VZIO - Earnings call transcript Q4 2021

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Operator

Good afternoon, everyone and thank you for joining us for our Fourth Quarter 2021 Earnings Call.

Joining me for today’s discussion are William Wang, our Founder and CEO and Adam Townsend, our CFO. Also joining us for the Q&A portion of today’s call is Michael O’Donnell, our Chief Revenue and Strategic Growth Officer. Please note that in addition to our earnings release, a slide presentation can be found on our Investor Relations website at investors.vizio.com. I’ll refer you to the second slide in the presentation and remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. SEC that forward-looking actual more afternoon. statements our with uncertainties materially to detail and release filings those press from are the risks could issued results cause differ in that These was our this and discussed in undertake any to that to reflect revise call. after this obligation no changes We statements occur

be During adjusted for the can with GAAP comparisons measures in EBITDA. non-GAAP be unless this a will we information found most section refer on made website. remarks Note non-GAAP to release year-over-year basis the also call, that specified. earnings Reconciliations the otherwise financial all including discussed financial or quarterly measures, our Investors today’s on our comparable in call in of

William. Now, I will turn to the over call

William Wang

everyone. for will then year I’d together. talk minutes and was This full and for we about you year on time first results. some XXXX VIZIO. Michael few us and details the to to joining the transformational Adam a a Thanks, get highlights to give QX take more a is hello on staff today. like year Thank XXXX

software strategy. and Our accelerate our see to continued for hardware invest execution success the to innovation employees, and And almost business. of year and more double talent our mostly We impact software XXX then, from to expertise we than in and in X IPO since integrated product engineering was have combined ago. XXX power in

new continuing strengthened and and model. accomplished grown maintaining strong innovation, customers. a a all flow. improve into national are of to sheet has and to our revenue of every dual devices business growth packed have functionality, We our lot cash balance experiences we While And programming also while a millions existing for the Americans, new connected this to sell positive of sales we TV organization we that

happen requires thank easy. This year Such team for that not of anniversary. VIZIO’s this to XXth want achievement making our and year expertise. marks a I amount Now after tremendous is discipline year.

value our We owning It to history experiences are is And we never maintained also greater. give continuing The of respect our both happy incredible the brand to full sixth and say top products TV and perfecting for of between our I brand XXXX quality our soundbar the share and consumers hardware with position one has value software products to customers. and number relationship the two. am delivering as been have the three that in market year smart selling U.S. the the year

on focused we big engagement season, screen to the end that and products efforts promotional holiday Going and the higher on greater are ARPU. drive

was above Our class. in strong with have normalized. TVs and shipments XX-inch strategy the for levels Inventory paid off,

increase healthy strength market us We quality competitive inventory remain competitor tactics to increase our to push value. combination are both strength heading continue on implement in leverage and we position as intend the to additional pricing and XXXX enhance that of share. to our and The executing dynamics we in of puts strategies demand and highly model aggressive products revenue position dual business market our pricing and and into

Smart about. winning Award the play. M-Series devices, sound fast-action into frame The available for new Sound M-Series value our Quantum latest with and We audio improved spring. is featuring Innovation for are which had program these updated guidance. a is week weigh Consumer screen the product VIZIO recognized CES for was highest start XK XX-inch Elevate collection new perfect SmartCast, rate the system, really which massive excited voice is our a collection, will new the X are Association named version great was TV, Award this the And shelves X.X.X all new including winning and bar, to of earning operating VIZIO on and Bar, our Elevate user launch in sleeker, award more a of gaming picture experience what products, a by affordable the capabilities VIZIO delivers patented, hitting technology Technology our which awards. asset HDR

WatchFree+ content We to addition users with our Samuel hours X,XXX improved Goldwyn. platform. supported all second is supported WatchFree+. are of was free as have the continue and expand our of watched of watching premium Lionsgate, ad such SmartCast WatchFree+ premium and content partners SmartCast service, XX% And ad on Pictures most we over Nearly, our also Sony Disney, the options. app top

features from the becoming Discovery and Plus, and favorites Networks. recently like of more apps channels fast data-driven are Our apps A+E collection big TV Sling we added even

content here streaming with and ad entertainment everyone. VIZIO record agency key QX in. business and from the to key even of for to seat So VIZIO was consumption in row tune content offerings expectations. insurance, grew up, heat a grew ARPU and and and that while The XXXX significantly help is stream relationships part quarter continues ad wars exceed which and We ad and growth, of expanded tremendous had continued provides another categories, media meet the customers business with a my to the ecosystem companies retail auto. our VIZIO We a front grow revenue subscriptions our U.S. including and drive not

billing as those to our devices. experiences TVs streaming, other and As to deliver find we experiences Connect, brand sell Household we brands building audiences able need for to them. which anchored to and our data, And us ad allow are across people with are move

level is inventory to billion data. This source TV data Years increasingly market VIZIO our ACR and our to advertising the linear experience award, of VIZIO of Granular years producing powered revenue When market-leading before on ago, historically payoff. VIZIO’s household for A the the the the stream In strategic scale optimization TV we in space. measurement investment VIZIO and go develop investments beyond X We differentiator excited key to in a of measurement better the shareholders. for industry. to of I the level TV viewing creates units market, for year glass our our became integration is important several team enhancements new $XX am advertising fueling for the richer And a the we viewing software investments XXth of and hardware data And our are benefits X by combined are is data monetization streaming are introducing with as experience additional streaming content finding the platform. more companies and supports best swings. dual future the data made to opportunities sponsorship opt-in for data, VIZIO glass kinds strengthen measurement data in and of manage also VIZIO’s the celebrates be opportunities the of of data us more revenue XXXX, leading effective all our seeing part data. out experience TV and TV a in opt-in revolution. at plus of more and advertising challenged utilities.

