Q2 2021 Vizio Holding Corp Earnings Call
Illinois.
Ladies and gentlemen, thank you for sending volume of welcome to the Q2.2021 Vizio earnings Conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
Ask a question during the session you will need of press star 1 on your telephone if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Mr. Michael Marx Investor Relations, Sir you may begin.
Good afternoon, everyone and thank you for joining us for our second quarter 2021 earnings call joining me for today's.
Discussion of our 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 plus. Please note that in addition to our earnings release, a slide presentation for you to follow along with our remarks can be found on our Investor Relations web site at <unk>.
<unk> Dot vizio Dot 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 the.
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 and 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.
<unk>, including adjusted EBITDA reconciliations of the most comparable GAAP measures for non-GAAP financial information discussed on this call can be found in our earnings release for on the investors section of our website note that all quarterly comparisons in today's remarks will be made on a year over year basis, unless otherwise specified.
Now I will turn the call over to William.
Thanks, Michael of.
Hello, everyone. Thank you for joining us today.
Our second quarter results were excellent.
Driven by strong advertising growth.
The benefit of our.
The fuel revenue model.
In the second quarter, while continuing to invest in 1 of the organization and talent.
The innovations.
The profile of user experience.
<unk> of our monetization of <unk>.
So far this year will have the added nearly 200, new jobs across the company.
So for our rapidly growing the CTV business.
These investments of salary of the growth platform plus business this quarter.
While we generated our highest ever year over year increase in ARPA.
<unk>.
The high margin revenue for our platform business.
Now for a great complement.
And by business.
Overall.
During the quarter.
We increased revenue gross.
Gross profit.
The adjusted EBITDA, even in the face of the pandemic on the <unk>.
Linzess continues to obtain from so many industries.
Adam will provide further detail later during the call.
I'd like to commend our team on their focus and effort.
For producing exceptional results.
Of these unusual items.
The other quarter of <unk>.
For the team worked closely with our various partners.
To minimize the logistical and supply chain disruption.
This was the moment.
Other than experience and great within the ship really pay off.
I Hope you will have a long history.
On investing in the basin, which has led our ability.
To bring great products for consumers.
Featuring the latest technology.
Affordable prices.
And our commitment to the core principle has never been more rather than them today the.
The rights of our screening and expulsion in concentrate for us.
As reported in the search and consumer demand for quality entertainment experiences.
We are meeting the demand by investing.
Extraordinary collection of Smart Tvs.
But come with a built in streaming platform.
Smart cash.
Broadcast strength billions of hours of <unk> content.
Of course.
As part of <unk>.
On the free AD supported streaming Thomas.
Also in 1 easy to use interface.
No need for consumer to go buy another bundle for box to stream the same ratio.
We're comparable of the PV with the range of market leading sandbox.
Each of the latest surround sound technologies to deliver of the screen experience.
In the comfort of the home.
Each of Spain.
We have a part of refresh where we can deliver of new collection for the market.
We use Lucas thanks for the time to deliver our latest technology at most of for the bulk pipeline.
For example, this year.
We added to the back half of.
New functionality call loosely of.
Right.
Firstly all of what allows users to work quickly search.
And the cover content with the small cap by simply talking to the television.
Most of the latest models.
And I'll come with our new Bluetooth enabled review of voice remote.
We also continue to ensure broad Iot compatibility.
Was the support for Apple Airfreight.
Amazon Alexa and Google Assistant.
The first television collection includes a number of pizza quality assets.
Including greater partners.
And the color spectrum.
Higher contrast ratios with the broad lineup featuring of quantum Dot technology.
We're also of further strengthen our positioning the rapidly growing gaming market with.
With over half of all television for lesson now being AMD Freesync certified.
The new product.
Very well received.
<unk> customers.
The high Star review of ratings by consumer as well.
For the smart TV.
The recognition of arrangements for our entry level of DCM is all the way through our premium models.
Just to name a few examples of the service was recognized for the editors choice for 2020.1 in USA Today's review.
And our premium OLED model, while the Tom Sky Award for 2020.1.
In addition, new features thoughts of the.
The capability.
<unk> recognized by influential publishers such as CNET.
Our diverse range of Sandbox also continue to receive awards for highly respect the outlook.
With our premium Atmos models being featured in Newsweek.
Wired.
All of the recognition helps strengthen our brand and consumer awareness with the <unk>.
Ultimately help drive market share.
