Q1 2021 Fubotv Inc Earnings Presentation
So total viewership hours up to 228 million and.
And hours per monthly active user up 8% to an amazing 129 hours per month on average. We also delivered strong advertising revenue growth of 206% year over year to $12 $6 million and advertising of $7 and 11 driving us towards our.
At a more than double our advertising revenue this year, our impressive engagement metrics, particularly our time spent indicate that consumers prefer a holistic content bundle with a wide assortment of premium content.
In our view the virtual Mvpds category will continue to gain popularity.
Over the long term, we believe it will become more burdensome and expensive for consumers to actively manage numerous asphalt services some of which carry slices of sports content.
We expect consumers will look for a more unified and personalized streaming experience that provides easy access to premium content.
Average sports teams and live TV channels.
And of course at a fair price.
Tumors come to food Oh television for our superior value our year round content offering live sports any customer centric innovative product experience.
We continue to be measured and disciplined in our constant approach investing in data to make informed decisions on the programming our consumers want to watch.
To further our sports first differentiation, we recently acquired the exclusive rights to South American World Cup qualifiers also known as Carnival, featuring some of Soccer's, most competitive teams, Argentina and Brazil.
We believe comparable will not only be a driver of engagement and monetization, but also a means to solidify our brand ahead of the upcoming World Cup in 2022.
We've also signed new distribution agreements with marquee Sports network, Chicago, and AT&T Sports network Pittsburgh that further extend our leading position as the live TV streaming platform with the most regional sports networks and our base package.
Recent activity by gaming and distribution companies has validated our vision of creating an immersive sports entertainment experience.
We believe we'll have a very distinct advantage compared to sports books that are partnering with media and distribution companies uniquely football TV will look to combine streaming and gaming under one data analytics platform, delivering a holistic and seamless user experience with lower cost of acquisition.
To accelerate the launch of our owned and operated sports book and entry into wagering in the first quarter. We completed the acquisition of sports betting and interactive gaming companies victory for a total of $37 $2 million comprised of the merger consideration and equity compensation vesting over future periods.
With victory, we acquired the technology to build a consumer driven sports betting product and accelerate our entry into the online wagering market.
Our new Fubu gaming subsidiary is led by my co founder Soho Choi and victories, Sam Ratner and Scott you Tara alongside key industry hires like all league on a body, our new head of regulatory technology.
Our day, our gaming team has decades of experience navigating the complex gaming regulatory environment and has already made significant progress. This.
This is evidenced by our recent multi market access deals with Caesars Entertainment one of the largest gaming entertainment operators in the United States.
<unk> Sports book is expected to launch in the fourth quarter subject to obtaining requisite regulatory approvals.
We are on pace with our internal schedule and making great progress in both market access discussions and product development.
Our gaming team is growing at a fast rate already hiring dozens of full time employees, including experienced industry executives.
Turning to our predictive free to play gaming strategy. We are now completing our minimum viable product and are excited to bring it to market.
We plan to test the experience integrated into our core video product in the next few weeks.
In summary, it has truly been a phenomenal quarter positioning the company for a stellar 2021.
Not only do we have many growth opportunities in the market to be excited about but we're also in the early innings with 78 million households, still tethered to legacy pay TV.
The three mega trends I laid out one year ago cord cutting advertising and sports betting are converging and quickly evolving in our direction.
We believe that with our forthcoming sports wagering integration, we have the platform and the expertise to innovate sports entertainment. Unlike any other company.
I look forward to updating you on our progress and we'll be on Twitter later this evening to answer questions.
And now I'll pass it over to Simona to discuss our Q1 financial highlights and raised guidance for 2021 Simona. Thank you David and good afternoon, everyone. In Q1, we exceeded our outlook and continue to make significant operational and financial progress our strong results reflect our strategic investment in people.
<unk> data and technology with a long term goal of achieving profitability and positive free cash flow as I walk you through our financial performance I would imagine comparisons to the coupons. It doesn't imply any pro forma for both TV pre merger plus space lengthy merger, excluding the businesses. We divested in July 2020, based Bank AG and next week. This is.
Consistent with our shareholder letter.
