unauthorized access, use or disclosure of, or the prevention of access to, sensitive or personal information, which could harm our business.
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The size, complexity, accessibility, and distributed nature of our information technology systems, and the large amounts of sensitive or personal information stored on those systems, make such systems vulnerable to unintentional or malicious, internal, and external threats. Because of our prominence in the TV streaming industry, we believe we may be a particularly attractive target for threat actors. The risk of harm to our business caused by security incidents may also increase as we expand our product and service offerings and as we enter new markets. Vulnerabilities can be, and have been, exploited from inadvertent or intentional actions of our employees, vendors, or business partners, or by malicious third parties. Open-source software, which may be incorporated into our systems or products, inherently presents a large attack surface and may contain vulnerabilities of which we are not aware and which we cannot control or fully mitigate. Moreover, AI technologies may be used to implement certain cybersecurity attacks or to increase their intensity, which may further increase risk. While we have processes in place to mitigate the risks related to these vulnerabilities, these measures may not be adequately designed or implemented to ensure that our operations are not disrupted, our reputation is not harmed, or that we will not be impacted by ransomware, cybersecurity attacks, or other vulnerabilities in the future. For example, despite our efforts to secure our information technology systems and the data contained in those systems, we and our third-party vendors and business partners have experienced, and remain vulnerable to, data security incidents, including ransomware, phishing attacks, bot attacks, credential stuffing attacks, improper employee access of confidential data, and inadvertent employee disclosure of confidential data. There is no way of knowing with certainty whether we have experienced any data security incidents that have not been discovered. While we have no reason to believe that we have experienced a data security incident that we have not discovered, we note that attackers continue to advance the ways they conceal their unauthorized access to systems.
Malicious attacks are increasing in their frequency, levels of persistence, sophistication, and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise, including organized criminal groups, “hacktivists,” nation states, and others. The geopolitical conflicts stemming from the Russian invasion of Ukraine and the current unrest in the Middle East have increased the risk of malicious attacks on information technology operations globally, including for companies headquartered in the United States, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell, and distribute our devices and services. Any attempts by threat actors to disrupt our streaming platform, streaming devices, smart home products, website, computer systems, or mobile apps, if successful, could harm our business, subject us to liability, be expensive to remedy, cause harm to our systems and operations, damage our reputation, and could result in contractual damages, litigation, governmental inquiries and investigations, enforcement actions, and regulatory notification requirements, fines, and penalties that could harm our business. For example, in the wake of a data breach involving payment card data, we may be subject to substantial penalties for failure to adhere to the technical or operational security requirements of the Payment Card Industry (“PCI”) Data Security Standards (“DSS”) imposed by the PCI Council to protect cardholder data. Penalties arising from PCI DSS enforcement are inherently uncertain as penalties may be imposed by various entities within the payment card processing chain without regard to any statutory or universally mandated framework. Such enforcement could threaten our relationship with our banks, card brands we do business with, and our third-party payment processors.
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Most of our employees have a hybrid work schedule (consisting of both in-person work and working from home). Although we have implemented work from home protocols, the actions of our employees while working from home may have a greater effect on the security of our systems and the data we process, including by increasing the risk of compromise to our systems, intellectual property, or data arising from employees’ combined use of personal and private devices, accessing our systems or data using wireless networks that we do not control, or the ability to transmit or store company-controlled data outside of our secured network.
The limitations of liability in our contracts related to our information technology systems may not be enforceable or adequate or otherwise protect us from liabilities or damages. While we maintain insurance policies to cover certain losses relating to our information technology systems, there may be exceptions. Security incidents or certain aspects of security incidents may not be fully covered by our insurance policies or covered at all. Additionally, insurance policies will not protect against the reputational harms caused by a major security incident. The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. Further, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
We and our service providers and partners collect, process, transmit, disclose, and store personal information, which creates legal obligations and exposes us to potential liability.
We and our service providers and partners collect, process, transmit, disclose, and store personal information of individuals. We collect such information from individuals located both in the United States and abroad and may store or process such information outside the country in which it was collected. Various federal, state, and foreign laws and regulations as well as industry standards and contractual obligations govern the collection, processing, retention, protection, disclosure, cross-border transfer, localization, and storage of such personal information. These regulatory requirements are evolving, and data privacy compliance is an area of increasing scrutiny for privacy and consumer rights groups and government bodies. For example, in addition to the EU General Data Protection Regulation (“GDPR”), the UK General Data Protection Regulation, and Brazil’s Lei Geral de Proteção de Dados, numerous U.S. states have enacted broad-based privacy and data protection legislation.
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We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards, and contractual obligations. We continue to monitor the implementation, enforcement, interpretation, and evolution of these laws and regulations, but they are still rapidly evolving and, as a result, their application, interpretation, and enforcement are uncertain, and they may be interpreted and applied inconsistently with our current policies and practices. In such event, we may be subject to significant fines and penalties (such as restrictions on personal information processing), or we may be required to settle with or pay damages to private litigants or make changes to our policies and operations, including the manner in which we provide our services or use our user data, and our business, financial condition, and results of operations may be harmed.
We continue to assess the available regulatory guidance, determinations, and enforcement actions on international data transfer compliance for companies. As part of our data protection compliance program, we have implemented data transfer mechanisms to provide for the transfer of personal information from the European Economic Area or the United Kingdom to the United States. We are certified under the EU, Swiss, and UK Data Privacy Framework programs to facilitate transfers of non-HR personal data to the United States from these jurisdictions. Our ability to continue to transfer personal information outside of the EU may become significantly more costly and may subject us to increased scrutiny and liability under the GDPR or other legal frameworks, and we may experience operating disruptions if we are unable to conduct these transfers in the future. In addition, some countries are considering or have enacted “data localization” laws requiring that user data regarding users in their respective countries be maintained, stored, or processed in their respective countries. Maintaining local data centers in individual countries could increase our operating costs significantly.
We, our service providers and partners use tracking technologies to collect information about users’ interactions with our platform, devices, websites, apps, and partners’ digital properties, and deliver advertising and personalized content for ourselves and on behalf of our partners. To personalize content and advertisements effectively, we must leverage this data, as well as data provided by third parties. The U.S. federal government, U.S. states, and foreign governments have enacted (or are considering) laws and regulations that could significantly restrict us and other advertising industry participants’ ability to collect, use, retain, and disclose personal information. For example, some of these laws and regulations may require more explicit consumer notice and consent for using tracking technology or collecting sensitive personal information, restrict disclosure of personal information between companies, or grant consumers the right to delete or limit the collection and use of their personal information. Our ability to collect, use and retain such data could also be further restricted by our agreements with advertisers and content partners.
Any restrictions on our ability to collect, use, or retain data is likely to increase the number of users to whom we cannot serve targeted advertising, which could make our platform less attractive to advertisers and partners, and harm our ability to grow our revenue, particularly our Platform revenue which depends on effective delivery of advertising campaigns. We are continuing to assess the impact of new and proposed privacy and data protection laws on our business.
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Any significant disruption in our information technology systems or those of third parties we utilize in our operations could result in a loss or degradation of service on our platform and could harm our business.
We rely on the expertise of our engineering and software development teams as well as the teams of our service providers and partners for the performance and operation of the Roku TV OS, streaming platform, smart home products, and other information technology systems. Service interruptions, errors in our software, or the unavailability of information technology systems used in our operations have at times affected our business and could diminish the overall attractiveness of our products and streaming platform to existing and potential users. We utilize information technology systems located either in our facilities or those of server hosting providers and internet-based or cloud computing services. Although we generally enter into service level agreements with these parties, we exercise no control over their operations, which makes us vulnerable to any errors, interruptions, or delays that they may experience.
Upon the expiration or termination of any of our agreements with vendors, we may not be able to replace their services in a timely manner or on terms and conditions, including service levels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until the transition is complete. In addition, fires, floods, earthquakes, wars, foreign invasions, terrorist activity, power losses, telecommunications failures, break-ins, and similar events could damage these systems and hardware or cause them to fail completely.
As we do not maintain entirely redundant systems, a disrupting event could result in prolonged downtime of our operations, products, or services, could result in liabilities to our customers or third parties, and could adversely affect our business. Our property insurance and cyber liability insurance may not be sufficient to fully cover our losses or may not cover a particular event at all. Any disruption in the services provided by these vendors could have adverse impacts on our business reputation, customer relations, and operating results.
If any aspect of our information technology systems or those of third parties we utilize in our operations fails, it may lead to downtime or slow processing time, either of which may harm the experience of our users. We have experienced, and may in the future experience, service disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, and capacity constraints. We expect to continue to invest in our technology infrastructure to maintain and improve the user experience and platform performance. To the extent that we or our third-party service hosting providers do not effectively address capacity constraints, upgrade or patch systems as needed, and continually develop technology and network architecture to accommodate increasingly complex services and functions, increasing numbers of users, and actual and anticipated changes in technology, our business may be harmed.
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Changes in how network operators manage data that travel across their networks could harm our business.
Our business relies upon the ability of our users to access high-quality streaming content through the internet. As a result, the growth of our business depends on our users’ ability to obtain and maintain high-speed access to the internet at reasonable cost, which relies in part on internet service network operators’ continuing willingness to upgrade and maintain their equipment as well as their continued willingness to preserve the open and interconnected nature of the internet. We exercise no control over network operators, which makes us vulnerable to any errors, disruptions, or delays in their operations, as well as any decision they may make to prioritize the delivery of certain network traffic at the expense of other traffic. Any material disruption or degradation in internet services could harm our business.
To the extent that the number of internet users continues to increase, network congestion could adversely affect the reliability of our streaming platform. We may also face increased costs of doing business, or decreased demand for our services, if network operators engage in discriminatory practices with respect to streamed video content in an effort to monetize access to their networks or customers by data providers.
Certain laws intended to prevent network operators from engaging in discriminatory practices with respect to streaming video content have been implemented in many countries, including in the EU. In other countries, laws in this area may be nascent or non-existent. Furthermore, favorable laws may change. Given the uncertainty around these laws and the rules that implement them, including changing interpretations, amendments, or repeal, coupled with potentially significant political and economic power of network operators, we could experience discriminatory or anti-competitive practices, such as usage-based pricing, bandwidth caps, zero rating of competing services by ISPs, and traffic “shaping” or throttling, that could impede our growth, result in a decline in our quality of service, cause us to incur additional expense, or otherwise impair our ability to attract and retain users, all of which could harm our business.
In addition, most network operators that provide users with access to the internet also offer users multichannel video programming, and some network operators also own streaming services. These network operators have an incentive to use their network infrastructure in a manner adverse to the continued growth and success of other companies seeking to distribute similar video programming. To the extent that network operators are able to provide preferential treatment to their own data and content, as opposed to ours, our business could be harmed.
Risks Related to Intellectual Property
Litigation and claims regarding intellectual property rights could result in the loss of rights important to our products and streaming platform, cause us to incur significant legal costs, or otherwise harm our business.
