fuboTV - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered modest top-line growth and a sharp improvement in profitability metrics: Revenue $416.3M (+3.5% YoY), Adjusted EPS loss improved to $0.02, and Adjusted EBITDA narrowed to -$1.4M; GAAP EPS was $0.55 driven by a $220M gain on settlement of litigation.
• Results vs consensus: revenue modestly beat (+$0.8M) and Adjusted/Primary EPS beat by ~$0.015; management noted underlying ad trends improving ex the drop of certain ad-insertable content and portfolio changes (beat on revenue and EPS)*.
• Guidance introduced for Q2 2025 reflects anticipated YoY declines given TelevisaUnivision content drop and one-time sports events in 2Q24; NA revenue $340–$350M and subs 1,225–1,255k; ROW revenue $6.5–$7.5M and subs 325–335k.
• Strategic narrative centers on super-aggregation and skinny bundles, interactive ad innovation, and pending Disney/Hulu + Live TV combination; mgmt emphasized acceptable terms for non-Disney content and targeted fall launch timing.

What Went Well and What Went Wrong

What Went Well

• North America exceeded subscriber guidance (1.47M vs 1.43–1.46M) and achieved revenue targets ($407.9M) despite a lighter sports calendar and portfolio changes.
• Profitability metrics improved: Adjusted EBITDA (-$1.4M) improved by $37.4M YoY; Adjusted EPS loss improved to $0.02.
• Management reiterated confidence in super-aggregation and progress toward fall launch of skinny bundles; CEO: “We remain excited about our agreement… to combine Fubo with Hulu + Live TV… We continue to work through the regulatory process”.

What Went Wrong

• North America ad revenue fell 17.3% YoY to $22.5M driven by the drop of certain ad-insertable content (TelevisaUnivision and WBD networks).
• Subscriber base declined YoY in NA (-2.7%) and ROW (-10.9%); ROW revenue down 0.4% YoY and ARPU down sequentially.
• Q2 2025 outlook guides double-digit YoY declines in both NA and ROW revenue/subs due to content changes and prior-year event timing (Copa).

Transcript

Operator (participant)

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fubo First Quarter 2025 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. If you would like to withdraw your question, press star one again. We kindly ask that you limit yourself to one question. Thank you. I would now like to turn the call over to Ameet Padte, SVP, FP&A, Corporate Development and Investor Relations for Fubo. Please go ahead.

Ameet Padte (SVP, FP&A, Corporate Development, and Investor Relations)

Thank you for joining us to discuss Fubo's First Quarter 2025 Results. With me today is David Gandler, co-founder and CEO of Fubo, and John Janedis, CFO of Fubo. 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 will start with some brief remarks on the quarter and our business, and John will cover the financials and guidance. We will turn the call over to the analysts for Q&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. 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 segment, which are accounted for as discontinued operations. 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 Q1 2025 earnings shareholder letter, which is available on our website at ir.fubo.tv. Please note as well that during Q&A, the company will not provide any information related to the pending business combination with Hulu + Live TV and ongoing regulatory matters beyond what we have already shared. With that, I will turn the call over to David.

David Gandler (CEO)

Thank you, Amit, and good morning, everyone. Thank you all for joining us today to discuss Fubo's First Quarter Results. In the first quarter, our global streaming business exceeded our subscriber forecast and achieved our revenue guidance. We are pleased with these results, which came against a typically lighter first quarter sports calendar and a broader backdrop of economic uncertainty.

Looking at our North American streaming business, we delivered 1.47 million paid subscribers, down 2.7% year-over-year, but exceeding our Q1 guidance of 1.46 million at the high point. Total revenue in the region was $407.9 million, and that was up 3.5% year-over-year. Notably, we once again improved our global profitability metrics by more than $100 million for the trailing 12 months. These results demonstrate our team's ongoing execution as we focus on profitability in 2025 for our global streaming business. We remain excited about our agreement with the Walt Disney Company to combine Fubo with Hulu + Live TV and the potential to increase competition and consumer choice in the pay TV space. We continue to work through the regulatory process and look forward to sharing more information when we are able.

The streaming landscape continues to evolve and grow more fragmented, further demonstrating the importance and relevance of Fubo's aggregation model. We remain committed to providing customers multiple and flexible packaging options, from skinny bundles to the full virtual pay TV bundle and everything in between. In recent months, we've seen the industry follow our lead and introduce skinnier content bundles. We are gratified by this because we believe a streaming landscape with multiple options benefits all consumers. We continue to focus on meeting consumer needs at every point along the demand curve. As we have previously communicated, our skinny bundle offering will include a sports and broadcasting service. In addition to featuring content from the Walt Disney Company, we are working hard to secure content from non-Disney programmers for the new service.

It is critical for Fubo subscribers that we are able to negotiate content licensing agreements at fair rates and terms. Our goal remains to launch this service for the fall sports season. In closing, we continue to focus on consumers and what they expect from a streaming service, namely premium content and innovative product experience, value, and above all, choice. At the same time, our priority is providing value for our shareholders, and we remain focused on achieving profitability in our streaming business this year. 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. John.

John Janedis (CFO)

Thank you, David, and good morning, everyone. Our performance during the first quarter validates our strategy to optimize our aggregated content platform, even amidst changes in the media landscape and a potentially cautious consumer outlook. We achieved North America revenue growth of 3.5% within our guidance range, and our North America subscriber count of 1.47 million was ahead of expectations. From an advertising revenue standpoint, ad revenue for the quarter was $22.5 million, down 17% year-over-year, largely due to the discontinuation of Warner Bros. Discovery and Televisa Univision Networks. Excluding these impacts, our underlying performance improved year-over-year. Net income from continuing operations was $188 million, or $0.55 per diluted share, compared to a net loss of $56.3 million and a loss per share of $0.19 in the prior year period.

It is important to note that net income includes the $220 million gain on settlement of litigation. Adjusted EPS loss improved to $0.02, a marked improvement compared to a loss of $0.14 a year ago, as we made meaningful progress reducing non-operating expenses and narrowing adjusted losses. Adjusted EBITDA was -$1.4 million, a $37 million improvement year-over-year, highlighting our ongoing focus on cost control, efficient growth, and driving leverage in the model. Turning to cash flow, net cash provided by operating activities was $151 million, reflecting the $220 million impact of the gain on settlement of litigation. Free cash flow improved by $9 million year-over-year to -$62 million, as we remain disciplined in our capital allocation and working capital management.

On a trailing 12-month basis, we improved both adjusted EBITDA and free cash flow by more than $100 million, underscoring the effectiveness of our profitability initiatives and operating efficiency. Looking ahead, our North America guidance for Q2 2025 calls for subscribers of 1.225 million-1.255 million, or a 14% year-over-year decline at the midpoint, and revenue of $340 million-$350 million, a 10% decline at the midpoint. Note that this guidance includes the continued impact of our recent drop of Televisa Univision content and reflects the benefit of one-time sports events in Q2 2024. For the rest of the world, our Q2 guidance projects subscribers of 325,000-335,000, down 17% year-over-year, and revenue of $6.5 million-$7.5 million, reflecting a 15% decline at the midpoint.

In closing, for several years, we've been driving important investments in Fubo's technology and have made strategic content changes, resulting in significantly improved profitability and cash flow under challenging circumstances. Looking ahead, we are energized by what we believe we can achieve through added scale with our pending transaction with Hulu + Live TV. In the meantime, we remain firmly focused on achieving profitability in 2025, alongside executing on our long-term strategic priorities. I would now like to turn the call over to the operator for Q&A.

Operator (participant)

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. We kindly ask that you limit yourself to one question. We will pause for just a moment to compile that Q&A roster. Your first question comes from the line of Dave Joyce with Seaport Research Partners. Please go ahead.

Dave Joyce (Analyst)

Thank you. On the little bit more color on the content front, please. Given that Televisa Univision did say on their earnings call that they would look forward to being in discussions with you again, is there anything new that you can report on that front since they expressed that interest? Also on the content side, how are you progressing on getting your programming contracts all realigned for skinnier packages in time for the football season? Thanks.

John Janedis (CFO)

Hey, Dave, this is John. I'll take the first one, and maybe David will talk to the skinny package progression. Look, on Televisa Univision, I would say no updates to share, but as you know, look, there's been content we've dropped in the past that we brought back, consistent with what we said last quarter. I think we're certainly open to those discussions with acceptable terms, and that's important. In the interim, we've lowered the price on our Latino package. We're seeing solid interest, and we're always looking to improve our offerings to our customers. I'd also say, as we mentioned, the impact will continue into the second quarter. We're now about four and a half months since the drop, but as the time goes on, the impact on our subscriber base will be more modest.

David Gandler (CEO)

Yes, and this is David. As to the second part of your question, look, we are very focused on releasing skinny bundles. We've stated this many times. We started offering some standalone services, and early indications really, I think, create a situation for us where we feel very comfortable that there's probably a growth opportunity headed into the fall. We are very focused on completing our content deals with non-Disney partners. Of course, we've made it very clear that it has to be on acceptable terms at a fair market price with the same flexibility as other distributors. That will be our focus in the short term, and we look forward to providing you more information as we move forward on that front.

Operator (participant)

Your next question comes from Clark Lampen with BTIG. Please go ahead.

Clark Lampen (Managing Director)

Thank you. Good morning. For David or John, I'll sort of ask the obligatory macro question and curious if you guys have seen any impact to Q2 to date or whether maybe you expect, as a result of some lag effect impact, any impact on your gross additions churn or on the ad side of your business demand in the U.S. For Q2, John, I don't know if it's possible to quantify for us or give us a sort of even directional sense for what Q2 growth would have looked like had you not had the Copa America and Televisa impacts. It might be challenging to quantify, but would just be curious, I guess, if you have a sense for what like-for-like performance across the U.S. is looking like right now. Thank you.

