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VIZIO HOLDING CORP. Reports Q1 2021 Financial Results

05/11/2021

VIZIO Holding Corp. (NYSE: VZIO) today announced its financial results for the quarter ended March 31, 2021.

“Our first quarter results demonstrate the success of our investments in our Device and Platform business," said William Wang, Founder and Chief Executive Officer of VIZIO Holding Corp. “We see tremendous opportunity ahead as we continue to invest in the quality of our execution, the quality of our products, and most importantly, the quality of our team. The evolution of TV is calling for a revolution, and VIZIO is here to answer it.”

First Quarter 2021 Highlights

Financial and operational highlights include:

  • Net revenue increased 52% year over year to $505.7 million
  • Platform+ net revenue increased 120% year over year to $52.2 million
  • Gross profit increased 82% year over year to $86.7 million
  • Net income declined 64% year over year to $3.3 million
  • Adjusted EBITDA increased 218% year over year to $40.4 million
  • SmartCast Active Accounts grew 57% year over year to 13.4 million
  • SmartCast Hours grew 70% year over year to 3.6 billion
  • Average Revenue Per User (ARPU) increased 76% year over year to $14.52

Business highlights include:

  • Ranked #2 best-selling TV brand in the US during Q1 20211
  • Ranked #1 best-selling Sound Bar in the US during Q1 20212
  • Named Best Connected TV Platform by Digiday
  • Awarded IGN's Best 4K TV for Gaming (P-Series Quantum 9)
  • Editors' Choice Award from IGN, Reviewed and Newsweek (OLED, P-Series Quantum X and Quantum 9)
  • Editors' Choice Award from Reviewed and WIRED Recommends (V-Series, M-Series and Elevate Sound Bar)
  • Added 32 free ad-supported channels, including HSN/QVC, Fuse Sweat, and several from AMC Networks
  • Univision joined Project OAR as the first Spanish-language network
  • Launched The CW, FOX NOW, and FOX Nation streaming apps

_________________________

1 The NPD Group, Inc., Retail Tracking Service, U.S., LCD TVs, based on unit share, Jan. - Mar. 2021.
2 The NPD Group, Inc., Retail Tracking Service, U.S., Sound Bars, based on unit share, Jan. - Mar. 2021.

Selected Quarterly Financial Results

(Unaudited, in millions, except percentages and ARPU)

 

 

Three Months Ended
March 31,

 

Change

 

2021

 

2020

 

%

Financial Highlights:(1)

 

 

 

 

 

Net revenue:

 

 

 

 

 

 

Device

$

453.5

 

$

308.9

 

47

%

 

Platform+

52.2

 

23.7

 

120

%

Total net revenue

505.7

 

332.5

 

52

%

Gross profit:

 

 

 

 

 

 

Device

48.2

 

32.5

 

48

%

 

Platform+

38.4

 

15.2

 

152

%

Total gross profit

86.7

 

47.7

 

82

%

 

Operating expenses

72.9

 

37.0

 

97

%

Net income

3.3

 

9.3

 

(64

)%

Adjusted EBITDA(2)

$

40.4

 

$

12.7

 

218

%

 

 

 

 

 

 

Operational Metrics:

 

 

 

 

 

 

Smart TV Shipments

1.5

 

1.2

 

28

%

 

SmartCast Active Accounts (as of)

13.4

 

8.5

 

57

%

 

Total VIZIO Hours

6,951

 

4,912

 

42

%

 

SmartCast Hours

3,622

 

2,137

 

70

%

 

SmartCast ARPU

$

14.52

 

$

8.23

 

76

%

_________________________

(1) some subtotals may not add due to rounding
(2) a reconciliation of Net Income to Adjusted EBITDA is provided below

Financial Outlook

(In millions)

 

 

 

Second Quarter 2021

Platform+ Net Revenue

$55 - $59

Platform+ Gross Profit

$36 - $40

Adjusted EBITDA

$12 - $18

Virtual Investor Event – Tuesday, May 11, 2021

VIZIO management will hold a live question and answer webcast at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss VIZIO's quarterly results and outlook. To listen to the webcast please visit this link. Following the live audio webcast, a playback will be available on VIZIO's Investor Relations website (investors.vizio.com) through June 1, 2021 at 11:59 p.m. (ET).

