It was another "beat and raise" quarterly performance for fuboTV (NYSE:FUBO) on Tuesday afternoon, even if the market reaction isn't as enthusiastic as the headline numbers would indicate. Decelerating growth in average revenue per user (ARPU) and another huge loss didn't help, and a pair of recent acquisitions may take time to digest. However, the initial hit the stock is taking seems to be based more on fuboTV's big run over the past year than any potential flaw in the fundamentals. 

fuboTV shares have more than doubled over the past year. As high as expectations were heading into this week's financial update it managed to land higher. The live TV streaming service is growing its audience of sports fan at a brisk pace, and since the end of the quarter it managed to cross the symbolic mark of a million subscribers.

Friends gather to watch a soccer on a large screen TV. The rug under them looks like grass.

Image source: Getty Images.

Playing to win 

There's no denying that fuboTV was growing at a blistering pace that would ultimately be unsustainable. Revenue accelerated sharply with every passing report since the digital platform operator went public late last year.

  • Q3 2020: 71% revenue growth.
  • Q4 2020: 98% revenue growth.
  • Q1 2021: 135% revenue growth.
  • Q2 2021: 196% revenue growth.

A 156% revenue jump in the third quarter to land on $156.7 million is technically deceleration after revenue nearly tripled three months ago, but it's not a failure any way you loo at it. Analysts were forecasting that year-over-year growth match the 135% it recorded two quarters earlier, and even that wouldn't have been so bad. 

There were 944,605 subscribers at the end of September, up 108% over the past year and a jaw-dropping sequential increase of 39%. Yes, the third quarter is the heart of sports season, with the major sports winding down or starting up new league years in the summer and early fall. It's still a big deal. The 262,884 net subscribers it added during the three-month period was more than it landed for all of 2020. You've come a long way, fuboTV.

Advertising revenue soared 147%, largely on more than a doubling of the audience -- but also as a result of marketers who are continuing to pay up to reach fuboTV's targeted viewers. It was still a slowdown from where fuboTV was in previous quarters, and it's surprising to see ad revenue grow slower than the 158% spike in subscription revenue. It's not ideal, as the upside in subscription revenue is limited given the highly competitive market. There is little wiggle room to push out another increase unless everyone else follows suit or it finds a way to bring the regional sports networks back for all major markets. 

The math still works out kindly in the end. ARPU of $74.54 a month is a 10% increase over the past year. Having viewing hours grow faster than its subscriber count is also commendable in a climate where streaming bellwether Roku (NASDAQ:ROKU) has experienced back-to-back quarters of viewership per subscriber slip against the prior year. Since we're bringing up Roku, it should also be pointed out that fuboTV is generating more than double the ad revenue per user that Roku is bringing in these days.  

The red ink also isn't a deal-breaker for fuboTV right now. The losses will continue, but the quarter itself showed improving margins as the model flexes its scalability. The bottom-line performance will get challenging in the near future as fuboTV launches its digital gambling initiatives, but the stakes are high on that front. It's a gamble worth taking for fuboTV.

Finally we can close with fuboTV's refreshed outlook. Raised guidance is always a good look, and fuboTV now sees 1.06 million to 1.07 million in subscribers by the end of next month. It sees $612 million to $617 million in revenue for all of 2021. There aren't too many media stocks growing faster than fuboTV, and right now that's a game that the live streaming TV speedster is winning.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.