Q4 2021 Fubotv Inc Earnings Call

Today is David Gambler, co founder and CEO of Foo Bow and John's Anita CFO of Foo boat.

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 Fu Bo Dot TV.

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 through both strategy and John will cover the financials and guidance.

I'd 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 market opportunity business strategy and plans, including our acquisition strategy and ability to any.

Great any such acquisition the expected continued rollout of Bubo sports book and the continued shift in consumer behavior. 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 annual report on Form 10-K for the period ended December 31, 2021 to be filed with the Securities and Exchange Commission 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, including certain metrics, excluding the impact of a Molotov acquisition. 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 Q4 2021 earnings shareholder letter, which is available on our website at IR Dot Fu Bo Dot TV with.

That I will turn the call over to David. Thank you Allison and thank you all for joining us today.

Our fourth quarter closes out an extraordinary year defined by triple digit year over year growth in total revenue advertising revenue and subscription revenue.

All while expanding adjusted contribution margin.

Within 2021, we achieved several notable milestones representing meaningful advancements towards our mission to build the world's leading global live TV streaming platform with the greatest breadth of premium content interactivity and integrated wagering.

Importantly, our performance over the course of the year reaffirms our thesis.

That an aggregated offering with multiple monetization levers remains the most attractive option to drive retention and to create strong unit economics.

Notably we have over 1 million subscribers validating that kubota TV is delivering tremendous value to them.

In Q4, we delivered significant year over year growth in total revenue up 119% year over year to $637 million and that's excluding the impact of our Molotov acquisition.

We added approximately 185000 net subscribers, bringing our total base to over one 1 million, that's an increase of 106% year over year compared to just 38% growth for the entire virtual mvpds market over the same period. These.

Numbers also exclude volatile.

We achieved this strong subscriber growth with the efficient deployment of sales and marketing dollars, which came in at 21% of revenue in the quarter and Thats down significantly from the 28% in the fourth quarter of 2020.

Subscriber acquisition costs also came in at the low end of our target range of one to one five times the monthly <unk> for the quarter.

In addition to dramatically growing our subscriber base, we made great strides in attracting high quality cohorts, who are staying longer with churn improving by 269 basis points year over year.

Our rapidly growing advertising business allows our partners to reach high quality audiences in a targeted will and measurable way as a result, the fourth quarter was also a record AD revenue grew 98% year over year and accounted for 11% of total revenue in the quarter, excluding the impact of.

The Molotov acquisition repeat advertiser spend grew 170% in 2021 with increased spend among our top five advertisers between three and 10 X and a meaningful increase in the number of advertisers spending above $1 million each.

During the fourth quarter, we closed two important acquisitions Molotov France's leading live TV streaming service with over 3 million monthly active users and Edison AI and AI powered computer vision platform with patent pending video recognition technologies.

These transactions provide the foundational technology and the human capital to accelerate development across infrastructure and our product.

We are enacting a disciplined approach to these assets in order to leverage global synergies, while also gaining operating leverage.

We continue to bring interactive product features to market to differentiate our live TV streaming service since the quarter ended we launched a new version of our popular multi view feature on Apple TV integrating it with our new fan view widget with this latest evolution subscribers can mix and match.

Up to four live channels and gain stats widgets, plus a scoreboard of all live sporting events and they can do this simultaneously. We believe this is the most personalized and customized TV viewing experience available in the market.

Our wagering business also continues to evolve less.

Less than a year after we announced our intention to expand into sports wagering, We launched the first iteration of <unk> Sports book in two states.

Iowa and Arizona.

We now have market access deals in 10 states and we expect to launch Hugo sportswear and additional markets soon.

We believe entry into new markets will allow us to more effectively monetize our existing subscriber network.

And we will create efficiencies in customer acquisition and retention and a deliberate measured approach to growing our sports book with limited marketing spend.

We believe the ability to watch and wager within a single ecosystem is a feature that only <unk> has brought to market.

