From their website:
Now, all smart TVs come with ads. But you still pay for the TV. All of that changes today. During the signup process we ask questions about you and your household to optimize your ad experience. Brands in turn, pay for the non-intrusive ad on the Smart Screen. That’s how you get Telly free. Plain and simple. It's time you got cut in on the deal.
They do have a point though. Is there any smart TV maker that don't put ads on their TV?
The TV cost would probably be paid off in a year with just $1 worth of ads per day. If they earn, say, $5/1000 impressions of ads (which is a bit on the low side for US citizens' eyeballs), they'll just need to show you 200 ads per day to earn $1 just from ad impressions. Assuming the TV is on about 8 hours per day, that's just 1 ads every 2.5 minutes.
They'll probably show more ads than this, and have deals with smart tv app makers to install their apps in the smart tv, and collect and sell customer profile data in the ad market as well, so I think it's not hard to imagine they can profit from the TV, as long as they run the service competently.