Q1 2022 Vizio Holding Corp Earnings Call

Stability is there.

Really one for consumers.

And the promotional wins for our network partners.

And as I've mentioned many times before this is just the tip of the iceberg for physio to monetize <unk> innovation.

Hardware and software platform.

We can combine innovation with even more comfort that consumer experience keeps getting better.

Enhancement to the Vizio integrated entertainment platform, including the addition of more premium apps.

Such us soon PV Amazon music.

And I'll watch three plus service has grown to one that 253 channels.

The expansion of our studio partnership has grown to 26, adding 1000, new on demand titles to.

To a wash REIT plus Avon catalog Dream Q1.

In addition, our first party data.

A core component of innovation and content enhancements.

And is used to power better content and experiences and more relevant advertising for consumers.

Beyond the increased value that vizio data brings to our own operated services. It is also fueling the ongoing evolution and modernization of the measurement landscape.

Two weeks ago.

We announced a multiyear partnership with Nielsen.

But the fact of currency provider in the TV industry for the last half century.

Nielsen has selected our inscape data to power their measurement capabilities and now gross our list of such partners two seven of the top eight in the U S.

This agreement further validates the inscape data.

<unk> fuel for the mass market.

And demonstrates that the persistent investment we're making in data during the last seven years is paying off.

If we build it they will come.

Has been my innovation mantra for 20 years.

Use case momentum positive proof of the operating philosophy.

Thank you thank our measurement partners for their continued faith.

And most importantly, my teammate.

With a relentless effort to.

We are building best in class ACR technology.

Thanks to our dual revenue business model.

23% increase in TV shipments versus pre pandemic Q1 2019 levels.

Our device business also achieved multiple Q1.

You will recall that during our last call we referenced the implementation of an aggressive pricing strategy across select models I am pleased to report that this strategy has paid off in Q1.

With a 50 inch V series being the number one selling of <unk> TV in America.

With this success in turn will have more to come.

We intend to implement additional efforts to deliver greater value to consumers and grow our TV market share.

In addition shipments will heavily engaged 43 to 58 inch models increased 40%.

Brazil was the number one TV brand in shelf space at Walmart and target.

I'm also proud to say that Brazil was the number two bestselling smart TV brand in the U S. During the March on the <unk>.

Our market share momentum, we're excited to launch a new collection of Tvs and sound bars in the coming months.

It was a handful of CES awards already in hand.

While 2022 collection will feature robust technology.

And design enhancements that will make the entertainment experience more enjoyable.

With Vizio devices mean, the infotainment centerpiece in millions of American homes. We also have a history of outstanding customer service that traditional continue in Q1 with <unk> being the recipient of a five <unk>.

The awards the Cds recognize excellence in customer service.

Hi, speaking a perennial leader in this space.

These five awards.

Stevie Awards totaled 211 over the last decade.

They will take great pride.

Focus on the consumer.

I want to thank our customer service team.

Based in South Dakota.

<unk> of America.

For this accomplishment we were also honored with.

Was the 2020, one sustainable materials management go tier distinction from the U S Environmental Protection Agency.

The sixth straight year.

Attainable practices have been Amit.

The EPA has built here award is presented to organizations with example, Erie Electronics collection and recycling program.

Prop that Brazil is the leader in sustainability and Plaza team for this recognition.

As consumers continue to seek out value in both their consumer electronics on comfort purchases, we believe that Brazil is planning to leverage not only our dual revenue model.

Our history of quality.

Portability and innovation to OLED preferred place in the Hearts.

Homes.

Consumers.

20th year, delivering incredible value with affordable quality devices.

We also bring the entirety of the entertainment experience to millions of homes.

Six years ago with four solve those strategic value in owning and operating the combined hardware and software expense. It seems like the market has taken notice while we might have a few new entrants as competition.

Also validation of our strategic vision.

Sumit benefit ports on a daily basis lets viewers navigate in the ocean of content options. We are proud to note that maintenance will be utilizing video screens and innovations to do it.

With that I will now turn it over to Adam to speak to Q1 results in more detail.

Thanks, William before opening the call to questions I'll take you through our quarterly financial highlights and discuss our outlook for Q2, starting with the first quarter total company revenue came in at $485 million platform, plus revenue was up 97% to $103 million.

Platform plus growth was driven by advertising revenue, which grew 116% to $76 million, our direct advertising client relationships grew by 80% and the average revenue per advertising client rose by 65% during the quarter. We were incredibly pleased to see an acceleration in the advertising growth rate over the fourth quarter growth rate.

