fuboTV(US:FUBO)2024-08-06 13:04PART I - FINANCIAL INFORMATION Financial Statements This section presents fuboTV's unaudited condensed consolidated financial statements, detailing financial position, operational results, and cash flows as of June 30, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $155,189 | $245,278 | | Total current assets | $280,951 | $386,754 | | Total assets | $1,108,848 | $1,232,640 | | Total current liabilities | $464,964 | $517,345 | | Total liabilities | $854,617 | $948,815 | | Total shareholders' equity | $254,231 | $283,825 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $390,965 | $312,735 | $793,312 | $637,109 | | Operating loss | ($35,675) | ($52,515) | ($98,988) | ($133,975) | | Net loss | ($25,727) | ($49,950) | ($82,311) | ($133,574) | | Basic and diluted loss per share | ($0.08) | ($0.17) | ($0.27) | ($0.51) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($99,549) | ($149,299) | | Net cash used in investing activities | ($7,686) | ($8,671) | | Net cash provided by financing activities | $17,143 | $114,400 | - The company's primary business is a live TV streaming platform focused on sports, news, and entertainment, with revenues mainly from subscriptions and advertising in the U.S., Canada, Spain, and France27 - As of June 30, 2024, the company had a working capital deficit of $165.3 million and an accumulated deficit of $1.93 billion, but management believes its current cash of $161.3 million is sufficient for at least one year3033 - During the six months ended June 30, 2024, the company repurchased $27.1 million of its 2026 Convertible Notes for $15.0 million and raised approximately $36.9 million in net proceeds from its at-the-market (ATM) stock offering31 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses fuboTV's financial performance, highlighting revenue growth, improved gross margin, and reduced operating loss, while addressing competitive threats and liquidity - The company's business model is to "come for the sports, stay for the entertainment," leveraging live sports to acquire subscribers and then using technology to drive engagement and monetization through subscriptions and advertising146 - A key competitive threat is the announced sports streaming joint venture (Network JV) by Disney, Fox, and WBD, which Fubo has challenged with an antitrust lawsuit152 - The company's business is highly seasonal, with significantly higher revenue and subscriber additions in the third and fourth quarters due to major sports seasons156 Results of Operations Q2 2024 saw a 25% revenue increase, primarily from subscriptions, alongside rising subscriber-related expenses, but reduced broadcasting costs and higher legal fees Revenue Analysis (in millions) | Revenue Type | Q2 2024 | Q2 2023 | Change | Reason | | :--- | :--- | :--- | :--- | :--- | | Subscription | $362.9 | $289.0 | +$73.9 | $57.1M from subscriber growth, $16.8M from price/attachment increases | | Advertising | $26.3 | $23.1 | +$3.2 | Increase in impressions sold | - Subscriber related expenses increased by $55.5 million in Q2 2024 vs Q2 2023, driven by growth in the subscriber base and higher contractual rates for content172 - Broadcasting and transmission expenses decreased by $3.2 million in Q2 2024 vs Q2 2023, attributed to initiatives to optimize the company's cloud infrastructure173 - General and administrative expenses increased by $4.8 million in Q2 2024 vs Q2 2023, primarily due to a $5.3 million increase in legal fees177 - Other income increased by $11.8 million in Q2 2024 vs Q2 2023, mainly due to a $12.1 million gain on extinguishment of debt from repurchasing convertible notes at a discount180 Key Performance Metrics North American paid subscribers grew to 1.5 million and ARPU increased, while Gross Profit more than doubled to $49.3 million with Gross Margin improving to 12.6% Paid Subscribers (as of June 30) | Region | 2024 | 2023 | | :--- | :--- | :--- | | North America | 1.5 million | 1.2 million | | Rest of World | 0.4 million | 0.4 million | Monthly Average Revenue Per User (ARPU) | Region | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | North America | $85.69 | $81.62 | $85.10 | $79.11 | | Rest of World | $7.02 | $6.91 | $7.01 | $6.74 | Gross Profit and Gross Margin (GAAP) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $49.3 million | $23.5 million | $77.0 million | $26.7 million | | Gross Margin | 12.6% | 7.5% | 9.7% | 4.2% | Liquidity and Capital Resources As of June 30, 2024, fuboTV had $161.3 million in cash, with management asserting sufficient liquidity for the next twelve months through operations and financing activities - As of June 30, 2024, the company had cash, cash equivalents, and restricted cash of $161.3 million196 - During the first six months of 2024, the company sold 28,791,969 shares under its ATM Program, raising net proceeds of approximately $36.9 million195 - The company has been actively managing its debt, exchanging $205.8 million of 2026 Notes for new 2029 Notes and repurchasing $46.9 million of 2026 Notes194 - Management believes existing cash and cash equivalents will provide the necessary liquidity to continue as a going concern for at least the next twelve months199 Quantitative and Qualitative Disclosures About Market Risk The company's market risk from interest rate fluctuations and foreign currency exposure is deemed not material due to fixed-rate debt and limited non-U.S. dollar revenues - The company's indebtedness bears a fixed interest rate, so a hypothetical 10% change in interest rates would not have a material impact on its financial statements212 - Revenues denominated in foreign currencies accounted for only 2.1% of consolidated revenue for the six months ended June 30, 2024, making foreign currency risk not material213 