Q2 2023 FuboTV Inc Earnings Call
Speaker 1: Thank you for standing by and welcome to the FUBOY Q2 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.
Thank you for standing by and welcome to the full by Q2 2023 earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number.
One on your telephone keypad if.
Speaker 1: If you would like to withdraw your question again, press star 1. Thank you. I will now hand today's call over to Allison Sternberg. Please go ahead.
If you want to withdraw your question again press Star one.
I would now hand todays call over to Alison Sternberg. Please go ahead.
Speaker 2: Thank you for joining us to discuss FUBO's second quarter 2023. With me today is David Gantler, co-founder and CEO of FUBO, and John Giannidis, CFO of FUBO.
Thank you for joining us to discuss the second quarter 2023 with me today is David Gambler, co founder and CEO of for about and John's Anita CFO for about full details of our results and additional management commentary are available in our earnings release and letter to shareholders, which can be.
Speaker 2: 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.fubo.tv.
Found on the Investor Relations section of our website at IR docs to bio Dot T V.
Speaker 2: Before we begin, let me quickly review the format of today's presentation.
Before we begin let me quickly review the format of today's presentation.
Speaker 2: David is going to start with some brief remarks on the quarter and full year and FUBO strategy, and John will cover the financials and guidance.
David is going to start with some brief remarks on the quarter and full year and for both strategy and John will cover the financials and guidance then we will turn the call over to the analysts for Q&A.
Speaker 2: Then we will turn the call over to the analysts for Q&A.
Speaker 2: I would like to remind everyone that the following discussion may contain forward-looking statements within the meaning of the Federal Securities Law, including, but not limited to, statements regarding our financial condition, anticipated financial performance, business strategy and plans, and expectations regarding profitability.
I would like to remind everyone that the following discussion may contain forward looking statements within the meaning of the federal securities laws, including but not limited to statements regarding our financial condition anticipated financial performance business strategy and plans and expectations regarding profitability.
Speaker 2: 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 include those discussed in our filings with the SEC.
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 include those discussed in our filings with the SEC.
Speaker 2: Except as otherwise noted the results and guidance we are presenting today are on a continuing operations basis excluding the historical results of our former gaming segment which are accounted for as discontinued operations.
Except as otherwise noted the results and guidance. We are presenting today are on a continuing operations basis, excluding the historical results of our former gaming segment, which are accounted for as discontinued operations.
Speaker 2: During the call, we may also refer to certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comfortable GAAP measures are also available in our Q2 2023 earnings shareholder letter, which is available on our website at ir.fubo.tv.
During the call. We may also refer to certain non-GAAP financial measures reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available in our Q2 2023 earnings shareholder letter, which is available on our website at IR docs about Dot T V.
Speaker 2: With that, I will turn the call over to David. Thank you, Allison, and good morning, everyone.
With that I will turn the call over to David. Thank you Alison and good morning, everyone. Thank you for joining us today to discuss through both second quarter 2023 results.
Speaker 3: Thank you for joining us today to discuss FUBO's second quarter, 2020 three results.
Speaker 3: In the second quarter, Fubo exceeded targets for revenue and subscribers in North America, delivering $305 million in total revenue, up 41% year over year, and 1,167,000 paid subscribers, up 23% year over year.
In the second quarter bubo exceeded targets for revenue and subscribers in North America, delivering $305 million in total revenue up 41% year over year and $1 million 167000 paid subscribers up 23% year over year.
Speaker 3: We are very confident our momentum will continue in the back half of the year, and therefore we have raised our previously stated full year guidance in North America.
We are very confident our momentum will continue in the back half of the year and therefore, we have raised our previously stated full year guidance in North America.
Speaker 3: Turning to our ad sales business, Fubo posted North America ad revenue of $22.8 million in the second quarter. That's up 5% year over year, despite a challenging ad market in the first half of 2023.
Turning to our AD sales business Bubo posted North America AD revenue of $22 $8 billion in the second quarter, that's up 5% year over year, despite a challenging AD market in the first half of 2023.
Speaker 3: We are very encouraged as green shoots in July indicate an advertising rebound and a sizable ad recovery for the back half of the year.
We are very encouraged as green shoots in July indicated advertising rebound and sizable AD recovery for the back half of the year.
Speaker 3: We meaningfully reduced net loss by $41 million year over year and ended the quarter with $300 million in cash, cash equivalence, and restricted cash.
We meaningfully reduced net loss by $41 million year over year and ended the quarter with $300 million in cash cash equivalents and restricted cash.
Speaker 3: We are confident that this provides us with sufficient liquidity to fund our operating plan as we target positive free cash flow in 2025.
We are confident that this provides us with sufficient liquidity to fund our operating plan as we target positive free cash flow in 2025.
Speaker 3: While there appears to be improvement in the ad market, the media and streaming industry is as tumultuous as ever. Even with recent consolidation among streaming plus services, which we have long predicted, content fragmentation continues to be a major consumer problem. And frustrated consumers are forced to subscribe to multiple and expensive streaming.
While there appears to be improvement in the AD market, the media and streaming industry is as tumultuous as ever.
Even with recent consolidation amongst streaming plus services, which we have long predicted content fragmentation continues to be a major consumer problem and frustrated consumers are forced to subscribe to multiple and expensive streaming services.
Speaker 3: Fubo is benefiting from the industry upheaval as consumers seek a single app to watch all of the content they love.
Yeah.
<unk> is benefiting from the industry upheaval as consumers seek a single App to watch all of the content They love.
Speaker 3: Fubo has maintained stability, continuing to show operating leverage while building value for shareholders. The primacy of sports, and particularly the primacy of local sports, is more apparent than ever.