Particularly considering typical seasonal trends. In addition, this first quarter marked our ninth consecutive quarter of triple digit AD revenue growth, we continue to see strength in our advertising business as we further expand our client relationships across multiple categories and increased their average spend on our platform.

We're also making great strides in growing our off device monetization led by our household connect product.

<unk> advertising revenue grew by over 200% year over year, driven by strength in household connect and it represents a significant long term opportunity to generate additional advertising monetization beyond our television installed base, our non advertising revenue, which includes data licensing branded buttons and content distribution fees also proof.

<unk> well during the quarter up 57% year over year as we indicated on our last call. We expect to see a resurgence in non advertising revenue growth in 2022 led by our highly valuable viewership data. This data has become the backbone of TV viewership measurement across both linear and CTV.

And is in high demand from TV measurement companies AD tech firms ad agencies and networks.

Contract renewals, new deals and expanded deals such as our recently announced agreement with Nielsen will continue to fuel steady growth in our overall non advertising revenue growth going forward.

Turning to our device segment total revenue was $383 million down 16% on fewer TV unit shipments and lower average unit price compared to the year ago period, which was still elevated by Covid dynamics.

In Q1, we shipped $1 4 million TV units and while as expected. This was down compared to the pandemic elevated Q1 of 2021, it was 14% and 23% higher than the pre pandemic first quarters of 2020 in 2019, respectively.

Being we know demand was elevated by the stay at home orders and government stimulus programs during much of 2020 and into early 2021, but if you look at the longer term trajectory, we have seen a nice overall growth trend and the difficult year over year pandemic related comparisons will begin to ease from this point forward as we lap the inventory constraints and the exploration.

Several government assistance programs last year.

So given our now healthy channel inventory levels and our strong retail partnerships. We are increasingly confident in our ability to grow our TV unit shipment volumes. This year over last year, even against expectations of a decline in the overall domestic TV market.

Turning to gross profit total company gross profit was $73 million for the quarter platform plus gross profit was $65 million or about 89% of the total and up 69% year over year device gross profit came in at $8 million.

While our strategy has been to be more competitive with certain promotion pricing and this has resulted in slightly lower than average device margins.

We continue to acquire active accounts for our platform plus business at a positive gross profit given.

Given the significant <unk> growth, we have already achieved and the continued upside. We see ahead. We believe our device strategy serves as an economically favorable growth driver for our platform plus business.

Total company adjusted EBITDA for the quarter was $4 million slightly ahead of our expectations and down from $40 million a year ago I would like to take a minute to provide some further specifics to help put this year over year decline into context. The change versus Q1 2021 is the net effect of four factors first device margins coming down from the previously elevated.

<unk> during the pandemic period and additional strategic investment we have made to strengthen our competitiveness in the market.

$9 million and higher marketing spend to help drive device sales.

Third higher SG&A due to investments in our engineering and software development teams to build future monetization features and opportunities as well as certain corporate functions needed now that we are a public company.

Finally, these three headwinds were partially offset by growth in our platform plus results.

Looking forward, we expect to see the impact of these factors begin to moderate as we scale the business and benefit from further growth as a result, we expect adjusted EBITDA to improve throughout the year.

We continue to maintain a strong highly liquid balance sheet with no debt and significant flexibility to invest for future growth now turning to our key performance metrics. Our Q1 results continue to highlight the growing success, we are experiencing in driving overall monetization across our platform.

<unk> growth this quarter accelerated to a record $23 68.

Up 64% over the year ago period benefiting from growth in homescreen monetization growth in video advertising revenue, particularly within water plus and growth in data licensing revenue driven by several contract renewals at higher rates we.

We are pleased with the success, we've achieved in monetizing our platform in a short period and we continue to see significant upside from here as we launch new features and gained further traction in the marketplace total vizio hours grew 18% to $8 2 billion and smart cast salaries grew 14% to $4 1 billion exceeding 4 billion hours in the quarter for the <unk>.

First time.

While we continue to see solid overall growth in our total hours and smart cast hours as we have said before where those hours are spent is particularly important to our monetization opportunities.

To that point, we are pleased by a trend we have seen over the past six months where growth in time spent on watch free plus has significantly outpaced overall time spent on our platform. This has helped fuel our growth in video advertising revenue.

Smart cast monthly active accounts grew just over 500000 to $15 6 million.

So now let me turn to what we expect to see for the second quarter.

