fuboTV Inc. Price & Performance (FUBO)

Thank you for joining us. Discuss fuboTV first quarter twenty twenty five results. With me today is David Gendler, Co Founder and CEO of fuboTV and John Janitas, CFO of fuboTV. Full details of our results and additional management commentary are available in our earnings release and letter to shareholders which can be found on the Investor Relations section of our website at ir. FuboTV. Before we begin, let me quickly review the format of today's call. David will start with some brief remarks on the quarter and our business and John will cover the financials and guidance. Then we will turn the call over to the analysts for Q and A. I would like to remind everyone that the following discussion may contain forward looking statements within the meaning of the federal securities laws including, but not limited to, statements regarding our financial condition anticipated financial performance, business strategy and plans, including our pending business combination and our products and subscription packages [indiscernible] industry, and consumer trends and expectations regarding growth and profitability. These forward looking statements are subject to certain risks uncertainties and assumptions. Important factors that could cause actual results to differ materially from forward looking statements are discussed in our SEC filings.

Except as otherwise noted, the results and guidance we are presenting today are on a continuing operations basis excluding the historical results of our former gaming segment which are accounted for as discontinued operations. During the call, we may also refer to certain non GAAP financial measures. Reconciliations of these non GAAP measures to the most directly comparable GAAP measures are also available in our Q1 twenty twenty five earnings shareholder letter which is available on our website at ir.fuboTV. Please note as well that during Q and A, the company will not provide any information related to the pending business combination with Hulu plus Live TV and ongoing regulatory matters beyond what we have already shared. With that, I will turn the call over to David. Thank you, Ami, and good morning, everyone. Thank you all for joining us today to discuss fuboTV's first quarter twenty twenty five results. In the first quarter, our global streaming business exceeded our subscriber forecast and achieved our revenue guidance. We are pleased with these results which came against a typically lighter first quarter sports calendar and a broader backdrop of economic uncertainty. Looking at our North American streaming business, we delivered 1,470,000 paid subscribers down 2.7% year over year, but exceeding our Q1 guidance of 1,460,000 at the high point.

Total revenue in the region was $407,900,000 and that was up 3.5% year over year. Notably, we once again improved our global profitability metrics by more than $100,000,000 for the trailing twelve months. These results demonstrate our team's ongoing execution as we focus on profitability in 2025 for our global streaming business. We remain excited about our agreement with The Walt Disney Company to combine fuboTV with Hulu plus Live TV and the potential to increase competition and consumer choice in the pay TV space. We continue to work through the regulatory process and look forward to sharing more information when we are able. The streaming landscape continues to evolve and grow more fragmented, further demonstrating the importance and relevance of fuboTV's aggregation model. We remain committed to providing customers multiple and flexible packaging options from skinny bundles to the full virtual pay TV bundle and everything in between. In recent months, we've seen the industry follow our lead and introduce skinnier content bundles. We are gratified by this because we believe a streaming landscape with multiple benefits all consumers. We continue to focus on meeting consumer needs at every point along the demand curve. As we have previously communicated, our skinny bundle offering will include a sports and broadcasting service.

In addition to featuring content from The Walt Disney Company, we are working hard to secure content from non Disney programmers for the new service. It is critical for fuboTV subscribers that we are able to negotiate content licensing agreements at fair rates and terms. Our goal remains to launch this service for the fall sports season. In closing, we continue to focus on consumers and what they expect from a streaming service, namely premium content, and innovative product experience value and above all choice. At the same time, our priority is providing value for our shareholders and we remain focused on achieving profitability in our streaming business this year. We look forward to keeping you updated on our progress. I will now turn the call over to John Janitas, CFO to discuss our financial results in greater detail. John? Thank you, David. Good morning, everyone. Our performance during the first quarter validates our strategy to optimize our aggregated content platform even amidst changes in the media landscape and a potentially cautious consumer outlook. We achieved North America revenue growth of 3.5%, within our guidance range our North America subscriber count of 1,470,000 was ahead of expectations. From an advertising revenue standpoint, ad revenue for the quarter was $22,500,000 down 17% year over year.

