Shares of the streaming service skyrocketed 68% in its first day of trading on Thursday as investors ignored competitive forces such as Alphabet's (GOOGL) - Get Report Chromecast and Amazon's (AMZN) - Get Report Fire stick. Shares popped as much as 22% in early trading on Friday.
While the company's debut benefited from investors looking for the next great tech IPO in a year of so few, there is indeed a growth story to Roku explained CFO Steve Louden in an interview with TheStreet.
Fueled by rapid cord-cutting, Roku's revenue rose 25% in 2016 and 23% during the first half of 2017 to $199.7 million. However, hardware sales fell 2% during the latter period to $117.3 million. Revenue growth stemmed entirely from a 91% increase in Roku's higher-margin "Platform" revenue. That business, which covers ad sales, software licensing, branded channel buttons on Roku remotes and revenue cuts on subscriptions and on-demand content purchased on Roku devices, increased to $82.4 million.
Roku isn't yet profitable, but has plans to get there quickly via a combination of selling ads on its platform and attracting more overall users, says Louden.
Says Louden, "Streaming is mainstream."
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