UK Markets closed

VIZIO HOLDING CORP. Reports Q2 2021 Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
·16-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Platform+ net revenue increased 146% year-over-year to $66 million

SmartCast Active accounts increased 43% year-over-year to 14 million

Average Revenue Per User increased 90% year-over-year to $16.76

IRVINE, Calif., August 04, 2021--(BUSINESS WIRE)--VIZIO Holding Corp. (NYSE: VZIO) today announced the following results for the second quarter ended June 30, 2021, as compared to the corresponding period of last year:

  • Net revenue of $401.2 million, up 2%

  • Gross profit of $79.5 million, up 37%

  • Net loss of $14.0 million, versus net income $17.3 million

  • Adjusted EBITDA of $26.5 million, up 7%

  • SmartCast Active Accounts of 14.0 million, up 43%

  • SmartCast Hours of 3.5 billion, up 22%

  • Average Revenue Per User (ARPU) of $16.76, up 90%

"VIZIO delivered excellent second quarter results driven by strong advertising growth, a direct benefit of our expanding dual revenue model," said William Wang, CEO of VIZIO. "Our increased revenue, gross profit and adjusted EBITDA in the second quarter is a testament to our talented team, who rose to the challenges that we and many other industries continue to face as a result of the global pandemic. We continue to invest heavily in our talent, adding nearly 200 jobs throughout the company in the first half of 2021 as we ramp up our numerous CTV initiatives. With our Platform+ business continuing its rapid growth trajectory, supported by our ongoing investments in our software and hardware integration, we are excited about the path we are on during a transformative time in the media and entertainment industry."

Business highlights include:

  • Launched our 2022 collection, which includes our 4K Ultra HD TVs and the industry's best color range 1

  • Expanded award-winning 2022 collection of immersive soundbars featuring DolbyAtmos and DTS:X

  • Powerful new Bluetooth VIZIO Voice remote enabling faster search & discovery

  • Doubled our direct advertiser customer base versus last year, and tripled our average revenue per advertiser

  • First IAB NewFronts presentation led to strong upfront commitments from advertisers

  • Expanded WatchFree with 32 FAST channels including Hallmark Movies, Real Crime, and Forensic Files

  • Leveraged first-party viewership data to launch curated FAST channels Fork & Flight and VIZIO Investigation

  • Surpassed 11 million TVs capable of dynamic ad insertion

_________________________

1

Based on the industry standard Rec. 2020 (uv) color space, per third-party/Rtings.com as of August 2, 2021

Selected Quarterly Financial Results
(Unaudited, in millions, except percentages and ARPU)

Three Months Ended June 30,

2021

2020

% Change

Financial Highlights(1)

Revenue

Device

$

335.6

$

366.9

(9

)%

Platform+

65.5

26.6

146

%

Total Revenue

$

401.2

$

393.5

2

%

Gross Profit

Device

32.1

40.2

(20

)%

Platform+

47.5

17.8

167

%

Total Gross Profit

79.5

58.0

37

%

Operating Expenses

88.4

35.2

151

%

Net Income

$

(14.0

)

$

17.3

(181

)%

Adjusted EBITDA(2)

$

26.5

$

24.7

7

%

Operational Metrics

Smart TV Shipments

1.1

1.6

(31

)%

SmartCast Active Accounts (as of)

14.0

9.8

43

%

VIZIO Hours

7,151

5,870

22

%

SmartCast Hours

3,505

2,874

22

%

SmartCast ARPU (TTM)

$

16.76

$

8.82

90

%

_________________________

(1)

subtotals may not add due to rounding

(2)

a reconciliation of Net Income to Adjusted EBITDA is provided below

Financial Outlook
(In millions)

Third Quarter 2021

Platform+ Net Revenue

$76 - $82

Platform+ Gross Profit

$55 - $60

Adjusted EBITDA

$20 - $25

Virtual Investor Event – Wednesday, August 4, 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 October 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 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 24, 2021, and in our Quarterly Report on Form 10-Q filed on May 12, 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
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Net revenue:

Device

$

335,644

$

366,886

$

789,104

$

675,741

Platform+

65,513

26,577

117,709

50,263

Total net revenue

401,157

393,463

906,813

726,004

Cost of goods sold:

Device

303,582

326,708

708,821

603,065

Platform+

18,035

8,781

31,788

17,237

Total cost of goods sold

321,617

335,489

740,609

620,302

Gross profit:

Device

32,062

40,178

80,283

72,676

Platform+

47,478

17,796

85,921

33,026

Total gross profit

79,540

57,974

166,204

105,702

Operating expenses:

Selling, general and administrative

77,739

29,799

145,589

59,915

Marketing

9,986

4,827

14,390

11,075

Depreciation and amortization

654

584

1,267

1,245

Total operating expenses

88,379

35,210

161,246

72,235

Income (loss) from operations

(8,839

)

22,764

4,958

33,467

Interest income

57

79

138

426

Other income (expense), net

35

45

(154

)

