Summary of the Conference Call for Fubo Group Company Overview - Fubo Group has been engaged in digital copyright protection since 2005, with nearly 20 years of experience in the field [3][4] - The company is a leader in global content security and monetization, particularly in online video protection and monetization [3][4] Core Business and Revenue Model - Fubo Group utilizes digital fingerprint technology and blockchain for copyright protection and monetization services, with 40% of revenue from copyright protection and 60% from monetization [4][5] - The company has undergone three development phases: 1. 2005-2017: Focused on copyright protection for major studios like Disney and Warner [9] 2. 2018-2023: Entered the UGC monetization phase [9] 3. 2023-Present: Adapting to AIGC (AI-generated content) developments [9] Market Expansion and Partnerships - Since its Hong Kong listing in 2018, Fubo Group has partnered with Ant Group to expand into the Chinese market and acquired Particle Technology in 2022 [4][6] - The company collaborates with major Chinese media platforms, focusing on content aggregation and rights management [6] Technological Innovations - Fubo Group is developing a MediaTwo architecture in collaboration with NVIDIA to integrate rights management and monetization capabilities into a video and audio generation ecosystem, expected to be launched in 2025 [4][10] - The company is addressing the challenges of copyright management in AI-generated content, focusing on effective rights confirmation and monetization [11][21] Future Growth Projections - The company anticipates a growth rate of approximately 25% in 2024, with significant product launches in 2025 [13][24] - Large-scale AI-related revenue is expected to materialize in 2026 [24] Industry Role and Compliance - Fubo Group acts as a technical advisor and partner for large content providers, ensuring compliance and tracking usage in the evolving landscape of AI-generated content [8][14] - The company is involved in ongoing litigation related to copyright issues, aiming to provide transparent data support for both content creators and AI model developers [16] AIGC Impact and Trends - AIGC is expected to disrupt traditional content production and distribution models, necessitating rapid integration of rights management and monetization systems [18][20] - The company is preparing for a shift from upfront licensing to a more decentralized revenue model based on performance [21] Operational Enhancements - Fubo Group is enhancing its operational capabilities to track and monetize content across fragmented distribution channels, including social media platforms [25][26] - The focus is on detailed data analysis and expanding monetization channels to adapt to the evolving content landscape [26] Conclusion - Fubo Group is strategically positioned to leverage its technological expertise and market partnerships to capitalize on the growing demand for digital rights management and monetization in the face of rapid industry changes driven by AI and user-generated content [4][11][24]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 3.50, representing a potential upside of 22.8% from the current price of HKD 2.85 [1][8][16]. Core Insights - The company has demonstrated strong growth, with total revenue increasing by approximately 29% year-on-year in the third quarter, and monthly recurring revenue (MRR) growing by 32% [3][12]. - The report highlights the increasing awareness of content copyright protection in the industry, which is expected to create growth opportunities for the company as it enhances its copyright management capabilities [4][13]. - The company showcased its watermark software integrated with AI-generated real-time video content at the CES 2025, indicating its innovative approach to copyright management and potential for new revenue-sharing models [6][14][15]. Financial Summary - The company’s main business revenue is projected to grow from HKD 2,001 million in FY2023 to HKD 3,624 million in FY2026, with a compound annual growth rate (CAGR) of approximately 19.8% [9][18]. - The report forecasts earnings per share (EPS) of HKD 0.04, HKD 0.06, and HKD 0.08 for FY2024, FY2025, and FY2026 respectively, with corresponding price-to-earnings (PE) ratios of 76, 50, and 36 [8][16]. - The gross profit margin is expected to remain stable around 41.5% to 41.6% over the forecast period [9][18].

