fuboTV(FUBO) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents fuboTV Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with detailed notes for Q1 2022 and FY2021 Condensed Consolidated Balance Sheets The balance sheets detail the company's financial position, including assets, liabilities, and equity, for Q1 2022 and FY2021 Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (QoQ) | | :-------------------------------- | :------------------------------ | :------------------------------- | :----------- | | ASSETS | | | | | Cash and cash equivalents | $450,922 | $374,294 | +$76,628 | | Total current assets | $520,595 | $428,505 | +$92,090 | | Total assets | $1,455,760 | $1,369,778 | +$85,982 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Total current liabilities | $327,555 | $337,297 | -$9,742 | | Convertible notes, net of discount | $392,217 | $316,354 | +$75,863 | | Total liabilities | $767,513 | $698,897 | +$68,616 | | Total stockholders' equity | $686,522 | $670,881 | +$15,641 | Condensed Consolidated Statements of Operations The statements of operations detail revenues, operating expenses, and net loss for Q1 2022 and Q1 2021, showing significant changes Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | Change (YoY) | | :---------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Total revenues | $242,019 | $119,720 | +$122,299 | | Subscription revenue | $219,168 | $107,114 | +$112,054 | | Advertising revenue | $23,152 | $12,606 | +$10,546 | | Wagering revenue | $(301) | $- | -$301 | | Total operating expenses | $377,260 | $184,802 | +$192,458 | | Operating loss | $(135,241) | $(65,082) | -$70,159 | | Net loss attributable to common stockholders | $(140,724) | $(70,110) | -$70,614 | | Basic and diluted net loss per share | $(0.89) | $(0.59) | -$0.30 | Condensed Consolidated Statements of Changes in Stockholders' Equity This statement outlines changes in stockholders' equity for Q1 2022 and Q1 2021, reflecting issuances, reclassifications, and net loss Changes in Stockholders' Equity (Q1 2022) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :---------------------------- | :----------------------------- | | Common Stock (Shares) | 182,677,189 | 153,950,895 | | Common Stock (Amount) | $18 | $16 | | Additional Paid-In Capital | $1,837,195 | $1,691,206 | | Accumulated Deficit | $(1,137,335) | $(1,009,293) | | Total Stockholders' Equity | $686,522 | $670,881 | - Issuance of common stock from at-the-market offering contributed $203,796 thousand to additional paid-in capital[26] - Reclassification of 2026 Convertible Notes equity components to liability upon ASU 2020-06 adoption resulted in a decrease of $87,946 thousand in Additional Paid-In Capital and an increase of $12,682 thousand in Accumulated Deficit[26] - Stock-based compensation recognized was $19,449 thousand[26] Condensed Consolidated Statements of Cash Flows The cash flow statements present cash generated from or used in operating, investing, and financing activities for Q1 2022 and Q1 2021 Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :---------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(126,685) | $(53,867) | | Net cash used in investing activities | $(5,895) | $(2,379) | | Net cash provided by financing activities | $209,208 | $384,960 | | Net increase in cash, cash equivalents and restricted cash | $76,628 | $328,714 | | Cash, cash equivalents and restricted cash at end of period | $456,034 | $464,935 | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations for the financial statements, covering policies, liquidity, acquisitions, revenue, and debt Note 1 - Organization and Nature of Business fuboTV Inc. is a Florida corporation focused on a technology-driven live TV streaming platform for sports, news, and entertainment, with revenues primarily from subscriptions and advertising in the U.S. The company expanded into online sports wagering in Iowa and Arizona in 2021 and plans further expansion - fuboTV Inc. offers a leading live TV streaming platform for sports, news, and entertainment[33] - Revenues are almost entirely derived from subscription services and advertising sales in the United States[33] - The company launched a business-to-consumer online sports wagering business ('Online Sportsbook') in Iowa and Arizona during 2021, with plans for additional states in 2022 and 2023[35] Note 2 - Liquidity, Going Concern and Management Plans The company has an accumulated deficit and incurred a significant net loss for Q1 2022, but its current cash and cash equivalents, supplemented by recent equity financing, provide sufficient liquidity to continue as a going concern for at least one year Liquidity and Financial Position | Metric | Amount (as of March 31, 2022) | | :---------------------- | :---------------------------- | | Cash and cash equivalents | $450.9 million | | Working capital | $193.0 million | | Accumulated deficit | $1,137.3 million | | Net loss (Q1 2022) | $140.8 million | - Received net proceeds of approximately $203.8 million from sales of 27,443,580 shares of common stock through an At-The-Market Sales Agreement during Q1 2022[38] - Current cash and cash equivalents provide necessary liquidity for at least one year[40] Note 3 - Summary of Significant Accounting Policies This note outlines the company's significant accounting policies, including principles of consolidation, use of estimates, and segment reporting, highlighting the adoption of ASU 2020-06 - The company has two operating segments: streaming and wagering[46] - Adopted ASU 2020-06 on January 1, 2022, using the modified