fuboTV Inc.

Hello, everyone. Hello, investors. Today we are going to talk about Fubo. Most particularly, we are going not only to talk, we are going to stream in live the earnings call for first quarter 2021 FuboTV. And that is insane what is going on today. I don't know if you saw that, guys. This morning I was doing another earnings call for Palantir and at this point I checked two of my favorite stocks at this moment, Palantir and Fubo. And in the morning, I bought Palantir at around $16 when it was pre-market. So when the market opened, you will not even see the graph. It was, on the chart, it was $18. And then it went up like crazy. And I was kind of thinking, Palantir or Fubo? Palantir or Fubo? And Fubo was $12 at this moment. Now, let's take a look where we are right now. Well, you see, actually, you see the price here. It's... It's insanely $17. And now after market close, it's $22 almost. So from $12 to $22 almost doubled in just a matter of one day. Crazy. Well, Palantir is good as well. But I like those two stocks. You don't see me. I'm here. Okay. Yeah, let me just move it on this side. So do not forget to like and subscribe. I will change this so you can see the price of Fubo in real time. And we are starting in about one minute. So yeah, I've also put the link in the description here and in the live chat. So this link to not private to discord group. There's a small group of investors. We are all like minded persons, just ordinary investors. And well, if you join, you will see everything there. So, yeah, and if you look at the chart here, just real quick, before we start, you see this was a real nice support, just as for Palantir this morning. Really long-term support. Look, one, two, three, and that's just... And then, right now, we're here. Crazy. Okay, now let's hear if... It started. By the way, the sound is okay. Hey, BadGamer. Yeah, 30% at one point. Wow. No, I didn't buy at 12. I was thinking about buying. And I bought Palantir. But it is okay as well. It's around 30-40%. Not 80% though. Okay. So, let me check. started now still silence coming up right how do you guys feel today right in the chat something You know, are you feeling good about Fubo? I saw first results. But I don't want to spoil everything. I want to really listen. Since as well, Fubo is the only company, well, Nokia as well a bit, who is doing a really good job at presenting an earnings call. When you see the video, the live video, well, that's their core thing, right? It's really good that it's there. And, well, it should have started already. I see the indicator live and everything. Okay, I'll just wait a bit. Yeah, my average of FUBA is around 20, 25, something like that. Because I first bought FooBoy was 2023. Then went up to 30. In that range I was buying. Each time I dipped. Yeah. Should start any moment now. 1200 shares I'm not sure how many shares do I have but I know it's around 7% of my total six figures portfolio and I want to buy more honestly this morning I just didn't have money coming on to buy more They're a bit late. The indicator's showing that we are live and everything. Okay, let me just refresh the page. It's refreshing now. While we are waiting, don't forget to smash that like button. And subscribe, of course. Alright, just trying to reload the page. It's going. I wonder if they have difficulties on their side. Just a few moments, guys. Yeah, 2215 now. well I guess they have some you see that their website is still showing that well it's it's live but no music nothing here I just refresh the page so guess we have to wait Okay, here we go.

Thank you for joining us to discuss FuboTV's first quarter 2021. With me today is David Gandler, CEO and co-founder of Fubo, and Simone Iannardi, 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 presentation. David is going to start with some brief remarks on the quarter and Fubo's strategy, and Simone will cover the financials and guidance. Then I'm going to turn the call over to the analyst to dig into Q&A. Before we begin, I'd like to remind everyone that the following discussion may contain forward-looking statements within the meaning of the federal security laws, including statements regarding our financial condition, anticipated financial performance, market opportunity, business strategy, and plans, and the expected launch of Fubo's sportsbook. 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 can be found in the Risk Factors section of our annual report on Form 10-K, filed with the Securities and Exchange Commission on March 25, 2021, and our other periodic filings with the SEC. These statements reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. During the call, we also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or an annihilation from our GAAP results. Reconciliation of these non-GAAP measures to the most directable comparable GAAP measures are also available in our Q1 2021 Earnings Shareholder Letter, which is available on our website at ir.fubo.tv. With that, I'll turn the call over to David.

