Q3 2021 Vizio Holding Corp Earnings Call
Partners alike.
I'd like to highlight a few key points.
Adam will give more detail on our Q3 results later in this call.
Bob do you have gotten smarter and people additional dongle, because they no longer need to purchase another stake robust towards our favor in the payments.
Multiple devices and remote controls are horrible consumer experience.
This is why we created a simple easy to use single device experience bump.
Bump in our Brazil Smart Tvs.
As consumers increasingly in favor of the simplified experience.
Other companies have also begun to into the smart TV space as they recognize the value of our business model.
In Brazil, we are always looking forward and saying aware of our competition.
Although new bigger smile.
But I think investing especially in the TV and streaming business for many years, we will continue to invest more and focused on what we do the best offer innovation and exceptional customer experience.
At the affordable price.
Although the buy side of our business. We have worked extremely hard to replenish retail inventories ahead of the holiday season to continue to drive customer acquisition.
And grow market share.
But being hit by the same logistical and supply chain issues.
Affecting all companies right now.
But we're having working very closely with our long term partners.
To help reduce delays.
Strategically invest to expedite shipping.
Although these higher freight and logistical cost of impact on our gross profit margin in the third quarter. This tactic has allowed us to mitigate supply chain disruptions and be confident.
Paula.
We'll be on the store shelf as we head into Black Friday.
We're aggressively working with our retail partners to stimulate sales by launching saving events.
Given earlier.
Out of the season across our product lines.
It means that there are amazing video deals of therefore, everyone.
With exceptional value partner like us so many filings.
Service model in Walmart for under just $750.
That is one great holiday gifts.
We're also bringing the big screen experience to the home.
With incredible pricing are passed by both M and P series Tvs and our number one selling some bars.
Our shelf shares matrix.
We're still on track for the year.
We have also been able to grow to a space with key retailers. Thanks.
Thanks to great product.
Continued to receive excellent reviews.
Tougher saw piece, there is smart Tvs, which arent Editor's choice award from Newsweek, Pankaj and reviewed.
We have also just received a special recommendation by Rolling Stone magazine.
Proposal two one.
There is some bar all of which are available for the holidays.
We are creating video product will be the center of the Conagra home with small cast at the heart of all Vizio Tvs.
The seamless integration of hardware and software it is key to a great consumer experience, which is always our number one part.
While software engineers are constantly working to create new ways to make our customers slightly easier.
This includes easy to use search and discovery functionality homepage to help people find their favorite TV shows.
Their favorite stars.
Was building voice capability.
<unk> also gets people count on us.
One hundreds of free streaming channels available right out of the box.
<unk> HBO Max.
<unk> TV.
Plus PBS.
Funimation.
With all launch this quarter.
As we mentioned on our last call.
We also upgraded our free streaming tunnel offering to <unk> plus.
With BARDA enhance user interface and even more comfort foods.
Popular destination market.
<unk>.
With the view of feedback and engagement so far.
Because of our rich glass level data.
We know what people like to watch.
Now able to curate a series of fibre channel called physical features.
In just three months.
Our first two channels for kind of flight.
And investigation.
Has already become two of the top 10, most watched channels in Wall Street plus.
Brazil features.
<unk> audience.
Our exclusive channels.
The leverage first party data and home screen targeting capability to deliver a more relevant in the payment experience.
But there is no.
Recently launched mobile featured channels.
<unk>.
Jim a nation.
With video games and esports programming.
Mrs.
China for us.
<unk>.
Beer was back to back horror movies.
And Polaris.
New creative driven channel.
Particularly shares hip hop on Black culture with the world.
Gary the content video features.
Delivers more offer free content that people love.
And generally more engagement.
So you kind of was during the quarter, obviously, you're asking continued to deliver exceptional results.
As we announced previously we closed out 2022 upfront season with over $100 million incumbent.
<unk> phone agency holding company and brands.
Which was a fourfold increase over 2021.
Our Q3 advertising growth was driven by.
Pending Bryan and category base, because we are continuing to broaden our universe.
Titan clients.
Q3 advertising revenue was five times higher in key categories.
Also in CPG in addition to media and entertainment.
Not only that.
While our advertising partners.
We are spending more with us than ever before.
Average revenue per advertisers with more than twice what it was.
At this time last year.