Group 1 - Some Hong Kong Stock Connect targets experienced a decline, with Fubo Group falling by 25.75%, becoming a market focus [1] - TCL Electronics and Canggang Railway dropped by 8.40% and 6.16% respectively [1] - Other companies such as Jingji Financial International, COSCO Shipping Holdings, and Quan Feng Holdings saw declines exceeding 3% [1] Group 2 - Companies like Genting Hong Kong-B, Bilibili-W, Li Auto-W, Zhongsheng Holdings, Meizhong Jiahe, and Xpeng Motors all experienced declines of over 2% [1]

Investment Rating - The report assigns a "Buy" rating for the company, indicating an expectation of outperforming the market by over 20% [2][62]. Core Insights - The company, Fubo Group, is a leading global provider of digital asset and transaction services, focusing on copyright protection through proprietary technologies such as digital fingerprinting and watermarking. The company is actively expanding its capabilities in the AIGC (Artificial Intelligence Generated Content) sector, which is expected to drive future growth [6][15]. - Revenue projections for 2024-2026 are estimated at HKD 25.0 billion, HKD 31.4 billion, and HKD 39.6 billion, respectively, with corresponding year-on-year growth rates of 25.0%, 25.5%, and 26.0%. The company is expected to turn profitable in 2024, with net profits of HKD 0.7 billion, HKD 1.2 billion, and HKD 2.1 billion for the following years [6][56]. Summary by Sections Company Overview - Fubo Group is recognized as a global leader in digital content asset protection and transaction services, leveraging its patented technologies to safeguard digital content rights. In the first half of 2024, the company reported revenue of HKD 11.81 billion, a year-on-year increase of 17.1%, and an adjusted net profit of HKD 0.64 billion, up 10.7% [15][20]. Growth Drivers - The company is experiencing growth driven by both domestic and international markets. In the U.S. market, revenue grew by 30.2% year-on-year, accounting for 48.4% of total revenue, while domestic revenue increased by 8%, representing 51.2% of total revenue [7][32]. - The company has established strong relationships with 335 top global clients, including major Hollywood studios and digital rights platforms, ensuring a solid customer base [7][32]. Financial Projections - The financial outlook for Fubo Group indicates a robust growth trajectory, with expected revenues of HKD 2.5 billion in 2024, HKD 3.1 billion in 2025, and HKD 4.0 billion in 2026. The company anticipates a gross margin improvement to 45.0% by 2026 [9][60]. - The report highlights a significant increase in subscription service revenue, projected to reach HKD 1.04 billion in 2024, with a year-on-year growth rate of 20.1% [56][60]. AIGC Sector Expansion - Fubo Group is positioning itself to capitalize on the AIGC sector, which is expected to reshape content generation and distribution. The company aims to provide solutions that mitigate copyright disputes and enhance revenue opportunities for content creators [51][55]. - The report emphasizes the importance of clear copyright ownership and revenue-sharing mechanisms to support the sustainable growth of AIGC [55][56].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company reported a significant revenue growth of approximately 29% year-on-year for Q3 2024, with domestic revenue increasing by about 27% in RMB terms and overseas revenue growth around 30% [2] - The company has been actively involved in the evolving landscape of copyright protection and AI, with recent lawsuits in the AI sector potentially increasing the demand for its services as a third-party provider [2] - The company is exploring opportunities in digital content rights and asset protection in line with the trends of Web3.0 and AI, aiming to enhance operational efficiency and reduce customer acquisition costs through platform upgrades [3] - The company executed a share buyback of 875,000 shares for a total of HKD 1.9763 million, reflecting management's confidence in the company's future [3] Financial Projections - The company's net profit forecasts for 2024-2026 have been revised upwards to HKD 737.9 million, HKD 1.2538 billion, and HKD 2.3078 billion respectively, indicating strong growth potential [4] - The current stock price corresponds to price-to-sales (P/S) ratios of 3.5, 2.7, and 2.1 for 2024-2026, suggesting a favorable valuation outlook [4]