About VIZIO

Founded and headquartered in Orange County, California, VIZIO’s mission is to deliver immersive entertainment and compelling lifestyle enhancements that make our products the center of the connected home. VIZIO is driving the future of televisions through its integrated platform of cutting-edge Smart TVs and powerful SmartCast operating system. VIZIO also offers a portfolio of innovative sound bars that deliver consumers an elevated audio experience. VIZIO’s platform gives content providers more ways to distribute their content and advertisers more tools to target and dynamically serve ads to a growing audience that is increasingly transitioning away from linear TV.

Supplemental Financial and Other Information

Supplemental financial and other information can be accessed through VIZIO’s Investor Relations website at investors.vizio.com. VIZIO announces material information to the public about VIZIO, its products and services, and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, webcasts, its Investor Relations website (investors.vizio.com), its blog (accessible via vizio.com/en/newsroom) and its Twitter account (@VIZIO) in order to achieve broad, non-exclusionary distribution of information to the public and for complying with its disclosure obligations under Regulation FD.

Key Operational and Financial Metrics

We review certain key operational and financial metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.

Smart TV Shipments. We define Smart TV Shipments as the number of Smart TV units shipped to retailers or direct to consumers in a given period. Smart TV Shipments currently drive the majority of our revenue and provide the foundation for increased adoption of our SmartCast operating system and the growth of our Platform+ revenue. The growth rate between Smart TV units shipped and Device net revenue is not directly correlated because VIZIO’s Device net revenue can be impacted by other variables, such as the series and sizes of Smart TVs sold during the period, the introduction of new products as well as the number of sound bars shipped.

SmartCast Active Accounts. We define SmartCast Active Accounts as the number of VIZIO Smart TVs where a user has activated the SmartCast operating system through an internet connection at least once in the past 30 days. We believe that the number of SmartCast Active Accounts is an important metric to measure the size of our engaged user base, the attractiveness and usability of our operating system, and subsequent monetization opportunities to increase our Platform+ net revenue.

Total VIZIO Hours. We define Total VIZIO Hours as the aggregate amount of time users spend utilizing our Smart TVs in any capacity. We believe this usage metric is critical to understanding our total potential monetization opportunities.

SmartCast Hours. We define SmartCast Hours as the aggregate amount of time viewers engage with our SmartCast platform to stream content or access other applications. This metric reflects the size of the audience engaged with our operating system as well as indicates the growth and awareness of our platform. It is also a measure of the success of our offerings in addressing increased user demand for OTT streaming. Greater user engagement translates into increased revenue opportunities as we earn a significant portion of our Platform+ net revenue through advertising, which is influenced by the amount of time users spend on our platform.

SmartCast ARPU. We define SmartCast ARPU as total Platform+ net revenue, less revenue attributable to legacy VIZIO V.I.A. Plus units, during the preceding four quarters divided by the average of (i) the number of SmartCast Active Accounts at the end of the current period; and (ii) the number of SmartCast Active Accounts at the end of the corresponding prior year period. SmartCast ARPU indicates the level at which we are monetizing our SmartCast Active Account user base. Growth in SmartCast ARPU is driven significantly by our ability to add users to our platform and our ability to monetize those users.

Device gross profit. We define Device gross profit as Device net revenue less Device cost of goods sold in a given period. Device gross profit is directly influenced by consumer demand, device offerings, and our ability to maintain a cost-efficient supply chain.

Platform+ gross profit. We define Platform+ gross profit as Platform+ net revenue less Platform+ cost of goods sold in a given period. As we continue to grow and scale our business, we expect Platform+ gross profit to increase over the long term.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States of America, or GAAP, VIZIO considers certain financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA. We define Adjusted EBITDA as total net income before interest income, other (expense) income, net, provision for income taxes, depreciation and amortization and share-based compensation. We consider Adjusted EBITDA to be an important metric to assess our operating performance and help us to manage our working capital needs. Utilizing Adjusted EBITDA, we can identify and evaluate trends in our business as well as provide investors with consistency and comparability to facilitate period-to-period comparisons of our business. We believe that providing users with non-GAAP measures such as Adjusted EBITDA may assist investors in seeing VIZIO’s operating results through the eyes of management and in comparing VIZIO’s operating results over multiple periods with other companies in our industry.

