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VIZIO HOLDING CORP. Reports Q3 2021 Financial Results

11/09/2021

Platform+ net revenue increased 134% year-over-year to $85.9 million

SmartCast Active accounts increased 35% year-over-year to 14.4 million

Average Revenue Per User increased 91% year-over-year to $19.89

VIZIO Holding Corp. (NYSE: VZIO) today announced the following results for the third quarter ended September 30, 2021, as compared to the corresponding period of last year:

  • Net revenue of $588.3 million, compared to $582.2 million
  • Platform+ net revenue grew 134% to $85.9 million
  • Gross profit of $82.9 million, compared to $88.8 million
  • Platform+ gross profit grew 88% to $57.3 million
  • SmartCast Active Accounts grew 35% to 14.4 million
  • SmartCast Hours increased 16% to 3.6 billion
  • Average Revenue Per User (ARPU) grew 91% to $19.89

“I’m proud of the strength of our Third Quarter results, as the investments we’ve made in our Platform+ business continue to bear fruit,” said William Wang, CEO of VIZIO. “Our dual revenue model is a competitive advantage, and it allows us to leverage our Device business to drive rapidly growing, high-margin revenue within our Platform+ business. Because VIZIO delivers the entire entertainment experience — from the hardware and software, to the content and ads — we are able to deliver an attractive value proposition to consumers, advertisers, and content partners alike. We are here to define the future of the Smart TV business.”

Business highlights include:

  • #2 bestselling TV brand in the US 1
  • #1 bestselling sound bar brand in the US 2
  • Increased premium (M Series, P Series and OLED) units shipped by 107% quarter-over-quarter
  • Successfully closed 2022 upfront negotiations and secured brand and agency commitments over $100 million
  • Grew direct advertising client base by over 50% and average revenue per advertiser by over 200%
  • Expanded our app partnerships to include HBO Max, fuboTV, BET+, PBS, and Funimation
  • Launched WatchFree+, our updated free, ad-supported streaming service with greater ad inventory control
  • Released VIZIO Features, our data-driven sponsorship offering that leverages our first party viewership data

______________________

1

The NPD Group, Inc., U.S. Retail Tracking Service, Jan. 2021 - Sep. 2021 combined

2

The NPD Group, Inc., U.S. Retail Tracking Service, Jan. 2021 - Sep. 2021 combined

Selected Quarterly Financial Results

(Unaudited, in millions, except percentages and ARPU)

     

 

Three Months Ended
September 30,

 

Change

 

2021

 

 

2020

 

 

%

Financial Highlights: (1)

 

 

 

 

 

 

 

Net revenue:

 

 

 

 

 

 

 

Device

$

502.5

 

 

$

545.5

 

 

(8

)%

Platform+

85.9

 

 

36.7

 

 

134

%

Total net revenue

588.3

 

 

582.2

 

 

1

%

Gross profit:

 

 

 

 

 

 

 

Device

25.6

 

 

58.2

 

 

(56

)%

Platform+

57.3

 

 

30.6

 

 

88

%

Total gross profit

82.9

 

 

88.8

 

 

(7

)%

Operating expenses

97.5

 

 

43.4

 

 

125

%

Net (loss) income

$

(18.6

)

 

35.1

 

 

(153

)%

Adjusted EBITDA(2)

$

23.4

 

 

$

47.2

 

 

(50

)%

 

 

 

 

 

 

 

 

Operational Metrics:

 

 

 

 

 

 

 

Smart TV Shipments

1.4

 

 

2.1

 

 

(36

)%

SmartCast Active Accounts (as of)

14.4

 

 

10.7

 

 

35

%

Total VIZIO Hours

7,320

 

 

5,905

 

 

24

%

SmartCast Hours

3,620

 

 

3,116

 

 

16

%

SmartCast ARPU

$

19.89

 

 

$

10.44

 

 

91

%

_________________________

(1)

subtotals may not add due to rounding

(2)

a reconciliation of Net (loss) income to Adjusted EBITDA is provided below

Financial Outlook

(In millions)

 

 

 

Fourth Quarter 2021

Platform+ Net Revenue

$100 - $110

Platform+ Gross Profit

$65 - $70

Adjusted EBITDA

$7 - $12

Virtual Investor Event – Tuesday, November 9, 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 January 1, 2022 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 (loss) before interest income (expense), 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 (loss) 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 (loss).