Whoever has maintained stability continuing to show operating leverage while building value for shareholders. The primacy of sports and particularly the primacy of local sports is more apparent than ever.
Speaker 3: FUBA's aggregated content offering, led by our leading local sports package, remains sought after by consumers. And, given our focus on live sports, we expect that FUBA will remain largely insulated from the Hollywood union strike.
Who both aggregated content offering led by our leading local sports package remains sought after by consumers and given our focus on live sports. We expect that football will remain largely insulated from the Hollywood Union strikes.
Speaker 3: This summer marks a year since we held our first investor day, during which we laid out our 2025 positive free cash flow goal. Our five-pronged approach to executing our long-term plan included.
This summer marks a year since we held our first investor day during which we laid out our 2025 positive free cash flow goal, our five pronged approach to executing our long term plan included.
Speaker 3: driving increased leverage of our content acquisition costs.
Driving increased leverage of our content acquisition costs, increasing the efficiency of our subscriber acquisition efforts.
Speaker 3: increasing the efficiency of our subscriber acquisition efforts.
Speaker 3: Furthering our investments in our advertising, ad technology, and ad infrastructure. Enacting our proof expansion tactics designed to strengthen unit economics. And maintaining our rigor around enterprise wide cost.
Furthering our investments in our advertising AD technology and add infrastructure enacting our pool expansion tactics designed to strengthen unit economics, and maintaining our rigor around enterprise wide cost discipline.
Speaker 3: I am pleased to report that we are making significant progress towards achieving positive free cash flow as we meaningfully advance on each of these five initiatives.
I am pleased to report that we are making significant progress towards achieving positive free cash flow as we meaningfully advance on each of these five initiatives.
Speaker 3: First, we continue to drive increased leverage of our content acquisition costs.
First we continue to drive increased leverage of our content acquisition costs. As a reminder, our subscriber related expenses significantly impacts these costs and have the greatest ability to influence our operating leverage we have made marked progress in optimizing these costs. This is reflected in our 1100.
Speaker 3: As a reminder, our subscriber-related expenses significantly impact these costs and have the greatest ability to influence our operating leverage. We have made marked progress in optimizing these costs. This is reflected in our 1,193 basis point reduction in SRE to 87% of revenue in the second quarter compared to 99% in the prior year period.
93 basis point reduction in sorry to 87% of revenue in the second quarter compared to 99% in the prior year period.
Speaker 3: We also continuously examine and adjust our channel plans and add-on offerings to optimize consumer value while driving healthy contribution margins.
We also continuously examine and adjust our channel play as an add on offerings to optimize consumer value, while driving healthy contribution margins.
Speaker 3: Second, we continue to increase the efficiency of our subscriber acquisition efforts.
Second we continue to increase the efficiency of our subscriber acquisition efforts for the first time ever we landed below our target range of one to one five times first month's average revenue per user or ARPA.
Speaker 3: For the first time ever, we landed below our target range of 1 to 1.5 times first month's average revenue per user, or RPOOP.
Speaker 3: Total sales and marketing as a percentage of revenue declined in the second quarter from roughly 13% to roughly 11% year over year.
Total sales and marketing as a percentage of revenue declined in the second quarter from roughly 13% to roughly 11% year over year.
Speaker 3: Third, we believe our investments in our ad team technology and infrastructure have enabled our ad sales business to remain healthy despite pressure on the market. We have successfully implemented initiatives to accelerate our direct sales business, offsetting expensive third-party programmatic costs while also optimizing our programmatic supply chain layer.
Third we believe our investments in our AD team technology and infrastructure have enabled our AD sales business to remain healthy despite pressure on the market.
We have successfully implemented initiatives to accelerate our direct sales business offsetting expensive third party programmatic cost while also optimizing our programmatic supply chain routes.
Speaker 3: As a result, we expect to increase Ad Arbu on a year-over-year basis through the back half of 2023 and beyond.
As a result, we expect to increase at <unk> on a year over year basis through the back half of 2023 and beyond.
Speaker 3: Fumo is the home for local sports. The ad inventory provided by our leading local sports coverage offers brands targeted reach both nationally and regionally.
<unk> is the home for local sports the AD inventory provided by a leading local sports coverage offers brands targeted reach both nationally and regionally.
Speaker 3: Our targeting capabilities also strongly position Fubo to leverage the upcoming political season, which is expected to top $11 billion in total ad spend across the industry in 2024.
Our targeting capabilities also strongly positions <unk> to leverage the upcoming political season, which is expected to top $11 billion in total AD spend across the industry in 2024.
Speaker 3: Fourth, we continue to enact tactics designed to expand ARPU. Our progress here was demonstrated in the second quarter by a 13% year-over-year ARPU expansion to $81.62 for our North American streaming business. This is an all-time record.
Fourth we continue to enact tactics designed to expand our pool. Our progress here was demonstrated in the second quarter by a 13% year over year ARPA expansion to $81.62 for our North American streaming business. This is an all time record.
Speaker 3: Finally, we continue to focus on maintaining rigor around our enterprise-wide cost.
Finally, we continue to focus on maintaining rigor around our enterprise wide cost discipline.
Speaker 3: Collectively, these initiatives help FUBO achieve a 1,380 basis point year-over-year improvement in gross margin to 7% during the second quarter, making this the fifth consecutive quarter of gross margin expansion.
Collectively these initiatives helped <unk> achieve a 1380 basis point year over year improvement in gross margin to 7% during the second quarter, making this the fifth consecutive quarter of gross margin expansion.