Financial Data and Key Metrics Changes - In 2023, the company's total revenue reached HKD 2 billion, with a gross margin of 42.5% [10] - For the first half of 2024, total revenue was HKD 1.18 billion, representing an 18% year-on-year growth, with subscription revenue at HKD 550 million and value-added revenue at HKD 164 million [10] - The net profit for the first half of 2024 was HKD 46.32 million, a 37% increase year-on-year [11] Business Line Data and Key Metrics Changes - The company has shifted its focus to content monetization since 2019, with this segment's revenue rapidly increasing to 60% of total revenue [4] - The company has maintained a customer retention rate of over 98% and achieved a compound annual growth rate of over 70% in revenue from 2021 to 2023 [10][21] Market Data and Key Metrics Changes - The Chinese capital market has shown a significant rebound, with the Hong Kong market outperforming the A-share market in terms of fundamental recovery and valuation changes [2] - The SaaS sector within the Hong Kong market has substantial potential for valuation recovery and expansion, particularly as valuations in the U.S. market have rebounded to 10-15 times price-to-sales ratios [2] Company Strategy and Development Direction - The company emphasizes a strategy of "foresight and implementation," focusing on AI applications and digital watermark technology since 2021 [5][23] - Future plans include strengthening AI-driven capabilities in copyright management and expanding market share in China through mergers and partnerships [5][30] Management's Comments on Operating Environment and Future Outlook - Management believes the current capital market environment presents both challenges and opportunities, with a strong fundamental performance that continues to attract investor interest [6] - The company is confident in its ability to maintain growth and will share further developments and strategies in future communications [6] Other Important Information - The company has established a Florida AI R&D center to enhance its capabilities in VIP content copyright management [5] - The company has formed strategic partnerships with major players like Ant Group to develop blockchain-based platforms for content rights management [5][12] Q&A Session Summary Question: What are the reasons for the rebound in the Chinese capital market and how is the Hong Kong market performing? - The Chinese capital market has rebounded significantly due to previous pressures on both the numerator and denominator, with the Hong Kong market showing better performance in fundamental recovery and valuation changes compared to the A-share market [2] Question: What is the business model and core competitiveness of the company? - The company is a leading provider of data asset protection and monetization services, focusing on helping content owners collect evidence of infringement and recover revenue from unauthorized use [3] Question: What are the company's future development directions? - The company will continue to enhance its capabilities in AI-driven information management and expand its market share in China through mergers and partnerships [5] Question: How does the company view the current capital market environment's impact on its operations? - The current capital market environment has some impact, but the company's fundamentals remain strong, and management is confident about future growth [6] Question: What are the company's key financial highlights? - The company has maintained a strong financial performance with a revenue model based on SaaS services, achieving significant growth and maintaining a high customer retention rate [21] Question: How does the company balance deepening existing customer relationships with expanding into new content areas? - The company focuses on large clients while gradually expanding into new categories, ensuring a balance between deepening existing relationships and exploring new opportunities [28]

Summary of Conference Call Notes Industry Overview - The capital market in China has shown a significant rebound, particularly in the Hong Kong stock market, due to previously suppressed factors on both the numerator and denominator sides [1] Key Insights - The degree of suppression in the capital market was notably high in the past, leading to a more substantial recovery now [1] - The fundamental recovery in the Hong Kong market is expected to be more pronounced compared to the A-share market, driven by changes in both fundamentals and material factors [1] Additional Important Points - The analysis indicates that the current market dynamics in Hong Kong may present more investment opportunities compared to A-shares, suggesting a potential shift in investor focus [1]