John Janedis (CFO)

Yeah, sure. I'll take those, Clark. Maybe I'll start with the second question first. Look, on Q2, to your question, we have ongoing churn in the Latino package, as we referenced, and then to your point, we had Copa last year. If I were to kind of clean it up and calculate the same store, if you will, I would say on a same-store basis, our subscriber growth looks to be relatively flattish. On the macro side, what I would say is, short answer, nothing stands out in terms of tone from both our customers and our advertising partners. I'd say on the customer side, to your question, I think overall churn for our English package is relatively in line or actually slightly better on a year-over-year basis, even with the price increase.

I would say also that reactivations were better than we expected for the month of April, which I think is relevant given the timing of some of the macro headlines out there. On the advertising side, I would say if I look at what I would just call year-to-date on the monthly basis, April is actually our best month in terms of growth. I would say that it's as a reminder in terms of modeling that we lapped the Discovery Scripts drop as of the end of April, and so we'll see more of a normalization of our advertising business starting now.

Operator (participant)

Your next question comes from Laura Martin of Needham. Please go ahead.

Laura Martin (CFA and CMT)

Good morning. Okay. David, I wanted to ask you about rest of world. We've got the rest of world subs down 11% for the last six months now. RPU's down, revenue's down. I know this was, my recollection is sort of it was an Occuhire, but is this business just going to shrink structurally? How are you thinking about rest of world? Also for you, David, I wanted to know about GenAI. What are you guys doing with GenAI integrating some of the new forms? Are you doing anything with creative or advertising with using GenAI tools? John, for you, ad revenue down 17%, sort of disappointing. I didn't understand why it mattered if we dropped certain networks. You guys got plenty of networks, so why would they have some kind of commitment where they had to advertise with you?

Because you have plenty of ad inventory, I don't understand why losing two big content players would actually drive ad revenue down 17% year-over-year. Thanks, guys.

David Gandler (CEO)

Okay. Yeah, Laura, I'll take that first question. There's a lot in there. On the Molotov side, I think we've said this many times, it's really about team, technology, and the synergies that we see with that business. As we've stated now, since 2022, despite all of the whiplash that we've seen over this period of time from larger companies like Netflix and others and Plus services, etc., our goal has always been profitability, profitability over growth. Molotov, like Fubo, we've set that same expectation, and they have to get to profitability. We feel comfortable that they will get there. On the other side of that coin is the fact that we are really focused on building out our unified platform. We feel very good about where the platform is today. Fubo itself is now on that platform. We are now onboarding Molotov.

In terms of subscriber growth, it's very simple. It's a relatively straightforward formula. You have to invest in marketing. As we stated, investing in marketing is an upfront cost that has short-term cost implications, and that has not been on the forefront for us. Yeah, international is an important piece to the long-term trajectory of this business. We see what YouTube has been able to accomplish on a global basis and where the majority of viewership and revenue is coming from international. We see the same trend with Netflix. I think even Reed Hastings, when he was still CEO, had mentioned that many, many times, the importance of international. We're getting everything ready to expand at the right moment at the right time. This will be a testing ground, as it has been, and we're almost there.

John, would you like to take the rest of this?

John Janedis (CFO)

Yeah, sure. Laura, I would just add one thing to David's comment that, to your point, even with the subscriber decline there, we had, or the team had, EBITDA that came in comfortably ahead of budget. Profitability remains the focus. In terms of your question on the ads, I would say a couple of things. One is just do not forget that we do have ad insertion for those networks. For instance, both on the Univision Nets and on the Discovery Scripts Nets, we are losing ad insertable hours. There is a direct impact on that. If I were to normalize for that, I would tell you that Q1 would have actually been upsliding on a year-over-year basis. I would tell you that Q2 looks to be a little bit better than Q1.

Operator (participant)

Your final question comes from Alicia Reese of Wedbush. Please go ahead.

Alicia Reese (SVP of Equity Research)

Hey, guys. Thanks for taking my question. I have a few as well. On the ad spend, I'm wondering if you could dig in a little bit on how your gamified ads are tracking and how you can get more advertiser interest while the budgets are tightening with features such as that. If it's gotten much traction so far, we had heard in the quarter that it has. Do you just double-click on that? I'd appreciate it.

John Janedis (CFO)

Yeah, sure. Hey, Alicia, this is John. I'll take it. Look, I'd actually broaden it out from gamified to what I would just call interactive ads. Look, over the past, I'd say, couple of quarters or a few quarters, you've seen us and read about us launching various new formats that I would just call interactive, gamified, etc. We're also going to be launching shoppable. If I take that as a larger bucket, I would say that we're really starting to see some good traction. Our interactive ads are up 30% or 37% year-over-year. I'd say that interest is actually accelerating. I'd say ad products overall, in terms of big picture, up 41% year-over-year for the first half. We're seeing the acceleration.

Look, I would say candidly, the sales cycle was a little bit longer than I would have expected initially, but I'd say that we actually like what we're seeing. In terms of advertiser interest, as budgets potentially shrink, look, I think that we need to innovate. I would say our ad sales team was at a conference earlier in the week. We had very strong interest from a variety of parties, including the Holdcos, about a new ad format that we've just brought to market. I expect that I'll start talking about that on our next quarter's call. We do like what we're seeing from our POS ads, from Marquee, among others.

Operator (participant)

There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.