Q1 2021 Vizio Holding Corp Earnings Call
Okay.
[music].
Good day, and thank you for standing by and welcome to the Q1 2021 at <unk> earnings Conference call.
At this time all participants are on a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During the session you will need to press star one on your telephone keypad.
I would now like to hand, the conference over to your Speaker today, Mr. Michael Martin Director of Investor Relations. Please go ahead Sir.
Good afternoon, everyone and thank you for joining us for our first 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 as Mike Odonnell, Our chief revenue officer for platform.
Please note that in addition to our earnings release, we have a slide presentation for you to follow along with our remarks found on our Investor Relations website at investors that Vizio Dot Com note that all quarterly comparisons in today's remarks will be made on a year over year basis, unless otherwise specified I want to refer you to the second slide in the presentation.
<unk> and remind you that certain statements made on this call are forward looking statements that involve risks and uncertainties. These risks and uncertainties that could cause actual results to differ materially from those forward looking statements are discussed in more detail in our filings with the SEC, including our prospectus filed on March 25, 2021 and.
In our press release that was issued this afternoon, we undertake no obligation to revise any statements to reflect changes that occur. After this call. During the call. We also refer to non-GAAP financial measures, including adjusted EBITDA reconciliations with the most comparable GAAP measures for non-GAAP financial information discussed on this call can be found in the earnings release or on the investors section.
<unk> of our web site now I will turn the call over to William.
Thanks, Michael.
Hello, everyone and thank you for joining us for first earning call.
We know that many of you are new to the local authority.
We are excited to share that with you today on going forward.
As you learn more about vizio youll.
You will find that would have a long history of innovation.
And culture like seeks to challenge the status quo.
Who has created a great business model fueled by ownership of both the hardware and software.
All of these assets work together seamlessly.
With these from minimum profitability ahead of us.
As we continue to invest into the quality of our execution.
The quality of our product.
Most importantly, the quality of our team.
We'll continue to make these investments.
Exceptional user experiences to consumers.
As well as tremendous savvy to autonomy partners.
Tigers.
Content partners.
And of course, our shareholders.
Our first quarter results demonstrate the payoff of these investments as we are now seeing the contribution from.
On an expanding base of revenue sources.
Total net revenue grew 52% to 500 million.
<unk>.
Driven by strong results in our device platform plus businesses.
Both operating segments.
Built based on the momentum.
We saw in 2020.
With continued strength from TV and sandbox.
Well as a validation of our advertising revenue.
Our success advertising business, particularly impressive given that we are just latching on our first year in the market.
Gross profit in the quarter came in at $87 million.
82%.
So the dynamic of the packaged salad rates of adoption of streaming.
And we are aligned to benefit in a bigger way.
Sooner than previously thought.
It has been incredible.
Exciting pain grouping our position within the industry at Omnicom, such rapid transformation and massive shifts in consumer behavior.
Adam will provide additional financial details in there but.
Further I'd like to share more perspective on our businesses.
We are operating in two strategically integrated.
Grid business unit.
Bye bye.
Platform plus.
I'll start with devices.
As we always have we remain focused on bringing to consume a range of high quality smart Tvs and sound bars.
At affordable prices.
We're a prop.
Product continued to be recognized.
With numerous awards.
But delivering a makes a premium technology and innovation from market at a price within reach for most American households.
Our deep focus on value quality and efficiency.
Estimate vizio, a top TV and some of our brands in the us for many years.
Now as we head into the spring part of re price in a few weeks.
<unk> growth of automakers of our latest generation products hitting the shelves.
Our TV continued to win over equivalents for the processing fee incredible picture quality and interactivity with the likes of Amazon Alexa Google home.
Apple home kit.
All of which help further position.
Screen at the center of the connected home side.
<unk>.
We're expanding the features of our <unk>.
Critical day clean from bars to offer an even more immersive experience.
Quite a book value.