We expect platform plus revenue to be between 107% to $111 million with strong contributions from both advertising and data licensing.

We expect platform plus gross profit to be between 66% and $69 million implying.

Implying continued strong margins over 60% at the midpoint of these ranges.

From a total company perspective, we expect adjusted EBITDA to be in the range of $3 million to $7 million. We also expect to see significant increase from this level in Q3 and Q4.

So overall Q1 was a great demonstration of the strengths and benefits of our new revenue model, our monetization capabilities continue to expand as we execute on existing market opportunities and tap into new opportunities through product innovations, all while delivering to consumers an exceptional user experience at a tremendous value.

With that let's open the call up to questions operator.

If you would like to ask a question. We invite you to press star followed by the number one on your tenancy.

Thank you.

Have you changed your mind and no longer wish to ask your question there'll be staff.

Okay.

Please limit your questions to one question and one for Amy.

Operator, we'll take the first question.

Okay.

Thanks, Keith we'll take our first question today from Jim Goss of Barrington, Jim ACTH.

Okay.

Thank you.

I'd like to ask first.

The the 50 inch V series <unk>, there was a number one for a key step sold.

Can you talk about what share of total television revenues television revenues that represented.

The principal reason for the drop in.

Device gross profit two 8 million from $48 million.

Yes, my one follow up.

Hey, Jim no.

So first of all the decline in.

Gross profit as part of our broader strategy of becoming more competitive in the marketplace as we come into this year. The V series is an example of us.

Of a tactic we deployed to achieve that that competitiveness. So we priced out in the market to be very aggressive a quickly gained share it surged into into.

Into the March time frame and pushed up our market share over the course of the quarter. So it is a tactic that really proved itself.

More broadly remember a year ago. The gross profit was elevated due to the pandemic dynamics. It was a period of time, where there was enormous demand. It was challenged supply in the marketplace, you didn't need a discounter or overly market product and so it actually generated above normal gross profit in our device business year on year, we're now nor.

<unk> down to what I would imagine to be more of a regular gross profit margin and then on top of that we are strategically moved like the example on the 50 inch to be even more competitive and push those margins down into the low single digit level at that level as I said in the prepared remarks, it allows us to drive growth competitiveness in the marketplace.

Then feeds our platform plus business. So we're going to look for other opportunities on other skus that may fit this same strategy in the months ahead and see if we can continue to move the needle we really proved ourselves by gaining market share throughout the quarter. We ended March and the number two market share position in TV and Thats really a great ever.

<unk> point of the strategy.

Okay.

Okay and the other the other.

Question was is there room for say a joint venture with some other smart TV sellers.

It has not been as aggressive or innovative issue have that could expand the platform and.

Scrap so both of you.

No not at this time, we're not really working with us mark can be manufactured.

To license our <unk>.

Platform OS.

Question you have.

Yes.

The objective is to platform.

Okay. Thank you.

Thanks, Jim.

Operator, we'll take the next question.

Of course. Thank you. Your next question comes from the line of Jason <unk>.

Craig Hallum, Jason It's no assurance.

Great. Thanks for taking my questions first one just on jumped you curious if you've seen traction beyond the Fox relationship and then any color on the user experience that you've seen so far just in terms of utilization or how customers are adopting that pivot over to streaming.

Yes, I'll take that I think.

One I think we're pretty excited about jumps to you because it showcases really the benefits of that integrated system. We have hardware software all the data flowing through it gives us the opportunity to create some really cool consumer experiences.

As a jump for you, which allows them to seamlessly consumers can seamlessly jump between linear and streaming environment, regardless of HDMI input.

So in terms of the launch partnership with Fox went really well that was the beta out in the marketplace.

Good opportunity for us to continue to push.

There has been significant demand for it from specifically from the media and entertainment community and we think it opens up not only opportunities for media entertainment, but also the opportunity to expand into additional categories.

Perfect and then maybe a follow up.

Yes.

Analytics side that was a key component of your new presentation.

Presentation, a couple of weeks ago, just curious.

The key components that drive that drove the good results in the quarter and then any takeaways that you've had from that new front presentation, where you really focus that off platform capability.

Yeah look in terms of what are the key growth drivers for us this quarter.

<unk> continues to be surrounding luxury plus obviously, we continue to invest and support.

Watched Sri plus we've seen significant growth we've made a lot of innovations to it. If you think about three quarters ago. We went through a complete redesign right. When we took over the user experience now controlled all the content Q4, we added on demand content.

