Video streaming company Roku raises $219M in IPO

Video streaming company Roku raises $219M in IPO

Video streaming company Roku raises $219M in IPO

This company connects users to the streaming content, enables content publishers to build and monetize large audiences, and provides advertisers with unique capabilities to engage consumers.

Roku, however, has managed to deftly navigate the turbulent landscape, wisely branching out from the revenue from its streaming sticks and boxes-which is still three-quarters of total sales-into areas like advertising and licensing. But instead of having to worry about only one major foe, Roku must prove it can outmaneuver a cast of formidable competitors, including Amazon, Apple and Google.

However, there are some pitfalls to be wary of: the online streaming industry has a few very big players involved and Roku might be considered a small boat on this very big ocean.

Like many Silicon Valley tech companies entering the public market, Roku is not profitable.

Roku's revenues are weighted towards the hardware side of the business. Roku priced its IPO at the high end of its expected range and seeks to raise more than $200 million in its Wall Street debut.

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The company licenses its software to companies such as Sharp and Hitachi and gets a cut of the advertising revenue from media companies with apps on its platform. For its 2016 fiscal year, Roku generated $398.5 million of revenue which was an increase of more than 25% compared to its fiscal year 2015.

To compete better, the California-based firm has opened its platform to more TV apps than its peers, including Amazon Prime Video, Hulu and Google Play, allowing it to offer over 3,000 channels internationally.

Local TV streaming startup Roku popped in its public market debut Thursday morning, with its shares climbing almost 30 percent.

Earlier this month, the company launched the Roku Channel, which features hundreds of free, ad-supported movies. It generated revenue of $199.7 million in the first six months of 2017, up 23% from $162.3 million in the same six months of 2016.

"That's great growth for them, but that playbook can also be copied", said Kathleen Smith, principal at Renaissance Capital.

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