fuboTV Inc. — FY2021 Form 10-K Summary
Business context and reporting period
fuboTV operates a sports-first live television streaming platform offering sports, news and entertainment content through subscription and advertising revenue. The company also launched its online sportsbook in Iowa in November 2021 and Arizona in December 2021. The filing covers the fiscal year ended December 31, 2021; it is an annual filing, not a standalone fourth-quarter filing.
During 2021, fuboTV acquired Vigtory, Edisn and approximately 99% of Molotov. The company reported streaming and online wagering as separate segments beginning in the third quarter, although online wagering revenue was immaterial for the year.
Key financial metrics
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Total revenue | $638.4 million | $217.7 million | +$420.6 million |
| Subscription revenue | $564.4 million | $184.3 million | +$380.1 million |
| Advertising revenue | $73.7 million | $24.9 million | +$48.8 million |
| Operating loss | $(359.4) million | $(479.9) million | Improved by $120.5 million |
| Net loss | $(383.0) million | $(599.4) million | Improved by $216.4 million |
| Net loss per share | $(2.78) | $(12.82) | Improved |
| Cash flow from operations | $(192.6) million | $(149.0) million | Outflow increased |
| Cash and cash equivalents | $374.3 million | $134.9 million | +$239.4 million |
| Total debt and borrowings, principal basis | $408.9 million | $27.4 million | Significant increase |
Operating expenses were $997.8 million, exceeding revenue by approximately $359.4 million. Direct subscriber-related and broadcasting costs totaled approximately $648.8 million, or about 101.6% of revenue, implying negative direct-cost contribution before sales, technology and corporate expenses. The reported operating margin was approximately negative 56.3% and the net margin was approximately negative 60.0%.
Non-GAAP monthly ARPU increased to $72.70 from $62.84, while monthly ACPU increased to $65.62 from $56.48. Adjusted contribution margin was approximately 9.7%, compared with 10.1% on the company’s pro forma comparable basis. Paid subscribers excluding Molotov increased to 1,129,807 from 547,880; including 185,626 Molotov subscribers, the reported December 31, 2021 subscriber count was 1,315,433. Content hours more than doubled to 1.16 billion from 544.9 million.
Cash used in investing activities was $76.2 million, including $22.9 million for acquisitions, $39.8 million for market-access and license-fee deposits, and $5.1 million of capital expenditures. Financing activities provided $512.0 million, principally from $389.4 million of net convertible-note proceeds and approximately $140.4 million from at-the-market common-stock sales.
Material changes versus the prior comparable period
- Revenue increased substantially, primarily reflecting a full year of fuboTV operations in 2021 versus nine months in 2020, subscriber growth, higher package prices and increased advertising impressions. Comparability is affected by the 2020 merger and the disposition of FaceBank AG and Nexway.
- Operating and net losses narrowed partly because 2020 included a $248.9 million impairment charge for legacy FaceBank intangible assets and goodwill. No comparable impairment was recorded in 2021.
- Subscriber-related expenses increased to $593.2 million from $204.2 million, and sales and marketing expense increased to $142.4 million from $63.1 million.
- Technology and development expense increased to $60.5 million, including higher staffing, stock-based compensation and costs associated with online wagering.
- The company issued $402.5 million principal amount of 3.25% convertible senior notes due 2026 and repaid its senior secured loan and Paycheck Protection Program loan.
- Common shares outstanding increased materially through Series AA preferred-stock conversions, acquisitions, at-the-market sales and warrant exercises. The company had 153.95 million common shares outstanding at December 31, 2021.
Guidance, outlook, risks and unusual items
The filing does not provide a clear numerical revenue, profitability or subscriber forecast. Management expects continued investment in subscriber acquisition, technology, international expansion, interactivity and sports wagering. Additional sportsbook launches during 2022 were subject to regulatory approvals.
- The company expects seasonal strength in the third and fourth quarters, driven principally by sports calendars and the NFL, with subscriber declines typically occurring during the first and second quarters.
- Management states that existing cash is expected to support operations for at least the next twelve months, but the company has incurred losses and negative operating cash flow since inception and may require additional capital.
- The $402.5 million convertible notes mature in 2026 and may require cash settlement upon conversion, repurchase or maturity. The company reported $316.4 million of carrying value after debt discount at year-end.
- A $5.1 million CAM Digital note, including accrued interest and penalties, was in default and under negotiation with the holders.
- Content agreements frequently include multi-year commitments and minimum guarantees. Accrued deferred royalties were $10.5 million, and future sponsorship commitments totaled $46.3 million.
- The company paid $44.2 million under sports-wagering market-access agreements during 2021 and had not generated material sportsbook revenue by year-end.
- Key risks include continuing losses, negative operating cash flow, dependence on costly content rights, intense streaming competition, seasonality, regulatory uncertainty around sports wagering, cybersecurity and privacy obligations, reliance on cloud providers, and possible dilution from future equity financing.
- The company disclosed a pending securities class action alleging misleading statements regarding subscription growth, profitability, seasonality, advertising, costs and sports wagering. It also disclosed unresolved patent-licensing discussions and a vendor contract dispute for which potential costs could be material but were not estimable.
- Material weaknesses in internal control over financial reporting identified for prior periods were reported as remediated as of December 31, 2021. Management and KPMG concluded that internal control over financial reporting was effective at year-end.
Most important facts for investors to verify
- Whether subscriber growth and higher ARPU can offset content, distribution and marketing costs, particularly during seasonally weaker periods.
- The company’s cash runway after recurring operating cash burn, minimum content and sponsorship commitments, market-access payments and debt service.
- Terms, conversion mechanics and potential cash-settlement requirements of the 2026 convertible notes, as well as the status of the defaulted CAM Digital note.
- Regulatory approvals, launch timing, user adoption, losses and capital requirements for Fubo Sportsbook.
- Whether the preliminary purchase-price allocation for Molotov changes materially and whether acquired goodwill or intangible assets require future impairment.
- Potential dilution from convertible notes, stock options, restricted stock units, warrants and future equity offerings.
- The status and potential financial exposure of the securities litigation, patent-licensing discussions and vendor dispute.
- Whether the remediation of prior internal-control weaknesses remains effective as the company integrates acquisitions and expands internationally.