FuboTV Inc. Class A

Thank you for joining us to discuss FuboTV's third quarter 2021. With me today is David Gandler, co-founder and CEO of Fubo, and Simone Nardi, 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 analysts 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 securities law, including statements regarding our financial condition, anticipated financial performance, market opportunity, business strategy and plans, including our acquisition strategy and ability to integrate any such acquisitions, the expected continued rollout of Fubo Sportsbook, and the continued shift in consumer behavior. 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 quarterly report on the Form 10-Q for the quarterly period ended September 30, 2021, to be filed with the Securities and Exchange Commission 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 non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available in our Q3 2021 earnings shareholder letter, which is available on our website at ir.fubo.tv. With that, I will turn the call over to David.

Thank you, Allison, and thank you all for joining us today. Before we dive into our record third quarter results, we are thrilled to announce that since closing the quarter, FuboTV has passed the 1 million subscriber mark. Yes, that's 1 million paying subscribers. This is an extraordinary milestone by any measure, but particularly remarkable given the momentum of our business over just six short years. The implications of the milestone are tremendous and undoubtedly far-reaching. 1 million subscribers means increased relevance, leverage, and influence with content partners and leaks, plus the opportunity to go upstream on sports tent poles. It also means billions of data points for product iteration and personalization, more monetization opportunities, and increased consumer mindshare. And even at 1 million subscribers, we are still only scratching the surface as 72 million-plus households still subscribe to traditional pay televisions. Our record third quarter 2021 results showcase consistent, strong execution of our company's mission. It's a mission to define a new category of interactive sports and entertainment television, turning passive viewers into active participants. We continue to make great traction towards our long-term growth and margin targets, and we are once again raising our full-year guidance. In Q3, we delivered triple-digit year-over-year growth in total paid subscribers, up 108%. Total revenue, up 156%. And advertising revenue, up 147%. And that's compared to the prior year period. We added approximately 263,000 net subscribers. That's 56% more than in the third quarter of last year. And more than the entirety. of 2020. Also noteworthy, we were able to drive subscriber growth while spending less as a percentage of revenue than in the prior year. Turning to engagement, our users streamed 284 million hours. That's an increase of 113% year over year. Our monthly active users watched 121 hours per month on average. While this is strong engagement, it was impacted by the huge influx of new subscribers at the end of the quarter. As these new cohorts mature, we expect to expand their engagement and monetization. The third quarter was also record-breaking for our advertising business, representing our strongest ad sales quarter to date. Ad revenue grew 147% year-over-year and accounts for 12% of total revenue in the quarter. Alongside our record revenue growth, we also made meaningful progress towards our profitability goals. Adjusted contribution margin was 12.4% in Q3. That's up 189 basis points compared to the normalized third quarter 2020 results. This was driven by ARPU expansion with both advertising and subscription, partly as a result of strong execution associated with upsells and packagings. Our attach rate was 2.3. That's up from 1.8 in the third quarter of 2020. And we sold 2.2 million attachments as of the end of the quarter. It's also illustrative of our ability to expand ARPU and extend the lifetime value of our customers through the provision of additional products and services. This positions us really well to drive adoption of our wagering product. Today, we announced a major milestone towards global expansion with the acquisition of Molotov, France's leading live TV streaming platform with 4 million monthly active users. Molotov operates a freemium business model, which leverages a free tier to drive growth, then upsells customers to premium channel packages. The technology capabilities between the companies will enable us to efficiently launch our interactive sports and entertainment streaming platform on a global scale. scale. Our transaction is expected to close sometime within the first quarter of 2022, and that's of course subject to certain closing conditions. Our internally built technology stack is the cornerstone to our platform, and that has kept us innovating ahead of the streaming industry. We are prioritizing our product and engineering capabilities to bring to market a category-defining streaming experience that's characterized by interactivity. This is a long term commitment we're making in our product and expected to yield strong and defensible competitive advantages over the next few years. Accordingly, we are thrilled to announce the acquisition of Edison AI. Edison is an AI powered computer vision platform with patent pending video recognition technologies based in Bangalore, India. With Edison AI, we will be able to create new experiences that integrate interactivity and data directly within our live TV feeds, pushing the boundaries of innovation even further. The acquisition also expands our data science and engineering organization globally. Last quarter, we announced the beta release of two new interactive features, FanView and free-to-play predictive games. Throughout Q3, we continued to iterate on each and expanded their rollout to additional leagues. We're very excited about the potential to further engage our subscribers and ultimately to become gateways to real money wagering. Here's a quick video. Our wagering business also continues to evolve. We are transforming how consumers watch and engage with live television with our first-generation integrated Fubo Sportsbook, which launched November 3rd in our first state, Iowa. This is the first of a healthy pipeline of other states where we plan to launch in the ensuing months, which will allow us to unlock the scale of our growing subscriber base, driving down betting acquisition costs. In addition to serving as an important new on-ramp to our platform, we believe this will over time improve engagement and retention while driving monetization and advertising sales. We believe only FuboTV has brought to market this seamless connection between streaming video and our mobile betting app. we see ourselves in the very early innings of an enormous opportunity to innovate. While we are very pleased with our progress to date, we are taking a very measured and deliberate approach as we operationalize this initiative. So, in summary, I am exceptionally proud of our execution this quarter. We are building a category-defining streaming experience that will achieve a strong flywheel, driving subscriber growth increasing engagement and enhancing monetization while also attracting advertising dollars to our high quality premium paying audience. All while we continue to benefit from our optimal position at the intersection of three mega trends, the secular decline of traditional television, the shift of TV ad dollars to connected devices and the rapid adoption of online sports wagering. I look forward to updating you on the progress, and will be on Twitter later this evening to interact with shareholders. And now I'll pass it over to Simone to discuss our Q3 financial highlights and raised guidance for 2021. Simone, please.

