Roku Had One-Fourth Of Its Cash In Failed Silicon Valley Bank, Most Of It Uninsured; Streaming Giant Says It Can Still Meet Expenses

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The biggest bank failure since the financial crisis more than 15 years ago has hit streaming giant Roku.

In an SEC filing Friday, the company disclosed that 26% of its cash was held at Silicon Valley Bank, and the funds were “largely uninsured.” The 16th largest bank in the U.S., with more than $200 billion in assets, SVB collapsed earlier in the day and was taken over by the Federal Deposit Insurance Corp. It ranks as the second-largest bank failure in U.S. history after Washington Mutual in 2008.

Roku’s filing says the FDIC has told those with insured funds at the bank that they will have full access to their insured deposits no later than Monday morning. Uninsured depositors, meanwhile, will receive an “advance dividend” over the next week. “Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds,” according to the filing. “As the FDIC sells the assets of SVB, future dividend payments may be made to uninsured depositors.”

As of Friday, about $487 million of Roku’s total cash and cash equivalents of $1.9 billion was held by SVB, Roku said. About $1.4 billion of the company’s cash is spread across multiple large financial institutions.

“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 filing said. “Notwithstanding 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.”

The SVB crisis comes as Roku is already navigating a transition at the top of its finance exec ladder. Steve Louden, who joined the company as chief financial officer in 2015 and helped spearhead its IPO, announced last year that he planned to exit in 2023. On Wednesday, Roku announced former Stitch Fix exec Dan Jedda will join the company as CFO, effective May 1, with Jedda and Louden working together until the latter’s departure in August.

The FDIC was created as a safety net for investors after the stock market crash of 1929 and the subsequent run on banks that plunged the country into the Great Depression. But FDIC insurance is capped at $250,000 per account holder, putting larger customers at greater risk.

Roku is far from the only tech firm to be affected by the troubles at the bank, which has been the premier institution for Silicon Valley tech startups for decades. A number of companies had been withdrawing funds in recent days amid increasing signs of volatility due to the impact of interest rate hikes by the Federal Reserve. FuboTV is an exception in the entertainment sector. The company put out an SEC filing noting it had no funds at the bank.

Rep. Eric Swallwell, a Democrat from California, on Friday called for Congress to increase the FDIC cap in order to provide relief to some customers of SVB. “We must make sure all deposits exceeding the FDIC $250k limit are honored,” he tweeted. “Banking is about confidence. If depositors lose confidence on the safety of their deposits over 250k then we are in trouble.”

Jill Goldsmith contributed to this report.

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