Q2 2021 Fubotv Inc Earnings Call
<unk> 'twenty 'twenty 1.
With me today is David Gambler, CEO, and cofounder of <unk>, and Simona Nardi CFO of Blue belt.
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 Dot Bubo Dot TV before.
Before we begin let me quickly review the format of today's presentation, David is going to start with some brief remarks on the quarter and flew both strategy and Simone I will cover the financials and guidance.
Then I'm going to turn the call over to the analysts to dig into Q&A.
Before we begin I'd like to remind everyone that the following discussion may contain forward looking statements within the meaning of the federal securities laws, including statements regarding our financial condition anticipated financial performance market opportunity business strategy and plans and the expected launch of free to play gaming span view.
Sue both sports book. 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 can be found in the risk factors section of our quarterly report on form 10-Q for the quarterly period ended March 31, 2021 filed with the Securities and exchange.
Commission on May 13th 2021, our quarterly report on form 10-Q for the quarterly period ended June 30th 2021 to be filed with the SEC and our other periodic filings with the SEC. These statements reflect our current expectations based on our beliefs assumptions and information currently available to us. Although we believe these expectations are reasonable.
We undertake no obligation to revise any statements to reflect changes that occur. After this call. During the call. We also refer to non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results reconciliations of these non-GAAP measures to the most directly comparable.
GAAP measures are also available in our Q2.2021earnings shareholder letter, which is available on our website at IR Dot bubo dot TV with that I will turn the call over to David.
Thank you Allison and thank you all for joining us today.
I'm very excited to discuss our Q2.2021 results and to give you an update on how we are executing on the opportunity in front of us.
Our second quarter results demonstrate continued strong execution and meaningful advancement towards our long term growth and margin targets and we are once again, raising our full year guidance.
We achieved meaningful traction across all of our key growth initiatives in the quarter. While also capitalizing on favorable trends, we are seeing in the industry.
This drove outperformance on revenue, which grew by 196% to $130.9 billion advertising revenue, which increased by 281% to $16.5 million.
Paid subscribers, which grew by 138% to over 681700 and content hours streamed which increased by 148% to over 245 million each compared to the second quarter of 2020.
As we've cited previously our strategy is rooted in the intersection of 3 Megatrends.
The secular decline of traditional TV the shift of TV AD dollars to connected devices and online sports wagering market opportunity, which we believe complements our sports for live TV streaming platform.
We are laser focused on staying ahead of these trends.
Our vision is to activate a streaming platform that transcends the industry's current virtual mvpds model and transforms passive viewers into active participants.
Importantly, we achieved these results while also making significant progress towards our path to profitability with adjusted contribution margin at 8.3%, that's up 316 basis points year over year, and 301 basis points sequentially. This growth was driven by our <unk> expansion in our advertising and subscription biz.
<unk> and as a result of strong execution associated with Upsells and packaging. It's also evidenced by the 1.5 million attachments sold at the end of the quarter. We have repeatedly asserted that there will be a major shift back to aggregation and bundling as the proliferation of escalade services becomes increasingly burdensome.
And costly for consumers.
The industry now echoes this view recently pointing to consumer for T. As a consequence of actively managing numerous subscriptions and disparate sources of content.
We believe that the delivery of a unified.
Personalized and interactive streaming experience is the future of the space and the key to capturing market share.
And consumers agree.
As they continue to cut the cord and go virtual they are increasingly choosing <unk> over more expensive legacy pay TV services due to our innovative product experience and customer friendly approach and all for an affordable price.
This dynamic along with a heavy sports calendar drove a healthy 91291 net subscriber additions in the quarter compared to a decline of approximately 1000 in the same period last year. We have added approximately 396000 net subscribers since the.
Second quarter of 2020, resulting in subscriber growth of 138% year over year compared to just 31% growth for the entire virtual mvpds market over the same period.
Equally noteworthy we drove strong subscriber growth with efficient deployment of sales and marketing dollars in the quarter, which came in at only 16% of revenue down from 18% in the first quarter of 2021.
We also improved churn by 203 basis points year over year.
