Roku Inc (NASDAQ:ROKU) reported its first quarterly earnings since its September IPO. After posting a much narrower-than-expected loss, higher-than-expected Roku revenue and notching a 48% year-over-year increase in active accounts, ROKU stock was up a whopping 55%.
On the same day as its Q3 earnings hit, it was reported that Roku had quietly acquired a Danish company specializing in multi-room audio. All signs now point to a Roku smart speaker to join its stable of set-top video streamers.
Report: Roku Bought Dynastrom
Yesterday, Variety reported that it appears Roku bought Danish multi-room audio startup Dynastrom for $3.5 million in September. This is based on a regulatory filing made by Roku on Thursday. The filing doesn’t specifically name Dynastrom, but references a company based in Denmark. In addition, multiple key Dynastrom employees — including its CEO and CTO — changed their LinkedIn profiles to indicate they had joined Roku in September.
So that seems pretty conclusive.
Adding fuel to the fire, during the Q3 earnings call, Roku’s CEO told investors: “We are investing significantly into a massive opportunity.”
Dynastrom Technology Points to a Roku Smart Speaker
Dynastrom specializes in multi-room streaming audio for speakers. With the acquisition, Roku gains the technology needed to power multi-room audio. It had been reported earlier, that the Roku is also working on far-field microphones and had created a “center of audio excellence.”
Put it all together and the signs point to a Roku smart speaker.
It would enter an increasingly competitive environment, started by Amazon.com Inc.’s (NASDAQ:AMZN) Amazon Echo, but now including Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Home, Microsoft Corporation’s (NASDAQ:MSFT) Invoke and a growing collection of third party smart speakers. The competition gets even tougher in December, when Apple Inc.’s (NASDAQ:AAPL) HomePod smart speaker launches.
This begs the question: why enter such a crowded market, and one that’s dominated by tech giants that dwarf Roku? The answer may be found in the earnings report, where Roku points out that the company is focused on growing unit sales and active accounts rather than maximizing its hardware revenue.
In other words, the strategy is for Roku revenue and ROKU stock value to be based on growing the number of users and monetizing those users, rather than profiting from selling hardware.