retrospective method, simplifying accounting for convertible instruments[56] Impact of ASU 2020-06 Adoption (in thousands) | Balance Sheet Item | December 31, 2021 (As Reported) | ASU 2020-06 Adjustments | January 1, 2022 (As Adjusted) | | :-------------------------- | :------------------------------ | :---------------------- | :---------------------------- | | 2026 Convertible Notes | $316,354 | $75,264 | $391,618 | | Additional paid-in capital | $1,691,206 | $(87,946) | $1,603,260 | | Accumulated deficit | $(1,009,293) | $12,682 | $(996,611) | Note 4 – Acquisitions The company acquired approximately 98.5% of Molotov S.A.S, a French TV streaming platform, for €101.7 million ($115.0 million) in December 2021, with preliminary purchase price allocation adjustments recorded in Q1 2022 - Acquired approximately 98.5% of Molotov S.A.S, a French TV streaming platform, on December 6, 2021[62] - Total consideration for Molotov Acquisition was €101.7 million or $115.0 million, paid in cash ($16.3 million) and common stock ($98.8 million)[62] Molotov Acquisition: Assets Acquired | Assets Acquired (in thousands) | Amount | | :----------------------------- | :----- | | Cash | $818 | | Intangible assets | $18,429 | | Goodwill | $127,971 | Molotov Acquisition: Liabilities Assumed | Liabilities Assumed (in thousands) | Amount | | :--------------------------------- | :----- | | Accounts payable | $15,724 | | Accrued expenses and other current liabilities | $21,628 | Note 5 - Revenue from Contracts with Customers The company's total revenue for Q1 2022 was $242.0 million, primarily from subscriptions ($219.2 million) and advertising ($23.2 million), with a negative wagering revenue of $(0.3) million Disaggregated Revenue | Revenue Type | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------- | :--------------------------------------------- | :--------------------------------------------- | | Subscriptions | $219,168 | $107,114 | | Advertising | $23,152 | $12,606 | | Wagering | $(301) | $- | | Total revenue | $242,019 | $119,720 | Subscription and Advertising Revenue by Region | Revenue by Region | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | | United States and Canada | $236,774 | $119,617 | | Rest of world | $5,546 | $103 | - Contract liabilities (deferred revenue) totaled $43.0 million as of March 31, 2022, a decrease from $44.3 million at December 31, 2021[74] Note 6 - Property and equipment, net Property and equipment, net, increased to $7.3 million as of March 31, 2022, from $6.8 million at December 31, 2021, with depreciation expense totaling $0.4 million for Q1 2022 Property and Equipment, Net | Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------ | :---------------------------- | :----------------------------- | | Total property and equipment, net | $7,253 | $6,817 | - Depreciation expense for the three months ended March 31, 2022, was $0.4 million, up from $0.1 million in the prior year[76] Note 7 - Intangible Assets and Goodwill Net intangible assets decreased to $207.8 million as of March 31, 2022, from $218.2 million at December 31, 2021, with amortization expense of $12.1 million for Q1 2022, and goodwill slightly decreased to $627.6 million Intangible Assets, Net | Intangible Asset | March 31, 2022 (Net Balance in thousands) | December 31, 2021 (Net Balance in thousands) | | :-------------------------------- | :---------------------------------------- | :----------------------------------------- | | Customer relationships | $7,610 | $11,860 | | Tradenames | $30,265 | $31,421 | | Software and technology | $155,373 | $160,280 | | Gaming licenses and market access fees | $14,509 | $14,625 | | Total intangible assets, net | $207,757 | $218,186 | - Amortization expense for intangible assets was $12.1 million for Q1 2022, up from $9.1 million in Q1 2021[79] Goodwill Changes (Q1 2022) | Goodwill Balance | Amount (in thousands) | | :--------------- | :-------------------- | | Balance - December 31, 2021 | $630,269 | | Balance - March 31, 2022 | $627,632 | - Goodwill decreased by $2.6 million, primarily due to a foreign currency translation adjustment of $(2.1) million[81] Note 8 - Accounts Payable, Accrued Expenses and Other Long-Term Liabilities Total accounts payable, accrued expenses, and other long-term liabilities decreased slightly to $278.1 million as of March 31, 2022, from $284.7 million at December 31, 2021, with affiliate fees remaining the largest component Accounts Payable, Accrued Expenses and Other Long-Term Liabilities | Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------------ | :---------------------------- | :----------------------------- | | Affiliate fees | $171,915 | $177,692 | | Sales Tax | $30,007 | $27,316 | | Total | $278,067 | $284,725 | Note 9 - Income Taxes The company recognized an income tax benefit of $0.4 million for Q1 2022, primarily from a net reduction of the valuation allowance against deferred tax assets Income Tax Benefit | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------- | :--------------------------------------------- | :--------------------------------------------- | | Income tax benefit | $403 | $465 | - A valuation allowance is maintained against a portion of deferred tax assets due to the 'more likely than not' realization threshold not being met[86] Note 10 - Notes Payable, Long-Term Borrowing, and Convertible Notes The company's total outstanding debt was $401.1 million as of March 31, 2022, primarily consisting of $402.5 million in 2026 Convertible Notes, with ASU 2020-06 impacting non-cash interest expense Notes Payable, Long-Term