Streaming Video Company Roku Files for U.S. Initial Offering

(Bloomberg) -- Roku Inc., the maker of devices and software for streaming video that was an early challenger to traditional home-entertainment providers, filed for a U.S. initial public offering.

The company listed an initial offering size of $100 million, which it said is a placeholder used to calculate fees and will probably change. The company plans to use the proceeds for general corporate purposes including research and development and marketing, according to a filing Friday with the U.S. Securities and Exchange Commission.

Roku was an early mover in what is now a crowded market of home devices and streaming tools. It’s a specialist in an industry in which several technology giants, including Apple Inc., Alphabet Inc.’s Google and Amazon.com Inc., are now focusing intently.

The company, which has been losing money since it began in 2002, acknowledges the risk of the “highly competitive” market, according to its regulatory filing. While competitors may be able to afford to lose money on their devices, Roku said its advantage is in its neutrality. Unlike some of the other players, Roku isn’t competing with content providers by making original programming.

“Our mission is to be the TV streaming platform that connects the entire TV ecosystem,” Chief Executive Officer Anthony Wood wrote in the filing.

Roku said it made $11.22 in average revenue per user in the four quarters ended on June 30 compared with $9.28 at the end of 2016. The company said its growth strategy is to increase the number of active accounts and the amount of revenue it makes per user -- money they make when consumers order a streaming-video service, or through advertising deals. Ads and subscription-revenue share make up about 40 percent of total sales.

Roku had 15.1 million active accounts using its streaming services as of June 30, according to the filing. For the six months ended June 30, Roku had revenue of $199.7 million, a 23 percent increase from the same period in 2016, according to the filing. 

Morgan Stanley and Citigroup Inc. are leading the offering, which will be listed on the Nasdaq Global Select Market under the symbol ROKU. The company will offer Class A shares. The company’s seven non-employee directors are venture capitalists and current and former executives in tech and media. All are men.

To contact the reporters on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net, Alex Barinka in New York at abarinka2@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Tom Giles at tgiles5@bloomberg.net, Andrew Pollack, Michael Hytha