Q4 2024 FuboTV Inc Earnings Call
Business strategy and plans, including our pending business combination industry and consumer trends.
Expectations regarding growth and profitability.
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 are discussed in our SEC filings, 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 segments, which are accounted for as discontinued operations.
During the call. We may also refer to certain non-GAAP financial measures.
Conciliation of these non-GAAP measures to the most directly comparable GAAP measures are also available in our Q4 2024 earnings shareholder letter, which is available on our website at IR docs, Google without television.
Please note as well that during Q&A the company will not provide any information related to the business combination with Hulu plus live television and ongoing regulatory matters beyond what we have already shared.
David: With that I will turn the call over to David.
David: Thank you Amy and good morning, everyone. We appreciate you joining us today to discuss <unk> fourth quarter and full year 2024 results.
David: 2024 was a record year for the company, we delivered double digit revenue growth in North America closing the year, just shy of $1 $6 billion in total revenue up 19% year over year.
David: Paid subscribers in the region hit $1 million 676000 up 4% year over year, both full year metrics were all time highs and in line with our guidance.
David: In the fourth quarter total revenue in North America was approximately $434 million up 8% year over year also in line with guidance, we delivered a record $87.90 of average revenue per user in the fourth quarter, marking an expansion of one 4% year over.
David: A year.
David: As we continue to drive towards our 2025 profitability goal, we improved full year, adjusted EBITDA and free cash flow by over $100 million for the second consecutive year. These.
David: These results reflect our team's focused execution amidst an industry and disruption.
David: Continuing with our strong operating performance into the new year. We have also fostered a more competitive environment, one that benefits the consumer.
David: In early January we announced a definitive agreement with the Walt Disney Company to combine Hulu plus live TV and <unk>.
David: Under the combination both footballing Hulu plus live TV will operate as separate and distinct consumer brands under <unk>, which will continue to trade on the NYSE.
David: For both existing management team will continue to lead the company and I will remain CEO.
David: This combination will make through both the sixth largest player in the pay television space by subscribers behind larger players like Comcast charter Directv Youtube TV and <unk>.
David: As a result, we anticipate the ability to offer more competitive offerings at more competitive price points.
David: We are making significant progress on our plan to provide consumers with greater choice offering multiple flexible options that enable them to tailor their streaming experience to their needs.
David: Include.
David: Through both our existing sports focused bundle, where consumers come for the sports, but stay for the entertainment.
David: Hulu plus live television and entertainment focused bundle and a forthcoming entirely new sports and broadcasting service.
David: This new sports and broadcasting service will feature a robust lineup of their favorite Pro and college sports we intend to launch this service for the fall sports season, and it is independent of the Hulu plus live TV transaction.
David: <unk> has always envisioned a fair streaming marketplace with the consumer at its core we.
David: We are excited to have help lead an industry shift to more consumer friendly skinny sports levels. This was most recently demonstrated by Comcast and Directv as new sports focused content offering.
David: Our forthcoming Skinny sports and broadcasting service will offer even more consumer friendly bundles in a competitive industry as we have consistently asserted the consumer always wins.
David: Football is not limiting skinny bundles only to sports programming.
David: Sports is a unified across our diverse country and we want to ensure we supplement this content with other types of focused programming that appeal to many different communities.
David: To that end last week, we launched a Z family bundle of 18 linear channels, serving the South Asian demographic.
David: Z family can be purchased as a standalone bundle or as an add on to one of our more robust channel plants. We believe multi cultural programming can be a strong growth segment for us and we plan to launch additional bundles this year.
David: These standalone smaller bundles fit our super aggregation strategy of delivering multiple and flexible streaming packages at every point along the demand curve from free to skinny to the full content bundle.
David: These tiers must be appropriately priced and deliver value to our subscribers.
That is why we will only enter into content distribution agreements with programmers when it makes sense for our subscribers the decision not to renew our long standing agreement with Univision was the only choice based on the significant rate increases Univision demanded cost that would have been passed onto our <unk>.