Our investment in strong alone bending rhythms to shift with ODM suppliers and retail channel partners remains core to our success.
In a highly competitive industry relationship matter.
Our team works closely with these partners to control costs.
Consistent supply as the pure prominent shelf space.
With merchandising support.
This year.
We're excited to expand our number of shop with several of the largest retailers in the country.
To premium even wider range of products into the stores.
We're also looking to expand with the online sales channels.
Which are expected to gain share going forward.
Building on the strong foundation of our devices.
Platform plus.
With a wide range come from available proprietary small cap operating system.
We're now tapping into the rapidly growing CTV ad marketplace.
We drive our current revenue.
Free to consumer at the profit whilst fleet services as well as from inventory share across many AI bot.
We're also monetize our home screen with content and streaming services advertising as well as the sponsorship.
From a branded content hub.
Even like the holiday and the Super Bowl.
We're also positioned to growth as Bob <unk> and <unk> engagement.
Platform.
From a rich data in from all of that we do and drive advertisers to our platform.
To reach millions of streaming viewers that cannot be reached elsewhere.
Our investment in the integrated experience is paying off and been recognized not only through our growing base of active accounts.
But also by industry critics.
In fact, just a few weeks ago, we were honored to receive the prestigious <unk>.
Award for best connected TV platform.
So.
So the combination of our winning devices.
<unk> operating system <unk>.
We're excited about growth potential ahead.
Bye you may be wondering why the plus platform.
We'll call it platform plus because it represents not just a great streaming platform.
Also a wide array of technologies.
Solutions and data and tools that help us bring so much more to viewers advertisers and growing range of our content partners.
Just one example of this was a project order.
This is an industry wide consortium with be ahead of three years ago was the number.
A major media networks and agencies.
To develop a technology standard for delivering linear addressable advertising.
Now the architecture and the standard are in place to enable dynamic AD insertion and we're working closely with network to help them increase their salary.
At inventory and improve the viewing experience for users.
More rather than app for users.
Higher monetization potential or network.
Now that's a win win powered by Brazil.
This type of innovation that is made possible by continued investment in product cost.
The inscape.
Powertrain ACR Technology, Inc.
<unk>.
Has grown to become a key data component in the TV measurement marketplace.
And field execution.
Both solutions across the media ecosystem.
Do the integrations with our smart Tvs Inchcape can use anonymous glass bottle of data.
Which means we are able to detect content.
If the screen regardless of the input for us.
This data improved transparency in our network agent.
<unk> agency and come from partners, who help drive better targeting solutions.
We see tremendous opportunities ahead.
For our data driven advertising business as we are just getting profit.
Last week, we participated in our first iab, new pump to drive broader awareness of what we can bring to the advertisers we presented a host of advertising capability.
And are very encouraged by the response so far we also dramatically expanded our cross device advertising capability in a part of them. We call household connect through a new partnership with Verizon media.
Now we can offer advertisers the ability to launch campaign.
Spark has inventory and delivery cross screen advertising opportunities via desktop and mobile.
I also want to take a moment to highlight that our investments extend well beyond our product and software platform. For example over the last 10 years, Brazil has swung 112 American business award for customer service with take consumer satisfaction.
As we know it is the key component to the product experience and to build brand loyalty.
Im really part of our team and the award winning efforts.
So to wrap up this is very exciting time in our company's progress.
With no.
That was the big changes underway in entertainment and advertising.
That's the number from opportunities ahead, we will continue to investing in our television.
<unk> software.
And people needed to further redefine how consumers engage with the larger screen in the home.
The evolution of television is calling for revenues.
Vizio is here to answer.
We're happy here on the journey with us.
With that I will now turn the call over to Adam to discuss the financial details of the quarter.
Then we will take questions.
Thank you William let me start by saying Q1 was an exceptional one for vizio, we successfully completed our IPO during a challenging market environment launching a new chapter for the company, but perhaps more importantly, we delivered strong financial results during an atypical business environment due to the pandemic, demonstrating our focus and tenacity of our team.
