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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________________
FORM 10-Q
_____________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 001-40271
VIZIO HOLDING CORP.
(Exact Name of Registrant as Specified in its Charter)
_____________________________________
Delaware365185-4185335
( State or other jurisdiction of incorporation
or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
39 Tesla
Irvine, California
(949) 428-2525
92618
(Address of principal executive offices)(Registrants telephone number, including area code)(Zip Code)
_____________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Class A common stock, par value $0.0001 per shareVZIONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
x
Smaller reporting company
¨
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  x
As of October 31, 2021, the registrant had 110,813,782 shares of Class A common stock outstanding and 76,814,638 shares of Class B common stock outstanding.



Table of Contents
Page

i


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements by terminology such as “anticipates,” “believes,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “could,” “would,” “will” or the negative of these terms or other comparable terminology. In particular, statements regarding our plans, strategies, prospects and expectations regarding our business are forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:
our ability to keep pace with technological advances in our industry and successfully compete in highly competitive markets;
our expectations regarding future financial and operating performance, including our Device business, and the growth of our Platform+ business;
our ability to continue to increase the sales of our Smart TVs;
our ability to attract and maintain SmartCast Active Accounts;
our ability to increase SmartCast Hours, including to attract and maintain popular content on our platform;
our ability to attract and maintain relationships with advertisers;
our ability to adapt to changing market conditions and technological developments, including with respect to our platform’s compatibility with applications developed by content providers;
the impact of the COVID-19 pandemic and related supply chain delays on our business, operations and results of operations;
our anticipated capital expenditures and our estimates regarding our capital requirements;
the size of our addressable markets, market share, category positions and market trends;
our ability to identify, recruit and retain skilled personnel, including key members of senior management;
our ability to promote our brand and maintain our reputation;
our ability to maintain, protect and enhance our intellectual property rights;
our ability to introduce new devices and offerings and enhance existing devices and offerings;
our ability to successfully defend litigation brought against us;
our ability to comply with existing, modified or new laws and regulations applying to our business, including with respect to data privacy and security laws;
our ability to implement, maintain and improve effective internal controls; and
our ability to maintain the security and functionality of our information systems or to defend against or otherwise prevent a cybersecurity attack or breach and to prevent system failures.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking
ii


statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

iii


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
VIZIO HOLDING CORP.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands except per share amounts)
As of
September 30,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$375,936 $207,728 
Accounts receivable, net356,765 405,609 
Other receivables due from related parties1,117 978 
Inventories23,683 10,545 
Income tax receivable14,092 1,315 
Other current assets82,047 55,460 
Total current assets853,640 681,635 
Property, equipment and software, net10,009 7,929 
Goodwill, net44,788 44,788 
Intangible assets, net45 131 
Deferred income taxes25,355 26,652 
Other assets12,782 13,847 
Total assets$946,619 $774,982 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable due to related parties$266,410 $209,362 
Accounts payable129,331 166,805 
Accrued expenses163,303 154,959 
Accrued royalties65,970 81,143 
Other current liabilities4,706 5,272 
Total current liabilities629,720 617,541 
Other long-term liabilities7,268 8,210 
Total liabilities636,988 625,751 
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 100,000 shares authorized and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
  
Series A Convertible Preferred stock, $0.0001 par value; 0 and 250 shares authorized and 0 and 135 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
 2,565 
Common stock, $0.0001 par value; 1,000,000 and 675,000 Class A shares authorized, 112,743 and 150,831 Class A shares issued, and 110,496 and 150,831 Class A shares outstanding as of September 30, 2021 and December 31, 2020, respectively; 200,000 and 0 Class B shares authorized, 76,815 and 0 Class B shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively; 150,000 and 0 Class C shares authorized, 0 Class C shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
19 15 
Additional paid-in capital292,016 98,885 
Accumulated other comprehensive income (43)873 
Retained earnings 17,639 46,893 
Total stockholders’ equity309,631 149,231 
Total liabilities and stockholders' equity$946,619 $774,982 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


VIZIO HOLDING CORP.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands except per share amounts)


Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net revenue:
Device$502,457 $545,511 $1,291,560 $1,221,252 
Platform+85,859 36,673 203,569 86,935 
Total net revenue588,316 582,184 1,495,129 1,308,187 
Cost of goods sold:
Device476,880 487,289 1,185,701 1,090,354 
Platform+28,551 6,109 60,339 23,346 
Total cost of goods sold505,431 493,398 1,246,040 1,113,700 
Gross profit:
Device25,577 58,222 105,859 130,898 
Platform+57,308 30,564 143,230 63,589 
Total gross profit82,885 88,786 249,089 194,487 
Operating expenses:
Selling, general and administrative88,683 37,371 234,274 97,286 
Marketing8,068 5,527 22,457 16,602 
Depreciation and amortization705 496 1,972 1,740 
Total operating expenses97,456 43,394 258,703 115,628 
Income (loss) from operations(14,571)45,392 (9,614)78,859 
Interest income (expense)89 (361)227 66 
Other income (expense), net(24)118 (178)509 
Total non-operating income (expense)65 (243)49 575 
Income (loss) before income taxes(14,506)45,149 (9,565)79,434 
Provision for income taxes4,060 10,095 19,660 17,772 
Net (loss) income $(18,566)$35,054 $(29,225)$61,662 
Net (loss) income attributable to Class A and Class B stockholders:
Basic$(0.10)$0.19 $(0.17)$0.33 
Diluted$(0.10)$0.19 $(0.17)$0.33 
Weighted-average Class A and Class B common shares outstanding:
Basic182,820 144,417 171,077 144,367 
Diluted182,820 147,093 171,077 147,064 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