Borrowing, and Convertible Notes | Note | Stated Interest Rate | Principal Balance (March 31, 2022, in thousands) | Net Balance (March 31, 2022, in thousands) | | :---------------------------- | :------------------- | :----------------------------------------------- | :----------------------------------------- | | 2026 Convertible Notes | 3.25% | $402,500 | $392,217 | | Note payable (CAM Digital Note) | 10.0% | $2,700 | $5,215 | | Total | | $408,837 | $401,075 | - The 2026 Convertible Notes were issued on February 2, 2021, with a 3.25% interest rate, maturing on February 15, 2026[90] - Net proceeds from the 2026 Convertible Notes offering were approximately $389.4 million[90] - The fair value of the 2026 Convertible Notes was $271.1 million as of March 31, 2022[95] Note 11 - Segments The company operates in two reportable segments: streaming and wagering, with streaming generating $242.3 million in revenue for Q1 2022, and the majority of assets and revenue in the United States - The company operates two reportable segments: streaming and wagering, with the wagering business commencing operations in Q3 2021[99] Financial Performance by Reportable Segment (Q1 2022) | Segment | Revenue (Q1 2022, in thousands) | Adjusted Operating Expenses (Q1 2022, in thousands) | Total Assets (Q1 2022, in thousands) | Total Goodwill (Q1 2022, in thousands) | | :-------- | :------------------------------ | :-------------------------------------------------- | :----------------------------------- | :----------------------------------- | | Streaming | $242,320 | $347,850 | $1,379,311 | $616,950 | | Wagering | $(301) | $9,961 | $76,449 | $10,682 | | Total | $242,019 | $357,811 | $1,455,760 | $627,632 | Financial Performance by Geographical Location (Q1 2022) | Geographical Location | Total Revenue (Q1 2022, in thousands) | Total Assets (Q1 2022, in thousands) | | :-------------------- | :------------------------------------ | :----------------------------------- | | United States | $235,636 | $1,296,463 | | Rest of world | $6,383 | $159,297 | Note 12 - Fair Value Measurements The company had no warrant liabilities outstanding as of March 31, 2022, following a redemption of $5.2 million in Q1 2022 Changes in Level 3 Warrant Liabilities (Q1 2022) | Warrant Liabilities (in thousands) | Amount | | :------------------------------- | :----- | | Fair value at December 31, 2021 | $3,548 | | Change in fair value | $1,701 | | Redemption | $(5,249) | | Fair value at March 31, 2022 | $- | Note 13 - Stockholders' Equity During Q1 2022, the company raised $203.8 million net proceeds from an at-the-market common stock offering, with stock-based compensation expense totaling $19.4 million - Received net proceeds of approximately $203.8 million from sales of 27,443,580 shares of common stock through an At-the-Market Sales Agreement during Q1 2022[112] Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total | $19,449 | $9,374 | - Unrecognized stock-based compensation expense related to unvested options was $18.0 million as of March 31, 2022, to be recognized over 2.0 years[119] - Unrecognized stock-based compensation expense for time-based restricted stock units totaled $69.7 million as of March 31, 2022, with a weighted average remaining contractual term of 3.5 years[127] - Granted 1.9 million performance-based restricted stock units (PRSUs) to an employee on November 3, 2021, with a fair value of $64.4 million, vesting over 5 years based on performance metrics[128] Note 14 - Commitments and Contingencies The company has operating lease liabilities of $43.4 million, market access agreement obligations of $10.8 million, annual sponsorship agreements totaling $49.7 million, and sports rights agreements of $81.6 million, and is involved in several legal proceedings Contractual Obligations | Commitment | Total Obligation (in thousands) | | :-------------------------- | :------------------------------ | | Operating lease liabilities | $43,352 | | Market Access Agreements | $10,842 | | Annual Sponsorship Agreements | $49,708 | | Sports Rights Agreements | $81,572 | - The company is a defendant in a consolidated securities class action lawsuit (Said-Ibrahim v. fuboTV Inc.) alleging violations of federal securities laws[143][145][147] - A derivative lawsuit (Rosenfeld v. Edgar Bronfman Jr.) was dismissed with prejudice on July 28, 2021[150] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for Q1 2022, discussing business overview, strategies, revenue and expense trends, key metrics, liquidity, and cash flows Overview fuboTV's business model focuses on leveraging sports to acquire subscribers, driving engagement through technology, and increasing monetization through advertising and wagering, with core strategies to grow its paid subscriber base, optimize engagement, and increase monetization - Business motto: 'come for the sports, stay for the entertainment'[154] - Core strategies include growing paid subscriber base, optimizing engagement and retention, and increasing monetization[156] - The COVID-19 pandemic has accelerated the shift to streaming TV and advertising budgets to streaming, largely unaffected the company's overall business positively in 2021 and Q1 2022[158] Nature of Business fuboTV operates as a leading live TV streaming platform, primarily generating revenue from subscriptions and advertising in the U.S., with recent international expansion and the launch of Fubo Sportsbook in Iowa and Arizona in Q4 2021 - fuboTV is a leading live TV streaming platform for sports, news, and entertainment[159] - Revenues are almost entirely derived from subscription services and advertising sales in the United States, with international operations in Canada, Spain, and France[159] - Launched Fubo Sportsbook in Iowa and Arizona in Q4 2021, with plans to expand to additional states in 2022[161] Seasonality The company experiences significant seasonality, with higher revenue and subscriber additions in the third and fourth quarters, primarily driven by major sports leagues like the National Football League, a trend also anticipated for the Fubo Sportsbook - Significantly higher revenue and subscriber additions occur in the third and fourth quarters, driven by sports leagues, especially the National Football League[162] - Subscribers typically decline from the fourth quarter through the first and second quarters of the following year[162] - Similar seasonal trends and user behavior are anticipated for the Fubo Sportsbook[162] Segments Since Q3 2021, the company operates and reports results through two segments: streaming and wagering, with the Chief Operating Decision Maker (CODM) evaluating performance and allocating resources based on revenue and adjusted operating expenses for each segment - Operates through two operating and reportable segments: streaming and wagering, following the launch of the wagering business in Q3 2021[163] - The CODM (Chief Executive Officer) reviews revenue and adjusted operating expenses to assess segment performance and allocate resources[163] Components of Results of Operations This section defines the key revenue streams—subscription, advertising, and wagering—and outlines the primary operating expense categories, including subscriber-related, broadcasting and transmission, sales and marketing, technology and development, general and administrative, and depreciation and amortization - Revenue streams include Subscription (from plans), Advertising (from ad impressions), and Wagering (net of payouts and incentives)[164][165][167] - Operating expenses comprise Subscriber related expenses (affiliate rights), Broadcasting and transmission (signal acquisition/retransmission), Sales and marketing (payroll, campaigns), Technology and development (payroll, software, hosting), General and administrative (payroll, professional fees), and Depreciation and amortization (fixed assets, intangibles)[168][169][170][171][172][173] Results of Operations for the three months ended March 31, 2022 and 2021 For Q1 2022, total revenues increased significantly to $242.0 million, driven by higher subscription and advertising revenues, but total operating expenses also rose substantially to $377.3 million, leading to an increased operating loss of $135.2 million and a net loss of $140.8 million Key Financial Results (Q1 2022 vs. Q1 2021) | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Total revenues | $242,019 | $119,720 | +$122,299 | | Total operating expenses | $377,260 | $184,802 | +$192,458 | | Operating loss | $(135,241) | $(65,082) | -$70,159 | | Net loss | $(140,817) | $(70,186) | -$70,631 | - Subscription revenue increased by $112.1 million, and advertising revenue increased by $10.5 million, contributing to the overall revenue growth[178][179] - Subscriber related expenses increased by $132.4 million due to higher affiliate distribution rights and subscriber growth[180] - Sales and marketing expenses increased by $24.0 million, driven by an $8.2 million increase in stock-based compensation and $15.8 million in marketing for new streaming customers[182] - Technology and development expenses rose by $10.0 million, primarily due to payroll, the Edisn Inc. acquisition, wagering segment expenses, and software costs[183] - General and administrative expenses increased by $14.0 million, influenced by wagering segment expenses, payroll, the Molotov S.A.S acquisition, sales tax accrual, and stock-based compensation[184] Key Metrics & Non-GAAP Measures The company uses non-GAAP metrics like North America Paid Subscribers, Monthly Average Revenue Per User (ARPU), Monthly Average Cost Per User (ACPU), and Adjusted Contribution Margin (ACM) to evaluate performance, with North America paid subscribers reaching 1.1 million and ARPU at $71.03 as of March 31, 2022 North America Key Metrics | Metric | March 31, 2022 | March 31, 2021 | YoY Change | | :-------------------------------- | :------------- | :------------- | :----------- | | North America Paid Subscribers | 1.1 million | 0.6 million | +0.5 million | | North America Monthly ARPU | $71.03 | $69.88 | +$1.15 | | North America Monthly ACPU | $71.57 | $66.24 | +$5.33 | | North America Adjusted Contribution Margin | (0.8)% | 5.2% | -6.0 percentage points | Liquidity and Capital Resources The company's liquidity is primarily supported by subscriber and advertising revenues, along with equity and debt financings, with $450.9 million in cash and cash equivalents as of March 31, 2022, bolstered by $203.8 million from an at-the-market equity offering - Primary cash sources are subscriber receipts, advertising revenue, and proceeds from equity and debt financings[196] - Primary uses of cash include content/programming license fees, operating expenses, and wagering business launch/operations[196] Liquidity Position | Metric | Amount (as of March 31, 2022) | | :------------------------ | :---------------------------- | | Cash and cash equivalents | $450.9 million | - Raised approximately $203.8 million net proceeds from an at-the-market equity offering during Q1 2022[196] - Existing cash is expected to provide necessary liquidity for at least the next twelve months[198] Cash Flows For Q1 2022, net