Some internet, technology, and media companies, including some of our competitors, own large numbers of patents, copyrights, and trademarks, which they may use to assert claims against us. Third parties have asserted, and may in the future assert, that we have infringed, misappropriated, or otherwise violated their intellectual property rights. Such claims may be asserted regardless of their merit, and defending against them can be costly and time-consuming. As we grow and face increasing competition, the possibility of intellectual property rights claims against us will grow. Plaintiffs who have no relevant product revenue may not be deterred by our own issued patents and pending patent applications in bringing intellectual property rights claims against us and may seek to challenge the validity or enforceability of our own patents and patents applications. The cost of patent litigation or other proceedings, even if resolved in our favor, has been and is expected to be substantial. Some of our competitors may be better able to sustain the costs of such litigation or proceedings because of their substantially greater financial resources. Patent litigation and other proceedings may also require significant management time and divert management’s attention from our other business concerns or otherwise adversely affect our business and operating results. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace. The occurrence of any of the foregoing could harm our business, reputation, or operations, including by restricting our ability to offer certain products, services, or features.
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As a result of intellectual property infringement claims, or to avoid potential claims, we may choose or be required to seek licenses from third parties. These licenses may not be available on commercially reasonable terms, or at all, thereby hindering our ability to sell or use the relevant technology or requiring redesign of the allegedly infringing solutions to avoid infringement, which could be costly, time-consuming, or impossible. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, with the potential for our competitors to gain access to the same intellectual property. In addition, the rights that we secure under intellectual property licenses may not include rights to all of the intellectual property owned or controlled by the licensor, and the scope of the licenses granted to us may not include rights covering all of the products and services provided by us and our licensees. Furthermore, an adverse outcome of a dispute may require us to: pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property; cease making, licensing, using, or importing technologies or products that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our products; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content, or materials; and indemnify our partners and other third parties. For example, we have in the past elected to develop and implement specific design changes to address potential risks that certain products could otherwise become subject to exclusion or cease and desist orders arising from patent infringement and other intellectual property claims brought to the U.S. International Trade Commission. In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel.
If we fail to, or are unable to, protect or enforce our intellectual property or proprietary rights, our business and operating results could be harmed.
We regard the protection of our patents, trade secrets, copyrights, trademarks, trade dress, domain names, and other intellectual property or proprietary rights as critical to our success. We strive to protect our intellectual property rights by relying on federal, state, and common law rights, as well as contractual restrictions. We seek to protect our confidential proprietary information, in part, by entering into confidentiality agreements and invention assignment agreements with all of our employees, consultants, contractors, advisors, and any third parties who have access to our proprietary know-how, information, or technology.
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However, we cannot be certain that confidentiality and invention assignment agreements have been executed with all parties who may have helped to develop our intellectual property or who had access to our proprietary information, nor can we be certain that our agreements will not be breached. In addition, we may not be able to discover such breaches, and if we do, we may not be able to obtain adequate remedies for such breaches. We cannot guarantee that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Detecting the disclosure or misappropriation of a trade secret and enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, time-consuming, and could result in substantial costs, and the outcome of such a claim is unpredictable.
Further, some foreign jurisdictions do not provide the same level of protection for proprietary information and assets such as intellectual property, trademarks, trade secrets, know-how, and records as the laws of the United States. For instance, the legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection. As a result, we may encounter significant problems in protecting and defending our intellectual property or proprietary rights abroad. Additionally, we may also be exposed to material risks of theft, counterfeiting, or unauthorized reverse engineering of our proprietary information and other intellectual property, including technical data, manufacturing processes, data sets, or other sensitive information. These risks could materially adversely affect our business, financial condition, or results of operations.
Our efforts to enforce our intellectual property rights in such foreign jurisdictions may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop, which could have a material adverse effect on our business, financial condition, and results of operations. Moreover, if we are unable to prevent the disclosure of our trade secrets to third parties, or if our competitors independently develop similar or equivalent technologies, our ability to establish or maintain a competitive advantage in the market may be impaired, which could harm our business.
There can be no assurance that the particular forms of intellectual property protection that we seek, including business decisions about when to file patents and when to maintain trade secrets, will be adequate to protect our business. We have filed and will in the future file patent applications on inventions that we deem to be innovative. There is no guarantee that our patent applications will issue as granted patents, that the scope of the protection gained will be sufficient or that an issued patent may subsequently be deemed invalid or unenforceable. U.S. patent laws, and the scope of coverage afforded by them, have been subject to significant changes, such as the change to “first-to-file” from “first-to-invent” resulting from the Leahy-Smith America Invents Act. This change in the determination of inventorship may result in inventors and companies having to file patent applications more frequently to preserve rights in their inventions, which may favor larger competitors that have the resources to file more patent applications. Another change to the patent laws may incentivize third parties to challenge any issued patent in the United States Patent and Trademark Office (“USPTO”), as opposed to having to bring such an action in U.S. federal court. Foreign patent laws may also continue to develop and significantly impact our ability to protect or maintain our intellectual property. Any invalidation of a patent claim could have a significant impact on our ability to protect the innovations contained within our products and platform and could harm our business.
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The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other provisions to maintain patent applications and issued patents. We may fail to take the necessary actions and pay the applicable fees to obtain or maintain our patents. Noncompliance with these requirements can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to use our technologies and enter the market earlier than would otherwise have been the case.
We pursue the registration of our domain names, trademarks, and service marks in the United States and in certain locations outside the United States. We are seeking to protect our trademarks, patents, and domain names in an increasing number of jurisdictions, a process that is expensive and time-consuming and may not be successful or which we may not pursue in every jurisdiction in which we conduct business. Despite the cost and time we spend monitoring, we may not be able to detect infringement by third parties. Our competitive position may be harmed if we cannot detect infringement and enforce our intellectual property rights quickly or at all. In particular, our actions to monitor and enforce our trademarks against third parties may not prevent counterfeit versions of our products or products bearing confusingly similar trademarks to ours from entering the marketplace, which could divert sales from us, tarnish our reputation, or reduce the demand for our products. In some circumstances, we may choose to not pursue enforcement because an infringer has a dominant intellectual property position or for other business reasons.
Litigation may be necessary to enforce our intellectual property or proprietary rights, protect our trade secrets, or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity, or diversion of management and technical resources, any of which could adversely affect our business and operating results. These proceedings may also result in injunctions or other court orders restricting our ability to market certain technologies, products, or services. If we fail to maintain, protect, and enhance our intellectual property or proprietary rights, our business may be harmed.
Our use of open-source software could impose limitations on our ability to commercialize our products and our streaming platform or could result in public disclosure of competitively sensitive trade secrets.
We incorporate open-source software in our proprietary software. From time to time, companies that have incorporated open-source software into their products and services have faced claims challenging the ownership of certain open-source software or compliance with open-source software license terms. Therefore, we could be subject to similar suits by parties claiming ownership of what we believe to be open-source software or our noncompliance with the open-source software license terms. Any such claims could expose us to significant legal costs, require us to modify or discontinue our products, or otherwise adversely affect our business.
Although we have processes and procedures designed to help monitor our use of open-source software, these processes and procedures may not be followed appropriately or may fail to identify risks. Additionally, the terms of many open-source software licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our products or technology or impose unanticipated obligations that could require the disclosure of trade secrets. Some open-source software is governed by licenses containing conditions that any person who distributes or uses a modification or derivative work of software that was subject to an open-source license make the modified version subject to the same open-source license. Distributing or using software that is subject to this kind of open-source license can lead to a requirement that certain aspects of our solutions be distributed or made available in source code form. In such event, we could be required to make portions of our proprietary software generally available under similar open-source software license terms to third parties, including competitors, at low or no cost, to seek licenses from third parties in order to continue offering our products, to re-engineer our products, or to discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could harm our business. Additionally, complying with these obligations may divert significant resources from our development activities and could harm our competitive position.
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Further, use of open-source software can involve greater risks than those associated with use of third-party commercial software, as open-source licensors generally do not provide warranties, assurances of title, performance, non-infringement, or controls on the origin of the software. Open-source software typically lacks support, and authors of such open-source software may abandon further development and maintenance. Open-source software may contain security vulnerabilities and other liabilities, and we may be subject to additional security risk by using open-source software. We have established processes to help alleviate these risks, but there can be no assurance that these processes will alleviate all risks with the open-source software we incorporate.
Under our agreements with many of our content partners, licensees, distributors, retailers, contract manufacturers, and suppliers, we are required to provide indemnification in the event our technology is alleged to infringe upon the intellectual property rights of third parties.
In certain of our agreements, we indemnify our content partners, licensees, distributors, retailers, manufacturing partners, and suppliers. We have in the past, and may in the future, incur significant expenses defending these partners if they are sued for patent or other property infringement based on allegations related to our technology. If a partner were to lose a lawsuit and in turn seek indemnification from us, we also could be subject to significant monetary liabilities. In addition, because the devices sold by our licensing partners and licensed Roku TV partners often involve the use of third-party technology, this increases our exposure to litigation in circumstances where there is a claim of infringement asserted against the streaming device in question, even if the claim does not pertain to our technology. Liability under our indemnification commitments may not be contractually limited.
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Legal and Regulatory Risks
We have been, are currently, and may in the future be subject to various lawsuits and other legal proceedings, disputes, claims, and government inquiries and investigations, which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business.
We have been, are currently, and may in the future be subject to various lawsuits, stockholder derivative actions, class action lawsuits, individual or mass arbitration proceedings, and other types of legal proceedings, as well as other disputes, claims, and regulatory or governmental inquiries and investigations, including with regard to contract or commercial disputes, consumer protection, privacy, data protection, intellectual property, tax, employment, and corporate governance, among other matters. If we fail to meet our contractual commitments or otherwise fail to comply with our contractual obligations, then we could be subject to breach of contract or other claims. Any claims, proceedings, individual or mass arbitration demands, or inquiries or investigations initiated by or against us, whether successful or not, may be time-consuming, subject us to damage awards, regulatory orders, consent decrees, injunctive relief, fines, or other penalties or sanctions, require us to change our policies or practices, result in increased operating costs, divert management’s attention, harm our reputation, and require us to incur significant legal fees, other litigation costs and settlement costs, as well as other expenses. In addition, our insurance may not be adequate to protect us from all material expenses related to pending and future claims. Further, non-monetary awards, such as injunctive relief, consent decrees, and regulatory orders, may impair our ability to continue offering certain products and services, may increase our operating expenses with respect to products and services we continue to offer, or may impact the revenue we earn in regard to those products and services. Any of these factors could materially and adversely affect our business, financial condition, and results of operations.
If government regulations or laws relating to the internet, video, advertising, or other areas of our business change, we may need to alter the manner in which we conduct our business, or our business could be harmed.
We are subject to or affected by general business regulations and laws, as well as regulations and laws specific to the internet and online services, including laws and regulations related to data privacy and security, consumer protection, child and youth protection, data localization, encryption, telecommunications, social media, payment processing, subscriptions, taxation, trade, intellectual property, competition, electronic contracts, internet access, net neutrality, advertising, calling and texting, content restrictions, AI, and accessibility, among others. We have been, and may be in the future, subject to claims or governmental or regulatory inquiries and investigations with regard to our compliance with such regulations and laws.
