It looks like sports could not have come at a better time for fubo TV. The streaming service recently entered into an agreement with Disney to bring its family of networks in with its many international offerings Fox Sports and more to make it the biggest provider of live sports in streaming. The return of College and pro football along with Hockey and baseball meant that the investment has a chance to pay off. This has led fubo to raise expectations for the third quarter of 2020.
According to a shareholder letter by David Gandler, co-founder and CEO Revenues for the third quarter 2020 are expected to be $50-$54 million, which would be a 27% to 38% increase year-over-year.
This growth is expected to be driven by continued subscriber growth, an increase in subscription Average Revenue Per User (ARPU), and growth of advertising sales. The company also expects ad sales for the third quarter to be fuboTV’s highest revenue quarter of 2020, with a 100% year-over-year increase.
Not bad for a service that is still trailing the top offerings in its segment by hundreds of thousands of subscribers. But while everyone would like to be on top, surviving and thriving is the most important thing the company can do. Now as a publically traded company it could almost be an advantage to be smaller because the truth is that there appears to be a cap on the cable replacement market. It is in a position to get a second look from disaffected users on other platforms.
Gandler expects revenues for the fourth quarter to be $68-$75 million, a 53%-68% increase year-over-year. While subscriber growth expected to reach between 410,000-420,000 paid subscribers, an increase of 30% to 33% year-over-year.
“The current quarter has been very strong for fuboTV with double-digit revenue and subscription growth year-over-year as well as improvement in retention – all achieved during the ongoing pandemic,” said Gandler. “With the leading live sports package in the market, we are encouraged that the major sports leagues have found ways to navigate the pandemic. The NFL has a great example with Major League Baseball on how to handle COVID-19, and we’re excited for the season. The start of the NFL season and the expectation of a heavy fall sports calendar is driving engagement, ad revenue and higher CPMs, giving us additional confidence to forecast a strong third quarter for fuboTV. Looking ahead, we are focused on driving revenue growth by increasing subscription and ad sales and improving engagement.”
See full letter:
September 15, 2020
Fellow Shareholders,
2020 continues to be an exciting time at fuboTV with positive growth and productivity despite what looked to be a seemingly difficult year with live sports, a key component of our business, grinding to a halt for several months. I’m pleased to share additional guidance and recent corporate updates with you today.
As previously announced, we completed the merger of fuboTV and FaceBank Group, Inc. in April 2020. The company has changed its legal name to fuboTV Inc. We currently trade on the OTC market and our common stock has been approved to list on the New York Stock Exchange (NYSE), conditional upon successful pricing of this offering, under the ticker symbol “FUBO.”
We encourage you to read our full set of financial statements and SEC filings, and to sign up for email alerts, on the investor relations section of our website at ir.fubo.tv.
As I’ve stated in my previous Shareholder Letters, we continue to believe fuboTV is at the forefront of the streaming TV revolution. fuboTV is the leading sports-first, live TV streaming platform, offering subscribers access to tens of thousands of live sporting events annually as well as leading news and entertainment content. We offer a broad mix of 100+ channels, including 43 of the top 50 Nielsen-ranked networks across sports, news and entertainment (Primetime A18-49), making fuboTV a leading cable TV replacement product for the entire household. Our retention rate has remained high during the pandemic as customers have found a diverse range of content on the platform to satisfy their needs.
At the core of our offering is our proprietary technology platform optimized for live TV and sports viewership. Our proprietary technology stack has enabled us to regularly offer new features and functionality. For example, we were the first virtual multichannel video programming distributor (vMVPD) to stream in 4K resolution. We also offer multi-view on Apple TV, which enables subscribers to watch two live streams simultaneously, as well as the ability to watch select sports content from multiple camera angles.
We believe consumers will, particularly in this current economic climate, continue to choose streaming over traditional pay television because of this more personalized, premium viewing experience that is also less expensive.
Furthermore, we believe fuboTV’s sports package is unparalleled in the marketplace. fuboTV offers more than 50,000 live sporting events each year and is the only vMVPD streaming 11 Thursday Night Football (FOX) games in 4K this season. The start of the NFL season has been significant for fuboTV. It’s been widely publicized that television ratings declined nearly 13% for the NFL’s 2020 Kickoff Game on Thursday, September 10. fuboTV, on the other hand, has achieved record viewership with our NFL carriage. On Sunday, September 13, our viewing hours doubled year-over-year and reached one million hours for the first time. Cord-cutters are clearly embracing streaming platforms for sports viewing.
In addition to carriage of 90% of nationwide NFL with the majority of country receiving all games (airing on ESPN/ABC, CBS, FOX, NBC and NFL Network, plus live look-ins of national and regional action on NFL Redzone), fuboTV has strong coverage of other nationally televised leagues: 100% of NHL (NBC, NBCSN, NHL Network), 88% of MLB (ESPN, Fox/FS1, MLB Network) and nearly 70% of NBA (ESPN/ABC, NBA TV) alongside our market leading soccer coverage.
In addition to sports, Hollywood is gearing up for its fall TV season and we continue to be in a strong news cycle. This broad mix of content is why our consumers “come for the sports and stay for the entertainment.”
Equity Funding
As I’ve highlighted in previous Shareholder Letters, the company has been focused on strengthening its balance sheet. We recently added $52 million in equity funding from institutional and private investors. This is incremental to the $20 million raised from Credit Suisse Capital, LLC., which we announced in July. These efforts further strengthen our balance sheet.
Revenue and Subscriber Guidance
The current quarter has been very strong for fuboTV with double digit revenue and subscription growth year-over-year as well as improvement in retention – all achieved during the ongoing pandemic. With the leading live sports package in the market, we are encouraged that the major sports leagues have found ways to navigate the pandemic. The NFL has a great example with Major League Baseball on how to handle COVID-19, and we’re excited for the season.
The start of the NFL season and the expectation of a heavy fall sports calendar is driving engagement, ad revenue and higher CPMs, giving us additional confidence to forecast a strong third quarter for fuboTV. Therefore, we have raised subscriber guidance as the uncertainty around the return of live sports has diminished.
Revenues for the third quarter 2020 are expected to be $50-$54 million, a 27% to 38% increase year-over-year*. This growth will be driven by continued subscriber growth, an increase in subscription Average Revenue Per User (ARPU) and growth of advertising sales. The third quarter is expected to be fuboTV’s highest revenue ad sales quarter of 2020, with a 100% year-over-year increase. Advertising ARPU is expected to be $6-$7.
Additionally, we’re raising third quarter subscriber guidance to 370,000-380,000, an increase of over 28% year-over-year and up from 20% growth previously forecast.
Looking ahead to the fourth quarter, we expect revenues to be $68-75 million, a 53% to 68% increase year-over-year*. We also expect to end the fourth quarter with 410,000-420,000 paid subscribers, an increase of 30% to 33% year-over-year. Full year revenue for 2020 is expected to be $220-231 million, an increase of over 50% year-over-year, while our 2021 revenue guidance is $400-420 million, an increase of over 82% year-over-year.
*Metrics compare the combined company (fuboTV Inc. and FaceBank Group, Inc.) in 2020 to the legacy fuboTV company (“pre-merger fuboTV”) in 2019.
Summary
fuboTV continues on the path of solid growth with double digital revenue and subscriber increases year-over-year. We are confident in the continued strength of our business as consumers look towards a streaming platform that offers the broad sports, news and entertainment programming of cable TV but with personalized product features and at a lower cost. We are encouraged that major sports leagues have found ways to navigate through the pandemic and continue to play. The start of the NFL season and the expectation of a heavy fall sports calendar is driving engagement, ad revenue and higher CPMs and therefore we are forecasting a strong third quarter for fuboTV. We look forward to continuing to update investors on our growth and future opportunities.
Sincerely,
David Gandler, co-founder and CEO
