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Set-Top Box Maker Roku Files for IPO, Could Raise $100 Million

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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."

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