Benzinga | Jun 23, 2021 04:08PM EDT

Vizio Aims To Expand Its Higher Margin Software Business With IPO Proceeds: WSJ

* Vizio Holding Corp (NYSE:VZIO) is shoring up its software business investment amid budding streaming content demand, the Wall Street Journal reported.

* Vizio earns around 90% of its revenue from selling hardware like internet-connected TV sets and soundbars. However, the software unit's profit margin was 73.7% for the March 31 quarter, beating the hardware business margin of 10.6%.

* Vizio is devoting more funds in 2021 to the software unit Platform+ development and hiring engineers and advertising-sales employees for the department.

* Vizio plans to use the cash raised from its $257 million March initial public offering to fund the expansion partly.

* The Platform+ unit includes SmartCast operating system for its Vizio TVs that allow users to stream content from various services.

* Vizio generates revenue through advertisements and by selling and renting streaming content to consumers.

* Vizio is investing funds to tweak the consumer's content search and recommendation process.

* Vizio's operating expenses rose 97% Y/Y to $72.9 million for the March 31 quarter ended March 31, partly due to higher research and development costs. R&D spending jumped 165% Y/Y to $9.8 million.

* The revenue grew 52% Y/Y to $505.7 million. The net income plummeted 64% Y/Y to $3.3 million.

* Vizio plans to expand its staff by 52% Y/Y to 800 in 2021, mostly in engineering and sales.

* Vizio's initiatives resemble Roku Inc (NASDAQ: ROKU) streaming ad business expansion plans, Needham & Co analyst stated.

* Vizio has opted not to develop its content or expand beyond the U.S. at present.

* Price action: VZIO shares closed 6.02% at $23.06 on Wednesday.