Some of our business activities may be within the scope of existing or proposed laws and regulations intended to protect minors online. In this regard, examples of potentially applicable laws and regulations include the UK Age-Appropriate Design Code, UK Online Safety Act, the Irish Fundamentals for a Child-Oriented Approach to Data Processing, various minor-specific provisions of the GDPR and EU Digital Services Act, the Children’s Online Privacy Protection Act, age-appropriate design code style laws at the state level, and minor-specific provisions of state consumer privacy laws. Many states have also incorporated children’s privacy requirements into their laws. This is a rapidly evolving area of law and regulation, and the need to comply with this growing body of laws across the jurisdictions in which we operate could impact our business and require us to incur additional expenses for compliance. Additionally, there have been a dramatic rise in claims asserted under various unsettled laws in the United States, including the Video Privacy Protection Act, other similar U.S. state video privacy laws, and the California Invasion of Privacy Act, which provide a private right of action and allows for statutory damages, actual damages, and, in certain cases, attorneys’ fees.
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As we develop new products and services and improve our streaming platform, we may also be subject to new laws and regulations specific to new technologies that may require us to make changes to our business practices, and failure to adequately address or comply with such laws and regulations may result in legal liability, regulatory action, or brand and reputational harm. For example, to the extent that we incorporate generative AI into our products and services, we will be subject to the evolving legal and regulatory landscape surrounding generative AI technologies. Various national and local governments have proposed or enacted measures that impose new and substantial obligations related to the use of generative AI systems, including the EU and many U.S. states.
The laws and regulations governing our industry are still evolving and, as a result, their application, interpretation and enforcement are uncertain, and they may be interpreted and applied inconsistently with our current policies and practices. All litigation and regulatory proceedings are inherently uncertain, and the federal, state, and foreign laws and regulations governing such issues continue to develop. See also “—We and our service providers and partners collect, process, transmit, disclose, and store personal information, which creates legal obligations and exposes us to potential liability.” Regulatory inquiries, investigations, and enforcement actions could also adversely impact our business operations. For example, we and other companies in the media, entertainment, and advertising technology industries have been subject to government inquiries and investigations by regulatory bodies with regard to our compliance with privacy and data security laws, the Federal Trade Commission Act, state consumer protection laws, and other applicable laws and regulations. Advocacy organizations have also filed complaints with data protection authorities against businesses with streaming apps and advertising technology, arguing that certain of these companies’ practices do not comply with applicable law. The potential effects of such inquiries, investigations, or enforcement actions are far-reaching, uncertain, and difficult to predict, and may require us, our partners, and our advertisers to modify data processing practices and policies and to incur substantial compliance costs and expenses. Furthermore, if we or the vendors and third parties that we work with are alleged to violate applicable laws, our contractual obligations, or our policies, our users could lose trust in us. Any decrease in user retention, growth, or engagement could render our products less attractive to users, advertisers, or partners, and would seriously harm our business.
Changes in U.S. or foreign trade policies, geopolitical conditions, general economic conditions, and other factors beyond our control may adversely impact our business and operating results.
Our business is subject to risks generally associated with doing business abroad, such as U.S. and foreign governmental regulation in the countries in which we operate and the countries in which our contract manufacturers, component suppliers, and other business partners are located. Our operations and performance depend significantly on global, regional, and U.S. economic and geopolitical conditions, which have grown increasingly uncertain beginning in the first quarter of 2025.
Trade disputes, geopolitical tensions, or political uncertainty can disrupt supply chains and increase the cost of our and our partners’ products, and have a negative impact on consumer confidence, which could impair our future growth and adversely affect our operations, business, financial condition, and results of operations. For example, several countries are considering or have recently implemented tariffs or other trade barriers or restrictions, as well as other measures impacting cross-border commerce, including in response to ongoing and unpredictable changes in U.S. trade policy, which could negatively affect our business. Notably, beginning in the first quarter of 2025, the U.S. Administration has announced, delayed, re-imposed and revised a series of broad-based, as well as country-, bloc-, and sector-specific tariffs on goods imported into the United States, as well as other trade policy changes. Such actions have given and may continue to give rise to further escalations of trade measures by the United States and impacted countries. Further, developments with regard to the timing and manner in which tariffs are implemented, the amount, scope and nature of tariffs, and the countries subject to new or additional tariffs imposed by the United States are rapidly evolving and may change unexpectedly at any time, making it impossible for us to predict future developments regarding global tariffs or other trade restrictions or their ultimate effects on our business and results of operations. The threat, implementation, or modification of such new import restrictions, as well as any retaliatory measures adopted by affected U.S. trade partners, could increase our costs and otherwise be disruptive to the business environment in which we operate.
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In addition, following Russia’s invasion of Ukraine, the United States and other countries imposed economic sanctions and severe export control restrictions against Russia and Belarus, and the United States and other countries could impose wider sanctions and export restrictions and take other actions should the conflict further escalate. Similarly, the effects of Brexit on EU-UK political, trade, economic, and diplomatic relations continue to be uncertain and such impact may not be fully realized for several years or more. Continued uncertainty and friction may result in regulatory, operational, and cost challenges to our international operations.
Also, various countries, in addition to the United States, regulate the import and export of certain products, commodities, software, and technology, including through import and export licensing requirements, and have enacted laws that could limit our ability to distribute our products or collaborate on technology with our commercial or strategic partners, or could limit the ability of our commercial or strategic partners to implement our products in those countries. Changes in our products or future changes in export and import regulations may create delays in the introduction of our products in international markets, disrupt supply chains, prevent our commercial or strategic partners with international operations from deploying our products globally, or, in some cases, prevent the export or import of our products to certain countries, governments, or persons altogether. Any changes in U.S. or foreign export or import regulations, customs duties, or other restrictions on intangible goods (such as cross-border data flows) could result in decreased use of our products by, or in our decreased ability to export or sell our products and services to, existing or new customers in U.S. or international markets or hamper our ability to source products, components, and parts from certain suppliers or lead to potential supply chain disruptions and business or reputational harms. Any decreased use of our products or limitation on our ability to export, import, or sell our products or services, or source parts or components, could harm our business.
Although we attempt to ensure that we, our retailers, and partners comply with the applicable import, export, and sanctions laws, we cannot guarantee full compliance by all. Actions of our retailers and partners are not within our complete control, and our products could be re-exported to sanctioned persons or countries or provided by our retailers to third persons in contravention of our requirements or instructions or applicable laws. In addition, there are inherent limitations to the effectiveness of any policies, procedures, and internal controls relating to such compliance, and there can be no assurance that such procedures or internal controls will work effectively at all times or protect us against liability under anti-corruption, sanctions or other laws for actions taken by us, our retailers or partners. Any such potential violation by us, our retailers, or our partners could have negative consequences, including government inquiries, investigations, enforcement actions, monetary fines, or civil and/or criminal penalties, and our reputation, brand, and revenue may be harmed.
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The ability of internet access network operators in some jurisdictions to degrade users’ internet speeds or limit internet data consumption by users, including unreasonable discrimination in the provision of broadband internet access services, could harm our business.
Our products and services depend on the ability of our users to access the internet. We believe that the continued growth of streaming as an entertainment alternative will depend on the availability and growth of cost-effective broadband internet access (including mobile broadband internet access), the quality and reliability of broadband content delivery, and broadband service providers’ ability to control the delivery speed of different content traveling on their networks. Laws, regulations, or court rulings that adversely affect the popularity or growth in use of the internet, including decisions that undermine open and neutrally administered internet access, or that disincentivize internet access network operators’ willingness to invest in upgrades and maintenance of their equipment, could decrease customer demand for our service offerings, may impose additional burdens on us, or could cause us to incur additional expenses or alter our business model. Some jurisdictions have adopted regulations governing the provision of internet access service. Substantial uncertainty exists in the United States and elsewhere regarding such provisions. For example, in the United States, a federal appellate court recently prevented new FCC “net neutrality” rules and an associated broadband oversight framework from going into effect, finding that the FCC likely does not have statutory authority to adopt such requirements. As a result, there are no FCC rules currently in effect that prohibit internet service providers from unreasonably restricting, blocking, degrading, or charging for access to certain products and services offered by us and our content partners.
If network operators were to engage in restricting, blocking, degrading, or charging for access, it could impede our growth, result in a decline in our quality of service, cause us to incur additional expense, or otherwise impair our ability to attract and retain users, any of which could harm our business. Several states and foreign countries in which we operate also have adopted or are considering rules governing the provision of internet access. In addition, in some jurisdictions (including the United States), network operators are pursuing proposals that would require or enable them to impose fees on content providers related to delivery of network traffic.
As we expand internationally, government regulation protecting the non-discriminatory provision of internet access may be nascent or non-existent. In those markets where regulatory safeguards against unreasonable discrimination are nascent or non-existent and where local network operators possess substantial market power, we could experience anti-competitive practices that could impede our growth, cause us to incur additional expenses, or otherwise harm our business. Future regulations or changes in laws and regulations (or their existing interpretations or applications) could also hinder our operational flexibility, raise compliance costs, and result in additional liabilities for us, which may harm our business.
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If we are found liable for content that is distributed through or advertising that is served through our platform, our business could be harmed.
As a distributor of content, we face potential liability for negligence, copyright, patent, or trademark infringement, public performance royalties or other claims based on the nature and content of materials that we distribute. We rely on the statutory safe harbors, as set forth in the Digital Millennium Copyright Act (the “DMCA”), Section 230 of the Communications Decency Act (“Section 230”) in the United States, and the E-Commerce Directive in Europe, for protection against liability for various caching, hosting, and linking activities. The DMCA, Section 230, and similar statutes and doctrines on which we rely or may rely in the future are subject to uncertain judicial interpretation and regulatory and legislative amendments. Any legislation or court rulings that limit the applicability of these safe harbors could require us to take a different approach toward content moderation on our platform, which could diminish the depth, breadth, and variety of content that we offer, inhibit our ability to generate advertising, or otherwise adversely affect our business.
Moreover, if the rules around these statutes and doctrines change, if international jurisdictions refuse to apply similar protections, or if a court were to disagree with our application of those rules to our business, we could incur liabilities and our business could be harmed. If we become liable for these types of claims as a result of the content that is streamed over or the advertisements that are served through our platform, then our business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could harm our business. Our insurance may not be adequate to cover these types of claims or any liability that may be imposed on us.
In addition, regardless of any legal protections that may limit our liability for the actions of third parties, we may be adversely impacted if copyright holders assert claims, or commence litigation, alleging copyright infringement against the developers of apps that are distributed on our platform.
While our platform policies prohibit streaming content on our platform without distribution rights from the copyright holder, and we maintain processes and systems for the reporting and removal of infringing content, in certain instances our platform has been misused by unaffiliated third parties to unlawfully distribute copyrighted content. If content owners or distributors are deterred from working with us as a consequence, it could impair our ability to maintain or expand our business, including through international expansion plans.
Our financial results may be adversely affected by changes in accounting principles applicable to us.
The generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the SEC, and other bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported results of operations and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. It is difficult to predict the impact of future changes to accounting principles or our accounting policies, any of which could harm our business.
48
If we fail to comply with the laws and regulations relating to the payment of income taxes and the collection of indirect taxes, we could be exposed to unexpected costs, expenses, penalties, and fees, which could harm our business.
