FuboTV Revenue, Subscribers Soar on Continued Pay-TV Erosion

FuboTV shares rose 11% Wednesday to close at $31.82 after Q2 revenue and subscriber numbers were well above projections. The virtual MVPD raised full-year revenue guidance by 15 percentage points at the midpoint to $560 million-$570 million, a 116% increase vs. 2020, and end-of-year subscriber count to 910,000-920,000, a 67% bump. Q3 revenue is estimated to be $140 million-$144 million, with an end-of-quarter subscriber count rising 79% to 810,000-820,000.

CEO David Gandler attributed Q2 results to consumers “choosing fuboTV over more expensive legacy pay TV services” and the service's “affordable price.” The cord-cutting trend, along with a heavy sports calendar, drove 91,291 net subscriber adds in the quarter, said the executive in the Q2 shareholder letter. Ad revenue grew 281% year-over-year to $16.5 million.

On a Tuesday earnings call, Gandler referenced fuboTV’s strategy on trends including the continued decline of traditional pay-TV, the shift of ad dollars to connected devices and online sports wagering. Revenue guidance didn’t include any contribution from its sports wagering business, which the company expects to launch in Q4.

Fubo Sportsbook will create an “interactive streaming platform” that goes beyond the current vMVPD model, Gandler said. Fubo Sportsbook has “gone pretty far with many of the regulators,” said Gandler, calling the potential market “pretty sizable.” He showed a preview of the betting feature using a companion mobile app with examples from test content from MLB and the South American Football Confederation, known as Conmebol; it owns exclusive streaming rights for Conmebol.

Other industry players’ recent moves to partner with gaming and media distribution companies confirm that the TV market is “moving towards interactivity,” said Gandler, saying Fubo Sportsbook will differentiate as the first integration of streaming and a sports wagering product.

FuboTV launched smart TV partnerships with LG and Vizio and is looking to grow the number of connected TV devices for its service. Some 94% of fuboTV viewers use connected devices, Gandler said: “The more connected devices or smart TVs that we are on, the better we will be able to monetize our offering.”

Despite his cord-cutting message, Gandler envisions a “major shift back to aggregation” as “the proliferation of [subscription] VOD services becomes increasingly burdensome and costly for consumers,” which would benefit vMVPDs. He cited “consumer fatigue” of having to manage numerous subscriptions and “disparate sources of content.” A unified, personalized and interactive streaming experience is key to capturing market share, he said. FuboTV added 396,000 net subscribers since Q2 2020 for 138% subscriber growth over the period. The overall vMVPD market had 31% growth over the same period, he said.

Wedbush analyst Michael Pachter maintained an “outperform” rating on fuboTV stock in a Wednesday investor note, saying the company “soared over its revenue and subscriber guidance in Q2.” Wedbush expects cord-cutting and cord-shaving to continue for the foreseeable future and thinks a “sizeable portion of the population will grow up as 'cord-nevers'” who prefer customizable bundles of content to predetermined MVPD programming.

FuboTV’s ability to offer “comprehensive entertainment and sports viewing is a real differentiator,” said Pachter, saying its focus on the sports viewer and bettor should accelerate subscriber growth. “As the company learns more about the viewing habits of its audience, it should be able to exploit its data set” to drive higher ad-based average revenue per user, he said.