Financial Performance - Total revenue reached HKD 1,181 million, a 17.7% increase from HKD 1,003 million in the first half of 2023[6] - Subscription service revenue was HKD 545 million, up 16.8% from HKD 467 million in the first half of 2023, accounting for 46.2% of total revenue; value-added service revenue was HKD 635 million, an 18.5% increase from HKD 536 million, making up 53.8% of total revenue[6] - Revenue from the China business segment was HKD 605 million, an 8.0% increase from HKD 560 million in the first half of 2023; revenue from the US and other regions was HKD 576 million, a 30.1% increase from HKD 443 million[6] - Gross profit was HKD 504 million, a 28.3% increase from HKD 393 million in the first half of 2023, with a gross margin of 42.7%, up approximately 3.5 percentage points[6] - Net profit was HKD 46 million, a 36.5% increase from HKD 34 million in the first half of 2023[6] - Adjusted net profit was HKD 64 million, a 10.7% increase from HKD 58 million in the first half of 2023[6] - Adjusted EBITDA was HKD 196 million, an 8.3% increase from HKD 181 million in the first half of 2023[6] Strategic Focus - The company is focusing on high-quality development and sustainable growth, leveraging its strengths in copyright protection and monetization services to capitalize on opportunities in the AIGC sector[7] - The strategic layout emphasizes the importance of clear copyright ownership and benefit distribution mechanisms to support the sustainable development of AIGC[8] - The company aims to become a key builder of ecological balance between content copyright holders and AI technology companies, facilitating large-scale applications of technology through innovation and business upgrades[8] - The company is focusing on the AIGC era, enhancing its copyright services to benefit both content copyright holders and AI technology companies[9] - The company is actively participating in the construction of regional copyright ecosystems, playing a significant role in multiple digital infrastructure projects in mainland China and Hong Kong[11] Research and Development - The company has established a research and development center in Florida, which has been operational for three years, achieving key advancements in content rights confirmation and watermark technology[9] - The company is enhancing its watermark technology solutions and is fully prepared for commercial application, aiming to integrate this technology into existing streaming workflows[17] - Research and development expenses for the six months ended June 30, 2024, were approximately HKD 143 million, an increase of about HKD 48 million or 50% compared to the same period in 2023[28] Market Expansion - The company is expanding its service capabilities to include more copyright categories, with a continuous increase in customer numbers and content library penetration[13] - The company is actively expanding its digital content services in key business regions, particularly in the Greater Bay Area, to enhance its market presence[16] Financial Position - Total assets as of June 30, 2024, were approximately HKD 3,721 million, an increase from HKD 3,506 million as of December 31, 2023[32] - The company's cash and cash equivalents totaled approximately HKD 317 million, with current assets of about HKD 1,717 million and current liabilities of approximately HKD 944 million, resulting in a current ratio of 1.8[36] - The company's capital debt ratio as of June 30, 2024, was 21%, an increase from 18% as of December 31, 2023[40] - The company reported a total comprehensive income of HKD 7,055 for the period, compared to a loss of HKD 35,187 in the same period last year[88] Shareholder Information - The total number of shares available for issuance under the post-IPO stock option plan is 149,120,000 shares, accounting for 6.56% of the company's issued share capital as of the report date[60] - The group has three current share plans, including pre-IPO and post-IPO share option plans, and a share award plan[48] - The total number of share options and awards available for grant under the plans as of January 1 and June 30, 2024, was 154,975,020 shares[48] - The company has set operational milestones for stock options, with a market capitalization of at least USD 10 billion and achieving at least nine operational milestones to vest a total of 112,000,000 stock options[64] Governance and Compliance - The board of directors believes that the current governance structure, with the roles of chairman and CEO held by the same individual, ensures effective decision-making and strategic planning[43] - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited interim results for the six months ended June 30, 2024[45] - The unaudited interim financial statements were approved and authorized for publication by the board on August 30, 2024[129] Employee and Salary Information - The group generated total salary costs of approximately HKD 125 million for the six months ended June 30, 2024, compared to HKD 120 million for the same period in 2023, reflecting a 4.17% increase[47] - The group employed a total of 566 employees as of June 30, 2024, down from 578 employees as of December 31, 2023[47] - The total salary costs for the group reflect ongoing reviews based on market terms and individual employee performance[47] Risk Management - The company is actively monitoring foreign exchange risks, particularly with USD and RMB, to mitigate the impact of currency fluctuations[39]