As I mentioned earlier, we are building for the future.
With the number of kind of investing in people and software for <unk>.
For our platform plus business.
We will have added to our advertising sales on content acquisition team in New York and Los Angeles.
And nearly doubled the size of our engineering teams in Denver and Dallas.
We have invested heavily.
To make spark at faster and easier for users to find the Thompson the month.
Speaking of the content, we're being very busy.
As many of them may have seen just yesterday, we announced that we have reached agreements with 2 new marquee apps to our platform.
<unk> plus and discovery plus.
We're thrilled.
To offer the premium content of apps to millions of small cash users.
The T plus the available now and the software plus from the targeting of September loans.
Today I am also very excited to announce another assessment for our content lineup.
For both TV.
He will be joining our platform in the coming weeks.
Just in time for football season.
Broadcast users will be able to subscribe for the virtual Mvpds service.
Our home screen.
In addition to football TV.
We have also launched extremely asphalt hallmark piece.
The <unk>.
<unk> channel and legal television.
And I'll watch free surplus at the 32 more free AD supported channel.
During the quarter.
So to say the leap it.
It has been a very busy time for our company the agribusiness team of.
There's so much more to come.
On the back of all of the content.
These are often first party data.
The gain insights into our users' preferences.
The investments we have made into our integrated hardware and software and specifically our ACR technology.
Ill informed us of the content to source from the best opportunities to enhance search discovery and ultimately monetization.
All of this leads to more personalization and the better overall user experience.
A great example of how we pull the data in from the insights to work with our new generation of Osophy.
Now called Washington, plus.
Whilst we grew quickly over the past few years and of <unk>.
<unk> popular with our vizio audience.
And became a major force of video advertising revenue on our platform.
The newly improved version and I will take the success to a new level.
Phosphate plus we're bringing our audience of cable TV expense.
With the newly defined program guidance enhance search and discovery of the option and data in from co lending.
The newly enhanced version of our watchman plus what's happening at the exciting paying for a platform plus business.
In less than 2 years.
The market awareness of our advertising capability has gone from largely unknown.
Towards the non become clearer in the CTV ecosystem.
We just recently closed our first from Steven.
With commitments from Blue chip advertisers networks and dozens of brands network.
As of now established partnerships with all of the large media by agents in the U S.
Who are recognizing the value of our unique and engaged audiences.
So with all of the investments and improvements we have made over the years in software product and most importantly people.
We're excited about the path we're on other transformative time.
In the industry.
Now ill turn the call over to Adam to discuss the details of our second quarter results.
Thanks, William the Vizio, we see change as our opportunity the way in which media and entertainment are being distributed and consumed is undergoing a dramatic evolution and we are ideally positioned to capitalize on it.
As people are seeking a more immersive home entertainment experience. We are there for them with our award winning smart Tvs and sound bars, all at an attractive combination of quality and price and as the media companies and advertisers are looking for effective ways to attract and reach viewers. We offer them Our award winning screening platform smart cast to host their content and provide <unk>.
The value advertising solutions, the directly benefit from our rich in the first party data.
Our direct operating relationship with our users of allows us to better understand their tastes and preferences. This as well as our integrated software and hardware structure is a key ingredient to our success.
As you heard from William the investments, we've made particularly over the past several years have transformed our business and positioned us for continued growth through an expanded range of monetization opportunities.
While we are still early in this transformation our second quarter results clearly demonstrate the benefits of our strategy and our dual revenue stream model.
For the quarter total company revenue was up 2% to $401 million per.
Platform, plus revenue grew 146% to $66 million, representing an acceleration from the already strong growth rate we saw during the first quarter.
Advertising revenue grew 5 fold to $47 million driven by an increased demand of our home screen inventory and growth in the number of monetize of all AD supported apps and fast channels on the platform, including our own service watch free.
And we continue to leverage our valuable first party data to increase personalization more personalization helps us drive higher CPM across video in the home screen inventory as well as to grow off device ad monetization.
With greater scale and broader awareness of our advertising capabilities, we doubled our direct advertising customer base this quarter versus a year ago and more than tripled our average revenue per advertiser.
As a result of the strong trends, we are now generating more advertising revenue in just the first half of 2021 than we did during all of last year.
The non advertising revenue on our platform plus segment grew 2% to $18 million driven by increased content distribution fees as well as the return to growth in data licensing primarily due to our recently announced the deal with Verizon media.