With deals with all the major studios that was a big benefit to consumers and to the advertisers.

We continue to add to it in Q1 with <unk>.

Expansion of our video features and if you look at those video features specifically for conflate, an vizio investigation.

We're seeing viewership that's last thing about three times longer than the standard fast channel out there.

So all of this has allowed us with what Sri plus continue to grow active users.

And continue to grow time spent which is converting into increased monetization and now the number two AD supported app on our platform. The other key growth driver.

<unk> continues to be our home screen, we continue to do.

Very well with the media entertainment community, helping them.

Grow grow awareness.

New shows they have in the market helped them reduce reduce churn on subscriptions.

And continue to bring new partners.

Into the fold through brand sponsorships, giving the opportunity for customers like CPG, where insurance companies to get access to our home screen in innovative ways and I would say the last driver really is.

Off device. So households connect we continue I think we mentioned grew at over 200% now we.

To be out there in the marketplace evangelizing the strength of our data.

And how those data that data can help increase our tam by expanding advertising opportunities for our customers off platform.

In terms of new fronts, we've got really good response from the advertising community both brands and agencies from our new front and I think.

We were very successful.

Piggybacking off last year's new front to drive <unk>.

Significant upfront commitments that were working through this year and we've now started the negotiations.

With major holding companies as well as larger brands to two what we believe to have a much larger upfront. This year, so very well received.

Sounds great. Thanks, Michael.

Operator, we'll take the next question.

Your next question comes from Steven Cahall of Wells Fargo.

Steven NTT, Inc.

Thanks.

First one for me the smart cash conversion was a little weaker than last quarter.

Based on what you said about being able to grow shipments for the rest of the year to above last year and then just what you see on the Activations I was wondering if you had any sense of how we can think about that ratio for the remainder of the year. Do you think you can get back to that kind of 50% that you ran at a little bit more historically and then secondly smart.

Cash salaries I think those are up kind of team, but obviously AD revenue was up over 100% looks like it accelerated that just implies a lot of incremental AD monetization. So would love to just kind of help me.

Frame up how you're thinking about that what are you doing to drive folks onto watch free maybe what your content strategy is there any other color. Thank you.

Sure Stephen It's Adam I'll start with the first one and then turn it over to Mike for the second one so on the conversion ratio as I said last quarter, we think in a normalized environment that that metric is kind of going to shakeout between 40, and 50% now clearly not been in a normal environment for quite a while there has been ebbs and flows.

Versus shipments versus sell through in those dynamics can play a role in that metric in Q1. It was a period, where we saw shipments out into the retail channels exceed sell through and that was as we were trying to catch up and build up the channel inventory so that we'd be in a strong position to deploy the pricing strategy that we've already talked about and so as a.

Result of that dynamic youre seeing the shipment number which is what we disclosed because it is what is tied to revenue recognition, but when shipments exceed sell through it's going to it's going to depress that metric from just a math standpoint, but over the course of the year, we're still looking at being in that 40% to 50% range at the end of the day, we grew our active accounts by a solid over five.

1000, and that's pretty consistent with what we've seen over the last four quarters and then Mike is going to go to monetize that you're on the platform side as we grow that base. So think about it in that context.

Yes, and I think to answer your question.

Around the ramp of AD monetization versus that growth I think we just talked about the key growth drivers, we had but we still have a lot of runway we've talked about this in the past, but we're still just a little over two years in to our AD monetization or driving our direct sales business. So we continue.

To close our Jive relationships with brands and agencies in the marketplace. I think we expanded our direct advertising client base by 73% increased average revenue per advertiser by over 70% 76%.

Versus last year. So we still have a long runway ahead of us to continue to grow and continue to build our pool on the advertising side. So we'll continue to take advantage of that and then in terms of driving people in to watch three plus.

Look we have multiple touch points to get our consumers to watch three plus whether that be.

The remote button, whether that be the app on the platform.

A different different carrier.

<unk> ourselves that we incorporate within within our platform, but the biggest driver continues to be the promotion.

And we have.

Credible UI for search and discovery when you get to the smart cast home screen and we can continue to utilize that inventory to drive our consumers into luxury plus and show them. The great high quality content. We have available. So as we continue to support that we believe will continue to drive a flagship plus and ultimately kantar.

To drive up the advertising monetization.

Thank you.

Great. Thanks, David Operator, we'll take the next question.

Your next question comes from the line of Cory Carpenter from Jpmorgan. Please.

Please go ahead with your question.

