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Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023 (the “Annual Report”).
The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results to be expected for the full year or any future periods.
Certain prior period amounts reported in our condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, net revenue, and expenses. Significant items subject to such estimates and assumptions include:
•revenue recognition: determining the nature and timing of satisfaction of performance obligations, variable consideration, determining the stand-alone selling prices of performance obligations, gross versus net revenue recognition, and evaluation of customer versus vendor relationships;
•the impairment of intangible assets;
•amortization of content assets;
•valuation of assets acquired and liabilities assumed in connection with business combinations;
•valuation of the Strategic Investment;
•useful lives of tangible and intangible assets;
•allowances for sales returns and sales incentives; and
•the valuation of deferred income tax assets.
The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates and assumptions.
Principles of Consolidation
The condensed consolidated financial statements, which include the accounts of Roku, Inc. and its wholly-owned subsidiaries, have been prepared in conformity with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. The Company’s restricted cash balance is used to secure the outstanding letters of credit after the Credit Facility (defined in Note 10) matured and was repaid in February 2023.
The Company maintains its cash, cash equivalent and restricted cash balances with financial institutions which often exceed regulated insured limits. The table below reflects the percentage of cash, cash equivalent and restricted cash balances at financial institutions that individually held greater than 10% of the Company’s total cash, cash equivalent and restricted cash balance at each period reported.
As of
InstitutionsJune 30, 2023December 31, 2022
Institution A (1)
16%26%
Institution B (1)
18%—%
Institution D*21%
(1) Institutions designated as global systemically important banks (G-SIBs) by the Financial Stability Board, in consultation with the Basel Committee on Banking Supervision (BCBS) and national authorities.
* Less than 10%
Accounts Receivable, net
Accounts receivable are typically unsecured and are derived from revenue earned from customers. They are stated at invoice value less estimated allowances for sales returns, sales incentives, doubtful accounts, and other miscellaneous allowances. The Company performs ongoing credit evaluations of its customers to determine allowances for potential credit losses and doubtful accounts. The Company considers historical experience, ongoing promotional activities, historical claim rates, and other factors to determine the allowances for sales returns and sales incentives.
Allowance for Sales Returns: Allowance for sales returns consists of the following activities (in thousands):
 Three Months Ended Six Months Ended
 June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Beginning balance$5,845 $4,099 $7,417 $6,015 
Add: Charged to revenue5,275 5,289 8,164 8,810 
Less: Utilization of sales return reserve(3,728)(4,718)(8,189)(10,155)
Ending balance$7,392 $4,670 $7,392 $4,670 
Allowance for Sales Incentives: Allowance for sales incentives consists of the following activities (in thousands):
 Three Months Ended  Six Months Ended
 June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Beginning balance$11,672 $27,888 $28,903 $48,411 
Add: Charged to revenue16,993 13,938 27,550 31,550 
Less: Utilization of sales incentive reserve(11,237)(16,933)(39,025)(55,068)
Ending balance$17,428 $24,893 $17,428 $24,893 
Allowance for Doubtful Accounts: Allowance for doubtful accounts consists of the following activities (in thousands):
Three Months Ended  Six Months Ended
 June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Beginning balance$4,506 $3,171 $3,498 $2,158 
Provision for (recoveries of) doubtful accounts1,072 (546)2,962 467 
Adjustments for write-off— (347)(882)(347)
Ending balance$5,578 $2,278 $5,578 $2,278 
The Company did not have any customer that accounted for more than 10% of its accounts receivable, net balance as of June 30, 2023 and December 31, 2022.