Thank you, Brinley, and thank you all for joining us today. I'm very excited to discuss our Q1 2021 results and to give you an update on all the achievements our team has delivered this quarter. First quarter results were very impressive, and we commenced 2021 by raising our full year guidance once again. We achieved our highest ever quarterly revenue, highest ever paid subscriber count, and highest ever viewership hours. As compared to the first quarter of 2020, we grew revenue by 135% to $120 million. advertising revenue by 206% to $12.6 million, paid subscribers by 105% to over 590,000, and streamed content hours by 113% to over 228 million. We accomplished all of this while making significant progress in our path to profitability, improving adjusted EBITDA margin by 33.5 percentage points year over year. This quarter represents an inflection point for our business, as for the first time we overcame historical first quarter seasonal trends and reported sequential revenue and sequential subscriber growth. Consumers are increasingly cutting the cord to go virtual, and they're choosing FuboTV. Net subscriber additions in the first quarter were approximately 43,000 compared to a decline of approximately 28,000 over the prior year period. Since the first quarter of 2020, we have reported approximately 303,000 net ads, which resulted in subscriber growth of 105% year over year, compared to only 24% growth for the entire virtual MVPD market, as reported in Nielsen Media Research over the same period. Equally noteworthy, we achieved strong subscriber growth efficiently, reducing sales and marketing as a percentage of revenue from 28% in Q4 of 2020 to 18% in the first quarter of 2021. Our investments in subscriber intelligence and insights to drive effective decision-making and content optimization play a critical role in our success. While some in the investor community anticipated elevated churn levels in Q1 due to gaps in our basketball coverage, we continue to achieve better churn with 105 basis point improvement year over year. And as a result of our investments in subscriber onboarding, product enhancements, and content personalization, we continue to see year over year lifts in underlying retention. These investments, along with those in technology and platform stability, drove total viewership hours up to 228 million and hours per monthly active user up 8% to an amazing 129 hours per month on average. We also delivered strong advertising revenue growth of 206% year-over-year to $12.6 million, an advertising ARPU of $7.11, driving us towards our target of more than double our advertising revenue this year. Our impressive engagement metrics, particularly our time spent, indicate that consumers prefer a holistic content bundle with a wide assortment of premium content. In our view, the virtual MVPD category will continue to gain popularity. Over the long term, we believe it will become more burdensome and expensive for consumers to actively manage numerous SVOD services, some of which carry slices of sports content. We expect consumers will look for a more unified and personalized streaming experience that provides easy access to premium content, favorite sports teams, and live TV channels. and of course, at a fair price. Consumers come to FuboTV for our superior value, our year-round content offering, live sports, and a customer-centric, innovative product experience. We continue to be measured and disciplined in our content approach, investing in data to make informed decisions on the programming our consumers want to watch. To further our sports-first differentiation, we recently acquired the exclusive rights to South American World Cup qualifiers, also known as CONMEBOL, featuring some of soccer's most competitive teams, Argentina and Brazil. We believe CONMEBOL will not only be a driver of engagement and monetization, but also a means to solidify our brand ahead of the upcoming World Cup in 2022. We've also signed new distribution agreements with Marquee Sports Network Chicago and AT&T Sports Network Pittsburgh that further extend our leading position as the live TV streaming platform with the most regional sports networks in our base package. Recent activity by gaming and distribution companies has validated our vision of creating an immersive sports entertainment experience. we believe will have a very distinct advantage compared to sportsbooks that are partnering with media and distribution companies. Uniquely, FuboTV will look to combine streaming and gaming under one data analytics platform, delivering a holistic and seamless user experience with lower cost of acquisition. To accelerate the launch of our owned and operated sportsbook and entry into wagering, in the first quarter, we completed the acquisition of sports betting and interactive gaming company, Victory, for a total of $37.2 million, comprised of the merger consideration and equity compensation vesting over future periods. With Victory, we acquired the technology to build a consumer-driven sports betting product and accelerate our entry into the online wagering market. Our new Fubo Gaming subsidiary is led by my co-founder, Sung Ho Choi, and Victory's Sam Ratner and Scott Butera, alongside key industry hires like Ali Ganavati, our new head of regulatory technology. Our gaming team has decades of experience navigating the complex gaming regulatory environment and has already made significant progress. This is evidenced by our recent multi-market access deals with Caesars Entertainment, one of the largest gaming entertainment operators in the United States. Our Fubo Sportsbook is expected to launch in the fourth quarter, subject to obtaining requisite regulatory approvals. We are on pace with our internal schedule, making great progress in both market access discussions and product development. Our gaming team is growing at a fast rate, already hiring dozens of full-time employees, including experienced industry executives. Turning to our predictive free-to-play gaming strategy, we are now completing our minimum viable product and are excited to bring it to market. We plan to test the experience integrated into our core video product in the next few weeks. In summary, it has truly been a phenomenal quarter, positioning the company for a stellar 2021. Not only do we have many growth opportunities in the market to be excited about, but we are also in the early innings, with 78 million households still tethered to legacy pay TV. The three megatrends I laid out one year ago, cord cutting, advertising, and sports betting are converging and quickly evolving in our direction. We believe that with our forthcoming sports wagering integration, we have the platform and the expertise to innovate sports entertainment unlike any other company. I look forward to updating you on our progress and will be on Twitter later this evening to answer questions. And now I'll pass it over to Simone to discuss our Q1 financial highlights and raised guidance for 2021. Simone.