Speaker 3: In closing, we are very encouraged by our strong second quarter results and our progress towards our long term plan. We continue to believe Fubo is well positioned to benefit from expected streaming and advertising trends.
In closing we are very encouraged by our strong second quarter results and our progress towards our long term plan. We continue to believe <unk> is well positioned to benefit from expected streaming and advertising trends.
Speaker 3: Fubo's sports-first offering continues to meaningfully appeal to consumers, and we are confident that our momentum will continue as we approach our 2025 positive cash flow goal. I will now turn the call over to John Genita, CFO , to discuss our financial results in greater detail. Cool. John ?
Who both sports first offering continues to meaningfully appeal to consumers and we are confident that our momentum will continue as we approach. Our 2025 positive cash flow goal I will now turn the call over to George I need a CFO to discuss our financial results in greater detail John .
Speaker 3: Thank you, David. And good morning, everyone. The second quarter furthered the momentum we experienced over the past few quarters, including healthy top line and subscriber growth, resulting in meaningful improvements across many of our KPIs and providing us with added confidence in our ability to achieve profitability.
Thank you David and good morning, everyone.
The second quarter further the momentum we experienced over the past few quarters, including a healthy topline and subscriber growth, resulting in meaningful improvements across many of our kpis and providing us with added confidence in our ability to achieve profitability.
Speaker 3: Total revenue for the quarter increased 41% to 312.7 million, driven by 41% revenue growth across North America and 40% revenue growth from the rest of the world. This represents 3% upside against the midpoint of our Q2 revenue guide.
Total revenue for the quarter increased 41% to $312 7 million driven by a 41% revenue growth across North America, and 40% revenue growth from rest of World. This represents 3% upside I guess at the midpoint of our Q2 revenue guidance.
Speaker 3: We ended the 2nd quarter with 1.167M subscribers in North America, representing 23% growth year over year and over 394,000 subscribers in the rest of world representing 14% growth year over year.
We ended the second quarter with 1.1 hundred 67 million subscribers in North America, representing 23% growth year over year and over 394 that subscribers and rest of world, representing 14% growth year over year.
Speaker 3: On the monetization front, ARPU in North America reached $81.62, an all-time high, while rest of rolled ARPU was $6.91.
On the monetization front <unk> in North America reached $81 62 sets, an all time high while rest of World ARPA was $6 91.
Speaker 3: Expansion and subscribers in our pool allowed us to exceed the midpoint of our Q2 guidance. Turning to advertising, despite the continued challenges many advertising businesses are facing, I am pleased with our ability to deliver 22.8 million in advertising revenue across North America, a 5% increase versus the prior year period.
Expansion of subscribers and <unk> allowed us to exceed the midpoint of our Q2 guidance turning to advertising. Despite the continued challenges. Many advertising businesses are facing I am pleased with our ability to deliver $22 8 million and advertising revenue across North America.
5% increase versus the prior year period.
Speaker 3: And since the closing of the second quarter, we have seen a significant uptick in advertising revenue, with July posting strong sequential improvement from the second quarter.
And since the closing of the second quarter, we have seen a significant uptick in advertising revenue with July posting strong sequential improvement from the second quarter.
There are only a third of the way through the third quarter. It bodes well for the second half of the year and reflects the positive impact of the strategic work, we are doing to improve our performance in this area.
Speaker 3: Importantly, we made material progress on the operational side of the business, lowering expenses and bringing added effectiveness and efficiency across a greater share of the business.
Importantly, we made material progress on the operational side of the business lowering expenses and bringing added effectiveness and efficiency across a greater share of the business.
These efforts resulted in a 1380 basis point improvement in gross margin to 7%.
Speaker 3: The top line growth and improvements across the income statement led to a 40.8M year over year reduction in net loss to a loss of 54.2M resulting in a net loss margin improvement to negative 17.3%. Favorably comparing to a negative 42.8% net loss margin in the prior year period, demonstrating that we are making meaningful progress towards our goal of becoming profitable.
The topline growth and improvements across the income statement led to a $48 million year over year reduction in net loss to a loss of $54 2 million, resulting in a net loss margin improvement to negative $17, 3% favorably comparing to a negative 42, 8% net loss.
Margin in the prior year period, demonstrating that we are making meaningful progress towards our goal of becoming profitable.
Speaker 3: This led to a 2nd quarter 2023 for share loss of 19 cents a significant improvement compared to a loss of 51 cents in the 2nd quarter of 2022.
This led to a second quarter 2023 per share loss of 19 says a significant improvement compared to a loss of 51 in the second quarter of 2022.
Speaker 3: Second quarter adjusted EBITDA loss also improved to a loss of 30.5 million compared to a loss of 70.1 million in the second quarter of 2022. While adjusted EBITDA margin was minus 9.8%. A significant improvement from minus 31.6% in the prior year period.
Second quarter adjusted EBITDA loss also improved to a loss of $30 5 million compared to a loss of $70 1 million in the second quarter of 2022, while adjusted EBITDA margin was minus nine 8% a significant improvement from minus 31, 6%.
In the prior year period.
Speaker 3: This resulted in an adjusted EPS loss of 12 cents, an improvement compared to an adjusted EPS loss of 39 cents in Q2 2020.
This resulted in an adjusted EPS loss of 12.
An improvement compared to an adjusted EPS loss of 39.
In Q2 2022.
Speaker 3: As it relates to our balance sheet, we are confident that we continue to have the necessary liquidity to invest in the business and support our path to profitability, and in the quarter with $299.7 million of cash, cash equivalents, and restricted cash.
As it relates to our balance sheet. We are confident that we continue to have the necessary liquidity to invest in the business and support our path to profitability ending the quarter with $299 7 million of cash cash equivalents and restricted cash.