2


VIZIO HOLDING CORP.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited, in thousands)


Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Other comprehensive income
Net (loss) income$(18,566)$35,054 $(29,225)$61,662 
Foreign currency translation adjustments101 299 (916)710 
Comprehensive (loss) income$(18,465)$35,353 $(30,141)$62,372 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


VIZIO HOLDING CORP.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, in thousands)
Preferred StockCommon Stock and Additional Paid-In CapitalAccumulated Other Comprehensive IncomeRetained Earnings (Accumulated Deficit)Total
SharesAmountClass A, B, and C
Shares
Amount
Balance at June 30, 2021 $ 184,915 $267,125 $(144)$36,205 $303,186 
Share-based compensation expense— — — 37,030 — — 37,030 
Shares issued pursuant to incentive award plans— — 3,388 5,371 — — 5,371 
Shares withheld to cover withholding taxes for stock awards— — (993)(17,396)— — (17,396)
Adjustment to IPO costs— — — (95)— — (95)
Foreign currency translation— — — — 101 — 101 
Net loss— — — — — (18,566)(18,566)
Balance at September 30, 2021 $ 187,310 $292,035 $(43)$17,639 $309,631 
Balance at December 31, 2020135 $2,565 150,831 $98,900 $873 $46,893 $149,231 
Share-based compensation expense— — — 97,510 — — 97,510 
Shares issued pursuant to incentive award plans— — 6,029 6,670 — — 6,670 
Accretion of preferred stock dividends— 29 — — — (29) 
Payment of accumulated preferred stock dividends(594)— — — — (594)
Conversion of Series A preferred stock upon IPO(135)(2,000)30,316 2,000 — —  
Sale of common stock in IPO, net of $13,700 of underwriting fees and other offering costs
— — 7,560 144,924 — — 144,924 
Forfeiture of RSA awards upon IPO— — (4,995)— — — — 
Shares withheld to cover withholding taxes for stock awards(2,431)(57,969)— — (57,969)
Foreign currency translation— — — — (916)— (916)
Net loss— — — — — (29,225)(29,225)
Balance at September 30, 2021 $ 187,310 $292,035 $(43)$17,639 $309,631 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


4


Preferred StockCommon Stock and Additional Paid-In CapitalAccumulated Other Comprehensive IncomeRetained Earnings (Accumulated Deficit)Total
SharesAmountClass A, B, and C SharesAmount
Balance at June 30, 2020135 $2,445 150,597 $96,790 $564 $(28,854)$70,945 
Share-based compensation expense— — — 1,339 — — 1,339 
Foreign currency translation, net of tax— — — — 299 — 299 
Net income— — — — — 35,054 35,054 
Balance at September 30, 2020135 $2,445 150,597 $98,129 $863 $6,200 $107,637 
Balance at December 31, 2019135 $2,445 150,597 $93,948 $153 $(55,462)$41,084 
Share-based compensation expense— — — 4,018 — — 4,018 
Shares issued pursuant to incentive award plans— — — 163 — — 163 
Foreign currency translation, net of tax— — — — 710 — 710 
Net income— — — — — 61,662 61,662 
Balance at September 30, 2020135 $2,445 150,597 $98,129 $863 $6,200 $107,637 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


VIZIO HOLDING CORP.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine Months Ended
September 30,
20212020
Cash flows from operating activities:
Net (loss) income$(29,225)$61,662 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization1,972 1,740 
Deferred income taxes1,297  
Share-based compensation expense97,946 4,018 
Allowance for doubtful accounts159 2,248 
Changes in operating assets and liabilities:
Accounts receivable48,682 26,574 
Other receivables due from related parties(138)4,403 
Inventories(13,134)(11,842)
Income taxes receivable(12,785)778 
Other current assets(27,015)(15,421)
Other assets1,315 (2,732)
Accounts payable due to related parties57,047 (18,646)
Accounts payable(37,334)(1,667)
Accrued expenses3,627 (15,193)
Accrued royalties(15,173)5,823 
Income taxes payable 3,591 
Other current liabilities(567)879 
Other long-term liabilities(942)1,815 
Net cash provided by operating activities$75,732 $48,030 
Cash flows from investing activities:
Purchase of property and equipment(3,579)(768)
Investment in third party(249) 
Net cash used in investing activities$(3,828)$(768)
Cash flows from financing activities:
Proceeds from exercise of stock options6,670 163 
Payment of dividends on Series A convertible preferred stock(594) 
Proceeds from IPO, net of $10,700 in direct offering costs
148,044  
Payments of other offering costs(2,850) 
Withholding taxes paid on behalf of employees on net settled stock-based awards
(53,928) 
Net cash provided by financing activities$97,342 $163 
Effects of exchange rate changes on cash and cash equivalents(1,038)710 
Net increase in cash and cash equivalents$168,208 $48,135 
Cash and cash equivalents at beginning of period$207,728 $176,579 
Cash and cash equivalents at end of period$375,936 $224,714 
Supplemental disclosure of cash flow information:
Cash paid for income taxes$29,722 $13,499 
Cash paid for interest$156 $140 
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities$ $4,318 
Cash paid for amounts included in the measurement of operating lease liabilities$731 $663 
Withholding taxes not yet paid for net settled stock awards$4,042 $ 
IPO costs not yet paid$270 $ 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)

