Company Overview

VIZIO is a leading provider of high-performance Smart TVs and innovative sound bars that deliver immersive entertainment and compelling lifestyle enhancements. The company’s mission is to make its products the center of the Connected Home. VIZIO operates two main business segments:

1. Device: This includes the sale of Smart TVs and sound bars to retailers and directly to consumers. Device net revenue currently makes up the majority of VIZIO’s total net revenue.

2. Platform+: This encompasses VIZIO’s proprietary SmartCast operating system, which powers the company’s fully integrated entertainment solution, as well as its Inscape data intelligence and services. Platform+ generates revenue through advertising, data licensing, content distribution and other monetization opportunities.

Financial Highlights

For the three months ended September 30, 2024, VIZIO reported:

• Net revenue of $444.7 million, up 4% year-over-year
• Platform+ net revenue of $197.0 million, up 26% year-over-year
• Gross profit of $109.1 million, up 13% year-over-year
• Platform+ gross profit of $115.8 million, up 16% year-over-year
• Net income of $0.5 million, compared to $13.8 million in the prior year period
• Adjusted EBITDA of $8.8 million, which includes acquisition-related costs and cash incentive awards, compared to $26.9 million in the prior year period

Key operational metrics also showed strong growth:

• SmartCast Active Accounts reached 19.1 million, up 7% year-over-year
• SmartCast Hours grew to 5.8 billion, up 12% year-over-year
• SmartCast Average Revenue Per User (ARPU) increased 18% to $37.17

Segment Performance

Device Device net revenue decreased 8% year-over-year for the three-month period, primarily due to lower Smart TV and sound bar shipments. Device gross margin declined to (2.7)% from (1.2)% in the prior year period, driven by decreases in gross margins for both sound bars and Smart TVs due to lower average prices and higher sound bar costs.

Platform+ Platform+ net revenue increased 26% year-over-year, driven by a 31% increase in advertising revenue and an 8% increase in non-advertising revenue. The growth was fueled by an increase in SmartCast Active Accounts and Hours, as well as expansion in direct advertising relationships.

Platform+ gross margin decreased to 58.8% from 63.9% in the prior year period, due to a greater mix of video revenue where a share is paid to inventory and content partners.

Pending Merger with Walmart

On February 19, 2024, VIZIO entered into a definitive agreement to be acquired by Walmart Inc. for $11.50 per share in cash. The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in 2025.

Outlook and Key Drivers

VIZIO’s future performance will be influenced by several key factors:

Device Business

• Ability to sell more devices and drive growth in SmartCast Active Accounts
• Effective management of product mix and supply chain to maintain margins
• Navigating macroeconomic and geopolitical headwinds impacting consumer demand

Platform+ Business

• Continuing to grow the SmartCast user base and increase engagement
• Expanding advertising relationships and monetization opportunities
• Investing in Platform+ capabilities to drive long-term growth

Connected Home Opportunity

• Leveraging the Smart TV as the center of the Connected Home ecosystem
• Developing new interactive features and use cases to drive monetization

Competition and Industry Dynamics

• Competing against other TV brands, streaming devices and services for viewership and advertising spend
• Adapting to the ongoing shift of advertising dollars from linear TV to Connected TV

Conclusion

VIZIO’s Q3 2024 results demonstrate the company’s ability to drive growth in its Platform+ business, which is becoming an increasingly important contributor to its overall financial performance. While the Device business faces near-term headwinds, VIZIO’s focus on innovation, user engagement and monetization opportunities positions it well to capitalize on the long-term shift towards Connected TV and the Connected Home.

The pending acquisition by Walmart presents an opportunity for VIZIO to accelerate its strategic initiatives as part of a larger, well-resourced organization. However, the company must continue to navigate macroeconomic uncertainties and intense competition in order to sustain its momentum and deliver value for shareholders.