Thank you, David. And good afternoon, everyone. In Q1, we exceeded our outlook and continue to make significant operational and financial progress. Our strong result reflect our strategic investment in people, product, data, and technology with a long-term goal of achieving profitability and positive free cash flow. As I walk you through our financial performance, I will mention comparisons to the Q1 2020 pro forma FuboTV pre-merger plus Facebank pre-merger, excluding the businesses we divested in July 2020, Facebank KG and Nexway. This is consistent with our shareholder ladder. Total revenue for Q1 was $120 million, our highest quarter yet, with an increase of 135% year-over-year and of 14% sequentially over Q4 2020. This growth was driven by strength in both subscription and advertising revenue. Subscription revenue increased 131% year-over-year, driven by growth in both subscribers and ARPU. We grew subscribers by 105% to 590,000. For the first time, we unlocked sequential growth in both revenue and subscribers in the first quarter of a fiscal year. And we achieved this growth efficiently, reducing sales and marketing expenses as a percentage of revenue from 28% in the fourth quarter of 2020 to 18% in the first quarter of 2021. Subscription ARPU expanded by 25% year-over-year to $61.98. This growth was propelled by investment in product, packaging, and upselling tactics. We're also very pleased to see that investment in our advertising business are paying off. Advertising revenue grew 206% compared to Q1 2020, fueled by improvement in all key levels, CPM, engagement, and fill rate. Advertising is also affected by market seasonality, so it is notable that for our first quarter of 2021, our revenue was on par with our fourth quarter 2020 revenue, setting us up for a solid year. As a result of increased per-user engagement and strategic investment in key areas, advertising ARPU increased 57% year-over-year to $7.11. We believe our investment in ad tech will deliver attractive returns for our brand partners while growing CPMs over time. In addition, the growth of our subscriber base and increased engagement should allow us to keep expanding inventory and increasing ad ARPU going forward. In Q1, we delivered positive adjusted contribution margin of 5.3%, up 230 basis points from 3% in Q1 2020. This growth was driven by strength in our advertising business and subscription ARPO expansion, partially offset by contractual annual escalators in our content distribution agreements, most of which take place in January. Our content offering was largely unchanged between the fourth quarter 2020 and the first quarter of 2021. However, compared to Q1 2020, our content offerings this quarter was larger, given the addition of the Disney and ESPN networks. Our ability to support content additions while expanding contribution margin year over year reflects our overall approach of scaling efficiently while making investment in the future of our business. For these reasons, we remain very comfortable that we will be able to deliver year-over-year adjusted contribution margin expansion in the coming quarters. Operating expenses for the quarters were up 80% year-over-year, 55 percentage point lower than the 135% increase in revenue. This is evidence of our increasing operating efficiency. Notably, our reported subscribers related expenses, which primarily consists of content cost, accounted for 94.6% of total revenue in the quarter, an improvement of 19 percentage points year over year. During the first quarter, we accelerated investment in team, marketing, technology, infrastructure, and wagering to build on our momentum. While this resulted in a planned expense increase in absolute dollars year over year, we significantly reduced expenses as a percentage of revenue. This drove a material year over year improvement in our adjusted EBITDA margin from minus 72.3% to minus 38.8% as we focus on our path to profitability. Headcount at quarter end increased 31% over Q1 2020 as we made investment in engineering, product, advertising, and wagering, among other areas. While we expect to keep adding headcount in the coming quarters to expand the business, we are confident in our ability to continue to deliver year-over-year margin improvements. Net loss was $70.2 million. This included approximately $21 million in expenses for depreciation and amortization, stock-based compensation, and accounting amortization of debt discount. EPS in Q1 was negative $0.59. This included $0.02 negative impact from expenses related to the launch of our wagering business and $0.02 negative impact related to the amortization of the debt discount from the senior convertible notes that we issued in February 2021. Note that our APS is based on weighted average shares of standing in Q1 equal to approximately 119 million. We closed the first quarter with 140.5 million common shares of standing following the conversion into common stock of the 46.4 million shares of CSAA preferred stock reported at the end of 2020. This conversion was completed during Q1 in February. During the first quarter, we also strengthened our balance sheet and further optimized our capital structure. As of March 31st, we had $465 million in cash, cash equivalent and restricted cash, which included $390 million net proceeds following our issuance of convertible seasonal notes that will mature in 2026. In the quarter, we also fully repaid $5 million from other loans. And more recently, in May, we repaid the senior loan with AMC Network outstanding at the end of Q1, further advancing our progress to optimize and simplify our desk structure. Operating cash flow in the quarter was negative $53.9 million, an improvement of more than $20 million compared to the fourth quarter of 2020. Q1 number included $13 million impact of payments associated with wagering, one-time content throughout payments, and timing of some annual operating expenses paid in the quarter. Given our strong start to 2021 and confidence in our growth trajectory, we are increasing our full-year guidance to $520 to $530 million in revenue in 2021. This equates to year-over-year growth of 99% to 103% and a 23 percentage point increase at the midpoint compared to our previous guidance. In addition, we are increasing our guidance for end-of-the-period subscribers to 830,000 to 850,000, implying year-over-year growth of 51% to 55%. This subscriber outlook reflects net addition of at least 282,000 across 2021, 22% higher than our 2020 net addition of 232,000. Focusing on the second quarter, our guidance for revenue is $120 to $122 million, implying year-over-year growth of 172 to 176%. And for subscriber, it's $600 to $605,000, a growth year-over-year of 110 to 111%. The above guidance does not include any projected revenue from online sport wagering. We're very pleased with our execution on our wagering plans and look forward to providing more details on launch dates and target markets during our second quarter earnings in August. As a six-year-old company in a rapidly changing market, our priorities for 2021 include growing subscribers and monetization, investing in product, and expanding into sport wagering. As always, we balance investment in the future with an eye to efficiency, profitability, and cash flow breakeven. We are very optimistic about our ability to execute on our long-term goals. Thank you for joining us for the call today. We will now take your questions.