Revenue for Q1 was $120 million, our highest quarter, yet with an increase of one other 35% year over year or 14% sequentially over Q4 of 2020. This growth was driven by strength in both subscription and advertising revenue subscription revenue increased one out of 31% year over year driven by growth.
In both subscribers and Aqua, we grew subscribers by one 5% to a high volume of 90000 for the first time, we unlock sequential growth in both revenue and subscribers in the first quarter that will make these scale, yet and we achieved this growth efficiently, reducing sales and marketing expenses as a percentage of revenue front weighted.
28% in the fourth quarter of 2022, 18% in the first quarter of 2021 subscription article expanded by 25% year over year to $61 98.
This growth was propelled by investment in product packaging and Upselling tactics, but also very pleased to see that investment in our advertising business are paying off.
License revenue grew to one 6% compared to Q1 2020 fueled by improvement in all key levers CPM engagement and fill rate.
Advertising is also affected by market seasonality. So these notable debt for our first quarter of 2021, our revenue was on par with our fourth quarter 2020 on driving setting us up for a solid year average.
Lots of increase per user engagement and strategic investment in key areas advertising are for increased 57% year over year to $7 11.
We believe our investment in that attack will deliver attractive returns for our brand partners, while growing cpm's overtime. In addition, the growth of our subscriber base and increased engagement should allow us to keep expanding inventory and increasing adapt for going forward. Each one we deliver positive adjusted contribution.
Margin of five 3% up 230 basis points from 3% in Q1 2020. This growth was driven by strength in our advertising business and subscription article expansion, partially offset by contractual annual escalators in our content distribution agreement most of which take place and generally our cash.
And offering was largely unchanged between the fourth for because it doesn't 20 in the first quarter of 2021, however, compared to Q1 2020, our content offerings. This quarter was larger given the addition of the Disney and ESPN networks, our ability to support content additions, while expanding contribution margin year over.
The flex our overall approach of scaling efficiency, while making investments in the future of our business for.
For these reasons, we remain very comfortable debt, we will be able to deliver year over year adjusted contribution margin expansion in the coming quarters.
Operating expenses for the quarters were up 80% year over year 55 percentage point lower than the one other 35% increase net revenue. This is evidenced of our increasing operating efficiency, notably our reported subscribers related expenses, which primarily consist of content costs accounted for 94, 6% of total revenue.
In the quarter, an improvement on 19 percentage points year over year.
During the first quarter, we accelerated invest 19 marketing technology infrastructure and wagering to build on our momentum.
These resulted in a planned expense increase in absolute dollars year over year, we significantly reduce expenses as a percentage of arriving.
These drove a material year over year improvement in our adjusted EBITDA margin from minus 72, 3% to minus 38, 8% as we for was on our path to profitability head count at quarter end increased 31% over Q1 2020, as we made investment in engineering product advertising and wagering among other areas.
While we expect to keep adding head count in the coming quarters to expand the business. We are confident in our ability to continue to deliver year over year margin improvement net loss was $70 2 million is included approximately $21 million in expenses for depreciation and amortization stock based compensation and accounting and what.
Mutational debt discount.
Yes in Q1 was negative 59 cents.
These included two cents negative impact from expenses related to the launch of our wagering business and two cents negative impact related to the amortization of the debt discount from the senior convertible notes that we issued in February 2021.
No debt our EPS is based on weighted average shares outstanding in Q1 equal to approximately 119 million. We closed the first quarter. We won other $40 5 million common shares outstanding following the conversion into common stock over the $46 for millions of shares of Suez I believe preferred stock reported at the end of 2020.
This conversion was completed during Q1 in February.
During the first quarter, we also strengthened our balance sheet and further optimize our capital structure as of March 31st we had for under $65 million in cash cash equivalents domestic debt cash, which included $390 million net proceeds following our issuance of convertible senior notes that will mature in 2026 in the quarter, we always.
So fully repaid $5 million from other loans.
And more recently in May we repaid a senior loans with AMC network outstanding at the end of Q1 further advancing our progress to optimize and simplify our debt structure.
Operations operating cash flow in the quarter was negative $53 9 million and.
An improvement of more than $20 million compared for the fourth quarter of 2020.