For today's presentation I'll walk through the financial results and the key drivers of our business, which are also detailed in the presentation slides provided on the Investor Relations page on our website.
And then I'll provide some comments on our outlook.
I'd like to start with our key performance metrics that drive growth in our platform plus business we.
We view these as the most important indicators of our future success as we expect the platform plus gross profit will surpass device gross profit this year and represent the majority of growth going forward.
We will focus on four key metrics that we believe provide the most significant insights into the drivers of our business the.
The first is smart cash active accounts. This was a measure of those units where a user has engaged in smart cast enabled TV. During the most recent 30 day period being reported.
Second total vizio hours. This is a measure of overall device level engagement and includes time spent across all input sources.
Third smart cast hours. This represents time spent on our streaming platform itself. This is where we achieved the highest monetization.
And finally average revenue per user or <unk>, which is defined as trailing 12 month smart cash platform revenue divided by the average number of smart cash active accounts over the annual period I want to be clear that when we talk about <unk>, we're only talking about smart cash related revenue and accounts. Thus we are excluding revenue and accounts associated with any.
Units running our legacy operating system by a plus.
In Q1, smart cash active accounts grew 57% to $13 4 million for an addition of $1 2 million net new active accounts in the quarter. This marks the highest number of first quarter net additions we've seen since we started tracking this metric three years ago.
Vizio hours grew 42% to $7 billion.
Of this total $3 6 billion hours were spent engaged with smart cash specifically, representing a 70% increase.
Growth in active accounts and increased engagement as the flywheel that drives our monetization model.
Given the strong growth of each smart cash <unk> for the quarter increased 76% to $14 52.
A new record for us.
For further insights into the viewing behavior of our users. We also analyzed time spent by input source on our smart cash Tvs, we are able to glean. These insights due to our integrated hardware and software architecture.
During the quarter viewing on smart cash represented 52% of total time spent on our Tvs up from 43% a year ago.
During that period time spin on linear fell from 41% to 34% highlighting the continued consumer shift towards screening.
Also of note just 7% of time was spent using an external screening device plugged into our Tvs, which we believe provides further evidence that our consumers are seeking an integrated solution and are increasingly choosing smart cast as their primary way to search discover and consume content. We expect these trends to continue and drive more monetized.
<unk> opportunities across our platform, while delivering exceptional value to consumers.
Turning now to our financials for the quarter.
As William mentioned.
First quarter total net revenue grew 52% to $506 million. This was driven by a 120% growth in platform plus revenue and 47% growth in device revenue or.
Our platform plus Q1 represents the first quarterly anniversary of the launch of our advertising business, which grew over five fold and represented 67% or $35 million of our total $52 million in platform plus revenue during the quarter.
Our advertising revenue comes from a combination of video inventory across hundreds of AD supported channel and apps on our platform as well as our ability to monetize off platform inventory.
It also includes AD placement on our smart cash home screen, which represents a powerful promotion opportunity right in the center of the living room.
With a continued shift of viewers towards streaming and advertisers following demand for both advertising revenue sources is accelerating through these dynamics and our growing presence in the market with agencies and brand advertisers, we expect to see rising cpm's against our expanding AD inventory base, particularly within our monetize volt.
Seo channels environment.
Non advertising revenue during the quarter was $17 million slowing slightly from last year as we made a strategic decision in our data business to shift licensing growth in exchange for supporting more rapid growth in advertising revenue.
Device revenue growth continued to benefit from strong demand for Tvs and sound bars with shipments grew 28% and 155% respectively.
We delivered these strong numbers, even as port congestion around the country caused delays.
We expect these continued delays to move some units out of the first half of the year and into the back half.
Fortunately demand continues to outpace supply. So we view this as a timing dynamic with no change to our expectations for the year.