This accelerating advertising demand continuing to be in line with broader market shifts.
As consumers increasingly move on linear TV to streaming brands are following them onto our platform.
And as our audience engagement growth or ACR TV premium pay the auto growth.
This proprietary on comprehensive glass level data does not only forming our own video content programming a monetization strategy and its also empowering that feature a media measurement on currency and stuff.
Although leading companies currently being considered.
Alternative to traditional media measurement are powered by the.
Data.
Which put us in a unique positioning in the industry.
Currently differentiate us from our competitors.
When you put all these things together.
Is it easy to see web platform plus.
As such our growth engine for us.
Looking ahead, we're going to continue to increase customer acquisition and market share.
By leveraging of dual revenue business model consistently developing or enhancing our Brazil Ana Paula.
To create greater consumer experience.
Finding new ways to engage and monetize them.
The audience to grow.
Although the investment, we're making a product or platform.
People are paving the way for.
Ill continue evolution.
Premium first data driven media company.
I'm very proud of our Brazil team for navigating this exciting and challenging time.
I want to thank everyone.
For all the great work.
We're continuing to resolution life, the smart PV industry.
And I am confident that way.
Have the right strategy the.
The red mentality and the right people to drive the future of TV.
With that I will.
Ill turn the call over to Adam to speak to our third quarter results in more detail.
Thanks, Liam in the third quarter the growth in our platform plus business exceeded our expectations as we further ramped up our advertising execution across home screen inventory and our expanding base of video inventory both on and off platform. We continue to invest in software and engineering resources to scale, our platform operations and expand monetization opportunities.
Our device business, we remained intensely focused on navigating through the supply chain and logistical complexity.
So these impacting so many companies.
After inventories bottomed out in early July we made strategic investments to help rebuild channel inventories as much as possible in advance of the holiday season of course.
Some of these actions had an impact on our device gross margins, but they were prudent steps designed to both help improve customer acquisition in the short term and to drive our growth strategy over the long term.
Turning to the financials for the quarter total company revenue grew 1% to $588 million with platform plus revenue up 134% to $86 million more than offsetting an 8% decline in revenue from our device business.
The third quarter, representing revenue, which grew 271% to $66 million.
With our home screen and video advertising revenue streams continue to grow and outperform and we're excited to highlight that the third quarter saw record breaking direct sold video advertising revenue.
While certain advertiser categories also a new player in the market, we are expanding our advertiser client base and deepening their total spend with us as they seek our growing combination of owned and operated inventory and first party data for.
For the quarter advertising revenue represented 77% of total platform plus the revenue grew 6% driven by increased data licensing and content distribution Commission fees.
Device revenue continued to face difficult year over year comparisons to last.
Last year's pandemic, driven surge in demand, but Q3 smart TV shipments grew 27% sequentially to $1 4 million even in light of increased logistical constraints and we expect Q4 to grow from there to somewhat offset the lower unit volumes.
TV A&P was up 42%, while audio was up 8%.
Platform plus gross profit.
The $7 million or about 69% of the total and device gross profit.
For the $26 million platform plus gross profit grew 88% growth in advertising revenue, which is increasing.
To me, becoming a mix of both on and off platform impressions, while we see tremendous headroom for continued growth on platform monetization. We're also gaining traction in off platform advertising capabilities, which allows us to expand our market and tap into opportunities across the broader connected ecosystem.
This broader capability offer strategic planning benefits to our advertising partners of course these off platform AD revenue sources won't carry the same margin profile that we achieve on platform, but they expand our overall tam and create advertising growth potential beyond our television installed base during the quarter platform plus gross profit margin was 67.
Percent.
Device gross profit fell 56% as we are lapping last year's Covid related surge in sales and working through the higher component and freight costs as well as more promotion pricing versus the year ago period.
As we have been anticipating for several quarters device gross profit margin came in at just over 5%, which is back in line with pre pandemic averages paneling component costs peaked in July and have come down significantly in recent months, while freight and container costs remain elevated.
Total company adjusted EBITDA for the quarter was $23 million in.
In line with our previous expectations.
It is only adjusted for share based compensation.
<unk> expense, which remained elevated this year due to a one year vesting for grants issued to certain executives in connection with our IPO earlier this year the higher amortization expense from these grants will roll off beginning in February of next year, resulting in considerably lower run rate comp expense going forward.
