Vizio Holding Corp, the renowned TV maker recently acquired by Walmart Inc., has released its fourth-quarter results showcasing a significant overperformance. This success can be attributed to a surge in advertising sales and smart-TV platform revenue.
Acquisition by Walmart
Walmart announced its acquisition of Vizio for $2.3 billion, marking a strategic move to expand its reach through digital advertising. The deal is expected to be finalized by the end of Walmart’s fiscal year in January 2025.
Positive Market Response
Following the news of Walmart’s acquisition, Vizio’s shares (VZIO) saw a 0.6% increase after hours on Tuesday. Over the last 12 months, the stock has risen by 6% driven primarily by the anticipation surrounding Walmart’s involvement.
Financial Highlights
In the fourth quarter, Vizio reported a net income of $13.2 million, or 7 cents per share, surpassing the previous year’s $6.3 million, or 3 cents per share. Although revenue dipped slightly to $502.6 million from $533.5 million, it still exceeded analyst expectations.
Analysts had predicted earnings of 1 cent per share along with $499 million in sales. Notably, Vizio’s Platform+ segment, which encompasses viewing-data analytics and streaming app platforms, experienced a substantial 28% increase in sales compared to the previous year. Furthermore, advertising revenue surged by an impressive 36%.
These results indicate Vizio’s strong performance and promising prospects under Walmart’s ownership, solidifying its position in the competitive TV market landscape.
Walmart Expands Advertising Reach with Vizio
When the Wall Street Journal initially reported a potential deal between Walmart and Vizio, analysts highlighted the significant benefits it would bring. This partnership would provide Walmart with access to Vizio’s operating system and valuable viewer data. With this data, Walmart can target advertisements more effectively to customers watching TV at home or in Walmart’s stores, where digital screens are increasingly utilized for promotional offers.
Growing Advertising Business
Brands pay Walmart for digital advertising space on screens in stores, on the website, and apps. Over the past year, Walmart’s advertising business has experienced rapid growth, mirroring the trend seen in companies like Amazon.com Inc. and Uber Technologies Inc.
Vizio’s Advertising Potential
Walmart announced the deal, emphasizing Vizio’s unique offerings such as free streaming services with advertisements and an established advertising platform with over 500 advertisers. The collaboration aims to combine Vizio’s affordable TVs with Walmart’s expansive advertising reach, taking advantage of the increasing popularity of connected TV.
Future Growth Opportunities
During Walmart’s recent earnings call, executives hinted at the strategic significance of this acquisition. CEO Doug McMillon expressed enthusiasm for the expansion of their advertising platform into the connected TV sector, emphasizing its potential to drive profitability growth.
