The sports-centric streaming alternative for cable TV fuboTV (FUBO 0.54%) is growing revenue and subscribers explosively. But instead of growth, investors will be focused on profit margins when fuboTV reports its fourth-quarter and fiscal year 2021 financial results after the market closes on Feb. 23.
The company is struggling to lower costs as a percentage of revenue, leading to massive losses on the bottom line. Will management be able to offer assurances that it is managing this aspect of the business when it reports later this week? Let's take a closer look at what investors might expect on Wednesday.
Triple-digit revenue growth expected for fuboTV in Q4
Interestingly, fuboTV already reported some preliminary results for Q4 on Jan. 10. Management said the company expects revenue to come in at $217.5 million at the midpoint. That was $10 million above initial management estimates of $207.5 million and an increase of 107% from the same quarter the year before.
Impressively, fuboTV is continuing its robust growth despite economic reopening. Some investors worried that as folks had more options for what to do with their time and money, the demand for at-home entertainment options like fuboTV would decrease. While that has materialized for some companies, it is not the case for fuboTV.
Fueling the revenue growth are subscriber gains. In this regard, fuboTV said it would exceed 1.1 million subs at the end of Q4. Again, that's more than 100% growth from the year before and above its own earlier estimates. It should not be overlooked that fuboTV is a sports-centric service. The economic reopening has brought fans back into stadiums, creating a more exciting viewing experience for those watching at home.
"fuboTV's strong preliminary fourth-quarter 2021 results close out a pivotal year where we made meaningful advancements against our mission to define a new category of interactive sports and entertainment television," said David Gandler, co-founder and CEO of fuboTV.
Still, crucial profit margin metrics were missing from preliminary results. In the nine months ended Sept. 30, fuboTV has lost $271 million on the bottom line and $143 million in cash from operating activities. Those interested in fuboTV will eagerly want to see its progress on this front. Already, it has shown it can deliver expanding margins through rising revenue. Subscriber-related expenses were 122% of revenue in third-quarter 2019, 100% in Q3 2020, and 91.5% in Q3 2021.
What this could mean for fuboTV investors
Analysts on Wall Street expect fuboTV to report revenue of $213.61 million and a loss in earnings per share (EPS) of $0.67. If it meets those projections, it would be increases of 103.30% and 70.74%, respectively, from the same period the year before. Interestingly, analysts' estimates for revenue are below the bottom of the $215 million to $220 million preliminary revenue figure that management announced on Jan. 10.
The stock price is down about 18% in the last month, as it has gotten caught up in the broader growth stock sell-off. One immediate catalyst that could boost the share price will be progress on controlling costs and expanding margins.