In summary, I am very optimistic and confident.

<unk> forward, given our exceptional execution this quarter, which closed out an outstanding year, we are undoubtedly well on our way to building a category defining company with attractive unit economics.

We delivered a record fourth quarter and full year.

Across a number of key financial and operational metrics we.

We continue to benefit from our position at the intersection of three industry Megatrends. The secular decline of traditional pay TV the shift of TV AD dollars to connected devices and the rapid adoption of online sports wagering.

I am more excited than ever about <unk> future as we aim to transcend the industry's current TV model.

And now I am pleased to introduce you to John Jim He is our new CFO .

John brings more than two decades of experience, leading equity research Investor Relations capital markets and M&A for some of the world's preeminent financial institutions.

He is a seasoned financial leader in the media space and will be a critical partner as we craft through both strategic and financial plan for this year and beyond we are all very excited to have him onboard John . Please go ahead.

David.

Afternoon, everyone I am really excited to be part of the <unk> team and joined because of my confidence in the vision of the team and the long term growth opportunities and the company's streaming advertising and wagering businesses and the potential to deliver significant value to all of our stakeholders I am very pleased with our strong fourth quarter results.

As we exceeded our guidance and made significant progress in delivering efficient top line growth and margin improvements in the fourth quarter, we delivered nearly a triple digit year over year growth in both subscription and advertising revenue, taking overall revenue up 119% to $229 million.

And the impact of the Molotov acquisition.

Subscription revenue increased 123% year over year to $204 million, excluding the impact of the amount of acquisition driven by strong growth in subscriber numbers and <unk>.

We also delivered this robust growth through acquisition efficiencies as well as improvements in retention.

<unk> from our interactive products and incurred a content offering <unk>.

<unk> description ARPA, excluding molotov expanded by 8% year over year to $74 52.

As we saw more subscribers, taking our premium offerings.

Advertising revenue grew 98% year over year to $25 9 million and accounted for 11% of total revenue excluding Molotov.

<unk> decreased 4% year over year to $8 12 Asics.

As expected we saw a large influx of subscribers within the last few weeks of December .

As these new subscribers become more familiar with the platform and mature into long term subscribers, we expect to expand their monetization further.

While at <unk> growth may have some variability from a quarter to quarter basis, our conviction in growth on an annual basis remains high.

Switching now to our path towards profitability, we reported adjusted contribution margin of 11%, we are well positioned to drive long term margin expansion with deliberate strategic investments in content technology and infrastructure and as we lay the foundation for future growth our strategic investments in programming team.

<unk> technology and infrastructure resulted in expected increased expenses on an absolute dollar value basis in the fourth quarter compared to the prior year. However expenses continued to decline in proportion to revenue year over year, resulting in a material improvement in adjusted EBITDA margin, which improved five seven percentage points in.

The fourth quarter of 2021 from the fourth quarter of 2020, as we improve our operating leverage and further advance on our path to profitability net loss in <unk> was $112 million EPS in the fourth quarter was a loss of 76, including a <unk> <unk> impact from expenses incurred for a raging business <unk>.

From the acquisition to Molotov and a <unk> <unk> impact from deal related expense.

Adjusted EPS in the fourth quarter of 2021 was a loss of 57 cents what's.

Which excludes the noncash impact of stock based compensation, the remeasurement of warrant liabilities and the amortization of intangibles and debt discount now turning to the balance sheet. We ended the quarter with $379 4 million in cash cash equivalents and restricted cash. This included 70 million net proceeds in the fourth quarter.

<unk> from our at the market offerings as well as $3 1 million in interest payments and $25 million cash outflow related to wagering, mainly in connection with our market access licensing deals.

As we have previously highlighted we plan to continue to evaluate our ongoing capital optimization plan to build optionality in order to fund growth initiatives.