Q1, non but included $13 million impact of payments associated with wagering onetime content through our payments and timing of some annual operating expenses paid in the quarter.
Given our strong start to 2021 and confidence in our growth trajectory, we are increasing our full year guidance by $120 million to $530 million in revenue in 2021 is equates to year over year growth of 19, 9% to one on for 3% and a 23 percentage point increase at the midpoint compared to our targets.
Previous guidance.
We are increasing our guidance for end of the Peter subscribers to 832, eight times debt 50000, implying year over year growth of 51% to 55%.
These subscribers outlook reflect net addition of at least one other 82000 across 2021, 22% higher than our 2020. Net addition of two other 32000.
Focusing on the second quarter, our guidance for revenue is $120 million to $122 million, implying year over year growth of 172 to one on day, 76% and for subscriber is 600 to 605000, a growth year over year or 110% to 111%.
The above guidance does not include any project revenue from online sports Wagering, we're very pleased with our execution on our wagering plans and look forward to providing more details on launch dates and target markets during our second quarter earnings in August.
As of six years old company in a rapidly changing market. Our priorities for 2021 include growing subscribers and monetization investing in product and expanding into sports wagering is always we balance investment in the future with an eye to efficiency profitability and cash flow breakeven, we're very optimistic about our ability to execute on.
Our long term goals. Thank you for joining us for the call today, we will now take your questions.
Thank you Simone eight for now going to turn it over to our analysts to dig into some Q&A. Thank you. Please try to limit yourself to two questions.
Our first question comes from Jed Kelly of Oppenheimer, Chad great to see it.
Hey, Thanks, Burnley Thanks, David Thanks volume for doing this.
Two questions. If I may 1st of all can you talk about what's driving your improvement in churn is it more more products with the regional sports network for more I should say more content for the regional sports networks or better product and then David It seems like a lot of other sports betting companies are.
We're making a pretty big investment in the media we've seen a couple drafting made a pretty big higher. So can you just talk about what you would see this overall convergence between sports betting and <unk> any update on the product launches sure. So first on the churn Jed I think that's a great question, we've now delivered.
Eight consecutive quarters of improving churn.
Okay, we have been very focused on our product.
Our ability to customize for our customers.
Personalization features and we've just really improved from an onboarding perspective.
And then we also want to thank our marketing team because they've done a phenomenal job targeting higher quality subscribers. So all of this together has allowed us to really.
Drive improvements in retention and I think equally noteworthy and I think you may have mentioned this to me in passing.
That you know not having turnover could probably have a negative impact.
On retention so what this clearly shows us that we have a very solid product people enjoy using Fu Boe and we continue to gain more market share.
With respect to your second question around sort of the changes in the ecosystem I think I've been the first one to actually say that I think that these two major areas are going to converge that streaming and wagering and I think what we do is actually quite difficult as you know we're already competing against one.
Trillion dollar companies right the googles of the world the Amazons of the world the Disney's et cetera on the Hulu side and again, we continue to take market share in 2019.
In 19, I think we had just below 3% of the virtual let me have any market share today, where we're approaching 5% north. So so we're feeling really good about that and as I've seen the recent news, which has validated what I've been saying.
So we're very well positioned as I said, we've been developing our team we're very happy with our acquisition of victory.
And we're meeting our schedule and we're about to roll out in beta.
No our free to play games, which are when we look at the surveys that we've done on the platform.
With a pretty decent sample size, what we found is that 30% of our subscribers that have watched at least two hours of sports on Fu both 30% are willing to participate in free to play that's one number to 20% of our subscriber base. That's our paid subscriber base has <unk>.
Already placed the debt and 22% of our subscriber base is willing to place bets on for both so we think we're very well positioned we think and as you've seen from our numbers.
Our ability to really drive down sac or subscriber acquisition cost for those who don't know.
It's been really successful and I think we're going to be able to really put together a service that's going to drive down subscriber acquisition costs on the gaming side. It's also going to improve engagement, which subsequent subsequently will improve our net gaming revenue lack of bonuses.
