FuboTV Inc. Class A

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the FuboTV fourth quarter and full year 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Alison Sternberg, Senior Vice President, Investor Relations. You may begin your conference.

Thank you for joining us to discuss Fubo's fourth quarter and full year 2022. With me today is David Gandler, co-founder and CEO of Fubo, and John Giannidis, 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 full year and FUBO strategy, and John will cover the financials and guidance. Then I'm going to turn the call over to the analysts for Q&A. Before we begin, I would like to remind everyone that the following discussion may contain forward-looking statements within the meaning of the federal securities laws including but not limited to statements regarding our financial condition, anticipated financial performance, including quarterly and annual guidance in cash flow and adjusted EBITDA targets, our business strategy and plans, expectations regarding innovation, growth, and profitability, consumer, industry, and advertising trends, the integration of Molotov, planned launch of the unified platform and expected synergies, and market opportunity. 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 for the year ended December 31, 2022, to be filed with the Securities and Exchange Commission and 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. Except as otherwise noted, the results and guidance we are presenting today are on a continuing operations basis, excluding the historical results of our former gaming segment, which are accounted for as discontinued operations. 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 Q4 2022 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, Alison, and good morning, everyone. We appreciate you joining us today. I'm proud to report that Fubo's global streaming business achieved record highs in the fourth quarter and full year 2022 across several KPIs. We delivered over $1 billion in total global annual revenue. We exceeded over $100 million in annual ad revenue in North America. At the same time, we achieved positive gross profit in Q4. We also closed the year with 1,445,000 subscribers in North America, an increase of 29% year over year, and 420,000 subscribers in our rest of world streaming business, an increase of 117% year over year. 2022 was an inflection point for our business. Our goal is to continue on this trajectory by expanding unit economics and generating positive free cash flow in 2025. My confidence and enthusiasm are not just based on our results, but on the dynamics and trends across the media and consumer landscape at large. Friction and fragmentation continue to persist in streaming, frustrating customers and creating a challenging path to sustainability for media companies. As a result, we continue to see the aggregation model and bundling as a massive opportunity. Our service empowers consumers to seamlessly access all of their favorite content via a single app from anywhere in the house and on any device or operating system. Fubo plays an important role in the media ecosystem. Our customers already spend over 100 hours on our platform every month on average, reflecting the value we provide to media companies, content creators, and advertisers. And as an aggregator and distributor of content, we will continue to work to advance on our vision, and that is to give customers a gateway to all television, surprising and delighting them with a personalized and seamless user experience. US consumers are already supporting our vision. We are extremely proud to rank number one in J.D. Power's 2022 Customer Satisfaction Survey among live TV streaming providers. We believe this proves that consumers understand the value of an aggregated multi-channel streaming platform, and in particular, Fubo's differentiated sports-first offering. On the content front, it's becoming clear that we have more leverage than we expected due to the certain content drops that historically have had almost no impact on subscriber growth and retention. As we optimize our content portfolio through our first-party data, we plan to selectively carry content that will drive subscribers and leverage our increased scale. As a result, We expect to drive leverage on the subscriber-related expense line on a year-over-year basis going forward. Before John dives into our subscriber guidance, I wanted to give you added context. Fubo has always punched above its weight class. We recently increased prices of our U.S.-based plans by $5. Additionally, we priced up against the recently added Bally's RSNs from $11 to $14 to be able to offer these and all RSNs in our base plan and to the widest number of consumers. In aggregate, this is a major price up of $16 to $19, our biggest increase and the first time we raised prices in Q1, which is typically lighter on sports content. The price up and its timing, coupled with the World Cup cohort and typical Q1 seasonality, is why we are delivering a conservative sub-guide. That being said, we are still very excited about our growth prospects in 2023 and beyond. Following these moves in Q1, we have been very pleased with our early retention metrics and are monitoring closely. Excluding the estimated impact of the 2022 World Cup, we believe we will maintain double-digit subscriber growth in 2023. We also remain committed to super-serving sports fans, which is at the core of our brand DNA. FUBO is the home for local sports coverage as evidenced by our carriage of approximately 35 regional sports networks. Our RSN portfolio gives us leading coverage of baseball when, notably, a large virtual MVPD recently reduced their coverage significantly. Fubo now delivers at least one RSN to nearly every US subscriber and is the lowest cost streaming option for local teams. Fast channels are a growing component of our margin expansion strategy as it relates to the leverage in our subscriber related expenses. Fast channels help us achieve two goals. They provide a wide range of content, creating more fungibility and negotiating leverage with content partners. They also provide us with significantly more ad inventory relative to our current cable network deals. As a reminder, we do not have any inventory with broadcast networks. The 80 plus fast channels on our platform generated 5% of total ad revenue in 2022, significantly up from 1% in 2021. That's why we are working to improve discovery of our fast channels to deliver even more ad inventory. In general, our advertising business continues to outperform, growing 30% in Q4 on a year-over-year basis, despite a very difficult quarter that impacted the entire industry. Our largest advertisers from 2021 increased total spend with us in 2022 by 85%, and we added a record number of new brands. While we are excited about our success last year, we still have much to do. This includes improving our ad tech, integrating more data products, and packaging up our inventory. On the product front, Fubo has historically been first to market among virtual MVPDs with new features and capabilities, from 4K streams to multi-viewing. Our internally built tech stack has enabled us to be ahead of the innovation curve. We see AI and computer vision products as a natural evolution of our commitment to interactivity. In December 2021, we acquired a company called Edison.ai, anticipating the power of artificial intelligence and computer vision to evolve the consumer experience and augment our advertising capabilities. With this technology, we can programmatically understand what happens in each frame of a live stream in real time. We are now focused on building product features that can allow sports fans to lean forward and choose to engage on a per-play basis, not just on a per-game basis. Additionally, we can leverage this tech to reduce costs, maximize the value of our fast channels, introduce new ad products, and optimize subscriber growth. We currently have multiple patents pending with this technology. We're excited about the initial results of our new capabilities and will also continue to explore opportunities with certain cloud providers about implementation on a B2B basis. We look forward to sharing more on our progress in the quarters to come. And finally, the fourth quarter also marked the one-year anniversary of our Molotov acquisition. The acquisition has been a success, delivering strong growth of our rest of world streaming business, more than doubling subscribers and achieving meaningful revenue growth, all with a modest marketing budget. Molotov's freemium model has proven to be effective and efficient, something we continue to evaluate as we think about the future of our business. I could not be more excited for 2023. There are still more than 62 million traditional pay TV consumers here in the United States, and a disproportionate number of cable customers who are cutting the cord continue to choose Fubo over many of our competitors. In summary, we are very pleased with our record Q4 and full year 2022 results. We are continuing to prioritize profitable growth and remain confident of our mission to deliver a leading global live TV streaming platform differentiated by the greatest breadth of premium content and interactivity. I will now turn the call over to John Giannidis, CFO, to discuss our financial results in greater detail.