Speaker 3: In addition, our ongoing efforts to identify efficiencies and maximize leverage across the business resulted in a $9 million improvement in free cash flow.
In addition, our ongoing efforts to identify efficiencies and maximize the leverage across the business resulted in a $9 million improvement in free cash flow.
Speaker 3: Further, as David mentioned, these results demonstrate the noteworthy progress we have made across our operating expenses, all of which have come down as a percentage of revenue, and in some cases on a dollar basis as well, as we remain disciplined in our investments and deployment of cash.
Further as David mentioned these results demonstrate the noteworthy progress we have made across our operating expenses all of which have come down as a percentage of revenue and in some cases on a dollar basis as well as we remained disciplined in our investments and deployment of cash.
Speaker 3: As we continue to grow subscribers and optimize their pricing, we expect to see continued leverage on the SRE line, which decreased from 99% to 87% of revenue in Q2 2023 versus the prior year period.
As we continue to growth described risk and optimize our pricing we expect to see continued leverage on the <unk> line, which decreased from 99% to 87% of revenue in Q2 2023 versus the prior year period.
Speaker 3: Regarding our outlook we are guiding to North America third quarter 2023 subscribers of one point three three to one point three five million representing nine percent year-over-year growth at the midpoint
Regarding our outlook, we are guiding to North America third quarter 2023 subscribers of 1.33 to 1.35 billion, representing 9% year over year growth at the midpoint.
Speaker 3: And we expect revenue of 272.5 to 277.5 million, representing 25% year-over-year growth at the midpoint.
And we expect revenue of $272 five to 277 5 million, representing 25% year over year growth at the midpoint.
Speaker 3: Before moving on to full year guidance, I want to point out that our Q3 guidance reflects the typical seasonality in which the subscriber growth is highly back-end loaded, resulting in a meaningful increase in subscribers, but a smaller increase in revenue, which is largely recognized in the following quarter.
Before moving on to full year guidance I wanted to point out that our Q3 guidance reflects the typical seasonality in which the subscriber growth is highly backend loaded resulting in a meaningful increase in subscribers, but a smaller increase in revenue, which is largely recognized in the following quarter.
Speaker 3: For the full year 2023, we are once again raising our guidance for North America and now expect full year 2023 subscribers of 1.565 to 1.585 million, representing 9% year over year growth at the midpoint. And full year 2023 revenue of 1.26 to 1.28 billion, representing 29% year over year growth at the midpoint.
For the full year 2023, we are once again, raising our guidance for North America, and now expect full year 2023 subscribers of 1.56521585 million, representing 9% year over year growth at the midpoint in the full.
Full year 2023 revenue of 1.26 to 1.28 billion, representing 29% year over year growth at the midpoint.
Speaker 3: This fiscal year 2023 revenue guidance implies 648 million of revenue at the midpoint in the second half of the year, more than 10 million higher than that's implied by our prior guidance.
This fiscal year 2023 revenue guidance implies $648 million of revenue at the midpoint in the second half of the year more than $10 million higher than as implied by our prior guidance.
Speaker 3: For rest of world, our Q3 2023 guidance now projects 382,500 to 387,500 subscribers representing 7% year-over-year growth at the midpoint and revenue increases to 7.2 to 8.2 million representing 34% year-over-year growth at the midpoint.
For rest of World. Our Q3 2023 guidance now projects 382500 to 387500 subscribers, representing 7% year over year growth at the midpoint and revenue increases to 7.2 to $8 2 million representing 30%.
4% year over year growth at the midpoint.
Speaker 3: Our full year 2023 rest of road guidance now projects 380,000 to 400,000 subscribers representing a 7% year over year decline at the midpoint and revenue of 29.4 to 33.4M representing 29% year over year growth at the midpoint.
Our full year 2023 rest of our guidance now projects 380000 to 400000 subscribers, representing a 7% year over year decline at the midpoint and revenue up 20, 942, a $33 4 million representing 29% year over year.
Growth at the midpoint.
Speaker 3: Note that our fiscal 2022 subscriber count was positively impacted by the 2022 World Cup.
Note that our fiscal 2022 subscriber count was positively impacted by the 2022 World Cup.
Speaker 3: In summary, our Q2 results provide further evidence that the operational and go to market initiatives we have enacted over the past few quarters are gaining momentum and transforming our business.
In summary, our Q2 results provide further evidence that the operational and go to market initiatives. We've enacted over the past few quarters are gaining momentum and transforming our business.
Speaker 3: These actions are driving improving trends, and we are confident Fubo has the foundation necessary to further grow and improve across every facet of our business and position us to deliver enhanced value to shareholders.
These actions are driving improving trends and we are confident <unk> has the foundation necessary to further grow and improve across every facet of our business and position us to deliver enhanced value to shareholders.
Speaker 3: I would now like to open the call to questions. Operator?
I would now like to open the call to questions.
<unk>.
Speaker 1: Thank you. At this time, if you'd like to ask a question, press star one on your telephone keypad. If you'd like to remove yourself from the queue, press star one again. Your first question is from the line of...
Thank you.
At this time, if you'd like to ask a question Chris Star one on your telephone keypad.
If you'd like to remove yourself from the queue Press star one again.
So first question just from the line of Laura Martin with Needham.
Speaker 4: Good morning, you guys. What excellent numbers these are. So as I think forward towards the NFL this season, if the strikes continue into the fourth quarter, shouldn't we expect to see record signups for the NFL since sports will be sort of the only new content on air by the December quarter?
Good morning, you guys what excellent numbers Dave.
So as I think forward towards the.