Thank you, Simone. We're now going to turn it over to our analysts to dig into some Q&A. We ask that you please try to limit yourself to two questions. Our first question comes from Jed Kelly of Oppenheimer. Jed, great to see you.

Hey, thanks, Brindley. Thanks, David. Thanks, Simone, for doing this. Two questions, if I may. First of all, can you talk about what's driving your improvement in churn? Is it more products with the Regional Sports Network or more, I should say, more content with the Regional Sports Networks? or better product. And then David, it seems like a lot of the sports betting companies are making a pretty big investment in the media. You know, we've seen a couple, DraftKings made a pretty big hire. So can you just talk about what you see this overall convergence between sports betting and media and any update on the product launches?

Sure. So first on the churn, Jed, I think that's a great question. We've now delivered eight consecutive quarters of improving churn. We have been very focused on our product, our ability to customize for our customers, personalization features, and we've just really improved from an onboarding perspective. And then we also want to thank the marketing team because they've done a phenomenal job. targeting higher quality subscribers. So all of this together has allowed us to really drive improvements in retention. And I think equally noteworthy, and I think you may have mentioned this to me in passing, that not having Turner could probably have a negative impact. you know, on retention. So what this clearly shows you is that we have a very solid product. People enjoy using Fubo, and we continue to gain more market share. With respect to your second question around sort of the changes in the ecosystem, I think I've been the first one to actually say that I think that these two uh... major uh... areas are going to converge that you know streaming and wagering and i think what we do is actually quite difficult as you know we're already competing against one trillion dollar companies right the google's of the world the amazons of the world the disney's et cetera on the hulu side and uh... again we continue to take market share two thousand uh... in nineteen i think we had just below three percent of the virtual mvp market uh... share we're we're approaching five percent north So so we're feeling really good about that. And as I've seen the recent news, which has validated what I've been saying, you know, we're very well positioned. As I said, we've been developing our team. We're very happy with our acquisition of victory. And, you know, we're meeting our schedule and we're about to roll out in beta, you know, our. free-to-play games which uh... when we look at the surveys that we've done on the platform uh... you know with a pretty decent uh... sample size what we found is that thirty percent of our subscribers that watch at least two hours uh... of uh... sports on fubo thirty percent are willing to participate in free-to-play that's one number two twenty percent of our subscriber base that's our paid subscriber base has already placed a bet and 22% of our subscriber base is willing to place bets on Fubo. So we think we're very well positioned. We think, and as you've seen from our numbers, our ability to really drive down SAC, or subscriber acquisition costs for those who don't know, has been really successful. And I think we're going to be able to really put together a service that's going to drive down subscriber acquisition costs on the gaming side. It's also going to improve engagement which subsequently will improve our net gaming revenue, lack of bonuses, and overall just usage on the platform, which will also drive advertising. So I think we're actually pretty far ahead on that front. And what's also important to note is that we're actually building a new category. And we are very lucky to be able to define what that category is going to look like. So I'm actually happy to see that others are also thinking the same way. And most important is that the barriers to entry, as you know, are quite high. So we feel very good about our positioning. And our recent results really demonstrate our ability to be able to compete with bigger companies. So we're looking forward to really building out that portion of our business. Thank you.

Thank you, Jed. Our next question comes from Sweta Kajore from Evercore. Go ahead, Sweta.

Okay, thank you. Let me try two, please. First, can you please talk about just the overall strength in the quarter? What really drove the strength in subscribers, in overall revenue, in ad revenue? This is, you know, it was very strong, probably above your own expectations. And then the second is on sports betting, just following up on Jed's question. can you please remind us the overall opportunity um and the size of the opportunity and second you know you talk about your advantage in this uh segment in betting in your letter around lowering acquisition costs and engaging first-time bettors as well as your integrated platform could you talk about what is your differentiated advantage versus competition in betting thanks