Note 1. Organization and Nature of Business
VIZIO Holding Corp. was incorporated as a Delaware corporation on December 7, 2020 in order to facilitate the holding company reorganization of VIZIO, Inc. and its subsidiaries (together with VIZIO Holding Corp., the “Company” or “VIZIO”). VIZIO, Inc. was incorporated in the State of California on October 21, 2002 and commenced operations in January 2003. On March 12, 2021, VIZIO Holding Corp. acquired 100% of the outstanding shares of VIZIO, Inc.
The Company’s devices include high-performance Smart televisions (“Smart TVs”), sound bars, and accessories. These products are sold to retailers and through online channels throughout the United States. Additionally, in 2020 VIZIO launched Platform+, which is comprised of SmartCast, the Company’s award-winning Smart TV operating system, which enables a fully integrated entertainment solution, and Inscape, which powers its data intelligence and services. SmartCast delivers content and applications through an easy-to-use interface. It supports leading streaming apps and hosts the Company’s own free ad-supported video app, WatchFree+, as well as VIZIO Free Channels. The Company provides broad support for third-party voice platforms and second screen experiences to offer additional interactive features and experiences.
VIZIO purchases all of its products from manufacturers based in Asia. Since inception, the Company had purchased a portion of its televisions from one manufacturer who holds a noncontrolling interest in the Company through its ownership of voting common stock, however, in 2021 the Company did not make any material purchases. Since 2012, VIZIO has purchased a portion of its televisions from three manufacturers who are affiliates of an investor who holds a noncontrolling interest in the Company through its ownership of common stock. These manufacturers do not have any significant voting privileges, nor sufficient seats on the Board of Directors that would enable them to significantly influence any of the Company’s strategic or operating decisions. All transactions executed with the aforementioned manufacturers are presented as related party transactions.
Reorganization Transaction
On March 12, 2021, the Company implemented a holding company structure through the merger of VIZIO Reorganization Sub, LLC, a wholly-owned subsidiary of VIZIO Holding Corp., pursuant to an agreement and plan of merger, with and into VIZIO, Inc., with VIZIO, Inc. surviving as a wholly-owned subsidiary of VIZIO Holding Corp (the “Reorganization Transaction”). As a result of the Reorganization Transaction:
VIZIO Holding Corp. became a holding company with no material assets other than 100% of the equity interests of VIZIO, Inc.;
Each share of Class A common stock and Series A convertible preferred stock, respectively, of VIZIO, Inc. was cancelled in exchange for the issuance of one share of Class A common stock and Series A convertible preferred stock, respectively, of VIZIO Holding Corp.;
VIZIO Holding Corp. began consolidating the financial results of VIZIO, Inc. and its subsidiaries;
VIZIO Holding Corp. assumed the VIZIO, Inc. 2007 Incentive Award Plan and the VIZIO, Inc. 2017 Incentive Award Plan, and the stock options and other awards granted thereunder, on a one-for-one basis and on the same terms and conditions; and
All of the business operations continue to be conducted through VIZIO, Inc. and its subsidiaries.
Between the incorporation of VIZIO Holding Corp. on December 7, 2020 and the completion of the Reorganization Transaction, VIZIO Holding Corp. did not conduct any activities other than those incidental to its formation and preparation for the IPO (as defined below).
Forward Stock Split
On March 15, 2021, the Company amended its Amended and Restated Certificate of Incorporation to effect a nine-for-one forward stock split of the Company’s Class A common stock. The number of authorized shares of Class A common stock was proportionally increased in accordance with the nine-for-one stock split, and the par value of the Class A common stock was not adjusted as a result of this forward stock split. As a result of the stock split, each share of the Company’s Series A preferred stock became convertible into 225 shares of Class A common stock. All Class A common stock, stock options, RSUs and per share information presented within these unaudited condensed consolidated financial statements and related notes have been adjusted to reflect this forward stock split on a retroactive basis for all periods presented.
7

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
Initial Public Offering
On March 29, 2021, the Company closed its initial public offering (“IPO”) of 12,250,000 shares of its Class A common stock at a public offering price of $21.00 per share. The Company issued and sold 7,560,000 shares of Class A common stock, and certain existing stockholders sold an aggregate of 4,690,000 shares of Class A common stock. The Company received net proceeds of approximately $145.0 million after deducting underwriting discounts and commissions of approximately $10.7 million and offering expenses of $3.1 million. On March 31, 2021, certain existing stockholders sold an additional 1,709,274 shares of Class A common stock at $21.00 per share pursuant to the underwriters’ option to purchase additional shares. The Company did not receive any proceeds from the sale of shares by the selling stockholders.
Immediately prior to the completion of the IPO, 134,736 shares of Series A redeemable convertible preferred stock then outstanding converted into 30,315,600 shares of shares of Class A common stock. Immediately prior to the completion of the IPO, the Company filed its Amended and Restated Certificate of Incorporation, which authorizes a total of 1,000,000,000 shares of Class A common stock, 200,000,000 shares of Class B common stock, 150,000,000 shares of Class C common stock, and 100,000,000 shares of undesignated preferred stock. Immediately after the conversion and prior to the completion of the IPO, a total of 98,633,025 shares of Class A common stock held by William Wang and his respective affiliated trusts were exchanged for an equivalent number of shares of Class B common stock pursuant to the terms of certain exchange agreements. As a result, following the completion of the IPO, the Company has three classes of authorized common stock: Class A common stock, Class B common stock and Class C common stock. See Note 9 to these unaudited condensed consolidated financial statements for further information.
Impact of COVID-19
On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The challenges posed by the COVID-19 pandemic on the global economy increased significantly as the year progressed. In response to COVID-19, national and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. COVID-19 resulted in a net positive impact on consumer demand for the Company’s products in 2020 and through the first half of 2021 as the increased amount of time people spent at home, as well as stimulus check disbursements, led many people to upgrade their televisions. Overall, while the pandemic has had a positive impact on the Company’s total shipments, in the third quarter of 2021, the Company has seen demand moderate and has experienced the continued impact of supply-chain delays and increases in costs. The Company expects to see elevated costs at least through the fourth quarter of 2021.
Note 2. Summary of Significant Accounting Policies
Other than policies updated below, there have been no significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” of the audited consolidated financial statements for the year ended December 31, 2020, which are included in our prospectus filed pursuant to Rule 424(b)(4) on March 25, 2021 (the “Prospectus”).
Basis of Consolidation
The Company has prepared these accompanying unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). These unaudited condensed consolidated financial statements include the accounts of VIZIO and all subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The functional currency of most of the foreign subsidiaries is the U.S. dollar. The accounts of these remaining foreign subsidiaries have been translated using the U.S. dollar as the functional currency. Gains or losses resulting from remeasurement of these accounts from local currencies into U.S. dollars are recorded in other comprehensive income in these unaudited condensed consolidated financial statements. Financial statements of the Company’s foreign subsidiaries for which the functional currency is the local currency are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and the transaction date.
The condensed consolidated balance sheet as of December 31, 2020 and included herein was derived from the audited financial statements as of the same date. We have condensed or omitted certain information and notes normally included in complete financial statements prepared in accordance with GAAP. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2020 included in the Prospectus. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive
8