Largely due to the discontinuation of Warner Bros. Discovery Televis and Univision Networks, Excluding these impacts, our underlying performance improved year over year. Net income from continuing operations was $188,000,000 or $0.55 per diluted share, compared to a net loss of $56,300,000 and a loss per share of $0.19 in the prior year period. It is important to note that net income includes the $220,000,000 gain on settlement of litigation. Adjusted EPS loss improved to $0.2 a marked improvement compared to a loss of $0.14 a year ago. As we made meaningful progress reducing non operating expenses and narrowing adjusted losses. Adjusted EBITDA was negative $1,400,000 a $37,000,000 improvement year over year highlighting our ongoing focus on cost control efficient growth and driving leverage in the model. Turning to cash flow. Net cash provided by operating activities was $161,000,000 reflecting the $220,000,000 impact of the gain on settlement of litigation. Free cash flow improved by $9,000,000 year over year. To negative $62,000,000 as we remain disciplined in our capital allocation and working capital management On a trailing twelve month basis, we improved both adjusted EBITDA and free cash flow by more than $100,000,000 underscoring the effectiveness of our profitability initiatives and operating efficiency.

Looking ahead, North America guidance for 2Q twenty twenty five calls for subscribers of 1,225,000 to 1,255,000 or a 14% year over year decline at the midpoint. And revenue of $340,000,000 to $350,000,000 a 10% decline at the midpoint. Note that this guidance includes the continued impact of our recent drop of Televis and Univision content and reflects the benefit of one time sports events in 2Q twenty twenty four. For Rest of World, our Q2 guidance projects subscribers of 325,000 to 335,000 down 17% year over year and revenue of 6,500,000.0 to $7,500,000 reflecting a 15% decline at the midpoint. In closing, for several years, we've been driving important investments in fuboTV technology and then made strategic content changes resulting in significantly improved profitability and cash flow under challenging circumstances. Looking ahead, we are energized by what we believe we can achieve through added scale with our pending transaction Hulu plus Live TV. In the meantime, we remain firmly focused on achieving profitability in 2025. Alongside executing on our long term strategic priorities. I would now like to turn the call over to the operator for Q and A. At this time, I would like to remind everyone Your first question comes from the line of Dave Joyce with Seaport Research Partners.

Please go ahead.

Thank you. A little bit more color on the content front please. Given the Tel Aviv's Univision did say on their earnings call that they would look forward to being in discussions with you again. Is there anything new that you can report on that front since they expressed that interest And also on the content side, how are you progressing on getting your programming contracts all realigned for skinnier packages in time for the football season? Thanks. Hey, David, this is John. I'll take the first one and maybe David will talk to the skinny package progression. Look, on television and Univision, I would say no updates to share, but as you know, look, there's been content we've dropped in the past that we brought back. Consistent with what we said last quarter, I think we're certainly open to those discussions with acceptable terms and that's important. But the interim, we've lowered the price on our Latino package We're seeing solid interest, and always looking to improve our offerings to our customers. But I'd also say as we mentioned, the impact will continue into the second quarter. We're now about four point five months since the drop. But as the time goes on, the impact on the subscriber base will be more modest.

Yes. And this is David. As to the second part of your question, look, we're we are very focused on releasing skinny bundles. We've stated this many times. We started offering some standalone services and early indications, you know, really I think, create a situation for us where we feel very comfortable that there's probably a growth opportunity headed into the fall. So we're very focused on completing our content deals with the non Disney partners. But, of course, we've made it very clear that it has to be on acceptable terms at a fair market price with the same flexibility as other distributors. So that'll be our focus, in the short term, and we look forward to providing you more information as we move forward on that front.

Your next question comes from Clark Lampin with BTIG. Please go ahead.

Thank you. Good morning.

For David or John, I'll sort of ask the obligatory macro question and [indiscernible] curious if you guys have seen any impact 2Q to date or whether maybe you expect as a result of some lag effect impact any impact on your gross additions churn or on the ad side of your business demand in The U. S. And then for 2Q, John, I don't know if it's possible quantify for us or give us a sort of even directional sense for what 2Q growth would have looked like had you not had the Copa America and Televisa impact that might be challenging quantify, but would just be curious I guess you have a sense for what like for like performance across The U. S. Is looking like right now? Thank you.

Yes, sure. I'll take those, Clark. So I'll start with the second question first. Look, on 2Q, to your question, we have ongoing churn in the Latino package as we referenced. Then to your point, we had COPPA last year. If I were to kind of clean it up and calculate the same store, if you will, I would say on a same store basis, our subscriber growth looks to be relatively flattish. On the macro side, what I would say is look, short answer, nothing stands out in terms of tone. From both our customers and our advertising partners. I'd say on the customer side, to your question, I think overall churn for our endless package is relatively in line or actually slightly better on a year over year basis even with the price increase. I would say also that reactivations were better than we expected for the month of April.

Which I think is relevant given the timing of some of the macro headlines out there. And then on the advertising side, I would say if I look at what I would just call year to date on a monthly basis, April is actually our best month in terms of of growth.