us expect We discipline healthy growth to to experience expertise and to great us balance sheet. build the the and a forward drive help and propel maintenance that company of a

fourth we a use partners year lot of to at their heavy advertising happy home consumers XX results I Adam call will traded to publicly more and of look XXXX our have over We we quality second now use the you. that, detail. years value And our as data to grow next head With to of turn our and to speak as quarter can businesses. delivering that that Thank forward consumers. the products our company, in and into lots to

Adam Townsend

elevated earnings discuss and IR our then and revenue today presentation release will model, Platform my to on quarter Thanks, the our outlook blend are our $XXX revenue Plus comments William. revenue QX Full total XXXX. represents QX. Fourth faced performance fourth in demand focus product to headwinds results comparisons in while of revenue website. I from million. investor $XXX at our year million, where company XX% grew quarter dual $XXX latencies on This total the logistical million device XXXX the of came by available for and

triple-digits, video driven on revenue device impressions again advertising, XXX% powerful Platform to our off Plus both which revenue $XX and by screen in growth was Advertising units. grew of Our home consists million. by and up

monetizable banners category by video to become the across very we home home more opportunities. to expand the and remains known Demand we as screen in ad advertisers strong even and inventory hero sponsorship screen adding unlocked During additional continue more buyers our quarter, marketplace. with page and to sell relationships

quarter, experienced the During numerous insurance, core and media categories, including we strong ad and growth retail, across entertainment. automotive,

are performance who opted-in point remains advertisers for spend. better with viewing a increasingly for leading industry looking Our first-party data strong their

team. expanding fueling This Further, our is now directly into off-device fact, advertisers ads data. to the seek devices, ad as data half product, way of with device solutions rapid our impactful all guaranteed with growth we delivery mobile. targeted buyers across the use they ad capability this based Household our In of work is run new sales including for only TAM viewing ad inventory our key around our to beyond base performance-based first-party installed Connect. is And are ecosystem our digital our on on and bringing product

last XX% following our Platform and buttons data remote which licensing, today now includes quarter, shift on each rate licensing year. the quarters For revenue. branded in our data The non-advertising past primarily in growth of of advertising our in strategic content revenue has late model X%. fees, controls three total grew the improved distribution represented revenue Plus revenue, Non-advertising the

growth renewal. existing pipeline we We several expect XXXX our deals continue have trajectory coming to is up for deals new this strong as in and data for

low. X.X sequential consecutive For totaled smart quarter device, TV of second QX quarters million, two shipments growth the following marking

have into conditions light from worked and diligently improve the As channel team the heard you coming I challenging which many market been quarter have inventories, am our during sure quarter. to companies, remained

throughout lowered coming know forward. on work promotion for February we which XX-inch put opportunities. into we on ARPU number in the $XXX be key models their QX, going the mentioned, position selling engagement been competitiveness us increase our TV to aggressive TV that now our William quarter of early units we over-index that stronger to us month, To a in end, levels past country allow V-Series pricing the have more one deployed has X the As aggressive in XX-inch price and terms the much weeks. and and will past the In in

aggressive impact have Of on gross course, like profit this promotions margins. an

Platform to high Plus we quarter, growing to indicated strategic as margins rapidly profit margin enabler As last in lowering business acquisition. drive customer our TV gross a view

XX% with plus well as of finally, gross of gross quarter, of device engineering X software Total And income ramp capabilities the $XX per comp total company a was was was Plus $XX we adjusted up gross Platform $X.XX about and profit overall R&D range. stock-based and the was in net Platform in year-over-year. $XX dollars as For profit million, $X SG&A higher of million grew expected XX% profit million, EBITDA share for or particular. million. company our total quarter well or of the by investment profit to ahead million which loss continue and expense impacted as costs $XX development gross

the in driving now experiencing up QX the Turning key success overall metrics, record over to monetization. to our are period. a XX% results growing $XX.XX, our year operating grew we ago highlight ARPU

our benefiting including, Our ARPU in which VIZIO as of deliver monetization. to total grew higher billion factors, $X.X targeted $X.X basis, improved campaigns, expanded numerous into from awareness XX% the I enhancements year-over-year as are billion. hours demand well VIZIO translates that greater CPMs is and marketplace, more overall mentioned hours which earlier, driving a grew XX% WatchFree+ continued SmartCast as and to to On

While are in did of as see year-over-year of SmartCast a the growth down we dynamics terms. sequential XXXX, per return QX lap absolute user in we hours still

are in further So we strength far seeing trends. engagement QX, in

have from seasonally active already platform, particularly heels video-on-demand, results XX% For much during the nearly example, of account be in were strong hours per period. number is additional like the features to including a quarter, for January, the we a fourth a recent encouraging content, stat This enhancements SmartCast more. and apps on up better which average of search the to made tends

XX.X at show to a in with account XX% active continued solid accounts, increase active ending the base XX-day million. also quarter Our growth,

what Platform expect first in licensing. growth are and strong Plus, a benefits actions growth are we is our we this me We indicate realizing trends data serve. strategic far year our opportunities and we turn now for demand for to continued thus past are and seeing Let another with advertising in and our of planning quarter. the our year Starting to the data in inventory source, hungry revenue non-advertising expanding see ahead. market for position largest The strength the great we

million to revenue of $XX we Taken together, in $XX QX expect the million. Platform range Plus

range of steady XX% the the We range, midpoint with profit million a gross the levels. expect QX $XX implying of to Plus margin Platform in of $XX million, at

we device, sales inventory position across benefit our from improved expect channels. For to

in strategies but the know, all our we and have the As products to believe certain market uncertain, right somewhat competitiveness. increase we still dynamics we are the right

closely early in and working retail merchandising partners to the aggressive being on are tactics particularly our move We with promotions units year.

