LG Electronics subsidiary Alphonso announced its goal to go public on the U.S. stock market in the second half of this year. Alphonso operates the connected TV (CTV) advertising platform "LG Ad Solutions", and it is a company under Zenith, a 100% subsidiary of LG Electronics in the U.S. with a 65.7% equity stake. Alphonso's U.S. stock listing is being pursued according to a contract clause among shareholders established in 2020. At that time, the founder of Alphonso stated that he would list the company on the U.S. stock exchange if it demonstrated "business growth in the next three years" while securing investment from LG Electronics. LG Electronics' advertising and content business based on webOS exceeded 1 trillion won in revenue last year.
Alphonso founder Ashish Choudhary held a press conference on the strategy for corporate public offering (IPO) on the 19th at the Conrad Seoul hotel in Yeongdeungpo-gu, Seoul, where he unveiled the business achievements and future vision for LG Ad Solutions. He noted, "We will continue to achieve explosive growth based on over 200 million LG smart TVs equipped with LG Electronics' webOS," adding, "We will deliver results in the global CTV advertising market, which is set to grow to $1 trillion (approximately 1,390 trillion won)."
Alphonso is an advertising and content data analytics specialist established in Mountain View, California, in 2012. LG Electronics' Zenith invested in Alphonso in 2020, thereby integrating it into LG Group. Alphonso has since rebranded its product under the name "LG Ad Solutions" and operates an advertising, content, and data-driven technology platform. It has expanded its business area based on a network of over 200 million LG smart TVs equipped with webOS. Currently, it is focusing on the North American, Central and South American, and European markets.
Choudhary said Alphonso can continue to grow its performance based on the growth of the ▲CTV advertising market and LG Electronics' ecosystem. He explained, "The center of the advertising market is shifting from traditional TV to CTV, and hardware sales in the smart TV sector are gradually being replaced by software, with an increasing share of advertising revenue in the subscription economy, indicating ample growth potential."
One of Alphonso's advantages is its access to the ecosystem of over 200 million LG smart TVs supplied worldwide. The ability to display brand messages on consumers' "TV screens" through Alphonso's solutions serves as a "magnet point" for advertisers.
The automatic content recognition (ACR) technology built into LG smart TVs is also an advantage. It can collect and analyze viewers' content consumption patterns in real-time, enabling the provision of "personalized ads." Alphonso also has various advertising exposure channels, including integrated native ads on LG smart TV home screens, ▲over 350 FAST (free streaming) live channels, ▲around 7,000 on-demand video (VOD)-based CTV options, and cross-device advertising across mobile, tablet, and desktop.
Choudhary stated, "Alphonso's recent three-year revenue growth rate (over 40%) is higher than that of competitors Roku (14%) and Vizio (23%)," adding, "It is a strength of Alphonso that it has shown high performance growth even in a rapidly growing market."
The fact that LG Electronics is aiming to expand the webOS ecosystem is also considered a factor that raises expectations for Alphonso's growth. The plan is to expand platform-based service revenue by more than five times by 2030, with related revenue accounting for over 20% of total operating profit, thus developing it into a "core business." Jo Joo-wan, CEO of LG Electronics, mentioned at a press conference held in Las Vegas in January that "webOS will serve as a comprehensive content platform providing content across various devices, including TV and IT, as well as in-vehicle infotainment, and will expand its reach in the field of outdoor digital advertising, thus becoming an integrated media advertising platform that encompasses both indoor and outdoor spaces."
However, there are concerns that Alphonso's performance will be influenced by the fluctuations in LG Electronics' TV institutional sector. Choudhary commented on this, stating, "The success of LG Electronics' TV is related to Alphonso's success," adding, "We have various products that incorporate artificial intelligence (AI) technology, making revenue diversification possible." He continued, "Alphonso is currently contributing to LG Electronics' revenue and profit, and we will actively collaborate with our shareholder LG Electronics to promote technology investment, platform innovation, and aggressive expansion in global markets."
Whether LG Electronics' Zenith will sell its equity after Alphonso's listing on the U.S. stock market has not yet been decided. Choudhary said, "Issuing new shares or changes in equity percentages are based on LG Electronics' business judgment," and added, "There are no plans to sell the shares of the founding members even after the listing."