Streaming software and device manufacturer Roku Inc. priced its initial public offering at $14 a share late Wednesday, at the high end of its range. The stock began trading Thursday morning on the Nasdaq exchange under the ticker “ROKU,” and shares gained as much as 30% in initial trading.

Roku ROKU, +1.63% raised $219 million in funding at a valuation of $1.3 billion in the offering. The streaming device maker sold 9 million shares for $126 million, while early investor Menlo Ventures sold 6 million shares for $84 million and Sky Ventures Ltd. sold 668,000 shares for $9 million. Underwriting banks have access to another 2.35 million shares that they could sell in the offering, which would be split between the company and selling stockholders, according to a filing with the Securities and Exchange Commission..

The Los Gatos, Calif.-based company got its start as a unit of Netflix Inc. NFLX, -1.22% in 2007 and was at one time given the secret code name of “Griffin,” after Tim Robbins’ character from the film “The Player,” according to Fast Company. But the streaming giant sold its stake in 2009, in part because it was concerned about competing with hardware partners such as Apple Inc. AAPL, -0.27% .

The IPO filing is not exactly a surprise, and though the company had initially considered filing a secret IPO, it abandoned those plans and was rumored to launch its offering before the end of this year at a $1 billion valuation. Morgan Stanley MS, -2.56% , Citigroup C, -1.35% , and Allen & Co. are listed as underwriters, according to the filing.

It’s coming at a time of outperformance for the technology sector, as the SPDR Technology Select Sector exchange-traded fund XLK, -0.33% has climbed 5.4% over the past three months through Tuesday, while the Dow Jones Industrial Average DJIA, -0.44% has gained 4.6%.

Here’s what you need to know:

How Roku makes money

Roku essentially sells three things: its streaming hardware that works with TVs, advertising, and its partners’ content sold through its software. Roku lists the last two on that list under “platform revenue,” a segment that is growing while hardware revenue seemingly stalls.

Much like TiVo Inc. US:TIVO before it, Roku thinks the platform is where the money is. According to the filing, for the first six months of 2017, the company’s hardware sales dipped 2% to $117.3 million from the year-earlier period. Though the company is actually selling 37% more hardware, it said in its IPO filing that it is bringing down average selling prices. Platform revenue, on the other hand, jumped 91% to $43.1 million for the same six-month period.

It has been profitable for one quarter

So far, the company lists just one quarter of profitability in its filing, posting net income of $3.2 million in the fourth quarter of 2016. It has incurred losses every other quarter: The company’s net loss for the second quarter of 2017 widened to $15 million from $14 million in the year-earlier period, on sales of $99.6 million.

The Netflix legacy

Netflix initially invested $5.7 million in Roku, but the company sold its stake for a pretax gain of $1.7 million in 2009, then-Chief Financial Officer Barry McCarthy said on the company’s fourth-quarter earnings call in 2010. At the time, that translated to earnings just shy of 2 cents a share for Netflix, and would have likely been worth many times that if the company had held on to its stake until the IPO. The company still leases its Los Gatos office space from Netflix, including the third floor of the building Netflix lists as its headquarters and a three-story building next-door, according to leases included in the IPO filing.

In the first six months of 2017, Roku customers streamed 6.74 billion hours of programming, which amounts to about 2.45 hours a day for every active user. Netflix is responsible for a third of that traffic—nearly one hour a day—but Roku is unable to monetize that traffic like its other platform revenues. Roku also disclosed that its contract with Netflix is nearing an end and will have to be renegotiated soon.

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Dual share classes

Much like the nascent social media company Snap Inc. SNAP, +2.61% — and other Silicon Valley tech titans Facebook Inc. FB, +0.68% and Alphabet Inc. GOOG, +0.61% GOOGL, +0.32% —Roku has opted to offer two classes of shares to investors. Class B common stock, which is owned by executives, directors and several early investors, will have 10 votes for every one vote of the Class A stock, which is being offered to investors. In the S-1, Roku warned investors that as a result of the lopsided voting rights, investors who buy in at the IPO will have a limited influence over the company’s direction for the foreseeable future.

It’s a common move that allows insiders to retain greater control of the company after an IPO, but limits shareholders’ ability to step in if problems arise, as they have with Groupon Inc. GRPN, -0.76% . In Roku’s case, Chief Executive Anthony Wood currently has a 28.4% stake in the company, venture-capital firm Menlo Ventures has a 35% ownership, mutual-fund giant Fidelity Investments Inc. owns 12.9%, and 21st Century Fox Inc. FOX, -0.26% retains a 7% stake, among others. Once the company completes its offering, those stakes will be diluted, but they will retain the higher voting power.

Mexico sales ban

The streaming company’s device sales ran into a problem in Mexico after hackers offered pirated content from HBO, ESPN and others through Roku devices. Though Roku is fighting the case, a Mexican court has blocked its device sales altogether in the country, which has cost the company nearly $2 million, the S-1 filing said.

In the second quarter of 2017, the company recorded a $1 million write-down of its inventory, and a charge of $700,000 for sales incentives to sell its device inventory through other sales channels. “Our involvement in this litigation, or similar legal matters in the future, could cause us to incur significant legal expenses and other costs, and be disruptive to our business,” the filing said.