This was partially offset by lower sponsored button revenue, which is primarily a function of TV shipments in the period.
Turning to our device segment revenue of $336 million was down 8.5% year over year, which is not unexpected given the unique surge in demand from stimulus checks and the stay at home orders at this time last year.
Higher average unit prices for both smart Tvs and sound bars helped to somewhat offset the difficult unit volume comparisons for TV standby.
Some of our shipments grew by a strong 79% year over year.
Total company gross profit grew 37% to $80 million with platform plus gross profit of $47 million and device gross profit of $32 million.
Platform plus gross profit grew 167% year over year and surpassed device gross profit for the first time.
Strong overall growth in advertising with a larger mix from our higher margin homescreen inventory than last year contributed the platform plus gross profit margin of 72%.
As anticipated device gross profit declined on lower smart TV shipment volume of $1.1 million units versus $1.6 million a year ago. This can primarily be attributed to the surge in demand. During this time in 2020 and the industry wide supply and logistical challenges that we referenced in our last earnings call.
Those challenges this year led to a push of units out for the quarter.
The good news is consumer demand remains robust and average unit pricing continues to shift higher.
We're also working closely with our suppliers and distribution partners to increase product inventories throughout our retail channels.
The device gross profit margin for the quarter came in at a solid 9.6%.
Operating expenses grew 88 million from $35 million a year ago.
We are making significant investments to build out our engineering and AD sales teams. The bulk of this increase is related to share based compensation expense excluding share.
Share based compensation SG&A expense was $43 million compared to $28 million a year ago.
Share based compensation expense in 2021 will remain elevated due to the 1 year amortization associated with certain grants made in connection with our IPO back in the first quarter.
We would expect our share based compensation expense to moderate in 2022 as the amortization associated with these grants rolls off.
Share based compensation is also leading to an abnormally high effective tax rate due to the compensation expenses this allowance requirements.
We also expect this dynamic to normalize in 2022 for the same reasons.
Total company, adjusted EBITDA, which excludes share based compensation grew 7% to $27 million.
Finally, net income for the quarter came in at a loss of $14 million or <unk> <unk> per share we.
We continue to maintain a strong balance sheet with high liquidity and no outstanding debt.
Quarter ended cash and equivalents totaled $365 million during the quarter, we also renewed and extended our $50 million credit facility, which now matures in April of 2024.
As William mentioned earlier the investments we've made in people products and technology is paying off and generating strong returns across the business. Perhaps nowhere is this more evident from the growth of <unk> this quarter, which grew 16% sequentially and 90% year over year to $16.76.
While we are pleased with this exceptional growth we continue to make investments in our platforms features and capabilities that we believe will drive this metric much higher overtime.
Even with consumers returning to their daily lives, we continue to see strong growth and engagement year over year.
Total hours spent on Vizio Tvs grew 22% to $7.2 billion and smart cast hours also grew 22% to $3.5 billion.
Time spent on smart cash continues to represent the majority of how users spend their time on our smart Tvs a trend that we expect to continue as <unk> adoption expands and we continue to bring more and more content to the platform.
Smart cash monthly active accounts grew 43% and ended the quarter at $14 million.
Let me now turn to what we expect for the third quarter.
Starting with platform plus we see continued strong monetization trends with accelerated demand for advertising video inventory and homescreen promotion in Q3, we will just start to benefit from our new advertising upfront commitments and improve monetization model under the watch free plus.
Through the new version, we will know more directly control advertising inventory and will also use our first party data to drive more personalization and deeper engagement all leading to more effective monetization going forward. So based on what we know right now we expect to generate third quarter platform plus revenue in the range of <unk> $76 million to $82 million.
Representing continued triple digit growth year over year.
We expect platform plus gross profit in the range of $55 million to $60 million, while maintaining a similarly strong gross profit margin to what we delivered in the second quarter.
For the device, we expect to see sequential growth in TV unit shipments in the third quarter over the second quarter as we continue to replenish low channel inventories and benefit from sustained demand of course, we will likely be lower year over year as we lap the anomaly of last year's pandemic, driven Serge speaking more broadly while the industry wide supply chain dynamics have resulted in some.
Delays and challenges based on what we know today, we expect these constraints to have a relatively modest impact on our full year shipment volumes.
As a partial offset to this we do expect of continued upward trend in average unit pricing due to strong demand and growth in our mix of more premium models in larger screen units we.
We've also recently expanded our distribution relationship with Amazon, which we think strengthened our alignment with the growth and share gains within the online sales channel.