Sure. So on the first part of your question, look, I think at the end of the day, what Fubo has demonstrated quarter in and quarter out is really our ability to execute. We had our marketing team has done a phenomenal job, you know, driving down marketing as a percentage of revenue that's gone down from 28%. to 18%. We've been able to drive more subscribers in the door. They're higher quality subscribers, so our ability to really leverage our data capabilities, that certainly has played into it. And then our product team has really done a phenomenal job really introducing more customization, more personalization into the product. And then the advertising team, as always, does a phenomenal job. We're now at $7 a And that's in the first quarter. So as you can imagine, typically what you see is a much weaker first quarter than you do in fourth quarter. And I think this really sets us up for a great year across the board. So we're very excited about that. As for your second question, you know. It's clear to me we are the sports first pay TV replacement service. People come to Fubo for the sports. That's undeniable. You see that all the time. You see that in media outlets and different articles and tweets that people send out. You see that in the numbers in terms of the number of downloads you see for Fubo in seasonal months like September and October, which are typically seasonal. tied to the start of the fall sports season and more so the NFL. So we certainly have an advantage. We have all of the NFL games so far. Obviously, there are deals that have been done recently with the NFL and the broadcasters, which, in my opinion, really guarantee the success of of our business going forward and the virtual MBPD space because it's clear to me people want to have the best immersive experience that they can get. And we offer a holistic user experience that now is going to allow us to actually provide a new aspect, which is wagering. And I think that's really important to note that that is a true advantage. We added, and I don't know if you noticed this, Shweta, but we sold 1.2 million attachments in the first quarter of this year. That's a 2.1 attach rate up from 1.0 in Q1. So that tells you that we're actually pretty good at selling incremental services. The other thing is consumers are engaging 129 hours with our platform. So we're going to have ample opportunities to continue to upsell them, provide discreet and bespoke services. betting opportunities, which, by the way, will drive our net gaming revenue higher because we don't have to bonus a lot of those people. So I anticipate that as we continue to grow our base, and again, I want to make it clear, don't look at our base in a very static way. We had 540,000 subscribers at the end of the year. We are now pacing towards 840,000 subscribers. We have three market access licenses. We have, I can't really get into other deals, but we are in advanced discussions with other jurisdictions. And we are also spending a lot of time working with regulators right now to really talk about the authentication layer, the ability to really leverage our data in ways that have never been leveraged before. So I'm super excited about, you know, our opportunity here. And as I said to Jed, we are creating a new category. There will not be many players in that space.

Super. Thank you.

Thank you.

Thank you, Sveta. Our next question comes from Laura Martin at Needham. Laura, great to see you.

Hey, great numbers, you guys. And the stock's up 24 percent because you just keep doing what you say you're going to do.

Thank you, Laura. Thank you, Laura.

Okay, so let's drill down on advertising. This advertising growth was exceptional. And I guess what I'm wondering is, Simone said in his prepared remarks that CPM's fill rate and engagement were all higher. Could we drill down on some of those metrics maybe? What is your CPM running? It used to be about 20 bucks and your fill rate was about 50%. Can you give us where you are on those today? And when you think forward, I'm really interested in how much is programmatic versus direct sale also.

Yeah, so why don't I start with the end? Programmatic, we're still roughly in the 93% to 95% range, which I think is actually quite good because, as you know, we just recently announced the launch of our new studio, which we think is going to provide advertisers more opportunities to create immersive experience for a very specific set of customers, our customers. So we think that that's going to drive value, and obviously there's going to be opportunities to drive CPM. In terms of CPM, generally speaking, programmatically, you were right. I think we were trending roughly around $20. We were actually south of $20. CPMs have grown about 7%, which is actually a positive thing. The reason why is because we're still in the 20.6, I think it was the range, in Q1. Now, why that's important is because, as you know, we have significant upside potential. to get to the 30 to 35 ranges, other companies that have reported very recently. So I'm very bullish on the $7.11 that we've delivered this quarter that we'll be able to do that going forward. And as you know, as you get closer into Q4, CPM's continue to increase. I think we've set a very nice base for ourselves in the first quarter to really drive CPMs forward. As it relates to fill rate, we've got a lot of room there as well. Fill is certainly up, but we were selling out in the 55% to 60% range last year. Again, very similar to our CPM numbers. You're seeing growth of somewhere around 5% to 10%. Again, very healthy moves. We're very focused on fill before rate we think will drive rate up organically. Those are kind of the two areas. And then last but not least is viewership hours, right? So you see viewership hours continue to increase. And I'll just give you a quick nugget for Q2. But April numbers, despite COVID, seem to be very strong. obviously much stronger than our numbers in 2019. We can continue to see people spend more time watching television on Fubo. We see people watching more programs per monthly active user. We see people watching more channels, you know, at least April over April. We have not looked at our main numbers yet. But, you know, the numbers are coming in very strong. And actually, we're very excited about advertising. Going into Q2, we also have, as you know, we announced the acquisition of the South American World Cup qualifiers, CONMEBOL. So it's going to give us an opportunity similar like Roku did with Quibi. We want to test out some of our capabilities and our new relationship with LiveRAM. So it's going to be a very interesting time, but we're very excited.