David: Scribing.
David: Instead, we are a different approach we lowered the price of our Latino plan by 55% to deliver greater value to our customers. This is the first time, we are aware that any streaming service has shared with consumers cost savings beyond temporary credits.
David: Moving forward, we plan to replace Univision programming over time with other high quality sports content that better aligns with our commitment to flexibility and affordability.
David: In closing 2024 was a pivotal year for <unk> marked by strong revenue and overall subscriber growth along with meaningful improvements to our bottom line, we could not be more excited for the many opportunities ahead.
David: We believe the opportunity to create a more competitive player in the pay TV market combined with a secular streaming tailwind could position us to drive significant value for all our stakeholders consumers media partners and shareholders alike. We look forward to keeping you updated on our latest developments.
David: I will now turn the call over to John <unk> CFO to discuss our financial results in greater detail John.
John: Thank you David.
David: Everyone.
David: Our fourth quarter and full year 2024 results highlights <unk> continued execution of our long term strategy maximizing our aggregated content platform and made a fluid media landscape and evolving consumer trends.
David: This progress is reflected across just about every financial and operational metric validating our initiatives and positioning <unk> for success in a dynamic and evolving operating landscape.
David: Taking a look at the results for the quarter, we continued to see a healthy top line growth with North America revenue growth of 8% and rest of world revenue growth of 12%.
David: The primary drivers behind this continued growth in North America have been our ability to attract retain and monetize subscribers.
David: To that end I am pleased to report North America subscriber growth of 4% ending the quarter with $1 million 676000 subscribers and rest of world subscribers a 362000.
David: With respect to monetization, we attained all time high <unk> in both markets with North America, our pool of $87 90.
David: And rest of world <unk> of $8 50.
David: From an advertising standpoint, we delivered global AD revenue of $34 4 million and 11, 8% decline year over year.
David: This was primarily due to a decline in AD and charitable content as a result of our content portfolio adjustments in 2024.
David: Taking a look at the operational side of the business, our laser focus on improving efficiency, while expanding topline growth is reflected in our continued progress on our profitability metrics.
David: In Q4, net loss improved to $40 9 million compared.
David: Compared to a net loss of $71 million in Q4 2023.
David: Adjusted EBITDA loss was $8 7 million.
David: Comparing favorably to a loss of $50 1 million in the fourth quarter of 2023.
David: Adjusted EPS loss was <unk> <unk>, an improvement compared to an adjusted EPS loss of <unk> 18.
David: In Q4 2023.
David: Turning to cash I am excited to report that the business generated free cash flow a positive $16 $3 million.
A $22 $1 million improvement year over year.
David: This marks a significant milestone I am happy to share that this was <unk> first quarter of positive free cash flow and underscores our commitment to financial discipline cost management and sustainable growth.
David: We are encouraged by this progress and remain dedicated to further enhancing our financial performance in the quarters ahead.
David: Moving to the balance sheet and cash flow, we ended the quarter with $167 $6 million of cash cash equivalents and restricted cash up by $15 3 million from $152 3 million at the end of the third quarter note that this does not include the cash payments associated.
David: She added with our recently announced settlement, which took place in January 2025, and we did not access the capital markets.
David: In summary, our financial results highlight the significant progress we have made across the business.
David: We believe our current trajectory demonstrates both our potential and our resilience.
David: Furthermore, we are confident that our liquidity was sufficiently support investments in the core business and execute on broader strategic endeavors.
David: Turning to guidance, our first quarter North America subscriber guidance is $1 million and 430000 to $1 million 460000 subscribers.
David: Presenting a 4% year over year decline at the midpoint.
David: Our first quarter revenue guidance projects $400 million.
David: Q4 hundred $10 million, representing 3% year over year growth at the midpoint.
David: Note that this outlook reflects the expected potential subscriber impact of our recent non renewal with Univision.
David: Regarding rest of the World, We expect 330000 to 340000 subscribers in the first quarter, representing a 16% year over year decline at the midpoint, while our revenue guidance projects $7 5 million to $8 5 million representing a 5%.
David: Year over year decline at the midpoint.
This guidance reflects our current expected exposure to potential industry volatility and our commitment to maintaining discipline and subscriber acquisition costs relative to monetization.
David: In closing I am pleased with our results <unk> enters 2025 with strong momentum and significant improvements across nearly every aspect of our business as we drive towards profitability.
David: We anticipate continued top line growth in both revenue and subscribers along with continued efficiency in our cost structure.
David: We believe that a sports first live TV streaming model offer significant consumer value and we are dedicated to championing the consumer by redefining the future of live sports streaming.
David: I would now like to turn the call over to the operator for Q&A.
David: Thank you so much and at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and in the interest of time, we ask that you. Please limit yourself to one primary question and one follow up thank you.
David: We will pause just a moment to compile the Q&A roster.
Speaker Change: Okay. It looks like our first question today comes from the line of David Joyce with Seaport Research Partners. David. Please go ahead.
Speaker Change: Thank you with your pending Disney relationship.
Speaker Change: With Disney's ESPN, possibly opting out of major League baseball after.
Speaker Change: Next year once the opportunity for <unk> going forward with you with those rates is that something that could fit into your strategy somehow and related to that how would you manage to any type of programming conflicts.
Speaker Change: Queen ESPN flagship or.
Yes.
Speaker Change: As the offerings when theres still going to be a partner with you on <unk>.
Speaker Change: The virtual Mvpds.
John: Yes. Thank you why don't I take this one John.
Speaker Change: Obviously, we.
Speaker Change: Attempt to partner with all of the programmers.
Speaker Change: And the market as well as the league. So we have a relationship with major League baseball, but I think the primary goal is to continue distributing.
Speaker Change: Live channels.
Speaker Change: So should major league baseball decide to go in that direction as it did managing some of the.
Speaker Change: Local sports.
Speaker Change: Teams such as the Padres, we will certainly look to figure out a way to work together.
Speaker Change: And then as for the second part of your question.
Speaker Change: We don't really see any issues at all with Disney we are continuing to run our business.
Speaker Change: In the ordinary course.
Speaker Change: We have a relationship we have.
Speaker Change: A licensing distribution deal with them and.
Speaker Change: That deal is over multiple years and will continue to distribute Disney channels for the contract.
Speaker Change: Okay.
Speaker Change: Alright, thank you.
Speaker Change: Thanks, David.
Speaker Change: And our next question comes from the line of Patrick <unk> with Barrington Research Patrick. Please go ahead.
Patrick: Good morning.
Patrick: I was wondering if you can talk about like maybe the <unk>.
Patrick: Relative pricing.
Patrick: Content costs for.
Patrick: I guess the core for both servicing the broadcast and sports.
Patrick: Service.
Patrick: Just with the narrower.
Patrick: Offering the relative importance of those networks and the potential for I guess, the higher costs higher costs aside there.
Speaker Change: Okay, Hey, Pat and John maybe I'll start on on the pricing like I would say, it's too soon to get specific but I think it's fair to say that the difference will be significant on a percentage basis and as we look to what potential subscribers are looking for them.
We have another opportunity to reach them along the demand curve. So I do think it should widen the funnel for us.
Speaker Change: <unk>.
Speaker Change: Is there a second part I missed the second part of the question was that on on programming costs are.
Speaker Change: Programming costs, Yeah look unrounded programming contract they are certainly going to be lower.
Speaker Change: But I would just say give us another quarter or two to give you more context around that as we kind of get deeper into the offering.
Speaker Change: Okay, and then just on the subscriber guidance that you provided is it.
Speaker Change: Is that are the sub losses year over year, mostly within.
Speaker Change: The Suba Latino offering or is that more broad based in terms of the kind of challenge as a result of the programming.
<unk>.
Speaker Change: Yes, let me unpack that for you bet.
Speaker Change: So for.
Speaker Change: For the first quarter subscribers on a year over year basis, we would have expected to grow subscribers when adjusting for the impact of Univision.
Speaker Change: And so to give you a ballpark figure growth could be in say the mid single digits.
Speaker Change: Similar to I'd say slightly better than the 4% year over year over year growth that reported in the fourth quarter and let me also just take a step back and unpack it a bit more.
Speaker Change: Because as you know there is seasonality to our business and meaning we typically see a decline in <unk> on a sequential basis in the first half of the year and then growth in the second half of the year.
Speaker Change: And so again I think we feel pretty good about the trajectory for Q1 X Gene Division in terms of the overall year I would tell you that.
Speaker Change: We expect growth in subscribers with or without Univision.
Speaker Change: Okay. Thank you.
Pat: Alright, Thanks Pat.
Pat: And our next question comes from the line of Laura Martin with Needham Laura. Please go ahead.
Laura Martin: Good morning. The first one is on the Disney family is sort of an interesting.
Laura Martin: Sort of pivot away from sports for you guys do you see that is mostly an upsell opportunity for existing subs or do you think that could be a whole new Tam for you and if so how big could that be as an onboarding process to new subscribers that maybe.
Laura Martin: Would have been additive to the sports focused.
Laura Martin: Scrubbers.
Laura Martin: Hi, Laura this is David.
Speaker Change: Look I wouldn't say, we're moving away from sports not at all.
Speaker Change: I think we announced last year. The addition of cricket.
Speaker Change: Two our sports offering and so this was a natural extension as John just stated our goal is really to attract customers.
Speaker Change: Log demand curve this expands our funnel.
Speaker Change: And also fits very well with our Super aggregation strategy. So we want to provide.
Speaker Change: Slimmer bundles of programming and the way we've been sort of developing our product. We think that we're going to have some very interesting capabilities around upselling consumers once we get them in and I think over the years, we've built an excellent track.
Speaker Change: On the platform, where we have attractive customers through sports and have been able to.
Speaker Change: Drive monetization through entertainment this is.
Speaker Change: Similar in strategy. So we're excited to sort of test that out potentially there could be lower acquisition costs better retention and overall.
Speaker Change: We're very happy with where we are today the business is significantly healthier than it's ever been.
Speaker Change: And Laura I would just add one thing on that sorry, Carla our weekend and I would say, we're happy with what we're seeing in terms of that package.
Speaker Change: Okay.
Speaker Change: First subscribers are up sell to existing subscribers.
Speaker Change: I think it's too soon to tell I think it would be largely an upsell or a different set of subscribers.
Speaker Change: Okay, and then can we drill down on advertising a little bit.
Speaker Change: Intriguing words in the press release talking about you've expanded your suite of AD formats with dynamic.
Speaker Change: Could you talk about what's going on with advertising and how you see advertising unfolding in 2025 is the CPM pressure well near world downward CPM pressure on that could you just drill down into the app, what's going on with the advertising piece in fourth quarter and into the first quarter here of 2000.
Speaker Change: Yes, yes, sure Laura I'll start.
Speaker Change: On the fourth quarter I would say results were impacted by both the drop of discovery and Univision.
Speaker Change: So I would say adjusting for though as we performed I would say likely more so in line with the broader marketplace, but in terms of what we saw during the quarter I would say our direct business was up double digits and as you'd expect led by the sports vertical.
Speaker Change: On the pricing front, I would say that sports remain healthy.
Speaker Change: On pricing and sell out, but we are seeing some relative weakness or softness in entertainment as it relates to Cps.
Speaker Change: I would say anecdotally, we did see some uncertainty in the market post the election.
Speaker Change: That continued into the first quarter heading into March I would say our team feels like the tone has improved somewhat so from a growth perspective, I'd say March should look better than February and maybe at least directionally. Although it's early we're starting to see some.
Speaker Change: Good early interest as it relates to the.
Speaker Change: 2025 upfront.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Thank you Laura welcome.
Speaker Change: And our next question comes from the line of Clark <unk> with BTG Clark. Please go ahead.
Clark: Thanks, Good morning, I just have one.
Speaker Change: John you were talking about mid single digit growth for Q1.
Clark: <unk> not being very different and I know there were some headwinds from.
Clark: Univision and discovery throughout the year, but if we sort of pull back and take a bigger picture view.
Clark: Your growth relative to industry, we've seen deceleration over the last two years in both San I'm curious.
Clark: One if you and David could sort of provide some thoughts around the slowdown.
Clark: Sort of what's happening or are we heading perhaps a bedrock level of sports enthusiasts in traditional cable.
Clark: Or maybe more importantly, what are the avenues for sort of re accelerating the migration rate as we go forward do we need.
Speaker Change: Price and package adjustments Michele how do you guys think about being able to offer something different and better later in the year. Thanks a lot.
Clark: Sorry, there was a lot in that question. So let me see if I.
Speaker Change: Can break that down a little bit.
Clark: So in terms of the deceleration I think.
Clark: The United States is a relatively mature market you have about 70 million households between traditional pay TV.
Clark: And virtual of which I would say the traditional side probably represents around $50 million or.
Clark: Or so so for us we still think that there is pretty significant.
Clark: <unk> growth the streaming.
Clark: <unk> side, the <unk> side of the business I think is also maturing.
Clark: Which I think bodes well for <unk> and the virtual Mvpds space in general there is still a strong secular tailwind of consumers moving from traditional cable too.
Clark: Streaming, but what I think has changed dramatically over the last 24 months is the number of AD supported services.
Clark: Coming out of the likes of Netflix.
Clark: And other S. Vod services. So what I think has happened is over the last four or five years, we've seen sort of an escalation of about 7% growth.
Clark: Should say cost or pricing from these <unk> services, which is almost in line.
Clark: With the type of escalators that we've seen.
Clark: Over the last five or six years, and the virtual mvpds space, but our product is becoming more competitive.
Clark: Theres fewer programming.
Clark: TV shows or I think theyre more sparse.
Clark: <unk> services are programming, we continue to maintain about 100 or so hours of viewership. So I think it's just a more competitive product and we've done an excellent job getting people to convert.
Clark: You may have also noticed we've reduced our marketing spend as a percentage of revenue over the last couple of years and so we've really been focused on.
Clark: Ensuring that we have a healthy business and fourth quarter cash flow clearly highlights. The fact that we are still on track to deliver 2025 as we said back then but I think it's up I think people are probably have a much harder time now deciding whether they should go to an <unk> service or.
Clark: Look at pay TV.
Clark: Platform, a streaming TV platform like frugal ultimately when you aggregate the cost of three or four of these services without add products or youre getting into the sort of $100 price point. So I think over time, we're going to be a little bit more competitive with those services and as I said in my opening comments.
Clark: This an aggregated streaming service probably provides the best value for consumers. It provides the best value for media companies.
Clark: And it allows us to maintain lower churn. It allows media companies to reduce the amount of marketing their spending and allows everybody to take advantage of the <unk> hits from each of these different media providers.
Speaker Change: Yes, Mark I would just add one thing on top of what David said at least on the on the packaging side.
Clark: We actually.
Clark: <unk> rolled out two new packages in the fourth quarter, both lower priced and we're very pleased with what we've seen over the I guess, the first two or three months of having them in the marketplace.
Speaker Change: Thank you you guys saw on all of that sort of eight part question that I published before but just to make sure that I'm clear on sort of what you guys think is sort of differentiate or what I guess is resonating with the market.
Speaker Change: Filling gaps essentially in sort of important sports and as you guys put a broadcast programming.
Speaker Change: Better price point is that am I oversimplifying or do I have that right I guess and how you guys think about the go to market yes.
Speaker Change: Yes, I would say that's about 80% I think the other 20% probably lies in the fact that we continue to improve our product we continue to add additional features.
Speaker Change: Frankly, some features one feature in particular has really taken off similar it might actually have the same impact as multi you had on the industry, which is our <unk>.