And finally net income was a loss of $19 million or <unk> 10 per share.
In terms of our key metrics, our Q3 results highlight the growing success, we're experiencing in driving overall monetization.
<unk> growth this quarter accelerated to a record $19 89 up.
Up 91% over the year ago period, primarily benefiting from our improved monetization of <unk> plus.
In terms of our engagement measures as we anticipated both total time spent on device and time on smart cast.
Returned to sequential growth after the dip we saw in Q2 as the country began to open back up.
On a year over year basis total vizio hours grew 24% to $7 3 billion and smart cast hours grew 16% to $3 6 billion with our ever expanding content lineup, which as of the third quarter. Now includes household name apps, such as HBO, Max and beauty player.
So 5% over the year ago period, ending the quarter at $14 4 million, while our growth is good we do believe.
Quarter was somewhat impacted by low churn level.
Inventory at the start of the quarter, followed by the previously mentioned freight related delays, which pushed shipments out towards the end of the quarter. For example, 40% of the $1 4 million units shipped during the quarter were shipped in September.
Turning to new active accounts within the quarterly timeframe.
Now, let me turn to what we expect for the fourth.
Plus.
Our monetization.
Initiatives are paying off and we are continuing to expand our reach and identify new opportunities.
Our expanded relationships with media networks and AD agencies. Following this years.
The upfront process are driving growth and creating inventory scarcity in Q4 across both video and home screen. This will continue to be favorable for pricing and sellout levels. We're.
We are seeing increased demand for data licensing, which is contributing growth to our non advertising revenue and also strong competition for a remote control buttons sponsorships, which is driving increased pricing power.
Based on the current trends.
We expect Q4 platform plus revenue in the range of $100 million to $110 million, we expect platform plus gross profit in the range of $65 million to $70 million.
Implying a mid 60% gross margins as we continue to replenish channel inventory.
Tories and benefit from the holiday season.
Gross margins given our increased comps.
And our ability to grow our platform business, we see a strategic opportunity to trade lower device margins to support greater retail shelf share to acquire active accounts and to <unk>.
Celebrate the growth drivers of our platform plus business, we would anticipate low single digit gross profit margin over the coming quarters in order to feed our wide array of platform monetization, all leading to significantly higher <unk> over time lastly.
7% to $12 million.
So overall 2021 has been a transformative year for Vizio and we're very excited about the opportunities. We see ahead with that let's open up the call to questions operator.
Thank you if you'd like to ask a question. Please press star followed by one on antenna. Thank you Pat now.
If you'd like to remove your question. Please press star followed by <unk>.
When comparing to ask a question. Please ensure your phone as Amit lately and please limit your question Timna maximum of one pop Hassan.
We take our first question from Laura Martin from Needham. Please go ahead.
One for Brian and one for Adam.
Sorry, Brian.
Thank you.
Yes.
Inventory channel backlog, where are you today in terms of how many weeks of channel inventory you have and do you feel that that's going to creep upward.
Selling season in Q4.
And then Adam based platform numbers are excellent at 134.
My question is.
You actually specifically called out data licensing and remote controls, which are two of the line items.
<unk> be willing to get.
Can you give us any more granularity in Q3 about ad growth versus patents versus data by chance. Thank you guys.
Getting a lot healthier amount in Q3.
It was finalized.
The team spent a lot of effort.
And.
In terms of X by the expedited shipments.
And the overall supply situation from Asia on components of getting a lot better. So we do see a pretty healthy inventory for us.
And.
We're very glad to.
Right.
Coming out of promotional price and hopefully you will feel a lot of PCB.
Thanks Neely.
Hey.
Anna.
Yes.
Data licensing and the remote budgets I want to give a little bit of context of the non advertising piece. We did we did indicate that non advertising.
<unk> grew 270%.
Year over year, and that's being driven by really strong.
And more dynamic with a larger Tam for us as we monetize inventory both on platform and off platform. So the combination of those two is growing that pie and that's a strategic move that we're making to make sure that we aren't constrained by our installed base footprint, we want to be able to monetize against the entire connected ecosystem. So that's it really.
An important initiative, we rolled out a few ways, we're doing that with something called household connect which is leveraging our relationship with the Verizon media arrangement that we put out to the market last quarter and then we're doing other programs allow us to tap into inventory off device as well.
