Streaming software and device manufacturer Roku Inc. ROKU, +0.00% has signaled its intention to go to the market for an initial public offering and will be listed on the Nasdaq under the ticker “ROKU,” according to the company’s S-1 filed late Friday.
In the filing, the company wrote that it will seek $100 million in funding, which is a common placeholder that companies use when they file for an IPO and will likely change before shares change hands.
The Los Gatos, Calif.,-based company got its start as a unit of Netflix Inc. NFLX, -0.13% in 2007 and was at one time given the secret code name of “Griffin,” after Tim Robbins’ character from the film “The Player,” according to Fast Company. But the streaming giant sold its stake in 2009, in part because it was concerned about competing with hardware partners such as Apple Inc. AAPL, -1.20% .
The IPO filing is not exactly a surprise, and though the company had initially considered filing a secret IPO, it abandoned those plans and was rumored to launch its offering before the end of this year at a $1 billion valuation. Morgan Stanley MS, -2.77% , Citigroup C, -2.07% , and Allen & Co. are listed as underwriters, according to the filing.
Here’s what you need to know:
How Roku makes money
Roku essentially sells three things: its streaming hardware that works with TVs, advertising, and its partners’ content sold through its software. Roku lists the last two on that list under “platform revenue,” a segment that is growing while hardware revenue seemingly stalls.
Much like TiVo Inc. TIVO, -2.70% before it, Roku thinks the platform is where the money is. According to the filing, for the first six months of 2017, the company’s hardware sales dipped 2% to $117.3 million from the year-earlier period. Though the company is actually selling 37% more hardware, it said in its IPO filing that it is bringing down average selling prices. Platform revenue, on the other hand, jumped 91% to $43.1 million for the same six-month period.
It has been profitable for one quarter
So far, the company lists just one quarter of profitability…