Average unit price across Tvs and sound bars also rose during the quarter, probably due to the overall strong demand, but also as a result of a higher mix of larger screen TV units and from the success. We are seeing within our higher end five dot one and Atmos sound bar products.
Total company gross profit grew 82% to $87 million total gross profit margin increased 270 basis points to 17%.
Breaking this out further platform plus gross profit grew 152% to $38 million.
Platform plus gross profit margin was 74% benefiting from a favorable mix of higher margin AD revenue, particularly from expanded monetization of our home screen.
Device gross profit grew 48% to $48 million, representing an 11% margin.
Our device profit margin continues to remain somewhat elevated from atypical market conditions due to the pandemic.
Total company operating expenses were $73 million compared to $37 million in the year ago quarter. This increase was driven by a combination of higher share based compensation.
Higher R&D expenses as well as continued investment in people to support the growth of our platform business and transition to a public company.
Adjusted EBITDA, which has only been adjusted to exclude share based compensation grew 218% to $40 million and finally net income totaled $3 3 million compared to $9 3 million a year ago, driven primarily by an increase in noncash share based compensation expense.
With that let me turn to what we see ahead for Q2 and provide a little insight into our approach to our outlook commentary.
As you know our business includes two segments that while strategically integrated contained very different operating histories.
For this reason we want to provide more specific details on the shorter term trends for the platform plus business and then longer term directional commentary for the device businesses, which aligns well with the planning cycles and visibility more typical of that business.
So starting with platform plus we see continued momentum in monetization throughout the platform, we're seeing accelerating viewership and AD supported streaming content, particularly in our free channels, where we typically have the highest inventory share based.
Based on what we know right now we expect to generate Q2 platform plus revenue in the range of $55 million to $59 million.
Representing over 100% growth year over year.
We expect platform plus gross profit in the $36 million to $40 million range also doubling year over year.
We plan to continue to invest in engineering and add sales resources to capitalize on the rapid growth opportunities. We see ahead.
In terms of our active account growth Q1, typically sees much higher net account growth versus shipment volume.
This is due to holiday purchases that often become registered and active accounts early in the first quarter. As a result, we would not extrapolate the Q1 ratio to the full year.
Turning to devices, we tend to experience similar seasonality trends as overall retail with typically higher shipment volumes in the second half of the year. The holiday driven fourth quarter is usually our largest quarter in the second quarter is typically our lowest.
Of course, we expect that some of these trends this year will be altered due to the pandemic disruption. This.
This will cause atypical year over year comparisons over the next several quarters as we lap the stay at home orders and the impact of the initial stimulus checks last year, which drove a spike in TV and sound bar sales.
We expect device gross profit margin to trend towards single digit range over the coming quarters, which is more consistent with historical norms.
Quickly margins normalized will be a function of several factors, including consumer demand industry wide product supply and competitive pricing strategies, all of which remain more difficult to predict unusual given the current global dynamics.
Finally, we expect to generate Q2 total company adjusted EBITDA of between 12 and $18 million.
Overall, we are very pleased with the results we generated in our first quarter as a public company. We continue to benefit from the rapid adoption of streaming and our expanding presence in the advertising marketplace. We are increasing our offering of AD supported content on smart cash driving higher CPM rates and generating more data from our growing active account base that helps us deliver.
Liver higher value proposition to consumers.
Manned for our smart Tvs and audio products remained strong moving us closer to our mission of becoming the center of the connected home.
And with that operator, let's open the call up to questions.
As a reminder to ask a question you any day.
My Star one on your telephone to withdraw your question press, the pound or hash key.
Key we ask you please limit to one question and one follow up question. Thank you.
Thank you operator, let's take the first question.
And your first question is from the line of Douglas Anmuth Jpmorgan. Please go ahead.
Hey, it's Corey on for Doug.
Hoping you could expand some on the strategic partnership, we recently announced with Verizon and how meaningful that could potentially be true. This year and then for smart cash could you talk some about the product roadmap and key investment priorities from here. Thank you.