Our investment in product enhancements and content personalization are driving year over year lifts in underlying retention.
These investments along with improvements to our technology and platform infrastructure increased total viewership hours stream to 148% year over year and our monthly active users watch an amazing 134 hours per month on average in the quarter.
Our impressive engagement metrics, particularly the number of hours viewed indicate that consumers prefer a holistic content bundle with a wide assortment of premium content.
In our view, we are still in the early days for virtual Mvpds and our category will continue to gain popularity.
The second quarter was also record breaking for our advertising business as we delivered the strongest AD sales quarter in our history AD revenue reached $16.5 million and grew 281% year over year advertising ARPA was up 62% year over year to $8.70.
And increased 22% sequentially driving us closer to our goal of more than doubling our advertising revenues. This year. This growth demonstrates the strength of our advertising model offering brands the engagement and premium live content augmented by the efficiencies and addressable targeting capabilities of <unk>.
Connected TV platform.
In the second quarter, our recurring Advertiser base of Fortune 500 companies and Blue Chip National brands continue to rapidly expand.
Advertisers are drawn to our platform is differentiated and highly engaged premium paying audience.
As I said at the top of the presentation for.
<unk> TV is laser focused on activating our vision of an immersive sports entertainment experience.
Recent partnerships between gaming and distribution companies further validates the demand for a convergence offering.
The market is moving in our direction and we are staying at the head of the curve.
The launch of our own sports book is an important driver of the strategy as we aim to develop a flywheel turning passive viewers into active participants defining a new category of interactive sports Entertainment TV.
For both sports book will represent an industry first live sync integration between video and the sports book.
We are building for both sports book to be holistic and hyper personalized betting experience, reflecting what the users watching on for both TV at that very moment.
And for the first time I am really excited to share a preview of this particular integration. It's the first of many to come.
Okay.
Yeah.
Okay.
You can see how the app immediately updates with relevant bets in real time based on what the users watching.
Even as they change the channel to a new game.
This seamless connection between streaming video and our mobile betting App is a feature we believe only fu boat TV can bring to market.
As we scale our team we expect to accelerate our rollout of product features to enhance and differentiate the customer experience.
In July we announced a market access agreement for Pennsylvania through a partnership with the Cordish companies, our fourth state following previous agreements for Iowa, as well as Indiana and New Jersey.
We believe we are in the early innings of a massive opportunity and while these launches are subject to obtaining requisite regulatory approval.
We are extremely pleased with our progress thus far.
I'm also excited about the launch of predictive free to play games.
Free gaming serves to educate and train our customers, which we believe will ultimately reduce the learning curve.
And drive greater levels of adoption of our sports book.
We believe this will have a positive impact on retention engagement and advertising sales strengthening unit economics over time.
In summary, it was a spectacular quarter and we believe our sports first cable TV replacement product is very well positioned for a strong second half of the year.
The second quarter represents continued advancement towards our plans to build and scale a new category of interactive sports Entertainment.
We believe that our evolving sports wagering integration, our talented team distinctive partnerships and nimble technology stack position us well to build a category defining company.
I look forward to updating you on our progress and will be available on Twitter later, this evening to interact with shareholders.
And now I'll pass it over to Simona to discuss our Q2 financial highlights and raised guidance for 2021 Simonyi. Please go ahead.
Thank you David and good afternoon, everyone echoing David's comment I am very pleased with our operating performance this quarter as we exceeded our outlook and made significant operational and financial progress in delivering top line growth and margin improvement.
These results reflect our ongoing investment in people content product data and technology and position us to continue delivering revenue growth, while tracking towards our long term path to profitability and the generation of positive free cash flow the growth rates of both subscription and advertising revenue accelerated from their already strong.
Q1 levels, taking overall revenue up 196% year on year to $131 million in the second quarter of 2021 up 9% sequentially over the first quarter.
Q2, 2021 was our strongest quarter on revenue today.
I'm packing the performance subscription revenue increased 189% year over year to 1 either a $14 million driven by strong growth in both subscribers number an article we ended the quarter with 6 times for 82000 subscribers, an increase of 138 per cent or 396000 net adds.
