VIZIO HOLDING CORP. Reports Q1 2021 Financial Results

Rhea-AI Summary

VIZIO Holding Corp. (NYSE: VZIO) reported a 52% increase in net revenue for Q1 2021, totaling $505.7 million. Platform+ net revenue surged 120% to $52.2 million, while gross profit rose 82% to $86.7 million. However, net income fell 64% to $3.3 million. Adjusted EBITDA increased 218% to $40.4 million. Notable achievements include a 57% growth in SmartCast Active Accounts, reaching 13.4 million, and an average revenue per user of $14.52, a 76% year-over-year increase.

Positive

• Net revenue increased 52% to $505.7 million.
• Platform+ net revenue surged 120% to $52.2 million.
• Gross profit rose 82% to $86.7 million.
• Adjusted EBITDA increased 218% to $40.4 million.
• SmartCast Active Accounts grew 57% to 13.4 million.

Negative

• Net income declined 64% to $3.3 million.
• Operating expenses increased 97% to $72.9 million.

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

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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	%

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(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 a

FAQ

What were VIZIO's earnings results for Q1 2021?

VIZIO reported a net revenue of $505.7 million, a 52% increase year over year.

How much did VIZIO's net income change in Q1 2021?

VIZIO's net income decreased 64% to $3.3 million in Q1 2021.

What is VIZIO's revenue guidance for Q2 2021?

VIZIO projects Platform+ net revenue between $55 million and $59 million for Q2 2021.

How many SmartCast Active Accounts does VIZIO currently have?

VIZIO has 13.4 million SmartCast Active Accounts as of Q1 2021.

What growth did VIZIO see in its Platform+ business?

VIZIO's Platform+ net revenue increased 120% year over year, totaling $52.2 million.