Yes, I'll take that one.
So look we believe the relationship between customers Smart Tvs and the smartphone creates real opportunity for innovation for us for both the consumer experience and advertising.
Our household connect product, which is an example of this investment.
We're making and building new and creative solutions for advertisers that we think we will connect our glass level data and the consumer's personal device, which will ultimately give our sales team a lot of opportunities to now sell off platform.
The Verizon partnership significant for us in helping to create scale around this product.
It marries the largest footprint of.
<unk> opted in ACR smart TV data with the largest identity graph in the marketplace. So this gives us the opportunity to tap into over 200 billion daily Cross screen signals.
And it's going to enable a lot of cross device solutions for advertisers in the marketplace as a great opportunity for us as I mentioned expand off platform and sell sell outside of the smart gas platform.
And then hey, Corey it's Adam I'll take the second part or the first part of that.
So when you think about the roadmap we've laid out.
Our plan that we think is going to be more interactivity more capabilities for us to monetize the platform and more engagement for for our viewers over time.
These can range from additional interactivity on advertising solutions. This can range into capabilities for increased monetization and economics around subscription services. So this year is really going to be a year, where we take what we learned from last year, where we validated the strategy we validated the AD team, we validated what Michael.
Donald has brought to us and built out and now we're going to be able to invest and lean into that to drive additional growth you've already seen really strong growth on a year over year basis.
Terms of our RP.
Up over 70% year over year, and we're going to continue to lean into that with more resources on the engineering side, where resources on the AD sales side all to drive increased ARPA.
Thank you Bob.
Operator, we will take the next question.
And your next question is from the line of Laura Martin with Needham. Please go ahead.
I'm one of the things that you've been consistent about is why agal aligned.
On the connected home and income.
We hypothesized that your ex <unk>.
New other center of the connect.
Tell me, how you think that drives value opportunity.
Current year in your mind to drive value upside for our shareholders. If in fact from your Washington Economy Center.
Great.
Hello.
Great question.
Kony, we're monetizing.
Our platform multi because.
So users shift away from linear from cable to streaming but I do believe.
Tvs is that a scenario living room.
<unk>, we can do more things than just streaming detainment content.
You can look at those that are fund or you can perhaps.
Streaming music to you when you are not watching TV and radio.
<unk>.
In the kitchen cooking. So there are so many more applications, we believe that a device in the middle of U can provide you.
More convenience.
Better experience. So we believe that we can bring that to the consumer we can definitely monetize.
Based on that so.
My theory is always has been.
We can provide consumer a better experience.
We ought to be able to monetize based on that so thats, what we are looking forward to.
Okay. Thanks, and then I'm not sure Gupta from <unk>.
I know you guys said you just participated in the near flat for the first time have you started to give us quite you're calling for.
Now onto the upfront presentation of what Youre learning far to date.
On what your conversations with advertisers. It then after here.
Thanks very much.
Yes, I think Mike, Yes, I'll take that yeah, we're really excited about being able to participate and then first new fronts for us.
Very well received by the marketplace and if you think about our sales efforts, we really launched vizio adds about a year ago.
So this was a great opportunity for us to continue to tell our story to the marketplace not only our director device offering so the ability to talk about our owned and operated inventory.
What we can do with our first party.
Inscape ACR data.
But as well as talking about new products that we have in the marketplace like our households, connect which I just mentioned as.
As well as Vizio features.
Which is a data driven our day.
<unk> informs sponsor driven content programming opportunity that we rolled out so it's.
It's been very well received and if you look at the growth. We've had just over this past year and the growth we're thinking about for the future.
This is a great opportunity for us to continue to evolve our relationships with brands and agencies that are moving out of that old test and learn scenarios into really more of this upfront.
More enterprise type relationship.
Thanks, very much great numbers you guys. Congratulations thank you.
Thank you Laurie.
Operator, we'll take the next question.
And your next question is from the line of <unk> Mohan with Bank of America. Please go ahead.
