fuboTV(FUBO) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Provides a comprehensive overview of the company's financial performance, condition, and related disclosures Item 1. Financial Statements Presents unaudited condensed consolidated financial statements and detailed notes on accounting policies, liquidity, and revenue Condensed Consolidated Balance Sheets Presents a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $1,361,955 | $1,369,778 | | Total Liabilities | $760,191 | $698,897 | | Total Stockholders' Equity | $600,134 | $670,881 | | Cash and cash equivalents | $272,671 | $374,294 | | Short-term investments | $100,000 | — | Condensed Consolidated Statements of Operations and Comprehensive Loss Details the company's revenues, operating expenses, and net loss over specific reporting periods | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $221,890 | $130,884 | $463,909 | $250,604 | | Operating Loss | $(112,525) | $(81,066) | $(247,766) | $(146,148) | | Net Loss | $(116,274) | $(94,930) | $(257,091) | $(165,116) | | Basic and Diluted EPS | $(0.63) | $(0.68) | $(1.50) | $(1.27) | Condensed Consolidated Statements of Changes in Stockholders' Equity Outlines the changes in common stock, additional paid-in capital, and accumulated deficit over time | Metric (in thousands) | December 31, 2021 | March 31, 2022 (Unaudited) | June 30, 2022 (Unaudited) | | :-------------------- | :---------------- | :------------------------- | :------------------------ | | Common Stock Amount | $16 | $18 | $19 | | Additional Paid-In Capital | $1,691,206 | $1,837,195 | $1,867,924 | | Accumulated Deficit | $(1,009,293) | $(1,137,335) | $(1,253,459) | | Total Stockholders' Equity | $670,881 | $686,522 | $600,134 | - Issuance of common stock/At-the-market offering, net of offering costs, contributed $203.8 million to additional paid-in capital and common stock for the period ended March 31, 2022[25] - Stock-based compensation added $19.4 million and $14.2 million to additional paid-in capital for the periods ended March 31, 2022, and June 30, 2022, respectively[25] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(217,832) | $(87,424) |\ | Net cash used in investing activities | $(107,166) | $(5,178) |\ | Net cash provided by financing activities | $224,401 | $368,525 |\ | Net increase (decrease) in cash, cash equivalents and restricted cash | $(100,597) | $275,923 | - Cash, cash equivalents and restricted cash at the end of the period decreased to $278.8 million in 2022 from $412.1 million in 2021[29] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 - Organization and Nature of Business Describes the company's history, primary live TV streaming business, and recent expansion into online sports wagering - Company's primary business: Live TV streaming platform for sports, news, and entertainment[33] - Main revenue sources: Subscription services and advertising in the United States[33] - Online Sportsbook launch: Launched in Iowa and Arizona in Q4 2021, with plans for additional states in 2022[35] Note 2 - Liquidity, Going Concern and Management Plans Addresses significant losses and negative cash flows, affirming sufficient liquidity for at least one year through current assets and equity sales | Metric | June 30, 2022 (in thousands) | | :------------------ | :--------------------------- | | Accumulated Deficit | $(1,300,000) | | Net Loss (6 months) | $(257,100) | - Net proceeds of approximately $220.2 million were received from sales of 29,843,580 shares of common stock during the six months ended June 30, 2022[39] - Current cash, cash equivalents, and short-term investments ($100.0 million maturing December 2022) provide necessary liquidity for at least one year[40] Note 3 - Summary of Significant Accounting Policies Outlines key accounting policies, including consolidation, estimates, cash, investments, segment reporting, and recent accounting standards - The Company has two operating segments: streaming and wagering[56] - Adopted ASU 2020-06 on January 1, 2022, using the modified retrospective method, which impacted the accounting for 2026 Convertible Notes by increasing liability and decreasing additional paid-in capital and accumulated deficit[67][69] | Metric (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $272,671 | $374,294 | | Restricted cash | $6,138 | $5,112 | | Total cash, cash equivalents and restricted cash | $278,809 | $379,406 | Note 4 – Acquisitions Details the December 2021 acquisition of Molotov S.A.S. for €101.7 million, primarily via common stock, and goodwill allocation - Acquired approximately 98.5% of Molotov S.A.S. on December 6, 2021[74] | Acquisition Metric | Amount (in millions) | | :----------------- | :------------------- | | Total Consideration | €101.7 / $115.0 | | Cash Paid | €14.4 / $16.3 | | Common Stock Issued | 5.7 shares / $98.8 | - Goodwill of $128.0 million was recorded and allocated to the streaming segment[79][80] Note 5 - Revenue from Contracts with Customers Disaggregates revenue by category and region, highlighting significant growth in subscription and advertising revenue | Revenue Category (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------ | :----------------------------- | :----------------------------- | | Subscription | $419,111 | $221,482 |\ | Advertising | $45,172 | $29,072 |\ | Wagering | $(483) | — |\ | Other | $109 | $50 |\ | Total Revenues | $463,909 | $250,604 | | Revenue by Region (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------- | :----------------------------- | :----------------------------- |\ | United States and Canada | $452,896 | $250,342 |\ | Rest of world | $11,387 | $212 | Note 6 – Property and equipment, net Itemizes property and equipment, net, including depreciation expense for the reporting periods | Property and Equipment (in thousands) | June 30, 2022 | | :------------------------------------ | :------------ | | Total property and equipment, net | $6,992 | - Depreciation expense for the six months ended June 30, 2022, was approximately $0.8 million, up from $0.3 million in the prior year[88] Note 7 – Intangible Assets and Goodwill Summarizes intangible assets and goodwill, including amortization and a $10.7 million impairment charge for the wagering segment | Intangible Assets (in thousands) | June 30, 2022 | | :------------------------------- | :------------ | | Customer relationships | $6,093 |\ | Trade names | $29,093 |\ | Software and technology | $149,981 |\ | Gaming licenses and market access fees | $13,517 |\ | Total Net Balance | $198,684 | - Amortization expense for intangible assets was approximately $21.0 million for the six months ended June 30, 2022, compared to $18.1 million in 2021[90] - A non-cash goodwill impairment charge of $10.7 million was recorded for the wagering segment during the three and six months ended June 30, 2022, due to changes in operating conditions[94][97] - The streaming segment's goodwill was $616.3 million as of June 30, 2022, with no impairment recorded[94][98] Note 8 – Accounts Payable, Accrued Expenses, and Other Liabilities Details the composition of accounts payable, accrued expenses, and other liabilities, with affiliate fees as the largest component | Liability Category (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Affiliate fees | $167,449 | $177,692 |\ | Broadcasting and transmission | $13,734 | $15,179 |\ | Selling and marketing | $14,077 | $17,750 |\ | Sales tax | $33,242 | $27,316 |\ | Total | $272,646 | $284,725 | Note 9 – Income Taxes Reports income tax benefits and effective tax rates, which are lower than statutory due to valuation allowances | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------ | :----------------------------- | :----------------------------- | | Income Tax Benefit | $0.8 million | $1.2 million |\ | Effective Tax Rate | 0.29% | 0.73% | - Effective tax rates were lower than the U.S. statutory rate of 21% due to valuation allowances against deferred tax assets for future tax benefits of losses[104] Note 10 – Notes Payable, Long-Term Borrowing, and Convertible Notes Details the company's debt structure, including $402.5 million in 2026 Convertible Notes and the impact of ASU 2020-06 | Debt Instrument (in thousands) | Principal Balance (June 30, 2022) | | :----------------------------- | :-------------------------------- |\ | 2026 Convertible Notes | $402,500 |\ | Note payable | $2,700 |\ | Bpi France | $2,139 |\ | Other | $30 |\ | Total | $407,369 | - The 2026 Convertible Notes bear interest at 3.25% per annum, maturing on February 15, 2026[109] - Adoption of ASU 2020-06 on January 1, 2022, reclassified $75.3 million of debt discount to long-term debt, eliminating non-cash interest expense for the previously separated equity component[111] - The fair value of the 2026 Convertible Notes was $123.6 million as of June 30, 2022[112] Note 11 – Segments Reports financial performance for two segments: streaming and wagering, with the latter commencing in Q4 2021 - The Company operates two reportable segments: streaming and wagering[117] | Segment Performance (in thousands) | Streaming (6 months ended June 30, 2022) | Wagering (6 months ended June 30, 2022) | | :--------------------------------- | :--------------------------------------- | :-------------------------------------- | | Revenue | $464,392 | $(483) |\ | Impairment of goodwill | — | $10,682 |\ | Loss before income taxes | $(184,049) | $(30,059) | | Total Assets by Segment (in thousands) | June 30, 2022 | | :------------------------------------- | :------------ | | Streaming | $1,296,311 |\ | Wagering | $65,644 | Note 12 – Fair Value Measurements Describes fair value measurements for assets and liabilities, including cash, investments, and warrant liabilities | Assets at Fair Value (in thousands) | June 30, 2022 | | :---------------------------------- | :------------ | | Cash and cash equivalents | $272,671 |\ | Short-term investments | $100,000 |\ | Total assets at fair value | $372,671 | - Warrant liabilities were $0 as of June 30, 2022, down from $3.5 million at December 31, 2021, due to redemption and changes in fair value[125][129] Note 13 – Stockholders' Equity Details changes in stockholders' equity, including equity offerings, warrant exercises, and stock-based compensation activity - Received net proceeds of approximately $220.2 million from sales of 29,843,580 shares of common stock through an At-the-Market Sales Agreement during the six months ended June 30, 2022[132] | Stock-Based Compensation Expense (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Total | $33,658 | $33,805 | - Unrecognized stock-based compensation related to unvested options totaled approximately $14.2 million as of June 30, 2022, to be recognized over 1.8 years[142] - Unrecognized stock-based compensation related to restricted stock units totaled $66.4 million as of June 30, 2022, with a weighted average remaining contractual term of 3.3 years[148] - Unrecognized stock-based compensation related to performance-based restricted stock units totaled $47.8 million as of June 30, 2022[151] Note 14 – Commitments and Contingencies Outlines lease obligations, contractual commitments, and legal contingencies, including ongoing class action lawsuits | Lease Obligations (in thousands) | June 30, 2022 | | :------------------------------- | :------------ | | Operating lease liabilities | $43,208 | | Future Payments (in thousands) | Total | | :----------------------------- | :---- | | Market Access Agreements | $11,139 |\ | Annual Sponsorship Agreements | $48,868 |\ | Sports Rights Agreements | $137,281 | - The Company is a defendant in two consolidated class action lawsuits alleging federal securities law violations, which it intends to vigorously defend[166][171] Note 15 – Subsequent events Reports post-period events, including a Maximum Effort agreement for content and new common stock sales agreements - Entered into a binding framework agreement with Maximum Effort Productions, Inc. on August 2, 2022, for a linear channel and original programming[173] - As part of the Maximum Effort agreement, the Company agreed to issue 2 million shares of common stock (valued at $10 million) and additional shares/warrants over two years[174][175] - Entered into a new sales agreement on August 4, 2022, to sell up to $350.0 million of common stock through sales agents[176] - Filed a shelf registration statement on Form S-3 on August 5, 2022, for up to $750.0 million in various securities[177][179] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition, operating results, future outlook, strategies, and macroeconomic impacts Overview Outlines fuboTV's strategy to acquire subscribers, enhance engagement, and monetize through streaming and wagering platforms - Business motto: 'come for the sports, stay for the entertainment'[181] - Core strategies include growing the paid subscriber base, optimizing engagement and retention, and increasing monetization[183] - Evaluating strategic opportunities for the wagering business to be capital efficient in a rapidly-evolving macroeconomic environment[182] Nature of Business Describes fuboTV as a leading live TV streaming platform, generating revenue from subscriptions and advertising, with recent wagering expansion - The Company is a leading live TV streaming platform for sports, news, and entertainment[187] - Revenues are almost entirely derived from subscription services and advertising sales in the United States[187] - Expanded into international markets including Canada, Spain, and France[187] - Launched Fubo Sportsbook in Iowa and Arizona in Q4 2021, with plans for additional states in 2022[189] Seasonality Explains significant seasonality with higher revenue and subscriber growth in Q3 and Q4, driven by sports leagues - Generates significantly higher levels of revenue and subscriber additions in the third and fourth quarters, primarily driven by sports leagues, specifically the National Football League[190] - Typically sees subscribers decline from the fourth quarter of the previous year through the first and second quarter of the following year[190] - Anticipates similar seasonal trends and user behavior for the recently launched Fubo Sportsbook[190] Segments Details the company's two reportable segments, streaming and wagering, with performance evaluated by the CEO - Operates through two operating and reportable segments: streaming and wagering[191] - The wagering business was launched in the fourth quarter of 2021[191] - Performance of each segment is evaluated based on revenue and adjusted operating expenses by the Chief Operating Decision Maker (CEO)[191] Components of Results of Operations Defines key revenue components (subscription, advertising, wagering) and operating expenses, including other income/expense - Revenue components include Subscription, Advertising, and Wagering[192][193][194] - Operating expenses include Subscriber related expenses, Broadcasting and transmission, Sales and marketing, Technology and development, General and administrative, Depreciation and amortization, and Impairment of goodwill[195][196][197][198][199][200][201] - Other income (expense) primarily consists of changes in fair value of financial instruments, interest expense, and amortization of debt discount[201] Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021 Analyzes financial performance for Q2 and H1 2022 vs. 2021, showing revenue growth alongside increased expenses and net losses Revenue Total revenues