Investment Rating - The report maintains a "Buy" rating for the company, citing its technological barriers in the copyright protection sector [1][2] Core Views - The company achieved H1 2024 revenue of HKD 1,181 million, a 17.7% YoY increase, with gross profit rising 28.3% to HKD 504 million and gross margin improving by 3.5 percentage points to 42.7% [1] - Subscription business revenue grew 16.8% to HKD 545 million, while value-added services revenue increased 18.5% to HKD 635 million [1] - Overseas revenue reached HKD 576 million, with the US market contributing HKD 572 million, a 30.0% YoY growth, while mainland China revenue grew 8.0% to HKD 605 million [1] - The company is expanding its AIGC service capabilities through collaborations with leading universities and technology companies, developing watermarking solutions, and enhancing content recognition and rights confirmation technologies [1] Business Development - Domestic business expansion includes partnerships with China Media Group for copyright protection and trading platforms, collaboration with Ant Group for copyright ecosystem development, and cooperation with China Film Press for film asset aggregation [1] - International cultural expansion efforts include partnerships with Mango TV for overseas platform coverage, collaborations with provincial TV stations for content distribution, and the creation of an AIGC cloud platform with China Mobile [1] - Customer base grew to 227 content clients and 139 platform clients, with managed assets reaching 3.43 million on social media platforms and 2.57 million hours on video platforms [1] Financial Performance - 2024-2026 revenue forecasts are adjusted to HKD 2,500 million, HKD 2,991 million, and HKD 3,417 million respectively, with net profit projections of HKD 74 million, HKD 115 million, and HKD 153 million [1][7] - The company's P/S ratio is expected to decline from 2.4 in 2022 to 1.0 in 2026 [2] - Total assets are projected to grow from HKD 3,506 million in 2023 to HKD 4,159 million in 2026, with shareholder equity increasing from HKD 2,140 million to HKD 2,542 million over the same period [7] Market Data - The company has a total market capitalization of HKD 3.477 billion with 2.272 billion shares outstanding [4] - The stock price has shown significant volatility, with a 52-week range of HKD 1.12 to HKD 2.68 [4] - Recent performance shows a 23.4% 1-month return and a -28.5% 1-year return [5]

Investment Rating - The report maintains a "Buy" rating for the company [3]. Core Insights - The company reported a revenue of HKD 1.181 billion for H1 2024, representing a year-on-year increase of 17.74%. The gross margin improved by 3.53 percentage points to 42.70% [1]. - Adjusted net profit for H1 2024 was HKD 64 million, up 10.67% year-on-year, with an adjusted net profit margin of 5.44% [1]. - The adjusted EBITDA for H1 2024 reached HKD 196 million, reflecting an 8.26% increase year-on-year, with an adjusted EBITDA margin of 16.63% [1]. Subscription Business - Subscription revenue for H1 2024 was HKD 545 million, a year-on-year increase of 16.8%, accounting for 46.2% of total revenue [1]. - The company expanded its subscription service capabilities across various copyright categories, leading to a steady increase in customer numbers and content library penetration [1]. Value-Added Business - Value-added business revenue reached HKD 635 million in H1 2024, up 18.5% year-on-year, making up 53.8% of total revenue [1]. - The company enhanced monetization capabilities through diverse revenue-sharing models and deepened partnerships with major social media platforms [1]. Market Performance - Revenue from the Chinese market was HKD 605 million, growing approximately 8.0% year-on-year, representing about 51.2% of total revenue [1]. - In the U.S. market, revenue was HKD 572 million, a year-on-year increase of 30.0%, accounting for approximately 48.4% of total revenue [1]. Financial Forecast - The company has adjusted its revenue forecasts for 2024-2026 to HKD 25.10 billion, HKD 33.80 billion, and HKD 44.00 billion, respectively, with corresponding price-to-sales ratios of 1.4, 1.0, and 0.8 [1][2].