Lesions when compared to Q2.2020.
We the Libre this robust growth through acquisition efficiency as well as improvements in retention, resulting from our interactive product and curated content offering.
Subscription article expanded by 30% year over year to $71.43 propel by investments in product packaging and upsell tactics advertising is a key component of our growth and monetization strategy and we saw continued strength on this front in the quarter.
Advertising revenue surged to 181 per cent, Seattle, although year to $16.5 million and accounted for 13% of total revenue in the quarter compared to 10% a year prior.
Advertising article grew 62% year over year to $8, 70%, making Q2.2021, our strongest advertising quarter to date.
As David alluded to earlier this continuous strength exceeds our robust subscriber growth and he has built an enhanced monetization as we continue to extend our differentiated value proposition to advertisers by providing them access to our platform highly engage premium paying audience on.
On the profitability side within Q2, we also made significant traction towards our long term goals delivering adjusted contribution margin of 8.3% up 316 basis points year over year and up 301 basis points sequentially. This was driven by a 62% increase year over year.
Rising output and a 30% increase in total output as well as continued optimization of our content offering.
These position us well to continue making deliberate strategic investment in content technology and infrastructure optimize our market position and grow share.
While also driving margin expansion on a year over year basis.
Accordingly, as we lay the foundation for future growth, we expect expenses to increase in absolute dollars year over year, but significantly less than our expected revenue growth operating expenses as a percentage of revenue in the second quarter improved 97 percentage points for 252 per sign in Q2.2020.
<unk> to 155% in Q2 thousand 21, underscoring our continuous focus on driving operating leverage in the business.
Within expenses it is worth noting that subscriber related expenses, which primarily consist of content costs accounted for 92% of total revenue in the quarter, an improvement of 28 percentage points compared to the prior year and our sales and marketing expenses as a percentage of revenue went down sequentially from 18 per standing there first.
Water to 16% in the second quarter of 2021, showcasing hours increase efficiency and growing our subscriber base.
As a result, we achieved a meaningful year over year improvement in adjusted EBITDA margin for -95% to minus <unk> 36 per cent net loss in Q2 was $94.9 million and included approximately 44 million noncash expenses stock based compensation Remeasurement of Warner liabilities amortization.
Nation of intangibles and of that discount EPS in the quarter was negative 68 cents compared to a loss of $2.08 in the second quarter of 2020 adjusted EPS in the second quarter 2021 was a loss of 38% excluding the impact of stock based compensation the measurement of warrants liability.
<unk> and amortization of intangibles and of the debt discount related to our 2026 convertible notes.
Expenses incurred for the launch about wagering business impacted EPS and adjusted EPS by 2 cents in the quarter.
Now turning to the balance sheet, we ended the quarter, we for under $12 million in cash cash equivalents and restricted cash. This includes the $18 million impact in Q2 over there for repayment of the senior secured loan to AMC networks.
As part of our ongoing capital structure optimization that is resulting in a strengthening balance sheet and a significant reduction in our cost of debt.
Operating cash flow in the quarter was negative $33.6 million improving $20 million compared to the first quarter of 2021, and inclusive of $4.3 million negative impact from payment associated with the buildup of our wagering business moving.
Moving now to our outlook given our strong performance in the first half for 2021, continuing industry tailwind and confidence in our growth trajectory. We are once again, increasing our full year 2021 revenue guidance to $565 million at the midpoint, representing a 116% increase year over year and.
Up from an increase of 101% reflect that in our prior guidance. Similarly, what increasing our end of the subscriber guidance for 2 and another 15000 at the midpoint up 67% year over year subscriber outlook implies full year 2021, net additions of at least 367058 per cent.
Higher than our full year 2020, net additions of 232000 Tony.
Turning to the third quarter, we estimate revenue to grow to $142 million at the midpoint of the guidance up 132% year over year, we estimate annual Peter subscribers to come in at 815000 at the midpoint a growth of 79% year over year.