Operating cash flow in the quarter was negative $49 5 million inclusive of $3 1 million nonrecurring payments $10 2 million associated with the wagering business and $6 1 million operating cash flow associated with the molecule business.

Moving on to our outlook, we are thrilled with our performance in the fourth quarter of 2021 and remain well positioned to execute on our long term revenue and margin goals, all while delivering a differentiated and world class experience to the consumer.

In order to provide greater visibility into our business, we will be breaking down these metrics by region, specifically in North America and rest of World, which includes our existing Spain and recently acquired Molotov operations.

Note that this guidance does not include any projected revenue from online sports wagering.

First we will discuss North America streaming due.

Due to the seasonality in our business Q1 has historically been softer than Q4 when viewed sequentially on revenue and subscribers are Q1 2022 revenue guidance takes the seasonality into account with projected revenue of $232 million to $237 million <unk>.

Similarly, our Q1 2022 subscriber guidance includes 1.028 million to 1.033 million subscribers on a full year basis, we are guiding to projected revenue of a 1 billion 80 to a 1 billion 90. We're also guiding to total year and subscribers of $1 5 million to 1.510 million and we also.

Expect to see continued operating leverage and adjusted EBITDA improvement going forward now we will discuss rest of world streaming. We're guiding to Q1 2022 projected revenue of $3 million to $6 million and subscribers of 235000 to 240000 on a full year basis, we are guiding to projected revenue of 15 to 20.

In total year and subscribers of 270000 to 280000.

So to summarize we are very pleased with our performance this quarter as we continue to efficiently drive robust growth and operating leverage.

Before going to Q&A, David will end with some closing remarks.

Thanks, Sean.

2021 was a pivotal year for <unk>.

Our team executed on our business plan and we have increased confidence in our long term strategy.

Looking ahead to 2022 and beyond.

We expect losses to improve in our core domestic streaming business led by continued share gains and operating leverage our high margin advertising business is expected to scale with very strong double digit growth fueled by further improvements in subscribers ARPA and Cps.

And we will continue to lay the foundation for our wagering business, which we expect will become a major beneficiary of our flywheel and a contributor to our growth in 2023.

Finally, I hope you will be able to join us in the second quarter for our first Investor day.

We plan to share more details about our long term strategy and our targets for our businesses.

The agenda will follow in the coming weeks.

Thank you for joining our call today, and we will now take your questions Alison.

Thank you David Thank you John and we're now going to turn to the Q&A portion of our call. We ask that in the spirit of timing you restrict your questions to two.

And our first question comes from Laura Martin with Needham Laura.

Hi, there hi, guys Hello.

Hey, Lauren.

Hi, welcome John Hello, Adam to that.

Okay.

I'm going to stick to two.

CTV AD revenue of 98%.

Now I'm going to ask you about CPM is are we still at $20 sheet dams are we moving up the ranks as we hoped and was the core driver of more viewer engagement more viewers or was it more CPM or sell out I'm curious as to what really drove that upside of AD revenue.

First one sure I'll take.

It well CPM is up.

To about $22 in the fourth quarter.

So we're starting to see some movement. There. We've also seen advertisers starting to move into different buckets of programmatic going more direct so we think that trend will continue over time in terms of viewership hours.

As you already know we clocked in just under a 130 hours per customer.

So it was really more about just the the demand side and the CPM that really have been the key driver for this quarter.

Perfect.

And then I'm very interested in the fact that you had a three months pricing model and then a couple of weeks ago. You went back to month to month could you tell us what you learned from that experience experiment of three months minimums versus month to month sure well you know as well now. This is a company that is predicated on its ability to manage its data.

Focus on different capabilities, and try and better understand how to optimize all of the components of our service and so that certainly was an experiment were still going through the data now you should anticipate that we will continue to experiment just to better understand sort of what the.

You know what the value is for us and also what the expectations are for consumers.

Okay. Thank you very much.

