Ladies and gentlemen, thank you for standing by. My name is Sharao, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fubo Q3 2023 Earnings Call. All the lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Alison Sternberg, Senior Vice President of Investor Relations. Please go ahead.

Thank you for joining us to discuss Fubo's third quarter 2023. With me today is David Gandler, Co-Founder and CEO of Fubo; and John Janedis, CFO of Fubo. Full details of our results and additional management commentary are available in our earnings release and letter to shareholders, which can be found on the Investor Relations section of our website. Before we begin, let me quickly review the format of today's presentation. David is going to start with some brief remarks on the quarter and full year and Fubo's strategy, and John will cover the financials and guidance. Then, we will turn the call over to the analysts for Q&A. I would like to remind everyone that the following discussion may contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to certain risks, uncertainties, and assumptions. Important factors that could cause actual results to differ materially from these statements include those discussed in our filings with the SEC. Except as otherwise noted, the results and guidance we are presenting today are on a continuing operations basis, excluding the historical results of our former gaming segment. During the call, we may also refer to certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our Q3 2023 earnings shareholder letter, which is available on our website. With that, I will turn the call over to David.

Thank you, Alison, and good morning, everyone. We appreciate you joining us today to discuss Fubo's third quarter 2023 results. We are very pleased with our results, which we believe continue to show the strength of Fubo's aggregated sports-first content and leading product features. In the third quarter, in North America, we delivered $313 million in total revenue, up 43% year-over-year, and a record 1.477 million paid subscribers, up 20% year-over-year. Our North American ad business continues to grow as a result of our expanding focus on direct sales alongside our already successful programmatic business. We delivered $30.3 million in North America ad revenue during the quarter, an increase of 34% compared to the same period last year. We noted on our last earnings call that we expected the ad market would experience an acceleration in the back half of 2023, and are pleased that trends are moving favorably in that direction. Fubo's growth trajectory gives us continued confidence in our full-year performance. Therefore, we are raising our 2023 North American guidance to $1.319 billion to $1.324 billion in total revenue, representing 34% year-over-year growth at the midpoint, and 1.584 million to 1.599 million paid subscribers, representing 10% year-over-year growth at the midpoint. In addition to strong results across our key performance metrics, we also continue to make significant progress towards our 2025 positive cash flow goal. The third quarter marked continued healthy year-over-year improvement in cash usage as a result of our focus on unit economics and cost discipline. We meaningfully reduced net loss by $21 million and delivered a 619 basis point reduction in subscriber-related expenses, or SRE, as a percentage of revenue to 89%. Additionally, we reached 6% gross margin, an 884 basis point year-over-year improvement. We closed the year with $266 million in cash, cash equivalents and restricted cash, and we believe have sufficient liquidity to fund our current operating plan as we progress towards our 2025 goal. The cable TV and streaming space experienced a true inflection point during the third quarter with the creation of new content distribution models following the Charter-Disney dispute. Since the first quarter of 2021, we have stated that the industry would see a shift from the unbundling of content back to aggregation. More recently, many in the industry have called it The Great Rebundling. We have been steadfast in this position over the last two-and-a-half years and are confident that bundling is the best way consumers can extract value while providing media companies a profitable path to monetizing their content portfolios and sports contracts. Going a step further, we believe the industry will shift towards super aggregation, meaning distribution platforms will start to package content in different ways and deliver it to consumers at multiple price points. This could mean an entry-level AVOD or FAST tier to a skinny bundle comprised of multiple premium channels and Plus services to the full virtual MVPD bundle, with, of course, AI contributing to a personalized streaming experience. Fubo's goal is to be a super aggregator and we are well on our way. Our aggregated sports-first offering coupled with diverse news and entertainment programming is delivered through a single app that is customized to our users. We expect to deliver an even more personalized Fubo experience as we focus on our technology advantage in creating must-have product features, like we did with MultiView and 4K streaming. First on our roadmap is Playlists, which, leveraging our proprietary video AI technology, will allow the user to view and select the most important moments of live sports events recorded on their DVR. We believe it's this compelling value proposition, aggregated content delivered through a personalized streaming experience that will make Fubo the gateway to television. In summary, our third quarter results, progress to our 2025 positive cash flow goal and evolving market dynamics provide us with more confidence than ever that Fubo's business model will provide value for consumers, our content and distribution partners, and of course, you, our shareholders. I will now turn the call over to John Janedis, CFO, to discuss our financial results in greater detail.