Great. Thank you I hope to just.

I was hoping to hear your thoughts on on Netflix one gene at spring service curious, how impactful that could be some video over time.

And then secondly, I think this is the first call in a while where we didn't talk at length about the TV supply chain.

So just hoping for and I think there and how close you think we are back to a more normal environment. Thank you.

Alright, I will take the Netflix question.

I mean look I think Netflix Disney I think we're pretty excited about.

Them getting into the advertising space.

As a whole we think it's really good for the entire connected TV ecosystem and very good for our ecosystem.

The opportunity to bring an AD supported tier and we think we will continue to help shift viewers into streaming.

And also help them reduce and ensuring they have on our platform. Those are good for us because we've got economics with them and economics with those partners.

We also.

As good as more partners come in to the streaming environment.

We still have more and more opportunities to monetize our home screen more time spent on the home screen leads to more monetization, but I think from the advertising side.

It's going to be really good for the market.

CTV right now is under bought compared to.

Two its reach an amount of time spent.

And we believe this move will most likely accelerate the shift.

Linear dollars into connected TV.

And for us as more and more dollars shift into other linear and interconnected TV luxury plus we'll benefit from that.

We are effectively a next generation cable network.

And and.

We should see good upside as more dollars are able to be brought out pulled out of linear into into streaming and then I think finally, it's also good for us from a from a data standpoint.

William and I both touched on.

Continue to build.

Build our relationships and partnerships and expand those with next generation currencies that are trying to solve the problem of the shift from linear to streaming and <unk>.

Got what we already had deals in place with seven out of the top partners.

Spot comp scores video apps and more that are that are continuing to build out. These solutions and then we just brought on Nielsen This past quarter and our data is powering or fueling the next generation of their products looking to help bring bringing measurement and currencies to two.

To the connected television space. So so all in all very good for us across pretty much all our revenue streams.

Yes regarding your question on our supply chain on PD.

The shutdown all of the major city in China definitely brought a lot of.

Challenges to the supply chain.

However, we have a.

Great team I want to thank our team for being well prepared.

For this particular shutdown on our supply chain.

This time it is pretty healthy for us.

Our short term near term and.

Again, I want to thank them because they were way ahead of the curve.

We're prepared so our supply chain looks pretty good right now.

Operator, we'll take the next question.

Your next question comes from Nick <unk>.

Stevens Nick ACTH.

Hey, guys.

First off I just think these results.

And the guidance here is phenomenal so so congrats there but.

I've got a few starting with inscape.

Obviously Nielsen expanding their partnership with Vizio and the quarter, gaining access to ACR data for the use of local TV measurement any way to just sign to size up how incremental this is and do you see your other CTV measurement partners looking to gain access to this local data.

Just like Nielsen is.

I mean, obviously results here were were very strong this quarter and it sounds like the growth trajectory here is inflicting. So maybe just also if you could frame up how we should think about the segment going forward.

Yeah, I think touching on.

Touching on the Nielsen.

Not necessarily getting to the specifics, but I think within that our ability to start to add incremental local stations I think we talked about 400 into our fold theres a windows exclusivity for Nielsen.

Which which is good for our partnership and will help continue to build the marketplace, especially around local.

Within cross screen measurement.

Has that window of exclusivity is up it's good for our business because it just continues to give us more opportunities to grow and sell against a new revenue stream within data.

Yes, Nick the way to think about these as well. These data contracts are multi year contracts. So we have good visibility on what they look like and what the ramp looks like over time, so that that helps us with predictability in that non advertising revenue growth and as we said, we do expect that to inflect. This year remember last year, we were in the middle of a little bit of a strategic pivot on how we handle our data and what we're willing to license in the.

Market place, we've made that change you have seen the benefits to our own advertising business as a result of that change and now we're in a position where the data that we are licensing the market is becoming increasingly valuable and we're expanding the number of deals we're doing with these players.

Players, we're adding and expanding our relationship with the large people like Nielsen as you mentioned and with the multiyear structure. It gives us really good visibility. So we do think we're going to see a reacceleration of non advertising revenue growth this year.

Got it and just any learnings from the more aggressive pricing strategy that you guys employed in the first quarter I mean actually the gross margins on the base or higher than I expected. So it almost suggests that you could press even harder, but maybe you could just level set on.

On the expectations on pricing, how much more or less promotional and aggressive youll be as you push forward.

Well I'd say the first learning is that when you give consumers a great product at an amazing price they buy it.