Thank you Laura and our next question comes from Jed Kelly with Oppenheimer Chad Good to see you at <unk>. Please go ahead.

Hey, great to see Hey, Dave Hey, John welcome aboard.

First question just on this was subscriber related expenses.

We're seeing nice leverage the first three quarters. It was up significantly year over year. So you saw some deleverage there can you kind of just talk about how we shouldn't use subscriber related expenses what happened in <unk> and then can you kind of give us any guidance so gross profit into 2022.

When it start with yes, why don't I start on the sports side Jed hopefully we liked that little video with the product features that we continue to improve.

With respect to the SRU line, what Youre seeing is that we've added some regional sports networks. We've acquired some sports rights again very light, we're getting ready to test some new things and we want to better understand what the value proposition is for our customers and the impact on all of our key performance indicators.

And Ted I would just add there there were a couple of one time that one timers, but we added some content in the fourth quarter. Some affiliates also some content from Canada, and so that was a bit of a tick up there, but going forward you will see that deleverage on a same store basis.

And then my second question, David You mentioned <unk>.

<unk> setting being a significant revenue driver in 2023 is that pushing it out a year or just where are you in terms of the progress yeah. So.

Sure you have noticed we continue to add more market access licenses I think given the macro situation. We've decided that our sub base is large enough, where we don't plan to compete with draft Kings and fan dual head to head.

For customers, we've decided that we have over 1 million customers right now on the platform and the more market access licenses, we get the easier it is for us to leverage our subscriber base to drive customers and the idea really is to reduce the cost of entry into each market and to create attractive user economics, and we think that given the early data.

Once that we've seen again very early.

We've had about I think it's just under $2 million of Handel.

But the results are certainly interesting and support our thesis for the.

The goals that we've set for the company.

Thank you.

Thanks, Chad great questions and.

Next we have Darren <unk> with Roth Darrin. Please go ahead.

Hi, David Hi, John Thanks, taking my questions first just to clarify.

Newsletter, when you talked about the AD sales you talked about a kind of a demand driven scalability issue on the.

Advertising business I'm, just kind of curious if you could expand on that one or two like when do you think you'll have resolution on that.

Yeah. So look I think we've mentioned before in many of our meetings that we've been very focused on the consumer side developing a platform.

With the quality of service that consumers deserve but.

But we really haven't had a chance to really focus on the AD Tech side, we have begun to focus on the AD Tech side since we since fourth quarter and we think many of the.

The items that we're working on will be completely resolved within the next call. It two to three months, but as you can see the demand is there and we continue to grow the outside of the business and I would just say Darren to piggyback on that.

I look at say our one our January numbers and then also February to date.

We're pretty confident that some of those issues are being resolved and so if I look at the top 10 advertisers through January all up triple digits, and the ones that are down or frankly.

Advertisers that are less than $5000 in terms of spend so feeling good about trajectory.

Great and then just on your OEM channel relationships.

<unk> can you speak to how those are performing and then can we expect to see additional OEM relationships. This year, yes.

Sure why don't I start.

The OEM relationships are very important I think if you look back two or three years, we were very focused on two or three platforms.

Platforms and now as we continue.

To extend beyond those major platforms, we're starting to see more leverage and I think that's the that's the name of the game leverage with content partners as well as with our platform partners. So those relationships are going really well in some cases, we're going to start getting access to actually the code. So that we will be able to build out better experiences.

Faster experiences higher quality experiences. So we're very excited about the newer platforms and you can see that it has certainly had an impact on net adds.

Great. Thank you Darren and our next question or questions I should say come from <unk> <unk> with Evercore Schweitzer. It's always good to see you. Please go ahead with your questions.

Allison Thanks for the question.

I'll stick with two first is you mentioned losses will improve and continue to improve just help us with the drivers of how youre thinking about the investments you are making versus efficiencies that youre, gaining us help us with.