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

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, and our expectations regarding advertising spend commitments. 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 we 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 25, 2021, and in our Quarterly Reports on Form 10-Q filed on May 12, 2021 and August 5, 2021, and 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.

VIZIO HOLDING CORP.

Condensed Consolidated Statement of Operations

(Unaudited, in thousands except per share amounts)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2021

 

2020

 

2021

 

2020

Net revenue:

 

 

 

 

 

 

 

Device

$

502,457

 

 

$

545,511

 

 

$

1,291,560

 

 

$

1,221,252

 

Platform+

85,859

 

 

36,673

 

 

203,569

 

 

86,935

 

Total net revenue

588,316

 

 

582,184

 

 

1,495,129

 

 

1,308,187

 

Cost of goods sold:

 

 

 

 

 

 

 

Device

476,880

 

 

487,289

 

 

1,185,701

 

 

1,090,354

 

Platform+

28,551

 

 

6,109

 

 

60,339

 

 

23,346

 

Total cost of goods sold

505,431

 

 

493,398

 

 

1,246,040

 

 

1,113,700

 

Gross profit:

 

 

 

 

 

 

 

Device

25,577

 

 

58,222

 

 

105,859

 

 

130,898

 

Platform+

57,308

 

 

30,564

 

 

143,230

 

 

63,589

 

Total gross profit

82,885

 

 

88,786

 

 

249,089

 

 

194,487

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

88,683

 

 

37,371

 

 

234,274

 

 

97,286

 

Marketing

8,068

 

 

5,527

 

 

22,457

 

 

16,602

 

Depreciation and amortization

705

 

 

496

 

 

1,972

 

 

1,740

 

Total operating expenses

97,456

 

 

43,394

 

 

258,703

 

 

115,628

 

Income (loss) from operations

(14,571

)

 

45,392

 

 

(9,614

)

 

78,859

 

Interest income (expense)

89

 

 

(361

)

 

227

 

 

66

 

Other income (expense), net

(24

)

 

118

 

 

(178

)

 

509

 

Total non-operating income (expense)

65

 

 

(243

)

 

49

 

 

575

 

Income (loss) before income taxes

(14,506

)

 

45,149

 

 

(9,565

)

 

79,434

 

Provision for income taxes

4,060

 

 

10,095

 

 

19,660

 

 

17,772

 

Net (loss) income

$

(18,566

)

 

$

35,054

 

 

$

(29,225

)

 

$

61,662

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Class A and Class B stockholders:

 

 

 

 

 

 

 

Basic

$

(0.10

)

 

$

0.19

 

 

$

(0.17

)

 

$

0.33

 

Diluted

$

(0.10

)

 

$

0.19

 

 

$

(0.17

)

 

$

0.33

 

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

 

 

 

 

 

 

 

Basic

182,820

 

 

144,417

 

 

171,077

 

 

144,367

 

Diluted

182,820

 

 

147,093

 

 

171,077

 

 

147,064

 

VIZIO HOLDING CORP.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands except per share amounts)

 

 

As of

 

September 30,
2021

 

December 31,
2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

375,936

 

 

$

207,728

 

Accounts receivable, net

356,765

 

 

405,609

 

Other receivables due from related parties

1,117

 

 

978

 

Inventories

23,683

 

 

10,545

 

Income tax receivable

14,092

 

 

1,315

 

Other current assets

82,047

 

 

55,460

 

Total current assets

853,640

 

 

681,635

 

Property, equipment and software, net

10,009

 

 

7,929

 

Goodwill, net

44,788

 

 

44,788

 

Intangible assets, net

45

 

 

131

 

Deferred income taxes

25,355

 

 

26,652

 

Other assets

12,782

 

 

13,847

 

Total assets

$

946,619

 

 

$

774,982

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable due to related parties

$

266,410

 

 

$

209,362

 

Accounts payable

129,331

 

 

166,805

 

Accrued expenses

163,303

 

 

154,959

 

Accrued royalties

65,970

 

 

81,143

 

Other current liabilities

4,706

 

 

5,272

 

Total current liabilities

629,720

 

 

