We’ve been spending a lot of time inside lately. You’ve probably been watching a lot of Netflix, Disney+, March Madness and random content on YouTube. You might have even used your stimmy to buy a new TV or sound system. That might not be as much of a need now in the late stages of pandemic, but all that money has translated to big bucks for companies in the home entertainment market.
One of those players is VIZIO. But this week, they don’t just want you to buy their TVs and sound systems — they want you to buy their stock. VIZIO plans to go public this week on markets.
So, we’re breaking down the VIZIO IPO from their S-1 filing with the SEC, which includes all the juicy details about a company and its operations. Here’s what you need to know:
1. The future of VIZIO isn’t in selling TVs, but selling ads
Since 2002, VIZIO has sold over 82 million televisions and nearly 12 million soundbars. In their S-1 filing, VIZIO boasts being ranked no.2 in television market share and the no.1 sound bar brand from January 2018 to December 2020. These numbers are impressive, but what’s even more impressive is that VIZIO is making more money selling less TVs.
You may have noticed while browsing online that TVs are suddenly cheap. Why? Because these TVs are collecting your data, selling it and serving you ads. Sound familiar? (hint: it’s Facebook). According to their S-1 filing, VIZIO sold over 4 million smart TVs in 2018, 6 million in 2019 and 7 million in 2020. This shows that while VIZIO’s TV sales growth is slowing, their revenue has actually grown. They’ve even posted a growing profit (net income) since 2019.
This growth in revenue is made possible by their SmartCast platform, an operating system on VIZIO smart TVs that enable “monetization opportunities” such as advertising. As of 2020, VIZIO boasts over 12 million SmartCast active accounts as of 2020. Each account is making them an average revenue of approximately $13.
2. Thanks COVID
Admit it. Some of you took the plunge and bought new stuff to survive those stay-at-home orders. We all did. And VIZIO was one of the big winners. They shipped over 7 million smart TVs in 2020. According to their S-1 filing, this was a 20% increase year-over-year. Selling TVs, soundbars and other home entertainment accessories is the core way that VIZIO makes money, making up nearly $2 billion (93%) of their revenue.
VIZIO’s SmartCast was also tremendously successful among the millions of new buyers. Of those new shipments, 65% of new smart TVs became users on SmartCast (which you already know why that’s a big deal). They also saw significant growth in revenue and engagement on the SmartCast segment. Their Platform+ segment, which includes SmartCast, represents over $147 million (7%) of their revenue.
COVID-19 also encouraged TV sales. This helped VIZIO’s year-over-year device revenue grow nearly 7% increase in device revenue. VIZIO’s Platform+ revenue, which grew 132.9% year-over-year, will grow against traditional device growth if they continue to keep those people watching TV and using their native Platform.
3. VIZIO is actually making money and holding onto it
VIZIO posted a net income of over $102 million in 2020. That was up from $23 million in 2019 and a loss of $156,000 in 2018. The growth of these profits are a shiny and exciting figure for growth investors. But value investors might find the company’s nearly $208 million in cash and cash-equivalents to be an exciting proposition.
It looks as though VIZIO is finally not just making money and then postmarking it to debtors or parties they have to pay. They’re actually holding onto it. The company’s total retained earnings rose in 2020, their total liabilities dropped and they have more in cash and accounts receivable than they did in 2019.
All of this fares exceptionally well for VIZIO and its IPO. After all, there is no shortage of companies coming to market, but very few with enticing balance sheets. These facts are sure to attract robust interest from investors on IPO day.