Why Roku should be the benchmark for Uber
Before its first trade on Friday, Uber (UBER) CEO Dara Khosrowshahi should give Roku (ROKU) founder and CEO Anthony Wood a quick call. He probably won’t, but he should.
That’s because Roku has been a model for a successful tech IPO. The company has delivered above plan on its financials, has kept it real with Wall Street and media and is generally viewed as not having a pompous suite of Silicon Valley executives in its C-suite.
Thus far, Wood’s steady demeanor and laser focus on the big prize – being the de facto distribution platform of choice for streaming content – has paid off handsomely for investors. Since a well-received initial public offering on Sept. 28, 2017 (the stock closed up 68% on the first day of trading), Roku’s stock has skyrocketed 243%.
The company has won over a good portion of an initially skeptical Wall Street with impressive growth in active accounts and the number of hours content is streamed on the Roku platform. Roku’s active accounts surged 40% to 29.1 million in the first quarter of 2019. Hours streamed on the platform exploded by 1.6 million sequentially as people consume more of their content on demand.
Helping to fuel that rapid growth is the relatively cheap Roku device. For $30 or so, a consumer can quickly get into content streaming. Easy setup and a slick user interface have also long been key selling points.
The operating system of choice for smart TVs
Meanwhile, Roku, based in Los Gatos, Calif., has charted a path to being the operating system of choice in smart TVs while also launching wireless surround sound speakers.
Roku says its operating system is the number one licensor to TV manufacturers. One in three smart TVs in the first quarter came equipped with a Roku built in, according to Roku. These products, Wood says, are part of Roku’s efforts to make it easier for people to enjoy content from the confines of their own home. They also help diversify Roku from its ubiquitous streaming device.
Roku has also struck deals with Apple and and Disney to be the platform of choice for their new streaming services. Factor in a surging ad business, investors still have a lot to like about Roku’s prospects.
Wood admits he has learned a few lessons being a public company CEO. But he sounds more akin to a veteran of the earnings calls battles rather than an executive approaching only two years as a public company.
“Being a public company has raised Roku’s profile — we are in a competitive industry and that has been helpful,” Wood said on Yahoo Finance’s ‘The First Trade.’ “I think the quarterly results provide a little more discipline, which I think is helpful — although a lot of work. It has been a good process for us.”
Uber can learn a thing or two from Wood and Roku, that much is for sure.
Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi
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