I would also like to highlight that our guidance does not include any revenue contribution from our sports wagering business. While we are very pleased with the progress we're making both in securing market access licenses in new states and building up our sports books were still in the early innings of this opportunity and as you approach I would expect the new market launches in there.
Second half for the year, we plan to increase our investment in estimate between for 35 and $45 million of wagering expenses to hit the P&L in the second half a day a year is.
These expenses will be largely driven by the operating and marketing investment associated with our planned launches.
Again, we're pleased with our execution on our wagering plans and look forward to providing more details on launch dates as well as target markets in the ensuing weeks as the growth regulatory review process continues.
In closing, we're very pleased with our performance in the first half for 2021, as we continue to efficiently drive robust growth and operating leverage we believe that we are well positioned to continue to executing our long term growth strategy you'd be doing wagering, while delivering a differentiated and world class experience for the consumer.
Thank you for joining for our call today.
We will now take your questions Alison.
Thank you for Mani. Thank you David we're now turning to the Q&A portion of our call I would ask that everyone. Please restrict your questions to 2 just in the interest of time.
Our first question comes from Laura Martin with Needham and company, Laura It's great to see you and please go ahead.
My first question is David your additions for 90000 subs, we thought they were going to be 12.
We'd like more granularity on what are you getting better at is it. The churn is down 203 basis points is that what's improving these add numbers or are you doing something on the customer acquisition side. So much better now than when you were at the IPO day 8 months ago.
Yeah, well first of all Laura it's great to have you here with US again and you know.
Obviously churn is very important I think this is our 10th quarter now.
Sequentially year over year that we've improved our churn numbers the team is getting better at.
Leveraging the data.
My co founder Alberto Horrid Wala is his team is just doing a phenomenal job from an acquisitions perspective.
We continue to really focus on all the channels that we've always discussed with you but.
I think this quarter in particular.
We've been able to really.
I have more efficient acquisition cost in that acquisition cost is allowing us to really excel in terms of subscriber growth. So we're very happy with the quarter from a from an acquisitions perspective.
And then my second question would be on this amazing advertising number you just fast roku and Theyre in Avon platform Youre supposed to VNS platform and Youre doing a lot more AD revenue growing a lot faster your AD revenue. So could you go into the components.
Of what's driving your AD revenue growth, especially on the CPM side, but also is it sustainable yeah well.
First of all yes on all of those it is very sustainable we're very excited about our advertising business.
As you know there are 3 components to driving advertising sales at <unk>. The first obviously is the fill rate the.
The second is the CPM.
He will talk about shortly and the third is just the number of hours that people are watching.
People continue to watch more and more on food OTV, we're actually taking more share of the market 245 million hours.
In the quarter, but with respect.
The sustainability, if you think about it.
Goal is to hit $35 CPM and we're currently still in the low twenty's, so putting 50% to 70% on that.
Ponant in and of itself will actually pushes the 13 to $14 of AD over so we're very excited about the AD piece and I think the other component is that we're really focused on mail, we skew heavily male.
42 years old that significantly younger than the you know the.
The male viewer on cable household income is $85000. So that's also driving more advertiser interest and we continue to leverage our first party data. So we're very excited about advertising and we think that will continue to be able to drive growth.
Inadequate.
Thanks, very much for taking my questions and excellent. Congratulations again. Thank you great. Thank you Laura great questions.
Our next question comes from Jed Kelly with Oppenheimer Jed good to see you and feel free to ask your question.
Great great. Thanks, Thanks, David it's volume.
Yeah. My first question just on.
How do you think about measured growth seems like you're leveraging that.
Your subscriber related expenses advertising appears here.
Sure is true.
Added to that so how do you David you know subscriber growth as it seems like it's doing well, but how should we looked at it over the next call.
Call. It 12 to 18 months, yeah, well Jed. Thank you for soil for joining us today look right.
You know our wheat looks we have said and told you. This I think I told the street that we are very focused on subscriber growth and we've actually pulled forward.
You know our subscriber number for 2022 to 2021, so 915000 subscribers at the midpoint as our goal for the end of the year, but we're again, we're on track we feel good about our.