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
loss and cash flows for the interim periods, but due to seasonality of sales and other factors, they are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2021.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates and assumptions. Significant items subject to such estimates and assumptions include the allowances for doubtful accounts and sales returns, reserves for excess and obsolete inventory, accrued price protection and rebates, accrued royalties, share-based compensation, intellectual property and related intangible assets, valuation of deferred tax assets and other contingencies. Supplier and customer concentrations also increase the degree of uncertainty inherent in these estimates and assumptions.
Customer Allowances
The Company offers sales incentives through various programs, consisting primarily of discounts, cooperative advertising and market development fund programs. The Company records cooperative advertising and market development fund programs with customers as a reduction to revenue unless the Company receives a distinct benefit in exchange for credits claimed by the customer and can reasonably estimate the fair value of the benefit received. These arrangements are recorded as accrued liabilities. Cooperative advertising arrangements recorded as an (increase) or reduction of net revenue totaled $(185) and $1,935 for the three months ended September 30, 2021 and September 30, 2020, respectively. Cooperative advertising arrangements recorded as a reduction of net revenue totaled and $1,615 and $3,234 for the nine months ended September 30, 2021 and September 30, 2020, respectively.
Research and Development Costs
Research and development expense consists primarily of employee-related costs, including salaries and bonuses, share-based compensation expense, and employee benefits costs, third-party contractor costs, and related allocated overhead costs. In certain cases, costs are incurred to purchase materials and equipment for future use in research and development efforts. These costs are capitalized and expensed as consumed. Research and development costs were $8,771 and $3,678 for the three months ended September 30, 2021 and September 30, 2020, respectively, and $25,861 and $11,022 for the nine months ended September 30, 2021 and September 30, 2020, respectively, and are recorded in selling, general and administrative expense in the accompanying consolidated statements of operations.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued guidance, ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, to reduce complexity in accounting standard. The guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Accounting Standards Codification Topic 740 ("ASC 740") as well as by improving consistent application of the topic by clarifying and amending existing guidance. This standard is effective for the Company for the year ending December 31, 2021. The adoption of this standard did not result in a material impact to the Company’s consolidated financial statements.
There have been no material developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company’s consolidated financial statements and footnote disclosures, from those disclosed in the audited consolidated financial statements included in the Prospectus.
Note 3. Net Revenue
The Company derives revenue primarily from the sale of televisions and sound bars, advertising and data services. Revenue is recognized when control of the promised goods or services is transferred to the Company’s retailers, in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company applies a five-step approach as defined in Financial Accounting Standards Board (“FASB”) ASC 606, Revenue from Contracts with Customers (Topic 606), in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied. The Company sells products to certain retailers under terms that allow them to receive price protection on future price reductions and may provide for limited rights of return, discounts and advertising credits.
9

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
The Company disaggregates net revenue by (i) Device Revenue, and (ii) Platform+ Revenue, as it believes it best depicts how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors.
The revenue recognized from contract liabilities consisted of the Company satisfying performance obligations during the normal course of business. The Company did not identify or record any material contract assets as of September 30, 2021 and December 31, 2020. Additionally, no costs associated with obtaining contracts with customers were capitalized, nor any costs associated with fulfilling its contracts. All costs to obtain contracts were expensed as incurred as a practical expedient.
Significant Customers
VIZIO is a wholesale distributor of televisions and other home entertainment products, which are sold to the largest retailers and wholesale clubs in North America, primarily in the United States. The Company’s sales can be impacted by consumer spending and the cyclical nature of the retail industry.
The following customers account for more than 10% of net revenue:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net revenue:
Customer A
39 %46 %39 %48 %
Customer B
13 9 13 9 
Customer C
14 13 13 11 
Customer D
10 11 10 9 
Customer E5 9 6 10 
The following customers account for more than 10% of accounts receivable:
As of
September 30,
2021
December 31,
2020
Net receivables:
Customer A
43 %41 %
Customer B
10 18 
Customer C
18 16 
Customer A and Customer C, and certain other customers not separately identified in the table above, are affiliates under common control with each other. Collectively, they comprised 53% and 59% of VIZIO’s net revenue for the three months ended September 30, 2021 and September 30, 2020, respectively and 52% and 59% for the nine months ended September 30, 2021 and September 30, 2020, respectively. Their collective accounts receivable balance as of September 30, 2021 and December 31, 2020 was 61% and 57% of our total net receivables, respectively. However, throughout VIZIO’s history and presently, the Company has dealt with separate purchasing departments at Customer A and Customer C, and have at times sold products to Customer C without selling products to Customer A.
10

