FuboTV Shares Plunge on Lower 2022 Subscriber, Revenue Guidance

Fubo’s late March price increase for its base package, to $69.99 a month, didn’t factor into its lower subscriber guidance for the year, said CEO David Gandler on a Thursday Q1 earnings call, citing seasonality instead. The $5 monthly increase should drive the bulk of fuboTV’s 2022 revenue growth, Wedbush analyst Michael Pachter wrote investors Friday.

Gandler said higher priced packages typically result in higher ad average revenue per user, with some of the more expensive packages delivering double-digit ad ARPU. Management maintained a long-term target for ad ARPU of $15-$20, “but with current trends likely keeping ad ARPU in the low-$8 range for another year, that target may be years away,” Pachter said. Ad ARPU declined 4.5% year over year.

FuboTV lowered its 2022 North America revenue guidance to $1.02 billion-$1.03 billion from $1.08 billion-$1.09 billion and bumped Rest of World revenue by $5 million to $20 million-$25 million, said the Q1 shareholder letter. The company clipped subscriber guidance to 1.46 million-1.48 million from 1.5 million-1.51 million. Chief Financial Officer John Janedis said the company needs to get to about 3 million subscribers to reach profitability. First quarter net loss doubled to $140.8 million from year earlier.

Q1 revenue was $242 million, up 102% on 81% increases in both subscribers, to 1.4 million, and ad revenue ($22.8 million), the company said. Churn improved by 49 basis points in the quarter. Shares touched a 52-week low at $2.87 Friday, before dropping 21% to close at $3.25.

The virtual MVPD is launching additional “upsell pathways” to drive attachment sales, such as the recently launched eight-channel News Plus add-on at $2.99 per month. Gandler said the strategy is boosting ARPU expansion. It’s also adding free ad-supported (FAST) channels to drive viewership to channels where it has more ad inventory. FAST channel programming allows fuboTV to “dilute the viewership on the platform of channels where we have less available ad inventory" and are a good way to lower content costs, Gandler said: “The typical deals are zero fees with 50-50 rev share." FuboTV plans to roll out 50-100 more FAST channels, Gandler said.

On whether its decision to drop Turner Sports had an impact on subscriber count during NCAA March Madness, Gandler said fubo showed last year it could continue to grow “in excess of the market without Turner.” He noted more content is better than less, and conversations will continue. “If the pricing is in line with our 2025 goal of hitting profitability, then there is a chance that we can always bring Turner back,” he said.

Market conditions affected advertiser demand, causing delays to fubo’s ad technology and the launch of header bidding solutions, Gandler said; it expects to launch header bidding at the end of Q2. The executive attributed delays to hiring challenges: “It’s been a little slower than we had anticipated.”

On the competitive landscape, Gandler said streaming and streaming plus services are heading into a “zero-sum game where there will be losers and there will be winners.” Fubo’s bundled platform is a way for “everybody to make money,” he said, citing a recent Nielsen survey saying 64% of respondents were unhappy that they couldn’t find content they were looking for. He compared that with a similar survey from four or five years ago on customers’ dissatisfaction with cable, saying, “It looks like we're coming full circle.”

Gandler believes virtual MVPDs will become “the gateways to television” by offering customers a way to create a “frictionless environment” where they can move in and out of programming from different media companies. He touted fubo’s brand and sports-focused platform, its content differentiation and feature differentiation from general entertainment vMVPDs such as YouTube TV and Sling.

Artificial intelligence technology fubo acquired allows the company to “really understand what's happening on screen,” Gandler said, referencing “very targeted ads, based on what you're seeing on screen.” FuboTV owns several patents for the technology and will continue to implement it, he said. He also noted fubo’s audience is “captive,” which will help the vMVPD “sell more and more goods” when it has the supporting infrastructure in place.

Commenting on fubo’s plans to leverage its FanView app experience with sponsorships or ads, Gandler said the company is looking at ways to integrate product experiences to create brand value since “sports fans like to participate with brands during events.” It’s trying to build out the right product set to ensure that "we're not … interfering with the viewing experience.”