Okay. And then my second question is... You've taken a position in your note that's a little bit anti-consensus, which is that the 10-year deals the NFL signed are good for streaming. But because they gave a lot of streaming rights, I think there's at least an argument I hear from some investors that that creates more competition for Fubo and sports streaming. So I would love your view on that and why you think it's positive that the NFL signed these 10-year deals with lots of streaming rights included in those terms.

Yeah, well, thank you, Laura. That's a great question. That's why we wanted to cover it in the shareholder letter. I think you've known us, well, you've known me for a very long time now. I think it's clear that we are natural contrarians. We've always been on the other side. And so far, based on track record, that has been proven correct. These deals are very important. It guarantees the longevity of our business for the next 13 years, right, which is always a criticism that you get is how do you know there's a future? The NFL is by far the number one media, I'm not even going to call it sports, media property in the world, at least in the United States, right? So that's a very important piece of our business. If you look at wagering data for any company that's already provided their earnings numbers, you'll see that far and away it's Q3 and Q4 that does really the majority of the heavy lifting. In our case, this is nothing new. You know, you've seen the Super Bowl has been available on Fox and CBS for the last few years. So, you know, we've seen, you know, customers leverage different platforms to view sporting events. But, again, I'm a huge believer in aggregation. I've said this to you privately and publicly many times. I believe that people want to have a unified and personalized experience. They don't have time or energy or the desire to run around looking for opportunities which games are on which platform at which time. So, again, I'm very bullish on it, but I think the key here is that those deals are a decade long. So if anybody has any concerns about Apple or anybody else coming in, obviously we now know that's highly unlikely.

Thank you very much.

Thank you.

Thank you, Laura. Our next question comes from Jim Gross at Barrington. Jim, please go ahead.

Thanks. I think I'll start out with one question. regarding the marquee deal, and I think there were a couple of others that were similar to it. A lot of your sports are more in terms of what's on the networks with which you have a relationship. The marquee seems a little bit different. I'm in Chicago. I know the Cubs have created this network of their own. Could you talk about the terms there and what you're expecting to get in terms of costs and subscriber additions out of something like that and the others like it?

Sure. Well, first of all, Jim, thank you very much. And just so you know, we love the Windy City. We've opened our headquarters up for our gaming team in Chicago. So we're very excited about that geography, generally speaking. As you know, we also have a market access license in Indiana. So that is a region that has strategic importance for our company. But, you know, we continue to increase the number of regional sports networks on our platform. Last year, as you know, we launched AT&T Southwest in Houston. We added Pittsburgh, and we renewed our deal with Nessun. So, you know, it's very important for our fans to get access to their favorite sports teams. And I think in Chicago, you have a phenomenal team in the Cubs. You know, we're rooting for the Cubs always. But at the same time, we think that there's a huge sports demographic in Chicago that we certainly want to tap into. And we're going to continue to look for opportunities to expand our sports coverage, both regionally and nationally. But again, we don't provide numbers on a state-by-state or sort of geographical basis. you know, all in. We're very comfortable with our strategy. And as you can see from our ARPU growth, that we're certainly able to make, you know, this work out.

Okay. And I have a second question, too, then. I was wondering if you could get a little more granular in terms of the monetization options for your gaming ambitions. Is it primarily advertising, or are you looking to get... payback in additional ways? And also, if you might frame out the pace at which these sort of monetization options might surface and what sort of timeframe might, over what timeframe might they be more important to you?

Yeah, very good question, Jim. Look, I think the way we think about our business is really about creating long-term shareholder value. And so the easy way out is to just greater utility for this set of customers. And more importantly, a new revenue stream for the company. The fact that consumers spend 129 hours on the platform give me comfort that we're going to really be able to innovate around business models. This is not a static company, and I've said this before. It's sometimes very difficult to understand evolving companies, but we think that we can Just like NVIDIA, we've taken 5% market share in the virtual MVPD space. I don't think it's unreasonable for us to take 5% of an expanding wagering market, which could be as large as $70 billion. So we think we're going to create more value for our customers. We're going to create more value for our shareholders. And from a monetization perspective, Simone, I think you would agree, You know, we're planning to launch in the fourth quarter. That'll be a fully functioning sportsbook, a fully functioning sportsbook that we've acquired, which is Victory. And that sportsbook will be ready to go in fourth quarter.

And as we get closer to the timeline for the launch, we'll be able to provide more details on the wager and monetization as well. Thanks.

Thank you, Jim.

Thank you, Jim. It's good to see someone wearing a tie again. Our next question comes from David Beckel at Barenburg. First time this year.

I feel bad I'm not wearing a tie. Hey, guys. Hope you're well. Question about content investment in general. I'm just wondering if you can elaborate a little bit on how you think about return on investment for your content. Are you looking for a specific return on advertising, or is it more about brand building at this stage, sort of like an S5 model? And similarly, to what extent are you expecting to continue to invest in exclusive content over the next year or two? And then second question is, you know, just around pre-launch spending on the wagering product. I'm wondering if you can maybe give us some color in terms of how much you expect to spend and if you're willing, you know, at what point you think you'll cash flow break even on that product. Thanks.