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
Note 4. Accounts Receivable
Accounts receivable consists of the following:
As of
September 30,
2021
December 31,
2020
Accounts receivable$356,919 $405,627 
Allowance for doubtful accounts(154)(18)
Total accounts receivable, net of allowances$356,765 $405,609 
VIZIO maintains credit insurance on certain accounts receivable balances to mitigate collection risk for these customers. The Company evaluates all accounts receivable for the allowance for doubtful accounts. For the three months ended September 30, 2021 and 2020, the Company reserved allowances for bad debt of $(527) due to a recovery and $2,165, respectively. For the nine months ended September 30, 2021 and 2020, the Company reserved allowances for bad debt of $159 and $2,248, respectively.
Note 5. Inventories
Inventories consist of the following:
As of
September 30,
2021
December 31,
2020
Inventory on hand
$5,111 $3,237 
Inventory in transit18,572 7,308 
Total inventory$23,683 $10,545 
Significant Manufacturers
VIZIO purchases a significant amount of its product inventory from certain manufacturers. The inventory is purchased under standard product supply agreements that outline the terms of the product delivery. Once all aspects of the product are agreed upon, the manufacturers are then responsible for transporting the product to their warehouses located in the United States. The manufacturers are considered the importers of record and are required to insure the product as it is shipped to the warehouses. The title and risk of loss of the product passes to VIZIO upon shipment from the manufacturer’s warehouse in the United States to the customer. The product supply agreement stipulates that the manufacturer will (i) generally reimburse VIZIO for at least a portion of the price protection or sales concessions negotiated between the Company and customers on product purchased, and (ii) indemnify VIZIO against all liability resulting from valid and enforceable patent infringement with regard to product purchased under the agreement except if such infringement arises out of the Company’s modification or misuse of the product.
The Company has the following significant concentrations related to suppliers:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Inventory purchases:
Supplier A25 %26 %29 %28 %
Supplier B – related party37 45 40 48 
Supplier C6 11 9 9 
Supplier D23 9 12 6 

11

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
The Company is currently reliant upon these manufacturers for products. Although VIZIO can obtain products from other sources, the loss of a significant manufacturer could have a material impact on the Company’s financial condition and results of operations as the products that are being purchased may not be available on the same terms from another manufacturer.
The Company has also recorded other receivables of $1,623 and $3,033 due from the manufacturers as of September 30, 2021 and December 31, 2020, respectively. The other receivable balances are attributable to price protection and customer allowances as well as accrued royalties due in connection with the settlement of certain patent infringement cases for units shipped, which are indemnified by the Company’s manufacturers and are recognized at the time the aforementioned liabilities are incurred. The net effect is recorded in the condensed consolidated statements of operations as a reduction to cost of goods sold.
Recycling costs
The Company incurs recycling costs in order to comply with electronic waste recycling programs within certain states. These fees are assessed by the states using current market share and actual costs incurred on administration of such programs and are expensed as incurred. Recycling costs were $1,844 and $2,947 for the three months ended September 30, 2021 and September 30, 2020, respectively, and $5,780 and $5,691 for the nine months ended September 30, 2021 and September 30, 2020, respectively, and are recorded in cost of goods sold in the accompanying condensed consolidated statements of operations.
Note 6. Property and Equipment
Property and equipment consist of the following:
As of
September 30,
2021
December 31,
2020
Building$10,095 $9,998 
Machinery and equipment1,644 1,284 
Leasehold improvements3,438 3,438 
Furniture and fixtures2,879 2,840 
Computer and software22,267 19,184 
Automobile and truck22 22 
Total property and equipment40,345 36,766 
Less accumulated depreciation and amortization(30,336)(28,837)
Total property and equipment, net$10,009 $7,929 
The Company capitalized software development costs of $272 and $814 during the three months ended September 30, 2021 and September 30, 2020, respectively, and $1,585 and $2,300 during the nine months ended September 30, 2021 and September 30, 2020, respectively.
Amortization of capitalized software development costs was $704 and $914 during the three months ended September 30, 2021 and September 30, 2020, respectively, and $2,098 and $2,666 during the nine months ended September 30, 2021 and September 30, 2020, respectively, and are recorded in costs of goods sold in the accompanying condensed consolidated statements of operations.
Depreciation expense was $536 and $327 for the three months ended September 30, 2021 and September 30, 2020, respectively, and $1,499 and $1,152 for the nine months ended September 30, 2021 and September 30, 2020, respectively. The Company’s long-lived assets, which include property and equipment and other intangible assets are located entirely within the United States.
Note 7. Goodwill and Other Intangible Assets
(a)Goodwill
The Company’s goodwill balance was $44,788 as of September 30, 2021 and December 31, 2020. The goodwill balance was determined based on the excess of the purchase price paid over the fair value of the identifiable net assets acquired and
12

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
represents its future revenue and earnings potential and certain other assets acquired that do not meet the recognition criteria, such as assembled workforce. The Company performs its impairment test of goodwill on October 1st annually in accordance with its accounting policy and to date, has not recorded any impairment.
13