Lastly, we expect total company adjusted EBITDA to be in the range of $20 million to $25 million. This range contemplates our expectations for both continued investment to support growth in our platform plus business as well as an anticipated move toward more normalized gross profit margins for our TV business.
So overall, we're very excited about the progress we're making on multiple fronts and as I mentioned earlier, we are ideally positioned to capitalize on the trends we're seeing in the marketplace with that let's open the call up for questions operator.
As a reminder to ask a question you will need to press. The Star then the number of line on your telephone keypad to withdraw your question press the pound or hash key please standby, while we compile the Q&A roster.
We will take the first question.
First question comes from the line of Steven Cahall with Wells Fargo. Please go ahead.
Thanks.
Maybe for William and Adam the first 1 the growth in video and smart past hours I mean, it slowed a little bit in the quarter, but I think that's no big surprise on the reopening it looks like Roku had a similar trend I would say.
A little more surprised at smart cast hours as a percentage of the total vizio hours did fall a little bit sequentially. I was wondering if you could just unpack that turned a little bit. Maybe this is a mix issue. As you are selling larger TV is people are watching more sports on the cable box. So any color you have there and if you expect that long term trend to revert back to increasing share.
Those are cash salaries.
And then on the platform <unk> that was really outstanding I was just wondering if you could unpack that a bit or was the strength from home screen or higher AD loads of ad pricing or data or all of the above and any color as we think about modeling <unk> going forward would be helpful. Thank you.
Adam.
Yes sure.
Yeah look I think in short term periods, you may see some fluctuations in some of these metrics relative to each other but over the long term I think we certainly see an ongoing continued trend towards the adoption of streaming which is going to increase overtime on the secular basis. So to your point, yes in terms of the broadcast hours for the quarter, we were down about 3%.
<unk>, but I would step back and put that a little further context, because obviously it is.
Oddities in the market as we're coming off of the Covid dynamic if you look back at 2019, our smart cast hours per active account.
We grew 25% relative to 2019, if you sort of adjust back to the <unk> pre pandemic dynamics. So I think thats important context, as we think about where this is going overtime.
Grameen differences availability of live events sports that can cause of the mill movements between total the zero hours and smart cast hours, but we think that the trends we're seeing from our users continue to adopt more and more behavior on the platform of bringing more content for them, we're thrilled to be bringing now discovery, plus and BB&T and Google is going to be.
On the non so I think the availability of what they're looking for from the streaming standpoint is only going to continue to expand and that creates significant monetization opportunities for us.
1 of the hit on some of the mix alone.
Yes, I think on the <unk> side I mean, we saw the the largest trajectory of growth in the advertising side of the business.
As we both home screen.
But I think of lot of that growth comes from the fact that look we are 19 months into monetization of.
Our platform. So we move now into an established player in the marketplace and coming out of the initial IH.
The new fronts, we did this year leading into the upfront season, we've been able to establish much deeper relationships with our partners on the home screen on the media and entertainment side, we continue to drive new solutions for them help them drive new users active users as well as grow engagement. The responding by continued investment and then.
On the <unk> side.
Our ability to add this direct sales team built stronger relationships with the agencies has helped us drive the much larger deal sizes and increase our CPM significantly year over year.
Thanks, a lot.
Yes, Thank you Steven.
We'll take the next question.
Your next question comes from the line of Cory Carpenter with Jpmorgan. Please go ahead.
Yeah, Hey, this is Katie on for Cory Thanks for taking the question.
So all of this summer you talked about reaching over $11 million addressable Tvs across the U S that enable glass of dynamic AD insertion can you just talk more about the progress you are making here and what do you see the opportunity overall down the line. Thanks.
Yes, I think.
Take that 1.
We're excited to continue to grow the scale on that front.
With a <unk> is a great opportunity today it's.
It's relatively small, but we see a good opportunity to increase the scope of that in the future of the rebuild at our relationships with networks I think when we look at how we work with partners like networks I think discovery pluses of good example of how we can kind of create of rainbow of monetization.
Effect for for Vizio, right, we're working with them obviously through this new deal through.
Through the discovery plus App plus some additional portfolio apps that will be coming on the platform through add economics, the subscriptions, but really we can build a more holistic partnership.
Key partner of project or and we will continue to work with them to help as the day bridge that gap between linear the streaming will continue to help them support and bring solutions that can help them grow revenue on both sides and then turn that will help us continue to grow the revenue on Australia.