We are subject to requirements to deduct or withhold income taxes on revenue sourced in various jurisdictions, pay income taxes on profits earned by any permanent establishment (or similar enterprise) of ours that carries on business in various jurisdictions, and collect indirect taxes from our sales in various jurisdictions. The laws and regulations governing the withholding and payment of income taxes and the collection of indirect taxes are numerous, complex, evolving, and vary by jurisdiction. A successful assertion by one or more jurisdictions that we were required to withhold or pay income taxes or collect indirect taxes where we did not could result in substantial tax liabilities, fees, and expenses, including substantial interest and penalty charges, which could harm our business.
New legislation that would change U.S. or foreign taxation of international business activities or other tax-reform policies could harm our business.
We earn a portion of our income in foreign countries and, as such, we are subject to tax laws in the United States and numerous foreign jurisdictions. Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change. Changes to U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on U.S. and foreign earnings. Such changes could have an adverse impact on our effective tax rate, income tax expense (benefit), and cash flows.
In addition, both tax policy and tax administration are becoming multilateral. This multilateralism and collaboration among taxing authorities (including the U.S. and many foreign jurisdictions in which we operate) has resulted in proposed new tax measures specifically targeting online commerce, digital advertising and services, streaming services, and the remote sale of goods and services. Some of these measures (such as a global corporate minimum tax) require adoption of local legislation consistent with the agreed to multilateral framework. Other measures (such as digital services taxes) have already been implemented but may terminate upon the adoption of multilateral tax rules.
The rapid growth of multilateralism in tax administration means greater sharing of tax information among taxing authorities as well as the likelihood of joint and simultaneous tax audits of companies such as ours who have cross-border business activities in which the tax administrations may have a common or complementary interest. The results of any such audits or related disputes could have an adverse effect on our financial results for the period or periods for which the applicable final determinations are made. For example, we and our subsidiaries are engaged in intercompany transactions across multiple tax jurisdictions. Although we believe we have clearly reflected the economics of these transactions and that the proper local transfer pricing is in place, tax authorities may propose and sustain adjustments that could result in changes that may impact our mix of earnings in countries with differing statutory tax rates.
49
Exhibit 99.4
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information presented below illustrates the estimated effects of the (i) acquisition of Roku, Inc. (“Roku”) by Fox Corporation (“FOX”) and (ii) related financing transactions.
On June 14, 2026, FOX, Falcon Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of FOX (“Merger Sub 1”), Falcon Merger Sub 2, LLC, a Delaware limited liability company and wholly owned subsidiary of FOX (“Merger Sub 2” and, together with Merger Sub 1, the “Merger Subs”), and Roku, entered into an Agreement and Plan of Merger, dated as of June 14, 2026 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”). On November 6, 2026 (the “Merger Closing Date”), pursuant to the terms and conditions of the Merger Agreement, FOX acquired Roku by way of (i) the merger of Merger Sub 1 with and into Roku (the “First Merger”), with Roku continuing as the surviving corporation in the First Merger and becoming a wholly owned subsidiary of FOX (the “Surviving Corporation”), and (ii) immediately following the First Merger, and as the second step in a single integrated transaction with the First Merger, the merger of the Surviving Corporation with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 continuing as the surviving entity in the Second Merger and continuing as a wholly owned subsidiary of FOX. Merger Sub 2 was subsequently renamed “Roku, LLC.”
Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the Mergers (the “Effective Time”), each share of Class A Common Stock, $0.0001 par value per share, of Roku (“Roku Class A Common Stock”) and each share of Class B Common Stock, $0.0001 par value per share, of Roku (“Roku Class B Common Stock”), other than certain excluded shares and shares subject to appraisal rights was converted, for the purposes of the unaudited pro forma condensed combined financial information presented herein, into the right to receive (i) 0.9693 shares of Class A Common Stock, par value $0.01 per share, of FOX (the “FOX Class A Common Stock”) and (ii) $96.00 in cash, without interest (collectively, the “Merger Consideration”). The exchange ratio is fixed and will not be adjusted, except in limited circumstances as described in the joint proxy statement/prospectus of FOX, filed and declared effective on September 1, 2026 (the “Joint Proxy Statement/Prospectus”). For purposes of the unaudited pro forma condensed combined financial information presented herein, no adjustments to the exchange ratio have been made and an exchange ratio of 0.9693 shares of FOX Class A Common Stock and $96.00 in cash has been used. No fractional shares of FOX Class A Common Stock were issued in connection with the Mergers.
FOX financed the cash portion of the Merger Consideration through borrowings of approximately $8.4 billion under the Bridge Facility (as defined below), $2 billion of borrowings under the Term Loan Facility (as defined below), and available cash on hand at FOX and Roku. The Term Loan Facility and the Bridge Facility are collectively referred to herein as the “Financing Transactions.”
In connection with the Mergers, FOX entered into a commitment letter (the “Bridge Commitment Letter”), dated June 14, 2026, pursuant to which the commitment parties thereto committed to provide up to $12 billion of senior unsecured bridge loans (the “Bridge Commitment”). On November 5, 2026, FOX entered into a bridge credit agreement (the “Bridge Credit Agreement”), among FOX, as borrower, Morgan Stanley Senior Funding, Inc. (“Morgan Stanley Senior Funding”), Citibank, N.A., Deutsche Bank AG New York Branch, Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A., and/or their respective affiliates (collectively, the “Bridge Lenders”), and Morgan Stanley Senior Funding, as administrative agent, pursuant to which the Bridge Lenders party thereto committed to provide, contingent upon the consummation of the Mergers and certain other customary conditions to funding, a senior unsecured bridge facility in an aggregate principal amount of $8.4 billion (the “Bridge Facility”). On the Merger Closing Date, FOX borrowed $8.4 billion of loans under the Bridge Facility, the proceeds of which were used to pay a portion of the cash consideration and other amounts payable in connection with the Mergers. The remaining balance of the Bridge Commitment under the Bridge Commitment Letter was terminated on the Merger Closing Date. FOX expects to complete additional financing transactions subsequent to the consummation of the Mergers, including the issuance of senior unsecured debt to refinance borrowings under the Bridge Facility (the “Permanent Financing”).
On June 30, 2026, FOX entered into the term loan agreement, pursuant to which the lenders party thereto committed to provide, subject to the consummation of the Mergers and other customary funding conditions, a senior unsecured term loan facility in an aggregate principal amount of $1 billion (the “Term Loan Facility”). The Term Loan Facility matures two years following the Merger Closing Date and provides FOX with the ability to borrow up to an additional $1 billion of term loans, subject to certain conditions. On November 6, 2026, FOX entered into an amended and restated term loan agreement, among FOX, as borrower, the lenders party thereto and Morgan Stanley Senior Funding, as administrative agent, to amend and restate in its entirety the term loan agreement with respect to the Term Loan Facility to, among other things, (i) increase the commitments thereunder from $1 billion to $2 billion, (ii) remove the ability of FOX to incur additional term loans under the Term Loan Facility and (iii) permit full cash netting in connection with the calculation of the financial covenant contained therein. On November 6, 2026, FOX borrowed $2 billion under the Term Loan Facility to fund a portion of the cash consideration and other amounts payable in connection with the Mergers.
On the Merger Closing Date, Roku’s existing credit agreement, dated as of September 16, 2024, was terminated. No adjustment for purposes of the unaudited pro forma condensed combined financial information presented herein (a “pro forma adjustment”) has been made to reflect the termination of commitments under the existing Roku credit agreement because no borrowings were outstanding under Roku’s existing credit agreement on the Merger Closing Date or on September 30, 2026, the date of the unaudited pro forma condensed combined balance sheet presented herein.
1
Pursuant to the Merger Agreement, Roku established a cash transaction and retention bonuses pool, consisting of one-time transaction bonuses payable at the Merger Closing Date and retention bonuses that generally vest and become payable 12 months following the Merger Closing Date, in each case, subject to the employee’s continued employment. Roku finalized retention bonuses totaling $31 million for certain employees. These bonuses will vest and become payable 12 months following the Merger Closing Date, subject to the employees’ continued employment, or earlier upon termination by FOX other than for cause. Accordingly, a pro forma adjustment of $31 million has been reflected to recognize the retention bonus expense in the unaudited pro forma condensed combined financial information presented herein.
The following unaudited pro forma condensed combined financial information has been prepared to illustrate the effects of the Mergers and the Financing Transactions as if each had occurred on September 30, 2026, for the purposes of the unaudited pro forma condensed combined balance sheet, and as if the Mergers and the Financing Transactions each occurred on July 1, 2025, the first day of the FOX fiscal year ended June 30, 2026, for the purposes of the unaudited pro forma condensed combined statements of operations for the three months ended September 30, 2026, and the fiscal year ended June 30, 2026.
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. Pro forma adjustments reflected in the unaudited pro forma condensed combined financial information are based on information currently available and certain assumptions that management believes are reasonable and supportable, and do not reflect any cost savings, operating synergies or revenue synergies that may result from the Mergers or the costs to achieve such synergies.
FOX and Roku have different fiscal year ends. Accordingly, Roku’s historical financial information has been aligned with FOX’s reporting and reflects Financing Transaction Accounting Adjustments and Mergers Transaction Accounting Adjustments that are required under Article 11 of Regulation S-X. No Management’s Adjustments have been reflected in the unaudited pro forma condensed combined financial information. All financial data included in the unaudited pro forma condensed combined financial information is presented in millions of U.S. dollars, except per share information, and has been prepared on the basis of generally accepted accounting principles in the United States (“U.S. GAAP”) and FOX’s accounting policies.
2
The unaudited pro forma condensed combined financial information was prepared using the following financial information:
| • | The unaudited pro forma condensed combined balance sheet as of September 30, 2026 combines the historical unaudited consolidated balance sheet of FOX as of September 30, 2026 with Roku’s historical unaudited condensed consolidated balance sheet as of September 30, 2026. |
| • | The unaudited pro forma condensed combined statement of operations for the three months ended September 30, 2026 combines FOX’s historical unaudited consolidated statement of operations for the three months ended September 30, 2026 with Roku’s historical unaudited condensed consolidated statement of operations, after reclassifications, for the three months ended September 30, 2026. |
| • | The unaudited pro forma condensed combined statement of operations for the year ended June 30, 2026 combines FOX’s historical audited consolidated statement of operations for the year ended June 30, 2026 with Roku’s historical unaudited consolidated statement of operations, after reclassifications, for the twelve months ended June 30, 2026. |
| • | Roku’s historical unaudited consolidated statement of operations, after reclassifications, for the twelve months ended June 30, 2026 was derived starting with Roku’s audited consolidated statement of operations for the fiscal year ended December 31, 2025, subtracting Roku’s unaudited condensed consolidated statement of operations for the six months ended June 30, 2025, and adding Roku’s unaudited condensed consolidated statement of operations for the six months ended June 30, 2026. |
The unaudited pro forma condensed combined financial information has been prepared by FOX and is provided for informational purposes only. The unaudited pro forma condensed combined financial information is not necessarily, and should not be assumed to be, an indication of the actual results that would have been achieved had the Mergers and Financing Transactions been completed as of the dates indicated or that may be achieved in the future. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors,” in the Joint Proxy Statement/Prospectus and the other reports FOX and Roku file with the SEC under the Securities Exchange Act of 1934, as amended.