<unk> you there.
Hello Hello.
Sure.
Oh, yes, sorry.
I had two questions one on the device side.
The magnitude of shipments that are that are pushed out why do you think that will not result in either lost sales are lost share and can you quantify what is what is the magnitude of the push out from the from the first to the second half and a follow up.
Yes.
Really a result of some of the delays that we're seeing and the biggest portion of the country, particularly in California, where a lot of our product comes through there has been a slowdown in being able to unload vessels and get products process and out into the distribution hubs.
We don't think it's that material over the course of a number of months or even into our quarter. So we wanted to give you some indication that while we had a great number an increase of 29% growth in shipments in Q1.
Doesn't really reflect even what could have been possible if not for those delays right and so our view is.
The year is intact, we think demand continues to be very strong. We're now seeing as you all know another round of stimulus checks going out to consumers. There is actions being proposed even in California for additional stimulus. So we think there is there is demand in the marketplace and it's just a matter of getting our products into those stores and onto the shelves.
So we think overall over the course of the year doesn't change our view of total shipment volumes that we can see maybe a little bit of a shift out of Q1 and into either Q2 or into Q3, if it pushes out that far there's only so much we can do to control of the dynamics at the ports.
Okay. Thank you and as a follow up on the platform plus side you saw some deceleration in our stream for smart guest accounts.
Given that there is the trajectory of the economy looks like it's heading towards a reopening and a lot of a lot of companies are sort of alluding to a slowdown in in conjunction of on demand content can you help us think through how youre thinking about the second half trajectory here I know you mentioned some.
Seasonality in comps because of because of COVID-19.
Yes.
And then I think Adam you could talk about where the trends are moving but I think we saw a slight dip, but still pretty consistent youre seeing about 70% year over year growth in terms of our <unk> platform.
Continue to add.
A ton of new content to the platform content.
Ton of new ways in which we can engage consumers on the smart cash platform. So I think we added 32 free AD supported channels, including a bunch from AMC QVC HSN, we added some new apps.
During this quarter in terms of CW Fox now.
Fox Nation and.
Pretty excited.
Some of the upcoming or additional potash partnerships, we'll be announcing.
In the next in the next few months.
So we continue to see opportunities or see growth on our smart cash platform. There was a slight dip but at the same time, we're also thinking about.
How we can continue as things open up how we can continue to drive engagement on the device as well as mentioning again, our household connect product, but how we can leverage that TV viewership data as people start to get out more.
Out and about more and how we can leverage new products outside of the household.
So how do we continue to grow our advertising base, both on platform and off.
Yes, but let me just add that fundamentally we believe that the consumer can continue to shift towards streaming more and more there is no doubt that as people are able to get back to the normal life, we're going to spend their time, a little bit differently, but over the long term. We think there is absolute secular shift going on is going to continue to favor more and more activity on streaming and it's one of the reasons we measure.
And even disclose and talk about.
Our metric around total vizio hours, and then smart cast as a subset we want to be able to highlight that the growth is happening in the streaming piece, even if people watch less TV overall, perhaps.
They're moving into a place where we monetize them the most effectively and so to Mike's point, he's going to focus on how do we drive consumers into a monetize the board view and experience into our watch free channels of our Vizio free channels, where we have the best economics can we drive CPM growth off of where we are today. We think we have a lot of room to grow in terms of both consumption.
<unk> on our highly monetize content offerings as well as the CPM against that and so the combination of those two things are really what's going to help us drive <unk> and that remains our continued focus.
Hey, Kevin.
Operator, we will take the next question.
And your next question is from the line of Steven Cahall with Wells Fargo.
Please go ahead.
Thanks, maybe just picking up on those are from question comments, Adam So I think ARPA grew faster than our than accounts I guess that would imply that you did get some nice pricing increase CPM increase maybe you could just delve a little bit into what happened in the quarter are these advertising trend in this what's going on in the home screens, a little color I think.