But <unk> seen them strong demand and growth in categories, we're seeing growth in demand from <unk>.
Insurance financial services Auto I mean, these are really big advertisers and marketers.
Into our overall ecosystem.
But none of the non advertising fees data licensing is our largest component of that the remote buttons will tie partly to shipment volumes because it's related to the volume of remote controls that go out people Dubai independent remote controls aside from the TV as an add on as well so we monitor.
But what's changing is the economy.
Competition Theres, so many streaming services and content partners now in the marketplace that getting access to that to that button availability on a remote is getting more and more competitive and that benefits us from a pricing standpoint.
Thanks very much.
Great. Thanks, a lot.
Operator, we'll take the next question.
The next question comes from Michael Morris with Guggenheim. Please go ahead.
Hi, Thanks, good afternoon guys.
I'll ask.
Two if I could first on the platform revenue growth guide or the revenue guide another quarter of good sequential growth.
I'm, hoping you can break down a little bit of the drivers, especially on the advertising side.
<unk> video inventory display what where the strength is coming in.
I think we did a little bit of gross margin contraction on this side of the business reflects some of that owned inventory, but love to hear your take on on those components.
And also the seasonal component right fourth quarter is usually stronger so into that my second question is on the kind of conversion devices to tack of accounts units shipped Adam you clarify that a bit in terms of.
The late deliveries are later in the quarter.
Deliveries, but as we look forward should we think that that reverses or just given some of the supply chain.
Churn dynamic that youre working through.
Is there going to be sort of a sustained kind of depressed conversion.
So if you could share anything there thanks.
Mike you want to hit the advertised drivers yeah, I can talk about the drivers of advertising.
So Mike I would say for us.
We're accelerating in a couple of key areas first is on our own watch III plus so our owned and operated apps.
We're really excited about the direction that is heading.
We know we did the redesign last Q3 alright.
Or I should say last quarter.
Which has been very well received by our audience. We've added a lot of new content into the fold with six new Vizio features channels all of that has driven higher time spent.
Driven and new users.
Ultimately added more revenue per hour.
On top of that we're getting smarter right. We're still we're getting smarter about fill rates.
Those have increased as well so good momentum on the watch free plus side.
Biggest driver for us as home screen.
We continue to.
To be able to monetize.
What I would consider is the best UI for search and discovery in the marketplace I mean, we got 10.
Monetize it'll impressions directly on the home screen.
So that's been very well received by the media and entertainment community and as we continue to build those out we continue to expect significant growth on the home screen and then the last I think is.
Adam has touched on is our off platform.
We continue to build out or educate the marketplace around our audience extension products and our ability to leverage our first party data to drive video solutions based on what Youre viewing habits are on the screen into our mobile and desktop environment and Thats been really well received and when you talk about.
Q4, as we look ahead.
As inventory across the entire marketplace starts to tightened audience extension products give us a good opportunity to continue to drive value with our advertisers.
Yes.
They've account conversion.
Thanks for asking that Mike.
It's certainly an interesting.
Dynamic that we look at very very closely because it is a combination of both what I'll call sort of top of the bucket so new newly converted accounts and then.
And then managing the base, which is the fleet that goes all the way back to when we started shipping front has to use back in 2016. So when we look at newly sold Tvs, we have a pretty consistent conversion of north of 90%.
Newly sold Tvs convert into an active account and that's great. So that's feeding the top of the top of the bucket. But then you have a multiyear fleet that has dynamics to it that may be a wide range of reasons why someone might in any given period fallout of that activity levels to be active you have to engage with the TV has to turn it on as we connected to the internet so to qualify for that.
To achieve those.
Attributes and if you don't for whatever reason that might be youll become what I'll call churn or attrition and so we look very closely at why that happens what can we do about it and we want to pick that up in terms of re engagement and we think there's room for opportunity to improve I mean, theres definitely places to go there but.
We are seeing right now in the short term to your part of your question, yes. The latency in the supply chain dynamics certainly played a role.
When we were low in stock back in July and a lot of the shipments that went out were just initially to kind of get product back on the shelves.
Yeah on the first of all look we're going into strong seasonal period of the year. We have worked very hard with our logistics partners in our retail partners to get inventories up as we head into it and be ready to meet that demand. So we feel like we're in a really good position.
There, whether ultimately ends up being more or less than.