The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting pursuant to the provisions of ASC 805, whereby FOX has been identified as the accounting acquirer. FOX was determined to be the accounting acquirer for several reasons, including but not limited to the fact that FOX stockholders hold the majority of shares of common stock of the combined company outstanding, as well as the composition of the management team (including the chief executive officer) and board of directors of the combined company. The consideration transferred will be allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the Merger Closing Date, and any excess value of the consideration transferred over the acquired net assets will be recognized as goodwill. The assets and liabilities of Roku have been measured based on various preliminary estimates using assumptions that management believes are reasonable, based on information that is currently available. The purchase price allocation is preliminary and based on currently available information, and as a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. As a result, actual adjustments may differ from the amounts reflected in the unaudited pro forma condensed combined financial information and the differences may be material.
The unaudited pro forma condensed combined financial information should be read in conjunction with the following information:
| • | The historical unaudited consolidated financial statements of FOX as of and for the period ended September 30, 2026 and the related notes included in FOX’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 filed with the SEC on November 2, 2026; |
| • | The historical audited consolidated financial statements of FOX as of and for the fiscal year ended June 30, 2026 and the related notes included in FOX’s Annual Report on Form 10-K for the fiscal year ended June 30, 2026 filed with the SEC on August 6, 2026; |
| • | The historical unaudited consolidated financial statements of Roku as of and for the period ended September 30, 2026 and the related notes, included in Roku’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 filed with the SEC on November 2, 2026; |
| • | The historical audited consolidated financial statements of Roku as of and for the year ended December 31, 2025 and the related notes included in Roku’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on February 13, 2026; |
| • | The historical unaudited consolidated financial statements of Roku as of and for the periods ended June 30, 2026 and June 30, 2025 and the related notes, included in Roku’s Quarterly Report on Form 10-Q filed with the SEC on August 6, 2026; and |
| • | The historical audited consolidated financial statements of Roku as of and for the year ended December 31, 2025 and the related notes included in Roku’s Current Report on Form 8-K filed with the SEC on June 18, 2026. |
3
Unaudited Pro Forma Condensed Combined Balance Sheet
as of September 30, 2026
(in millions)
| Fox Corporation Historical |
Roku, Inc. Historical, After Reclassifications (Note 2) |
Financing Transaction Accounting Adjustments |
Notes |
Mergers Transaction Accounting Adjustments |
Notes |
Pro Forma Combined |
||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||
| Current assets |
||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 4,536 | $ | 2,721 | $ | 10,355 | 4(a)(b) | $ | (14,718 | ) | 4(c) | $ | 2,894 | |||||||||||
| Receivables, net |
3,657 | 888 | — | — | 4,545 | |||||||||||||||||||
| Inventories, net |
689 | — | — | — | 689 | |||||||||||||||||||
| Other |
320 | 328 | (32 | ) | 4(b) | — | 616 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current assets |
9,202 | 3,937 | 10,323 | (14,718 | ) | 8,744 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Non-current assets |
||||||||||||||||||||||||
| Property and equipment, net |
1,850 | 143 | — | — | 1,993 | |||||||||||||||||||
| Intangible assets, net |
2,834 | 39 | — | 8,761 | 4(d) | 11,634 | ||||||||||||||||||
| Goodwill |
3,647 | 309 | — | 14,264 | 4(c)(d) (e)(g)(h) |
18,220 | ||||||||||||||||||
| Deferred tax assets |
2,316 | 19 | — | (992 | ) | 4(g) | 1,343 | |||||||||||||||||
| Other non-current assets |
3,244 | 477 | — | — | 3,721 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total assets |
$ | 23,093 | $ | 4,924 | $ | 10,323 | $ | 7,315 | $ | 45,655 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| LIABILITIES AND EQUITY |
||||||||||||||||||||||||
| Current liabilities |
||||||||||||||||||||||||
| Accounts payable, accrued expenses and other current liabilities |
$ | 2,429 | $ | 1,461 | $ | — | $ | 143 | 4(f) | $ | 4,033 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current liabilities |
2,429 | 1,461 | — | 143 | 4,033 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Non-current liabilities |
||||||||||||||||||||||||
| Borrowings |
6,607 | — | 10,323 | 4(a)(b) | — | 16,930 | ||||||||||||||||||
| Other liabilities |
1,400 | 427 | — | — | 1,827 | |||||||||||||||||||
| Redeemable noncontrolling interests |
86 | — | — | — | 86 | |||||||||||||||||||
| Commitments and contingencies |
||||||||||||||||||||||||
| Equity |
||||||||||||||||||||||||
| Class A Common Stock |
2 | — | — | 1 | 4(h) | 3 | ||||||||||||||||||
| Class B Common Stock |
2 | — | — | — | 2 | |||||||||||||||||||
| Additional paid-in capital |
7,294 | 4,254 | — | 6,096 | 4(e)(h) | 17,644 | ||||||||||||||||||
| Retained earnings (deficit) |
5,277 | (1,218 | ) | — | 1,075 | 4(f)(h) | 5,134 | |||||||||||||||||
| Accumulated other comprehensive loss |
(109 | ) | — | — | — | (109 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total Fox Corporation stockholders’ equity |
12,466 | 3,036 | — | 7,172 | 22,674 | |||||||||||||||||||
| Noncontrolling interests |
105 | — | — | — | 105 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total equity |
12,571 | 3,036 | — | 7,172 | 22,779 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities and equity |
$ | 23,093 | $ | 4,924 | $ | 10,323 | $ | 7,315 | $ | 45,655 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.
4
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended September 30, 2026
(in millions, except per share data)
| Fox Corporation Historical |
Roku, Inc. Historical, After Reclassifications (Note 2) |
Financing Transaction Accounting Adjustments |
Notes |
Mergers Transaction Accounting Adjustments |
Notes |
Pro Forma Combined |
||||||||||||||||||
| Revenues |
$ | 4,571 | $ | 1,502 | $ | — | $ | (107 | ) | 5(c) | $ | 5,966 | ||||||||||||
| Operating expenses |
(2,363 | ) | (1,119 | ) | — | 107 | 5(c) | (3,375 | ) | |||||||||||||||
| Selling, general and administrative |
(567 | ) | (215 | ) | — | (68 | ) | 5(g) | (850 | ) | ||||||||||||||
| Depreciation and amortization |
(118 | ) | (14 | ) | — | (185 | ) | 5(d) | (317 | ) | ||||||||||||||
| Restructuring, impairment and other corporate matters |
(17 | ) | 10 | — | — | (7 | ) | |||||||||||||||||
| Equity losses of affiliates |
— | — | — | — | — | |||||||||||||||||||
| Interest expense, net |
(80 | ) | 23 | (123 | ) | 5(a)(b) | — | (180 | ) | |||||||||||||||
| Non-operating other, net |
(143 | ) | — | — | — | (143 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income before income tax expense |
1,283 | 187 | (123 | ) | (253 | ) | 1,094 | |||||||||||||||||
| Income tax expense |
(326 | ) | (4 | ) | 30 | 5(f) | 62 | 5(f) | (238 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income |
957 | 183 | (93 | ) | (191 | ) | 856 | |||||||||||||||||
| Less: Net income attributable to noncontrolling interests |
(14 | ) | — | — | — | (14 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income attributable to Fox Corporation stockholders |
$ | 943 | $ | 183 | $ | (93 | ) | $ | (191 | ) | $ | 842 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| EARNINGS PER SHARE DATA |
||||||||||||||||||||||||
| Net income attributable to Fox Corporation stockholders per share: |
||||||||||||||||||||||||
| Basic |
$ | 2.24 | 6 | $ | 1.48 | |||||||||||||||||||
| Diluted |
$ | 2.20 | 6 | $ | 1.45 | |||||||||||||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||||||||||
| Basic |
421,212,097 | 6 | 569,821,545 | |||||||||||||||||||||
| Diluted |
428,036,905 | 6 | 580,513,853 | |||||||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.
5
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended June 30, 2026
(in millions, except per share data)
| Fox Corporation Historical |
Roku, Inc. Historical, After Reclassifications (Note 2) |
Financing Transaction Accounting Adjustments |
Notes |
Mergers Transaction Accounting Adjustments |
Notes |
Pro Forma Combined |
||||||||||||||||||
| Revenues |
$ | 17,126 | $ | 5,209 | $ | — | $ | (302 | ) | 5(c) | $ | 22,033 | ||||||||||||
| Operating expenses |
(10,853 | ) | (4,024 | ) | — | 302 | 5(c) | (14,575 | ) | |||||||||||||||
| Selling, general and administrative |
(2,367 | ) | (823 | ) | — | (428 | ) | 5(g)(h) | (3,618 | ) | ||||||||||||||
| Depreciation and amortization |
(410 | ) | (69 | ) | — | (733 | ) | 5(d) | (1,212 | ) | ||||||||||||||
| Restructuring, impairment and other corporate matters |
(151 | ) | (19 | ) | — | (143 | ) | 5(e) | (313 | ) | ||||||||||||||
| Equity losses of affiliates |
(20 | ) | — | — | — | (20 | ) | |||||||||||||||||
| Interest expense, net |
(274 | ) | 90 | (642 | ) | 5(a)(b) | — | (826 | ) | |||||||||||||||
| Non-operating other, net |
(773 | ) | 24 | — | — | (749 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income before income tax expense |
2,278 | 388 | (642 | ) | (1,304 | ) | 720 | |||||||||||||||||
| Income tax expense |
(551 | ) | (33 | ) | 158 | 5(f) | 321 | 5(f) | (105 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income |
1,727 | 355 | (484 | ) | (983 | ) | 615 | |||||||||||||||||
| Less: Net income attributable to noncontrolling interests |
(42 | ) | — | — | — | (42 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income attributable to Fox Corporation stockholders |
$ | 1,685 | $ | 355 | $ | (484 | ) | $ | (983 | ) | $ | 573 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| EARNINGS PER SHARE DATA |
||||||||||||||||||||||||
| Net income attributable to Fox Corporation stockholders per share: |
||||||||||||||||||||||||
| Basic |
$ | 3.91 | 6 | $ | 0.99 | |||||||||||||||||||
| Diluted |
$ | 3.84 | 6 | $ | 0.97 | |||||||||||||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||||||||||
| Basic |
431,249,754 | 6 | 579,859,202 | |||||||||||||||||||||
| Diluted |
439,185,842 | 6 | 591,399,622 | |||||||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.
6
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1. Basis of Presentation
The accompanying unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, using the assumptions set forth in these notes to the unaudited pro forma condensed combined financial information.
FOX and Roku’s historical financial statements were prepared in accordance with U.S. GAAP. As discussed in Note 2, certain reclassifications were made to align the financial statement presentation of FOX and Roku. FOX has performed a preliminary review of Roku’s accounting policies to determine whether differences in accounting policies require adjustment to conform to FOX’s accounting policies. Based on the review completed to date, FOX has not identified any material differences requiring adjustment. As the review is finalized, additional differences may be identified.
