Fubo marks Q1 gains, says sports streaming JV is ‘existential challenge’

Fubo marked subscriber and revenue gains in the first quarter of 2024 and executives on Friday’s earnings call were encouraged by progress in the virtual MVPD’s antitrust lawsuit against Disney, Fox, Warner Bros. Discovery and the entities’ sports streaming joint venture.

Here are some of Fubo's Q1 results: 

  • Fubo added 226,000 North American subscribers compared to the same period a year ago, up 18% year over year, to end the period with 1.51 million paid subscribers. Sequentially, Fubo subscribers declined by around 110,000 compared to the end of Q4 when it had 1.62 million North American subs.
  • Total North American revenue of $394 million was up 24%
    • North American subscription revenue grew 25% yoy
    • North American ad revenue of $27.2 million was up more than 21% yoy
  • Average revenue per user (ARPU) was $84.54, up 10% yoy. Executives said in Q1 Fubo achieved its lowest subscriber acquisition cost (SAC) to ARPU ratio, “well below the low end of our target range of 1-1.5x.” Fubo attributed this to strong work by the marketing team.
    • Q1 saw a 339 bps reduction in subscriber-related expenses (SRE) as a percentage of revenue to 90% “reflecting significant progress in optimizing content costs.”
    • Additionally, March 2024 represented “the lowest churn rate for any March on record for the company,” boosted by an unexpected benefit from the popularity of women’s basketball.
  • Fubo improve its net loss to $56.3 million in the quarter, compared to a net loss of $83.4 million in the same period a year ago.
  • Gross Margin improved by 588 basis points (bps) yoy to 7%
  • Freee cash flow improved by $10 million and Q1 Adjusted EBTIDA improved by $18 million yoy

During opening remarks on Friday’s quarterly earnings call, Fubo CEO David Gandler took time to comment on the antitrust lawsuit against Disney, Fox and WBD and their joint venture that plans to launch a sports streaming service this fall.

While reporting strong first quarter results, Gandler said the company continues to be challenged by “excessively above market content licensing costs and other onerous contractual terms imposed by programmers,” noting that in Q1 Fubo spent approximately 90% of its total revenue on content.

“The exorbitant fees imposed on us and consequently on our customers are well above the market” he said, as well as terms like penetration rates – issues which Gandler said are “at the core” of its current litigation against the JV entities.

“The pending launch of those companies’ joint venture is an existential challenge that we face, one that we are committed to meeting, in part through our suit to enjoin the launch of the joint venture until and unless the playing field in the industry has been leveled,” he continued.

That said, while it remains early since the February lawsuit filing, the chief executive noted that Fubo “is encouraged by the progress we have made so far,” in particular by support from pay TV competitors Dish Network and DirecTV, which each filed declarations of support backing Fubo’s motion for a preliminary injunction. He also cited congressional support and reports of an ongoing DoJ investigation And it’s encouraged by the federal court granting its request for limited discovery and setting an August 7 hearing on Fubo’s motion for a preliminary injunction against the JV.

Fubo continues to allege that the three media companies have engaged in years-long anticompetitive practices stifling the vMVPD’s ability to compete, with the sports streaming JV the latest example.

“We remain steadfast in our fight to level the playing field of the sports streaming industry since, as alleged in our court filings, we believe the launch of the joint venture (a collaboration to introduce a sports-only streaming service) controlled by these parties could cause irreparable harm to Fubo and to consumers,” wrote Fubo in a letter to shareholders.

On the call Gandler took time to comment on a programming renewal dispute with WBD, which saw 19 WBD-owned Discovery networks leave Fubo’s platform earlier this week. The chief executive said the channel loss was a result of programmers forcing unfair deals, where WBD did not want to discuss new terms, including a request to newly license the Turner Sports networks.

WBD for its part has said it offered Fubo an extension and the same terms for Discovery channels that it’s paying now.

Fubo has targeted 2025 to achieve profitability and for the full-year 2024 is guiding for 1.675-1.695 million subscribers and between $1.525 billion and $1.545 billion in revenue.

The guidance does not include any potential impact from the JV’s sports streaming app that’s planned to launch this fall but did bake in expected impacts from the loss of WBD’s Discovery networks on the platform.  

For more on Fubo's advertising efforts including new formats, read here

Article updated to reflect that Fubo lost 110,000 subscribers compared to Q4 2023. An earlier version incorcetly stated 11,000.