We ODM volume at are our suppliers commitments also with pricing. competitive to closely working secure

alike. additional people, a range Lastly, ahead. products, surface only In a we expect for we XXXX, million are strategies to we XXXX total enhancements EBITDA pivotal and of and invest summary, systems continue believe investments that we platform $X lies be loss scratching we $X advertisers made opportunity we of company the to of viewers, gain to to will partners deployed in in in content the adjusted million. From the for VIZIO. year the the of was a In

will talent throughout invest in to to business. We drive growth continue the

We new greater drive and deploy expect monetizable efficiencies. capabilities develop to technologies to

As extraordinary that, Operator? the we believe capitalize resources ensure open opportunity we to up will on let’s call shifts to we and often the industry have said, allocate we has ahead. the With questions. to tremendous continue

Operator

question Instructions] go Laura, comes Martin [Operator first The of you. Laura Needham. Thank ahead. from please

Laura Martin

much. very you Thank

with EBITDA. start Let’s

really it feels lower for million EBITDA guess most the the then in we looks better quarter, $X of guidance or by QX or than strong fourth low But EBITDA I were worse – it’s expenses it operating course. your So expected. like like had about was

quarters to on potentially? expenses just So, is between there QX of some QX two terms from going shift the something in

Adam Townsend

It’s great question. Laura. Yes, a

there in So end as other down is this terms the well expenses dynamics that example increase as at But some some in marketing an as of are going as year. SG&A personnel with bring of market. of device is to strategy our such margins willing the part our expenses to as quarter being of the talking on the the competitive overall timing and we we about been broader have through

levels. We’re QX doing fact in good back inventory now the we here of have the that on more aggressively channel that strong

the as remarks. more acquisition, and merchandise help promote I we customer partners to Now with and have out that market, product units in the mentioned our and to can we drive retail work go move in

most that year. So that. for bit probably the it’s the of would And lowest – see we year. as a probably go dynamic just a level through It eases is we the the this

overall that you as I’ll lower on pricing. down but – – had to the dynamics we so And that inventory, remind you side, we I of to device promote were that strategy, do a demand, are emphasize market margins the want part over to the High or pull about, to the of we broader expecting have some demand, saw margins. single-digit the that talked need right? all that or pandemic period of products excessive no during cut elevated like due

were typical to flywheel in a was sustainable. better this double-digit us That We this, a and new drive so very help strategic puts business. very, period had device our of never where our was kind about in Plus then place but grow position business. into the margins Platform it And we clear

Laura Martin

then is, question second And that question a should million, to and last XX%. XXXX? both and thank is about William into – that my $XX the revenue of giving my see for Platform question was growth the and My your last this Okay. quarter do guess, said about data I in lot up step continue issue the of talked of XX% Plus you data we you you data, –

Adam Townsend

of deals quarter, up are that a think of the time XXXX. step We’ve renewal coming in for while. a a a first I into now for the multiyear got number did a more driver previous of up bit but pipeline It in it’s

a more Our data deals has clients those become that well. the even only originally new we into deals. valuable did have coming And in marketplace since larger with we then particularly as few

XXXX. I So returning in driver as see a growth data

around business our some strategy data growth we near-term us helped strategy. the into know, that in year pivoted well. off and But advertising as as a we ago, shifted drive growth that you As strategy our of a reduced new

where really that’s offset So the is.

simultaneously. we’re a be both position Now growing going sides are in where to

Laura Martin

Thank you much. very

Michael O’Donnell

to Mike going I I Yes, add think was thing. one

the of heard as almost these driver for currency Warner new solutions. a around in really this at market buzz the got We’ve TV generation industry marketplace Disney, Just new this years. Media, today, that’s data the incredible the I X the around next right? to data. you is note outcome-based And licensing all products starts to NBCU, of lot important market, talk shift experience with think in to of business been in We’ve currencies, looking the

core that’s the of currencies future. these the are powering data We foundational currency-grade

it’s important So forward. for moving an us business

Laura Martin

Thanks very much.

Adam Townsend

Thanks Great. take will a next a we lot. question. Operator,

Operator

question comes next Michael The from of Guggenheim. Morris

Michael. So, please go ahead,

Your line open. is

Michael Morris

questions. Thank Two sales One, guys. side and dig in I little things. to the you. a afternoon, sort just Good wanted of unit on more the outlook of

You talked levels promotion about And also quarter, in based ultimate the device on it being stock revenue back the still that referenced forward. to But are you going of the pandemic. pre sort then the seems some soft. sales

So the units And terms can also you bit just side of end the what people’s kind demand a on are bottlenecks maybe in the we getting connect still promotion. homes? into of on read should the where into dots little

I want So maybe WatchFree+. to I’ll start about with that a ask question and then you

Adam Townsend

Yes. Thanks, Mike.