Great. Thanks.
We will take the next question.
Your next question comes from the line of Michael Morris with Guggenheim Securities. Please go ahead.
Thanks, guys. Good afternoon, maybe to expand on that question a little bit.
The <unk>.
I'm curious if you can share anything about sort of the depth.
Of your relationship with.
Kind of tier 1 or some of the larger publisher network content partners and then some of the the smaller content.
Owners of controllers, who may be a bit more dependent on you for their advertising infrastructure.
I guess the root of my question here is when you look right now how much of your sort of add value is driven from your sort of smaller content partners and what's the path.
Maybe expand those those relationships with the tier 1 partners kind of like you just discussed on discovery, plus but maybe across the broader portfolio.
And then second on the <unk>.
Last call Mike discussed this concept of some of them.
Branded.
Sort of like original or brand of very specifically created content I am wondering if you of any update on how that's progressing.
Yes, so in terms of the scope of I'll take the Alan in terms of the scope of our relationships.
As we continue to invest for continuing to invest not only in the AD sales portion of the business, but also on the business development side right. So our relationships.
Over the past 2 years have continued to expand both with I think as you described for the smaller tier players as well as the tier 1 players in the marketplace as we continue.
Bringing on net new partners in both tier 1 and on the smaller size of the platform. We will continue to focus on building a strategy that helps both of us.
Monetize on our platform and.
And I think we will continue to have those same discussions with partners that have historically been on the platform as well.
In terms of branded content.
Actually in terms of what we.
Describe as Vizio features so leveraging the data we have our first party data to help identify what people are watching or what's being most watched within our platform and help inform content and channels that we can bring the.
The smart cast our specifically our watch free service.
We rolled out this last quarter Vizio for can flight, which is tremendously successful of focus is on food and travel and is based on based on viewership habits of the consumers and we target them specifically on the home screen to be able to drive up monetization within that and more recently rolling out vizio.
Destinations, which is focused on crime drama as well so continuing to build momentum there and we foresee adding continuing to add more channels or more branded content in the future.
Great. Thank you.
We will take the next question.
Next question comes from the line of Dan Medina of of Needham. Please go ahead.
Thanks for the taking the question and congratulations on a burn of terrific quarter growing in Manhattan.
I was just wondering.
Maybe just being a little more broader in terms of the off platform monetization opportunities and sort of what are the features technologies and data that you guys are.
Bringing to this opportunity and how is it leading to where you where you would like to be in the next several quarters. Thank you.
Yes, I think all platform monetization.
And it is an exciting opportunity for us I mean, I think when you look at this this past quarter and consumer habits of people or people are starting to get out of the house. They are starting to travel more head back to the office.
Get out of the house right. So we wanted to be able to continue the arm our sales team as they build these relationships with brands with new solutions, new opportunities that leverage our core differentiator, which is our first party data. So I think we mentioned on the last call or talked about our relationship with Verizon.
And which we marry our our first party TV data with their device graph in order to create of device solutions and the end of market we were.
Pulled that out this past quarter and it was very well received by the partners we have.
So we see this as a good opportunity. It's just we're just getting it off the ground we think it's Scott.
We have good momentum, especially heading into next year, but it gives us more tools for the sales team in the bag to go out and continue to grow the relationships, we have of advertisers and brands.
Yes, Hey, Dan in for Adam I, just wanted to add to that I mean this is the perfect example of where we're investing is when we talk about investing in engineering resources and support capabilities. This is the perfect point, where were not just limited to what we're doing with on device and the footprint of that provides but off devices well through the very point and so it expands our view of what our Tam is in the overall mark.
The place, which brings a lot of different opportunities to partner with different AD buyers and partnerships in the marketplace. So that this expands the opportunity for monetization beyond just the footprint of our install base. So it's an area that we're really looking at and putting significant resources behind.
Great. Thank you for the question and again congratulations on the great quarter.
Thank you.
We will take the next question.
Your next question is from the line of <unk> Mohan of with Bank of America. Please go ahead.
Hi, Thank you for taking my question out of its.
Jon asking on behalf of 1 day.
2 questions.
First.
<unk>.
Day.
Headwinds on the device side from supply chain issues to continue and if so maybe.
For how long do you expect that and on the platform side.
Could you share the progress on incorporating the.
The interface and do you have any update on the progress around the dynamic advertising insertion. Thank you.