And overall just usage on the platform, which will also drive advertising. So I think we're actually pretty far ahead on that front and what's also important to note is that we're actually building a new category and we are very lucky to be able to define what that category is going to look like so I'm actually happy to see that others are also thinking.
The same way and the most important is that the barriers to entry as you know are quite high. So we feel very good about our positioning and our recent results really demonstrate our ability to be able to compete with bigger companies. So we're looking forward to really building out that portion of our business.
Thank you.
Again, our next question comes from flat at CAD jewelry from Evercore go ahead.
Okay. Thank you let me try two please first can you. Please talk about just the overall strength in the quarter, what really drove the strength.
Subscribers in overall revenue and AD revenue.
It was very strong probably above your own expectations.
And then the second is on sports betting just following up on <unk> question.
Can you please remind us the overall opportunity.
And the size of the opportunity and second you talk about your advantage in this segment embedding in your life around really acquisition cost and engaging person and that is just around your integrated platform could you talk about what is your differentiated advantage versus competition in day. Thanks.
Sure. So on the first part of your question look I think at the end of the day with Kubota has demonstrated quarter in and quarter out it's really our ability to execute.
We had our marketing team has done a phenomenal job driving down our marketing as a percentage of revenue that's gone down from 28% to 18%, we've been able to drive more subscribers in the door, they're higher quality subscriber so our ability to really leverage our data capabilities that certainly has played into it.
And then our product team has really done a phenomenal job really introducing more customization.
More personalization.
For the products. So and then the advertising team as always does a phenomenal job. We're now at $7.11 and that's in the first quarter. So as you can imagine typically what you see is a much weaker first quarter than you do in fourth quarter and I think this really sets us up for a great year across the board. So we're very excited about that.
As for your second question you know.
It's clear to me we are the sport's first pay TV replacement service people come to <unk> for the sports. That's undeniable you see that all the time you see that in our media outlets in different articles and tweets that people send out you'll see that in the numbers in terms of the number of downloads you see for <unk> in seasonal months like September.
<unk> in October which are typically tied to the start of the fall sports season and more so.
The NFL. So we certainly have an advantage we have all of the you know the NFL games. So far obviously there are deals that have been done.
Recently with the NFL and the broadcasters, which in my opinion really guarantee the success.
<unk> of our business going forward and the virtual Mvpds space, because it's clear to me people want to have the best immersive experience that they can get and you know.
We offer a holistic user experience that now is going to allow us to actually provide.
New aspect, which is wagering and I think that's really important to note that that is a true advantage. We added I don't know if you noticed the shredder, but we sold 1.2 million attachments in the first quarter of this year. That's a 2.1 attach rate up from 1.0 in.
In Q1, so that tells you that we're actually pretty good at selling.
Incremental services. The other thing is consumers are engaging a 129 hours with our platform. So we're gonna have ample opportunities to continue to up sell them provide discrete and bespoke bedding opportunities, which by the way will drive our.
Net gaming revenue higher because we don't have to bonus a lot of those people. So I anticipate that as we continue to grow our base and again I want to make it clear don't look at our base in a very static way.
We had 540000 subscribers at the end of the year. We are now pacing towards 840000 subscribers. We have three market access licenses, we have you know.
Can't really get into other deals, but we are in advanced discussions.
With other jurisdictions and we are also spending a lot of time working with regulators right now to really talk about the authentication layer the ability to really leverage our data in ways that have never been leverage before so I'm super excited about our.
Our opportunity here and as I said to Jed, we are creating a new category there will not be many players in that space.
Super Thank you. Thank you.
Thank you for that at our next question comes from Laura Martin Needham Alright, great to hear.
Hey, Great numbers, you guys in the stocks at 24% because you just keep doing what you say you're going to see that thank you Laura.
Thank you Laura.
So let's drill down on advertising this advertising growth is exceptional and I guess, what I'm wondering is and I said.
Said in his prepared remarks, CCM celebrating engagement for a higher could we drill down on some of those metrics maybe what is your CPM running it used to be about 20 Bucks in your fill rate was about 50% can you give us where you are on those today and when you think for word I'm really interested in how much is programmatic versus direct sales.
Yeah, So why don't I start with the end.
Programmatic.
