TV service provider Roku files for big IPO

Roku, a major provider of streaming devices to households throughout the United States, plans to offer ownership in its company on the Nasdaq public stock exchange.

Roku filed for an initial public offering (IPO) on Friday, hoping to raise up to $100 million.

According to reports, the stock will list on the tech- heavy Nasdaq exchange under the symbol “ROKU.”

Roku, which offers users the ability to stream from services such as Netflix, Hulu and Amazon Prime, is benefiting from the decline in cable subscriptions.  Some experts say that in the future, the majority of TV viewing will be streamed, which is called “over-the-top” (OTT), via online apps.  According to ComScore, OTT viewing has grown to become a mainstream media “behavior” in the United States.

CEO of DML NEWS, Dennis Michael Lynch, agrees with the OTT model being the wave of the future.  “Everything is moving to an app-based model.  People don’t want the limitations that come with cable and satellite TV.  With an app for this, and an app for that, the ability to watch what you want when you want will prevail long term.”

Reportedly, 51 million households, or roughly 54%, of Wi-Fi connected homes are streaming video content OTT to a television set. According to Roku’s filing, with 15.1 million active accounts, Roku has grown from streaming less than a billion hours in 2012, to 9.4 billion in 2016.

“We believe all TV content will be available through streaming,” the company said. “Furthermore, as a pure play, neutral TV streaming platform, we are better able to serve content publishers compared to other platforms that have diversified business operations and competitive content offerings.”

According to CNBC, Roku is losing money. They report that Roku is experiencing “swelling expenses on staff for research and marketing.”

The media outlet complied key figures from the filing:

  • $398.6 million revenue in the 2016 fiscal year, up 25 percent from 2015
  • Net loss of $42.8 million in 2016
  • 74% of revenue came from selling player devices in 2016
  • Roku’s main manufacturers are Foxconn and Lite-On
  • The company is backed by Twenty-First Century Fox, Fidelity, and Menlo Ventures, which are the major shareholders that will get cash from the IPO
  • The IPO will be underwritten by Morgan Stanley, Citigroup, Allen & Company, RBC Capital Markets, Needham & Company and William Blair.

The following information about Roku was obtained from their website:

Roku pioneered streaming for the TV, and we aspire to power every TV in the world. We developed a streaming platform that delivers a best-in-class user experience. At the heart of the Roku platform is our proprietary operating system, the Roku OS, which we built from the ground up. Roku is recognized for streaming innovation. This is demonstrated by our growing, passionate and highly engaged customer base who love Roku streaming devices because of our coveted content selection, ease of use, and value. Roku has 15 million monthly active accounts as of June 30, 2017 that streamed in the last 30 days.

We believe that all television will be streamed, and that all TVs and set-top-boxes will be powered by software-based operating systems that provide a dramatically better user experience than has existed historically for the TV. Like the computer and mobile markets, a similar dynamic is happening with the big screen TV where only a small number of highly competitive platforms will exist.

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