significantly increased due to subscriber growth, higher package prices, and advertising revenue from the Molotov acquisition | Revenue (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total Revenues | $221.9 | $130.9 | +$91.0 |\ | Subscription Revenue | | | +$85.6 |\ | Advertising Revenue | | | +$5.6 | | Revenue (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :------ | | Total Revenues | $463.9 | $250.6 | +$213.3 |\ | Subscription Revenue | | | +$197.6 |\ | Advertising Revenue | | | +$16.1 | - Subscription revenue increase was due to increases in subscriber base and subscription package prices[207] - Advertising revenue increase was partly due to the acquisition of Molotov S.A.S[206][207] Subscriber related expenses Subscriber-related expenses rose substantially due to higher affiliate distribution rights and increased subscriber base costs | Expense (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Subscriber related expenses | $218.9 | $120.5 | +$98.4 | | Expense (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :------ | | Subscriber related expenses | $464.6 | $233.8 | +$230.8 | - The increase was primarily due to higher affiliate distribution rights and other distribution costs resulting from an increase in subscribers[208][209] Broadcasting and transmission Broadcasting and transmission expenses increased due to additional channel launches and a growing subscriber base | Expense (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Broadcasting and transmission | $17.2 | $12.4 | +$4.8 | | Expense (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :------ | | Broadcasting and transmission | $37.5 | $22.9 | +$14.5 | - The increase was primarily due to higher linear feeds from additional channel launches and an increase in subscribers[210][211] Sales and marketing Sales and marketing expenses significantly increased due to higher customer acquisition costs, stock-based compensation, and payroll | Expense (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Sales and marketing | $30.8 | $21.5 | +$9.3 | | Expense (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :------ | | Sales and marketing | $77.0 | $43.7 | +$33.3 | - Key drivers for the increase include higher marketing expenses for customer acquisition in both streaming and wagering segments, increased stock-based compensation, and payroll expenses due to staff additions[212][213] Technology and development Technology and development expenses increased due to higher payroll, software, contractor costs, and acquisition-related expenses | Expense (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Technology and development | $20.9 | $20.0 | +$0.9 | | Expense (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :------ | | Technology and development | $42.3 | $31.4 | +$10.9 | - Increases were driven by higher payroll, software, and contractor expenses, and costs from the acquisitions of Edisn Inc. and Molotov, partially offset by a decrease in stock-based compensation[215][216] General and Administrative General and administrative expenses increased for the six-month period, driven by the Molotov acquisition and wagering segment costs | Expense (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | General and administrative | $27.4 | $28.3 | -$0.8 | | Expense (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :------ | | General and administrative | $59.7 | $46.4 | +$13.2 | - The six-month increase was primarily due to the Molotov acquisition, increased payroll, and player-related expenses in the wagering segment, partially offset by a decrease in stock-based compensation[218] Depreciation and amortization Depreciation and amortization expenses varied, influenced by customer list amortization and Molotov acquisition intangibles | Expense (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Depreciation and amortization | $8.5 | $9.2 | -$0.7 | | Expense (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Depreciation and amortization | $20.0 | $18.5 | +$1.5 | - The changes were primarily related to the full amortization of a customer list in the streaming segment, partially offset by an increase in amortization of intangible assets from the Molotov acquisition[219][220] Impairment of goodwill A $10.7 million non-cash goodwill impairment charge was recorded for the wagering segment due to operational changes - Recognized a non-cash goodwill impairment charge of $10.7 million for the wagering segment during the three and six months ended June 30, 2022[221] - The impairment was due to changes in operating conditions, including temporary delays of launches in new markets[221] - No impairment charge was recorded for the streaming segment, as its fair value was 101.7% of its carrying value[222] Other Income (Expense) Total other expense decreased due to reduced changes in warrant liabilities fair value and lower debt discount amortization | Other Income (Expense) (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | | Total other income (expense) | $(4.1) | $(14.6) | +$10.5 | | Other Income (Expense) (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | | Total other income (expense) | $(10.1) | $(20.2) | +$10.1 | - The decrease in other expense was primarily due to a reduction in the change in fair value of warrant liabilities and lower amortization of debt discount[223][224] Income tax benefit Income tax benefit decreased due to a reduced ability to recognize tax benefits from company losses | Income Tax Benefit (in millions) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change | | :------------------------------- | :--------------------------- | :--------------------------- | :----- | | Income tax benefit | $0.4 | $0.8 | -$0.4 | | Income Tax Benefit (in millions) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change | | :------------------------------- | :--------------------------- | :--------------------------- | :----- | | Income tax benefit | $0.8 | $1.2 | -$0.5 | - The decrease in income tax benefit was primarily due to a decline in the ability to recognize tax benefits related to losses[225][226] Key Metrics & Non-GAAP Measures Discusses key non-GAAP metrics like North America Paid Subscribers, ARPU, ACPU, and Adjusted Contribution Margin North America Paid Subscribers North America paid subscribers increased to 0.9 million as of June 30, 2022, reflecting user base growth | Metric | June 30, 2022 | June 30, 2021 | | :---------------------- | :------------ | :------------ | | North America Paid Subscribers | 0.9 million | 0.7 million | Non-GAAP North America Monthly Average Revenue Per User North America Monthly ARPU remained stable, showing a slight increase, indicating consistent revenue generation per subscriber | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP North America Monthly ARPU | $71.38 | $71.16 | Non-GAAP North America Monthly Average Cost Per User North America Monthly ACPU increased, reflecting higher variable expenses incurred per subscriber | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP North America Monthly ACPU | $70.91 | $66.32 | Non-GAAP North America Adjusted Contribution Margin North America Adjusted Contribution Margin significantly decreased, indicating reduced per-subscriber profitability | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Non-GAAP North America Adjusted Contribution Margin | 0.7% | 6.8% | Reconciliation of Certain GAAP to Non-GAAP Metrics Reconciles GAAP revenue and expenses to non-GAAP Platform Bookings, Variable COGS, and Adjusted Contribution Margin for transparency | Metric (in thousands) | Six Months Ended June 30, 2022 | | :------------------------------------ | :----------------------------- | | Non-GAAP North America Platform Bookings | $450,301 |\ | Non-GAAP North America Variable COGS | $447,370 |\ | Non-GAAP North America Adjusted Contribution Margin | 0.7% | Liquidity and Capital Resources Liquidity is supported by cash and investments, with ongoing capital raising through equity and debt offerings | Metric (in millions) | June 30, 2022 | | :------------------- | :------------ | | Cash, cash equivalents, and restricted cash | $278.8 |\ | Short-term investments | $100.0 | - Sold 29,843,580 shares of common stock in at-the-market offerings, generating approximately $220.2 million in net proceeds during the six months ended June 30, 2022[236] - Entered into a new sales agreement on August 4, 2022, to sell up to $350.0 million of common stock[237] - Filed an additional shelf registration statement on Form S-3 on August 5, 2022, for up to $750.0 million in various securities[237] Cash Flows Cash flow analysis reveals increased cash usage in operations and investing, offset by cash provided from financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(217,832) | $(87,424) |\ | Net cash used in investing activities | $(107,166) | $(5,178) |\ | Net cash provided by financing activities | $224,401 | $368,525 | - Net cash used in operating activities increased primarily due to a net loss of $257.1 million and cash outflows from changes in operating assets and liabilities[242] - Net cash used in investing activities increased significantly, primarily due to $100.0 million in purchases of short-term investments[244] - Net cash provided by financing activities was mainly from $220.2 million in net proceeds from at-the-market offerings[246] Off-Balance Sheet Arrangements The company reported no off-balance sheet arrangements as of June 30, 2022 - As of June 30, 2022, there were no off-balance sheet arrangements[248] Critical Accounting Policies and Estimates No material changes to critical accounting policies were reported, emphasizing judgment and estimates in financial reporting - No material changes to critical accounting policies from those disclosed in the Annual Report[250] - Preparation of financial statements requires management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenues, and expenses[249] Recently Issued Accounting Pronouncements Refers to Note 3 for recent accounting policies, with ongoing assessment of new pronouncements - Refer to Note 3 for a discussion of recent accounting policies[251] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses the company's exposure to interest rate and foreign currency risks and their potential financial impact Interest Rate Risk Interest rate