The rise in popularity of media streaming has been a feature of the last few years and as the fortunes of this industry have risen, so has the name of Roku, the California based service which, in early September 2017 announced that it was planning an Initial Public Offering that hoped to raise $100 million. The filing in which the company announced this objective included information that is bound to be of interest to any of you who wish to invest in a company that is a major player in this fast expanding field of enterprise. During the second quarter of 2017 Roku had acquired 15.1 million active accounts, a growth by 43% from the same period in the preceding year. Its users streamed 6.7 billion hours of content on the platform and again this represented a striking increase from the same time in the previous year, in this case, an increase of 67%.
The success of the company will come as little surprise to those you who are already familiar with the media streaming business since Roku has made a name for itself since its foundation back in 2008., not only with its set-top boxes and streaming sticks but also with streaming-ready TV sets which it manufactures in partnership with such companies as Sharp and TCL. Perhaps one of the most notable features of and the platform it provides is its so-called agnostic nature when it comes to apps; Roku put simply Roku allows its customers to download whichever apps they want to use.
Originally Roku only carried Netflix but now they offer over 5,000 apps, an indication of the expansion in the TV streaming market in the last decade. Roku as a company, has a firm and individualistic policy and vision for its core business, believing that TVs will, in the words of the CEO Anthony Wood “be powered by purpose-built operating systems optimized for streaming.”
If the preceding makes the picture sound completely rosy then there is also information contained in the filing that might sound a note of alarm for any possible future investors. Like the very great majority of recently established companies in the tech sector, Roku is not yet making a profit, indeed over the course of its existence it has acquired losses of $244 million, and even last year, with improved uptake and performance Roku made a loss of almost $43 million for its overall revenue of $399 million. However, as has been noted, this is hardly surprising and it does not make the company stand out as a particularly risky investment. Perhaps more worrying is the comparatively small size of the company when it is compared to its rivals. The figures mentioned above might sound impressive, but when compared to the revenues of such as Amazon, Google and Apple, they are strictly small potatoes. The IPO aims to raise some much-needed cash to enable this tech David to compete with some hefty and very well financed Goliaths.
(Simon Topliss, Research)
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