Our ability to be able to drive growth we've been a leader in subscriber net additions for the last few quarters, that's not only relative to the traditional ecosystem, but also with respect to the virtual space. So we're again, we're doing a lot of the right things that have some money if you'd like to add anything on that yeah. I would just add that you know if we do that with a very close eye to it.
<unk>, we have been increasing our.
Overall subscriber by 58 per cent in terms of net additional compared to 2020, and our latest guidance and we do that with a decreasing sales and marketing expense is now in the quarter, 16% of revenue down from 18% in the prior quarter in our first quarter 2021 is what has been an eye on stock buyback for the original question that you know what I mentioned.
Earlier asked early on as well.
Our target is to maintain stock you know, we're seeing a center for certain parameters and even in the second quarter liquidity in the first quarter. We were below that range is our target range. So we continue to see efficiencies and we continue to kind of push when we see the efficiency space.
Got it.
And then just on gaming.
Where do you want the product to be.
In terms of when you really start.
Aggressively marketed to your subscribers and can you give us any sense on what youre thinking about it true stimulating demand.
Well.
It's a good question and hopefully had a chance to see the product preview of a live sync opportunity I think this is going to be a phenomenal product I'm extremely bullish on the integration of 2 services as you know the flywheel effect is actually critical.
2 our ability to really drive overall growth the 3 goals that we set for ourselves is 1 is to reduce the cost of entry into the gaming business by leveraging our subscriber base.
That's the sort of the first thing and we are we're also looking to be able to deliver a product that we think consumers are going to.
Enjoy and right now I think the key is to get the market access deals done we're very happy with the way things are going the product team and also obviously, Sam Rattner and scarp use her with my other co founder Soho are doing an excellent job sort of preparing that product and we've gone.
You know pretty far.
With many of the regulators and we're excited to get the product launch we think that the opportunity is actually is pretty precise of a 50% gross margins will be our long term.
Target will also look to target about 10 to $15 of advertising our pool based on that 50% margin. So again, we're looking.
You know really good in terms of our launch timing around for fourth quarter.
Thank you.
Thank you Jack Great questions and our next question comes from Jim Goss at Barrington, Tim. Please. Please go ahead.
Alright, thanks very much.
I was wondering as you pursue this process are you finding that there are certain sports that are key to maintaining your customer.
Customer acquisition and retention and Conversely, any.
Non sports programming that you think are going to be very important to.
What is the same attributes and how is this influencing your program.
Mix would you say yep. Thank you Jim.
You know at the end of the day Fugazi Sports first cable TV replacement service, So entertainment, obviously being an important.
Part of our retention strategy, but the entertainment side of our business is really fungible.
And you know.
I think this quarter, we've demonstrated our ability to continue to acquire customers at a relative relatively efficient right.
We had a big quarter in terms of sports we had you know the.
The carnival.
Matches, which were live on the <unk> Sports network exclusively we also had the Euro Cup.
As well as a number of the U S and Mexican National games, So, where we had a really solid quarter and going into the third quarter, which as you know NFL being a key component a key driver of growth for.
For the company. So we're very excited.
With respect to the back half of the year given our performance.
You know in the first half for the year, which are giving us comfort in terms of raising our guidance for the future.
And another question would be.
2 the access points.
Believe you did a recent deal with Vizio and I'm wondering if you might discuss that at all.
Talk about how many other serta Simmons Serta deals, where you are in process well as you know we launched our partnership with LG and the second quarter, We've just announced our partnership with Vizio on their amazing smart cast.
Platform will look to continue to proliferate the number of connected TV devices and as you know 94% of our viewership is on connected devices. So the more connected devices or a smart Tvs that we're on the better.
We'll be able to monetize our offering so yeah. There's a number of other services and platforms that we're talking to and we will look to provide you with more.
Visibility in the coming quarters.
Alright, Thank you very much yeah. Thank you Joe.
Thank you Jim.
Our next question is from sweat tack, a giraffe from Evercore should I say, it's good to see you again.
Please proceed with your question nice to see you.
Year to Allison and thank you.