Thank you, David, and good afternoon, everyone. I'm very pleased with our strong third quarter results as we exceeded our outlook and made significant progress in delivering efficient top-line growth and margin improvements. In the third quarter, we delivered triple digits year-over-year growth in both subscription and advertising revenue, taking overall revenue up 156% to $156.7 million, up 20% sequentially over the second quarter. Subscription revenue increased 158% year-over-year to $138.1 million, driven by strong growth in subscribers numbers and ARPU. We ended the quarter with 945,000 subscribers, an increase of 108% or 263,000 net additions when compared to Q3 2020. We delivered this robust growth through acquisition efficiencies as well as improvements in retention resulting from our interactive product and curated content offering. Subscription ARPU expanded by 10% year-over-year to $66.31 as we saw more subscribers taking our premium offerings. Advertising ARPU grew 10% year-over-year to $8.23. Advertising is a key component of our growth and monetization strategy, and we saw continued strength on this front. Advertising sales were the highest to date in the third quarter of 2021, surging 147% year-over-year to $18.6 million, and accounted for 12% of total revenue. The strong results for our advertising business were driven by the strength in our subscriber growth increasing CPM, and fill rate optimization. As expected, we saw a large influx of subscribers within the last few weeks of September. As these new subscribers become more familiar with the platform and mature into long-term subscribers, we expect to expand their monetization further. Switching now to profitability, we made significant traction towards our long-term goals, delivering an adjusted contribution margin of 12.4%. This was up 189 basis points year-over-year when compared to our normalized Q3 2020 SEM of 10.5%, which we reported in our earnings last year. As a reminder, our Q3 2020 SEM of 16.1% reflected unusual timing of content deals in July 2020. Our contribution margin expansion in the quarter was driven by the improvement of advertising ARPU and subscription ARPU, as well as by the continued data driven optimization of our content offering. This position as well to continue making deliberate strategic investment in content, technology and infrastructure to optimize our market position and grow share while driving long term margin expansion. Accordingly, our strategic investments have resulted in the third quarter in expected expenses increase in absolute dollar basis year over year, However, expenses continue to grow significantly less than our revenue growth and accounted for 166% of total revenue in Q3 2021, significantly less than in 2019 and in 2020, underscoring our continued focus on driving operating leverage in the business. Within expenses, I would like to highlight how subscribers-related expenses, which primarily consist of content costs, accounted for 91.5% of total revenue in the quarter, an improvement of 8.5 percentage points compared to the prior year period. And our sales and marketing expenses as a percentage of revenue declined from 36% in the third quarter of 2020 to 32% this quarter, showcasing our efficiency in growing our subscriber base. As a result of this continued operating leverage, we achieved a material year-over-year improvement in adjusted EBITDA margin from minus 77.6% to minus 51.9%. Net loss in Q3 was $105.9 million and included approximately $21 million on non-cash expenses in stock-based compensation, remeasurement of warrant liabilities, amortization of intangibles, and debt discount. EPS in the quarter was negative 74 cents, compared to a loss of $6.20 in the third quarter of 2020. Adjusted EPS in the third quarter of 2021 was a loss of $0.59, excluding the non-cash impact of stock-based compensation, the remeasurement of warrant liabilities, and the amortization of intangibles and debt discount. Expenses incurred for the launch of our wagering business impacted EPS and adjusted EPS by $0.05 in the quarter. Now, turning to the balance sheet, we ended the quarter with $398.5 million in cash, cash equivalent and restricted cash. These include a $70 million net proceeds in the quarter from our at-the-market offering, as well as $7 million in interest payment and $33.7 million of cash outflow related to wagering, mainly in connection with our market access licensing deals. As was previously highlighted, The filing of our $500 million ATM in August is part of our ongoing capital optimization strategy to build optionality to fund growth initiatives while further strengthening our balance sheet. Operating cash flow in the quarter was negative $55.7 million, inclusive of $5 million of non-recurring payments, $5.2 million associated with a wagering business, and $7 million of interest payment for the 2026 convertible notes. Moving on to our outlook, with a strong performance in the third quarter of 2021, we believe we are well positioned to continue to execute on our long-term revenues and margin goals. We are therefore once again increasing our full-year 2021 revenue guidance to $614.5 million at the midpoint. This updated number represents a 135% increase year-over-year, up from an increase of 116% reflected in our prior guidance. Similarly, we are increasing our end-of-the-year subscriber guidance to 1,065,000 at the midpoint of the guidance, up 94% year-over-year. This guidance implies full-year 2021 net additions of approximately 517,000, 123% higher than our full-year 2020 net additions of 232,000. Our current guidance does not include any revenue contribution from our sport wagering business, nor from our recently announced Molotov and Edison AI acquisitions. In closing, we are very pleased with our performance this quarter, and we continue to efficiently drive robust growth and operating leverage. Thank you for joining our call today. We will now take your question. Alison?