On Friday, Roku Inc. filed for an initial public offering (IPO) in the United States, according to files available in the public record submitted by the company to the Security and Exchange Commission (SEC). The streaming powerhouse seeks to raise $100 million from investors and a valuation of roughly $1 billion.
The filing comes on a Friday before Labor Day weekend, a move many interpreted as seeking discretion in its highly competitive market, as well as with potential shareholders and interested parties. Roku recently reported significant, constant growth, although losses are still an issue it’s struggling with.
The popular set-top streaming box is about to get more popular, as it tries to diversify its business beyond hardware sales into other areas of growth. However, it also faces intense competition from tech giants like Amazon, Google, and Apple.
Roku and Netflix have a longstanding history
Throughout its 15-year-old history, Roku has carved itself a spot in the streaming race by being in the right place at the right time. Most notably, this happened due to a stellar partnership with Netflix at the beginning of its meteoric rise.
Back in 2008, Roku became the first hardware company to make a dedicated streaming box for the popular service. Back then, it was priced at $99.99 and it provided viewers with access to Netflix’s catalog of movies and TV shows. Both firms were effectively ushering a new era of media consumption.
Netflix continues to have a home in Roku boxes and sticks, and it accounts for a third of the content that its viewership base watches. Moreover, the two companies have drifted a little bit but old ties remain: Neil Hunt, Netflix’s former chief of product, joined Roku’s board of directors last month.
Roku, which is backed by Netflix and others, is expected to seek a valuation of $1 billion https://t.co/kaVMqO9uVf
— Wall Street Journal (@WSJ) September 1, 2017
Roku wants to drive revenue from sources other than boxes
In spite of this close relationship that has certainly helped Roku gain prominence and become competitive, its tremendous growth is nobody’s merit but its own. Against rivaling boxes like the Apple TV, Amazon Fire TV, and Google Chromecast, the streaming devices from the company outperformed them all.
However, its success comes mostly from set-top box sales and ad revenue from its platform. The manufacturer and service provider drove home close to $200 million during the first six months of the year, but its heavy investment in research and development has left it with losses nearing the $50 million mark.
Roku wants to raise $100 million through its IPO to compensate for this, since it knows that R&D will pay for itself in the long run. The firm might be looking into other sources of revenue, like original content production a la Netflix, to consolidate its position as a force to be reckoned with in the market.