Let me try 1 firstly you talk about what drove engagement on your platform in the quarter was it mostly or that's coming back was it product improvement.
We are entering a reopening economy and yet engaged them out of your platform was very strong. So could you. Please talk about that and then I have a follow up please.
Sure. Thank you.
You know, where we're super excited about our product I mean, we have done a lot I want to talk about the acquisitions that we've made baotou in particular.
That group brought a significant amount of knowledge.
To the company, we've launched a free to play product, which you're aware of in beta in Q2, We also launched a fan Hugh.
View, which also generated about 25% to 37%.
Engagement improvements on the content that we had.
And that's very important because it really highlights the fact that we're focused on really developing a sports first.
Product that allows us to really create more interactivity and engagement on the platform. So that has worked really well we're excited about the upcoming product improvements as we get into <unk>.
Q3, but we also.
Had acquired the rights to Carnival as you know and we've taken on some new skill sets around production.
That we didn't previously have so we're really looking forward to being able to develop more products around some of the content that we've acquired and we're looking to do more.
From a product perspective, so we believe that engagement will continue to improve over time in fact, just 1 interesting tidbit.
When you look at 2020.
In terms of daily viewership, we were averaging about 7.2 hours per day again, that's during shelter in place, which was in effect for I would say the majority of March through June this year year to date, we're averaging about 7 hours. So you can imagine how strong engagement is going into the back half of the year. So.
Again lots going on from a product perspective platform proliferation.
And again, we're super excited about the acquisitions that we've made in those acquisitions and their ability to be able to drive performance for the company over the long term.
Okay. That's helpful. Thank you and then my follow up is on churn.
Improved over 200 basis points year over year.
Consecutive quarter, he talked about it a little bit earlier, but where are we in terms of long term trend is it normalizing now is there a material upside how should we think about that yeah. So I believe there's material upside if you look at prepaid wireless levels in terms of churn, which are businesses that don't rely on contracts.
Churn rates for those businesses are roughly around 5% I think that we have a long way to go.
More mature streaming businesses like Netflix that are around for 25 years as I like to say, they're a quarter century old with century.
In that number we've got a long way to go. This is a company that is very young we're 6 years old I think that there is material upside in terms of retention.
Our retention improvement over the next 36 months.
Okay. Thank you very much thank you.
Thank you sure. That's a great question look for it to continuing to work with you and our next question is from Dan Salmon.
With BMO, Dan good to see you are.
Please feel free to proceed with your question.
Good afternoon, everyone. So first question a day.
Household for the Jews set of comparable matches to your gross subscriber additions and.
And how has the retention been with the customers that are viewing those matches.
Ill follow up with the second half.
Yeah. So look I think it's clear that you know how.
Adding content like Carnival, which is in my opinion, a very premium.
That has allowed us to do many things.
And I think 1 of them is the ability to develop more engaging product features around that content and as I said, we've launched these product beta features on 3 platforms, Android mobile iOS mobile and Roku and what we've seen is <unk> 30 up to 37%.
<unk> improvements when we add products around the games. So we've done a lot around carnival I think that we'll look to be opportunistic of course always in a measured and disciplined way.
In terms of adding exclusive content to the platform in terms of engagement and insurance. Obviously this was a high profile event, but this event also led right into the Olympics, which is performing well on the platform as well. So we haven't had a chance to really gauge that first cohort.
Yet, but we're optimistic that you'll continue to see.
Retention trends that are in line with previous quarters.
Okay, Great that's really helpful.
And also the note on the Olympics viewership too so.
Second question.
How did you think about your state by state rollout for the sports book, how does that dovetail with your regional sports strategy do you need to have the major R. S ends in a given state.
Yeah. That's that's a good question look ideally with the more content that we have available the better.
Realistically I think R. R.
You know scaffolding is quite clear, we're looking to develop a business unit, that's going to deliver 50%.
Gross margins our goal in terms of market access is to be able to provide access to our subscriber base.
By the end of 2023 of up to 50%.
