31% Decline in Vizio’s Q2 TV Shipments ‘Not Unexpected,’ Says CFO

Vizio’s smart TV shipments slumped 31% in Q2 to 1.1 million sets, driving device revenue 9% lower than a year earlier, to $335.6 million, the company reported Wednesday. But Vizio’s Platform+ business, including SmartCast streaming, generated 146% revenue growth in the quarter to $65.5 million.

Vizio’s life as a public company began late March, when it said it was “transitioning away from its legacy” as a device supplier, emphasizing ad monetization growth through Platforrn+ (see 2103250029). Platform+ contributed 16.3% of total revenue in Q2, compared with a 6.8% contribution in the 2020 quarter and 3.4% in 2019's Q2. Vizio generated more ad revenue in the first half of 2021 than in all of 2020, said Chief Financial Officer Adam Townsend on a call Wednesday with analysts and investors. Platform+ gross profit grew 167% year over year, surpassing device gross profit for the first time, he said.

The 1.1 million TVs that Vizio shipped in Q2 were down from 1.6 million a year earlier, the first full quarter of COVID-19 lockdowns that sent demand for consumer tech products skyrocketing to historically high levels. It was the fewest TVs Vizio shipped in a quarter since 2019's Q1, when it also shipped 1.1 million sets. The Q2 revenue and unit declines in Vizio’s TV business were “not unexpected, given the unique surge in demand from stimulus checks and the stay-at-home orders at this time last year,” said Townsend.

Industrywide “supply and logistical challenges” contributed to the decline in unit shipments, as did the tough comparisons with Q2 a year earlier, said Townsend. “The good news is, consumer demand remains robust and average unit prices continue to shift higher.” Vizio is working closely with its suppliers and distribution partners to “increase product inventories throughout our retail channels,” he said.

Vizio expects to report sequential growth in its TV shipments for Q3, “as we continue to replenish low channel inventories and benefit from sustained demand,” said Townsend. It’s projecting year-over-year TV shipments will decline from the 2.1 million sets shipped in 2020's Q3, “as we lap the anomaly of last year’s pandemic-driven surge,” he said. The industry’s “supply-chain dynamics have resulted in some delays and challenges,” he said. But “based on what we know today, we expect these constraints to have a relatively modest impact on our full-year shipment volumes,” he said.

Partially offsetting TV revenue declines in Q3 and full-year 2021 will be the increasing sales in the mix of more premium, larger-screen sets commanding higher average selling prices, said Townsend. Vizio also recently expanded its distribution relationship with Amazon, “which we think strengthens our alignment with the growth and share gains within the online sales channel,” he said.

With COVID-19 still “going on,” it’s hard to predict “what will happen next” in the supply chain, said CEO William Wang. The semiconductor and component shortage situations are “getting better from what we see right now,” and the logistics issues seem to be “getting better as well,” he said. With the delta variant so “unpredictable, we don’t really know what’s going to happen,” he said. Wang used the call to announce that fuboTV will be added to the SmartCast streaming platform in the "coming weeks," following earlier agreements with discovery+ and BET+ (see 2108030002). Vizio has “some visibility” into the supply-chain woes for 2021's second half, and “we have considered it in our forecasts for the rest of the year,” said Townsend.