It could be great. There, we saw some acceleration and <unk> and I think CPM that roku is well maybe kind of wondering about how that bakes into your Q2 guidance and then you had a number of streaming app launches in the quarter. Maybe just you could put some color on how those negotiations are going with content providers, especially on the Eva side are you finding that your terms.
Our improving as you gain scale in the industry I think getting more combative or is it sales sort of like a rising tide mentality. Thank you.
Yes, let me I'll take the first one Stephen.
Absolutely I mean, the growth in <unk> is really demonstrating the flywheel effect of the model that we talk about so as we grow active accounts, we grow engagement, we grow engagement in the right content on the platform.
That helps drive growth at a compounding rate on the <unk> side.
In addition, we've said we are new to the game. We're early in it we're only lapping on a first year being in the AD marketplace and the awareness and the opportunity for advertisers to come to our platform and send their messages to consumers and use our tools to help them generate a better ROI is really in the early innings and so we think there's a lot of headroom to continue to grow that.
And that will continue to drive ARPA overall.
Mike you want to take the second part of that yeah in terms of negotiations like I think touching on.
The fact that we're.
We're relative relatively new to the AD marketplace from an investment perspective, we're also continuing.
We're somewhat earlier on and our investment in building out our business development efforts on content and we've seen over the past year, a massive growth in terms of the number of partners. We've on boarded as we've been able to get out and work with them around the story, we have right. The number two smart TV in the marketplace continue to accelerated growth across our smart.
<unk> platform.
And as we move into the negotiations.
It is a rising tide as you mentioned rising tide scenario negotiations have been have been going well and as I mentioned before I mean, we're pretty excited about.
The future announcements, we'll be making around the content side as well.
Thank you.
Operator, we will take the next question.
And your next question is from the line of Michael Morris with Guggenheim. Please go ahead.
Alright. Thank you good afternoon.
Follow up question.
From the prior questions and things you just said my first is about the mix of revenue on the platform side and the strength you saw this quarter can you help us.
With any more details on sort of the mix between display advertising, particularly given.
Of new streaming service launches and then your core video advertising and maybe any thoughts on how you think those two.
Sort of sources progress from here.
And then my second is a question about on platform content and unique content I think Mike referenced.
Some sponsored content or some branded content earlier.
Yes. My question is how important is it for you to have programming that's unique to Vizio is original content something you would invest in.
And maybe a little more detail on that particular content, Mike referenced and we understand what you're doing there. Thanks guys.
Sure Yeah, Hey, Thanks, Mike I can give a little more breakdown on the platform plus revenue.
We're not disclosing all the different components of it but just to give you a general sense. When you look at the advertising business in the quarter.
Avon advertising and Homescreen, we're roughly 50 50, or maybe a little bit larger on the Eva side. It really show we've had tremendous growth on the home screen monetization as we've learned how to bring that value to.
To various partners on that front and there's a lot of ways that we can monetize its not just them adverts.
Advertising a show on our hero banner Theres. These sponsored hubs we've talked about so what it does for US is a broadens the advertiser.
Category base outside of just just entertainment we've done deals with.
T mobile we've done deals with Microsoft and so as we are able to bring that solution, which is a really powerful message right in the home it's that screen if someone sees when they're deciding where.
Where to go watch content, what to do right and so from the advertiser to put themselves in that spot, it's really really powerful and so that's driving great monetization on that piece over the long term. We do think the Avon has a larger addressable market as you know very well.
$70 billion linear AD TV AD market is going to be looking to find and chase those.
<unk> that are moving more and more into the connected television space. So we think thats, a very large addressable market and we're getting increasingly setup to monetize that across our platform. So I think I think the advertising piece at large.
Definitely grows significantly from here the non advertising pieces have a different growth profile to them as I mentioned before data will be a little bit different we have sponsored button dynamics.
So those that's a different growth profile versus advertising in total, but the combination of the Avon.
