Okay. Good morning, everybody. or good afternoon on the East Coast. Please note that important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, all appear as a handout available in the registration area. I am really excited to welcome to the conference as a speaker for, I think, the first time on VIZIO, I believe. Yeah. You're right. Adam Townsend, CFO. Adam, thanks for being here. Thanks for having me. Good to see you. Great to see you. We've talked a lot this week at the conference about the connected TV marketplace, and sort of strategic positioning. Roku, one of your competitors- Sure Anthony Wood was here on Monday. You guys seem to be navigating what is certainly a competitive market with some pretty big players pretty well. You know, still growing the business nicely. What would you describe as sort of the key elements of VIZIO's strategy or business model that's enabling its success? Look, I think, Ben, I think what's interesting is that from a position of VIZIO has been out in the marketplace for two decades. Really, this last year was our 20-year anniversary of VIZIO. VIZIO has established itself over that timeframe as a well-understood value player in the TV business, right? From a consumer standpoint, understanding who we are, that's well-established. What's been great is that over the last 7+ years, we've made a pivot to invest more in understanding the operating system, the platform, controlling your own destiny, controlling that access point to the home. As a result of that, we're kind of finally coming up that curve. We've put a number of years into this. We've now built out over the last two years our own ad sales capability and team that's now executing on this opportunity. We are in the kind of growth part of the, of the ecosystem, I would say, where CTV in general is gaining share, and there's massive consumer shifts in terms of viewing, and the ad dollars are beginning to follow. For us, specifically in that ecosystem, we're sort of the new players, right? Yeah. We're becoming established, building relationships with advertisers, brands, agencies. What's great is now we're at a scale that has started matters to those players. Two or three years ago, we were at, you know, seven or so, sub 10 million monthly active users. We're now over 17 million. When you think about it from an advertiser standpoint, when they're trying to replicate viewer reach that has been lost out of linear TV, two years ago, there was only a couple places to buy that in CTV. Yeah. Today, we are now another destination. We think that's really been benefiting us. We grew our advertising 25% in the fourth quarter. Outpaced, you know, many of our peers. We're, you know, really proud of the execution of the team and a lot more to come from us. I'll ask you the obligatory sleep-at-night question. What are the things you worry about? What are the biggest challenges to sort of you know, capturing the opportunity as you see it? Yeah. I think it really comes down to focus. I think as you look at the marketplace, there's many opportunities going on at once. We have limited resources at the end of the day. Every company does. I don't care how big you are, you have some version. Yeah. Of limited resources. To keep the team focused on executing on what's gonna move the needle, how do we build and prepare ourselves for the future and be able to capture this growing marketplace in the right way for our platform, that means engineering resources. It means creating, you know, great roadmaps. It's team, you know, continuing to kind of flesh out where we are. Again, we're only a couple of years into this in terms of really having these overall capabilities, and we've gotta keep the team focused. When I think about, like, winning in the CTV market, you have to sort of win twice. You gotta win with consumers and. Mm-hmm Win with publishers. Mm-hmm. Mm-hmm. What is VIZIO doing on both of those sides to really differentiate itself in the marketplace? Yeah. I think about it the same way. When someone walks into a store, they gotta decide which TV to buy. That's the gaining the access to the home, right? How do we gain households? Yeah. That comes down to our long legacy of having a great product at a really attractive price, right? Working very closely with our retail partners and our suppliers to make sure we have consistent access to product, that we put that into the retailers' hands, that we work with them in their merchandising to drive growth and awareness. Also working with the broader kind of tech review community to make sure that our TVs are being reviewed well and getting good star ratings from consumers and great recommendations from powerful voices in that, the influencer world. When you put all that together, that helps drive awareness and the purchase of the product. Once you're in the home, we have to have a great user experience. That user interface, the streaming capability, the content we bring to the platform, the overall value proposition that we're bringing to consumers has gotta be strong. We've built out our platform over the last several years, bringing new features, new capabilities to it, expanding our content offering. We now have all the major apps and then some, you know, on the platform. Plenty of content there. We've built out our own WatchFree+, which is our. Mm-hmm FAST channel service, similar to, say, a Tubi or a Roku Channel. That's now over 260 free ad-supported channels across all genres to consumers. We also use our data, our viewership data, to inform us about what to go get. When we know our consumers over-index in a particular genre or category and we need more content in that category, we can go out and find that and source that content for them, again, to bring a great value proposition back to them. You're basically getting a VIZIO TV with what I would call kind of free cable TV in the form of WatchFree+, and then you can subscribe to any of the services that you want or use in the additional, available on the platform. To your point about content partners as well, that is a great customer acquisition vehicle for those. They need to go come through these CTV platforms to get access to the home. We value the partnership from the content standpoint. We want the consumers to have a great user experience, and that brings ad dollars over as well. Yeah. I'd imagine you're probably earlier in your journey on the second piece, the content publisher side relative to sort of your long history at retail, et cetera. Yeah, we are. I mean, I would think that we've, you know, we've basically brought, like I said, all the major apps are on there now. Yeah. There's no big hurdle to develop to be able to be on our platform, so we've solved that for them. Mm-hmm. You know, there was a period a couple years ago where we, you know, we didn't have HBO Max, we didn't have some of those Discovery. We've since launched those, from a programming and content standpoint, we filled those gaps. It's available to the consumer. That's right. More to do with them in terms of marketing, helping them understand the power of our Home Screen. If they wanna acquire customers, retain customers, or drive people to their service. We can partner with them in a lot of different ways using our Home Screen, our viewership data, and then help support their apps. That's a great overview. Let's talk a little bit about your 2023 outlook. You guys reported earnings, I think that was last week. Was that last week? I think, yeah, something like that. Yeah, I think so. something like that. Yeah, I think so. Feels like a long, longer than a year ago, maybe. Yeah. What are the priorities for you and William and the team for this year? What are you guys focused on? Yeah. I think it's again, continuing to build out capabilities, features, and sort of drive awareness in the broader marketplace about us as a destination for advertisers to reach viewers. Mm-hmm. Us as a destination for content companies to be able to find subscribers, find viewers for their service. For us, reinvent and keep developing capabilities and features that sort of, in some ways, redefines what a smart TV is. You know, at the end of the day, we view a smart TV as something that can be so much more than just a video playback service. Yeah. Right? It's basically today, it's sort of a computer on the wall, right? It's the biggest screen in the home. What else can we bring and develop to serve those various constituents and help drive user experience? I think we're focused on that. In this market, obviously, there's uncertainty in the macro environment. We're gonna be very disciplined around cost management. Mm-hmm. We were in pretty rapid growth phase over the last couple years of building out the engineering team, building out the ad tech capabilities, building out our ad sales teams. You know, supporting the organization from a finance, accounting, and public company standpoint 'cause all new to us, right? We're only out in the market now a couple years. I think that's largely behind us. Now it's about controlling the SG&A cost, making sure we're efficient, so we can be as competitive as possible in that hardware business to acquire households and drive growth into the platform business. Speaking of the platform business, you reported, I think net revenue growth of 30%. Mm-hmm. In platform, plus ARPU up 30. SmartCast ARPU up 30%+ year-on-year. The ad market in Q4 by all other indicators was pretty terrible. My sense is from the conference that Q1 is still pretty tricky. What's allowing you guys to continue to put up these bigger growth rates? Is it a lot of the stuff we just talked about? Yeah. I think it's, I think it's awareness. I think it's getting more servable impression growth, so getting more time spent in streaming. We're seeing The time spent by our users in our streaming platform outpaced total usage, which means they're skewing more and more. You're talking about WatchFree+? SmartCast in general. More broadly. Okay. Okay. When they turn on the TV, they're increasingly spending more time in that SmartCast streaming environment. Some of that's obviously gonna be on non-ad supported SVOD, right? Some of it's gonna obviously, and hopefully more and more, is gonna be in WatchFree+ and other ad-supported where we have economics. In general, we're seeing consumers now spend over 50% of their time, about 54% of their time when our TVs are turned on in that streaming environment. Mm. That's up significantly from the last couple years. What does that mean? It means that we've given them the content they want. They're understanding how to use it. They're coming there more