fuboTV (NYSE:FUBO) is set to report first-quarter earnings on Tuesday, May 11. The sports-first streaming content platform had a solid year in 2020 as people cooped up inside wanted more in-home entertainment options.
FuboTV is competing with some heavy hitters in the media industry with deeper pockets and more experience. Still, the sports focus may give enthusiasts enough reason to pick it over rivals when choosing a streaming alternative to cable TV. Ultimately, FuboTV will need to add many more subscribers for the business to be profitable, and that's why it's the metric you're going to want to follow most closely when the company reports earnings.
Subscriber growth is the key
FuboTV reported having 547,880 subscribers at the end of 2020, up 73% from the previous year. Although the growth in subscribers was substantial, investors have sent shares of the media company down 40% year to date. For one, the company is losing money every quarter, but FuboTV also guided investors to expect a subscriber count of just 525,000 at the midpoint for the first quarter.
While that would be more than 80% higher than the year-ago quarter, it would still be a sequential drop from the 2020 year-end figure of 547,880. In other words, it expects to lose subscribers in the current quarter. One reason for the decline is likely the surge in new customers during the pandemic pulled forward much of the demand from 2021. Netflix already attributed its own subscriber growth slowdown in the most recent quarter to this dynamic, though the company still added subscribers quarter on quarter. On the other hand, FuboTV is still guiding for robust subscriber growth in 2021 with 760,000 to 770,000 subscribers at the end of the year, or 40% growth at the midpoint.
FuboTV generates average revenue per user (ARPU) of $62.84 per month, and the company plans to expand by offering online sports betting to its customers later this year -- a natural extension of its focus on sports content. Therefore, subscribers acquired now should add even more value down the line when sports betting is available. That's why the first-quarter total subscriber count is going to be vitally important.
What this could mean for investors
Analysts on Wall Street expect FuboTV to report revenue of $103.8 million and a loss per share of $0.44. If results turn out as Wall Street expects, the top-line figure will be above even the high end of management's revenue guidance ($101 million to $103 million).
And given that shares are already down 40% year to date, there is upside potential following earnings. That is, of course, if the company lived up to management's expectations (or better). The company is trading at a forward price-to-sales ratio of 5, down from a high of more than 12 times sales earlier in the year. The risk-versus-reward thus appears to be favorable for investors looking for a high-growth streaming play who are aware it comes with elevated risk.