So we saw great growth in that product as we talked about the gains in the <unk> fantastic. We specifically went after the 50 inch because it's just such a great volume product and a highly engaged products right that that is the screen size. It does really well for us on our platform plus side and so we're going to take those learnings and look at other skus that fit that pair.

Dime and try to push it in the market and see where we can be competitive.

So we're very pleased with the immediate reaction consumers took to the strategy, we see the lift in market share we see what it did for the whole the whole.

The whole product lineup, we'll get we'll get surgical about what units makes sense next but by and large overall, we can we can continue to manage this at a and as I said, we're acquiring customers at a positive gross profit dollar on selling devices. So even if it's a lower margin than has historically been the strategy has proven itself in.

It feeds right into our dual revenue model.

Got it and then just one final question for you guys.

I'm still ordering my pizza through my phone.

To order it through my TV, how far away are we from the introduction of more expensive ecommerce capabilities.

Great question that'd been waiting for that data for 25 years.

So that's my first.

<unk> TV I really thought it was going to make a lot of money Tony pays us.

So that day is coming relatively soon because it's a living.

As you all have been building the fundamental building blocks that will make that happen the billing engine.

The voice.

Capability the mobile experience.

<unk>.

Mike do you want to chime in a little bit more yes, I think I think we.

I'll touch on in the past, but for us to get to the next phase.

Smart Tvs as we extend beyond entertainment.

For video we're excited about that we're obviously continued to.

To hire and bring on people to start to think about the future of TV, but at the start we need to lay that foundation right.

And for US that foundation is William touched on is making sure it's very easy to communicate with.

With the television so we've made continue to make enhancements to our mobile offering.

We've continued to add voice capabilities, we added voice to a majority of our televisions rolling out or moving forward all new television that we bring into the marketplace will be voice will have voice capabilities. So we're excited about that we needed to add that as the foundation of <unk>.

<unk> billing system and a wallet.

Still on track with that.

At launch mid summer.

With that product and I think the last foundational pieces around interactivity and notifications and while we have that capability I think.

Jump view, which we already touched on as it is a good example of how we can continue to innovate around interactivity, how we can start to move consumers between HDMI inputs and serve notifications and a different and unique way that really enhances the consumer experience. So I think we're in a good position from a foundational standpoint.

And I think a lot of those opportunities are on the horizon.

Awesome, Thanks, guys, Congrats and good luck.

Thank you operator, we'll take the next question.

Thank you. Your next question comes from Michael Morris of Guggenheim Partners. Michael. Please go ahead.

Yeah.

Thanks, a lot and good afternoon, everyone.

I have two questions.

First one is about watch free plus in the competitive dynamic there.

No.

It's great to see the success of watch three plus.

But it does or can I guess come at the expense of some of your partners, who buy display advertising from you. So I'm just curious maybe for Mike O'donnell.

How you see that dynamic playing out how you can win on the retention side of watch free plus but still be a valuable partner for for other.

Networks, especially AD supported networks I'm curious your thoughts there.

And then the second thing.

Maybe a bigger picture one of the big completes we here is just that there's so much content now right, it's hard to sort of organize and find what you want and it feels like you guys continue to have an awesome.

Positioned to help people with that so maybe some of that as a wallet, but im curious if theres any more that you can share about the economic opportunity for you for helping organize and prioritize the content that people want across a number of platforms they might subscribe to it.

Yes, so in terms of competitive growth.

I think kind of going back to the question around Netflix and Disney I think it really does validate.

That customers have an appetite for AD supported services as they also have an appetite for subscription services in the marketplace being a distribution platform with scale.

Scale and scale, that's growing significantly I think we are well positioned to service all of that entire customer base and I think there is plenty of.

Eyeballs as well as AD dollars available to service all the different partners on the platform.

As I mentioned earlier look we think of luxury plus we continue to invest we continue to support it but we continue to generate revenue in a multitude of different ways across our platform and.

And it's important for us to continue to help and support the partners on our platform because they are their partners from us not only from a.

A consumer.

<unk> standpoint, but also from a revenue standpoint.

But we're also going to continue to feed feed watch free plus where we can from an editorial standpoint on our home home screen and I mentioned earlier, we think of luxury pluses as the next generation.

Cable channel.

And I think with that there is opportunities as more and more dollars shift over.

For us to continue to grow at an accelerated pace luxury plus as well as the rest of the partners on the platform continue to grow their revenue and opportunities.

And then the next question Mike Sorry. The next question was around search and discovery.

Yes exactly.

