Roku (NASDAQ:ROKU) has been a standout among recent tech IPOs. Over the last couple years, there have been a lot of tech IPOs as firms have taken advantage of tech stock fever and investors love of all things digital. Most of those IPOs have been less than stellar. That’s certainly not the case for ROKU stock.

Already having a wildly successful series of products didn’t hurt ROKU’s chances of victory and investors have gobbled up shares in spades. ROKU stock is up roughly 175% since its IPO last year. But that could just be the beginning for Roku and its dominance of the streaming sector. Thanks to its devices, ROKU stock is quickly moving into monetizing its platform in new ways. That could bring plenty of additional cash and profits its way

So, should you buy ROKU stock after its huge run-up? The answer could be a resounding yes.

Roku Stock Is the Streaming Kingpin

Watching T.V. has been forever changed. Traditional cable is dying a quick death as consumers have “cut the cord.” They’ve begun binge-watching and looking for on-demand entertainment. This is awesome news for Roku. There are a lot of streaming units out there, but Roku’s series of set-top and stick devices are the leaders. Pre-IPO, Nielsen Ratings data showed that 48% of all streaming players in the U.S. were Roku devices. At the time, that encompassed roughly 14 million active users. Today, that number is closer to 22 million active users and Roku has continued to gain market share.

The reason comes down to Roku’s platform.

When you buy an Amazon (NASDAQ:AMZN) Fire or Google (NASDAQ:GOOG) Chromecast, they really want you to watch their entertainment options. So while options for Netflix (NASDAQ:NFLX) and other channels are there, the name of the game is Amazon Prime or YouTube Red. In fact, consumers report tons of problems trying to watch other networks on these devices.

Roku is different. That’s because it’s based on Linux and is open source. Everyone’s apps and channels work well on the box. And because of its dominance and leadership position as the biggest streaming device, everyone wants to be on the service. And their apps all work perfectly. Even better is that this Linux-based operating system is very easy for T.V. manufactures to add to their products. Getting a TV with Roku is now quickly becoming the standard.

All of this has helped with hardware sales at the streaming firm. Revenues for device sales clocked in at $66.5 million during the second quarter of 2018. That was a big 24% year-over-year jump and was due for increased partnership sales with retailers such as Walmart (NYSE:

WMT).

The New Focus At Roku

Now that Roku has consumers hooked and getting reeled in in droves, it’s turning its attention to make more off of these users. And that comes from advertising. The firm’s so-called platform revenue segment makes money off of advertising and subscription revenue shares on its software. Every time a user engages with content on the devices or watches an ad, Roku gets a check. Efforts to boost this source of revenue continue to work.

Last quarter, Roku reported $90.3 million in platform revenue. That was an astounding 96% year-over-year gain and was the first time that this business segment made more money than hardware sales. That’s critical because the sales of set-top devices and sticks feature relatively low margins. However, gross margins for platform sales are a bit more robust. The platform-revenue jump allowed the firm’s gross margins to jump to 50%.

With more of Roku’s sales coming from this segment, the firm should be able to start making money rather than losing it. And that’s just what it’s did with its latest earnings results and big 15 cents per share beat.

Here is where it gets really juicy for ROKU stock. It has the ability to pull even more revenue from its users. Every time you or I click a movie, watch a show or engage with an ad, Roku is building up a massive cache of user data. And if that sounds familiar, it should. That’s exactly what Facebook (NYSE:FB) does.

It’s no secret that advertisers are pulling money away from more traditional means and placing them on the web and mobile channels. Streaming TV is getting the nod in a big way. By allowing advertisers to view and massage its data, Roku is potentially setting itself up to drive further profits per user. Marketers want this data and the ability to target specific consumers.

Buying Roku Stock

In the end, Roku’s businesses model is sound one and has been adopted by some of tech’s biggest players: create a platform that users can’t live without, get them hooked and continue to make money off of them.

Roku has already done the first two steps of the plan with its strong market share in the streaming world. With more TVs now coming equipped with its software, it’ll continue to see its user base grow further. Now, Roku stock is working on step two.

Boosting platform revenue by allowing advertisers access to its data cache will be its ultimate win and should translate into real profits down the road. After it’s current run-up, ROKU stock isn’t super cheap. But given the sort of platform revenue boosts we’ve seen already, those gains could be just the beginning of the stocks long-term story. For investors looking for a growth stock to add to their portfolios, ROKU stock could be it.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities