Q2 2024 FuboTV Inc Earnings Call
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Operator: Thank you for standing by. At this time, I would like to welcome everyone to today's Fubotv second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Speaker Change: Thank you for standing by at this time I would like to welcome everyone to today's Bubo television second quarter 2024 earnings Conference call. All lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star on your telephone, excuse me, star one on your telephone keypad. Once again, star one. Thank you. I would now like to turn the call over to Ameet Padte, Senior Vice President of FP&A Corporate Developments and Investor Relations. Ameet, please go ahead.
Speaker Change: 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 on your telephone excuse me star one on your telephone keypad once again star one thank you.
Amit <unk>: I would now like to turn the call over to Amit <unk> Senior Vice President of F. P N a corporate development and Investor Relations. Please.
Speaker Change: Please go ahead.
Ameet Padte: Thank you for joining us to discuss Fubo's second quarter 2024 results. With me today is David Gandler, co-founder and CEO of Fubo, and John Janedis, CFO of Fubo.
Speaker Change: Thank you for joining us to discuss <unk>.
Speaker Change: <unk> second quarter 2024 results.
Speaker Change: With me today is David Candler, cofounder, and CEO of <unk>, and John <unk> CFO of <unk>.
Speaker Change: 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 <unk> Dot TV.
Ameet Padte: 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. Before we begin, let me quickly review the format of today's call. David is going to start with some brief remarks on the quarter and our business, and John will cover the financials and guidance. Then we will turn the call over to the analysts for Q&A.
Speaker Change: Before we begin let me quickly review the format of today's call.
Speaker Change: David I just wanted to start with some brief remarks on the quarter and our business and John will cover the financials and guidance.
Ameet Padte: 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, industry and consumer trends, anti-competitive practices among our competitors, and our response plan, including our antitrust lawsuit, and expectations regarding profitability. These forward-looking statements are subject to certain risk, uncertainties, and assumptions.
Ameet Padte: Important factors that could cause actual results to differ materially from forward-looking statements include those discussed in our filings with the SEC. Except as otherwise noted, the results and guidance we're presenting today are on a continuing operations basis, excluding the historical results of our former gaming segment, which we account for as discontinued operations. In addition, our guidance and other commentary with respect to Fubo's financial condition and our anticipated financial performance in future periods do not reflect any potential impact of the launch of the sports streaming joint venture between the Walt Disney Company, Fox Corporation, and Warner Bros.
Ameet Padte: Disclosures, including the outcome of our antitrust lawsuit. Risks related to this joint venture and the litigation are described in further detail in the company's SEC filing. During Q&A, the company will not address any questions related to ongoing litigation, including this matter. 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 2024 earnings shareholder letter, which is available on our website at ir.fubo.tv. With that, I will turn the call over to David.
David Gandler: Thank you, Ameet, and good morning, everyone. We appreciate that you joined us today to discuss Fubo's second quarter 2024 results. Our second quarter continued our strong start to 2024 and the momentum we have achieved since becoming a publicly traded company in 2020. The second quarter marked our sixth consecutive quarter of global year-over-year improvement in our profitability metrics, while in North America, we exceeded expectations. In North America, we closed the second quarter with double-digit year-over-year growth, posting $382.7 million in total revenue, an increase of 26% year-over-year, and 1.45 million paid subscribers, up 24%. Our preliminary injunction hearing to prevent the JV's launch goes before the U.S. District Court, Southern District of New York, starting today.
David Gandler: As a super aggregator, our vision is to offer users the premium content they love all within the Fubo ecosystem. In closing, the second quarter continued to demonstrate how Fubo has grown efficiently as we balance our profitability goals while strategically investing in our business. We remain focused on bringing consumers an aggregated sports entertainment offering that delivers premium content and innovative product features at the price point that's right for them. And, as I said last quarter, we remain committed to a competitive streaming landscape that offers consumers choice, fair pricing, and innovation.
