Shares of TV maker Vizio (NYSE: VZIO) jumped as much as 28% in trading on Friday after the company reported third-quarter 2023 financial results. Shares closed the day up 26%.
The good from the bad
Revenue was down from $435 million a year ago to $426.2 million in the quarter, but Platform+ revenue jumped 22% to $156.2 million. Net income was also up 590% to $13.8 million, or $0.07 per share.
Analysts were expecting revenue of $425.6 million and earnings of $0.02 per share, so results zoomed past that.
Betting on a digital future
Vizio is known for making TVs, but it's trying to leverage software to grow margins and profits. Management said it is looking to partner with other OEMs to include Vizio's connected TV platform and have launched even more channels on the platform.
Device sales continue to fall, but that's why investors are focusing on the Platform+ revenue. Gross profit is over 60% in Platform+ and at the current rate, it would be half of the company's revenue in a few years.
I think Vizio is well positioned to continue its platform growth, but the stock is still relatively expensive given the low profitability. I also see the connected TV space as very competitive as more companies try to gain market share and distribute the same content.
For today, those fears are being overlooked on a good earnings report, but keep in mind the downside if next quarter isn't as strong.
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