fuboTV(FUBO) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics - Fubo achieved $394 million in total revenue for Q1 2024, up 24% year-over-year [19] - Paid subscribers reached 1,511,000, an 18% year-over-year increase [19] - North American ad revenue grew to$ 27.2 million, a 21% year-over-year increase [19] - Adjusted EBITDA margin improved to minus 10%, a 796 basis points improvement compared to Q1 2023 [20] - Free cash flow and adjusted EBITDA improved for the fifth consecutive quarter [20] - Global revenue grew by 24% to $402.3 million, driven by 24% growth in North America and 7% growth in Rest of World [31] - Adjusted EBITDA loss improved to$ 41.1 million from $58.9 million in Q1 2023 [33] - Net loss improved to$ 56.3 million, a 32% reduction year-over-year [48] Business Line Data and Key Metrics - North American ARPU improved to $84.54 from$ 76.79 in the prior-year period [27] - Rest of World ARPU improved to $7 from$ 6.57 [27] - Advertising revenue totaled $27.5 million, a 21% increase year-over-year [32] - FAST channels accounted for 9% of total viewing hours, with hours per subscriber far exceeding overall subscriber growth [80][81] Market Data and Key Metrics - Fubo achieved the lowest subscriber acquisition cost (SAC) to ARPU ratio in its history, well below the target range of 1 to 1.5 times [21] - March 2024 marked the lowest churn rate for any March on record for the company [21] - The company expects 1.275 million to 1.295 million North American subscribers in Q2 2024, representing 10% year-over-year growth [41] - Full-year 2024 North American revenue guidance is$ 1.525 billion to $1.545 billion, representing 15% year-over-year growth [41] Company Strategy and Industry Competition - Fubo is focused on tech innovation, particularly in AI-driven playlists and personalized DVR experiences [4][83] - The company is committed to achieving profitability by 2025, with a focus on cost-cutting and operational efficiency [67][102] - Fubo is engaged in litigation against The Walt Disney Company, Fox Corp, and Warner Bros Discovery, alleging anti-competitive practices [6][7] - The company is introducing a free tier and expanding its FAST channel offerings to drive engagement and monetization [79][87] Management Commentary on Operating Environment and Future Outlook - Management highlighted the challenges posed by above-market content licensing costs, which accounted for 90% of total revenue in Q1 [6] - The company is encouraged by the progress in its antitrust lawsuit and the support from competitors like DIRECTV and Dish [7][25] - Fubo expects continued ARPU expansion and improved unit economics, with revenue growth outpacing subscriber growth [41] - The company is focused on maintaining discipline in subscriber acquisition costs while investing in advertising and monetization capabilities [42][56] Other Important Information - Fubo has received strong support from Capitol Hill, with Congressmen expressing concerns over the JV's control of 80% of broadcast sports content [23][25] - The company has signed agreements with Comscore and TransUnion to enhance cross-platform measurement and data capabilities for advertisers [60] - Fubo's Molotov service in France has grown revenue from$ 7 million in 2020 to over $30 million, with a gross margin profile just below 40% [91][92] Q&A Session Summary Question: What is driving the lower churn and SAC? - The marketing team has improved efficiency, spending at the right time and moving budgets effectively, leading to the lowest SAC in company history [42][43] Question: What is driving the strong advertising performance? - New sales leadership and improved programmatic capabilities have driven advertising growth, with Q1 ad revenue up 21% year-over-year [43][56] Question: Will Fubo increase customer acquisition spending given the tailwind in advertising? - The company remains disciplined, focusing on achieving profitability by 2025, and will not significantly increase customer acquisition spending despite efficient SAC [67] Question: What is the outlook for the free tier and FAST channels? - FAST channels now account for 9% of viewing hours, and the free tier is expected to drive engagement and monetization when launched later this year [79][80][87] Question: How will the termination of the Warner Bros Discovery contract impact pricing? - Fubo plans to maintain current pricing, with savings flowing to the bottom line rather than altering pricing strategy [98] Question: What measures are being taken to ensure sustainable long-term growth? - Fubo is focused on cost-cutting, content strategy, technology development, and expanding reach and distribution, including the launch of a free tier [95][102]