The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with FOX as the accounting acquirer. Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed are recognized and measured at their estimated acquisition-date fair values. The excess of the preliminary estimated Merger Consideration over the estimated fair value of identifiable assets acquired and liabilities assumed, if any, is allocated to goodwill. The preliminary estimated value of the Merger Consideration is based upon (i) the number of shares of FOX Class A Common Stock estimated to be issued to Roku stockholders in the Mergers, calculated as the Exchange Ratio of 0.9693 multiplied by the number of shares of Roku Class A Common Stock and Roku Class B Common Stock outstanding as of November 4, 2026, multiplied by the closing price of the FOX Class A Common Stock as of November 4, 2026, plus (ii) the estimated aggregate cash payment, calculated as the number of shares of Roku Class A Common Stock and Roku Class B Common Stock outstanding as of November 4, 2026, multiplied by the cash consideration of $96.00 per share to be paid by FOX pursuant to the Merger Agreement. The preliminary estimated Merger Consideration also reflects the assumed conversion and settlement of outstanding Roku equity awards pursuant to the Merger Agreement. The final value of the Merger Consideration was determined based on the actual number of shares of FOX Class A Common Stock issued to Roku common stockholders multiplied by the closing price of FOX Class A Common Stock on November 5, 2026 and the actual cash payments made by FOX.
The allocation of the preliminary estimated Merger Consideration depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the preliminary estimated Merger Consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. Accordingly, the final purchase price allocation may differ materially from the preliminary allocation reflected herein. The final purchase price allocation will be based on the actual net tangible and intangible assets existing at the Merger Closing Date.
The pro forma adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that management believes are reasonable under the circumstances. The unaudited pro forma condensed combined financial information reflects adjustments to eliminate transactions between FOX and Roku related to the purchase and sale of digital advertising and distribution agreements between the companies. FOX is not aware of any additional material historical transactions between FOX and Roku during the periods presented that require elimination in the unaudited pro forma condensed combined financial information.
7
Note 2. Significant Accounting Policies and Reclassification Adjustments
Significant Accounting Policies
During the preparation of the unaudited pro forma condensed combined financial information, certain reclassifications were made to align the financial statement presentation of FOX and Roku. FOX has performed a preliminary review of Roku’s accounting policies to determine whether differences in accounting policies require adjustment to conform to FOX’s accounting policies. Based on the review completed to date, FOX has not identified any material differences requiring adjustment. As the review is finalized, additional differences may be identified.
Following the closing of the Mergers, FOX will conduct a more detailed review of Roku’s accounting policies to determine if differences in accounting policies require further reclassification or adjustment of Roku’s results of operations, or reclassification or adjustment of assets or liabilities, to conform to FOX’s accounting policies and presentation. As a result, FOX may identify additional differences between the accounting policies of FOX and Roku that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information. In certain cases, the information necessary to evaluate the differences in accounting policies and impacts thereof will not be available until after the Mergers are completed.
The following reclassification adjustments were made to conform the presentation of Roku’s historical consolidated balance sheet as of September 30, 2026, to FOX’s presentation (in millions):
| Fox Corporation’s Historical |
Roku, Inc.’s
Historical |
Roku, Inc. Historical as of September 30, 2026 |
Reclassification | Notes |
Roku, Inc. Historical After Reclassification as of September 30, 2026 |
|||||||||||
| Cash and cash equivalents |
Cash and cash equivalents |
$ | 2,519 | $ | 202 | (a) | $ | 2,721 | ||||||||
| Short-term investments |
202 | (202 | ) | (a) | — | |||||||||||
| Receivables, net |
Accounts receivable, net of allowances |
888 | — | 888 | ||||||||||||
| Inventories, net |
— | — | ||||||||||||||
| Inventories |
170 | (170 | ) | (c) | — | |||||||||||
| Prepaid expenses and other current assets |
173 | (173 | ) | (b)(d) | — | |||||||||||
| Other |
328 | (c)(d) | 328 | |||||||||||||
| Property and equipment, net |
Property and equipment, net |
143 | — | 143 | ||||||||||||
| Intangible assets, net |
Intangible assets, net |
39 | — | 39 | ||||||||||||
| Goodwill |
Goodwill |
309 | — | 309 | ||||||||||||
| Deferred tax assets |
19 | (g) | 19 | |||||||||||||
| Other non-current assets |
Other non-current assets |
77 | 400 | (b)(e)(f)(g) | 477 | |||||||||||
| Operating lease right-of-use assets |
223 | (223 | ) | (e) | — | |||||||||||
| Content assets, net |
181 | (181 | ) | (f) | — | |||||||||||
| Accounts payable, accrued expenses and other current liabilities |
1,461 | (h)(i)(j) | 1,461 | |||||||||||||
| Accounts payable |
349 | (349 | ) | (h) | — | |||||||||||
| Accrued liabilities |
993 | (993 | ) | (i) | — | |||||||||||
| Deferred revenue, current portion |
119 | (119 | ) | (j) | — | |||||||||||
| Other liabilities |
Other long-term liabilities |
83 | 344 | (k)(l) | 427 | |||||||||||
| Deferred revenue, non-current portion |
26 | (26 | ) | (k) | — | |||||||||||
| Operating lease liability, non-current |
318 | (318 | ) | (l) | — | |||||||||||
| Additional paid-in capital |
Additional paid-in capital |
4,254 | — | 4,254 | ||||||||||||
| Retained earnings |
Accumulated deficit |
(1,218 | ) | — | (1,218 | ) | ||||||||||
| (a) | Represents a reclassification of $202 million from “Short-term investments” to “Cash and cash equivalents,” based on remaining time to maturity as of September 30, 2026. |
| (b) | Represents a reclassification of $15 million from “Prepaid expenses and other current assets” to “Other non-current assets.” |
| (c) | Represents a reclassification of $170 million from “Inventories” to “Other.” Historically, FOX has recorded the current portion of its content assets within “Inventories, net,” with all other tangible inventory balances, not representing content assets, classified within “Other.” |
| (d) | Represents a reclassification of $158 million from “Prepaid expenses and other current assets” to “Other.” |
| (e) | Represents a reclassification of $223 million from “Operating lease right-of-use assets” to “Other non-current assets.” |
| (f) | Represents a reclassification of $181 million from “Content assets, net” to “Other non-current assets.” |
| (g) | Represents a reclassification of $19 million from “Other non-current assets” to “Deferred tax assets.” |
| (h) | Represents a reclassification of $349 million from “Accounts payable” to “Accounts payable, accrued expenses and other current liabilities.” |
| (i) | Represents a reclassification of $993 million from “Accrued liabilities” to “Accounts payable, accrued expenses and other current liabilities.” |
| (j) | Represents a reclassification of $119 million from “Deferred revenue, current portion” to “Accounts payable, accrued expenses and other current liabilities.” |
| (k) | Represents a reclassification of $26 million from “Deferred revenue, non-current portion” to “Other liabilities.” |
| (l) | Represents a reclassification of $318 million from “Operating lease liability, non-current” to “Other liabilities.” |
8
The following reclassification adjustments were made to conform the presentation of Roku’s historical consolidated statement of operations for the three months ended September 30, 2026, to FOX’s presentation (in millions):
| Fox Corporation’s Historical Consolidated Statement of Operations Line Items |
Roku, Inc.’s Historical Consolidated Statement of Operations Line Items |
Roku, Inc. Historical Three Months Ended September 30, 2026 |
Reclassification | Notes |
Roku, Inc. Historical After Reclassification Three Months Ended September 30, 2026 |
|||||||||||
| Revenues |
Net revenue | $ | 1,502 | $ | — | $ | 1,502 | |||||||||
| Operating expenses |
1,119 | (m)(n)(o) | 1,119 | |||||||||||||
| Cost of revenue | 853 | (853 | ) | (m) | — | |||||||||||
| Research and development | 187 | (187 | ) | (n) | — | |||||||||||
| Sales and marketing | 191 | (191 | ) | (o)(p)(s)(t) | — | |||||||||||
| Selling, general and administrative |
215 | (p)(q) | 215 | |||||||||||||
| General and administrative | 107 | (107 | ) | (q)(r)(u) | — | |||||||||||
| Depreciation and amortization |
14 | (t)(u) | 14 | |||||||||||||
| Restructuring, impairment and other corporate matters |
(10 | ) | (r)(s) | (10 | ) | |||||||||||
| Interest expense, net |
Interest expense | (1 | ) | 24 | (v) | 23 | ||||||||||
| Non-operating other, net |
Other income, net | 24 | (24 | ) | (v) | — | ||||||||||
| Income tax expense |
Income tax expense | 4 | — | 4 | ||||||||||||
| (m) | Represents a reclassification of $853 million from “Cost of revenue” to “Operating expenses.” |
| (n) | Represents a reclassification of $187 million from “Research and development” to “Operating expenses.” |
| (o) | Represents a reclassification of $79 million from “Sales and marketing” to “Operating expenses” to reflect the nature of the underlying costs, which primarily relate to activities supporting growth and engagement, and to drive sales of licensed Roku TV partners’ products to consumers through retail distribution channels. |
| (p) | Represents a reclassification of $128 million from “Sales and marketing” to “Selling, general and administrative” to reflect the nature of the underlying costs, which primarily relate to activities supporting the sale of Roku’s products and services. |
| (q) | Represents a reclassification of $87 million from “General and administrative” to “Selling, general and administrative.” |
| (r) | Represents a reclassification of $9 million from “General and administrative” to “Restructuring, impairment and other corporate matters.” |
| (s) | Represents a reclassification of $(19) million of contract settlement gains from “Sales and marketing” to “Restructuring, impairment and other corporate matters.” |
| (t) | Represents a reclassification of $3 million of depreciation expense from “Sales and marketing” to “Depreciation and amortization.” |
| (u) | Represents a reclassification of $11 million of depreciation expense from “General and administrative” to “Depreciation and amortization.” |
| (v) | Represents a reclassification of $24 million from “Other income, net” to “Interest expense, net.” |
9
The following reclassification adjustments were made to conform the presentation of Roku’s historical consolidated statement of operations for the year ended June 30, 2026, to FOX’s presentation (in millions):
| (A) | (B) | (C) | (A) - (B) + (C) | |||||||||||||||||||||||||
| Fox Corporation’s Historical Consolidated Operations Line |
Roku, Inc.’s Historical Consolidated Statement of Operations Line Items |
Roku, Inc. Historical Year Ended December 31, 2025 |
Roku, Inc. Historical Six Months Ended June 30, 2025 |
Roku, Inc. Historical Six Months Ended June 30, 2026 |
Roku, Inc. Historical Twelve Months Ended June 30, 2026 |
Reclassification | Notes | Roku, Inc. Historical After Reclassification Twelve Months Ended June 30, 2026 |
||||||||||||||||||||
| Revenues |
Net revenue | $ | 4,737 | $ | 2,132 | $ | 2,604 | $ | 5,209 | $ | — | $ | 5,209 | |||||||||||||||
| Operating expenses |
4,024 | (w)(x)(y) | 4,024 | |||||||||||||||||||||||||
| Cost of revenue | 2,663 | 1,189 | 1,365 | 2,839 | (2,839 | ) | (w)(cc) | — | ||||||||||||||||||||
| Research and development | 729 | 363 | 369 | 735 | (735 | ) | (x)(dd) | — | ||||||||||||||||||||
| Sales and marketing | 964 | 467 | 445 | 942 | (942 | ) | (y)(z)(ee) | — | ||||||||||||||||||||
| Selling, general and administrative |
823 | (z)(aa) | 823 | |||||||||||||||||||||||||
| General and administrative | 386 | 194 | 227 | 419 | (419 | ) | (aa)(bb)(ff) | — | ||||||||||||||||||||
| Depreciation and amortization |
69 | (cc)(dd)(ee) (ff) |
69 | |||||||||||||||||||||||||
| Restructuring, impairment and other corporate matters |
19 | (bb) | 19 | |||||||||||||||||||||||||
| Interest expense, net |
Interest expense | (2 | ) | (1 | ) | (1 | ) | (2 | ) | 92 | (gg) | 90 | ||||||||||||||||
| Non-operating other, net |
Other income, net | 101 | 46 | 61 | 116 | (92 | ) | (gg) | 24 | |||||||||||||||||||
| Income tax expense |
Income tax expense | 6 | (19 | ) | 8 | 33 | — | 33 | ||||||||||||||||||||
| (w) | Represents a reclassification of $2.8 billion from “Cost of revenue” to “Operating expenses.” |
| (x) | Represents a reclassification of $734 million from “Research and development” to “Operating expenses.” |
| (y) | Represents a reclassification of $457 million from “Sales and marketing” to “Operating expenses” to reflect the nature of the underlying costs, which primarily relate to activities supporting growth and engagement, and to drive sales of licensed Roku TV partners’ products to consumers through retail distribution channels. |
| (z) | Represents a reclassification of $468 million from “Sales and marketing” to “Selling, general and administrative” to reflect the nature of the underlying costs, which primarily relate to activities supporting the sale of Roku’s products and services. |
| (aa) | Represents a reclassification of $355 million from “General and administrative” to “Selling, general and administrative.” |
| (bb) | Represents a reclassification of $19 million from “General and administrative” to “Restructuring, impairment and other corporate matters.” |
| (cc) | Represents a reclassification of $6 million of depreciation expense from “Cost of revenue” to “Depreciation and amortization.” |
| (dd) | Represents a reclassification of $1 million of depreciation expense from “Research and development” to “Depreciation and amortization.” |
| (ee) | Represents a reclassification of $17 million of depreciation expense from “Sales and marketing” to “Depreciation and amortization.” |
| (ff) | Represents a reclassification of $45 million of depreciation expense from “General and administrative” to “Depreciation and amortization.” |
| (gg) | Represents a reclassification of $92 million from “Other income, net” to “Interest expense, net.” |
10
Note 3. Preliminary Purchase Price Allocation
Estimated Merger Consideration
The preliminary estimated Merger Consideration is based on the estimated number of shares of Roku Class A Common Stock and Roku Class B Common Stock outstanding that were converted into the Merger Consideration pursuant to the Merger Agreement and the closing price of the FOX Class A Common Stock as of November 4, 2026, the most recent practicable date. The Merger Consideration reflected in the unaudited pro forma condensed combined financial information is based on the exchange ratio of 0.9693 shares of FOX Class A Common Stock and cash consideration of $96.00 per share, which differs from the actual per share exchange ratio and cash consideration at closing. The estimated number of Roku shares outstanding and the closing price of FOX Class A Common Stock presented in the unaudited pro forma condensed combined financial information have each been determined based on information available as of November 4, 2026, the most recent practicable date.