risk is tied to cash and fixed-rate debt; a 10% rate change would not materially impact financials | Metric (in millions) | June 30, 2022 | | :------------------- | :------------ | | Cash, cash equivalents, and restricted cash | $278.8 |\ | Short-term investments | $100.0 |\ | Outstanding indebtedness | $410.0 | - Outstanding indebtedness bears interest at a fixed rate[253] - A hypothetical 10% change in interest rates would not have resulted in a material impact on consolidated financial statements as of June 30, 2022[253] Foreign Currency Risk Foreign currency risk is primarily with the euro; a 10% weakening would not materially affect revenue or operating income - Revenues denominated in currencies other than the U.S. dollar account for approximately 2.5% of consolidated revenue for the three and six months ended June 30, 2022[254] - Primary foreign currency risk is with the euro[254] - A hypothetical 10% weakening of the euro relative to the U.S. dollar would not materially affect revenue and operating income[254] Item 4. Controls and Procedures Details disclosure controls and procedures, affirming effectiveness and reporting no material changes in internal control Limitations on effectiveness of controls and procedures Controls provide reasonable, not absolute, assurance due to inherent limitations, resource constraints, and judgment - Controls and procedures provide only reasonable assurance, not absolute, due to inherent limitations[255] - Management applies judgment in evaluating the benefits of controls relative to their costs[255] Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures were deemed effective at a reasonable assurance level as of June 30, 2022 - Disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2022[257] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting were identified during the quarter - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2022[258] PART II - OTHER INFORMATION Presents additional information not covered in the financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings Details ongoing legal proceedings, including class action lawsuits, which management intends to vigorously defend - The Company is involved in two consolidated class action lawsuits (Said-Ibrahim v. fuboTV Inc. and Lee v. fuboTV, Inc.) alleging federal securities law violations[262][263][264][266] - Another lawsuit, Andrew Kriss and Eric Lerner vs. FaceBank Group, Inc. et. al., asserts claims for breach of contract, fraud, and other related issues[267] - Management believes the claims in all lawsuits are without merit and intends to vigorously defend them[266][267] Item 1A. Risk Factors Details numerous financial, operational, regulatory, and market-related risks that could adversely affect the company Risks Related to Our Financial Position and Capital Needs Highlights a history of operating losses, capital needs, seasonality, and substantial debt requiring significant cash flow - The Company has incurred operating losses since inception, with a net loss of $257.1 million for the six months ended June 30, 2022, and expects to incur future operating losses[270] - Additional capital may be required to support business growth, which might not be available on acceptable terms or could lead to significant shareholder dilution[271] - Revenue and gross profit are subject to seasonality, with significantly higher levels in the third and fourth quarters, making results difficult to predict[273] - As of June 30, 2022, the Company had $410.0 million of outstanding indebtedness, requiring significant cash flow for servicing[278][282] Risks Related to Our Relationships with Content Providers, Customers and Other Third Parties Addresses risks from content commitments, contract renewals, subscriber retention, parity obligations, and reliance on third-party cloud providers - Long-term content commitments with minimum license fees may adversely impact liquidity and results if subscriber acquisition and retention do not meet expectations[289] - Failure to renew long-term content contracts on sufficiently favorable terms could lead to increased costs or loss of content rights[292] - Inability to attract and retain subscribers due to unsatisfactory content, competitive services, or customer service issues could adversely affect the business[295][297] - Agreements with certain distribution partners may contain parity obligations, limiting the ability to pursue unique partnerships or offer differentiated products/services[298] - Reliance on Google Cloud Platform and Amazon Web Services for operations means any disruption or interference could adversely impact the business[314] Risks Related to Our Financial Reporting and Disclosure Covers risks from past internal control weaknesses, rapid growth management, financial system improvements, and key metric measurement challenges - Material weaknesses in internal control over financial reporting were identified in 2019 and 2020, though remediated as of December 31, 2021; future weaknesses could lead to loss of investor confidence[315][316] - Failure to effectively manage rapid growth could strain operational and financial infrastructure, impacting