Viewers are growing rapidly and home screen is really really a great driver for us.
Yes.
And I think to answer your question on <unk>.
<unk> features.
What we discussed.
We look at our home screen, obviously <unk> is a huge growth from partners, we have not only entertainment category, but but more categories in the space, but advertisers are always coming to us.
And continuing to look to ways in which they can expand their investments beyond just fifteens and <unk>.
So vizio features is really a sponsor driven content programming opportunity the benefit to advertisers as it provides more ways for them to engage with our consumers inside the smart cast experience weather.
On the home screen or within the actual content.
For consumers.
Gives them access to original or exclusive programming unique to vizio.
From our original strategy perspective, we see this as kind of a low risk.
Low capital intensive way of providing more value for our advertisers content partners and ultimately more stickiness and loyalty for our consumers.
Okay can you share win that.
We will come to market or any particular partnerships.
To date.
We're not going to announce we'll be rolling that out this year.
And we go deep into it.
And our new from presentation been well received by partners as well so we'll be rolling that out over the next few quarters.
Not ready yet to announce the specific partnerships, but we will soon.
Great. Thank you guys.
Great. Thanks, Mike.
Operator, we have time for one more question.
And your final question comes from the line of Tom Champion with Piper Sandler. Please go ahead.
Hey, good afternoon guys.
So maybe just moving back to the smart cast attach rate, which seems very high this quarter.
It sounded like there were some delayed holiday impact there.
Maybe you could just elaborate on that.
I guess I am curious you added.
30, plus free channels you're.
Kind of.
Working on on the platform offering overall do you feel like that.
Has a tangible benefit to your attach rate. Thank you.
Sure Tom I'll take the first one.
What I tried to highlight in the prepared comments was that Q1 typically does have a higher attach rate of conversion ratio whatever you'd like to call. It because of the dynamics that happened towards the end of the year oftentimes are typically bought around holidays, and then it doesn't get connected and become an active account maybe until early in Q1, and so we tend to see a very strong.
Our ratio of.
In the first quarter relative to shipments.
That doesn't continue necessarily throughout the year range I wanted to be realistic about how that happens and there is some dynamics that would cause other quarters to fluctuate a bit historically, we have seen somewhere around a $60 to 65% growth in active accounts relative to the volume of shipments.
And we think we can continue to try to drive that and look for ways to improve that over time, but that is sort of the historical context I want you to keep in mind, we always like seen a strong numbers in Q1, we had really strong holiday sales of our devices.
And that did translate into very strong Q1 numbers.
Overall for the year, we think we think we're going to continue to track closer to the more historical averages on the attach rates.
Mike.
Yes.
In terms of.
I would say, adding more and more free channel content to create stickiness for our consumers. Yes, we'll continue to do that moving forward I mean, I think we've made we've made a large investment in continuing to grow out our owned and operated services on the platform.
We mentioned 32 channels. This past quarter, we're going to continue to build on and announced some some newer relationships to add that we know our customers. While we have a we have a large portion of our customers that come for subscription services that we make available we know a lot of our consumers who want to come for free.
Alright, and they see free is a huge opportunity. So we will continue to invest in growing that platform and building out our watch free service.
Which is the number two AD supported service on our platform.
To make more and more free content available to our consumers across multiple categories.
And just to add one more thing Tom I think it is important to understand that we know how important free content is in there the engagement level of our viewers once are on the platform going back to that statistic I mentioned during the call. When you look at how people are.
Spending their time on our Tvs over 52% of the time is on smart cast itself Theyre looking for streaming solutions, but if you look at the total time they spend on streaming they're using smart cash to do it almost 90% of the time.
And so it really tells us they are wanting that integrated solution. They want to find content, there and Mike and his team will continue to feed that appetite and bring more and more to the platform.
Makes sense. Thank you.
Thanks, Tom and thanks, everyone for joining this concludes today's call have a great EBIT.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Zero.
Okay.
Yes.