How we should think about free cash flow EBITDA just the overall trajectory and then the second question I have is on improving churn. So churn has been improving our retention rates have been improving in other words help us with what you've seen us being the most important drivers of improving insurance is in the product improvement content.

What have you please spell that out for us.

So what I wanted to start with the second question first and so when.

When we look at churn I would tell you that every for the last three years, it's been better year over year every quarter.

And so we're pretty pleased with that a lot of that is driven by product development.

And I would tell you that three of the past four quarters are the best churn in quarters in the history of the company. So feeling good on the churn side from a retention perspective, I think it's also a great story and so if I look at the six month cohort churn or retention sorry in the 12 month retention.

It's been up several hundred basis points for both.

The trajectory wise and I think importantly, the the increase in the retention of the six month cohort and the 12 month cohort is the same in terms of percentage wise and so it actually suggests that we're seeing almost no drop off from six months 12 months from a subscriber perspective. So we're very pleased there.

On your first question that maybe I could start there and you wanted to go ahead. No go ahead, yeah. So on your first question, but I would just say is like from a.

From a leverage perspective in terms of on the expense side.

If we look at call it the biggest levers going forward to drive improvement, it's going to be the.

The sales and marketing line.

<unk>.

First and foremost and then G&A and then subscriber related expense, there, but but all of them should improve going forward now I'd like to David's point, we're going to do with your Investor Day. Sometime later this year over the next few months and so we'll have more to talk to but every lever and then the expense run should improve going forward.

Okay. Thanks, a lot you have a sorry I may have missed this in the release that you have a date with Investor day.

We're still working on it but we'll have more information for you. Shortly we plan to do it in the next call it two months.

We will have an exact number for you.

Thank you very much better.

Great. Thank you Schweitzer.

Our next question comes from Anna <unk> with J P. Morgan Hanna. Please go ahead with your question.

Hi, Thank you so much for the question and answer relating to churn leading on to the Super Bowl. We noticed that you had to acquire new customers to prepay for three months the service to mitigate churn and just given that Q1 has been a large lineup in sports content on jewelry.

<unk> no longer carry on how do you view the balance of content going forward on the Tivo platform.

Thank you and it's a good question.

With respect to the three month offer.

You'll typically see us test.

Current offers throughout the year and you know given the excitement around the Super Bowl. We thought it was a great time to test how sports fans would react to an offer that you typically don't see so.

That data is still coming in we're looking at the numbers, but as John said, our retention levels have improved every year as we said in Q4, an improvement of 269 basis points all of our cohort retention is extremely healthy and continues to improve and we believe that over the long term you should.

C.

Churn somewhere in the call it 4% to 5% range, so very happy about that with respect to.

Sports content as you know we didn't have Turner last year either.

And we managed to pretty well the teams are using all the data coming in.

And the platform is.

Is also.

Providing the type of content today that we think will keep consumers engaged.

But obviously, we have to be a little bit conservative because really sometimes it really depends on the type of tournament the teams and you.

I guess the storylines. So we're keeping a close eye on it but we feel very comfortable.

With the results going into end of February .

Thank you.

Thanks, Anna and good to hear from you and our next question comes from James Goss with Barrington.

James Please go ahead.

Thanks.

I would start by extending this conversation because I think that's one of the key things about for both sports as obviously the driver to get you.

Sure.

Viewers, but then you do have this fall off the first quarter ish football season.

Is there any Poland sort of option, you're considering to maybe create some other.

Incentives for.

Viewers too.

Adapt the service maybe other types other demographics or whatever just to balance things out a little so you don't have quite the same situation you continually have even if it's being reduced.

James It's a good question I mean, you are inherently going to have seasonality.

Given the amount of sports content, we have and then when you couple that with the number of sports fans on the platform I think I may have mentioned on the last call. It 96% of <unk> subscribers watch sports that's more than on any other traditional or virtual platform. So we continue to differentiate ourselves.

And that's evident in our continued.