Then.
Last year, I think it's kind of hard to comp against that number I think that shouldn't be a surprise for you, but it will be sequentially up nicely and I wanted to point that out because we know that we look at the cadence of the year.
He was strong Q1 was the trough quarter, we indicated that at the time that we thought that would be the lowest quarter of the year Q3 up from there in queue for up again, so we're in a pretty.
Dejectory now as we come out of and into the holiday season, and could you just reframe the.
The platform first question I think I missed that.
Yeah, well the second part of the first question was just whether or not the pricing breath that you saw with more more mixer just price curve because of supply constraints and then add a quick follow up on.
Phone plus.
Yeah, sorry about that yeah actually both Steve and we saw a premium up increase we shipped.
Twice as much premium lying product in Q3, as we did in queue too. So we saw an increase in our premiums are m-series an R. P series, we saw a sizing up as well so demand for larger screens that contributing as well and early in the seat in the quarter. When there was some scarcity of inventories in the marketplace there wasn't a need to.
Discount heavily and so prices remained where they were so I think all of those factors played into the 42% increase in AEP that we highlighted year over year.
Great and then then just on platform plus.
I think care hours per day per account that maybe about 80% of Roku and your <unk> is only about 50% of roku. So it seems like you've got a lotta pricing headroom, but also maybe a little bit of engagement headroom I guess, how do you think about driving both of those two different pieces that drive our from higher thank you.
I think in terms of driving the <unk> higher.
We still have a lot of runway, but if you look.
Continue to reinforce the point that we're only about 20 months enter the advertising business.
So we.
We've made a lot of headway in terms of breaking new categories in terms of building our relationships with advertisers and brands we did about.
He announced over $100 million, an upfront commitments from our partners. We've grown the advertiser base I think we said 50%.
Over a year as well as average advertising spend over 200%. So we still got a lot of room to run.
We've grown <unk> nearly doubled it year over year from 10 to 20.
But we still have we still have a lot of room for growth and a lot of headway to make in the marketplaces, we continue to evangelize our offerings.
Yeah, a number of things that we're investing in to help longer term drive continued expansion and growth in our appeal I think we've talked about over the time.
Investments, we're making in software development and engineering capabilities to add new use cases and features to our platform and that will just benefit us over the long term to be able to drive additional incremental <unk>, but to Mike's point a lot of headroom letter a lot of levers to pull in terms of getting closing the gap to your point nor activity levels is pretty good we wanted to.
That higher obviously, but the monetization piece of it is going to a festival.
Yeah.
Thanks, Steve Operator, we'll take our next question.
And I actually have a question from currently Constantan. Some J P. Morgan clearly please go ahead.
Mhm.
Distant in China asked you as well.
And Lance viewpoints could you talk a bit about just screaming and longer term masturbation acuity, that's certainly a big driver right now, but if we think of it as rationally monks anytime soon and today of course and she still hasn't it could be around that you know what's stopping you from resemble your spring back over time.
Maybe this is probably for you Tonight, but you still get features hoping you could talk more about that than I am in your ambitions there. Thanks.
Yeah, I think they actually tied together so it might actually be one question.
So when we talk about the big opportunity to grow watch free plus I think I just touched on the fact that we did a redesign we've been.
Enhancing the user experience, creating a better environment for our consumers engage that's really important because we need to continue to grow new users into the fold we need to increase time spent and we're going to continue to invest in bringing in new features of new content and to watch for a plus and I think one great example of that is what we've done with the video feed.
Yours.
Vizio features is our data informed programming.
Created for our audience, specifically for audience and can only be found in watch free plus.
There is a distinct channels that can't be found anywhere else and because they are unique to us they perform really well as William pointed out with fork in flight and video investigation being.
Some of the top channels within watch free plus already just after being recently launched.
But.
For example, or I should say another example, our data tells us that our viewers Wolf crime driven programs right. So we looked across the platform looked at linear data streaming data and we built vizio investigation like this channel, which is a cable like experienced right helped grow are active users within watch replace.
Has helped US increased time spent and most importantly has helped us increase.
The revenue per hour that we're gaining within watch free which is which is really important to us. It also helps us create a second monetization opportunity right as we can sell brands.
Our DIY channel.
Cause I think sponsor that gives them the opportunity to advertise or integrate directly into the.