spent to quarter. came were was inventories So is during a that of fourth trying the light lot channel into quarter up as the what that we we time articulate I building

easing has challenging, bit, And but still hearing companies. many so some of the from it’s latency system in as a you’re the been

would period. which forward we’re to I about that inventory. normalized what out, at you of X entered back of lot the quarter weeks channel up healthier time of a demand level in levels, was in bring much bottomed We done the a a lower the means and had position X call know, as work to inventories So to more July

So comments that position, move a promotions that earlier, position. with want to stock now And move into pricing, deploy kinds that strong William’s to you more to we what strong tactics it allows hard don’t us helped when those It’s strategic us we position. have be to have about do of units. that to

we immediately aggressive see now XX-inch QX, referenced and made starting there I the to a so – of number level TV, pretty the that, one do you’re our very into through kinds that TV sell you Those on XX-inch And stock the we’re selling where and coming us the example price you nice and have started move V-series tactics at it strong do a became of a to once in market. can position.

going manage are in know continue we’re that. that. We So some There market. challenges to to still the

of of in units of stuck to are the XXXX with to our continue inventories. still as all to have partners into of vessels the on just slow much possible. as get to we terms work We some in a coming through position and units our better – channel smaller significantly we’ll But that mitigate try ports and some are

Michael Morris

you? that. have might ad like users don’t that, it still valuable where for you more as how or engagement on SmartCast referenced controlled for to but now much you you has Can spent And the how you watching the trending? compared split talk to get know time how of WatchFree+. the time an another they’re spent, XX% isn’t And by WatchFree+ app completely time much you frame extent I something on or thanks maybe Okay, is maybe the then to can either spending been about

Adam Townsend

want Mike, take that? to you

Michael O’Donnell

that. take I’ll Yes.

is business our the where continue before So look, advertising I biggest think we WatchFree+ invest. we positioned for is engine to growth as

be got on our most we the a UI to made effectively adding invested past platform, points the And drive features. just carousels, BAR, recently the we service. a touch demand service new ton behind custom whether of in We We that promotion also the platform. to the the NAS into year. video but or lot app WatchFree+ more on it in remote enables an put we of big a on itself, In a new viewers app into AVOD So that content unavoidable WatchFree+. right? lot WatchFree+ added controlling made August, We’ve the transition bringing over to more a experience, us

service. the innovate to continuing we’re So

behind promotional to there future. driver spent We’re we But a generate continuing going more aspect. up as to from push users it’s put more platform within WatchFree+. support for be that think to continue active key the on time to us our continuing it well engagement the entails in And as of us

Adam Townsend

Mike, let add And one other in Yes. just context. me point

that which right, you home when people a about advertising spending portion our more of Now actually is screen impressions where into of the higher the CPMs, different their question. growth few from comes ARPU, your factors, think the time, and are

for to not non-ad-supported that’s all-time created spend time quite us doesn’t and spending them. much. that spending us time If is something great WatchFree+, apps, So equally. they’re help If as have in the place

in is up So when you this look XX% growth at ARPU, our year-over-year. in a

Our that up active in and up are our same SmartCast period, accounts hours rolling XX%. time XX%

of So flywheel of those overall to contributed ARPU. it monetization each we’re that shows effect occurring that the components getting because is that

monetization is point. incredibly the well exercise at this So working

Michael Morris

Thanks helpful. guys. lot, Appreciate it. That’s a

Adam Townsend

the You we will Operator, next question. bet. take

Operator

now We Stephens. Nick from a Zangler have of question

please So, Nick. ahead, go

Nick Zangler

results, some here. did Hey, great hours dig guys, to in Plus Platform on of Platform Plus the want guide. great I

hours XX% lower than of had increased fall SmartCast the to hours rate VIZIO the last over SmartCast year-over-year. year. results increased that penetration so which XX% is you’ve So XX.X%,

all guess just I the a quarter have given the I late that all fourth streaming quarter. So new throughout added would rate third higher here penetration you’ve expected services

So cable, discrepancy could VIZIO understand I’m on size be sticks up some to those some it’s hours. VIZIO specifically those systems, us. access dongles but maybe And and to of you’d games it’s of and non-SmartCast sources the willing maybe help be if to are thought. you’d any make I just What up you the use I XX%? mean, that of details that that wondering provide imagine me for players, in willing

Michael O’Donnell

the of right, the Look, lack original coming with of dynamic. off pretty and content traditional content interesting a couple atypical we’re providers. an it’s from linear pandemic of Yes, Sure. years Nick. coming the Yes, behavior, of

normal We’ve what So to exactly hard know it’s our been growing overall is. hours.

with pleased very We’re that.

the driving we them going content to to the itself. than to ARPU more into contribute that’s growth our where We’re what’s ours earlier by point monetize best,

So using important home our dynamic. that’s an And screen. we’re

people meet what people their using and results and to We’re looking ourselves. using drive and we into into content our they’re needs the search data where monetize for both to can drive for

So hours is quarters. we’ll percent XX% and of track closely. continue take, pandemic, in in to right come or as this the SmartCast very last mean I down during monitor XX%. few roughly, a give it It’s XX%, it it now was peak the back the total was about to

don’t But monetization a So across from a content is standpoint. normal watch we’re data an standpoint, they and consumer, them yet. active again, I know what the know proposition to that benefit the whatever value allowing we that to from want, we from great inputs overall bringing

Nick Zangler

And these Great. everybody have to wants seems it then like days. their own TV

both even advantages mind, and to the years So in supply the TV operating guys the you about come but Smart maybe perspective? software your system right I’m Thanks. from the long-term by you time unique the of challenges that chain owning facing a to just more now just context advantages, take wondering hardware some we’re could over in talk that the have if