Advancement in market share so.

The teams are working to ensure that we limit.

The churn, but again, we look at these things on an annual basis and.

As John said.

The cohorts are extremely healthy and in fact, one interesting item of note is that when you look at our January viewership numbers in terms of engagement.

These are already take north of 130 hours and we haven't seen a 130 hours plus.

Since February of 2020 right before.

Covid I think that's sort of a normalized level. So we're starting to see the maturation of these cohorts and again the team is working on this daily, but we feel very comfortable with the limited seasonality that we'll see.

In March and chip I would just add to David's point on the seasonality side, even with that the churn levels in Q1 have consistently been better year over year and then if you look at say churn in <unk> versus <unk> <unk>. It's in the same Zip code.

Okay.

My other question would be <unk>.

International I realize most of the service spec.

I wasn't here, but whats sort of ambition do you have does.

Is that something you think you can grow into any meaningful degree over some period of time and how would you finance such adventure So James I'm going to decouple that we have this company has tremendous ambitions to be the largest provider of live TV in the world.

Hands down that is our goal we also realize that.

We have to take our time.

And use the data that we have to build this business in a very disciplined and measured way and today. The focus with Molotov is really on two things. One is they have foundational technology. They have a similar operating model, which allows us to very quickly integrate human capital and.

To focus on the core <unk> product, but it's also important to note that having molotov there right behind Netflix was 3 million monthly active users the number two app.

As of today in France gives us that optionality that window that view into timing and I actually feel were actually better position than some of the other players that are in the market again, we are not a streaming player we not a plus service. This is an aggregation service and <unk>.

And we're very comfortable with this acquisition and we're very delighted with the progress that we're making on the integration front.

And Jim I would just add to David's point, if you look at the guidance for North America. As an example, we're looking at call it 70% plus organic growth in our North American ceramic message. So we don't have to do anything given that kind of growth that we have on the on the domestic side.

Okay. Thank you David and welcome aboard Jon Thanks, Tim.

Thanks, Tim Great questions as always and our next question comes from Zach Silverberg with Bahrenburg Zack.

Always good to see you. Please proceed with your questions.

Yes, thanks for taking my question.

So are there any internal discussions on inflation and how it could potentially impact consumers' purchasing power who are dealing with increased prices and good and maybe other streaming services is there a field of what subscribers price elasticity would be maybe heading into a slower TV.

Sports period during the summer.

Exactly Thats a great question I'm glad you brought it up no one no one really talks about it.

But <unk> like many other stay at homes companies took advantage of Covid. We were one of those companies you see the growth you see the retention and now we are in excellent position to take advantage of inflation. As you know we are a cable replacement service that is <unk>.

<unk> less expensive better quality better product than the traditional service and there is still 75 million people out there. So if you're a consumer and you want to maintain your lifestyle and cut costs at the same time. This is your option and we're going to continue.

<unk> to develop our brand continue to proliferate.

With respect to platforms and I think we're well positioned to take advantage of that in terms of pricing. We still have some ways to go as you know we started our service at $6.99, we've been pricing up.

For the last five years in.

There's a huge demand for sports people love sports content, whether they love to wager, where they love to watch where they like to buy.

Paraphernalia jerseys et cetera. So again, we're well positioned we think that our product is priced well for the value that we provide and we think there's probably a little bit more room there.

Given that we still are facing some inflationary pressure.

Got you that's helpful and just one more you talk about in the shareholder letter crossover users to replace the higher number of bets higher retention rates. Just curious how you are anticipating crossover rates given the NFL seasons over the <unk> won't be might go into the lockout I'll just.

Curious, how you're sort of.

Forecasting minutes are anticipating this into the spring and summer Yeah look.

As I said in my comments, it's very early days right, where in two states right now iowan, Arizona in terms of full boat TV. The TV product footprint, it's very small what we've seen right now and we call. It crossover what that really means is that it's a sports book customer who also has a.