service levels and financial condition[286][318] - Key metrics and other estimates are subject to inherent measurement challenges; inaccuracies could harm reputation and business[320][322] - Preparing and forecasting financial results involves judgments and estimates that may differ materially from actual results, potentially causing stock price decline if guidance is not met[323][324] - Impairment in the carrying value of goodwill or long-lived assets could negatively affect operating results, as evidenced by the $10.7 million goodwill impairment charge for the wagering segment[325][326] Risks Related to Our Products and Technologies Addresses competitive TV streaming, wagering market access, operational risks like inaccurate odds, and reliance on third-party data - The TV streaming industry is highly competitive, with many large technology and entertainment companies, requiring continuous differentiation to attract and retain subscribers[327][332] - Future growth depends on the acceptance and growth of OTT advertising and platforms, and advertisers increasing their spend on such advertising[334][335][339] - Expansion into sports wagering subjects the business to evolving U.S. and foreign laws, which could limit expansion or impose restrictive regulations and taxes[342][343][344][346] - Participation in the sports wagering industry exposes the company to new risks, including trading, liability management, pricing risk, payment processing, palpable errors, and reliance on third-party sports data providers[348][350] - The success of the sports wagering business depends on gaining market access in states that legalize sports wagering and competing effectively in an intensely competitive market[352][353][362] - Failure of proprietary or third-party technology used in operations, including content delivery networks and data analytics systems, could adversely impact service and subscriber retention[364][365] Risks Related to Regulation Covers heavy gaming industry regulation, license risks, shareholder suitability, and impacts from changes in internet, payment, and tax laws - The gaming industry is heavily regulated, requiring the Company, its officers, directors, major shareholders, and business partners to obtain and maintain applicable licensure or approvals[371][372][374] - Gaming licenses can be revoked, suspended, or conditioned, potentially leading to cessation of product offerings in impacted jurisdictions[374] - Shareholders may be subject to suitability investigations by gaming authorities, and a finding of unsuitability could lead to redemption of shares[383][387] - Changes in government regulations relating to the Internet, user privacy, data protection, payment processing, and taxation could require alterations to business practices and incur greater operating expenses[388][389][391][392] - The Company is subject to taxation-related risks in multiple jurisdictions, including potential penalties for delinquent tax filings and impacts from changes in tax laws[393][394][395][396] - Social responsibility concerns and public opinion can significantly influence sports wagering regulation, potentially leading to new restrictions or prohibitions[397][398] Risks Related to Our Operations Addresses COVID-19 impacts, historical transaction defects, legal proceedings, international expansion challenges, and economic conditions - The COVID-19 pandemic and global containment efforts continue to create volatility, uncertainty, and economic disruption, impacting sports content availability, subscriber demand, and employee productivity[399][400] - Defects with certain historical corporate transactions that were not properly authorized or documented could lead to future claims or liabilities[401][402] - Legal proceedings, including class action lawsuits, can cause unforeseen expenses and divert significant management time and attention[403] - Failure to provide adequate levels of customer support could lead to subscriber loss and harm the business[404] - International expansion plans are subject to various economic, political, regulatory, and other risks, including differing legal requirements and competitive pressures[405][407] - Dependence on highly skilled key personnel means inability to attract, retain, and motivate qualified employees could harm business development and growth[410] - Worldwide economic conditions, including rising inflation, may adversely affect advertising spending and consumer spending on TV streaming and sports wagering platforms[411][412] - Strategic acquisitions and investments, such as Molotov and Edisn, involve risks related to integration, failure to realize anticipated benefits, and diversion of management's time[416] Risks Related to Privacy and Cybersecurity Covers extensive global privacy and cybersecurity regulations, compliance risks, and threats to data integrity and service reliability - Subject to numerous legal requirements and obligations regarding privacy, security, and data protection (e.g., CCPA, CPRA, VCDPA, GDPR), with potential for substantial fines and reputational harm for non-compliance[418][419][421][425] - Uncertainty regarding data