Now this season, given it's the strikes continue into the fourth quarter shouldn't we expect to see record sign ups for the NFL and sports it'll be sort of the only new content on air by the December quarter.
Speaker 5: Laura, hi, this is David. Thanks for joining. Well, expectations are always high at FUBO, so we're obviously monitoring the strikes very closely and putting together our plan should things continue the way they are. So, as always, we're looking forward to the fall sports calendar.
Laura Hi, this is David Thanks for joining well expectations are always high at <unk>. So Ravi.
We're obviously monitoring the strikes very closely and.
Putting together our plans should things continue.
The way they are so as always we're looking forward to the fall sports calendar with the beginning of seasons for the NFL College football many of the soccer leagues and much much more so we're super excited and then we also get into the sort of towards the end of the baseball season as well so hopefully there'll be.
Speaker 5: with the beginning of seasons for the NFL, college football, many of the soccer leagues, and much, much more. So we're super excited. And then we also get into the
Speaker 5: sort of towards the end of the baseball season as well. So.
Speaker 5: Hopefully there will be some strong games and an excellent narrative for consumers to stay engaged with our completeness.
Some some strong games and an excellent narrative for consumers to stay engaged.
With our complete lineup Laura this is John I would add on the on the advertising side.
Speaker 3: Laura, this is John . I would add on the advertising side, I had some recent conversations with our team and I would tell you that we are getting incremental incoming calls to place advertising against both the NFL and other sporting events for the back half of the year.
I had some recent conversations with our with our team and I would tell you that we are getting incremental incoming calls.
To place advertising against both the NFL another sporting events for the back half of the year.
Speaker 4: Right, because there's going to be no new contact. These gross margins are outstanding. A 7% gross margin, I think that might be the highest.
Right because it was going to be no new contact Grace that these gross margins are outstanding 7% gross margin I think that might be the highest since you guys went public my question to you is.
Speaker 4: public. My question to you is, is this being driven by, structurally, or are you benefiting from sort of the drama going on at the RSN? So maybe your margins are high short term, but eventually you need to start paying for all that RSN stuff and the disruption will get sorted out in theory. So could you talk about the sustainability of standing gross margins?
Is this being driven by structurally or are you benefiting from sort of the drama going on at the RSA. So maybe your margins are high short term, but eventually you start and you need to start paying for all that RF and stuff.
And the disruption will get sorted out in theory, So could you talk about the sustainability scanning.
Speaker 3: Yes, sure. Hey, Laura, I'll start with that one. So you are correct from a gross margin perspective.
Yeah, sure Hi, Laura I'll start with that one yes. So you are correct from a gross margin perspective, and it's by far the biggest number we've had since we've been public.
Speaker 3: It's by far the biggest number we've had since we've been public, frankly going back probably forever since the company was formed.
And going back probably for ever since the company was formed.
Speaker 3: I would tell you I wouldn't necessarily overplay if you will. The, the impact from the, I would say it's really a company wide culture in terms of focusing on on cost growth. And so I'd say the, the, our sense help. I'd say a little bit. I'd say on a going forward basis that will not be an incremental or or or larger driver if you will of margin going forward. I would just say it's part of the overall company focus.
I would tell you I wouldnt necessarily overplay, if you will.
The impact from the <unk> I would say, it's really a companywide culture in terms of focusing on cost growth.
So I'd say that the <unk> I would say a little bit I'd say on a going forward basis that will not be an incremental or are a larger driver. If you will of margin going forward I would just say, it's part of the overall company focus.
Speaker 1: Your next question is from the line of Darren with rock.
Okay.
Your next question is from the line of Darren <unk> with Roth km.
Hey, guys good morning.
Speaker 6: progress here too if I may. So your comments about advertising, not necessarily about 2Q, but the July commentary, I think David you said about green shoots and kind of confidence in the second half of the year. Is that something that's sort of FUBA specific and progress you're making on direct or do you think that's more of an industry wide phenomenon?
Nice progress here.
Two if I may.
Your comments about advertising.
Advertising not necessarily about <unk>, but the July commentary I think David you said about green shoots and kind of confidence confidence in second half of the year is that something that sort of super specific and progress you're making on direct or do you think that's more of an industry wide phenomenon.
Speaker 5: Yeah, Darren, thank you for the question. I think that the industry basically between June and July has hit a trough. I think at Fubo, we were dealing with something that is I would say more specific. As you know, about 6 months ago, we set out to change the way we were doing things. And direct has become a greater part of the overall mix.
Yeah, Darren Thank you for the question I think that the industry basically between June and July has hit a trough I think at <unk>. We were dealing with something that is I would say more specific as you know about six months ago, we set out to change the way we were doing things.
And direct has become a greater part of the overall mix.
Speaker 5: Uh, between programmatic direct response and direct sales. So we're starting to see the benefits of that. You know, we saw a little bit of out of that at the end of June , but what was really nice to see that it was sustained. Well, into July with some really robust numbers. Uh, which gives us confidence that the 3rd quarter. And potentially the 4th quarter again, with local sports with the NBA.
Between programmatic direct response and <unk>.
Direct sales so we're starting to see the benefits of that.
We saw a little bit about of that at the end of June , but what was really nice to see that it was sustained.
Well into July with some really robust numbers, which.
Which gives us confidence that the third quarter.
Potentially the fourth quarter again with local sports with the NBA.
Speaker 5: Any NHL starting up I think will allow us to continue to drive.
Any any shelf starting up I think will allow us to continue to drive.
Speaker 5: CPMs, again, just given the fact that we're a sports firm. So we feel pretty good about it so far, and, you know, the team is performing quite well. And the last area I think that we've been focused on, which I don't believe we focused on last year, many companies haven't focused on it, is really the supply chain routes. As you know...
