Weekly Update #215: Roku files for IPO

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Hello Investors,

Today's blurb comes from Catherine Klinchuch, our Finance and Research Lead.

Roku files for IPO

  • Roku filed an S-1 with the SEC on Friday, indicating its intent to complete an IPO. The company will be trading on the NASDAQ under the ticker “ROKU”.

  • Roku is not yet profitable, but growth remains solid. Trailing twelve-month (TTM) revenue was $436M, a 23% increase over the prior twelve-month period.

  • Expected IPO pricing range is not available at this time. Roku’s implied valuation from its last funding round was $1.1B. Netflix - the closest pure-play comp - trades at 7.3x TTM sales. If Roku achieves a similar multiple, its shares would be worth ~$3.2B (using revenue figure cited above).

  • Key Roku investors include Menlo Ventures and Fidelity

Key questions from our reading of the S-1

  • Public investors can be less patient on achieving profitability than their private market peers and some recent tech IPOs have floundered post-offering as profit expectations were reset. What is Roku’s path to profitability and how quickly does the company expect to move out of the red?

  • What does the competitive landscape look like for Roku? The company indicates it has a 37% share in the streaming media playing market -- how has this changed over time? Roku’s key competitors include three formidable tech giants -- Apple, Amazon and Google. What is the company’s strategy to compete effectively against these deep-pocketed rivals?

In other news...

Phil Haslett
Founder + Head of Investments, EquityZen


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