and more, and that allows us an opportunity to grow servable impressions. To your point, we grew advertising 25% in the quarter. We definitely saw the slowdown that everyone saw in February. It seemed like that was mostly in the programmatic space. Yeah. That really evaporated in the last couple weeks of December. We have now seen that kind of start to come back. January picked up a little bit from where we were in where we finished the year in December. February built on that, and so far here in March, it's actually pretty encouraging. We're seeing some real return- Oh, that's great. Particularly in that programmatic space. Oh, good. How much has the sales force been scaled up? You guys have been hiring, I think, quite a bit as you've built this business out. Are there more opportunities to get more productivity out of that? Because you've also talked about being pretty careful on expense and hiring from here. Yeah, exactly. We're at a pretty good level now in terms of the actual sellers. Okay. Supporting our ad business. We're at about 30 people there. What that level allows us to do is both concentrate on kinda broad general market as well as special categories. At that kind of scale, we're able to have dedicated people focused on auto or CPG or pharma, for example, in addition to the team that's focused on general market. Media and entertainment obviously being a very important category. We're well-served there with a great team in place. It's about going out and building relationships with the brands in those various categories, building relationships with their ad agencies. Again, educating them about us as a destination to reach viewers. We've gone through a couple now cycles on the upfront. Each year we've sort of doubled our take. I wanna continue to build on that, keep growing those relationships. The viewership is there. It's coming. You know it. You've seen the cord cutting. Yeah, yeah. You know where the viewers are. The ad dollars have lagged, right? Issues around whether it's comfort with measurement, comfort with where those video impressions are gonna be served. There's plenty of room to go, and we gotta just keep educating. Yeah. You guys, I think, reported 400 or nearly 400 advertising partners in Q4 relationships. Are there particular verticals? You mentioned media. It's sort of an obvious one. Are there areas where you're doing well or where maybe, you know, there are bigger opportunities 'cause you're under-indexed? Yeah. I think both. I mean, some have really moved quickly. Mm-hmm. You know, I think we've seen real strong growth in financial services and insurance as a subcategory there. Brands like GEICO and Progressive have been very progressive. Well done. See what I did there? Moving into it, and that's been really helping us, you know, a lot. I think you're seeing big brands in auto, CPG, quick service restaurants. Those categories were all up about 100%, so double year-over-year even in the fourth quarter. Yeah. Market as we've all defined it. The fact that they're kind of waking up, coming there, understanding how to get to viewers is a great opportunity. We'll build on that. I think we're represented across all the major ad categories today. I don't think there's any of the traditional TV categories that we're not represented in. Okay. Let's, we'll shift gears a little bit. I wanna ask about the non-advertising revenue piece. Mm-hmm. Actually, it was your biggest contributor to growth in Q4. I think it was up over 50%. Yeah, it was. You are expecting that to moderate. Part of that's the comp. Just talk about the data licensing business in general and sort of how you're thinking about the opportunity and future growth. Yeah. Our data licensing business comes from the fact that we have proprietary built-in ACR data capabilities. What's different about that for us is that from its start, it is part of an integrated operating system with the hardware. We're not You know, dongle companies have to know what's going through the dongle. We have what we call glass-level data. Anything that hits the glass through any input to that TV, we can detect and identify. Whether it's what's being consumed from a set-top box input, a gaming console, streaming native on the platform, all of that can be detected, obviously at an a privacy. Mm-hmm. Level. What it does is it enriches the data so that we can make a better user experience for our consumers, and also package that and sell it to advertisers for targeting purposes or personalization capabilities. That part of the data, the customer segmentation data, we keep to ourselves. We don't license that out. If you wanna target our viewers, you have to come through us, right? That's part of it. The other part, which is really tied to more measurement, is in the marketplace. Again, with 17 million plus, you know, monthly active users, it's a great data set. It's very, it's representative, it's virtually real time, it's very powerful in the market. What we're seeing is a lot of our measurement partners out in the marketplace are using our data as sort of a cornerstone of their own products. They're building measurement tools that they then sell based on our core data. Are these measurement companies or agencies or all of the above? All the above are our clients. Yeah. As we become. This is why we