Jeff.
On the device side.
However, COVID-19 going on with the.
Hard to predict from a half of Max but so far the.
The device the.
For those.
And the components of other gating getting better for us.
For where you see the right now the <unk>.
The key issue.
Give me a little better as well so we do see the Hamlin being less other sort of lot of.
We now have the delta of Varian kind of unpredictable. So we don't know exactly what's going to happen, but so far we're seeing less from former much other than before.
Yes, it could add to that a little bit.
You can imagine we work really closely with our partners both on the supply side and logistical.
The teams as well as our retail partners to kind of mitigate.
The impact of all of this and I think our team's done a phenomenal job of doing that and we talked last quarter about moving some units out of Q1 and into Q2 and back half of the year as a result of some of this and so we're managing through that I just wanted to be clear the that is contemplated in our guidance that we provided for this was I think about the volume that we're going to have the top of the funnel in terms of the units that are coming.
Through how that rolls through our financials, we've contemplated some of the challenges now that's based on what we know today of this incremental news then we'll consider that and work with our partners going forward, but as we sit here today.
The thought through that.
Some visibility about where things are headed and we have considered it in our overall forecast for the year.
The non dual dynamic ad insertion.
Mike talked about it a little bit earlier.
And I think it's really.
Small in terms of the contribution today, but we're excited about where it's going.
1 of the things you mentioned in your Vizio pay moving that back of onto our platform that is the best scenario, where we're also investing heavily with our engineering resources. We are gearing up to be able to have a launch of that capability. Later this year and what that will do for us as it will improve the economics.
In terms of the distribution agreements and this is the.
Subscription revenue agreements, we have of the various as thought of nave on partners.
And so we are not fully monetizing those relationships today as you can imagine because we are not in the position to facilitate those financial transactions, but once we are capable that only benefits us as we look forward. So it's it's a feature and capability, we think of but also add stickiness to our customer relationships.
<unk> the.
The value that we provide to them and create a great all the in 1 destination to manage their subscription services and we can do it with better economics over time, so stay tuned more to come on that later this year.
Okay, great. Thank you.
We have time for 1 more question.
And your final question comes from the line of Tom Champion with Piper Sandler. Please go ahead.
Hi, good afternoon.
Maybe to begin with you just the platform gross margins were a little stronger in the quarter then.
We were expecting look pretty strong from the guide and I'm. Just curious is there anything temporary or 1 time in there.
Sure.
Is it is the business, just maybe performing a little bit better.
And curious if that impacts any of your thoughts on kind of accelerating investment on the platform side of the business and then maybe for Michael Donald I'd Love to hear you talk of just a little bit more about the Verizon partnership and the opportunity for deepening.
Kind of personalization.
They're in.
How long it'll take the to fully explore that that opportunity over time any any thoughts from that would be really helpful. Thank you.
Okay, Yes, thanks, Tom 1 of them I start with the the first 1 so.
Look I think we're continuing to be very pleased with the strong gross profit margin that we're seeing on the platform business.
The mix of business can have some contribution to that this quarter, we had really strong growth in our home screen monetization homescreen comes through at an even higher incremental margin.
And then our video advertising so that mix was favorable this quarter by and large overall, we continue to see very strong margins in the business and other indicators for our third quarter guidance similar type of margins to what we saw in Q2.
Over the longer term as we tap into larger new pools of revenue.
Like I mentioned before of the subscription service those come through with the different margin profile for them and we've thought about that and talked about that at the in terms of our long term projections, but there's no doubt. This platform business is going to continue to be of very strong high margin contributor to the overall mix. There was a lot of financial flexibility to help complement our device business.
And then what.
Regardless of the Verizon partnership.
I think I mentioned for us the opportunity to go off device.
It has been of great benefit for the sales team as we continue to grow those relationships with brands and agencies what are for.
Verizon relationship does this help us build what we call our household connect product and really what that does is help us expand the reach of the brand's message.
That hits, our televisions and drive it into the personal digital digital devices of our customers.
So that we can hit them with an AD on the TV when they are in the home or when they leave the home as they get back out there.
Today, it's a good it's a good opportunity for us to start to build those relationships around this product with our advertisers 1 of the future we see of device opportunities leveraging our data.
To be to be of good driver of revenue in the future.
Thank you.
Thanks, Tom Thanks, Tom and thank you everyone for joining this concludes today's call of a great evening.
Thank you for your participation you may now disconnect.