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
Note 8. Accrued Expenses
The Company’s accrued expenses consisted of the following:
As of
September 30,
2021
December 31,
2020
Accrued price protection$43,489 $61,331 
Accrued other customer related expenses49,187 54,404 
Accrued supplier related expenses26,027 12,434 
Accrued payroll expenses29,237 10,874 
Accrued other expenses15,363 15,916 
Total accrued expenses$163,303 $154,959 
The Company periodically grants certain sales discounts and incentives to customers, such as rebates and price protection, which are treated as variable consideration for purposes of determining the transaction price. In certain instances, the Company will, in turn, negotiate with its manufacturers for reimbursement of a portion of the incentives so that the manufacturers are responsible for absorbing some of the rebates and price protection. The Company’s procedures for estimating customer allowances recorded as a reduction of revenue are based upon historical experience, as adjusted for the current environment, and management judgment. Customer allowances are accrued for when the related product sale is recognized. The accrued customer allowances are presented on the condensed consolidated balance sheets in accrued expenses and recorded in the condensed consolidated statements of operations as a reduction of net revenue. In 2021, the accrued balances for the Company’s supplier related expenses increased primarily due to additional accruals for Platform+ suppliers and the payroll expenses increased due to the timing of commission payments.
Note 9. Stockholders’ Equity

Forward Stock Split
As described in Note 1—Organization and Description of Business, on March 15, 2021, the Company amended its Amended and Restated Certificate of Incorporation to effect a nine-for-one forward stock split of the Company’s Class A common stock.
Conversion of Redeemable Convertible Preferred Stock and Amendment and Restatement of Certificate of Incorporation
As described in Note 1—Organization and Description of Business, immediately prior to the IPO:
all 134,736 shares of Series A redeemable convertible preferred stock then outstanding converted into 30,315,600 shares of Class A common stock;
the Company amended and restated its Amended and Restated Certificate of Incorporation to, among other things, authorize (i) 1,000,000,000 shares of Class A common stock, par value $0.0001 per share, (ii) 200,000,000 shares of Class B common stock, par value $0.0001 per share, (iii) 150,000,000 shares of Class C common stock, par value $0.0001 per share, and (iv) 100,000,000 shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by the Company’s Board of Directors; and
a total of 98,633,025 shares of Class A common stock held by William Wang and his respective affiliated trusts were exchanged for an equivalent number of shares of Class B common stock pursuant to the terms of certain exchange agreements.
As a result, following the completion of the IPO, the Company has three classes of authorized common stock – Class A common stock, Class B common stock and Class C common stock, in addition to authorized undesignated preferred stock.
Initial Public Offering
As described in Note 1—Organization and Description of Business, on March 29, 2021 the Company closed its IPO of 12,250,000 shares of Class A common stock, in which the Company issued and sold 7,560,000 shares of Class A common stock and certain existing stockholders sold an aggregate of 4,690,000 shares of Class A common stock at a public offering price of $21.00 per share. In connection with the IPO, the Company received net proceeds of approximately $144,922 after
14

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
deducting underwriting discounts and commissions of approximately $10,700 and other offering expenses of approximately $3,100.
In addition, in connection with the IPO, certain stockholders forfeited 434,334 shares of restricted stock to the Company to satisfy tax withholding obligations in connection with the IPO (the “RSA Forfeiture”). The Company recorded the value of the forfeited shares as treasury stock within Additional paid-in capital in its unaudited condensed consolidated balance sheet dated September 30, 2021 based on the fair value of the stock at the time of forfeit.
Preferred Stock
As of September 30, 2021, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, which became effective on March 29, 2021 in connection with the closing of the IPO (the “Restated Certificate”) the Company’s Board of Directors is authorized to issue up to an aggregate of 100,000,000 shares of undesignated preferred stock, par value $0.0001 per share, in one or more series and to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions of the shares of each of these series including the dividend rights, dividend rates, conversion rights, voting rights, term of redemption, including sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of a series without further vote or action by the stockholders.
Series A Convertible Preferred Stock
On March 29, 2021, in connection with the closing of the Company’s IPO, all 134,736 shares of Series A convertible preferred stock outstanding immediately prior to the IPO were converted into an aggregate of 30,315,600 shares of Class A common stock and recorded in the unaudited condensed consolidated balance sheet to common stock and additional paid-in capital. Additionally, approximately $588 in dividends accumulated through the conversion date were paid to the holders of outstanding shares of Series A convertible preferred stock as of immediately prior to the closing of the IPO. As of the effectiveness of the Amended and Restated Certificate of Incorporation on March 29, 2021, there are no shares of the Series A convertible preferred stock authorized for issuance.
Common Stock
As of September 30, 2021, pursuant to the terms of the Restated Certificate, the Company is authorized to issue 1,350,000,000 shares of common stock with $0.0001 par value, of which 187,310,311 shares are issued and outstanding. The Company has three classes of authorized common stock, Class A common stock, Class B common stock and Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting and conversion.
Voting rights: The holders of Class A common stock are entitled to one vote per share of Class A common stock and holders of Class B common stock are entitled to 10 votes per share of Class B common stock. Holders of our Class C common stock are not entitled to vote on any matter that is submitted to a vote of stockholders, except as otherwise required by law.
Conversion rights: Each share of Class B common stock is convertible into one share of Class A common stock at any time at the option of the holder and will automatically convert into Class A common stock upon any transfer, except for certain permitted transfers and so long as the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock. All shares of Class B common stock will convert automatically into an equivalent number of shares of Class A common stock on the date fixed by the Company’s Board of Directors that is no less than 61 days and no more than 180 days following (i) the first time that William Wang and his affiliates hold less than 25% of the shares of Class B common stock held by Mr. Wang and his affiliates as of the date of the completion of the IPO, (ii) following the date on which Mr. Wang is terminated for cause (as defined in the Company’s Restated Certificate); or (iii) the date upon which (A) Mr. Wang is no longer providing services to us as our Chief Executive Officer and (B) Mr. Wang is no longer a member of the Company’s Board of Directors. Additionally, shares of Class B common stock will convert automatically at the close of business on the date that is 12 months after the death or permanent and total disability of Mr. Wang, during which 12-month period the shares of our Class B common stock shall be voted as directed by a person designated by Mr. Wang and approved by the Company’s Board of Directors (or if there is no such person, then our secretary then in office).
After the conversion or exchange of all outstanding shares of the Company’s Class B common stock into shares of Class A common stock, all outstanding shares of Class C common stock will convert automatically into Class A common stock, on a share-for-share basis, on the date or time specified by the holders of a majority of the outstanding shares of Class A common stock, voting as a separate class.
15