William Wang

a we’ve And today’s doing XX really what been impress building need to power can’t both separation we Yes, to the details. And TV years And and I anybody of again, imagine not IoT to understand think a software to now. of good I – maximize the question. in I what understand world And paid the attention for the and I consumer lot without market, believe to almost want don’t don’t software. the hardware we’re experience. do. who build

any product in integrate control us need final consumer order a and maximize build on order to for – consumer qualities for we here We’re to it to together. experience, to consumer in both we

somebody we of X But system XX operating run been ago, work. than XX to more end have we’ve last on tried we And working And from years. the Smart that X not end, doing and years it been TV for for the actually else. So did years.

believe going integrated we’re to hardware who our smart So build feature software stick TV. this and I the – indication to to anybody for is want solution.

Nick Zangler

guys. Thanks, Good luck.

William Wang

Thanks.

Adam Townsend

Operator, question. we next take will the

Operator

of have JPMorgan. Cory Carpenter We now

So, when please ready. ahead, go you are

Cory Carpenter

Thank if more lot And trends have both you maybe all. for Curious you. seeing on off-platform advertising certainly saw couple broadly that you you’re others the hoping just about two, then the market. We’ve the Mike, in around at talk ad did could inventory a you I prepared of remarks. heard mention advertising, in categories, a from times

hoping discuss how some big that could the you So you. today on that Thank there? you’re of maybe just stuff doing is

Michael O’Donnell

Yes.

for categories with the I’ll smaller marketplace. So of dollar the us, pools for we’re starting kind start Look, seeing. at we’re on – from, this point,

years before talked I about X So we’re really monetization. only into

of we rate a ahead us. have run still So huge

So category. from entertainment standpoint, category today, a and media is our largest

going reducing the voice, There’s And always shows to this us We foreseeable future. the always There’s and of existing continue into to be attention, to share subscriptions. see in category strong they are new going need new momentum momentum and we help to expect There’s to coming strong there audience new to for with promote. be charts. need drive market. apps to be the subscribers

And So and year media a business But categories. expanding broad grow. largest our than in new and continues today. that and really lifts automotive. to much our the we And this past we’ve retail job, great is over that and really done insurance, of in overall category pools more saw to in of terms entertainment growth still is especially

do able the to to pressure year. categories, we to is continue there that be up to these prop and continue as we our in some marketplace, grow continue for on us, we push today to we ramp categories to as these in of continue value expect this While next the marketplace,

of run of can is exciting I’ll us. for you add-on consumers know what TV the product it or lot time it TV, is a terms an important they’re platforms. that that to the call omni-channel right? multiple us different because and a inside or us and really Household see lot it outside it’s consumers, of remessage campaigns effectively It’s aren’t most In home allows time allows across Connect, desktop of to we spending of coordinate does mobile, What whether home, look, does are across to those spending an

allows marketplace For So right? to opportunities in be it the much them we it’s problem, coordinated and team us this for help more partners. right? of all Household platform, or us, brings have say, more best-in-class because in have we outcomes platform their and supply able past, want an the advertising a incredible ECR very off as graph This to our on-platform identity with the marketplace deliver well as sell to the campaigns grow Yahoo!. more and Connect against we’ve as and and We our can across products demand. And has our, announced Verizon Household continued a TransUnion. really largest dataset necessarily TAM, expand well and more. large improve as or the in so invested, that just already into we we marketplace helps our Connect our our device. as We in But deal our which invested sales I device had don’t this see as generate from expand gives advertising more important said to we to demand be effectively

in offering and innovate Connect the and to to Household continuing we’re expect the to that expand with continue push So forward we marketplace. on

terms growth we’re from some any see not we’ll that that expect say guidance year. of this ready we next think at it that. But product I point, this like, to good in share looks In around to what this

Cory Carpenter

helpful. Very you. thank Great,

Adam Townsend

the Operator, take question. next let’s

Operator

of Mohan The from question Bank Wamsi comes America. from next

Wamsi, please So, ahead. go

Wamsi Mohan

Yes, thank you.

growth in units maybe in were I TV level as end be the the about have pandemic TVs XXXX follow-up. X promotional XXXX? of growth look drive into side, the versus a levels thinking – years, should your you driving device talking better, if to inventory talk I that ‘XX? versus On Assuming Can sort you about be indicated increased past as of units or I But in you’re activity. to you’re and TV are what know look And units But know promotional. more intentions hoping ‘XX of the benefits lower at some TV we used about were the there how absolute you some we monitors. rate

Michael O’Donnell

if a in million a There the roughly XXXX, days brunt that stimulus at pandemic challenges, and was really much, of chip year in terms in units. a the of do was better. Obviously, various of supply supplies, hangover Look, think supply you took dynamic. we came every did trucking, Yes. the be extent. shipped impact. continues year, chain the X that easing element bottlenecked still a challenges surge seen component XXXX. side, to of Logistics logistics XXXX some and early chain look and those panel, supplies, peak into there the sort the right? freight, We XXXX during challenged the chain challenges the on and elements of was supply certain much Certainly to we’ve of the pre-pandemic in

challenged broadly even So we’re think that. people I want monitor year the a make certainly, it to those going to peak But ‘XX. to as expectations prediction, start in I in a continue don’t the to some market, ease predicting challenges doing midyear. but

at our bringing now inventories, of added features X we pandemic the we’re a million our be return to and to should that then pre promote think to with XXXX from that, the unit to towards to went down think in We during lineup, you the channel SmartCast now XXXX. product back mid-X units shipments. we’ve if what able growth million the up we X and our capabilities strength in with million certainly the to see and ability So market, range,

