Nearly a half a billion dollars of streaming company Roku’s cash and cash equivalents was held at Silicon Valley Bank (SVB), which collapsed last week and was shut down by regulators. Over the weekend, though, federal officials said they planned to take action to ensure all depositors will be able to access their money.
In a March 10 SEC filing, Roku disclosed that around $487 million, or around 26% of its total $1.9 billion in cash, was held at SVB, with the remaining $1.4 billion distributed across multiple large financial institutions.
In the filling, Roku said “The Company’s deposits with SVB are largely uninsured. At this time, the Company does not know to what extent the Company will be able to recover its cash on deposit at SVB.”
The Federal Deposit Insurance Corporation (FDIC) typically insures deposits up to $250,000 – and insured depositors were expected to have full access to their funds by Monday morning. As of the end of 2022, SVB had approximately $209 billion in total assets and $175.4 billion in deposits, according to the FDIC. The amount of estimated uninsured deposits in U.S. offices “that exceed the FDIC insurance limit were $151.5 billion” as of December 31, 2022, according to a Q4 2022 10-K filing by SVB.
“The FDIC will pay uninsured depositors an advance dividend within the next week,” Roku stated in the Friday SEC filing. “Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of SVB, future dividend payments may be made to uninsured depositors.”
Although the lion’s share of Roku’s deposits were uninsured, comments made after the filing by U.S. President Joe Biden and banking regulators over the weekend suggest it will receive full access to its money, as the government took steps to prevent impacts from SVB’s failure (which was the largest since the 2008 financial crisis) from spreading to other financial institutions and creating wide-reaching issues for the U.S. banking system.
In a joint statement Sunday, the Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell and FDIC Chairman Martin Gruenberg said they approved actions enabling the FDIC to complete its resolution of SVB “in a manner that fully protects all depositors.”
“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of the Silicon Valley Bank will be borne by the taxpayer,” the officials stated.
On Twitter Sunday night, President Biden said that at his direction, Yellen and his National Economic Council director “worked with banking regulators to address problems” at SVB.
“I’m pleased they reached a solution that protects small businesses, taxpayers, and our financial system,” Biden tweeted.
Ahead of the weekend announcement, Roku on Friday said that not withstanding the closure of SVB, “the Company continues to believe that its existing cash and cash equivalents balance and cash flow from operations will be sufficient to meet its working capital, capital expenditures, and material cash requirements from known contractual obligations for the next twelve months and beyond.”
Roku in the most recent financial quarter saw its platform business continue to outpace devices sales by a wide margin. As it puts less focus on streaming sticks and dongles, Roku is leaning more heavily into the TVOS space, debuting Roku-branded smart TVs – which in part allow the company to improve on its streaming product and experience, collect additional data and leverage for advertising opportunities.
Still in the fourth quarter Roku saw its operating expenses soar 71% year over year to $614.3 million, and it reported a quarterly net loss of nearly $250 million. In November the company disclosed plans to slash headcount by around 5%, or about 200 jobs in the U.S. as it worked to curb the rise of operating expenses, at the time saying it was driven by current economic conditions and a weaker ad market.