Cpm's again, just given the fact that we're sports first so we feel pretty good about it.
So far and the team is performing quite well and the last area I think that we've been focused on which I don't believe we focused on last year. Many companies haven't focused on it is really the supply chain routes as you know.
Speaker 5: The big that some of these ad tech partners take is quite significant. And so we've gone back to start reviewing our deals.
Yeah.
Big that some of these AD Tech partners take is quite significant and so.
So we've gone back to start reviewing our deals.
Speaker 5: Just given the high quality inventory that we provide, we feel we should be getting much better.
Given the high quality inventory that we provide we feel we should be getting much better.
Speaker 5: Terms than than what we have been getting and so we're doing, I would say a little bit of everything to get those numbers up. But again, we haven't seen.
Terms than what we have been getting and so we're doing I would say a little bit of everything to get those numbers up but again, we haven't seen.
Speaker 5: this level of improvement since maybe 2020. So we're excited about that. Of course, we're cautiously optimistic and
This level of improvement since maybe 2020. So we're excited about that of course, we're cautiously optimistic.
Speaker 5: You know, our views are based off of what we're able to see today. Obviously, if market conditions deteriorate quickly that that would change it. But as of now, you know, we feel pretty good about 3rd quarter at revenue. Yeah, and maybe I could add a couple of things in there for you with more granularity on the direct front. What I could tell you is that on a year over year basis for July . Uh, we're seeing pretty dramatic growth and we saw very dramatic growth. And then I would tell you on top of that for August the money.
Our views are.
Are based off of what we're able to see today, obviously if market conditions deteriorate quickly that that would change it but as of now we feel pretty good about third quarter AD revenue and Darren maybe I can add a couple of things and therefore you.
With more granularity on the direct front, what I can tell you is that on a year over year basis. We're in July we're seeing pretty dramatic growth and we saw very dramatic growth and then I would tell you on top of that for August the money on the books call. It four days and for the month is already larger than what we did for the month of July So we feel good on that front.
Speaker 3: Call it four days in for the month. There's already a larger than what we did for the month of July . So we feel good on that front. Secondly, I would say the visibility that we have has improved. So call it three-key visibility starting today versus the visibility may is better. And then I would say just more broadly, you know this, but I want to put a bit of an exclamation point on it, because we have the dual-pronged town wind up sector of the growth within CTV and then also the subscriber growth. And
Secondly, I would say the visibility that we have has improved so call. It three key visibility starting today versus the visibility of May is better and then I would say just more broadly you know this but I wanted to put a bit of an explanation point on it because we have the dual pronged tailwind up second the growth within CTV and then also subscriber growth and I would just add.
Speaker 3: I would just add that the up people in linear TV has given us access to talent that we maybe would not have had this year.
Add that the upheaval in linear television has given us access to talent that we maybe would not have had this year or two ago.
Speaker 7: So, one more, the synthesization of costs.
Okay. That's helpful.
One more.
This is.
Sensitization of costs.
Speaker 6: kind of made over the last call it year like where are we with that are we closer to the ninth inning are we still kind of in early innings but i guess that another way like how much more cost can you kind of strip out of the business or do you feel like most of that work has kind of been done
You've kind of made over the last call. It year like where are we with that are we closer to the ninth inning are we still kind of are in early innings. I guess said another way like how much more costs can you kind of strip out of the business or do you feel like most of that work is kind of a dumb.
Speaker 3: I would say that I think we have a significant amount of cost savings to go. You know, from an ending, I'd say kind of early-ish to maybe mid, but somewhere in that range. I would tell you that I'd say on a weekly basis, we go out to the teams and they come back and actually add to the existing cost savings. So I feel very, very good that we have significant to go from here over the next couple of years at least.
Yes.
Yeah, I would say that I think we have a significant amount of cost savings to go from adding I would say kind of early ish to maybe med, but somewhere in that range.
I would tell you that I would say on a weekly basis, we go out to the teams and they come back and actually.
Add to the existing cost savings so I feel very very good that we have significant to go from here over the next couple of years at least.
Speaker 1: Your next question is from the mind of Nick Zangler with Stevens.
Your next question is from the line of Nick Zheng <unk> with Stephens.
Speaker 6: Yeah, hey guys, so obviously strong subscriber number for 2Q despite the price hikes on the plan and the incremental RS 10 fees. So maybe if you could just talk about, you know, the upside that you had the quarter relative to your expectations set in that guide. Just curious, you know, if the stronger result was a was due to new customer growth, or just maybe less churn that you might have expected in that initial guide and thought.
Yeah, Hey, guys. So obviously, a strong subscriber number for <unk>. Despite.
The price hikes on the plan and the incremental <unk>. So maybe if you could just talk about the upside that you had the quarter relative to your expectations set in that guide.
Just curious if the stronger result was due to new customer growth or just maybe less churn that you might have expected in that initial guidance.
Speaker 5: Yeah, look, I think, Nick, as you know, we've raised prices in the beginning of this year materially. So we were somewhat conservative, I think, at the beginning of the year. But what we have demonstrated is that the true pricing power of our brand and our product. And so, you know, I think that, you know, we are well positioned.
Yes look I think Nick as you as you know we've raised prices in the beginning of this year materially. So we we were somewhat conservative I think at the beginning of the year, but what we have demonstrated is that the true pricing power of our brand and our product and so.
I think that we are well positioned.
Speaker 5: You know, in terms of being able to bring in new customers, but at the same time, I think we've done a really solid job. Reactivating customers back to the platform despite the price up. So I would say it's a combination of that also, you know, just thinking about the sports viewership and news again, just.
