Figure: VIP+; Adobe Stock
About a quarter of Roku’s cash and equivalents — nearly half a billion dollars — was held at Silicon Valley Bank (SVB), which was shut down by financial regulators on Friday after its collapse. And the streaming platform company said it’s unsure how much of that money it will get back.
After facing a deposit rush and being unable to raise capital to make up the deficit, the SVB was shut down by the California Department of Financial Protection and Innovation, which named 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 said in an SEC filing that about $487 million of its $1.9 billion in cash and equivalents is held at SVB, or about 26% of the company’s cash and cash equivalents as of March 10. The remaining $1.4 billion is “spread across several large financial institutions,” Roku said in the filing.
“The company’s deposits with the SVB are largely uninsured. At this point, the company does not know to what extent the company will be able to recover its cash deposits with SVB,” Roku said.
The FDIC will pay an “advance dividend” to uninsured depositors within the next week, according to the filing. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells SVB’s assets, future dividend payments may be made to uninsured depositors.
Roku said it “continues to believe” that its current inventory of cash and cash equivalents — and cash flow from operations — “will be sufficient to support its working capital, capital expenditures and material cash needs from known contractual obligations” for the next 12 months to cover “and beyond.”
Roku’s revenue growth slowed dramatically in the second half of last year — and the company expects overall revenue to fall about 5% in the first quarter of 2023. Amid the macroeconomic headwinds, Roku’s operating expenses have skyrocketed, rising 71% in the fourth quarter. In November, Roku announced it would lay off 200 employees in the US, about 5% of the total workforce.
Roku makes and sells its own streaming devices and has launched its own brand 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 full-year 2022, 87% of the company’s revenue, or $2.7 billion, came from the platform segment, which reported gross profit of $1.5 billion (56% gross margin). In contrast, Roku’s device business posted a negative gross margin of -22% last year.