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Vizio’s earnings show Wall Street why Walmart wants to buy the smart-TV maker

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Vizio Holding Corp., the TV maker being bought by Walmart Inc., reported fourth-quarter results Tuesday that beat expectations, helped by a jump in advertising and smart-TV platform sales.

The results came after Walmart
WMT,
-0.02%

last week said it would buy Vizio for $2.3 billion. The retail and e-commerce giant hopes the purchase will help it reach more people with digital ads in stores and on their screens at home and harness the consumer data that falls its way in the process.

Shares of Vizio
VZIO,
+1.38%

rose 0.2% after hours on Tuesday. The stock is up roughly 6% over the past 12 months, thanks largely to news of Walmart’s purchase.

Due to that deal, Vizio did not hold a conference call to discuss the results, and it didn’t offer any financial forecasts. Walmart has said it expects the purchase to close during its fiscal year, which wraps up at the end of January 2025.

Vizio reported fourth-quarter net income of $13.2 million, or 7 cents a share, compared with $6.3 million, or 3 cents a share, in the same quarter a year earlier. Revenue came in at $502.6 million, down from $533.5 million in the prior-year quarter.

Analysts polled by FactSet expected Vizio to earn 1 cent a share, on $499 million in sales.

Sales in the company’s Platform+ segment — which includes Vizio’s viewing-data analytics as well as the platform that allows viewers to use streaming apps — jumped 28% year over year. Advertising revenue was up 36%.

When the Wall Street Journal first reported on the possibility of a deal, analysts said it would give Walmart access to Vizio’s operating system and reserves of viewer data. That data would help the company serve ads more precisely to people watching TV at home or in Walmart’s stores, where digital screens are increasingly used to advertise deals.

Brands pay Walmart for digital ad space on those screens and on Walmart’s website and apps. The company’s advertising business has grown rapidly over the past year, and similar ad sales have become a bigger priority for companies like Amazon.com Inc.
AMZN,
-0.68%

and Uber Technologies Inc.
UBER,
+0.50%
.

In announcing the deal last week, Walmart noted that Vizio offers a service that allows viewers to stream shows and movies for free with ads, as well as an advertising platform that has relationships with more than 500 advertisers. Walmart said the deal would bring together Vizio’s affordable TVs with the retailer’s own advertising reach, and capitalize on the growth in connected TV.

Executives, during the retailer’s earnings call last week, did not elaborate much beyond that.

“Marketplace and advertising are key drivers of profitability growth, as we’ve already discussed, and this acquisition accelerates the build-out of our advertising platform into the connected-TV business, which will be exciting,” Walmart Chief Executive Doug McMillon said on the call.

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