In terms of being able to bring in new customers, but at the same time I think we've got a really solid job reactivating customers back to the platform. Despite the price up so I would say it's a combination of that also just thinking about the sports viewership and news again just.
Speaker 5: wanting to briefly mention the strikes. We've seen a pretty significant bump year over year in sports viewership, as well as news viewership up by about 14%. And that might be headline related, of course. But I think those two coupled with our work with our current database of customers, I think has really been the key driver to maintain a pretty, I would say, strong retention.
I wanted to briefly mentioned the strike, we've seen a pretty significant bump year over year in sports viewership.
As well as news viewership up by about 14% and that might be headline related of course.
But I think those two are coupled with our work with our current database of customers. I think has really been the key driver to maintain a pretty I would say strong retention rate.
Speaker 6: And then obviously on that point, if you're seeing higher news viewership and obviously sports always strong, that would potentially suggest that political ad spend would.
And then obviously on that point, if youre seeing higher news viewership and obviously sports always strong that would potentially suggests that political ad spend wood.
Speaker 6: would be favorable for you guys, or at least the opportunity is there. So just any thoughts on whether you've actually seen political ads spent start to flow through? I know it's early, but the talk is that...
What would be favorable for you guys released there the opportunity is there. So just any any thoughts on whether you've actually seen political AD spend start to flow through I know, it's early but the talk is that.
Speaker 6: political ad spend campaigns can start far earlier. So curious if you're seeing any flow through yet on the advertising front from political.
Political AD spend campaigns can start far earlier, so curious if you're seeing any flow through yet on the advertising front from political and and then just thoughts on the back half of 2023 for political obviously most of that flows in through 2024, but again expectations are that that maybe we could see some earlier recognition. So.
Speaker 6: And then just thoughts on the back half of 2023 for political.
Speaker 6: Obviously, most of that flows in through 2024, but again, expectations are that maybe we could see some earlier recognition. So again, just overall thoughts on political and what you're seeing so far. Thanks. Hey, maybe I'll start with that. I would say just to bring it back for a second as a reminder, last year we did call it somewhere in the $45 million range in terms of political for the year.
Again, just overall thoughts on political and what you're seeing so far thanks.
Hey, maybe I'll start with that I would say just tend to bring it back for a second as a reminder, last year, we did call it somewhere in the $45 million range in terms of political for the year I can tell you at this point, it's been a significant focus for the team starting I would say call. It in April or May I would say over the past couple of weeks there has been incremental interest if you will.
Speaker 3: I can tell you at this point, it's been a significant focus for the team starting, I'd say, call it in April or.
Speaker 3: I say over the past couple of weeks there's been incremental interest if you will on the political advertising side I think maybe there's some small money on the books But I would say that the team is very very optimistic in terms of where we can go with that in the cell The team I'd say is focused much earlier this season versus the prior season Yeah, and just to add a couple comments there why I'm super excited about political because this is a real opportunity For FUBO to drive rate on that side and we've been sort of
On the political advertising side I think maybe there is some small money on the books, but I would tell you that the team is very very optimistic in terms of where we can go with that and the sales team I would say is focused much earlier this season versus the prior season and Nick just to add a couple of comments there why I'm Super excited about political because this is a real opportunity.
For <unk> to drive rate on that side, and we've been sort of.
Speaker 5: you know doing the rounds think about it elections are one and lost by a couple thousand votes so there's no way you can overlook a platform like ours with elections decided with such slim margins so we're
Doing the rounds and think about elections are won and lost by a couple of thousand votes. So theres no way you can overlook a platform like ours with <unk>.
Elections decided was such slim margins. So we're.
Speaker 5: well prepared for political and the teams have this on focus.
Well prepared for political and the teams have this on focus.
Speaker 5: And the goal will obviously be to take advantage of some of these really tight races. And let's not forget, given our local programming,
And the goal will obviously be to take advantage of some of these really tight races, and let's not forget given our local programming.
Speaker 5: capabilities, you know, we think we're going to have a pretty strong opportunity within our local sports coverage to be able to really drive political business.
Capabilities, we think we're going to have a pretty strong opportunity within our local sports coverage to be able to really drive.
<unk> business.
Speaker 1: As a reminder, if you would like to ask a question, press star 1 on your telephone keypad.
As a reminder, if you would like to ask a question press star one on your telephone keypad.
Speaker 1: Your next question is from the line of Jim Goss with Barrington Research.
Your next question is from the line of Jim Goss with Barrington Research.
Speaker 8: Good morning. Thanks for taking the question. This is Pat on for Jim. I just wanted to ask about on subscriber acquisition costs, which you said was kind of below your target range. I was wondering what some of the drivers of that were and if like the kind of a softer ad market might make that a little less sustainable as the market improves.
Hi, Good morning, Thanks for taking the question. This is Pat on for Jim I, just wanted to ask about on our subscriber acquisition costs, which you.
So it was kind of below your target range I was just wondering what some of the drivers of that word just like the kind of a softer AD market might make that a little less sustainable as the market improves.
Speaker 5: Yeah, I think, look, I think historically, if you look back, we've always been hyper focused on efficiency, just given our budgets versus budgets of other players whether they're traditional or virtual. And so I think what you're really seeing is continued efficiencies on the digital advertising front, of course, some of the CPMs and other tactics that we typically deploy have.
Yes, I think look I think historically, if you look back.
We've always been hyper focused on efficiency, just given our budgets were budgets of other players whether they're traditional or virtual.
And so I think what you're really seeing is continued efficiencies on the digital advertising front of course.