391

Total non-operating income (expense)

92

124

(16

)

817

Income (loss) before income taxes

(8,747

)

22,888

4,942

34,284

Provision for income taxes

5,256

5,567

15,600

7,676

Net (loss) income

$

(14,003

)

$

17,321

$

(10,658

)

$

26,608

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

Basic

$

(0.08

)

$

0.09

$

(0.07

)

$

0.14

Diluted

$

(0.08

)

$

0.09

$

(0.07

)

$

0.14

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

Basic

184,273

144,416

165,108

144,342

Diluted

184,273

147,019

165,108

146,981

VIZIO HOLDING CORP.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands except share amounts)

As of

June 30,
2021

June 30,
2020

Assets

Current assets:

Cash and cash equivalents

$

365,380

$

207,728

Accounts receivable, net

193,880

405,609

Other receivables due from related parties

806

978

Inventories

17,244

10,545

Income tax receivable

15,110

1,315

Other current assets

78,392

55,460

Total current assets

670,812

681,635

Property, equipment and software, net

9,737

7,929

Goodwill, net

44,788

44,788

Intangible assets, net

74

131

Deferred income taxes

25,424

26,652

Other assets

12,985

13,847

Total assets

$

763,820

$

774,982

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable due to related parties

$

131,805

$

209,362

Accounts payable

116,067

166,805

Accrued expenses

134,130

154,959

Accrued royalties

66,017

81,143

Other current liabilities

5,153

5,272

Total current liabilities

453,172

617,541

Other long-term liabilities

7,461

8,210

Total liabilities

460,633

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 June 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 June 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, 87,660 and 150,831 Class A shares issued, and 86,624 and 150,831 Class A shares outstanding as of June 30, 2021 and December 31, 2020, respectively; 200,000 and 0 Class B shares authorized and 98,291 and 0 Class B shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; 150,000 and 0 Class C shares authorized and 0 Class C shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

18

15

Additional paid-in capital

267,107

98,885

Accumulated other comprehensive (loss) income

(144

)

873

Retained earnings

36,206

46,893

Total stockholders’ equity

303,187

149,231

Total liabilities and stockholders' equity

$

763,820

$

774,982

VIZIO HOLDING CORP.

Condensed Consolidated Statement of Cash Flows

(Unaudited, in thousands)

Six Months Ended June 30,

2021

2020

Cash flows from operating activities:

Net (loss) income

$

(10,658

)

$

26,608

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

Depreciation and amortization

1,267

1,245

Deferred income taxes

1,228

-

Share-based compensation expense

60,660

2,679

Allowance for doubtful accounts

685

83

Changes in operating assets and liabilities:

Accounts receivable

211,044

127,760

Other receivables due from related parties

172

3,924

Inventories

(6,700

)

1,278

Income taxes receivable

(13,795

)

778

Other current assets

(23,174

)

(4,855

)

Other assets

1,110

(3,233

)

Accounts payable due to related parties

(77,556

)

(62,622

)

Accounts payable

(50,754

)

(78,387

)

Accrued expenses

(26,541

)

(33,117

)

Accrued royalties

(15,126

)

(523

)

Income taxes payable

-

6,788

Other current liabilities

(120

)

828

Other long-term liabilities

(749

)

2,434

Net cash provided by (used in) operating activities

50,993

(8,332

)

Cash flows from investing activities:

Purchase of property and equipment

(2,770

)

(529

)

Investment in third party

(249

)

-

Net cash used in investing activities

(3,019

)

(529

)

Cash flows from financing activities:

Proceeds from exercise of stock options

1,299

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

(2,627

)

-

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

(35,442

)

-

Net cash provided by financing activities

110,680

163

Effects of exchange rate changes on cash and cash equivalents

(1,002

)

412

Net increase (decrease) in cash and cash equivalents

157,652

(8,286

)

Cash and cash equivalents at beginning of period

207,728

176,579

Cash and cash equivalents at end of period

$

365,380

$

168,293

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$

26,677

$

63

Cash paid for interest

$

108

$

92

Supplemental disclosure of non-cash investing and financing activities:

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

$

4,289

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

$

1,444

$

1,171

Withholding taxes not yet paid for net settled stock awards

$

5,131

IPO costs not yet paid

$

398

VIZIO HOLDING CORP.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(Unaudited, in thousands)

Three Months Ended June 30,

2021

2020

Net (loss) income

$

(14,003

)

$

17,321

Adjusted to exclude the following:

Interest income

(57

)

(79

)

Other expense (income), net

(35

)

(45

)

Provision for income taxes

5,256

5,567

Depreciation and amortization

654

584

Share-based compensation

34,641

1,340

Adjusted EBITDA

$

26,456

$

24,688

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005411/en/

Contacts

Investors and Analysts:
Michael Marks
IR@vizio.com

Media:
Jodie McAfee
PR@vizio.com

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting