Q2 2025 FuboTV Inc Earnings Call

Speaker #3: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fubo Q2 2025 earnings call.

Speaker #3: Online has been placed on mute to vent any background noise. After the speakers' remarks, there will be a question and answer session. If ou would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Speaker #3: If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Ameet Padte, SVP, FP, and a corporate development and investor relations.

Speaker #3: Please go ahead.

Speaker #4: Thank you for joining us to discuss Fubo's second quarter 2025 results. With me today is David Gandler, co-founder and CEO of Fubo, and John Janedis, CFO of Fubo.

Speaker #4: 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 fubo dot tv.

Speaker #4: Before we begin, let me quickly review the format of today's call. David will start with some brief remarks on the quarter and our business, and John will cover the financials.

Speaker #4: Then we will turn the call over to the analysts for Q and A. 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, including our pending business combination, and our products and subscription packages market, industry, and consumer trends, and expectations regarding growth and profitability.

Speaker #4: 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.

Speaker #4: Except as otherwise noted, the results 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 #4: 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 2025 earnings shareholder letter which is available on our website at ir dot fubo dot tv.

Speaker #4: Please note as well that during Q and A, the company will not provide any information related to the pending business combination with Hulu Plus Live TV and ongoing regulatory matters beyond what we have already shared.

Speaker #4: With that, I will turn the call over to David.

Speaker #5: Thank you, Ameet, and good morning, everyone. We appreciate you joining us today to discuss Fubo's second quarter 2025 results. We are pleased to report that the second quarter represented Fubo's first quarter of positive adjusted EBITDA and important milestone for our business.

Speaker #5: This achievement is the result of Fubo's focused execution, our ability to deliver on consumer needs, and our commitment to value and relevance. Despite a fragmented and friction-filled streaming marketplace, our global streaming business exceeded both revenue and subscriber expectations in the second quarter.

Speaker #5: In North America, we delivered total revenue of $371 million down 3% year over year, and $1 million 356 thousand paid subscribers down six and a half percent year over year.

Speaker #5: In the rest of the world, we closed quarter with total revenue of $8.7 million up 4.7% year over year, and $349 thousand paid subscribers down 12 and a half percent year over year.

Speaker #5: We have filed a preliminary proxy statement seeking shareholder approval of our agreement with the Walt Disney Company to combine Fubo with Hulu Plus Live TV.

Speaker #5: As previously stated, we continue to be excited about the potential to increase competition and consumer choice in the pay TV space. The anticipated timeline to close this transaction is currently the fourth quarter of calendar year 2025, or the first quarter of calendar year 2026.

Speaker #5: Closing remains subject to regulatory approvals, Fubo shareholder approval, and the satisfaction of other customary closing conditions. Fubo has a demonstrated history of fighting for consumer choice, and we continue to focus on super serving customers with flexible content options at appropriate price points.

Speaker #5: In the coming weeks, we will launch Fubo Sports, a skinny content service for sports fans. We look forward to sharing more details soon. Fubo's recent launch of pay-per-view further underscores our commitment to offering flexible content experiences.

Speaker #5: This new feature allows both subscribers and non-subscribers to purchase access to premium live events, including boxing, wrestling, and soccer, on a one-off basis. By opening the door to a broader audience, pay-per-view not only expands Fubo's reach but also creates a strategic pathway to convert casual viewers into monthly subscribers.

Speaker #5: Our strategy to introduce the Fubo experience to new audiences is exemplified by our recent content partnership with DAZN in the US. Through this collaboration, Fubo Sports Network, our free ad-supported streaming TV channel, has expanded its distribution to DAZN's platform, increasing visibility and reach.

Speaker #5: In turn, Fubo subscribers now enjoy access to a premium content package that includes the DAZN One channel, featuring select exclusive sports rights. Notably, Fubo was first to market with this offering, reinforcing our leadership in sports streaming.

Speaker #5: At Fubo, we believe premium content must stand alongside product quality and user experience. Our recent launches of personalized features like catch-up to live, game highlights, and timeline markers optimize the live sports viewing experience on Fubo and complement our strategy of delivering the moments that matter.

Speaker #5: Such as scoring plays, in addition to full game access. These and other engaging features enable our customers to consume content the way they choose and have driven a steady lift in time spent on Fubo.

Speaker #5: In closing, the second quarter was a milestone for Fubo, marked by our first ever quarter of positive adjusted EBITDA. We continue to focus on delivering a premium sports streaming experience at scale with flexibility and choice for every consumer.

Speaker #5: We look forward to keeping you updated on our progress. I will now turn the call over to John Janedis, CFO, to discuss our financial results in greater detail.

Speaker #5: John?

Speaker #6: Thank you, David. Our second quarter financial results reflect continued execution against our strategic priorities and profitability goals. Our performance once again demonstrates the value of our aggregated content model and technology-driven platform.

Speaker #6: As disclosed last week in the announcement of our preliminary second quarter 2025 results, the company meaningfully exceeded revenue and subscriber guidance. We delivered North America revenue of $371 million and North America paid subscribers of $1.36 million.

Speaker #6: And we are pleased with our ability to deliver outperformance in the second quarter versus expectations. Ad revenue in America totaled $25.5 million, a 2% year-over-year decline primarily due to the loss of certain ad insertable content from Warner Bros. Discovery and Televisa Univision.

Speaker #6: Turning to the of the world, revenue was $8.7 million and our scriber count was $349,000 with both metrics also exceeding guidance. Net loss narrowed to $8 million or $0.02 per share, compared to a loss of $25.8 million or $0.08 per share a year ago.

Speaker #6: We are also extremely pleased to report second quarter adjusted EBITDA of $20.7 million and an improvement of more than $30 million year over year. As David mentioned, this marks a major milestone as our first-ever quarter of positive adjusted EBITDA.

Speaker #6: This underscores our ongoing focus on driving operating leverage in the model to best position the company for long-term growth. Net cash used in operating activities in the quarter was $34.6 million, and free cash flow declined by $2.4 million year over year to negative $37.7 million.

Speaker #6: We ended the quarter with over $285 million in cash, cash equivalence, and restricted cash, providing ample financial flexibility. In closing, I want to emphasize how proud we are of this quarter's performance and the momentum we've sustained.

Speaker #6: We are energized by what we believe we can achieve through our pending business combination with Hulu Plus Live TV and look forward to updating you on our progress.

Speaker #6: With that, I'll turn it to the operator for Q and A.

Speaker #7: At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad.

Speaker #7: We request that you limit yourself to one question and one follow-up. We will pause for just a moment to compile the Q&A roster.

Speaker #7: Your first question comes from from the line of Patrick Shaw with Barrington Research. Your line is open.

Speaker #8: Hi. thank you. And, congrats on the, the, EBITDA profitability. I, I just in, in terms of the, third quarter, can you maybe just talk some of the puts and takes and how we should formulate subscriber expectations for the quarter?

Speaker #8: just with the, the launch of products, from competitors and their, their, expected launch of, of a skinnier product. And, you know, just when, with, with, with the competitive environment, how should we think about, like, the marketing efforts?

Speaker #8: both to support your, yeah, to support your service, relative to the traditional seasonal pattern. Thank you.

Speaker #6: Sure. Pat, maybe I'll start. This is John, and I think maybe David will jump in too, but, let me just start on July. look, that finished in line in terms of the month with what we expected in terms of subscribers.

Speaker #6: what I would tell you, though, with the fall sports season starting soon, we d you would expect to see, the typical seasonal uptick, alongside a reactivations.

Speaker #6: You know, in terms of puts and takes, we're mindful that the market is competitive. So the team spends a lot of time looking at, SAC conversion and insurance.

Speaker #6: David, I'm not sure if ou have much to add on that.

Speaker #9: Yeah. I would say, as you said on July, I think, h, July, you know, we're seeing some, I would say, relatively strong, retention as it relates to our core, English product and because we've been so focused on more effective and efficient marketing, we believe that that will, lead to greater retention from this particular cohort going into the football season.

Speaker #9: And, you know, we're gonna continue to maintain, an effective and efficient approach to marketing in the third quarter, because we do feel that there is that tailwind that we typically see, in the season.

Speaker #8: Okay. Thank ou.

Speaker #7: Your next question comes from the line of Laura Martin with Needem. Your line is open.

Speaker #10: Hey, good morning. So, David, I would like to go to the French acquisition. And the industrial logic there, we're not only were they great tech guys, but we also have really great, like, free streaming service and you were gonna try to bring some of that know-how into Fubo.

Speaker #10: The offer free. Can you update us on what's happening with the French assets and were they, did they actually come true? Did it actually, actually help you?

Speaker #10: Because I can't, I, I, you haven't done that much with free services in front of the paywall in the end, right? So can you update on us on whether the logic sort of worked there and if not, why ?

Speaker #10: And if so, how?

Speaker #9: Yeah. thank you, Laura. I ink there were a few pieces to that acquisition that we talked about. One was, you know, our CTO, our current CTO, led the Molotov streaming platform.

Speaker #9: So we've integrated the, technology teams, we've been very focused on unifying our technology stack, which will give us a, a, significant edge as we, look to continue to drive value across the rest of the world.