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
Dividends: The holders of the Company’s common stock are entitled to share equally, on a per share basis, in any dividends declared by the Company’s Board of Directors out of legally available funds, subject to the rights of holders of preferred stock, if any, and the terms of any existing or future agreements between the Company and its lenders.
Liquidation: In the event of the Company’s liquidation, dissolution or winding up, holders of its common stock are entitled to share equally, on a per share basis, in all assets legally available for distribution after payment of all debts and other liabilities, and subject to the prior rights of any holders of outstanding shares of preferred stock, if any.
Common Stock Issuance: On June 20, 2018, VIZIO issued approximately 12,978,000 shares of its Class A common stock for $70,000, or $5.39 per share, to two related party manufacturers one of which was Supplier B as referenced in Note 5. In conjunction with this common stock issuance, VIZIO entered into strategic cooperation agreements with these suppliers. Prior to the IPO, if certain conditions set out in the agreements were achieved, the agreements provided opportunities for potential further equity investment in VIZIO. The agreements also provided for preference in future board member assignment, and future strategic financial incentives. After the expiration of the warrants the opportunity for further investment closed, while the other rights remain. The value of these were determined to be immaterial within the arrangement and to the condensed consolidated financial statements.
Warrant Issuance: On December 31, 2019, VIZIO issued warrants to the same two suppliers in accordance with the strategic cooperation agreements entered into on June 20, 2018, upon the achievement of certain purchase volume milestones as set out in the strategic cooperation agreements. The warrants provided the suppliers the right to purchase a total of $15,000 of Class A common stock at an exercise price of $5.39 per share. The awards were exercisable in cash for a period of six months from the grant date and had a fair value of $1,927 at the grant date. The warrants were valued using the Black-Scholes option pricing model as of the issuance date and have been expensed in full within cost of goods sold within the condensed consolidated statement of operations. Assumptions used include the annualized volatility of 48%, fair value of common stock of $5.39 and the dividend rate of 3%. In July 2020, the warrants expired unexercised.
Note 10. Share-Based Compensation
In August 2017, the Company’s Board of Directors adopted the 2017 Incentive Award Plan (as amended, the “2017 Plan”), which provides for the granting of qualified and nonqualified stock options, restricted stock awards, restricted stock units, dividend equivalents, stock appreciation rights and other share-based awards. The 2017 Plan was amended and restated prior to the Company’s IPO. The 2017 Plan, reserves for issuance to eligible employees, directors and consultants a total of (i) 24,446,502 shares of common stock in addition to (ii) the number of shares that, as of the date the 2017 Plan was originally adopted, were available for issuance under the 2007 Plan (as described below), plus (iii) the number of shares subject to awards outstanding under the 2007 Plan as of the date the 2017 Plan was originally adopted, that on or after that date, are forfeited or otherwise terminate or expire for any reason without the issuance of shares to the holders of the awards; provided, that the maximum number of shares of Class A common stock that may be added to the number of shares reserved under the 2017 Plan under clauses (ii) and (iii) is 40,520,655 shares. The primary purpose of the 2017 Plan is to enhance the Company’s ability to attract, motivate, and retain the services of qualified employees, officers, and directors. Any stock options or stock appreciation rights granted under the Plan will have a term of not more than 10 years and the vesting of the awards are set at the discretion of the Board of Directors but is not expected to exceed four years for any grant.
The Company’s 2007 Incentive Award Plan (the “2007 Plan”), which the Board of Directors had adopted in 2007, was terminated in connection with the adoption of the 2017 Plan. Any outstanding awards that had been granted under the 2007 Plan prior to its termination remain outstanding, subject to the terms of the 2007 Plan and awards agreements, until such awards vest and are exercised (as applicable) or until they terminate or expire by their terms. As of September 30, 2021, options to purchase a total of 1,315,940 shares of Class A common stock remained outstanding and subject to the terms of the 2007 Plan. The awards under the 2007 Plan have a term of not more than 10 years and the vesting of the awards was set at the discretion of the Board of Directors upon grant but is not expected to exceed four years for any grant. All awards are subject to forfeiture within 90 days if employment or other services terminate prior to the vesting of the awards. Grants are no longer permitted from the 2007 Plan.
16

