Failed SVB kept $487 million of its cash, or 26% – Variety

Illustration: VIP+; Adobe Stock

About a quarter of Roku’s cash and equivalents — nearly half a billion dollars — are held in Silicon Valley Bank (SVB), which was shut down by financial regulators on Friday after the collapse. And the streaming platform company said it’s not sure how much of that money it will get back.

SVB, after facing a run on deposits and failing to raise capital to make up the shortfall, was shut down by the California Department of Financial Protection and Innovation, which appointed the FDIC as the recipient of its assets. SVB, which had $209 billion in assets at the end of 2022, had tried to find a buyer, but was ultimately unsuccessful.

Roku disclosed in an SEC filing that approximately $487 million of its $1.9 billion in cash and cash equivalents is held with SVB, or approximately 26% of the company’s balance of cash and cash equivalents as of March 10. The remaining $1.4 billion is “divided across multiple major financial institutions,” Roku said in the filing.

“The company’s assets with the SVB are largely uninsured. At the moment, the company does not know to what extent the company will be able to recover its money on deposit with SVB,” said Roku.

The FDIC will pay uninsured depositors an “advance dividend” within the next week, the filing said. Uninsured depositors receive a certificate of guardianship for the remaining amount of their uninsured funds. Since the FDIC sells SVB’s assets, future dividend payments can be made to uninsured savers.

Roku said it “continues to believe” that its current balance of cash and equivalents – as well as cash flow from operations – will be “sufficient to meet its working capital, capital expenditures and material cash requirements of known contractual obligations” for the next 12 months” and further.”

Roku’s revenue growth slowed dramatically in the second half of last year – and the company expects total revenue to fall by about 5% in Q1 2023. Amid macroeconomic headwinds, Roku’s operating expenses have soared — up 71% in the fourth quarter. In November, Roku said it would lay off 200 employees in the US, cutting about 5% of its total workforce.

Roku makes and sells its own streaming devices and has launched its own branded line of connected TVs – available exclusively through Best Buy later this month. The company also licenses its operating system to TV manufacturers with brands such as TCL, Hisense, Sanyo, JVC, Philips and Sharp.

However, most of Roku’s revenue comes from ad sales and content partnerships. For the full year 2022, 87% of the company’s revenue, or $2.7 billion, came from the Platforms segment, which posted gross income of $1.5 billion (56% gross margin). Roku’s appliance business, on the other hand, had a negative gross margin of -22% last year.