We're still roughly in the 93% to 95% range, which I think is actually quite good because as you know we just recently announced the launch of our new studio, which we think is going to provide advertisers more opportunities to create immersive experience for a very specific set of of customers our customers. So.
We think that that's going to drive value and obviously, there's going to be opportunities to drive C. P. M.
In terms of CPM generally speaking programmatically Youre right I think we were trending roughly around $20, we were actually south of $20.
<unk> have grown about 7%.
Which is actually a positive thing.
The reason why is because we're still in the 2026 I think is the range in Q1 now why that's important is because as you know we have significant upside potential.
To get to the 30 to 35 range as other.
Companies that have reported very recently, so I'm very bullish on the 711 $7.11 that we've delivered this quarter that we'll be able to do that going forward and as you know as you get closer into Q4, Cpm's continue to sort of to increase so I think we've set a very nice base for ourselves.
In the first quarter to really kind of drive cpm's for it as it relates to fill rate you know we've got a lot of room, there as well Phil is certainly up but you know we were selling out in the $60, 55% to 60% range last year. So again very similar to our CPM numbers youre seeing growth of right somewhere around 5% to 10%.
Again, very healthy moves we're very focused on fill before a rate. We think will drive right up organically those are kind of the two areas and then last but not least this viewership hours right. So you see viewership hours continue to increase and I'll just give you a quick nuggets for Q2, but April numbers, despite COVID-19 seem to be very strong obviously.
Stronger than our numbers in 2019, we can continue to see people spend more time watching TV on Fu BOE, we see people watching more programs for monthly active user we see people watching more channels.
You know at least April over April we have not looked at our may numbers, yet but.
But the numbers are coming in very strong and actually we're very excited about advertising going into Q2. We also have as you know we announced the acquisition of the South American World Cup qualifiers Carnival. So it's going to give us an opportunity similar like Roku did with Quebec, we want to test out some of our capabilities and our new relationship with a library.
So that it's going to be very interesting time, but we're very excited.
Okay and then my second question is.
You've taken a position in your net it's a little bit anti consensus which is a 10 year deals. The NFL Stein are good for our streaming but because they gave a lot of streaming rights I think there's at least an argument I hear from some investors that that creates more competition for flu volume starts towards sports screaming. It's true so I would love your.
Do you on that and why you think it's positive that the NFL signed these 10 year deals with lots of streaming rights included in that those terms yeah well. Thank you Laura that's a great question and that's why we wanted to cover it.
In the shareholder letter I think you've known US well you know me for a very long time now I think it's clear that we are natural contrarians, we've always been on the other side and so far based on track record that has been proven correct.
These deals are very important it guarantees the longevity of our business for the next 13 years right, which is always a criticism that you get is how do you know theres a future. The NFL is by far the number one media I'm not even going to call. It sports media property in the world at least in the United States right. So that's a very.
An important piece of our business. If you look at wagering data for any company that's already provided.
Their earnings numbers, you'll see that.
Far and away, it's Q3 and Q4 that does really the majority of the heavy lifting in our case. This is nothing new.
You've seen the Super Bowl has been available on Fox and CBS.
For the last few years. So there you know we've seen our customers.
Customers leverage different platforms to view sporting events, but again I'm a huge believer in aggregation and I've said this to you privately and publicly many times I believe that people want to have a unified and personalized experience. They don't have time or energy or the desire to run around looking for which games.
On which platform at which time, so again I'm very bullish on it but I think the key here is that those deals are decade long. So if anybody has any concerns about apple or anybody else coming in.
Obviously, we now know that's highly unlikely.
Thank you very much thank you.
Our next question comes from Kim growth at Barrington Kim. Please go ahead.
Thanks, I think I'll start out with one.
Regarding the Murphy deal and I think there are a couple of others that were similar to it a lot of your sports are more in terms of what.
I'm the networks with which you have a relationship.
Mercury seems a little bit different in Chicago I know the Cubs have created this.
Network of their own but could you talk about the terms, there and what you're expecting to get in terms of costs and subscriber additions out if something like that and the others like it.
Sure well first of all Jim. Thank you very much and just so you know we love the Windy city.
We've opened our headquarters up for a gaming team in Chicago. So we're very excited about that geography generally speaking.