617,541

 

Other long-term liabilities

7,268

 

 

8,210

 

Total liabilities

636,988

 

 

625,751

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.0001 par value; 100,000 shares authorized and 0 shares issued and outstanding as of September 30, 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 September 30, 2021 and December 31, 2020, respectively

 

 

2,565

 

Common stock, $0.0001 par value; 1,000,000 and 675,000 Class A shares authorized, 112,743 and 150,831 Class A shares issued, and 110,496 and 150,831 Class A shares outstanding as of September 30, 2021 and December 31, 2020, respectively; 200,000 and 0 Class B shares authorized, 76,815 and 0 Class B shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively; 150,000 and 0 Class C shares authorized, 0 Class C shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

19

 

 

15

 

Additional paid-in capital

292,016

 

 

98,885

 

Accumulated other comprehensive (loss) income

(43

)

 

873

 

Retained earnings

17,639

 

 

46,893

 

Total stockholders’ equity

309,631

 

 

149,231

 

Total liabilities and stockholders' equity

$

946,619

 

 

$

774,982

 

VIZIO HOLDING CORP.

Condensed Consolidated Statement of Cash Flows

(Unaudited, in thousands)

 

 

Nine Months Ended September 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(29,225

)

 

$

61,662

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

1,972

 

 

1,740

 

Deferred income taxes

1,297

 

 

 

Share-based compensation expense

97,946

 

 

4,018

 

Allowance for doubtful accounts

159

 

 

2,248

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

48,682

 

 

26,574

 

Other receivables due from related parties

(138

)

 

4,403

 

Inventories

(13,134

)

 

(11,842

)

Income taxes receivable

(12,785

)

 

778

 

Other current assets

(27,015

)

 

(15,421

)

Other assets

1,315

 

 

(2,732

)

Accounts payable due to related parties

57,047

 

 

(18,646

)

Accounts payable

(37,334

)

 

(1,667

)

Accrued expenses

3,627

 

 

(15,193

)

Accrued royalties

(15,173

)

 

5,823

 

Income taxes payable

 

 

3,591

 

Other current liabilities

(567

)

 

879

 

Other long-term liabilities

(942

)

 

1,815

 

Net cash provided by operating activities

75,732

 

 

 

48,030

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

(3,579

)

 

(768

)

Investment in third party

(249

)

 

 

Net cash used in investing activities

(3,828

)

 

(768

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

6,670

 

 

163

 

Payment of dividends on Series A convertible preferred stock

(594

)

 

 

Proceeds from IPO, net of $10,700 in direct offering costs

148,044

 

 

 

Payments of other offering costs

(2,850

)

 

 

Withholding taxes paid on behalf of employees on net settled stock-based awards

(53,928

)

 

 

Net cash provided by financing activities

97,342

 

 

163

 

Effects of exchange rate changes on cash and cash equivalents

(1,038

)

 

710

 

Net increase in cash and cash equivalents

168,208

 

 

48,135

 

Cash and cash equivalents at beginning of period

207,728

 

 

176,579

 

Cash and cash equivalents at end of period

$

375,936

 

 

$

224,714

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid for income taxes

$

29,722

 

 

$

13,499

 

Cash paid for interest

$

156

 

 

$

140

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

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

$

 

 

$

4,318

 

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

$

731

 

 

$

663

 

Withholding taxes not yet paid for net settled stock awards

$

4,042

 

 

$

 

IPO costs not yet paid

$

270

 

 

$

 

 

VIZIO HOLDING CORP.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(Unaudited, in thousands)

 

 

Three Months Ended
September 30,

 

2021

 

2020

Net (loss) income

$

(18,566)

 

 

$

35,054

 

Adjusted to exclude the following:

 

 

 

Interest (expense) income

(89)

 

 

361

 

Other expense (income), net

24

 

 

(118)

 

Provision for income taxes

4,060

 

 

10,095

 

Depreciation and amortization

705

 

 

496

 

Share-based compensation

37,286

 

 

1,339

 

Adjusted EBITDA

$

23,420

 

 

$

47,227

 

 

Investors and Analysts:
Michael Marks
IR@vizio.com

Media:
Amy Jane Finnerty
press@vizio.com

Source: VIZIO Holding Corp

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