Roku Files For An IPO As Diversification Starts Bearing Fruits

Streaming software and devices maker Roku last week filed to go public. According to documents provided to the U.S. Securities and Exchange Commission, Roku is looking to raise approximately $100 million. Roku will be listed on the Nasdaq and has been assigned ROKU as the symbol. This comes almost two months since it was reported by the Wall Street Journal that the streaming devices firm would be filing for an IPO before the end of the year.

About 74% of the revenues from the firm which was started by Anthony Woods in 2002 are generated from hardware sales. In this calendar year’s first six months, the share of revenues generated from selling hardware has reduced to 59%. After a process of diversification, Roku, which had initially wanted to file for an IPO three years ago, now also generates revenues from subscriptions and advertising and this currently comprises about 41% of total revenues.

R&D costs

In the first two quarters of this year, revenues have increased by 23% to reach a figure of $199.7 million compared to $162.3 million which was generated last year in a similar period. Last year the firm made losses of close to $43 million. In this year’s first half the company has lost $24.2 million. Part of the reason for the losses is that Roku is spending huge amounts on research and development for a company its size. In the first half of this year Roku will spend $48.1 million on research and development.

The IPO filing documents show that Roku had slightly over 15 million active accounts by the end of the first half of this year. This puts Roku ahead of Apple and Google and other competitors. Additionally in the first half of this year users of Roku devices streamed over 6.7 billion hours and this was an increase of 62% from a similar period in 2016.

Financial backers

Some of the backers of Roku include Fidelity, Globescan Capital Partners, Menlo Ventures and 21st Century Fox. Menlo Venture is the biggest shareholder of Roku as it has a stake of 35.3%. Fidelity’s stake in Roku is 12.9% while that of 21st Century Fox is 7%. Globescan Capital Partners owns approximately 6.1% of Roku.

Documents availed in Roku’s IPO filing have also revealed that Neil Hunt, a former long-serving chief product officer of Netflix, has joined the streaming devices maker as a non-executive director. His selection to Roku’s board of directors was as a result of his long experience in the online video streaming sector.

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