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective214 - There were no material changes in the company's internal control over financial reporting during the quarter ended June 30, 2024215 PART II - OTHER INFORMATION Legal Proceedings This section details fuboTV's significant legal matters, including an antitrust lawsuit against Disney/Fox/WBD, a patent infringement case, and VPPA class actions - A shareholder class action lawsuit alleging false and misleading statements was dismissed with prejudice on April 19, 2024135220 - The company is defending against a patent infringement lawsuit filed by DISH Technologies, and has filed petitions for inter partes review of the asserted patents136137221 - On February 20, 2024, Fubo filed an antitrust lawsuit against The Walt Disney Company, Fox, and Warner Brothers Discovery to block their announced sports streaming joint venture, with a preliminary injunction hearing set for August 6, 2024141142225 - The company is a defendant in several putative class action complaints alleging violations of the Video Privacy Protection Act (VPPA) for sharing subscriber information without consent142228 Risk Factors This section outlines significant risks including operating losses, intense competition, the Disney/Fox/WBD joint venture, content reliance, cybersecurity threats, and privacy regulations Risks Related to Our Financial Position and Capital Needs The company faces risks from ongoing operating losses, potential capital needs, business seasonality, substantial debt obligations, and limitations on utilizing net operating loss carryforwards - The company has a history of operating losses ($82.2 million for the six months ended June 30, 2024) and may never achieve or maintain profitability232233 - The business may require additional capital for growth, but financing may not be available on acceptable terms, if at all234235236 - Revenue is subject to seasonality, with higher levels in Q3 and Q4 due to sports seasons like the NFL, making forecasting difficult238239 - As of June 30, 2024, the company had $350.1 million of outstanding indebtedness, and servicing this debt requires significant cash flow243247 Risks Related to Our Relationships with Content Providers, Customers and Other Third Parties Success depends on relationships with content providers and technology partners, with risks from fixed-cost content commitments, subscriber retention challenges, and reliance on cloud infrastructure - Long-term content commitments limit operating flexibility and could adversely affect liquidity if subscriber growth does not meet expectations251252 - The business could be adversely affected if it fails to attract and retain subscribers, especially as content providers shift popular sports programming to their own direct-to-consumer services258260 - The company relies on Google Cloud Platform (GCP) and Amazon Web Services (AWS) for its computing infrastructure, and any disruption or interference from these providers could harm the business283284 Risks Related to Our Products and Technologies and Competition The company faces intense competition, particularly from the proposed Disney/Fox/WBD sports joint venture, alongside risks from OTT advertising growth, technology failures, and AI adoption - The TV streaming industry is highly competitive, with rivals including large technology and entertainment companies (YouTube TV, Hulu Live) and TV manufacturers294295 - If the company's antitrust lawsuit to prevent the launch of the Disney/Fox/WBD sports joint venture (Network JV) is unsuccessful, the launch would likely materially and adversely affect the company, potentially threatening its solvency298299 - The company's growth depends on the continued acceptance and expansion of Over-The-Top (OTT) advertising, as many advertisers still devote substantial budgets to traditional media304305 - The business faces risks from the use of artificial intelligence (AI), including potential for incorrect outputs, increased regulatory scrutiny, and uncertain market acceptance322323 Risks Related to Privacy, Consumer Protection and Cybersecurity The company is subject to complex and evolving data privacy laws (CCPA/CPRA, VPPA, GDPR) and faces significant cybersecurity threats, including potential service interruptions and data breaches - The company is subject to numerous evolving privacy laws like California's CCPA/CPRA, the federal VPPA, and Europe's GDPR, which impose significant compliance costs and potential liabilities361363366 - The company's systems are subject to significant cybersecurity threats, including cyber-attacks, which could result in service loss, unauthorized data disclosure, or theft of intellectual property373376 - The company experienced a criminal cyber-attack on December 14, 2022, which caused a temporary service outage, highlighting its vulnerability to such incidents376 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported during the period - None reported for the period427 Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None reported427 Mine Safety Disclosures This item is not applicable to fuboTV's business operations - Not applicable427 Other Information On August 5, 2024, the Board adopted the 2024 Employment Inducement Equity Incentive Plan, reserving 3,000,000 shares for new hire awards - On August 5, 2024, the Board adopted the 2024 Employment Inducement Equity Incentive Plan, reserving 3,000,000 shares of common stock for new hire inducement awards427 Exhibits This section lists all exhibits filed with the Form 10-Q report, including corporate governance documents, debt indentures, and required certifications - The exhibits section lists documents filed with the report, including the newly adopted 2024 Employment Inducement Equity Incentive Plan and required CEO/CFO certifications428434