As you know we also have a market access license in Indiana. So that is a region that has strategic importance for.
For our company, but we are continuing to increase the number of regional.
Our regional sports Nets sports networks on our platform.
Last year as you know we launched AT&T.
Southwest.
In Houston, we added Pittsburgh, and we renewed our deal with NES and so you know.
It's very important for our fans to get access to their favorite sports teams and I think in Chicago, you have a phenomenal team and the Cubs you know we're rooting for the Cubs always.
But at the same time, we think that Theres a huge sports demographic.
In Chicago that we certainly want to tap into and you know we're going to continue to look for opportunities to expand our sports coverage.
Both regionally.
And nationally, but again, we don't provide numbers on a on a state by state or sort of geographical basis, but all in we're very comfortable with our strategy and as you can see from our ARPA growth debt. We're certainly.
Able to make.
This workout.
Okay.
And I have a second question to them and I was wondering if you'd give a little more granular in terms of the monetization options for your gaming ambitions.
Is it primarily advertising or are you looking to get.
Payback and then additional ways in and also if you might frame out.
Hey sandwich.
They started monetization options by its surface and what sort of timeframe.
For what timeframe might they be.
More important for you.
Yeah very good question Jim.
Look I think the way, we think about our business is really about creating long term shareholder value.
And so the easy way out is to just develop an advertising business around wagering, but we already know and I just provided the survey data.
You know to one of your colleagues, but <unk>.
People on Fu Boe or customers on for both Love sports. They love our platform. They are extremely engaged we want to make sure that we're building more value for them, they're greater providing greater utility.
For this set of customers and more importantly, a new revenue stream for the company. The fact that consumers spend 129 hours in the platform. You know give me comfort that we're going to really be able to innovate around business models. So this is not a static company and I've said this before it's.
It's sometimes very difficult to understand evolving companies, but we think that we can just like in video we've taken 5% market share in the virtual Mvpds space I don't think it's unreasonable for us to take 5% of an expanding wagering.
Wagering market.
Which could be as largest $70 billion. So we think we're going to create more value for our customers, we're going to create more value for shareholders and from a monetization perspective Simona I think you would agree we're planning to launch in the fourth quarter that'll be a fully functioning sports book, a fully functioning sports book that we've acquired which is victory.
And that sports book will be ready to go in fourth quarter.
And as we get closer to the timeline for the launch would be able to provide more details on the wages for monetization as well.
Thanks.
You can see someone wearing a tie again and our next question comes from David Becker.
This year.
Yeah.
So but that I'm not worried.
Hey, guys hope you're well.
A question about content investment in general.
If you can elaborate a little bit on how you think about.
Return on investment for your content is it are you looking for a specific return on advertising or is it more about brand building at this stage sort of like in other spot model.
And similarly are you to what extent are you expect it to continue to invest in exclusive content over.
Over the next year or two and then the second question is.
Just around free prelaunch spending on the wagering product I'm wondering if you can maybe give us some color in terms of how much you expect to spend and if you're willing what point you can get your free cash flow breakeven on that product. Thanks.
Yes sure. Thank you David that's a great question. So in terms of our content approach as you know, we're very data driven in our analyses on many areas in content clearly is a critical one and we look at the return of the content in terms of their engagement in terms of advertising and in terms of.
Keeping people engaged on our platform or getting people to join our platform and become subscribers for approval. So based on these economics any dynamics you know, we're able to leverage and position our negotiation in a way to kind of give us a return that clearly we cannot disclose now but in terms of ensuring that we get the long term profit.
Related targets that we mentioned many times before and they just start already to see concretely in our numbers, even just looking at European outerwear subscriber related expenses in Q1 accounted for less than 95% of total revenue and subscriber related expenses, mainly content. So we continue to assassinate dynamic midway these content offering and really trying to.
Put together for the best possible package for our subscribers that we can monetize and invest in the best possible way.
Yeah, and just on the on the Wagering front, David that's a great question look I just want to make it clear to everybody that we have a very strong balance sheet, we've got over $400 million.
Of cash I think clearly we've demonstrated pound for pound, we execute like no other company and so we do not require the same type of funding that other companies need to actually.