Of our total sub base. So you can imagine at 915000, which is our guidance for the end of this year that becomes a pretty sizeable cohort and the idea really is very simple how do we create a flywheel and what we're doing and we're starting to see opportunities that we believe significantly differentiate us from the pack right and the goal as I was I was.
Saying earlier is to 1 reduce the cost of entry entry into that business. A number 2 is to create very attractive unit economics and number 3 which is probably.
Equally important is the ability to create integrated experiences, which are really build defensibility or a moat around the product and the more we start to kind of delve in with regulators are again based on the feedback that we're getting everyones kind of excited about it. So we're very very excited about the opportunity in the business. The last thing I'll say.
Day on that front is that for vote today from a video perspective, and a virtual mvpds space.
Commands about 6% or roughly 6% based on the available data in the market today of the virtual Mvpds space. So.
It's very likely that over the long term, we push to achieve anywhere between 3 and 6% of the total gaming.
You know Tam if you will so we think there's tremendous upside for the overall business and the most important factors we control all those screens right. This is what Amazon is after this is what Apple Apple is actor Fubu controls 135 hours of viewership, which averages on a daily basis of <unk>.
Just over 7 hours, so with that in mind, we're very confident in our ability to be able to rollout additional products and services.
Thank you.
Great. Thank you Dan great questions insightful questions and I appreciate it. Our next question is from Dillon Heslin with Roth.
Thank you for joining us and please please.
Please go ahead with your question.
Hey, Thanks for taking my question first.
With your sports channel.
Scheduled to come out later this year and like the NFL season, starting up.
Do you have any incentives or initiatives plan that can help you.
Lift your conversion rate and getting people to adopt the app given it will likely come out during peak time in the sports season, Yes, John That's a great question I think right now as you know everything is subject to regulatory approval.
Things are I would say moving pretty well.
Along those lines we are still.
On track to launch in the fourth quarter, obviously, we'd like to do that in a very staggered way, but we do plan to launch.
At least 3 markets.
Before the end of the year. So maybe we can we can get there.
But again, we're very excited about the opportunity I think the ability to market. These 2 services are actually quite strong to be able to create this unified message that gives people an opportunity to sort of you know.
Really sort of engage and interact with a service like no. Other I mean, that's just a fact and again leveraging the the data from both of these 2 are going to provide us ample opportunity to create a.
No really interactive and engaging opportunities, but I do foresee the ability for us to create some really compelling promotions for customers during the NFL season.
Great. Thank you.
As a follow up.
Regarding the upsell attachment and the strength you're seeing there.
Could you comment at all about where those are being like.
Net new subs, you're adding or is it people who have been on our platform and now theyre upgrading to additional packages of services. Yeah. So again excellent question I think it's important to highlight we sold 1.5 million, that's 1.5 million attachments.
At the end of this quarter, that's a phenomenal number of attachments that number is up from 388000, just 12 months prior.
Prior so we're super excited about our attachment business as you can see Youtube TV and others are beginning to copy a lot of what <unk> is doing so we obviously take that as a huge compliment.
This is an area of focus for us at the moment, we don't have a.
Enough product integrations to allow us to continue to drive Upsells.
Within product, but our product teams now are working very closely with our engineering teams to be able to isolate and identify customers that we think will have a propensity.
To acquire.
For more of these.
Up sell opportunities, particularly as we head into the NFL season with Red Zone. So again, we're super excited about the opportunities not only around advertising, but also around our ability to upsell customers on both.
Service attachments as well as content attachments I think those are the 2 that we'd like to distinguish between because as you know our service attachments, which is really our key focus.
Has the margin profile closer to 95 per cent to 100%, whereas our content attachments.
Have a profile between 20 and 60 per cent from a margin perspective. So again. This is an area of focus for us and we believe we will continue to be able to drive that forward.
Thank you. Thank you.
Great. Thank you so much for your thoughtful questions and this actually concludes the Q&A portion of our call today I want to thank everybody for their participation and for their thoughtful questions and encourage folks to reach out with any follow up and we look forward to continuing to update you on the app.
Business in the ensuing weeks and quarters to come thanks, everyone again.
Thank you very much.
Yes.