Higher revenue generated by Vizio's digital platform product offset lower sales of its smart TVs and soundbars during its most recent quarter, the company revealed this week.
On Wednesday, Vizio disclosed that its third quarter net income was $2 million (1 cent per share), reversing a net income loss of $18.6 million (10 cents per share) recorded at this time last year.
Overall revenue was $435 million for the quarter, an increase of over $26 million reported last quarter, but down from the $588.3 million Vizio generated last year.
The company shipped around 1.2 million smart TV sets during the three-month period ending September 30, about 15% fewer than what it shipped last year.
Vizio said its lower hardware sales was offset by higher revenue across its Platform Plus business, which includes the streaming SmartCast platform as well as Vizio's free, ad-supported streaming TV service WatchFree+. Platform Plus revenue jumped to $128 million for the quarter, a year-over-year increase of 48%.
The higher revenue was particularly impressive for Vizio, considering the company barely added new customer accounts over the quarter. On Wednesday, Vizio said its active Platform Plus user base was 16.6 million accounts, up from 16.1 million reported three months ago.
Like other streaming platforms, Vizio sells advertisement space on the home and menu screens where users access to streaming apps. It also offers commercial inventory within some content streams on its WatchFree+ service.
On a conference call with investors, Vizio's Chief Financial Officer Adam Townsend said increased use of Platform Plus helped revenue grow to a quarterly record of $128 million, which accounted for nearly 30% of Vizio's revenue. Vizio also added nearly 160 new advertising clients for Platform Plus, which helped the company generate $97 million over the quarter, a 47% increase compared to last year.
"We believe that CTV [connected TV] advertising continues to grow faster than the overall ad market, and our advertising business continues to outpace the growth within CTV," Townsend said.
That said, Platform Plus is only useful to a Vizio TV household if it has the streaming apps that a viewer wants.
William Wang, Vizio's chief executive officer, affirmed on Wednesday that Platform Plus currently supports 135 popular and niche streaming services, including Netflix, Amazon Prime Video, Apple TV+, Peacock, HBO Max, Disney+, Hulu and Discovery+.
Historically, Vizio has worked directly with streaming services to develop apps for Platform Plus, which has effectively locked out startup and independent developers who might lack the knowledge of "the right people" within a company to get their streaming service in front of Platform Plus users. Over the summer, Vizio took a substantial step to remedy this by launching a dedicated developer program, which Wang said was tasked with optimizing and accelerating the "onboarding process for new features and content partners."
"This program is available nationwide and helps connect certified developers and content distributors," Wang said. "They get smart to build apps and experiences for future smart TVs. We are excited to bring the opportunity to the developer market."
It also offers additional revenue opportunities for Vizio. Mike O'Donnell, Vizio's chief revenue and strategic growth officer, said as more streaming services become integrated within Platform Plus, the company may take a cut of revenue earned from these services, similar to what Roku and Amazon do with their platforms.
"We expect the business model to run similar to how the business model works today, a cut or a share off of the dollars generated on our platform," O'Donnell said.