cash used in operating activities was $126.7 million, investing activities used $5.9 million, and financing activities provided $209.2 million, largely from the at-the-market equity offering Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net cash (used in) operating activities | $(126,685) | $(53,867) | | Net cash (used in) investing activities | $(5,895) | $(2,379) | | Net cash provided by financing activities | $209,208 | $384,960 | - Operating cash outflow in Q1 2022 was primarily driven by a net loss of $140.8 million, partially offset by non-cash movements of $34.4 million[201] - Investing activities in Q1 2022 included $4.0 million for market access and license fees, $1.0 million for internal use software capitalization, and $0.9 million for property and equipment purchases[204] - Financing activities in Q1 2022 were primarily boosted by $203.8 million from the at-the-market offering and $5.4 million from stock option and warrant exercises[206] Critical Accounting Policies and Estimates The company's financial statements rely on estimates and assumptions, but there have been no material changes to its critical accounting policies from those disclosed in the Annual Report - No material changes to critical accounting policies from those disclosed in the Annual Report[209] Recently Issued Accounting Pronouncements For a discussion of recent accounting policies, refer to Note 3 of the unaudited condensed consolidated financial statements - Refer to Note 3 for a discussion of recent accounting policies[210] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rate fluctuations and foreign currency exchange rates, but a hypothetical 10% change in either would not materially impact financial statements, given $450.9 million in cash equivalents and $411.4 million in fixed-rate debt - As of March 31, 2022, cash and cash equivalents were $450.9 million, primarily invested in money market funds[212] - Outstanding indebtedness totaled $411.4 million, including $402.5 million in convertible notes, all bearing fixed interest rates[212] - A hypothetical 10% change in interest rates would not materially impact the consolidated financial statements[212] - Foreign currency risk primarily involves the euro, accounting for approximately 2% of consolidated revenue for Q1 2022[213] - A hypothetical 10% weakening of the euro relative to the U.S. dollar would not materially affect revenue and operating income[213] Item 4. Controls and Procedures Management acknowledges that disclosure controls and procedures provide reasonable assurance, not absolute, due to inherent limitations, and as of March 31, 2022, they were concluded to be effective at the reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures provide only reasonable assurance of achieving desired control objectives[214] - As of March 31, 2022, disclosure controls and procedures were effective at the reasonable assurance level[215] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[216] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, including a consolidated securities class action lawsuit (Said-Ibrahim v. fuboTV Inc.) alleging federal securities law violations, which remains pending, while a derivative lawsuit was dismissed, and another contract/fraud case is pending a motion to dismiss - The company is a defendant in a consolidated securities class action lawsuit (Said-Ibrahim v. fuboTV Inc.) alleging violations of federal securities laws, which is currently pending[220][222][224] - A derivative lawsuit (Rosenfeld v. Edgar Bronfman Jr.) against certain directors and officers was dismissed with prejudice on July 28, 2021[225][227] - A lawsuit (Andrew Kriss and Eric Lerner vs. FaceBank Group, Inc.) asserting claims for breach of contract, fraud, and unjust enrichment is pending a motion to dismiss[229] Item 1A. Risk Factors This section details numerous risks that could adversely affect the company's business, financial condition, and results of operations, spanning financial stability, relationships with content providers and customers, financial reporting, product and technology competitiveness, regulatory compliance, operational challenges, privacy and cybersecurity, intellectual property protection, and risks related to its convertible notes and common stock ownership Risks Related to Our Financial Position and Capital Needs The company faces risks from historical and expected future operating losses, potential need for additional capital that may not be available on favorable terms, significant seasonality in revenue and gross profit, limitations on utilizing net operating loss carryforwards, and challenges in managing current and future debt obligations - The company has incurred operating losses since inception and expects to continue to incur substantial losses, with a net loss of $140.8 million for Q1 2022[232] - Additional capital may be required for business growth, but might not be available on acceptable terms, potentially leading to dilution for existing shareholders or restrictive debt covenants[234][235] - Revenue and gross profit are subject to seasonality, with significantly higher levels in Q3 and Q4 due to sports leagues, making results difficult to predict and potentially harming the business if expectations are not met[236][238] - The company may not be able to fully utilize its net operating loss carryforwards due to past and potential future ownership changes, which could increase future tax obligations[239][241] - Outstanding indebtedness of $411.4 million (as of March 31, 2022) requires significant cash for servicing, and