FuboTV (FUBO)

Investment Analysis Clubs Saul’s Investing Discussions
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S1: https://www.sec.gov/Archives/edgar/data/1484769/000149315220…
Q3 earnings: https://platform.livex.tv/fubo-q3-2020-earnings-webinar
website: fubo.tv

FuboTV (FUBO) is a streaming platform which streams primarly sports.

I am starting with the financials to show the growth of the company. Later there are more details on the latest earnings and S1.

  • strong growth on every KPI having the strongest Q in company history (founded 2015)
  • revenue up 47% YoY at 61M, beating guidance of 52-55M
  • subscription revenue up 64%, advertising revenue up 153% YoY
  • paid subscriptions 455k, 58%+ YoY
  • net additions 167k, up 100% YoY, lower subscription acquistion cost
  • adjusted contribution margin expanded to 16%
  • raised guidance, with Q4 expected at 80-85M revenue. NOTE: sequential rev increase would be 31-39%
  • expecting to end Q4 with 500k-510k subscriptions 58-62% YoY
  • full year 2020 rev guided to be 244-248M 65%+ YoY
  • S&M makes up 17% revenue, lots of room to market
  • ARPU up to $7.50 from $6.50, expects to see up to $20 here

This company is a streaming service with a 2B market cap. They have expanded in advertising which is growing rapidly and are adding sports betting to the platform. I’ve also listened to the DraftKings conference call, and there is a lot of positive momentum on legislation fully legalizing sports betting.

One selling point of the company is that most people are keeping their cable subscription for sports or news, and that is the niche of FuboTV.

Biggest concerns would be margins for this company. In their S1 they spent slightly more to get licensing for all the channels than they did in revenue. As I understand this licensing pricing stays flat and they are growing subscriber count fast. They mention repeatedly the are a tech company, and also have detailed how they plan to reach profitability and grow both top and bottom line.

More details from the conference call and S1 below, and leaving out some financials I covered above.

Conference call

David Gandler - CEO

  • margin expansion ahead of estimates
  • looking to expand margins by 150 bps every Q going forward
  • Disney/ESPN are partners
  • increased monthly fee by $5 from $60 to $65
  • better merchandising, 800k attachments compared to 235k last year, 240% YoY (An attachment is an upsell like a family plan or premium package)
  • advertising sales is expanding margins
  • tailwinds have never been stronger
  • 3 mega secular trends, one is decline of TV, two is shift of ad dollars to connected devices, 3 is online sports wagering
  • founded in 2015 on international soccer
  • soccer fans wanted more content, intuitive user experience, and exceptional value
  • 110 channels currently
  • only live sports streaming platform in 4K and allows up to 4 streams at once on AppleTV
  • improving retention rates and expanding into sports wagering
  • laser focus on top line and path to profitability
  • tech focused user experience

Simone Nardi - CFO

  • continued strength across all revenue segments
  • raising guidance (details above)

Questions section

  • benefitted from subs/retention
  • wagering is executing on 3 levels: acquisition advantage, engagement advantage, monetization advantage
  • for sports wagering they can already market to 500,000 subscribers for free
  • 50,000 sporting events on the platform
  • average person watching 120 hours per month
  • covid acceleration and shift to ad dollars, no negative impact from covid
  • SAC (subscriber acquisition cost) is lowered
  • will be increasing marketing now to add subs
  • examining churn on sport by sport and also across segments
  • Q3 saw high interest in political shows offering
  • long runway with adtech and evolution of ads
  • cloud born company with everything in the cloud and everything being automated
  • team is data driven, 21B data points per month, A/B testing, 400 landing pages with different offerings
  • Stars/epics to drive “attach rate”
  • many sports betting announcements in the coming months
  • Fubo is cable TV replacement service
  • not zero sum game, 80M still with cable
  • 197M raised from the IPO
  • amazing Q3 and 2020, strong prospects for 2021

Details from the S1

  • Subscriber means paid, user means paid or unpaid
  • MAUs/DAUs counted as content consumed for longer than 10 seconds
  • streamed 299 million content hours in 2019, increase of 210%+ YoY
  • 43 of 50 top Nielson ranked networks
  • summer 2020 enhanced offering with ESPN/ABC/Disney
  • app ranked #1 for streaming apps in last 12 months in Apple/Android
  • proprietary tech platform built for live
  • first to market with vMVPD streaming in 4k resolution
  • able to stream from mobile devices
  • can watch content from multiple angles
  • monthly ARPU of $54, 42%+ YoY
  • attachments mean cloud DVR and family share plan
  • 2019 revenue of 146M up 96% YoY
  • net loss of 129M in 2019
  • 2019 ad revenue 12.5M up 201% YoY
  • sports betting market to reach 155B by 2024
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was looking at this since I am a soccer fan. But I really concern on Fubo’s cash position. Any idea?

Thx.

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FUBO released preliminary 4Q revenue/subscriber numbers today. Both with big beats over their guidance. Seems like a young hypergrowth company that can do well if they can improve their margins and successfully enter into the sports betting space next year as well. Market cap is <$2bil

I echo wpr that margins are pretty poor, will be nice to see the full report next month.

https://ir.fubo.tv/news/news-details/2021/fuboTV-Announces-P…

From the link:
-Q4 total revenue is expected to be between $94-$98 million, a 77% to 84% increase year-over-year.* Prior guidance was $80-$85 million.
-Paid subscribers at year-end are expected to exceed 545,000, an increase of more than 72% year-over-year. Prior guidance was 500,000-510,000 subscribers.