Speaker #9: I know we've been very focused on France, but at the same time, as you know, we've been really focused on achieving our profitability targets. That has been the priority.

Speaker #9: But I will say in France that, you know, we're, in the midst of discussing, French property, sports properties in particular. I just don't want talk about the ones that were in the process of negotiating, but, ou know, we believe that there will be some significant sports rights that will likely come online.

Speaker #9: you know, in the coming few weeks. So we are very focused on that. I do believe that there's a significant opportunity there. The technology stack, is now capable of handling, multiple services.

Speaker #9: that we developed. So, I'm very bullish on that. the other thing is we haven't really provided Molotov with a lot of the ad technology that we've been developing.

Speaker #9: over the last, couple of years and all of that, we believe will become available to Molotov sometime in, h, either end of fourth quarter or certainly around first, first quarter 2026.

Speaker #7: Interesting. David. and then the other one is this is not you, this is me. Disney, in my opinion, has decided to collapse. They've just told us that their launch of the new ESPN flagship, service, ESPN Plus, is gonna cost 30 bucks and in that you will get free Disney Plus and Hulu.

Speaker #7: So they're lapsing all of their streaming services into this new ESPN flagship app. That's me. So my question for you is, theoretical only, if you had an open book with unlimited access to all sports, having nothing to do with Fubo's past, but just a much broader range of sports, and you could overlay your tech aspirations onto the, a consumer experience, what would you say would be the ideal sort of upgraded consumer experience over what's in the marketplace today to give your offering, your go-to-market, a competitive advantage?

Speaker #9: Yeah. Look, I think we've been, very focused on two things. One, we wanted to develop a super aggregated, service where we can, comfortably sell standalone offerings, which we've ed to do, as well as a more broad, sports, you know, offering, whether it's a service or the bundle.

Speaker #9: And I think that's where we're still headed. You know, we've seen a nice uptick on the standalone offers that we've put out there.

Speaker #9: it's become very lear that consumers are very focused on spending less, rather than more. we see that in the, in the data at least in, across Latino, and our, our some of our standalone sports, bundles.

Speaker #9: But, as it relates to a broader opportunity, I do think that there continues to be a lot of fragmentation and confusion for consumers in the market.

Speaker #9: we will be implementing, you know, ES actually, I think we, implemented as of today and emails will be going out over the next few days, the authentication to ESPN Plus.

Speaker #9: but, ou know, my sense is that a broader package will appeal to many people. you know, lots of folks don't have, interest in looking for, for programming.

Speaker #9: They're not sure where it's, where it can be found. but, you know, the, the market's evolving quickly and I think we've been, you ow, not only have we been proactive, but we've also been reactive very quickly to ensure that we, remain, at the forefront, in, for consumers.

Speaker #9: So, broadly speaking, I do think that there's a need in the market for, for broad packages. and, as we've always said, you know, the goal is to deliver, you ow, value to consumers along the demand curve at, at different price points.

Speaker #9: So that's, that's what we'll continue to focus on. And, you ow, again, as it relates to, to ESPN, you ow, I think everyone's looking the right, strategy, and, again, this is just another example , of, you ow, a company that's looking to leverage all of its assets, and create, you know, better price to value equation, for consumers in such a, competitive environment.

Speaker #7: Your next question comes from the line of Alicia Rees with Bed, Bed Bush. Your line is open.

Speaker #11: All right. Thanks, guys. thanks for taking my questions. I appreciate that. And, congratulations on the positive EBITDA. let me print it the quarter. so if, if I could, I'd like to start by asking about the ad trends in the quarter.

Speaker #11: obviously, you had some, s a nice uptick in the ad ARPU, year over year. So was really nice to see. but I'm wondering if, you've seen a slowdown in the ad bookings, related, perhaps to the tariff pressure on consumer brands and if, you know, by what you surmise, the Fubo Sports Network Fast Channel, is, is working to offset that, those trends, if that's the piece that's offsetting it or there are other factors, if you could highlight those.

Speaker #6: Yeah. Hey, Alicia, this is John. There's a few things in there. So if I missed anything, let me know. But, I'll start by saying on the tower front, I, I think called out auto softness last quarter, particularly on foreign auto.

Speaker #6: You know, I would say that's continued. but I wouldn't call the overall decline in dollars significant. I would say maybe it's, you know, one percentage point plus drag in terms of the total portfolio on growth.

Speaker #6: I'd say, outside of auto, nothing stands out as it relates to, call it, tire driven. You know, more broadly on the consumer, what I would tell ou is that if, as I look at some of the stronger categories and some of the larger categories, you know, retail, e-com is one of our top five categories and it was up double digits.

Speaker #6: Tech was up, strong double digits. And so I, I would say nothing, nothing too obvious there as it relates to the tariff piece. I'd say, you know, more broadly on 3Q, I think too soon to call.

Speaker #6: July, as you know, is our smallest month of the quarter. I, I, I don't know that we have a strong read on back to school yet.

Speaker #6: And with a sports calendar hitting later this month, I'd say we'll have a better sense of the quarter, you know, kind of my mid to August.

Speaker #6: And one last thing I'd also added. Oh, Ry. Go.

Speaker #11: Oh, I was just wondering if you could highlight at least qualitatively how the Fast Channel is contributing.

Speaker #6: Oh, yeah. ure. Yep. Sure. on the Fast Channels, I think what David and I have said in the past is that that in terms of the totality of it, the dollars are in the mid to high singles and the growth is in the strong doubles.

Speaker #6: And so over time, that number has grown, meaning as a percentage of the totals. So now, Fast Channels are call it high single digits approaching low doubles.

Speaker #6: and so, and still growing strong double digits. And so, you know, a modest positive, tailwind, if you will, to the overall ad growth.

Speaker #7: Your next question comes the line of Joseph Estasio with BTIG. Your line is open.

Speaker #12: Hey, guys. Thanks for the question. In the absence of guidance this quarter, I was just kind of hoping to get your thinking around the directional trend for EBITDA from here.

Speaker #12: If we strip out some of the one-time costs that were in the quarter, we still land at a, at a pretty good number. So I was just curious if this is maybe the new normal in terms of EBITDA profitability or if there are some seasonal fluctuations that we should keep in mind looking ward.

Speaker #12: Thanks.

Speaker #6: Yeah. Sure. I'll take that. This is John. Look, I, I would say that, as you know, our, our business, has been and remains seasonal.

Speaker #6: historically speaking, 2Q has been our, our strongest adjusted EBITDA quarter of the year. and then in the back half of the year, while we grow our subs sequentially meaningfully, typically, there's also marketing costs associated with that.

Speaker #6: And so, I would say that the normal seasonal trends as it relates to profitability, directionally, should continue.

Speaker #12: Got it. Thanks very much.

Speaker #6: You're come.

Speaker #7: Your next question comes from the line of Doug Arthur with Uber Research. Your line is open.

Speaker #13: Yeah. Thanks. question either for David or John. just, interested in your take on the sub guide that you, the original sub guide for Q2, and then the revised sub guide, a couple of eks ago, you know, what were the sort of put, puts and takes on that?

Speaker #13: And then, a follow-up i-in terms of these broad relationships that you have, terminated, over the last, you ow, several quarters, where are we in terms of the arc of those, like, Univision?

Speaker #13: W-where, where do you e that sort of annualizing? Thanks.

Speaker #6: This is John. Maybe I'll start with the sub guide. and so, look, to your point, we, we guide more or ess to, to where we're forecasted in terms of, pacing.

Speaker #6: And so, you ow, we came in, you know, call it 100,000 or so ahead. Relative to the original guide, I would say it was a couple of things there.

Speaker #6: One was that we continue to see strong interest in the Latino product given the, the price reduction there post the Univision dropped. And then we've also seen better retention trends in s of churn, across the portfolio for the, for the quarter.

Speaker #9: Yeah. And, just to add to that, as John said, I mean, you know, we have had a very difficult year that I think we've performed exceptionally well in.

Speaker #9: with respect to the number of content channels and partners that have been dropped. since, June of last year, a-as you've rightly, stated, Warner Brothers Discovery as well as, h, Univision.

Speaker #9: I, I think, again, as, I said earlier, it's very clear consumers are price sensitive at this point. They're looking for a tremendous amount of value.

Speaker #9: And, you know, we have seen, although we, we ended up, not able to get to a deal with Univision, you know, we've, we've, we've , still seen a pretty strong conversion, uptick on our Latino packages.

Speaker #9: Which, you know, John briefly mentioned in his earlier comment. And so, you know, we think that those deals will ultimately work themselves out. But, you know, I think right now we're situated well.

Speaker #9: we've been able to stabilize the, advertising business after losing a significant number of, advertising, enabled, channels. we've started to put together some standalone offers, we're very focused on our, skinny, sports, service.

Speaker #9: That, we've called Fubo Sports. And so, you know, again, we're really looking for the price-value equation. I think over time, particularly over the next year, with some of the changes that are going to happen at the traditional media company side, you know, we just, we're keeping our options open.

Speaker #9: But again, we think those ings will work themselves out, in due time.