We use Adjusted EBITDA in conjunction with net income as part of our overall assessment of our operating performance and the management of our working capital needs. Our definition of Adjusted EBITDA may differ from the definition used by other companies and therefore comparability may be limited. In addition, other companies may not publish Adjusted EBITDA or similar metrics. Furthermore, Adjusted EBITDA has certain limitations in that it does not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Thus, Adjusted EBITDA should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, including net income.

We compensate for these limitations by providing a reconciliation of Adjusted EBITDA to net income. We encourage investors and others not to rely on any single financial measure and to view Adjusted EBITDA in conjunction with net income.

Forward-looking information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or VIZIO’s future financial or operating performance. In some cases, you can identify forward looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “going to,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, priorities, plans, or intentions.

Forward-looking statements in this press release include, but are not limited to, statements regarding VIZIO’s future financial and operating performance, including our outlook and guidance, our expectations regarding the impact of the COVID-19 pandemic, and our ability to keep pace with technological advances in our industry and successfully compete in highly competitive markets. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties, including changes in our plans or assumptions, that could cause actual results to differ materially from those projected. These risks include the possibility that: we are not able to keep pace with technological advances in our industry and successfully compete in highly competitive markets; we do not have the ability to continue to increase the sales of our Smart TVs; we cannot attract and maintain SmartCast Active Accounts; we cannot increase SmartCast Hours; we are not able to attract and maintain popular content on our platform; we are not able to maintain relationships with advertisers; and cannot adapt to market conditions and technological developments, including with respect to our platform's compatibility with applications developed by content providers.

The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on March 24, 2021, and in our Quarterly Report on Form 10-Q that will be filed following this earnings release. The forward-looking statements in this press release are based on information available to VIZIO as of the date hereof, and VIZIO disclaims any obligation to update any forward-looking statements, except as required by law.

Condensed Consolidated Statement of Operations

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

Three Months Ended
March 31,

 

2021

 

2020

Net revenue:

 

 

 

Device

$

453,460

 

 

$

308,855

Platform+

52,196

 

 

23,685

Total net revenue

505,656

 

 

332,540

Cost of goods sold:

 

 

 

Device

405,238

 

 

276,357

Platform+

13,753

 

 

8,456

Total cost of goods sold

418,991

 

 

284,813

Gross profit:

 

 

 

Device

48,222

 

 

32,498

Platform+

38,443

 

 

15,229

Total gross profit

86,665

 

 

47,727

Operating expenses:

 

 

 

Selling, general and administrative

67,851

 

 

30,116

Marketing

4,404

 

 

6,248

Depreciation and amortization

614

 

 

660

Total operating expenses

72,869

 

 

37,024

Income from operations

13,796

 

 

10,703

Interest income

82

 

 

348

Other (expense) income, net

(189

)

 

345

Total non-operating (expense) income

(107

)

 

693

Income before income taxes

13,689

 

 

11,396

Provision for income taxes

10,344

 

 

2,109

Net income

$

3,345

 

 

$

9,287

 

 

 

 

Net income attributable to Class A and Class B stockholders:

 

 

 

Basic

$

0.02

 

 

$

0.05

Diluted

$

0.02

 

 

$

0.05

Weighted-average Class A and Class B common shares outstanding:

 

 

 

Basic

145,730

 

 

144,268

Diluted

157,174

 

 

146,944

Condensed Consolidated Balance Sheets

(In thousands except per share amounts)

 

As of

 

March 31,
2021

 

December 31,
2020

Assets

(Unaudited)

 

(Audited)

Current assets:

 

 

 

Cash and cash equivalents

$

435,135

 

 

$

207,728

 

Accounts receivable, net

248,503

 

 

405,609

 

Other receivables due from related parties

815

 

 

978

 

Inventories

9,743

 

 

10,545

 

Income tax receivable

 

 

1,315

 

Other current assets

56,599

 

 

55,460

 

Total current assets

750,795

 

 

681,635

 

Property, equipment and software, net

9,829

 

 

7,929

 

Goodwill, net

44,788

 

 

44,788

 

Intangible assets, net

102

 

 

131

 

Deferred income taxes

25,424

 

 

26,652

 

Other assets

13,218

 

 

13,847

 

Total assets

$

844,156

 

 

$

774,982

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable due to related parties

$

159,680

 

 

$

209,362

 

Accounts payable

128,365

 

 

166,805

 

Accrued expenses

146,043

 

 