failure to manage this debt could adversely affect financial condition and operations[242][243][245] Risks Related to Our Relationships with Content Providers, Customers and Other Third Parties The company's business is highly dependent on its relationships with content providers, facing risks from long-term content commitments, potential non-renewal of contracts on favorable terms, and the need to continuously attract and retain subscribers with popular content, along with challenges in maintaining adequate ad inventory, content provider restrictions, potential liability from content acquisition/production, and reliance on device partners for service delivery - Long-term content commitments, often with fixed minimum license fees, may limit operating flexibility and adversely affect liquidity if subscriber acquisition and retention do not meet expectations[252][254] - Failure to renew long-term content contracts on sufficiently favorable terms or to obtain popular content could lead to loss of content rights, impacting subscriber retention and acquisition[256][257] - Inability to attract and retain subscribers due to competitive offerings, changes in platform value perception, or high cancellation rates could adversely affect business growth[259][260] - Agreements with distribution partners contain parity obligations that limit the company's ability to pursue unique partnerships or offer differentiated products/services[261] - Failure to maintain an adequate supply of ad inventory or compete effectively for advertising revenue with larger, more experienced competitors could harm the business[262][264] - Content providers may refuse to license streaming content or impose restrictions on distribution and marketing, limiting the company's flexibility and potentially increasing costs[265][268] - As a producer and distributor of content, the company faces potential liability for negligence, copyright infringement, or other claims, particularly with expanding original programming[274][275] - Reliance on partners to make its service available on their devices means business could be adversely affected if partners cease providing access or demand unfavorable terms[277][278] Risks Related to Our Financial Reporting and Disclosure The company faces risks related to financial reporting, including potential future material weaknesses in internal controls despite past remediation, and the need to comply with Exchange Act reporting obligations, as rapid growth strains operational and financial systems, and inaccuracies in key metrics or financial forecasts could harm reputation and stock price - Despite remediating material weaknesses in internal control over financial reporting as of December 31, 2021, future weaknesses could be identified, leading to loss of investor confidence[280][281] - Failure to comply with Exchange Act reporting obligations could result in penalties, lawsuits, and restricted access to financing[282] - Rapid growth places significant demands on management and infrastructure, requiring continuous improvement of operational and financial systems to avoid adverse effects on billing services and financial reporting[285][286] - Key metrics (e.g., ARPU, subscribers) are subject to measurement challenges, and real or perceived inaccuracies could harm reputation and business[287][289] - Financial results rely on judgments and estimates, and actual results differing from guidance or analyst expectations could lead to a decline in stock price[291][292] Risks Related to Our Products and Technologies The company operates in a highly competitive TV streaming market, facing challenges from large technology and entertainment companies, with growth dependent on the acceptance of OTT advertising and expanding content beyond live sports, while the sports wagering business introduces new risks related to evolving laws, trading, liability management, and reliance on third-party data providers, with technology failures, inadequate identity/location validation, and inability to attract/retain wagering users also posing adverse impacts - The TV streaming market is highly competitive, with large technology and entertainment companies, TV brands, and service operators actively focusing on this industry, making it difficult to attract or retain subscribers without differentiation[293][294][296] - Future growth depends on the acceptance and growth of OTT advertising, and failure to increase advertising revenue could harm business prospects[298][299] - The company may not be successful at expanding content beyond live sports or overcoming its reputation as primarily a live sports streaming service[300] - Expansion into sports wagering subjects the business to a variety of unsettled and developing U.S. and foreign laws, which could lead to claims or harm operations[305][306][308] - 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, potentially leading to significant losses[310][311][318] - The success of the sports wagering business depends on gaining market access in states legalizing sports wagering, which may be limited by state regulations on the number of 'skins' (branded websites) permitted per license[313] - Failure of proprietary or third-party technology (e.g., CDNs, data analytics, payment processing) could impair service operation, subscriber retention, and new subscriber acquisition[324][325] - Reliance on third-party providers for identity and geolocation validation, and real-time sports data, means inadequate performance or termination of these relationships could adversely affect operations and lead