TV subscription.

And what we've seen is that those customers seem to be at least in this neon said, they're more active more active means that they produce more volume of bets realm.

Relative to just the regular non TV using us.

Bedding customer.

And then we're also seeing that that customer has better retention, but again theres only been two months. So we've only seen these people place bets in a second months. So right now it's still early.

The data is coming in really strong we actually started are starting to feel we will not have to spend.

<unk>.

Large amounts of money to compete we've got over 1 million customers. We're guiding towards one 5 million customers. We think we're going to be able to pull from that customer base customer base, assuming we can continue.

To.

Expand our market access footprint and then there is one other cohort which are trial cohort, which is a relatively large cohort that we see over the course of the year, but if I was to kind of.

Gauge, where the growth is going to be of course, it's going to look like our TV product, where you have seasonality post Super Bowl just like the sports book I'm sure, they're probably strongest growth is in the back half of the year up until the Super Bowl. So we'll see probably some of that but we're taking a very measured approach as I said, we think that.

If we can nail down the product and focus on casual betters. The goal here is not to focus on are the.

The same cohort of users that Caesars and draft Kings and sandals all focus on but this is event driven when you have 800000 concurrence that are streaming that product and theyre watching the Georgia game and you say Hey, we know you Love, Georgia put five Bucks down on this game, we think that that's going to create a lot of value.

A lot of entertainment value.

And that we think is going to prove to be a game changing when the time is right.

Thank you.

Thanks, Zach for your thoughtful questions. Our next question comes from Dan Salmon with BMO Dan. Please go ahead.

Okay, great guys good afternoon.

John .

So I'm going to try to slip in two questions.

First I may have missed it but I see the 2022 outlook still does not include anything for sports gambling can you just elaborate on that how you might integrate it into guidance eventually.

And then second David.

Your own sports rights portfolio continues to grow yeah, It's obviously taken out a little bit more of an international flavor as well.

Any updates on your thinking for that part of your strategy and how it might be impacting some of your key subscriber metrics like gross adds or churn.

So I'll start on the second one look we have been very deliberate on everything we do and if you go back since we've IPO. We have delivered on every metric that we said we would deliver on and so what we're doing now is testing. The waters you are correct, we've acquired Carnival rights.

We've acquired the UEFA.

UEFA rights starting this fall we have the EPL rights in your home country of Canada.

And Syria, So we're really starting to look at what can we do to expand our footprint in the sports space, where were known and also start to leverage some of the fixed costs associated with that right. Because we're now starting to think about that margin profile in terms of sports betting again the <unk>.

Obviously plays into that and our ability to leverage our some of our new product features such as predictive games, which will help us isolate.

Users that will eventually will be able to turn into casual gaming customers again, just delivering on our mission, which is really to drive our pool right lower the cost of entry and create positive.

An attractive user economics, and so on the bedding side. The reason we've taken a different approach slightly different approach is we're starting to feel comfortable one with the pace and growth of our subscriber base number two we're starting to see.

The brand emerge as a sports platform and you can see that because it's supported by you.

I think we had the highest NPS score of all virtual Mvpds services per parks associates. So from that perspective, I think we're very comfortable we don't plan on spending a lot of money competing directly with draft Kings and so the idea now is continue to focus on sub growth, we want to acquire more market access licenses. So we can.

Drive subscribers into the sports book and so we think we can do that very efficiently.

In ways that others can simply just won't be able to do that.

And at the same time, we're really focused on continuing to deliver a really immersive product and hopefully from that little video that you saw were starting to get a bit closer to where we want to be.

Thank you guys.

Thank you thanks, Dan Thank you Dan.

This concludes the Q&A portion of our call I want to thank everybody for your participation and your thoughtful and insightful questions and also encourage you to reach out to what extent you have any follow up questions and we look forward to speaking with everybody. Soon thank you again.

Thank you.