Set-Top Box Maker Roku Files for IPO, Could Raise $100 Million
As has been widely expected, set-top box maker Roku has filed for an initial public offering (IPO) with the goal of generating $100 million. The news broke late Friday, just before the holiday weekend. Morgan Stanley and Citigroup Inc. are taking the lead on the IPO.
Roku is well-poised for an IPO, as Parks Associates recently announced the company is the streaming device leader, besting Amazon, Apple, and Google in a competitive market. Roku began selling set-top boxes in 2008. The company is known for easy set-up, intuitive software, and offering hardware at a range of consumer-friendly prices. In recent years, it has licensed its streaming video interface to TV makers (including TCL and RCA).
Roku's IPO filing shows it generated $199.7 million in revenue in the first half of 2017, which is a 23 percent improvement over the same time the previous year. The company has never turned a profit, however.
The filing shows Roku made 59 percent of its revenue this year from device sales and 41 percent from selling ads on certain channels, licensing fees, and related income. The company has 15.1 million active accounts, with the average user streaming 3 hours per day. One-third of content streaming through Roku devices comes from Netflix.
While Roku is popular with streamers, financial writers haven't been as positive with the IPO. Citing looming competition from Apple and week financials, Forbes advises investors to pass. It sees acquisition as Roku's best hope for profitability. TheStreet notes that two other tech IPOs this year—Snap Inc. and Blue Apron Holdings Inc.—have both been "rocky."
The ad-supported Roku Channel will gain live news feeds in May, as well private listening support for up to four devices per account.
Not content with owning the living room, Roku wants to link smart speakers and soundbars in a home entertainment network.
While customers currently need a Roku box or stick, or a licensed Roku TV, to stream from its channels, soon they might only need a mobile app.
The leading STB maker quietly drops two models from its hardware line while pushing its devices to support more than just streamed content.
Roku and Amazon have had a successful year and increased their share of the U.S. broadband market, while Apple and Google have lost ground.
Ahead of a rumored IPO, Roku is warning those who add private channels to their accounts, and may be banning services with pirated content.
This is a good time to plan an IPO: Roku has risen to become the most popular video streaming device, while the Apple TV falls farther and farther behind.