Some of the Cps and other.
Tactics that we typically do.
Deploy have.
Speaker 5: Sorry, I got cut off there. You know, typically,
Sorry.
Got cut off there.
Typically.
Speaker 5: just again, focused on efficiency. And so we typically move dollars in and out of inefficient areas on a regular basis, frankly, almost in real time. So we're super excited about that. And just to kind of give you a sense of
Just again focus on efficiency and so we typically move dollars in and out of inefficient areas on a regular basis frankly, almost in real time. So we're super excited about that and just to kind of give you a sense of how important that number is I mean, if you think about other companies that or similar companies that have.
Speaker 5: How important that number is? I mean, if you think about other companies that, or similar companies that have recently reported, we've seen spells and marketing lines.
<unk> recently reported we've seen sales and marketing lines anywhere from at some of the most efficient companies at 13%.
Speaker 5: anywhere from some of the most efficient companies at 13% and 25% companies like Roku. So coming in...
And 25% of companies like Roku, so coming in.
Speaker 5: you know in terms of subscriber growth subscriber revenue with such an efficient uh... marketing spend is uh... is a real pleasure for us and will continue to focus on that uh... and which is part of our our focus for the back after the year and pat i i would have a couple things to that as well i think one is that there there certainly i think increased
In terms of subscriber growth subscriber revenue with such an efficient.
Marketing spend is.
Real pleasure for us and will continue to focus on that.
Which is part of our focus for the back half of the year, Yes, I would add a couple of things to that as well I think one is that there are certainly I'd say increased recognition in terms of the Puma brand, which has helped and then I'd say secondly, I would just want you to remember that in terms of television, which arguably is where the pressure is in terms of CPM is downward.
Speaker 3: recognition in terms of the FUBO brand, which is help. And then I'd say secondly, I would just want you to remember that in terms of TV, which arguably is where the pressure is in terms of CPM is downward. That's a very small portion of overall ad budget. OK, thank you.
That's a very small portion of our overall ad budget.
Okay. Thank you.
Okay.
Okay.
Yeah.
Okay.
Thank you I will now hand, todays call back over to Alison Sternberg.
Speaker 4: Thank you. So David, we have a, I'm going to combine it into one question, but we have some questions from investors via our State Technology Platform.
Thank you David we have that I'm going to combine it into one question that we have some questions from investors via our <unk> technology platform.
Speaker 2: Again, there are two questions, but they're sort of similar thematically, so I'll combine them into one. The first is, what makes FUBO different from the rest of the streaming services? So, calling out 10,000 feet, what differentiates the offering and as somewhat of an extension of that, what are some of the things that will be implemented in the future in order to maintain that competitive advantage relative to other streaming platforms?
Again, there are two questions, but they're sort of similar thematic Lisa I'll combine them into one the first is what makes <unk> different from the rest of the streaming services, so calling out 10000 feet, what differentiates the offering and as somewhat of an extension of that what are some of the things that will be implemented in the future.
Sure in order to maintain that competitive.
Advantage relative to other streaming platforms.
Speaker 5: Yeah, so as always, we've been focused in three areas. One is, I think we differentiate on brand. We always have, we are known to be the sports brand. That is evident still today. As you look at opening day or any other start of any sports season, you'll see organic downloads really grow significantly. The second piece is content. We continue to differentiate on the sports side. Most recently we have become...
Yes, so as always we have been focused in three areas. One is I think we differentiate on Grand we always have we are known to be the sports brand that is evident still today as you look at opening day or any other.
Start of any sports season, Youll see organic downloads.
Really grow significantly.
The second piece is content.
We continue to differentiate on the sports side. Most recently we have become.
Speaker 5: The home for local sports. We have relationships now with the multitude of teams.
The home for local sports, we have relationships now with a multitude of teams.
Speaker 5: Including our recent announcement with our partnership with sky, so we're continuing to build on those. Locally, and that creates a lot of goodwill. With customers, and then 3rd is really a focus on on product as everyone knows we've been. Historically focused on being 1st to mark.
Our recent announcement with our partnership with Sky. So we're continuing to build on those.
Locally.
That creates a lot of goodwill with customers and then third is.
Is really a focus on on product as everyone knows we've been.
Historically focused on being first to market with key sports features and you know today.
Speaker 5: sports features and today we've already launched a couple new capabilities that are in beta and we're continuing to test all of which are related to our video AI. Capabilities are proprietary technology stack that we've continued to develop and we've tested a new AI feature with the MBA finals.
We've already launched a couple new capabilities that are in beta and we're continuing to test all of which are related to our video AI.
Capabilities, our proprietary technology stack that we've continued to develop and we've tested a new AI feature with the NBA finals, which allow viewers to relive the most exciting moments.
Speaker 5: which allowed viewers to relive the most exciting moments.
Speaker 5: allowing us to really index in real time a lot of these capabilities. So you'll start to see more and more on the advanced DVR front and all of our work with our video AI. Once we have launched our unified platform...
Allowing us to really index in real time.
A lot of these capabilities, so youll start to see more and more on the advanced DVR front.
And all of our work with our video AI. Once we have launched our unified platform, which I think will start to roll that out. This month very conservatively, we'll be able to open up more resources to really focus on driving.
Speaker 5: Which I think we'll start to roll that out this month very conservatively. We'll be able to open up more resources to really focus on driving greater feature steps for our enthusiastic sports audience.
Greater feature sets for our enthusiastic sports audience.
Excellent. Thank you David.
Back to you operator.
Speaker 1: Thank you. This does conclude today's call. You may now disconnect your line.
Thank you this does conclude today's call.
You may now disconnect your line.
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