Sure. Thank you, David. That's a great question. So in terms of our content approach, as you know, we're very data-driven in our analysis on many areas, and content clearly is a critical one. We look at the return of the content in terms of clear engagement, in terms of advertising, and in terms of either keeping people engaged on our platform or getting people to join our platform and become subscribers for Fubo. So based on these economics and the dynamics, we're able to leverage and position our negotiation in a way that kind of gives us a return that clearly we cannot disclose now, but in terms of ensuring that we get the long-term profitability targets that we mentioned many times before. And as you start already to see concretely in our numbers, even just looking at our P&L, we're subscriber-related expensive in Q1, accounted for less than 95% of total revenue, and subscriber-related expenses in mainly content. So we continue to assess in a dynamic way this content offering and really trying to put together the best possible package for our subscribers that we can monetize in the best possible way.

Yep. And just on the wagering front, David, that's a great question. Look, I just want to make it clear to everybody that we have a very strong balance sheet. We've got over 400 million of cash. I think clearly we've demonstrated pound for pound. We execute like no other company. And so we do not require the same type of funding that other companies need to actually, you know, start to really drive value for the business. So, you know, in my opinion, I think, you know, for the rest of this year we'll probably look to spend under $50 million, and that would just get us to launch. So we'll be able to put a book out there, you know, by the end of this year, sometime in fourth quarter. Again, we haven't provided that type of data. We've got three-plus market access licenses we're working on more. And we'll be in market at a lower cost than any other service out there. And I'm very confident in our team's ability to actually deliver results. And you've seen our acquisition costs. I just think that as you kind of start targeting the same customers and offering them multi-services, I think you will really be able to take down our subscriber acquisition costs as well as our active player costs as well. So we're very bullish on it. We don't think it's going to cost us that much money to be able to get out there to market. Again, this is in line with the way we've continued to develop our own video business. And I also think that people are looking right now for us to be able to provide that type of service. And let's not forget, we leverage our data very well, so we'll be able to provide a lot of bespoke and discreet markets within betting. So I think that there's a lot of opportunity here for us to innovate, and we are going to take full advantage of that at the end of 2021 and certainly well into 2022 and beyond. Great, thanks.

Thank you, David. Our next question comes from Dan Salmon of BMO. Go ahead, Dan.

Hey, good afternoon, everyone. I've got three questions. David, could we start by returning to... your RSN differentiation and how important that has been to your subscriber outperformance here so far this year. Is that real targeted strength in those markets that you highlighted like Chicago and Pittsburgh happening? Second, what are your expectations for your advertising ARPU growth rate once you lap the addition of ESPN's networks to the service? And then finally, David, I guess a bit of a big picture one for you. You've talked a lot about the convergence of sports and streaming content here and your own efforts in both areas, including the South American rights. It seems like there's a category of content that sits right in between there. Just original commentary around sports betting. We saw Fox acquire Outkick. Is more investment in that type of area? Does that make sense for you? That seems like a sweet spot that would make sense for Fubo. Love to hear your thoughts on that.

You want to start?

Which one? Okay. Sorry, Dan. Can you repeat the first question? The first question. Sorry, Dan.

I was mesmerized by the number of questions you asked.

How important were the RSNs? Yeah, RSN strategies.

So, look, you know, we're a sports-first cable TV replacement service. We're going to be smart. We want to provide our customers with the best content that we can provide them with, right, and the greatest breadth of content. I think also we spoke offline, and you felt that, you know, there could be some – headwinds without Turner and March Madness. I think that we've really demonstrated that we know our audience well and we know how to target subscribers. You know, as it relates to sort of the overlay of subscribers, you know, on the geographical map, I would say, look, it's pretty much in line with the size of the DMAs. You're going to get more customers in Chicago than you're going to get in San Diego. So we're looking for, you know, for markets where people really care about their sports. And we've always said that sports is local. Again, we're just natural contrarians, and we felt this way. We're the only ones that still carry Madison Square Garden, Nesson, the Houston Astros. So we actually believe that people come to our service to really get that great breadth of sports programming, and we're going to continue to do our best to bring it to our customers at an affordable price, and we're clearly doing that. And then just one thing on sports betting. I think it's really important to note. I mean, we look at the earnings reports of a lot of the wagering companies as well. And our sort of fluctuation, our growth is very similar to what you're seeing on the wagering side, which really gives us comfort as to our understanding of sports. Because if you think about it, what are these wagering companies really doing? It's really about their ability to market effectively to get people in the door. And we think that we have a solid product that allows us to do that at a very affordable and very efficient cost and providing people with a great user experience. So we'll be focused on continuing to increase the breadth of content that we have and also target sports fans as we have been and looking forward to Q2 and beyond. As for the second question.