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
Stock Option Awards
A summary of the status of the Company’s stock option plans as of September 30, 2021 presented below:
Number of
Options
Weighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value
Outstanding at December 31, 202016,416 4.16 7.1$71,934 
Granted2,847 18.55 
Exercised(2,229)3.00 
Forfeited and expired(488)6.02 
Outstanding at September 30, 202116,546 $6.75 7.0238,797 
Options vested and exercisable at September 30, 202110,277 $3.51 5.8$182,230 
In February 2021, the Company granted approximately 688,068 stock option awards to various employees. These options vest over a four year period and the fair value of the option on the grant date was $10.54 as determined using the Black Scholes Option Pricing Model and a common stock share price of $19.49 per share, volatility of 39%, a dividend yield of 2%, a risk free rate of 1%, and an expected term of 6.25 years.
In March 2021, the Company granted 172,196 stock options to various employees. These options vest over a four year period and the fair value of the option on the grant date was $7.63 using the Black-Scholes Options Pricing Model and a common stock share price of $21.00 per share, volatility of 44%, a dividend yield of 2%, a risk free rate of 1% and an expected term of 6.25 years.
In May 2021, the Company granted 1,936,568 stock options to various employees. These options vest over a four year period and the fair value of the option at the grant date was $8.93 as measured using the Black Scholes Option Pricing Model and a common stock share price of $21.84 per share, volatility of 44%, 0.76% dividend yield, a risk free rate of 1%, and an expected term of 6.25 years.
As of September 30, 2021, the Company had $34,207 of unrecognized compensation costs related to share-based payments, which is expected to be recognized over a weighted average vesting period of approximately 2.54 years.
September 30, 2021September 30, 2020
Weighted average grant date fair value of stock options granted during the period$9.22 $1.58 
A summary of the nonvested stock options as of September 30, 2021 is as follows:
Shares Weighted
average
grant date
fair value
Nonvested at December 31, 20207,154 $1.64 
Granted2,847 $9.22 
Forfeited or expired(346)$4.65 
Vested(3,413)$3.87 
Nonvested at September 30, 20216,242 $6.24 
Restricted Stock Awards
Effective October 29, 2010, the Board of Directors granted a total of 4,995,000 restricted stock awards (“RSA”) to the Company’s Chief Executive Officer and Chief Operating Officer with a stock price of $1.93 per share. The restricted stock awards vest and become non-forfeitable ratably over a four-year period assuming VIZIO made its first public offering of
17

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
common stock pursuant to a registration statement filed with the Securities and Exchange Commission during this period. Under the terms of the grant, if a public offering did not occur within the four-year vesting period, the restricted stock awards would remain outstanding and unvested for an additional three-year period and all shares would vest contingent upon an initial public offering. If after seven years, VIZIO was not successful at completing an initial public offering, all of the restricted stock awards would forfeit. Effective April 25, 2017, the forfeiture date on these awards was extended to December 31, 2020. In estimating the fair value of the common stock at the grant date, the Company engaged an independent valuation specialist to assist in determining the stock price.
Effective December 29, 2017, the Board of Directors granted a total of 1,179,000 restricted stock awards to members of senior management with a stock price of $2.89 per share. On October 8, 2019, the Board of Directors granted a total of 234,000 restricted stock awards to members of senior management with a stock price of $5.39 per share. Subsequent to December 31, 2020, 4,995,000 of these RSAs were forfeited.
Restricted Stock Units
On December 31, 2020, the Board of Directors granted a total of 2,035,000 restricted stock units (“RSU”) to members of senior management with a stock price of $8.54 per share. The restricted stock units vest ratably over a one to four-year period assuming VIZIO made its first public offering of common stock pursuant to a registration statement filed with the Securities and Exchange Commission in December 2020. Under the terms of the grant, if a public offering did not occur within the vesting period, the RSUs would remain outstanding and unvested for an additional period and all shares shall vest contingent upon an initial public offering. Since the vesting of the RSUs was contingent upon an initial public offering, VIZIO deferred the recognition of compensation expense for these awards until the first quarter of 2021. In estimating the fair value of the common stock at the grant date, the Company engaged an independent valuation specialist to assist in determining the stock price. See further discussion of valuation below.
Number of SharesWeighted Average Grant Date Fair Value
Outstanding at December 31, 20202,035 $8.54 
Granted7,532 20.59 
Released (3,788)17.70 
Forfeited (99)21.88 
Outstanding at September 30, 20215,680 $20.20 
The grant-date fair value of restricted stock units granted during the nine months ended September 30, 2021 and 2020 was $155,542 and $0.0, respectively. The grant-date fair value of restricted stock units that vested during the nine months ended September 30, 2021 and 2020 was $67,041 and $0.0, respectively. Total unrecognized compensation cost related to restricted stock units as of September 30, 2021 was $96,585, which the Company expects to recognize over a weighted-average period of approximately 1.78 years.
Fair Value of Share-Based Awards
Share-based compensation expense resulting from grants of employee and non-employee stock options is recognized in the unaudited condensed consolidated financial statements based on the respective grant date fair values of the awards. Stock option, restricted stock unit, restricted stock and warrant grant date fair values are estimated using the Black-Scholes-Merton option pricing model.
Prior to the IPO, given the absence of a public trading market, the Company’s Board of Directors considered numerous objective and subjective factors to determine the fair value of the common stock at each grant date. These factors included, but were not limited to (a) the prices at which the Company sold its Class A common stock to outside investors in arms-length transactions, (b) an independent third-party valuation of the Company’s Class A common stock, (c) the Company’s results of operations, financial position, and capital resources, (d) industry outlook, (d) the likelihood of achieving a liquidity event, such as an initial public offering or a sale of the Company, given prevailing market conditions, (e) the history and nature of the Company’s business, industry trends and competitive environment; and (f) general economic outlook including economic growth, inflation and unemployment, interest rate environment, and global economic trends, including the impact of COVID-19.
18

VIZIO HOLDING CORP.
Notes to Condensed Consolidated Financial Statements
(Unaudited, in thousands, except share and per share amounts, term and percentage data)
The table below provides information on the weighted-average assumptions used for stock options granted during the three and nine months ended September 30, 2021.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Number of options granted