Long FUBO ~1%
Bnh

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My apologies if this has been covered in a different thread before.

Beth Kindig has had a closer look at Fubo TV’s likely transition to/addition of sports betting last month. Her summary can be found here: https://www.forbes.com/sites/bethkindig/2021/12/31/fubotv-so…

In short, monetisation plans look promising while it already has a strong customer base and a strong growth outlook. Entering betting/gambling territory may pose policy problems/risks within the US(and possibly beyond), though.

Still, the above analysis and the provided numbers in this thread are sufficient for me to buy and hold a small position and to see how they will be doing this year - even if it is no strict SaaS business.

Disclaimer: Do your own research. Don’t listen to me. I know virtually nothing about investing.

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was looking at this since I am a soccer fan. But I really concern on Fubo’s cash position. Any idea?

I wouldn’t be concerned about cash, here is how much cash do they have as per quarterly report

“We ended Q3 2020 with $40.1 million in cash. This does not include gross proceeds of $197 million from the public offering completed in October.”

I’m more confused about total share number which is somewhere between 112m - quote from 3q report here:

“We ended the third quarter with 47,392,684 common shares outstanding, as well as 64,648,724 Series AA Convertible Preferred issued and issuable on an as-converted basis, for a total common shares outstanding of 112,041,408 on an as-converted basis.”

132m shares are mentioned in registration statement - page 143

“As of October 26, 2020, 67,495,090 shares of common stock, and 32,116,018 shares of Series AA Preferred Stock (or 64,232,036 shares of common stock on an as-converted basis) were outstanding.”

Short thesis’ authors mentioned 157m of shares.

Based on different shares number there is a substantial difference on EV and valuation obviously. On the other hand - management owns around 20% and strategic investors own between 30 and 40%. These are unlikely to sell (but still possible at least some of them).

In Fubo case both - bull and bear cases are well-known. So far the facts are confirming bull case as they have been accelerating in main metrics. I’ve started a smallish position in Fubo recently… :slight_smile:

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“New York reportedly going to legalize online sports betting”
https://www.si.com/gambling/2021/01/06/ny-legal-sports-betti…

New York Governor Andrew Cuomo is reportedly going to legalize online sports betting next week, according to NY Daily News. Shares of DraftKings (DKNG 50.94, +3.36, +7.1%) and Penn Natl Gaming (PENN 93.16, +6.19, +7.1%) are both up 7%.

Another good news for FUBO after they upgraded their Q4 guidance.
Long 5% FUBO

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This is clearly positive for Fubo. The main idea is that A LOT of states will start to legalize it in order to increase revenues in their stretched budgets. And Sky (one of the main owners of Fubo) has experience in monetizing it from UK (and other European) markets. So, there is more or less clear plan how to monetize sports wagering via FuboTV platform.

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Big news from FuboTV today:
https://www.businesswire.com/news/home/20210112005596/en/fub…

“NEW YORK–(BUSINESS WIRE)–fuboTV Inc. (NYSE: FUBO), the leading sports-first live TV streaming platform, announced today it has executed a binding letter of intent to acquire sports betting and interactive gaming company Vigtory, and expects to launch a sportsbook before the end of the year.”

“Additionally, fuboTV announced today more details of its online wagering strategy, further positioning itself to enter what Zion Market Research estimates will become a $155 billion industry by 2024. Through its December 2020 acquisition of Balto Sports and its content automation software, fuboTV intends to launch a free to play gaming experience this summer. Free to play gaming, which will be available to all consumers whether or not they are fuboTV subscribers, will first launch in a standalone app and later be integrated directly into the fuboTV user experience. By leveraging the Vigtory and Balto acquisitions, fuboTV intends to launch a sportsbook app where consumers can see current betting lines, place a variety of wagers, cash in their winnings and much more across sports they love. Finally, the company expects to integrate the sportsbook into fuboTV’s live TV streaming platform for a seamless viewing and wagering experience.”

Reminder from Q3 results:
• Revenues were $61.2 million, a 47% increase year-over-year on a pro forma basis, or +71% excluding 2019 licensing revenue from the FaceBank AG business, sold in July 2020. This growth was driven by continued subscriber expansion, an increase in subscription Average Revenue Per User (ARPU) and growth of advertising sales:
• Subscription revenue increased 64% year-over-year to $53.4 million.
• Advertising revenue increased 153% year-over-year to $7.5 million.
• Paid subscribers at quarter end totaled 455,000, an increase of 58% year-over-year.
• Average Revenue Per User (ARPU) per month was $67.70, up 14% year-over-year.
• Total content hours streamed by fuboTV users (paid and free trial) in the quarter increased 83% year-over-year to 133.3 million hours.
• Monthly active users (MAUs) watched 121 hours per month on average in the quarter, an increase of 20% year-over-year.

On Jan 5 announced Q4 revenue and subscriber growth:
• Q4 total revenue is expected to be between $94-$98 million, a 77% to 84% increase year-over-year.* Prior guidance was $80-$85 million.
• Paid subscribers at year-end are expected to exceed 545,000, an increase of more than 72% year-over-year. Prior guidance was 500,000-510,000 subscribers.

Daws
(Long FUBO)

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