FUBO TV – Post Earnings Results Analysis
Well, the earnings came out and a lot of people jumped on the EPS miss with a wider than expected loss in Q4. Some of the highlights were:
- Total revenue was up 83% YoY to $268.8 million
- Advertising revenue grew 133% YoY to $29.0 million
- Subscription revenue increased 73% YoY to $230.7 million
- Adjusted Contribution Margin was positive 10.1%1 , up from negative 3.1% in 2019
- fuboTV reached 547,880 subscribers, up 73% YoY
- Notably in 2H 2020, fuboTV grew by 261,754 net subscriber additions
- Average Revenue Per User (ARPU) per month increased 17% YoY to $62.84
- Annualized ARPU increased $109 to $754
- Total content hours streamed grew 82% YoY to 544.9 million hours
- Customers streamed 7.2 hours per day, up 11.8% YoY
Like I mentioned before, the key data everyone was looking for this quarter is not the earnings, but the growth in their subscriber base which is slightly higher than expected. The EPS should not be a factor at this time because of two outliers:
- The total share float taken into account based on GAAP rules is actually lower than the actual number – which means the “per share” number is elevated
- Acquisitions – with the move to incorporate synergies between live sports and online gaming, they acquired Balto Sports, which offers fantasy sports betting platform and then Vigtory. Both of these moves were expected to lead to a higher cash burn and lower EPS, but this should be considered an ‘investment’ rather than a spend.
Now the most important metric I was looking for was the growth in subscriber base and this number (which I had projected at 72%) is slightly higher at 73%
|Ticker||Market Cap||Subscribers (estimated)||Market Cap /Subscriber||Subscription Growth rate|
The other non-GAAP metric that I always look for is the Adjusted Contribution Margin – this is the difference between the Average Revenue per user (ARPU) and the Average Cost per User (ACPU). The ARPU has gone up to about $62.7/month which is a 17% increase. So how does a user paying $39.99/month on a subscription contribute an additional 50% revenue on top of that? This is where the Ad revenues come into play, and the higher the subscription base, the higher the propensity to increase ARPU without significantly adding to per-user cost.
Some volatility is to be expected as this business is still in the early stages of maturity, but savvy investors who can use this as an opportunity to initiate or add to their position should see returns similar to ROKU over a one year timeframe.