did the deal with Nielsen as well. As you become the cornerstone and the data supplier to that large measurement product, you become essential, right? We think that our data is really valuable in the marketplace. It's becoming more and more essential to these companies. That will give us, you know, a nice hand to play over time to keep driving growth. We will be lapping on the large deal we did with Nielsen around this time last year. I don't want anyone to extrapolate the 50% growth rate. Understood. Still very healthy, nice, strong, high teens, double-digit type growth, but just not 50%. Yeah. Makes sense. Okay. I wanna talk about scale of your audience. you know. Mm-hmm. Pretend we're all advertisers. Pretend this is an upfront meeting. Where's the celebrity? Yeah. Celebrity guest. Exactly. You know, you shipped 1.5 million Smart TV units, I think in Q4. you know, you continue to build the audience. Give us a sense, you mentioned the 17 million active accounts, but what is the audience you're sort of gonna go to market with from a, and how do you sort of convince advertisers that this is an audience worth investing in? Yeah. I think when you look at overlays of, geographic dispersion and average income levels, there's a variety of data points that we can put in. Because of who we are as a mass market brand and sold through the biggest box retailers in the country, we're really representative of the U.S. population. We don't skew to certain subsets of demographics. Mm-hmm. We don't skew towards the coasts. We are really representative. From that standpoint, for big brands that are just trying to get extended reach, we are a great solution for them. The more they understand that, I think that the better it is. Then you can get into the sophistication of how much do they wanna do in terms of targetability and addressability. That's the question is how do they use our tools to- Sure. Advance those initiatives. but in terms of just, hey, you wanna buy sort of America? Like, we are here. Let's talk a little bit about engagement too. Obviously, that's gonna matter. Yeah. Quite a bit from a upfront point of view and how you sell the business. You're at 3.2 hours streamed per active account per day. That's growing. Mm-hmm. What are you doing, operationally and from a product point of view to move that consumption more and more into the SmartCast environment? It comes down to quality and experience and having the right content and then the right message to the consumer, right? We spend a lot of time looking at, like, back to my earlier point, what content do we have that meets the needs of our consumers? For example, if we know someone is a avid viewer of motorsports because we know what they watch on NBC Sports on TV, maybe they're a Formula One fan, and we've recently done a deal with Discovery to bring MotorTrend, their channel, into our FAST channel, WatchFree+. Well, that household should know that we have that content now. We will use our home screen to promote that channel and drive engagement into it, you know- Mm-hmm. By virtue of that funnel. We do that, you know, we multiply that across a bunch of different categories, right? That, it starts there. Have a good user experience. We recently did an upgrade to our WatchFree+, electronic programming guide. Improved the speed of it, less lag, easier search, quicker reference. We just look and feel much more clean, easy to use. Mm-hmm. Better to understand. Reduce the friction points and increase the probability that someone's gonna spend an extra 10 minutes, 20 minutes, 30 minutes in that product. We want it to be as good as possible so that they stay there as long as possible. Meet their needs from a content standpoint, and then help our advertisers and us from an engagement monetization standpoint. Yeah. That's kind of the general mousetrap, if you will. Okay. I would imagine, correct me if I'm wrong, that engagement, on WatchFree+ is the most valuable to you from a revenue point of view? It's the highest single destination for monetization that we have on the platform. Yeah. Absolutely. Tell us a little bit about the engagement trends there, and what is the sort of product or, you know, if you think about innovation pipeline around WatchFree+? Yeah. Over the course of the next year or so to make that an even more popular destination? Yeah. We've been really pleased with the growth in WatchFree+. We've made a number of enhancements over the last 18 months that has sort of changed the sourcing of what, the content, that we bring on the platform. Before, when we didn't have an ad sales team, we didn't really have a biz dev team, we didn't have a content acquisition team, we were relying on just suppliers. You know, Pluto was an important partner and continues to be an important partner for us there, but they were largely kind of supplying what our WatchFree+ was. Since as we've built up the team and invested in that capability, we've now been able to go out and curate content ourselves, source that, tie it back to what our viewership data's telling us about what our consumers want and what they're looking for, and flush that out. We've made it a better product. As it's become a better product, engagement's gone up. The EPG upgrade I mentioned has also helped that. We'll continue to invest in that product because it is absolutely, you know, an important destination, you know, on the platform. We also monetize, you know, third-party apps where we have ad- Sure. Yeah. Sure. Yeah. Ad inventory as well. The video business is much, much larger than just that, it is probably, you know, the single strongest destination. We need to keep making it a great product, make it relevant, make it awareness, drive awareness. Use our home screen to help promote that. Are you seeing FAST in general as a growing area of engagement with consumers? Yeah. Sort of like the most recent push by media companies. Yeah. Into this, what almost feels like linear TV reinvented. 