Yeah, just adding on the point that David just mentioned, I mean, ultimately, you know, clearly each one of these content negotiations brings something, you know, that we clearly are very pleased in terms of results. It's the full package that clearly drives, you know, the value that we're seeing, you know, drives additional engagement, additional attraction and retention, you know, for all our subscribers. The numbers that we commented on have been witnesses in the first quarter, and we believe that that will continue for the remainder of the year and beyond. The second question you were asking, Dan...

Advertising ARPU growth expectations once the anniversary ESPN's edition.

Yeah, let me just start with Dan. I think, look, it's clear. I mean, you've been in this business for a very long time, and you know that Q4 is a lot stronger than Q1, right? As I like to say in my retail example, you know, you buy a product on Amazon in Q4 and you return it in Q1. It's sort of the same logic here. You have a massive Q4. You have, you know, the Coca-Colas, the... You know, all of the big CPGs are coming in. You've got, you know, auto. You've got everybody coming in. That's really going to drive rate. I think what we've done is demonstrated that we have a great strategy. We're doing lots of the things that you'd expect us to do. We're investing heavily into our team, into the ad tech capabilities that we have. And we're going to continue to drive that number. But the key is that we've already set, I think, a nice floor. for us in terms of advertising revenue. So we're, I think, really well positioned to more than double our advertising revenue this year. And that's against some very solid comps, as you mentioned, you know, in Q3 and Q4. But again, we feel very comfortable kind of where we are. And again, with the number of hours that people are continuing to consume Fubo, you know, we feel comfortable to be able to meet our expectations.

Absolutely. So the increase year over year will continue for the remainder of the year in terms of advertising monetization, for sure.

Thank you, Dan. Our final questions come from Dylan Heslin of Roth Capital. Go ahead, Dylan.

Hi, guys. Thanks for taking our question. First, could you talk about, on the plan side, what were some of the adoption trends you saw, whether that was like the starter, the elite, and then the attachments they're adding, and what sort of influence the difference was between monthly and quarterly on those plans? And then secondly, Can you walk us through the cadence of both like sub growth and engagement from Q1 until I guess looks like you have numbers into April and how those trends compared to the second half of last year when when a lot of the sports came back online.

Sure. So thank you, Dylan. Those are very good questions. You know, we don't comment on packages specifically. What I will say is that, you know, part of what we do well at Fubo is that we know how to leverage our data. And so what you'll find is you'll constantly see, you know, I've had somebody ask me, I see new packages all the time. Yeah, of course. We're always going to be testing new packages. We've got lots of consumers, obviously the bulk of our consumers that prefer monthly packages and We're testing out different offers to see what's going to stick. And by the way, all of this is in preparation of wagering. We want to understand what those capabilities could be and how we should be positioning different attachments. So that's on the first part of your question. Do you want to take the second part?

Yeah, Dylan, do you mind to ask again the second part of the question?

Yeah, sure. Just wondering... the cadence of sub growth and then their engagement on the platform in Q1 until like April and how that compared to second half of 2020 when sports came back online.

Yeah, so for sure. So as you've seen, clearly we had significant, you know, addition, net addition of 43,000 in the quarter. that is being driven by growth size as well as additional engagement and retention through the platform. For the remainder of the year, we expect that we will continue to kind of stabilize in the first half and grow more expansively in the second half of the year, similarly to what was done in prior years. But we started from a higher base that is the one that we're settling now with a stronger first half of the year in 2021.

Just to add to that, look... The cadence is good. As I said, April was a solid month. If you recall, the pandemic hit sometime around March 15th, where we saw a significant hockey stick increase in viewership that obviously went through April, May and June. And we saw the, you know, the impact of COVID really in May increase. April and May. And then we saw, I would say, a decline in viewership hours last June. We're very happy with our, at least out of April and the first few days of May that we've looked at, are really solid. And again, that really speaks to the quality of our product. our ability to improve discoverability of different content. As I said, programs per monthly active user are up, as well as the number of channels people are watching are also up. So to me, it really speaks to the quality of subscriber that we're bringing in. And again, we have 78 million subscribers households left to go. So this is a very large market. And given where we are today at 5%, I'm feeling really comfortable about the long-term opportunity, coupled with the decade-long NFL deals. I think we're in a really good position to take advantage of those tailwinds. And just given our ability to execute, I'm also very comfortable. in our ability to actually start driving value on the wagering side. And when I put both of those together, you know, I think the path to profitability is actually quite strong. This is going to be a very interesting company. And again, it's only six years old. So if you think about Roku and Netflix and Spotify, you're talking about companies that are 15 to 25 years old, right? So we feel good about the tailwinds. We feel good about the execution. And, you know, we're looking forward to Q2.

Thank you so much, Dylan. Many thanks to our shareholders, our analysts with our good questions, all the Fubo fans out there. We look forward to keeping you updated on our progress. And this concludes our remarks for today.

Thank you.

And that's it, guys. That was a brilliant presentation of our next call today. I wish you a very good evening if you're here in North America or a very good night if you're in other parts of the world. See you. Bye.