Roku Files for IPO, Plans to Raise $100 Million

Roku_Premiere
Courtesy of Roku

Streaming device maker Roku filed for an initial public offering (IPO) Friday afternoon, telling the SEC that it intends to raise as much as $100 million in the process.

The company plans to enlist on NASDAQ under the “ROKU” stock ticker, and Morgan Stanley, Citigroup, and Allen & Co. are listed as underwriters for the public offering.

The filing doesn’t come as a complete surprise; the Wall Street Journal had reported in July that the company had started to hire underwriters for such a move.

The S1 filing with the SEC nonetheless does offer a number of new insights into the company’s business. According to the filing, Roku generated $199.7 million in revenue during the first half of this year, up 23% from $162.3 million during the same time last year. However, Roku is not profitable. Net loss during those first six months was $24.2 million.

Roku began selling streaming devices in 2008, and has since branched out to also provide its operating system to TV manufacturers and pay TV operators. In addition, the company began to build out its own advertising business, which has grown rapidly and is getting closer to becoming the primary revenue driver for the company.

During the first six months of this year, 59% of Roku’s revenue came from the sale of streaming devices, 41% from what the company calls its platform business. This includes ad sales on advertising-supported channels, but also licensing fees, fees for placement in the Roku channel store and more. This platform biz grew 91% year-over-year.

Here are some other noteworthy stats from Roku’s S-1 filing:

— Roku ended June with 15.1 million active accounts. Those accounts stream an average of 3 hours per day.

— Roku users have streamed a total of 27.7 billion hours of audio and video content since the launch of the first Roku streaming device in 2008.

— Roku’s average revenue per user is $11.22.

— During the first half of this year, consumers streamed some 2.9 billion hours of ad-supported content on Roku — an important metric in light of Roku’s growing ad business.

— Roku spent $48 million on research and development during the first six months of this year, which is almost as much as it spent during all of 2015 ($50.5 million). Also, $10 million more that during first half of last year.

— Marketing expenses on the other hand are more or less flat on a year-over-year basis ($28.7 million vs. $26.2 million).

— One-third of all content streamed on Roku is coming from Netflix, a source that the company can’t monetize.

— The biggest ad-supported channel on Roku is YouTube, a service that also sin’t sharing any revenue with Roku.

— Roku employed a total of 696 people at the end of June.

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  1. nerdrage says:

    Roku can monetize Netflix. Don’t just think about this in terms of ads. Roku should set its sights on being a front-end aggregator to the plethora of streaming services that are frustrating people by scattering content around. Roku could create a menu of subscription schemes.

    Maybe I want Amazon, Netflix and HBO Now, that would be $35 separately. Could Roku bundle that for me for $30, and not only get me a $5 discount but also save me the frustration of three subscriptions? Once it’s all under a Roku subscription, I’d be more inclined to start adding services. I’ll try Hulu this month for $7 more…maybe drop HBO for a month…I wonder what’s on Disney…etc.

    The minute I see any news that suggests Roku is thinking along these lines, and has the ability to get Netflix, Amazon, Hulu, HBO etc sign on the dotted line, I am selling my Netflix stock and buying Roku because Roku will be the disrupter who disrupts Netflix. We’ve been waiting to see who will do this…

  2. Bas says:

    $5-10 Billion market cap. Great move!

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