I would say that as a reminder in terms of modeling that we lapped the Discovery Scripps drop as of the April. And so we'll see more of a normalization of our advertising business starting now.

Your next question comes from Laura Martin of Needham. Please go ahead. Good morning. Okay. So David, I wanted to ask you about rest of world. We've got the rest of world subs down 11% for the the last six months now. ARPU is down. Revenue is down. I know this was, my recollection is sort of it was an occupier. Is this business is this business just gonna shrink structurally? And how are you thinking about rest of world And then also for you, David, I wanted to know about GenAI. Are you guys doing with GenAI integrating some of the new forms? Are you doing anything with creative or average advertising with using GenAI tools? And then, John, for you, revenue down, 17%, sort of disappointing. And I didn't understand why it mattered if we dropped certain networks. You guys have plenty of networks. So why would did they have some kind of commitment where they had to advertise with you? Because you have plenty of ad inventory, so I don't understand why losing two big content players would actually drive ad revenue down 17% year over year. Thanks, guys.

Okay.

Yeah. Laura, I'll I'll take that first question. There's a lot in there. On the Molletop side, I think we've said this many times. It's really about team tech technology. And and the synergies that we see with that business. As we've stated now since 02/2022, despite all of the whiplash that we've seen over this period of time, from, you know, the larger companies like Netflix and others and you know, plus services, etcetera. Our goal has always been profitability. Profitability over growth.

Molotov is like fuboTV. We set that same expectation, and they have to get to profitability. And, you know, we feel comfortable that they will get there. And then on the other side of that coin is the fact that we are really focused on building out our unified platform We feel very good about where the platform is today. FuboTV is itself is now on that platform. We are now onboarding Molotov you know, in terms of subscriber growth, it's very simple. You know, it's a it's a relatively straightforward formula. You have to invest in marketing, and we as we stated, investing in marketing is an upfront cost that has you know, short term you know, cost implications and so that has not been on forefront for us. But, yeah, international is a, an important piece to the long term trajectory of this business. We see what YouTube has been able to accomplish on a global basis and where the majority of, you know, viewership and revenues coming from international. We see the same trend with Netflix. I think even Reed Hastings when he was still CEO, had mentioned that many, many times the importance of international. And we're getting everything ready.

You know, to expand at the right moment at at the right time. And so this will be a test ground as it has been, and we're we're almost there. John, would you like to take the rest of this?

Yes, sure. Laura, I would just add one thing to David's comment that to your point, with the subscriber decline there, we had or the team had EBITDA that came in comfortably ahead of budget.

So again profitability remains the focus.

In terms of your question on the ads, would say a couple of things. One is, just don't forget that we do have ad insertion for those networks. So for instance, both on the Univision nets and on the Discover scripts nets, we're losing ad insertable hours. And so and there's a direct impact on that.

If I were to normalize for that, I would tell you that Q1 would have actually been upsliding on a year over year basis And I would tell you that 2Q looks to be a little bit better than Q1.

Your final question comes from Alicia Reese of Wedbush. Please go ahead. Hey, guys. Thanks for taking my I have a few as well. On the ad spend you know, I'm wondering if you could dig in a little bit on how your gamified ads are tracking and how, you know, you can get more advertiser interest while the budgets are tight tightening with features such as that.

If it's gotten much traction so far, had heard in the quarter that it has, Jesus, double click on that, I'd appreciate it.

Yes, sure. Hey, Alicia, this is John. I'll take it. Look, I'd actually broaden it out from Gamify to what I would just call interactive ads. And look over the past, I'd say couple of quarters or a few quarters you've seen us and read about us launching various new formats that I would just call interactive, gamified, etcetera. We're also be launching shoppable. But if I take that as a larger bucket, I would say that we're really starting to see some good traction.

And so our interactive ads are up 30% or 37% year over year.

And I'd say that interest is actually accelerating.

I'd say our ad products overall in terms of big picture up 41% year over year for the first half. And so we're seeing acceleration. Look, I would say candidly, the sales cycle was a little bit longer than I would have expected initially. But I'd say that we're actually like what we're seeing. And then in terms of of advertiser interest as budgets potentially shrink, look, I think that we need to innovate.

And I would say our ad sales team was was at a conference earlier in the week. We had very strong interest from a variety of parties, including the HoldCo's.

About a new ad format that we've just brought to market. And I expect that I'll start talking about that on our next quarter's call. But we feel like what we're seeing from our pause ads from Marquee among others.

There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.