VIZIO reports Q3 2023 financial resultsThursday, November 9th, 2023
VIZIO Holding Corp. Reports Q3 2023 Financial Results
- Platform+ net revenue increased 22% year-over-year (YoY) to $156.2 million
- Platform+ gross profit increased 26% YoY to $99.8 million
- SmartCast Average Revenue Per User increased 14% YoY to $31.55
IRVINE, Calif. — VIZIO Holding Corp. (NYSE: VZIO) today announced the following results for the three months ended September 30, 2023:
Financial and operational highlights include the following, compared to Q3’22:
- Net revenue of $426.2 million, compared to $435.0 million
- Platform+ net revenue of $156.2 million, up 22%
- Gross profit of $96.5 million, up 20%
- Platform+ gross profit of $99.8 million, up 26%
- Net income of $13.8 million, up 590%
- Adjusted EBITDA of $26.9 million, up 61%
- SmartCast Average Revenue Per User (ARPU) of $31.55, up 14%
“At VIZIO, we continue to invest in delivering the best possible experience for our users and partners alike. Over the past few years, we have been continuously retooling and enhancing our operating system to unlock further growth opportunities,” said William Wang, CEO of VIZIO. “While these efforts not only successfully drove record ARPU in Q3, but they are also opening up additional strategic options as well. Today, we are excited to announce that we are beginning to explore partnerships with other TV OEMs looking for alternatives within the CTV market. Our deep expertise with integrated hardware and software provides a distinct potential for mutually beneficial outcomes for VIZIO and future partners.”
Q3’23 Business highlights include:
- Reached 17.9 million SmartCast Active Accounts, which streamed 5.2 billion hours
- Grew average SmartCast Hours per SmartCast Active Account to 97 per month, up 12% YoY
- Expanded our direct ad relationships by 20% compared to Q3’22, adding 66 net new advertisers in Q3’23
- Rolled out an all-new quantum 4K QLED Smart TV in 65” ($499) and 75” ($699) online and at major retailers including Walmart and Sam’s Club
- Added WatchFree+ channels including Golf Nation, Celebrating Hispanic Heritage, Cheaters, and getTV bringing the total number of FAST channels to 290
- Launched 9 new apps including ESPN, Pet Collective, Black Voices+, and Local BTV, bringing the total number of built-in apps to almost 200
- Hosted the 2nd Annual VIZIO Developer Conference, a program created to help developers and content partners build apps and experiences for VIZIO Smart TVs
- Exclusive CTV partner of the Intuit SMB Media Labs business, unlocking both B2B budgets, and a new wave of retail media network partnerships for VIZIO
Selected Quarterly Financial Results
(Unaudited, in millions, except percentages and SmartCast ARPU)
Three Months Ended March 31, ------------------ -------- 2023 2022 % Change -------- -------- -------- Financial Highlights Net Revenue Device $270.0 $307.0 (12)% Platform+ 156.2 128.0 22% Total Net Revenue 426.2 435.0 (2)% Gross Profit Device (3.3) 1.2 NM Platform+ 99.8 78.9 26% Total Gross Profit 96.5 80.1 20% Operating Expenses 83.8 75.4 11% Net Income $13.8 $2.0 590% Adjusted EBITDA $26.9 $16.7 61% Operational Metrics Smart TV Shipments 1.1 1.2 (8)% SmartCast Active Accounts (as of) 17.9 16.6 8% Total VIZIO Hours 8,913 8,129 10% SmartCast Hours 5,153 4,243 21% SmartCast ARPU $31.55 $27.69 14%
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.
The metrics included in this press release and the accompanying call, including the key operational and financial metrics defined below, as well as SmartCast Hours per SmartCast Active Account, direct advertising client relationships and net new advertisers, are not based on any standardized industry methodology and are not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies. Similarly, these metrics may differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology. The numbers that we use to calculate these metrics are based on internal data. While these numbers are based on what we believe to be reasonable judgments and estimates for the applicable period of measurement, there are inherent challenges in measuring usage and engagement. 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 Shipments 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 useful 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.
1. A reconciliation of Net Income (Loss) to Adjusted EBITDA is provided below.
2. Direct advertising relationships consists of the number of advertisers that purchased advertising inventory directly from VIZIO during the third quarter. Net new advertisers for the quarter is calculated as the difference between the number of direct advertising relationships during the third quarter of 2023 versus the third quarter of 2022.