Start to really drive value.
For the business so.
You know in my opinion I think for the rest of this year will probably look to spend under $50 million.
And that would just get us to launch so we'll be able to put a book out there.
By the end of this year sometime in fourth quarter again, we havent provided that.
That type of data, but we've got three plus market access licenses were working on more and you know we'll be in market.
At a lower cost than any other service out there and I'm very confident in our team's ability to actually deliver results and you've seen our acquisition costs I just think that as you kind of start targeting the same customers and offering them multi services I think you will really be able to take down our subscriber acquisition costs as well.
Well as our active player costs as well so we're very bullish on it we don't think it's going to cost us that much money.
To be able to get out there to market again. This is in line with the way we've continued to develop our own video business.
And I also think that people are looking right now for us to be able to provide that type of service and let's not forget we leverage our data very well, so we'll be able to provide a lot of bespoke and discrete.
Markets with embedding so I think that there's a lot of opportunity here for us to innovate and we are going to take full advantage of that at the end of 2021, and certainly well into 2022 and beyond.
Great. Thanks.
Thank you David Our next question comes from Dan Salmon of BMO go ahead Dan.
[laughter].
Hey, good afternoon, everyone I've.
I've got three questions.
David could we start by returning to your RSM differentiation and how important that has been to your subscriber outperformance here so far this year.
That will targeted strength in those markets that you highlighted like Chicago and Pittsburgh happening.
Second.
What are your expectations for your advertising growth rate. Once you lap. The addition of Espn's networks for the service.
And then finally, David I guess a bit of a big picture. One for you you talked a lot of other convergence in sports and streaming content here.
And your own efforts in both areas, including the South American rates. It seems like there's a category of content that sits right in between there just original commentary around sports betting we.
We saw Fox acquire kick.
Is more investment in that type of area does that makes sense for you that seems like a sweet spot that would make sense for Uber loved to hear your thoughts on that.
Sorry.
Uh huh.
Which one.
Okay can you sorry can you repeat the first part first question from our side then.
I was meant for us really.
Yes.
Super at how important for the RSM, Yeah, RFID strategies, so large subscriber growth where is sports first cable TV replacement service.
We're gonna be smart, we want to provide our customers with the best content that we can provide them with right and the greatest breadth of content. I think also we spoke offline and you felt it.
Could be some headwinds without Turner in March Madness, I think that we've really demonstrated that we know our audience well, we know how to target subscribers.
As it relates to sort of the the overlay of subscribers.
On the the geographical map I would say look it's pretty much in line with the size of the DMA, So you're going to get more customers in Chicago, and then youre going to get in San Diego. So we're looking for.
For markets, where people really care about their sports and we've always said that sports is local.
Again, we're just natural Contrarians that we felt this way, which we're the only ones who still carry Madison Square Garden Nesson. The Houston Astros. So we actually believe that people come to our service to really get that great breadth of.
Sports programming and we're going to continue to do our best to bring it to our customers at an affordable price and we're clearly doing that.
And then just one thing on sports betting I think it's really important to note I mean, we look at the earnings reports of a lot of the wagering companies as well and you know are sort of fluctuation or our growth is very similar to what you're seeing.
On the wagering side, which really gives us comfort as to our understanding sports because if you think about it what really what are these wagering companies really doing right. It's really about their ability to market effectively to get people in the door and we think that we have a solid product that allows us to do that at a very affordable and very efficient.
Cost and providing people with a great user experience. So we'll be focused on continuing to increase the breadth of content that we have and also target sports fans as we have been and looking forward to Q2 and beyond.
As for the second question I'll, just add on the point that David just mentioned I mean, ultimately you know clearly each one of these content negotiation and bring something you know that we clearly are very pleased in terms of results is the full package that clearly drive you know what the value that we're seeing you know it drives additional engagement not just on attraction of attention you know for them for all of our subscribers and the numbers that we commented.
One other I mean, the weaknesses in the first quarter and we believe that that would continue for the remainder of a day and beyond.
The second question you were asking them.
Advertising <unk> growth expectations once you anniversary ESPN.
Let me just start with Chad I think look it's clear you've been in this business for a very long time.