Them, an opportunity to get real estate on our home screen.
Which is a good opportunity.
Median entertainment on the home screen, bringing new advertisers into the fold and give a good consumer experience for our viewers.
So for us.
It's a great opportunity.
Due to build on watch for a plus but also a double dip on the monetization opportunities.
Thanks for a great thanks, where operator will take the next question.
We have a question from Lindsay Manhattan from Bank of America. Please go ahead.
Yes. Thank you Adam you noted willingness to take lower devised gross margins to accelerate adoption of platform plus.
You just added about 400 cases broadcast accounts any sense for how much of an acceleration you can see with this initiative and and how much will you'll flex this level of it sounds like you're talking about maybe low single digit devised gross margins, but but why not push that even even lower.
And then as a follow up I also wanted to ask it appears as though you're smart cast hours grew slower than total was your hours that's not been historically the case, what what's driving that and do you think that that that continues a trend continues. Thank you.
Yeah look what I'm.
What I'm excited about is that we are at a point now where we've proven over the last year that we can really monetize the platform. The teams them extraordinary draw job of driving monetization and went that allows us to do is be a little bit more strategically flexible with where profit comes from aware growth coming from.
And so as we think about that and as opportune the marketplace to be aggressive on getting more units into homes.
Forgoing some margin in exchange for account growth is now really viable.
And so we're excited about what that looks like.
We're going to we're going to tiptoe into it and be careful I don't know.
That we need to go if you're suggesting sort of loss leader type dynamic I dunno. If we have to go that far right now, but I think we were bringing the consumer a very compelling value proposition of great quality at a really amazing price. They are getting something that a razor thin margin to us great product for them and then obviously as we bring value to them in terms of the content that platform experience and obviously the partner.
Ships, we have now with the media companies and the advertisers it becomes a win win no across the board. So we think we can certainly.
Separate ourselves in the pack in the marketplace and that should translate into active account growth.
In terms of smart cast the growth rate comparisons.
I think that's really a function of the kind of odd comparisons we're looking to back to Q3 of last year, we were going.
Going through the early days of the pandemic. It was a time when people were rushing the streaming there wasn't a lot of new network content, there weren't any live events in sports and we're seeing some normalization of that it was good to see on a sequential basis that it's return to growth trajectory after dipping last quarter.
But I think long term there is no doubt my mind that the continued shift towards screaming adoption of streaming is going to be really strong within our own platform. Even in the context of smart cast hours or watch me plus time spent his way up and.
And that's important because those smart cast hours not every hour Street I think you see it even though the growth rate wasn't as strong on smart cast hours versus vizio hours look at the mall monetization, but the big acceleration <unk>, that's where it's translating.
Okay.
Swansea Great thing smoking operator will take the next question.
Next thing I have a question from <unk> from the Stevens. Please go ahead.
Yeah.
Hey, guys great results.
With regard to expectations for shipments.
And new accounts additions and <unk> can you just elaborate on the menu.
As yours, you've taken to get Vizio smart Tv's into the hands of retailers. It sounds like you are paying up for prioritize shipping.
And then does prioritize shipping give you prioritize delivery at ports.
Even when there is extreme congestion.
It looks it there's a number of dynamics to come throughout the supply chain and logistics process.
On one hand, the inbound freights are coming from our suppliers. We are partnered with many of the largest suppliers in this product in the world and we use their scale and leveraged influenced as they're they're they're scaling and capabilities on that front to benefit themselves as well and so that partnership really pays off and then go to squeeze as like this when you get it on land then it.
A very different dynamic right, you're dealing with making decisions around rail versus truck versus warehousing. We work with many of our three PL partners to help them higher and get workers into warehouses and truck drivers to try to mitigate some of the challenges that have emerged in the marketplace. It's still very challenging I don't want I don't want to pretend that it is not.
We have certainly used our team and their expertise or groups and around for a long time. They are really great relationships and a lot of experience in this area and so they've been able to get involved and mitigate.
These challenges as much as possible.
So I think we're in a better position than we would otherwise have been in it wasn't it wasn't perfect and it hasn't been perfect for anybody so still room to improve and we're looking forward to some of these bottlenecks easing up with some time.
That's <unk> competition that come to.
Particularly in the last quarter really from some size both players.
Vizio has held market share really across television sales over the years, that's even as the Walmart on brand is seeing a lot of success, peaking shares.