The final Merger Consideration was determined based on the number of shares of Roku Class A Common Stock and Roku Class B Common Stock outstanding as of November 5, 2026. Accordingly, the final Merger Consideration will differ from the amounts reflected in the unaudited pro forma condensed combined financial information.
The following table presents the preliminary estimated Merger Consideration:
| (Amounts in millions, except per share amounts) |
Amount | |||
| Roku shares outstanding |
149,105,522 | |||
| Partially vested Roku RSUs |
472,210 | |||
| Vested Roku options |
3,738,525 | |||
|
|
|
|||
| Total Roku shares expected to be converted into Merger Consideration (1) |
153,316,257 | |||
|
|
|
|||
| Exchange Ratio |
0.9693 | |||
|
|
|
|||
| Total FOX Class A Common Stock to be issued |
148,609,448 | |||
|
|
|
|||
| Total FOX Class A Common Stock to be issued |
148,609,448 | |||
| FOX Class A Common Stock price (2) |
$ | 69.65 | ||
|
|
|
|||
| Total preliminary stock consideration |
$ | 10,351 | ||
| Total Roku shares expected to be converted into Merger Consideration (1) |
153,316,257 | |||
| Per Share Cash Consideration |
$ | 96.00 | ||
|
|
|
|||
| Cash consideration (3) |
$ | 14,718 | ||
|
|
|
|||
| Total preliminary estimated Merger Consideration |
$ | 25,069 | ||
|
|
|
|||
| (1) | Represents the number of Roku shares outstanding, partially vested RSUs, and vested options that are expected to be converted into the right to receive Merger Consideration pursuant to the Merger Agreement. This estimate is based on Roku shares outstanding as of November 4, 2026, the most recent practicable date. |
| (2) | Represents the closing market price of FOX Class A Common Stock as of November 4, 2026, which has been used in estimating the preliminary stock consideration. |
| (3) | Represents the cash consideration payable pursuant to the Merger Agreement based on $96.00 per Roku share. |
For purposes of the unaudited pro forma condensed combined financial information, the preliminary estimated stock consideration is based on the closing price of FOX Class A Common Stock as of November 4, 2026. A hypothetical 10% fluctuation in the market price of the FOX Class A Common Stock is reasonably possible based on historical volatility, and an illustration of the potential effect on each component of Merger Consideration would be:
| (amounts in
millions, |
FOX Class A Common Stock price |
Stock Consideration | Cash Consideration | Merger Consideration | ||||||||||||
| As presented |
$ | 69.65 | $ | 10,351 | $ | 14,718 | $ | 25,069 | ||||||||
| 10% increase |
$ | 76.62 | $ | 11,386 | $ | 14,718 | $ | 26,104 | ||||||||
| 10% decrease |
$ | 62.69 | $ | 9,316 | $ | 14,718 | $ | 24,034 | ||||||||
Preliminary Purchase Price Allocation
The preliminary estimated Merger Consideration presented above has been allocated to the identifiable assets acquired and liabilities assumed based on their preliminary estimated fair values. The preliminary purchase price allocation has been prepared using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed are recognized and measured at their estimated acquisition-date fair values.
11
The preliminary purchase price allocation is based on information currently available and assumptions that management believes are reasonable. The final purchase price allocation will be based on the final acquisition date fair values of the identifiable assets acquired and liabilities assumed as of the Merger Closing Date and may differ materially from the preliminary allocation reflected below as additional information becomes available and further analyses are completed.
The following table presents the preliminary allocation of the estimated Merger Consideration to the identifiable assets acquired and liabilities assumed of Roku based on their preliminary estimated fair values as of September 30, 2026.
| (Amounts in millions) |
As of September 30, 2026 | |||
| Current assets |
||||
| Cash and cash equivalents |
$ | 2,721 | ||
| Receivables |
888 | |||
| Other |
328 | |||
|
|
|
|||
| Total current assets |
$ | 3,937 | ||
|
|
|
|||
| Non-current assets |
||||
| Property and equipment |
$ | 143 | ||
| Intangible assets |
8,800 | |||
| Deferred tax assets |
19 | |||
| Other non-current assets |
477 | |||
|
|
|
|||
| Total assets, excluding goodwill |
$ | 13,376 | ||
|
|
|
|||
| Current liabilities |
||||
| Accounts payable, accrued expenses and other current liabilities |
$ | 1,461 | ||
|
|
|
|||
| Total current liabilities |
$ | 1,461 | ||
|
|
|
|||
| Non-current liabilities |
||||
| Deferred tax liabilities (1) |
$ | 992 | ||
| Other liabilities |
427 | |||
|
|
|
|||
| Total liabilities |
$ | 2,880 | ||
|
|
|
|||
| Net assets acquired |
$ | 10,496 | ||
| Goodwill |
14,573 | |||
|
|
|
|||
| Preliminary fair value of total estimated Merger Consideration |
$ | 25,069 | ||
|
|
|
|||
| (1) | Includes a preliminary net deferred tax liability of approximately $1 billion, consisting of a $2.1 billion deferred tax liability primarily arising from the acquisition-date fair value step-up of identifiable intangible assets, partially offset by a $1.1 billion reduction to Roku’s historical valuation allowance based on FOX’s assessment of the realizability of the acquired deferred tax assets as of the Merger Closing Date. The resulting net deferred tax liability is reflected as a corresponding increase to preliminary goodwill. |
Note 4. Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet
Transaction accounting adjustments include the following adjustments related to the unaudited pro forma condensed combined balance sheet as of September 30, 2026:
Financing Transaction Accounting Adjustments
The financing transaction accounting adjustments to the unaudited pro forma condensed combined balance sheet as of September 30, 2026 are primarily comprised of the impact of borrowings of $2 billion under the Term Loan Facility, less debt issuance costs, and borrowings of $8.4 billion under the Bridge Facility, net of applicable capitalized financing fees, for total net borrowings of $10.3 billion. FOX financed the remaining cash consideration and related transaction costs with available cash on hand at FOX and Roku. FOX expects to refinance all of the borrowings under the Bridge Facility with Permanent Financing subsequent to the consummation of the Mergers.
| (a) | Represents borrowings of $2 billion under the Term Loan Facility, less debt issuance costs, which were used to pay a portion of the cash consideration and related transaction costs in connection with the Mergers. |
| (b) | Represents the net borrowings of $8.3 billion under the Bridge Facility of $8.4 billion, less $76 million of capitalized financing fees, which were used to fund a portion of the cash consideration and related transaction costs in connection with the Mergers. The capitalized financing fees include structuring and upfront fees incurred in connection with the execution of the Bridge Commitment Letter, as well as funding fees payable upon drawing on the Bridge Facility. FOX has presented the borrowings as long-term within “Borrowings” in the unaudited pro forma condensed combined balance sheet based on its expectation to refinance all of the borrowings under the Bridge Facility with Permanent Financing subsequent to the consummation of the Mergers. Additionally, FOX’s historical balance sheet as of September 30, 2026 has been adjusted to reclassify $32 million of fees capitalized in connection with entering into the Bridge Commitment Letter from “Other” to “Borrowings.” |
12
Mergers Transaction Accounting Adjustments
| (c) | Represents an adjustment of $14.7 billion to decrease the amount of cash and cash equivalents, which was determined as follows: |
| (Amounts in millions) |
As of September 30, 2026 | |||
| Cash consideration transferred (1) |
$ | 14,718 | ||
| Transaction costs (2) |
— | |||
|
|
|
|||
| Pro forma net adjustment to cash and cash equivalents |
$ | 14,718 | ||
|
|
|
|||
| (1) | Represents the estimated cash consideration transferred to Roku stockholders of $96.00 per outstanding share of Roku Class A Common Stock and Roku Class B Common Stock pursuant to the Merger Agreement (See Note 3). |
| (2) | Represents the incremental cash payment for estimated FOX transaction costs paid at the Merger Closing Date in connection with the Mergers. This adjustment reflects only transaction costs not previously accrued in FOX’s historical financial statements. |
| (d) | Represents an adjustment of $8.8 billion to intangible assets acquired from Roku recognized in connection with the Mergers, consisting of the following: |
| (Amounts in millions) |
Estimated Useful Life (in years) |
Preliminary Fair Value | ||||||
| Trade name |
20 | $ | 2,500 | |||||
| Existing technology |
7 | 2,200 | ||||||
| Customer relationships |
13 | 4,100 | ||||||
|
|
|
|||||||
| Total fair value of Roku’s identifiable intangible assets |
$ | 8,800 | ||||||
| Less: Roku’s historical intangible assets |
39 | |||||||
|
|
|
|||||||
| Pro forma adjustment to intangible assets |
$ | 8,761 | ||||||
|
|
|
|||||||
The fair value estimates for all identifiable intangible assets are preliminary and are based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). The final fair value determination for identifiable intangibles may differ materially from this preliminary determination.