And you know that Q4 is a lot stronger than Q1, right as I like to say in my.
Retail example, you buy product on Amazon in Q4, and you return it in Q1.
The same logic here you have a massive Q4 you have the Coca Cola is the you know all of the the big CPG or coming in you've got you know.
<unk>, you've got everybody coming in that's really going to drive rate I think what we've done has demonstrated that we have a great strategy, where we're doing lots of other things that you would expect us to do we're investing heavily into our team into the AD tech capabilities that we have and we're going to continue to drive that number but the key is that we've already set I think a nice floor for us.
In terms of advertising revenue, so were I think really well positioned to more than double our advertising revenue this year and that's against a very solid comps as you mentioned.
In Q3, and Q4, but again, we feel very comfortable kind of where we are and again with the number of hours for people are continuing to consume Fu Boe, we feel comfortable we'll be able to meet our expectations.
Absolutely. So they increase the total area will continue for the remainder of it over the year in terms of other patent monetization for sure.
Sure.
Thank you Dan our final questions come from Dillon Heslin of Roth Capital go ahead Balan.
Hi, guys. Thanks for taking my question.
First could you talk about on.
On the player side for some of the adoption trends you saw.
Whether that was like the starting of the knee.
He attaches, there, adding and what sort of influence.
The difference is between monthly and quarterly on those plans.
And then secondly.
Can you walk us through the cadence.
Both like sub growth in engagement.
From Q1 until I guess looks like you guys numbers into April and how those trends compared to the second half of last year.
While other sports came back online.
Sure so.
Thank you Dylan that those are very good questions.
Comment on packages specifically.
What I will say is that you know.
Part of what we do well at <unk> is that we know how to leverage our data and so what you'll find is you're constantly see I've had somebody asked me I've seen packages. All the time now of course, we're always going to be testing new packages. We've got lots of consumers obviously, the bulk of our consumers that prefer a monthly packages we're testing out.
Different offers to see what's going to stick and by the way all of this is in preparation of wagering want to understand what those capabilities could be and how we should be positioning a dip.
Different attachments. So that's on the first part of your question you want to take the second part yes. The other do you mind sort of play through.
So you're kind of cycling thoughts other question.
Sure just wondering.
The cadence of sub growth and then they are engaging on the platform in Q1 into April and how that compared to second half of 2020 and sports came back yeah. So for sure. So as we've seen clearly we had significant you know a decent net addition of 43000 in the quarter.
That is being driven by you know gross adds as well as additional engagement and a potential for the platform for the remainder of the year. We expect that we will continue to kind of stabilize in the first half and grow more expansively in the second half of the simulator for dining you know in prior year and prior years, but you know we started from a higher base.
One day, we steadily now with a with a stronger first half for the year in 2021, just just to add to that look.
The cadence as good as I said April was a solid month, if you recall the pandemic hit sometime around March 15th where we saw a significant hockey stick increase in viewership that obviously went through April may and June.
And we saw the.
The impact of COVID-19 really in May April and May and then we saw I would say a decline in viewership hours last June we're very happy with our at least out in April and the first few days of May that we've looked at a really solid and again that really speaks to the quality of our product our ability to you know.
Improved discover ability of different content as I said programs for monthly active user are up as well as the number of channels people are watching are also up so to me. It really speaks to the quality of subscriber that we're bringing in and again, we have 78 million.
Households left to go. So this is a very large market and given where we are today at 5% I'm feeling really comfortable about the long term opportunity coupled with the you know the decade long NFL deals I think we are really good position to take advantage of those tailwind and just given our ability to execute I'm also very.
We'll.
In our ability to actually start driving value on the wagering side and when I put both of those together you know I think the path of product to profitability is actually quite strong. This is going to be a very interesting company and again, it's only six years old. So if you think about roku and Netflix and Spotify Youre talking about companies that are 15 to 25.
Five years old right. So we feel good about the tail winds, we feel good about the execution and we're looking forward to Q2.
Thank you so much sterling and many thanks to our shareholders or analysts for their good questions and other super fans out there for them.
To keeping you updated on our progress and die remarks for today. Thank you. Thank you.