Potential for value creation, they're totally.

Yeah look I think for us we're already.

We continue to invest and refining search and discovery for our consumers our user interface, we continue to hear from customers as well as partners the best in the market for search and discovery.

And I think as as our partners continue to grow as we bring more eyeballs to smart cast and time spent as well as active user growth, we think theres going to be a lot of opportunities for us to continue to drive.

Not only viewership or subscriptions for our partners to help them reduce churn, but also continuing to increase monetization for our most monetize a bowl.

<unk> opportunities, which includes luxury plus.

Operator, we'll take the next question.

Your next question comes from the line of Tom Champion of Piper Sandler.

Please go ahead.

Thanks, a lot.

Guys I'm, just looking at the smart TV shipments chart in the deck.

Two of the three years it looks like <unk> is kind of a low watermark.

I don't know if this.

What state it already but I mean is the implication there that you expect shipments to increase.

Sequentially.

Through the year.

And I'm wondering if you could just talk a little bit about kind of your view of the economy.

How you think.

The consumer is doing and maybe just a last one in terms of the promotions.

Our competitors responding any thoughts on that would be really helpful. Thank you.

Yes sure Tom.

There is some seasonality throughout the year typically.

Q4 is our biggest that's obviously a big holiday sales period.

Q1, usually does fairly well Q2 can have a little change depending on if we're in a reset period, if we're bringing back so the comps over multiple periods is a little bit a little bit tricky. The comment. We made was we look back at last year and some of the availability constraints that we dealt with we are confident that we're going to build or grow our shipments this year over last year.

And that will I.

Don't know if it'll be exactly steadily throughout every single quarter, but absolutely moving in that direction with a lot of strength because of the strong position. We have right now with available product in the channels and the pricing strategies. We deployed we feel good about both shipments and then obviously sell through and how that starts to feed into active account growth as I talked about earlier so.

The comps start to get easier as I mentioned in the prepared remarks, we're obviously lapping now on the period a year ago, where there was availability supply constraints, there where the country was reopening up people are getting out and doing other things and so the dynamics. We're shifting we're now comping against that which should be favorable for growth rates as you look at this year.

And then from a from a from a marketplace standpoint.

Look in an environment, where there's challenges we know that consumers tend to gravitate towards value Vizio has a long history of being a value brand. We've been in the marketplace. A long time with that presence consumers will will select quality at a great price and we think we have a very strong hand to play into that in this environment that you're describing so we'll watch it like everybody else.

Will the.

The backdrop is still <unk>.

From a labor standpoint people are working obviously theres inflation, so everyones got the forgot to navigate these things, but having good strong channel inventory and attractively priced product at a great quality, we've got a good hand to play.

Great Operator, we'll take the next question. Thanks, Tom Thanks, Jim.

Your next question comes from <unk> Mohan Bank.

Bank of America Ramsey. Please go ahead.

Yes. Thank you.

On your guide for platform plus revenues I mean, if you look at <unk>, it's about at the midpoint about $6 million incremental sequentially last year <unk> you did roughly doubled up why should either be tracking a lot higher on a quarter over quarter basis. Given also some of the new initiatives you have.

Yes. Thanks, a lot I mean look I think it's still certainly reflects very strong year over year growth.

We're looking at we're looking at the environment. This is also a period, where we come off of.

Q1, and then the new selling season right. We had benefit from last year's upfront that rolls through and then now the new season will start when the fall launches come around and Mike can talk maybe a little bit more about what.

You mentioned in terms of the new fronts, and so forth but.

Look I think it's still reflects very strong growth, which is what we want to show and demonstrate we're going to push the team obviously to continue to execute really well against that and we'll see we'll see where it comes out but let's not lose sight of the fact that we are now lapping periods, where the team was more established this time a year ago versus the earlier days of the comps are much much easier.

So keep that in context, but.

The excellent growth that we can achieve that midpoint of the range.

Okay. Thanks for that.

Okay I got it right.

I was just going to add I think.

From our perspective, I think again theres good growth in Q2 as I mentioned before we still got a lot of a lot of opportunities.

To continue our growth trajectory that we've been on I think what what Adam was referencing is coming out of the new front.

As we get into the back half of this year, we will start to kind of reset with the new upfront commitments that we're negotiating now we think that's a good good opportunity for growth.

As the year moves on.

We're projecting some good impact from political in the back half of this year. So from our perspective like I said I think good growth in Q2 still lot of opportunities still time left in the second quarter, but.