So just as a more competitors come to market, maybe you could just frame up your specific value proposition for consumers relative to some of the new entrants that you're seeing thanks.
Yeah.
We haven't deal revenue model, which everybody.
Entity and obviously.
Pettitoes salt what we did in the last few years.
Any jump into it and we'll be doing it for many many years and.
And then some of the Big company, you think the future for them to promote our own confidence to have to on television and.
And worldcom talents will be are working very hard to keep on investing that came out of hiding some of the best talent in the world to help us navigate through this competition and.
I do see more competitive coming in.
Being Ah.
Being a company, which compete with some of the biggest Cheyenne this industry for many many years will combat talents.
Look forward to.
To to compete.
Great. That's let go forward. Thanks.
Thanks, Thanks, Nick.
And we'll take the next question.
We have a.
Question from Sydney Carousel from 10 and pull research. Please go ahead.
Okay and I'm just said bookmark every hour is created equal in terms of monetization. So if you could explain a little bit.
More detail what you meant and then my question.
Because about platform tax revenue if you look at the.
Quarterly progression.
In this fiscal year is that pretty much how you think the normalized personality low played out and if not how.
Drivers would be.
What would drive the different different between this year in future years. Thank you very much.
Sure Yeah.
In terms of smart cast hours.
Trying to describe was that there are different.
Monetization opportunities depends on what content, you're engaging with right. So if you want to start at the highest level what street plus.
And that we monetize that we control the full waterfall, we can do really interesting campaigns for ad buyers.
Asian destination on the platform as you move over into other.
Content offerings around the Avon services theirs.
The mix their hybrid of how much inventory we have in any one of those deals all the way to for example time spent in Netflix which is not AD supported obviously, we're not going to.
Our contributor to the totals.
You too as well Time's been Youtube good time spent it adds to our app.
For spending time, and that's why we're so focused on.
Search and discovery our platform. The first party data we have to drive.
We have the best opportunity to monetize.
Interested in they've shown that before.
Affinity for it let's make a great.
And increase economics, so even if total hours where didn't stay flat, let's say hypothetically, but we drove an increase 10 20, 30% of the time spent and watch re plus if you're going to see that show up in our in our revenue.
The cadence.
Fair question hard to say I mean, we're still we're pretty pretty new at this and far from mature.
Sure.
Know pretty well the mature kaden the cycles of media companies and content consumption and we are still in building mode. So we might see different cadences because of that newness, but generally speaking obviously in the fall around content rolls into Q1 summer tends to be a little bit lower consumption, but.
I think we're still in a place where we're growing through those normal mature cycles because of just expansion on the platform.
Thank you very much.
You bet.
Alberta, we have time for one more question.
Hey can we take our last question from Tom Champion.
At the time that Tom the line is Nathan.
Thanks, very much good afternoon, I'm curious if there's an update on the payments opportunity I think we were looking for.
An announcement and in the second half of the year and then maybe for Adam just a clarification on the <unk> EBITDA guide of $7 million to $12 million <unk>. That's.
A little bit lower than what we're expecting.
A little bit lower sequentially, just curious if you could walk us through in broad strokes, what what might be driving that any comments would be helpful. Thank you.
Yeah, So I think given update on Vizio home.
Or or payment structure, we're currently on track.
We recently released.
What we call our partner portal, which is the tools that we provide to the app partner, so that they can build and integrate.
The payment system into their apps.
So we have content partners that have started to work on that we will continue to build will continue to add partners to that and we expect to roll out to consumers next year.
Yeah, Tom and then in terms of the.
EBITDA guidance commentary and expectation around device gross profit margin that flows flows through to that as you can imagine given up those dollars for all those strategic reasons that we highlighted I think it makes.
A ton of sense. We also know we're investing in building out capabilities to fund future growth as well so we're adding heads.
We've hired over 270 people this year largely on the software development side of the engineering side, that's going to help suit us and set us up for future growth. So it's a combination of taking our SG&A expectations higher while the device gross profit margin comes down a little bit net net all translated into a strong position for growth as we see a.
Real real opportunity on the horizon here.
Thank you.
Okay. Thank you thanks, Tom and thanks, everyone for joining this concludes today's call have a great evening.
Today's co has now continental please disconnect your lines.
Uh-huh.
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