fuboTV (FUBO +0.00%) just hit a grand slam with its first-quarter earnings report. The live sports streaming and soon-to-be-launched sports-betting platform said total revenue more than doubled, advertising sales tripled, subscription revenue surged 131%, and the number of subscribers exceeded 590,000, more than double the total from a year ago.
Sitting at the confluence of three massive trends -- cord-cutting, advertising dollars transitioning to connected devices, and sports betting -- fuboTV is uniquely positioned to capture the growth of all three, and its earnings report indicates its journey is well underway.
Image source: Getty Images.
Tuning in, turning on
Legacy TV is in trouble. While the loss of viewership is a secular decline that's been happening for years, it appears to be accelerating.
No longer are viewers required to maintain their cable or satellite connection to watch live sporting events, the glue that has kept many tethered to their legacy accounts. Rather, as fuboTV management notes in the latest shareholder letter, consumers are discovering "they can cut the cord without losing access to the sports teams, live channels, and content they love" by subscribing to fuboTV.
Certainly 2020 was a unique year, but it was the lack of live sports for a quarter of the year that made it so. fuboTV is showing just how much people still want to watch sports, even if they're reluctant to go out to the stadium or the pitch to see them in person.
In 2019, subscribers watched 48 million hours of streamed content during the first quarter, and last year that more than doubled to 107 million hours. One year further on, and they logged 228 million hours of sports streaming, representing a 113% increase.
Average revenue per user (ARPU) is also steadily growing, as is advertising ARPU:
| Metric |
Q1 2019 |
Q1 2020 |
Q1 2021 |
Q1 2021 Change (YOY) |
|---|---|---|---|---|
|
Subscribers (thousands) |
210 |
287 |
590 |
105% |
|
Content hours streamed (millions) |
48 |
107 |
228 |
113% |
|
ARPU |
$43.43 |
$54.16 |
$69.09 |
28% |
|
Advertising ARPU |
$2.89 |
$4.54 |
$7.11 |
57% |
Data source: fuboTV SEC filing. YOY = year over year.
Again, the leadership sees the trends continuing: "We believe they are choosing fuboTV, enticed by superior value, our year-round content offerings, and a customer-centric, innovative product experience relative to legacy pay TV."
In March, fuboTV had predicted it would have as many as 770,000 subscribers by the end of the current fiscal year, but now it is forecasting it will have between 830,000 and 850,000 subscribers. At the midpoint, that would represent a 53% increase over 2020's total.
The real opportunity for growth, however, will come from sports betting. While fuboTV has been laying the groundwork for its entrance into the space, for instance announcing last December it was buying fantasy sports outfit Balto Sports, it plans to go live in the fourth quarter with Fubo Sportsbook, which will blend sports wagering and interactive gaming.
It also entered into a partnership with Caesars Entertainment for its sportsbook to gain market access in Indiana and New Jersey.
A big bet on sports
fuboTV is creating a 360-degree experience around sports, giving subscribers access to tens of thousands of live sporting events annually over a mix of more than 100 channels, and blending them together with gaming and wagering.
While it's true it will be going up against some dominant players like FanDuel, DraftKings, and BetMGM, fuboTV has some unique advantages not necessarily available to the competition.
First, it has a narrowly focused subscriber base that's intensely interested in sports. There's a good likelihood they may want to bet on the sports they're watching and since they're already engaging with its service -- both financially and interactively -- fuboTV ought to be able to level up its subscribers to bettors at a lower cost of acquisition.
fuboTV notes its mobile app is installed on average some 400,000 times per month -- and up to 600,000 times per month during football season -- which gives it broad exposure. And because its product engages mainstream sports fans rather than the more sophisticated types that use existing sportsbook apps, it has a larger potential base from which to recruit.
fuboTV also says its all-in-one platform makes it self-sufficient, so it doesn't need to rely upon third-party operators for data.
Odds are in its favor
fuboTV has fallen hard this year as the markets turned against growth stocks. Shares were down 37% year to date prior to the earnings report, and while it's likely they will get a good bounce from the figures fuboTV put out, it will probably remain a discounted stock.
The sports streaming and sports-betting platform (that will be launched in the second half of 2021) has proven its ability to attract both subscribers and advertisers alike, a potent combination that is paying off in even greater growth than when its sector was in favor with the market.
fuboTV had a lot to prove this quarter, and its Q1 earnings report shows it deserves to be in the major leagues.
