The Los Gatos, Calif., start-up has become the leading brand in the online-video device industry. It has managed to fend off competition from bigger names, including Apple TV, Google Chromecast and Amazon Fire TV. The company generates revenue primarily from sales of its small boxes, which connect to the Internet and allow users to display Netflix, YouTube and other apps on their televisions.
If Roku goes forward with the initial public offering plans, it would be the highest-profile stock market debut of a hardware company since fitness-tracker company Fitbit in 2015 and action-camera maker GoPro in 2014.
The company indicated it plans to raise $100 million, though such initial figures are typically changed later in the IPO process. Roku previously raised more than $200 million from venture capitalists and other investment partners, including 21st Century Fox, which owns 7% of the firm. Such early investors would carry 10 votes per share after an IPO.
Though financial analysts say demand for new tech stocks remains high, unprofitable companies — such as Roku — have found troubled results recently. Snapchat maker Snap Inc., which went public in March, has traded below its initial price of $17 for several weeks amid concerns about encroaching competition. Meal kit delivery company Blue Apron has struggled since a June listing.
Roku generated $200 million in sales in the first half of this year, but it lost $24 million during that period because of costs related to manufacturing, marketing and other areas. The company has sought to diversify revenue by selling ads that appear in Roku’s home screen on the TV and by cutting partnership deals with media companies.
But not all of those relationships are paying off. Roku warned investors in a financial disclosure Friday that it doesn’t generate noticeable revenue from Netflix even though the app accounts for about one-third of all time spent accessing content through its devices. Neil Hunt, Netflix’s chief product officer until leaving the company in July, is on Roku’s board of directors.
Roku also receives no revenue from YouTube, another app where users spent considerable time. Overall, five apps together take up about 70% of the time people spend with Roku.
Stock buyers in the IPO, which possibly could take place next month, would receive one vote per share. Dual-class share structures have drawn criticism and changes to stock-index rules this year since Snap’s decision to offer only nonvoting shares in its IPO.
Roku held $70 million in cash as of June 30. The company, which has an office in Los Angeles, employs about 700 people.