2.0 or 3.0. 2.0. I don't know. I don't know which point O we're on at this point. I agree, it kinda caught many by surprise, including myself. I think in some of the early days of those FAST channel products, you're like, "This is just. We live in an on-demand world. Why are we going back to linear? Yeah. Back to the point, it's a great user value proposition, right? It's basically free cable TV. What it's actually done for this content partners and the studios is given them a new outlet to leverage their content library. If you own a bunch of titles, in today's world, you're not gonna go out and try to launch and program a linear cable network. Just, you can't do it, right? A streaming service maybe. Yeah. Or a subscription streaming service. You can come and the barrier to entry to launching and programming a FAST channel is very low. Yeah. For us, as the distributor, it's a very low-risk proposition as well because it's a partnership where a rev share structure happens, right? We bring in that content. Our ad sales team will sell it, and we'll rev share back to the partner. Yeah. If no one watches it, we didn't spend any money. They're not gonna make any money. If someone does watch it, we're both in that game together. It's opened up opportunities for maybe non-traditional, you know, content owners to monetize their libraries in a brand new way. We're happy to be their partners. Yeah. And work closely with them on that. Great. I wanna shift to ARPU. Also, if the audience has questions, for Adam, please, raise your hand and we'll let you fire away. ARPU was up, I think, 30% year-on-year in Q4. Yeah. Can you help us sort of unpack the platform revenue, at least on a relative sense, what are the biggest drivers of the business today, but also the growth and monetization that you're seeing? Yeah. Undoubtedly, advertising is the. Yeah. Sort of the biggest driver. I know the growth rates were bigger on data for this last year, but advertising in terms of long tail, I mean, you know, large TAM is really kind of where the focus is. Two years ago, when you looked at our ARPU, advertising was about 28% of that total. Today, it's over 70%, it really shows like what's happened now that we've kinda gotten there. You know, I think that, you know, ARPU in general, we look at the marketplace in terms of what the economics of the CTV marketplace are, is supporting today. We look at some of our peers out there, obviously some of the larger peers to say, "Okay, if they're able to achieve that, what does it take for us to be able to reach their numbers?" We target that as a near-term opportunity, and we're closing that gap nicely. We're up to $28 in ARPU. I think some of our bigger peers, like Roku, for example, is in the low 40s. Yeah. That's a moving target, but we're gonna continue to drive into that. It goes back to more engagement, more time spent in ad-supported content, more impressions, servable impressions. The economics of data is important. Our sponsor buttons on our remote controls is a piece of it. It all just kinda feeds together. As we've added capabilities like our VIZIO Account, where you can now subscribe to an SVOD service through our platform, you know, there should be growth in subscription revenue as well over time. That's a place where we're sorta recent to it. Mm-hmm. Room for growth. Makes sense. Yeah, go ahead. Sorry, I'm new to the business, but I'd love to just understand your hardware installed base more. Kinda what's the average life of a TV, and then how do you think about growing that installed base of users and kind of what's the out of your 17.5 million users. Mm-hmm. What percentage of the actual TVs installed base that is, and how's that trending? Mm-hmm. And also, for the next device or next TV, replacement TVs, like what percentage of your customers, continue with VIZIO- Yeah. When they replace their TV? Help us understand that aspect. Sure, sure. We've been selling SmartCast-enabled televisions since 2016. I would think about it as that's the starting point, 'cause that's the current technology that allows us to do what we do. It's the current technology that allows us to have backwards compatibility with our devices. If you bought a TV in 2018 and we added a new feature now to the current fleet, we can, from a software update standpoint, we can send that back to you and have, and have that be an enhancement to your now, what, 5, 6-year-old TV. That's the population that we look at. When a new TV is sold, we tend to see about a 90% conversion into becoming an active account. What I mean by that is that someone has to connect it to the internet and use it in that month to qualify as an active