Wamsi Mohan

should we the about clearly, investing in you’re here, there – pieces margins, That’s quite Plus know Okay. I And are gross you. margins can that the how Thank the think share around that’s heavily Thank you’ve back-end done of around helpful. integration, of the here? you any on when progressing? the gross lots color XXXX trajectory payment And expect you. work moving in Platform business. we How then side, and

Adam Townsend

Sure. Yes. There pie expand we as Platform to with profile. of Plus mean revenue come opportunity the margin clearly, are on going be Look, different that side. sources I our the a

has by talking just about, of a endemic off-platform screen, very device, has Mike it’s than some example, like, nature, high margin. For that a for lower was home example, the stuff very, which on margin

are quarter very We mid-XX% margin to growth to the consistent ways for offsets we for QX. guided gross So, maintain both QX create at areas strong and a help low to with looking drive margin. in

that of going So, not nice finding I for think are margins. job doing balance. a XX%-plus we am I apologize to

going manage But headed think will we component pie, are it. to components where home prop more down going think acquisition billing the partners. That the again, But we profile vehicle subscription Premium time, about so of our to in screen again, business of want it’s is to and lower profit great even has stickiness natural what’s If a to the a be value fantastic of can content bring content that But apps about it dollars. advertising, what for on business. thing customer we a generate a fulfill increases as business for margin to not TAM. we than more to it’s the too, are lined that. edge to what are the business. them. say happen that the for a we our capability partners are exactly We we brings total is It billing margin really just Cables value better our great because is service to That’s that, to start platform. becomes expanding to great them. asking are that have They now and example dramatic. the the up different is. and their launch I that’s want to consumer. way We over complex dynamics directionally of expanding are side. going by It’s the additional starts a One the an that on it’s margin have you

value to So, increased our obviously, just to collective advertising, partners all content across our our of across partners this and consumers. comes a

very are we closely going and to to work that like. continue looks So, manage what margin

Wamsi Mohan

much. Thank so you

William Wang

Operator, let’s take the next question.

Operator

next Fargo. have from please now Steven Sir, Cahall go ahead, question of Wells Steven. We the

Steven Cahall

your operating they that going is the William system first, players. of TV kind of consolidate think said Maybe market and Adam, peers to that Thanks. of has connected one down, just couple a

your it lot give cost are so think to play you market in you how is think if spend money year to operating as a could process? manage and order that the like investment going of going system margins how perspective just you with I out And of EBITDA they compete was on through sounds and to you about wondering that. kind this

William Wang

I pretty take is Yes, system connected will TV the operating system. solid. market The operating in

which their to has to We have switch own. another Samsung, system. They own. their LG operating is unlikely have

time. will likely our by what unlikely X%, happen, like immediately shrink but And immediately or or also see to systems two two leave it one domestic Chinese will EBITDA, like it’s operating share system, Roku operating certain camp. it’s a Supply system, like have system probably the particular to and market phone to cell future. all at to not see because Comcast over Google PC comes and operating a a through own and don’t time, this it is down Chain’s a I brand to or down I Hisense we so don’t have I aspired really happens And reasonably our the TCL also operating X% so joining The – – in Adam.

Adam Townsend

hardware costs over both think Yes. Look, have is the like. software and that what one control obviously, full we controlling benefits, those the of Steve, the look that of I

EBITDA aggressive. the over it’s we of and think elevated because where you to that on direction competition the result transitioning levels revenue baseline improve the growth of really Obviously, normalize and is time, don’t overall starts side. we margin are developing and are in period What as are profit once model, our the the dual a and consolidated Platform more now EBITDA OS I which we on to lower Plus business trends profitability. shift a other not in function necessarily EBITDA on from improve EBITDA. focused so will, that, in And a us growing help then EBITDA, even pandemic that the of high being more back But maybe of is trajectory

think of the to as tandem in I two about business to So, managing have that the strategic sides really benefit. it work

Steven Cahall

versus then, the it’s that pretty good what look expected maybe that’s know TV shipment net on rate conversion Great. know churn there. And we into is SmartCast some at now just net QX. adds, always in if there sometimes baked Adam, that to we I and I adds of

we So, I wondering there? what was into saw lines you. in if QX could anything other any trend or of Thank in XXXX out extrapolate you just

Adam Townsend

some we marketplace. This managing in Yes. dynamics is through are that happened another example atypical where the have

well right. sell-through shipments, both So, active account as growth is as a function of

years, the the pretty environment, be the dynamics market. look some seen divergence And two. would X at they a over normalized a together. so material There we between close two difference be together. But wouldn’t on have we those in past based In

year so to For example, the demand where outpaced shipments sort went that marketplace in was a huge of checks that due was the out of back there rush in there availability the dynamic inventories. stimulus opposite in period. the different everything with and had XXXX, drawdown, as This sell-through we

XX% TVs, XX%, XX% range. at sold to it’s of has in the become it’s tune year. that you, XX% will newly sort in moved rating sort looking active so to more down to think hard know I north we say, I but to of probably remind XX%-plus. accounts is normal, What XX% that range ‘XX, of And from of attachment ‘XX, this back in that