John: In total revenue an increase of 26% year over year, and one $4 5 million paid subscribers up 24% year over year. Our AD business also remained strong ending the quarter with $25 $8 million in revenue an increase of 14% year over year.
Speaker Change: Alongside this growth, we are making great strides on our path to profitability with meaningful year over year improvements in net loss adjusted EBITDA and free cash flow, which John will discuss in more detail.
This progress gives us continued confidence in our ability to execute with all teams at frugal operating at the highest levels note that our profitability goals exclude the potential impact of the sports streaming joint venture in.
John: In addition to our robust operational execution, we were agile and opportunistic in managing our balance sheet in Q2, 2024, we repurchased $46 9 million.
Speaker Change: Of convertible debt at an average price of 56, 6% of par value.
Speaker Change: To fund these repurchases we issued stock at $1 28 under our ATM program, achieving an impressive net effective issuance price of $2 and 26.
Speaker Change: It's an outstanding 77% premium.
Speaker Change: This strategic move not only enhanced shareholder value by reducing outstanding debt, but also boosted our financial flexibility and mitigated dilution. These.
John: That offers consumers choice fair pricing and innovation. This is the vision upon which <unk> was founded and is only achievable in a truly competitive market I will now turn the call over to John <unk> CFO to discuss our financial results in greater detail John.
David Gandler: This is the vision upon which Fubo was founded and is only achievable in a truly competitive market. I will now turn the call over to John Janedis, CFO, to discuss our financial results in greater detail. John?
John: Thank you David and good morning, everyone.
John: The second quarter saw a continuation of strong results and progress across just about every metric and in relation to our profitability goals.
John: These excellent results build on our strong momentum from the prior quarters and provide added approve that the initiatives and strategies. We have implemented are having a positive impact on the earnings power of our business.
John: Which we believe positions <unk> for success in what remains a dynamic operating environment.
Speaker Change: Taking a look at the results for the quarter, we continued to see healthy topline and subscriber growth with global revenue growing by over 25% year over year to $391 million driven by 26% growth in North America, and 2% growth in rest of world.
John: The primary driver behind this continued topline growth has been the ongoing robust increase in subscribers.
John Janedis: This leads to guidance of 395,000 to 405,000 subscribers for the full year 2024, representing a 2% year-over-year decline at the midpoint, and full year 2024 revenue guidance of $33 million to $35 million, representing 4% year-over-year growth at the midpoint. In closing, I am pleased with our ability to post strong top-line results and equally strong subscriber growth. While we recognize there's still much work to be done to capture the vast opportunities we see in front of us, we're encouraged by our ability to improve just about every aspect of how we do business. It is clear that our strategies to maximize revenue and improve operating efficiencies are working, providing us with added confidence in our ability to deliver long-term value to our employees, partners, and shareholders.
John: Over the long term value to our employees partners and shareholders.
Speaker Change: I would now like to turn the call over to the operator for Q&A.
John: Operator.
Speaker Change: Thank you and at this time I would like to remind everyone that in order to ask a question press star and the number one on your telephone keypad. Once again star one in the interest of time, we ask that you. Please limit yourself to one question. Thank you and we will pause just a moment to compile the.
John: A Q&A roster.
Laura Martin: And it looks like our first question today comes from the line of Laura Martin with Needham. Laura. Please go ahead. Good morning. My first one is about ads could you give us an update on what's happening with cost per thousand and give us an update on <unk>. It looks like the growth slowed a little bit to 14%.
Speaker Change: Year over year could you give us an update on what's happening generally in the AD market for you guys.
Laura Martin: Yeah sure Hey, this is John.
John: I would say couple of things so to your point on the AD side, you posted call it 13, 14% growth.
Speaker Change: That was off of a I'd say, a several percentage point tougher comp relative to the.
Laura Martin: The last year and so if you look at a two year stack comp basis more or less was it's kind of the same growth rate on a two year basis for both <unk> and <unk>. So I'd start with that I'd also remind you that we have a 34% comp in the third quarter.