transfer mechanisms (e.g., SCCs) for personal data from the UK/EEA to the US could affect service provision and financial results[423] - Computer systems and those of third parties are subject to cybersecurity threats, including cyber-attacks, which could result in service interruptions, data breaches, and theft of intellectual property[429][430][433] - Reliance on third-party cloud computing services and content delivery networks increases vulnerability to their technological or business-related disruptions and cybersecurity threats[431] Risks Related to Our Intellectual Property Addresses intellectual property infringement risks, the need for third-party licenses, and limitations from open-source software use - Risk of litigation regarding intellectual property rights, including claims of infringement or misappropriation, which could be costly and divert resources[436][437] - Inability to obtain necessary or desirable third-party technology licenses could impair the ability to develop platform enhancements[447] - Inability to obtain licenses for streaming content from suppliers or other rights holders on favorable terms could be costly and harm the business[438][440][441] - Inadequate protection of technology, trademarks, and other proprietary rights could diminish brand value and adversely affect the business[442][443] - Use of open-source software could impose limitations on the ability to commercialize the platform or require public release of source code[444][446] Risks Related to the 2026 Convertible Notes Highlights risks related to 2026 Convertible Notes, including cash settlement, repurchase obligations, and accounting impact on financials - The Company may not have the ability to raise funds necessary to settle conversions of the 2026 Convertible Notes in cash or to repurchase them upon a fundamental change, potentially leading to default[448][449] - The conditional conversion feature, if triggered, may adversely affect financial condition and operating results by requiring cash payments or reclassification of debt to current liability[450] - The accounting method for convertible debt securities (ASC 470-20 and ASU 2020-06) could materially affect reported financial results by increasing non-cash interest expense and impacting diluted earnings per share[451][453] - Provisions in the indenture for the 2026 Convertible Notes may deter or prevent a business combination favorable to shareholders[454] Risks Related to Ownership of our Common Stock Addresses stock price volatility, potential dilution from future sales, and impact of analyst coverage on market price - The market price of common stock is subject to wide price fluctuations due to variations in operating results, market expectations, competition, and technical trading factors[455] - If a substantial number of shares become available for sale and are sold in a short period of time by existing shareholders, the market price of common stock could decline[456] - Future sales and issuances of capital stock, including through shelf registration statements, could result in substantial dilution to existing shareholders[457][460] - If few securities or industry analysts publish research or reports, or if they publish adverse or misleading reports, the stock price and trading volume could decline[461] General Risk Factors Notes no cash dividends, investor reliance on stock appreciation, and potential inadequacy of insurance coverage - The Company has no plans to declare any cash dividends on its common stock in the foreseeable future, requiring investors to rely on stock price appreciation for gains[459] - Insurance coverage may not provide adequate levels of coverage against all claims, and any incurred loss could exceed policy limits[462] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities and no use of proceeds were reported[463] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[464] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable[465] Item 5. Other Information The Board approved the 2022 Employment Inducement Equity Incentive Plan, reserving 3.25 million shares for new employee awards - The Board approved the 2022 Employment Inducement Equity Incentive Plan on August 3, 2022, without shareholder approval, pursuant to NYSE Rule 303A.08[466] - An initial total of 3.25 million shares of common stock are reserved for issuance under the Inducement Plan[466] - Awards under the plan are intended as a material inducement for individuals entering employment or in connection with mergers/acquisitions[466] Item 6. Exhibits Lists all exhibits filed with the 10-Q report, including corporate agreements and certifications - The exhibits include various corporate documents such as the Agreement and Plan of Merger, Articles of Incorporation, Forms of Common Stock Certificate and Warrant, Indenture for Convertible Senior Notes, and certifications[468][471] SIGNATURES The report was signed by the Chief Executive Officer and Chief Financial Officer on August 8, 2022 - The report was signed by David Gandler, Chief Executive Officer, and John Janedis, Chief Financial Officer[476][477] - Date of signing: August 8, 2022[476][477]