So, currently sold TV high. is converted very

goes as have number base. to a gets as that big XXXX. back right. to that churn that changes, that fleet mentioned, bound you churn be now, in And and is bigger, There We got by base

try thing another to that’s So, that manage. we

time able that the in closely We do attachment sure of in we type make engaged, to units, marketing sell we them that speaking, how look right as we so we generally to range we probably at in reduce bring improve engage continue metric. terms are forward, looking do churn are how how more keeping of then right will very we do that products that the bring the customers the over in, But think content, I to we metric. be you

Steven Cahall

Adam. Thanks

Adam Townsend

will Operator, next we the question. take

Operator

Tom now you. of ahead, Tom. Thank please have Sandler. We go Sir, Piper Champion

Tom Champion

referenced script Adam guys. or those. behind just I you. talk about if Thank process the am Good afternoon little the more a William, in and you thought the could promotions bit curious you

you go out and market and seeing it’s are to in whether offensive nature or in there stimulate this nature responding to market. kind of grab and defensive share sales more the Just in curious, dynamics is

Mike you could. if if O’Donnell, and provide maybe And I additional a for context one could some second curious there? Just color

nascent, in and rapidly about think goals I curious how priorities advertising Thank ‘XX picture? is Your big am you. business but the still up. scaling you And just

Adam Townsend

Hey Tom, yes.

been key is this a some find we the relationships beneficial doing one all obviously and And one, effort closely has retail across with mutually is long to promotions for So, have our dynamics deep very This of really partners. our time to our where team it. work right. partners highly very, collaborative a

offensive would it probably initially. as characterize I So,

know to you aggressive our if XX-inch. seen immediate what going know earlier are used on we got benefit never I do, it’s right. defensive But have the we people until other You and when example

and to going because similar prepared opportunities. are over-index our lineup that remarks ARPU to do actions, engagement models in mentioned look certain the to units terms We as of we other at tend in throughout know I

engagement because, whole our drive but us with And of of to so that And lean get more is we it goal units that. and ARPU to customers. in want help kind into the home, that’s the the units again, deeper

will to tactful have units get are we can market. what we aggressive into looks like. and move we assess know But and see and that so do, to be at pretty want on and to what for What the that means going see we the fleet. about lean we look And what overall competitors

quality at We for little a the skews a that product leaders, attractive and high-quality a price those line some have when consumer. ratio to down more cost of got you favorably great great lower comes bit the very And price. get with price in

partners effective as as we are possible. and with going work make continue to our So, to that

Michael O’Donnell

advertiser XX%. political we which relatively I still shared. our we includes business revenue the touch grow I right, a But advertiser, which last grow XX%, new continue base, priorities fundamental And the I quarter we are to did a standpoint, over – a did want goals. per will to this on and Yes. market, continue that as the in it’s to we over year, and past think and year Yes, just from

from value that tools going we can way to first-party in continuing out only in one, the ACR be to we new marketplace, the advertising us household continue marketplace, ad relationships the products give think bring addressable are that ability multiple evangelizing only technology to data the in the continuing an is the and we prop and also have leveraging invest our standpoint, I we to side, to that the the not ad do bring business. not SmartCast like expand tech behind our devices. TAM market across in deepen connect And are then but on to and to WatchFree+, platform continuing the

That tech increase have CPMs, we products. engineering months. connect, team six to new fill So, about, past the over expand tools rates, has out built increase us a build continue to and strong helped to also product continue start but talked and as ad household we

markets advertisers. first-party we tools recently, our So planning for to the to provide data leveraging are

linear, We leverage our audience. great this have We against them reach to on in incremental what’s ACR platform happening their so can target bias got help inform drive they and data. frequency can

ad on the we will but sales continue in So, the to engagement platform support tech. in team, also only invest continue to to advertising growing the not invest

Tom Champion

you, Thank guys. it. Got

William Wang

take next Operator, we question. the will

Operator

We have Research. next Cannonball of the go Vasily please from now Vasily. Karasyov question Sir, ahead,

Vasily Karasyov

much. advertising very you about Thank questions My revenue. are

You that CPMs mentioned earlier call on increased. the

mean I Platform assume much. versus compared if what let’s the revenue, a it the you sell-through wondering as your talk the each screen Thank And of of advertising? to you where say, that revenue, of is volume sits as could was I will video coming to, it So, were down home then Plus percentage about be of for margin the part very fair because drivers CPM? gross advertising growth advertising versus

Michael O’Donnell

that XX% data. key that, saw would advertise CPM Yes. I component. terms when But within growth, the CPM our margin then inventory that’s now of generating and off And specifically grow to video leveraging of gross on our roughly to of the and a is Adam take is can expand. growth in touch that we on speak where is ACR I our the revenue we are of component coming device video continuing –

data set also but higher first-party foundational better core that having drive to customers, in our data, the us to us outcomes market. enables for drive ACR CPMs Our enables

money growth big a of that linear are getting and having where television. to function be in their Advertisers down CPM tougher is. the competitive. Also, more that’s So, tougher marketplace times continues

drive beneficiary space So, are up in the that’s we continuing connected streaming TV the of or to demand that. space, and a

Adam Townsend

revenue the very be advertising, range right. we margin. we to home come Look, as certainly, for Yes. Home is around high highest to be a in our your gross be right off I of TAM. video and because opportunities business. high-margin about there you pie is to range, well. But mentioned is that’s device, and some profit as continuing we the Plus what increase I strong business, means Certainly, is as a margin in that that screen on anticipate Obviously, as going going our margin, question And okay to the have monetization particularly dynamic expands the as a it going that Platform little expands as earlier, mentioned earlier, but screen lower go that’s bit the

get for out coming that’s more If we part CTV mix are at ways broad-based a is to Dollars to their of advertising these viewers them, bring and slightly CTV helps platforms. which out that our want to so billion And pie. them okay. TV of be to more partnerships on to going the we diversified have coming as a is into marketplace. and help linear marketplace, advertisers dollars have forget, Albeit of margins, large different are capture $XX a to able that very revenue digital There well. Don’t for benefit are and we of budgets. solutions really looking

want to for as this buyers in for in viewers the destination a looking known these marketplace we be So, ourselves that marketplace. position are to

Vasily Karasyov

follow-up, A you quickly margin, Why stream explain? off-screen Thank lower you. quick if is I a advertising can may.