to regulatory action or reputational harm[326][327][328] Risks Related to Regulation The gaming industry is heavily regulated, requiring extensive licensure and compliance, with potential for revocation or suspension of licenses and significant costs, and shareholders may also be subject to suitability investigations, while changes in internet and business regulations, payment processing rules, and tax laws across multiple jurisdictions could increase operating expenses and liabilities, and social responsibility concerns can also influence regulation and impact operations - The gaming industry is heavily regulated, requiring the company and its associates to obtain and maintain licenses and approvals, with failure potentially leading to business disruption, fines, or loss of licenses[331][332][335] - Shareholders may be subject to governmental oversight and suitability determinations by gaming authorities, with potential for redemption of shares if found unsuitable[343][344][347] - Changes in government regulations related to the Internet, user privacy, data protection, consumer protection, and taxation could require alterations to business practices and incur greater operating expenses[348][349][351] - The company is subject to payment processing risk, where increases in fees, changes in rules, or disruptions could adversely impact revenue and operating expenses[352] - Taxation-related risks exist in multiple jurisdictions, including potential fines for delinquent filings, collection of additional sales taxes, and impacts from changes in tax laws or interpretations[353][354][355][356] - Social responsibility concerns and public opinion can significantly influence sports wagering regulation, potentially leading to harsher restrictions or prohibition, and increased compliance costs[358][359] Risks Related to Our Operations The COVID-19 pandemic continues to pose risks to operations, content availability, and customer service, while the company also faces potential liability from historical corporate transaction defects and ongoing legal proceedings, with maintaining high-quality customer support crucial for subscriber retention, and international expansion plans subject to various economic, political, and regulatory risks, along with dependence on key personnel, impact of worldwide economic conditions, changes in marketing strategies, and risks associated with strategic acquisitions also affecting operations - The COVID-19 pandemic continues to impact sports content availability, potentially reducing consumer demand and subscription retention, and posing risks to customer service and employee productivity[360][361] - Defects in historical corporate transactions could lead to claims, dilution of existing shareholders, or payments to security holders[363][364] - Ongoing legal proceedings could cause unforeseen expenses, divert management's time, and negatively affect business operations and financial position[365] - Failure to provide adequate customer support could lead to subscriber loss and harm the company's business and reputation[366] - International expansion plans are subject to economic, political, regulatory, and other risks, including differing legal requirements, competitive pressures, and currency fluctuations[369][370] - Dependence on highly skilled key personnel means inability to attract, retain, and motivate qualified employees could harm business development and growth[372] - Worldwide economic conditions can adversely affect advertising spending and consumer spending on discretionary items, impacting revenue and subscriber numbers[373][374] - Changes in marketing strategies or loss of marketing channels could adversely affect marketing expenses and subscription levels[376][377][378] - Strategic acquisitions and investments involve risks such as integration difficulties, failure to realize anticipated benefits, and diversion of management's attention[379] Risks Related to Privacy and Cybersecurity The company is subject to extensive and evolving legal requirements and obligations regarding privacy, security, and data protection, including CCPA, CPRA, VCDPA, and GDPR, with non-compliance or perceived failures potentially leading to regulatory investigations, fines, litigation, reputational damage, and increased operational costs, while cybersecurity threats, including cyber-attacks and data breaches, pose significant risks to system reliability, data integrity, and business operations - Subject to various international, federal, and state laws and regulations governing personal information processing, including CCPA, CPRA, VCDPA, and GDPR[380][381][383] - Non-compliance or perceived failures in privacy and data protection could result in substantial operational costs, regulatory investigations, fines (up to 4% of global annual revenue or €20 million under GDPR), litigation, and reputational harm[383][384][388][391] - The company's computer systems and those of third parties are vulnerable to cybersecurity threats, including cyber-attacks, viruses, and data breaches, which could lead to service interruptions, unauthorized data disclosure, or theft of intellectual property[393][394] - Reliance on third-party cloud computing services and content delivery networks means disruptions or security issues with these providers could adversely impact user experience[395] - Efforts to prevent security breaches are expensive and require ongoing monitoring, and there is no assurance that insurance coverage will be adequate for data security liabilities[396][397] Risks Related to Our Intellectual Property