154,959

 

Accrued royalties

77,223

 

 

81,143

 

Other current liabilities

12,081

 

 

5,272

 

Total current liabilities

523,392

 

 

617,541

 

Other long-term liabilities

7,810

 

 

8,210

 

Total liabilities

531,202

 

 

625,751

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.0001 par value; 100,000 and 0 shares authorized and no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

 

 

 

Series A convertible preferred stock, $0.0001 par value; 0 and 250 shares authorized and 0 and 135 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

 

 

2,565

 

Common stock, $0.0001 par value; 1,000,000 and 675,000 Class A shares authorized, 85,470 and 150,831 Class A shares issued, and 85,036 and 150,831 Class A shares outstanding as of March 31, 2021 and December 31, 2020, respectively; 200,000 and 0 Class B shares authorized and 98,633 and 0 Class B shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively; 150,000 and 0 Class C shares authorized, 0 Class C shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

18

 

 

15

 

Additional paid-in capital

262,799

 

 

98,885

 

Accumulated other comprehensive (loss) income

(72

 

873

 

Retained earnings

50,209

 

 

46,893

 

Total stockholders’ equity

312,954

 

 

149,231

 

Total liabilities and stockholders' equity

$

844,156

 

 

$

774,982

 

Condensed Consolidated Statement of Cash Flows

(Unaudited, in thousands)

 

Three Months Ended
March 31,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income

$

3,345

 

 

$

9,287

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

614

 

 

660

 

Deferred income taxes

1,228

 

 

 

Share-based compensation expense

26,019

 

 

1,339

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

157,102

 

 

172,180

 

Other receivables due from related parties

164

 

 

2,486

 

Inventories

808

 

 

3,889

 

Income taxes receivable

1,323

 

 

778

 

Other current assets

(1,338

)

 

(1,381

)

Other assets

628

 

 

(2,719

)

Accounts payable due to related parties

(49,680

)

 

(107,415

)

Accounts payable

(38,249

)

 

(69,752

)

Accrued expenses

(19,659

)

 

(38,892

)

Accrued royalties

(3,920

)

 

(115

)

Income taxes payable

6,823

 

 

1,339

 

Other current liabilities

(17

)

 

471

 

Other long-term liabilities

(400

)

 

2,419

 

Net cash provided by (used in) operating activities

84,791

 

 

(25,426

)

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

(2,353

)

 

(280

)

Net cash used in investing activities

(2,353

)

 

(280

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

 

158

 

Payment of dividends on Series A convertible preferred stock

(594

)

 

 

Proceeds from IPO, net of $10,700 underwriting fees

148,044

 

 

 

Payments of offering costs

(1,363

)

 

 

Net cash provided by financing activities

146,087

 

 

158

 

Effects of exchange rate changes on cash and cash equivalents

(1,118

)

 

(2

)

Net increase (decrease) in cash and cash equivalents

227,407

 

 

(25,550

)

Cash and cash equivalents at beginning of year

207,728

 

 

176,579

 

Cash and cash equivalents at end of year

$

435,135

 

 

$

151,029

 

Supplemental disclosure of cash flow information:

 

 

 

Net cash paid (received) during the period for income taxes

$

69

 

 

$

(56

)

Cash paid for interest

$

47

 

 

$

38

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

$

 

 

$

3,366

 

Cash paid for amounts included in the measurement of operating lease liabilities

$

720

 

 

$

551

 

Payment to taxing authority in connection with shares directly withheld from

employees not yet made

$

9,121

 

 

$

 

IPO costs not yet paid

$

1,663

 

 

$

 

Reconciliation of Net Income to Adjusted EBITDA

 

Three Months Ended
March 31,

 

2021

 

2020

 

(Unaudited, in thousands)

Net income

$

3,345

 

 

$

9,287

 

Adjusted to exclude the following:

 

 

 

Interest income

(82

)

 

(348

)

Other expense (income), net

189

 

 

(345

)

Provision for income taxes

10,344

 

 

2,109

 

Depreciation and amortization

614

 

 

660

 

Share-based compensation

26,019

 

 

1,339

 

Adjusted EBITDA

$

40,429

 

 

$

12,702

 

 

Investors and Analysts:
Michael Marks
IR@vizio.com

Media:
Jodie McAfee
PR@vizio.com

Source: VIZIO Holding Corp

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