Michael O’Donnell

Yes.

the off-platform. Connect lower or margin, So, inventory why own because control a Household we don’t

are we on our the So, leveraging data have screen. we

that leveraging the these some out we out units, attaching we marketplace the mobile, but are then We to tablet we campaigns. open in buying on-device going and desktop are advertising are and are

go little costs because we is have to lower that grab there of So to bit margin, layout inventory. a a

Vasily Karasyov

Thank it. much. you Got very

Michael Marks

Yes.

bet. for You we Operator, have more question. time one

Operator

Thank you.

Capital. Our when final go Searle are question start. ROTH Scott please Searle, ahead you today comes to ready of from

Scott Searle

not bit or we down less is normalized the XX% wondering on little you that would that a than us give if the bit existed Typically in imagine of fourth of front? but a in that and so, Then two-thirds way the quick of given device was are right it’s that I quarter guidance supply are complicated normalizing a wondering with normalization Hey, couple environment. through. not spike getting the the we in that, which good question. a constraints the Hey, clarity in during afternoon. had for I like the could I I overall quarter? follow-ups. taking terms going and little provide certainly through the to you pandemic chain issues, could seem are back of as are Thanks market visibility more seasonal normalized. And the was they we if to aspect supply

Adam Townsend

Yes. us to that’s the tactics Look, inventory we about it, now I think fair. stronger to quarter us a for are allow some And and with general period difference right into is the earlier. going first position of the as I you described that the is that do coming talked dynamic

some Super around QX had the right. for promotion opportunities, example, So, Bowl,

and to participants we So to continue to going products. are move in heavy environment that we look were

should a overshadow of would normal first relatively I possibly have So, strong quarter that seasonality think in play to the sort trends. we hand

Scott Searle

it. Got

less is than better bit the So be should environment, bottom in line given first quarter? normal the seasonality current performing little a

Adam Townsend

be would That my anticipation.

Scott Searle

Okay.

you kind terms how the you we us defining to front should Second, could about billing on of that that ‘XX and of terms payments of e-wallet on front the commercialization in capabilities, think see milestone more when ‘XX? widespread success of in timeline update in and and expect metrics

Michael O’Donnell

Yes.

are schedule. have the In to launch terms partner of Right this the tools the mid-summer We VIZIO on our we open. portal now, year. roadmap to marketplace schedule, we plan

it’s I platform, directly those comes to available excited onto create our the kind that say foundational so only to we not we a them think is about of us of start the We rate, relationship really But working future also critical with And with generate expect integrate of help element TV would higher that partners the with it’s are account better get consumers. television. backbone take could do that for I into what a foundations VIZIO or that account future but build consumers. one-to-one of are a system we we the to so it’s as VIZIO about. So

Scott Searle

Thanks. helpful. very That’s

Adam Townsend

am little while little was will And a lastly, yes, to that on begin But a us consumers while I that It that am out will word take will say you going while ramp as I I take to start get it. if just for could, and about are launching to a I it up. excited to think I. it it excited to the adopt it of. take Scott, transacting

is over be out and up opportunities a in a So, expand just conservative. But those foundational ramp lot to that are half to of modest infrastructure be this the us to point the we different important long-term, Mike’s monetization to the going time really over having That for year, more back come. to expect allows place building of key.

Scott Searle

just there Adam, Connect, other Household payments, Perfect. Platform the now, at whether opportunities, of are opportunities. And SmartCast to billing, lot but it’s wrap is then, scale up investable

the any next ‘XX? in about that couple in level in over and of thinking be ‘XX we EBITDA should how high EBITDA from – managing we Thanks. profitability So, there of about and wonder target years? I metrics a your that should are business think terms very if the

Adam Townsend

get we I is opportunity households. to consumers in gain here grab are it out and before, phase as an have a and Look, there growth said and

are what we mode. would not I so And maximization in, EBITDA call

in are investment. We capability

units. We are that sets the broaden to have going we feature the on

to tactics to market going share are devise and sales. We gain device

drive and that together coming more growth. long-term and households control to of All help own collectively us

are So, personnel. in investing we

We development are more adding software engineers.

of the throughout are more media and adding strong this make the the really do space, sure transformative capabilities the TV, connected, think is need this growth, to we a going in is team integrated it. in the and us, for can we smart a place so in right to support being We organization where because where future consumers center that execute we are already to around moment have the being

Scott Searle

you. Great. Thank

Adam Townsend

Great. Thanks, Scott.

Michael Marks

evening. everyone Have Scott for today’s Thanks, great and concludes a joining. thanks This call.

Operator

conclude Thank call. today’s you does for joining. This

now disconnect your lines. may You

Vizio Holding (VZIO) 4 Mar 222021 Q4 Earnings call transcript