account. Some TVs don't ever connect to the internet. They might have bought it to be a monitor. They might have bought it for some other use case. They may be a loyalist to a different operating system, and they decide not to connect the TV, but they plug in a dongle and connect that. That's fine. That happens. Generally, we have a very high conversion of newly bought TVs to become connected and active. Over the time, there's obviously, there's a base that grows, right? You're gonna have some attrition out of that base. Now to your question about customer, keeping our customer. We are just now getting better data on that because before, you know, there was not a VIZIO Account where you would set up and put in your information, so we didn't know as much. We know more today about our users than we did in those early days of the TV. What we do know, and somewhat anecdotally, is that about 80% of our customers respond to surveys and say that they would recommend a VIZIO to their friends or family. That tells us a pretty high indexing in-intent to continue to be with us. As we bring out new features, new capabilities, new enhancements to the hardware, the probability of continuing to keep that customer is pretty strong, I think. I think we're optimistic about that. What happens though in our active account install base, though, is if you replace the TV, that 2018 model I just mentioned about that you bought, and you replace it with a model next year and recycle the old one, you're not a new active user, even though we sold another TV, right? There's a dynamic around that. That's why we look at market share very closely. We wanna be highly competitive in terms of market share 'cause that's gonna drive the growth in the flywheel of where we can go. We have been a top three, mostly, you know, kinda on an annual basis, in the market. Obviously Samsung, then there's, whether it's TCL or LG or Hisense, there's some movement within the other competitor in that top three range. That's largely kinda where we've been, we wanna continue to have a great product at a great value proposition with great features to kinda maintain that level and let that help convert into additional growth in our install base from an active account standpoint. Trying to grow your install base, I know I guess we're lapping COVID. Sure. With the growth of your hardware, right? going forward, yeah, are we- Yeah. What's our strategy towards, you know, getting that $17 million- Yeah. Users up and being aggressive? Yeah. Look, it's always a competitive. The TV market's been competitive for a long time, and VIZIO's had a long history of competing in a highly competitive environment. Nothing's changed from that standpoint. I think you're seeing some different dynamics with the competition for operating systems and what that means in terms of subsidies and who's pricing a product at what level. We've seen some pretty aggressive moves, even this holiday season was very aggressive. To your question, we expect to continue to be very highly competitive. We have more information about the usage of our TVs and what TVs by series and by screen size generate the best economics. We will lean in hard on the ones that we know we can generate a better ROI on. We don't have to cut pricing or be highly competitive across the entire board, but there are places where we're gonna be surgical and be very competitive for this exact reason. At the end of the day, selling the TV is about gaining a household. If we gain a household, I didn't answer this other part, 'cause the lifetime of a TV is roughly six to seven years. If you think about an ARPU now that's at $30 and growing from there, how much would you be willing to potentially lose as a CAC on acquiring the household by selling a TV and then monetize that multi-year ARPU opportunity? It's really kind of, not Trojan horse, but sort of think of it like that. Like, get into the house and then monetize the platform now that we have the capability to do this effectively. Do you have a question? Take one last one. Yeah, just curious on your visibility on when this market will recover from a hardware perspective? I know it's kind of hard to know. Yeah. Any innovations you're making on the hardware side. Yeah, great question. I mean, it is hard to know. I do believe that there are periods where companies are willing to price things in a somewhat irrational way. I don't think that's sustainable for the long term, so there's probably going to be some shakeout in the market. The fact that we have now created this dual revenue model gives us strategic and financial flexibility around that. We're driving growth in a platform plus business that's now approaching, you know, $500 million in annual revenue at a 60% type gross profit margin. That gives us a lot of flexibility to think about how do we keep being competitive on the hardware side to drive overall growth. Not every company has that dual revenue structure. We'll see how it shakes out. It's gonna be competitive. We're gonna be in there to play. We have been for a long time. It's not new to our team to be competitive in these, in these dynamics. Really glad that we're continuing to invest in and expand the capability on the platform side. Great. Adam, thanks so much for coming. Happy to be here. Thank you. Thank you, everybody.