But I think we're positioned well not only for Q2, but for the back half of this year as well.

No. Thanks, I appreciate that and then on your <unk> growth can you give us any color on how much of that is sort of CPM growth driven versus growth and monetize mobile ad impressions.

Sure.

Yes.

I would say both.

I think I think the answer is both I think if youre looking at the growth we've had and if you go back to when we launched this business two years ago.

Somewhere around I think $7, we've more than tripled the ARPA, so where we've seen growth has been and monetize the impressions. We continue to see an increase in that.

I mentioned, Washington, plus is growing at a faster pace than overall time spent on our platform that's a positive for us.

Also as we continue to solidify those relationships.

Talking about average revenue per advertiser grown by over 76%.

Function of getting bigger deals, but that's also a function of us.

<unk> to leverage to grow Cpm's.

And continue to leverage the data we have our inscape ACR data to drive higher CPM through addressable advertising.

Yes, I would just add it's great point, Mike and I would just add to that the comments earlier, where we talked about the growth in watch free plus relative to other.

Content on the platform is really important to this because as we grow accounts, where they spend their time is really really critical and to Mike's point all of the things we're doing to drive people into watch free plus that disproportionately benefits us on the <unk> side, because it's putting more time spent in the highest and best place, where we can monetize video inventory, which is what three plus so those taken together is really drive.

<unk>.

Two higher even on.

The size of the active account growth that you've seen.

Okay. Thanks, Adam if I could just really quickly is a netflix password sharing crack down efforts converting into more time on luxury plus when you guys can probably tell that from your data that you see.

But as I have already happened or is that yet to happen or any color. There. Please. Thank you.

Look I don't know if we can comment directly on that I mean, the concept. We wanted people to make sure. They understand is that if people are moving around and there is a saturation in certain services. Obviously the availability of more content AD supported is really great for us and that behavior is shifting and we've seen that trend now for quite a while and that's.

That's a positive for us so when the marketplace reacts to declines in some of these very.

Highly distributed arguably saturated services that doesn't necessarily mean that consumers are not streaming streaming in different ways sampling other content, we have all that content, it's actually a good tailwind for us.

Okay. Thank you so much.

Thanks, Operator, we have time for one more question.

Thank you. Your final question today comes from Vasily <unk> of.

Cannonball research.

Please go ahead.

Thank you Paul good.

Good afternoon, I wanted to ask you to talk about.

Gross margin also.

Glen.

Furthermore, with the platform cloud subs liquidambar scan.

<unk>.

Impact on gross profit dollars for example.

Costco recognizes the Guam.

Against Google Congrats on their homes.

And so on so even if you can talk about it.

So granted four months something like that the big decline. Thank you.

Sure.

Yes, let me take a shot at it.

Think about the various revenue sources.

Each have sort of somewhat different dynamics to them right. So.

I would say our homescreen as one of the very highest very very high we own that inventory theres very little cost to go against that so that's a really tremendous.

In highly attractive inventory source for us.

Buttons on our remote control as you can imagine don't have much incremental cost to go against that so those are high margin and they are attached to obviously shipment volumes.

Our data licensing revenue is probably maybe next on the chart.

Because once the infrastructure is in place we put some analytics around it we have some workflows that go against it to make it a good product, but in general it's a very high margin contributor and then as you get into video.

Video is a mix of on platform and off platform and those as we've said many times have very different characteristics right on platform is going to have a higher margin, but a lot of our products are rev share structures, we've talked about a rev share dynamics before and so that's going to play a function in terms of what the margin is for us on the video side and then off the <unk>.

<unk> is more of arbitrage model, where we go out and get.

Inventory and we resell that inventory that's going to come through at a lower margin profile, but what I like about that is that it gives us broader tam beyond our install based on our television. So we don't have to think about just how do we monetize what's in People's homes are with our brand, but the entire ecosystem more broadly and those are going to be incremental dollars to our total system. So.

That's kind of the hierarchy as you think about it and you can see how the various growth dynamics will play into the aggregate gross profit margin as we as we deliver going forward.

Well. This is very helpful. Just a quick follow up so would it be correct to infer from what you saw but do the program globally.

Our gross margin.

That is true that is true it depends on where it's occurring on device off device and what the partnership Rev share mixes might look like.

Well. Thank you so much have a good day.

You too thanks for joining us.

And thanks, everyone for joining this concludes today's call have a great evening.

Thank you everyone for joining you may now disconnect.

[music].

Yes.

Yes.