Speaker Change: <unk> team channels.
Speaker Change: Capability, which is our in house developed AI feature that seems to have really picked up traction in the hundreds of thousands of users relatively quickly. So we think we're going to continue to develop our product and obviously as you said fill in the gaps.
Speaker Change: With more flexibility better options.
Speaker Change: As we renegotiate our deals in the market becomes accustomed to.
Speaker Change: Ensuring that the virtual mvpds space can drive value for them, we think we'll be able to create more value for consumers over time.
Speaker Change: Alright, Thanks Clarke and.
Speaker Change: And our next question comes from the line of Nick <unk> with J P. Morgan Nick. Please go ahead.
Nick: Hey, guys. Good morning, How's it going thanks for taking the question. So I believe this should be the first kind of seasonal roll off quarter, where you have the <unk> for each of your active so.
Nick: Can you discuss any early insights there and how thats worked as a retention tool.
Nick: Longer term, if you have any update to your thinking.
Nick: And move the free tier in front of the paywall at some point.
Nick: Yes, I think the one major point that we've seen through the.
Nick: The free tier is the improved reactivation rates.
Nick: Frankly, I think if you.
Nick: Exclude the December Covid months, I think December was our best retention month.
Nick: And the history of the company so we're continuing to.
Nick: Work on the different tiers that we have and obviously, we are starting to feel pretty good about where we our payback periods are coming down our retention is improving which by the way not an easy task when you're removes a significant number of channels from the platform in a very short period of time. So again, we're very excited about the future and we think.
Nick: We're well positioned for growth when we're ready, but as John said, it's really about sustainable growth going forward.
Speaker Change: Understood. Thanks.
Speaker Change: And one more if I could just unpacking the <unk> guide.
Speaker Change: You talked about the Univision impact or was there any kind of a material benefit maybe on a subscriber acquisition front related to the MSG networks blackout at optimum.
Speaker Change: Yes, Nick this is John I'll take that I believe that was a Q1 event not a Q4 event in terms of when that blackout occurred I would tell you that anecdotally, we've seen a modest benefit but now that that's back on we'll see how much of that in terms of that has legs on that.
I'd say, we saw a modest improvement or benefit in Q1.
Speaker Change: Got it thanks guys.
Speaker Change: Great. Thanks, Nick.
Speaker Change: Our final question today comes from the line of Doug Arthur with Huber Research Doug. Please go ahead.
Speaker Change: Just a quick John on the on the operating expenses there were some Gibson doodles insurers of the cash.
Speaker Change: Categories like G&A was down a lot was there any I haven't been through every document here is there anything unusual, particularly in that line in the quarter.
Doug Arthur: Yes, Doug Thanks for the question so to your point.
Doug Arthur: On that line item there is some ins and outs I would tell you that caught on a run rate basis, it's probably more like a low double digit million dollars type of number for 2025, and so maybe there is a few million dollars of net benefit in the fourth quarter to David's comment before I would just add that if you look at the other cost buckets, we saw an absolute improvements if you will.
Doug Arthur: All year over year on a dollar basis.
Doug Arthur: Across both marketing, we would have seen that in tech and data not for some capitalized costs.
Doug Arthur: We also see that in <unk> the operating leverage continues.
Doug Arthur: Moving in the right direction and I would just add you mentioned this but since you are talking about the expenses I would like to say that from a broader perspective look the team has been hyper focused on balancing our investment in the business and reaching those cash flow targets.
And so our incremental adjusted EBITDA margins were call it 34% in 'twenty, three and then 45% and 24.
Doug Arthur: So I do think even with.
Doug Arthur: <unk> announced the incremental margins on the business and cash flow improvements are are still very significant.
Doug Arthur: Okay, great. Thank you.
Laura Martin: Great. Thanks, Doug.
Laura Martin: And that concludes our Q&A session that also concludes our call today. Thank you all for joining and you may now disconnect have a great day everyone.
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