Analyst: Great, thanks a ton. I want to kind of ask about the Free Ad Supporter Service. Can you just give us a bit more details on, you know, the learning so far? Are you seeing it actually moving the needle on your churn or retention profile? And is that driving part of the North America sub-sale performance this quarter? And also, if you can kind of just expand on your plans to roll this out into more cohorts? Thanks a lot.
Analyst: Congratulations on the balance sheet management, first of all, but second, if you could please drill down on the strength of the net ads in North America. What were some real, I guess, content drivers there? There were some other streamers, obviously not virtual MVPDs, that had some issues in the quarter, but timing-wise, I was just wondering, what were the drivers there?
David Gandler: I would just add that, generally speaking, it was a very strong sports calendar. We had two major soccer events, and at the same time, I think we did a really nice job, you know, marketing our cricket championship, as well as, you know, some strong work behind the ERSNs, adding Yes Network and ensuring that there was continuity, you know, with respect to some of the other regional sports networks and the baseball season.
Laura Martin: Okay.
Laura Martin: Ensuring that there was continuity you know with respect to some of the other regional sports networks and baseball seasons.
Laura Martin: Proven to be a stronger this year than it was last year for us.
Operator: All right, thank you. And our next question comes from the line of Jim Goss with Barrington Research. Jim, please go ahead. All right, thank you.
Speaker Change: All right. Thank you.
Speaker Change: And our next question comes from the line of Jim Goss with Barrington Research Jim. Please go ahead.
Jim Goss: Alright, thank you.
Jim Goss: I Wonder if you might comment on the potential.
Jim Goss: The impact of connect connected TV options on your Tam.
Speaker Change: Vizio, Walmart, a tivo and proprietary OEM efforts, providing that option.
Speaker Change: For consumers to get into some of the services without using something else and how do you view that as a competitive threat.
Speaker Change: Hey, everyone to take that one.
Speaker Change: Yes, sorry, Jim I'm not sure I understood. It sounded like you were saying how how are we competing with some of these other SaaS services are you, saying on the SaaS side, sorry, if you could just rephrase.
Jim Goss: Yeah, well, the fact that if you buy certain televisions, you'll have an opportunity to gain access to a lot of the programming, including a lot of the same sort of fast channels without having a service at all, and I'm just wondering if that satisfies the needs of enough individuals that it poses a competitive threat to you.
Speaker Change: Yeah, well. This is the fact that if you buy certain televisions, you'll you'll have an opportunity to gain access to a lot of the programming.
John Janedis: And, Nick, on the capital question, what I would say there is, look, as you would expect, I can't comment on what we may or may not do as it relates to the capital structure or our capital structure directly, but what I can say is that we continue to believe that we are funded to execute on our operating plan, excluding the potential impact of the JV, and I would say that we are very sensitive to shareholder delusions.
Operator: All right, thanks for the question, Nick. And our next question comes from the line of Darren Aftahi with Roth. Darren, please go ahead.
Darren Aftahi: Thank you. Thank you.
Speaker Change: To any specific piece of content, but what I can tell you is.
Speaker Change: What I'm consistent with what I've said before is that we will continue to see improvement in that line item going forward.
Speaker Change: And so expect to see that again in the third quarter and also in the fourth quarter, but again I can't get more specific on that.
Speaker Change: Yes, I would just add one more thing.
Speaker Change: I just don't want you to think that it's.
Speaker Change: It's just discovery the discovery drop this is a combination of other activity.
Speaker Change: There are constant negotiations that have transpired.
Speaker Change: Some some mixed shift.
Speaker Change: Opportunities as well that came up just driving customers into different types of packaging. So I think it's a culmination of things, but certainly not.
Speaker Change: Specific to Warner Brothers alone.
Speaker Change: Alright, Thanks for the question, Brett and that is all the questions. We have today, so ladies and gentlemen, I just want to let you know this concludes today's call. Thank you all for joining and you may now disconnect.
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