Vizio Aims To Expand Its Higher Margin Software Business With IPO Proceeds: WSJ

Vizio Holding Corp VZIO is shoring up its software business investment amid budding streaming content demand, the Wall Street Journal reported.
Vizio earns around 90% of its revenue from selling hardware like internet-connected TV sets and soundbars. However, the software unit’s profit margin was 73.7% for the March 31 quarter, beating the hardware business margin of 10.6%.
Vizio is devoting more funds in 2021 to the software unit Platform+ development and hiring engineers and advertising-sales employees for the department.
Vizio plans to use the cash raised from its $257 million March initial public offering to fund the expansion partly.
The Platform+ unit includes SmartCast operating system for its Vizio TVs that allow users to stream content from various services.
Vizio generates revenue through advertisements and by selling and renting streaming content to consumers.
Vizio is investing funds to tweak the consumer’s content search and recommendation process.
Vizio’s operating expenses rose 97% Y/Y to $72.9 million for the March 31 quarter ended March 31, partly due to higher research and development costs. R&D spending jumped 165% Y/Y to $9.8 million.
The revenue grew 52% Y/Y to $505.7 million. The net income plummeted 64% Y/Y to $3.3 million.
Vizio plans to expand its staff by 52% Y/Y to 800 in 2021, mostly in engineering and sales.
Vizio’s initiatives resemble Roku Inc ROKU streaming ad business expansion plans, Needham & Co analyst stated.
Vizio has opted not to develop its content or expand beyond the U.S. at present.
Price action: VZIO shares closed 6.02% at $23.06 on Wednesday.

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