The preliminary fair value of Roku’s identifiable intangible assets includes finite-lived intangible assets. The fair value assigned to intangible assets has been estimated based on third-party preliminary valuation studies utilizing income-based methodologies. The preliminary estimates and related useful lives are subject to refinement as additional information becomes available and the valuation procedures are completed. For purposes of the unaudited pro forma condensed combined financial information, leases, personal property, content assets (owned and licensed), deferred revenue, and inventory are presented at their respective historical book values, as management has determined that the carrying amounts of these assets and liabilities approximate their respective fair values. The final fair value, useful lives and resulting amortization may differ materially from the preliminary estimates reflected in the unaudited pro forma condensed combined financial information.
| (e) | Represents the recognition of the preliminary goodwill of $14.3 billion associated with the Mergers. Goodwill represents the estimated Merger Consideration in excess of fair value of the underlying identifiable net assets acquired. |
| (Amounts in millions) |
As of September 30, 2026 | |||
| Goodwill per preliminary purchase price allocation |
$ | 14,573 | ||
| Less: Historical Roku Goodwill |
309 | |||
|
|
|
|||
| Net pro forma transaction adjustment to Goodwill |
$ | 14,264 | ||
|
|
|
|||
| (f) | Represents an adjustment to accrue FOX’s incremental estimated transaction costs of $143 million incurred in connection with the Mergers. This adjustment reflects only transaction costs not previously accrued in the historical financial statements. These costs are non-recurring and are not expected to have a continuing impact on FOX’s operating results in future periods. |
| (g) | Represents an adjustment of approximately $1 billion to increase the net deferred tax liability for temporary differences between the book and tax basis as a result of the preliminary purchase price allocation. The adjustment consists of a $2.1 billion increase to the deferred tax liability primarily arising from the acquisition-date fair value step-up of identifiable intangible assets, partially offset by a $1.1 billion reduction to Roku’s historical valuation allowance. |
As part of the preliminary acquisition accounting, FOX reassessed Roku’s deferred tax assets and the related valuation allowance based on the facts and circumstances existing as of the Merger Closing Date, including expected sources of taxable income of the combined company. Based on this assessment, FOX preliminarily determined that Roku’s historical valuation allowance was no longer required.
A blended federal and state statutory rate of 24.66% was used in establishing the deferred tax liability. The purchase price allocation, including the related deferred tax balances, is preliminary and based on management’s current estimates and assumptions. The final purchase price allocation may differ from these preliminary estimates as additional information becomes available and the valuation of the acquired assets and assumed liabilities is completed.
| (h) | The following table summarizes the transaction accounting adjustments impacting the historical equity balances of Roku: |
Adjustments to Roku Equity: Represents the elimination of Roku’s historical equity balances as of September 30, 2026.
| (Amounts in millions) |
Adjustments to Roku Equity |
Transaction Costs (1) |
Total Transaction Accounting Adjustments |
|||||||||
| Common stock |
$ | 1 | $ | — | $ | 1 | ||||||
| Additional paid-in capital (2) |
6,096 | — | 6,096 | |||||||||
| Retained earnings |
1,218 | (143 | ) | 1,075 | ||||||||
| Accumulated other comprehensive income (loss) |
— | — | — | |||||||||
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| Pro forma net adjustment to equity |
$ | 7,315 | $ | (143 | ) | $ | 7,172 | |||||
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| (1) | Transaction Costs: Represents $143 million of FOX’s estimated incremental transaction costs incurred in connection with the Mergers which have been reflected as a decrease in retained earnings. This adjustment reflects only transaction costs not previously accrued in the historical financial statements. |
| (2) | Additional paid-in capital: Reflects net adjustment to eliminate Roku’s historical additional paid-in capital of $4.3 billion and to record the issuance of $10.4 billion of FOX Class A Common Stock as Merger Consideration. |
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Note 5. Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations
Transaction accounting adjustments include the following adjustments related to the unaudited pro forma condensed combined statements of operations for the three months ended September 30, 2026 and the year ended June 30, 2026, as follows:
Financing Transaction Accounting Adjustments
| (a) | Represents an adjustment to interest expense related to borrowings under the $2 billion Term Loan Facility, including contractual interest and the amortization of debt issuance costs. The Term Loan Facility has an assumed SOFR-based interest rate of 5.04%, inclusive of the applicable margin. |
| (Amounts in millions) |
Three Months Ended September 30, 2026 |
Year Ended June 30, 2026 |
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| Interest expense on the Term Loan Facility |
$ | 25 | $ | 101 | ||||
| Amortization of capitalized debt issuance costs |
— | — | ||||||
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| Pro forma adjustment to interest expense |
$ | 25 | $ | 101 | ||||
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An increase or decrease of 0.125% in the assumed variable interest rate is not expected to have a material impact on pro forma interest expense for the three months ended September 30, 2026 or the year ended June 30, 2026.
| (b) | Represents an adjustment to interest expense related to borrowings under the Bridge Facility, including the contractual interest, commitment fees to maintain access to the Bridge Facility, and the amortization of capitalized fees incurred in connection with the execution of the Bridge Commitment Letter and the related drawdown. The Bridge Facility has an assumed SOFR-based interest rate of approximately 5.16%. |
| (Amounts in millions) |
Three Months Ended September 30, 2026 |
Year Ended June 30, 2026 |
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| Interest expense on the drawn Bridge Facility |
$ | 109 | $ | 433 | ||||
| Amortization of capitalized fees incurred in connection with the execution of the Bridge Commitment Letter and commitment fee on undrawn Bridge Facility |
(11 | ) | 108 | |||||
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| Pro forma adjustment to interest expense |
$ | 98 | $ | 541 | ||||
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An increase or decrease of 0.125% in the assumed variable interest rate would increase or decrease pro forma interest expense by approximately $3 million and $11 million for the three months ended September 30, 2026 and the year ended June 30, 2026, respectively.
FOX’s historical statements of operations for the year ended June 30, 2026 include expenses associated with the Bridge Commitment Letter. The pro forma adjustment includes only the incremental amount not already reflected in FOX’s historical financial information. For the three months ended September 30, 2026, an adjustment of $11 million reflects the reversal of historical amortization expense associated with the Bridge Facility, as the related financing fees are reflected in the pro forma results for the year ended June 30, 2026.
Mergers Transaction Accounting Adjustments
| (c) | Represents the elimination of transactions between FOX and Roku of $107 million and $302 million for the three months ended September 30, 2026 and the year ended June 30, 2026, respectively, related to the purchase and sale of digital advertising and distribution agreements between the companies. |
| (d) | Reflects the net incremental amortization expense of $185 million and $733 million for the three months ended September 30, 2026 and the year ended June 30, 2026, respectively, resulting from the preliminary fair value of Roku’s finite-lived intangible assets. Refer to the summary of amortization by component below: |
| (Amounts in millions) |
Three Months Ended September 30, 2026 |
Year Ended June 30, 2026 |
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| Amortization expense based on preliminary fair value of acquired intangible assets |
$ | 189 | $ | 755 | ||||
| Elimination of Roku historical amortization expense |
(4 | ) | (22 | ) | ||||
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| Pro forma adjustment to amortization expense |
$ | 185 | $ | 733 | ||||
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| (e) | Represents an adjustment to record FOX’s estimated transaction costs of $143 million, incurred in connection with the Mergers. These costs are non-recurring and are not expected to have a continuing impact on FOX’s operating results in future periods. The pro forma adjustment includes only the incremental amount not already reflected in FOX’s historical financial information. |
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| (f) | A blended federal and state statutory rate of 24.66% and 24.66% for the three months ended September 30, 2026 and the year ended June 30, 2026, respectively, has been assumed and applied only to the pro forma adjustments. The historical financial information reflects FOX’s and Roku’s historical reported amounts and has not been adjusted to reflect this assumed tax rate. The blended tax rate is not necessarily indicative of the effective tax rate of FOX. Further, as preliminary assessments are ongoing, no adjustments have been recorded related to tax deduction limitations for transaction costs. |
| (g) | Represents the incremental compensation expense of $68 million and $397 million for the three months ended September 30, 2026 and the year ended June 30, 2026, respectively, recognized following the Mergers related to the modification of Roku’s outstanding RSUs and options. The adjustment reflects the estimated incremental fair value attributable to the modified, unvested awards, which will be recognized over the respective remaining requisite service periods. |
| (h) | Represents an adjustment to selling, general and administrative expense of $31 million for the year ended June 30, 2026, associated with retention bonuses payable to certain Roku employees in connection with the Mergers. The bonuses vest and become payable 12 months following the Merger Closing Date, subject to continued employment, or earlier in the event of termination by FOX other than for cause. The adjustment reflects a nonrecurring expense that is not expected to have a continuing impact on the combined company’s results of operations. |
Note 6. Pro Forma Earnings Per Share
The unaudited pro forma combined basic and diluted earnings per share calculations are based on the weighted average basic and diluted shares of FOX. The following table summarizes the computation of the unaudited pro forma combined basic and diluted earnings per share:
| (Amounts in millions, except per share amounts) |
Three Months Ended September 30, 2026 |
Year Ended June 30, 2026 |
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| Numerator: |
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| Pro forma net income |
$ | 856 | $ | 615 | ||||
| Pro forma net income attributable to common shareholders |
$ | 842 | $ | 573 | ||||
| Denominator - Basic: |
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| Historical FOX weighted average shares of common stock outstanding |
421,212,097 | 431,249,754 | ||||||
| Class A Common Stock issuance |
148,609,448 | 148,609,448 | ||||||
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| Pro forma weighted average shares outstanding - Basic |
569,821,545 | 579,859,202 | ||||||
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| Pro Forma earnings per share - Basic |
$ | 1.48 | $ | 0.99 | ||||
| Denominator - Diluted: |
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| Historical FOX weighted average shares of common stock outstanding - Diluted |
428,036,905 | 439,185,842 | ||||||
| Class A Common Stock issuance |
148,609,448 | 148,609,448 | ||||||
| Converted unvested awards outstanding - Diluted |
3,867,500 | 3,604,332 | ||||||
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| Pro forma weighted average shares outstanding - Diluted |
580,513,853 | 591,399,622 | ||||||
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| Pro Forma earnings per share – Diluted |
$ | 1.45 | $ | 0.97 | ||||
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