The company faces risks of costly intellectual property litigation, including claims of infringement or misappropriation, which could divert resources, restrict technology use, or require licensing, while inability to obtain necessary content licenses from rights holders could harm the business, and failure to adequately protect patents, trademarks, and trade secrets could diminish brand value, with the use of open-source software potentially imposing limitations on commercialization - The company could become subject to costly litigation regarding intellectual property rights, including claims of infringement or misappropriation, which could result in damages, restrictions on technology use, or the need for expensive licenses[398][399] - Inability to obtain necessary or desirable third-party technology licenses could impair the ability to develop platform enhancements and harm competitiveness[408] - Failure to adequately protect patents, trade secrets, trademarks, and copyrights could diminish the value of the brand and other intangible assets[404][405] - The use of open-source software in the platform could impose limitations on commercialization, potentially requiring public release of source code or licensing under unfavorable terms[406][407] - Inability to obtain necessary or desirable third-party technology licenses could impair the ability to develop platform enhancements and harm competitiveness[408] Risks Related to the 2026 Convertible Notes The company may lack sufficient funds to settle conversions of the 2026 Convertible Notes in cash or repurchase them upon a fundamental change, potentially leading to default, while the conditional conversion feature, if triggered, could adversely affect liquidity by requiring cash payments or reclassification of debt to current liability, and accounting methods for convertible debt, particularly ASU 2020-06, could materially impact reported financial results and diluted EPS, with provisions in the indenture potentially deterring favorable business combinations - 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, which could lead to default[409][410] - If the conditional conversion feature is triggered, the company may be required to settle obligations in cash, adversely affecting liquidity, or reclassify debt as a current liability, reducing net working capital[412] - Accounting methods for convertible debt, specifically ASU 2020-06, could materially affect reported financial results by increasing non-cash interest expense and potentially impacting diluted earnings per share[413][415] - Provisions in the indenture for the 2026 Convertible Notes, such as repurchase rights upon fundamental change and merger restrictions, may deter or prevent business combinations favorable to shareholders[416] Risks Related to Ownership of our Common Stock The company's stock price is highly volatile due to various factors, including operating results, market sentiment, and competition, while substantial sales of common stock by existing shareholders could depress the market price, and the company does not plan to declare cash dividends in the foreseeable future, with future equity issuances potentially diluting existing ownership, and limited analyst coverage or adverse reports also negatively impacting the stock price and trading volume - The market price of the common stock is subject to wide fluctuations due to factors like operating results, market sentiment, competition, and technical trading factors[417] - Substantial sales of common stock by existing shareholders, especially after lock-up periods expire, could significantly decrease the market price[418] - The company does not anticipate declaring any cash dividends on its common stock in the foreseeable future, requiring investors to rely on stock price appreciation for gains[422] - Future sales and issuances of capital stock, including through shelf registration statements, could dilute existing shareholders' ownership and reduce the stock price[423] - Limited or adverse research reports from securities or industry analysts could negatively impact the stock price and trading volume[424] General Risk Factors General risks include the potential for inadequate insurance coverage against claims and losses, which could adversely affect business prospects and financial condition - Insurance coverage may not provide adequate levels of coverage against all claims or losses, and any incurred losses could exceed policy limits, adversely affecting business[425] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or use of proceeds to disclose for the period - No unregistered sales of equity securities or use of proceeds to report[426] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[427] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[428] Item 5. Other Information This section indicates that there is no other information to report for the period - No other information to report[429] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including various corporate documents, agreements, and certifications - The exhibits include corporate documents (Articles of Incorporation, Bylaws), agreements (Merger and Reorganization, Convertible Notes Indenture, Sales Agreement), and certifications (CEO/CFO certifications)[430][431] SIGNATURES SIGNATURES The report is duly signed on behalf of fuboTV Inc. by its Chief Executive Officer, David Gandler, and Chief Financial Officer, John Janedis, on May 9, 2022 - Report signed by David Gandler (Chief Executive Officer) and John Janedis (Chief Financial Officer) on May 9, 2022[433]