Thank you, David, and good morning, everyone. The third quarter furthers the momentum that we experienced over the first half of the year, including healthy top-line and subscriber growth, resulting in meaningful improvements across many of our KPIs and providing us with confidence in our ability to achieve profitability. Total revenue for the quarter increased 43% to $320.9 million, driven by 43% revenue growth across North America and 45% revenue growth from the Rest of the World. This represents a 14% upside against the midpoint of our Q3 revenue guidance. We ended the third quarter with 1.477 million subscribers in North America, representing 20% growth year-over-year, and over 411,000 subscribers in the Rest of the World, representing 15% growth year-over-year. On the modernization front, ARPU in North America reached $83.51, an all-time high, while Rest of World ARPU was $6.98. Growth in subscribers and ARPU allowed us to exceed the midpoint of our Q3 guidance. Turning to advertising, despite the continued challenges many advertising businesses are facing, I am pleased with our ability to deliver $30.3 million in advertising revenue across North America, a 34% increase versus the prior-year period. Importantly, we continue to make material progress on the operational side of the business by lowering expenses and increasing efficiencies. These efforts resulted in a near 900-basis-point improvement in gross margin to 6%, marking our fourth consecutive quarter of positive gross margin. The top-line growth and improvements across the income statement led to a $21 million year-over-year reduction in net loss to a loss of $84.4 million, resulting in a net loss margin improvement to negative 26.3%, favorably comparing to a negative 47% loss margin in the prior-year period. This led to a third quarter 2023 per share loss of $0.29, a significant improvement compared to a loss of $0.57 in the third quarter of 2022. The third quarter adjusted EBITDA loss also improved to a loss of $61.5 million compared to a loss of $83 million in the third quarter of 2022, while the adjusted EBITDA margin was minus 19.2%, a significant improvement from minus 36.9% in the prior-year period. This resulted in an adjusted EPS loss of $0.22, an improvement compared to an adjusted EPS loss of $0.46 in Q3 2022. As it relates to our balance sheet, we believe we continue to have the necessary liquidity to invest in the business and support our path to profitability, ending the quarter with $266 million of cash, cash equivalents, and restricted cash. In addition, our ongoing efforts to identify efficiencies and maximize leverage across the business resulted in a $40 million improvement in free cash flow. Further, as David mentioned, these results demonstrate the noteworthy progress we have made across our operating expenses, all of which have come down as a percentage of revenue and, in some cases, on a dollar basis as well, as we remain disciplined in our investments and deployment of cash. As we continue to grow subscribers, optimize our pricing, we expect to see continued leverage on the SRE line, which decreased from 95% to 89% of revenue in Q3 2023 versus the prior-year period. Now turning to guidance. For the full-year 2023, we are once again raising our guidance for North America. We expect full-year 2023 subscribers of 1.584 million to 1.599 million, representing 10% year-over-year growth at the midpoint, and the full-year 2023 revenue of $1.319 billion to $1.324 billion, representing 34% year-over-year growth at the midpoint. In the fourth quarter, we expect revenue of $385 million to $390 million, representing 24% year-over-year growth at the midpoint. For the Rest of the World, our full-year 2023 guidance now projects 388,000 to 393,000 subscribers, representing a 7% year-over-year decline at the midpoint, and revenue of $32 million to $33 million, representing 33% year-over-year growth at the midpoint. Note that our prior-year subscriber count was positively impacted by the 2022 World Cup. In the fourth quarter, we expect revenue of $7.6 million to $8.6 million, representing 13% year-over-year growth at the midpoint. In summary, we believe our third quarter results provide further evidence that the operational and go-to-market initiatives we have enacted over the past few quarters are gaining momentum and transforming our business. These actions are driving improving trends and we are confident Fubo has the foundation necessary to further grow and improve across every facet of our business and position us to deliver enhanced value to shareholders. I would now like to open the call to questions.

Okay, thank you for taking my question. Could you please comment on the overall brand sentiment, advertiser sentiment that you are seeing and hearing? And any commentary on how the ad revenue trended intra-quarter? And then, any thoughts on any impact from the Israel war at all? And then finally, any commentary on different impacts from different verticals? What are you seeing in auto versus perhaps CPG or travel and financial services? Thanks a lot.

Shweta, this is John. I'll start by addressing the categories and I'll go in reverse chronological order. For the third quarter, we experienced a 34% growth. The strongest categories for Q3 included retail, e-commerce, and auto, which saw strong double-digit gains. Home and garden and pharma also performed well. On the other hand, the weaker categories were food and beverage, insurance, and tech. Looking ahead to the fourth quarter, we continue to see some weakness in tech, insurance, and possibly some financial sectors. However, auto, retail, and e-commerce are showing general strength to date. Regarding the war, we aren't seeing a significant number of cancellations right now, but we do notice that clients are being more cautious with their spending as they wait to see how the situation unfolds. As for the quarter's performance, July was the strongest month, while September was the slowest, but with a 34% growth, all months performed relatively well. If there's anything else I might have overlooked, please feel free to ask.

No, that was great. Thanks, John. I guess anything you've seen so far in terms of how October trended, and what you're hearing for the rest of the quarter as it relates to ad spend? Thank you.

I would say October was a bit lighter than what we experienced in the third quarter on a monthly basis. To give you a rough idea, if Q2 grew by about 5% and Q3 saw a growth of around 34%, I would estimate Q4 will be closer to the growth rate of Q2 than to Q3.

Hi, guys. Thanks for taking my questions. Just following up on that, can you guys speak to with the success you've kind of seen with the direct ad business, like how confident are you in just like your ad business having legs beyond the fourth quarter? I guess said another way, do you feel like the business has pivoted or inflected in a positive way kind of longer term?

Yeah, Darren, this is David. Thank you for the question. Look, we have been very focused on this part of our business. I think we've touched base with you throughout the year. We've made some significant changes in the back-end, meaning we've been really focused on developing our team, increasing the size of the team, and refocusing from programmatic to direct sales. I think we were one of the first to actually talk about the relevancy of direct ad sales versus programmatic to really drive revenue. And I think we've executed really well on that since we talked about it in March. And we're very focused on continuing to talk to our third-party vendors, our programmatic partners and, in many cases, we have revised some of our agreements to ensure that when we do decide to go programmatic, those rates will be reflective of where we are in our business and what our goals are with respect to driving CPMs and advertising ARPU. So, I think execution has been very strong. In terms of a product roadmap on the advertising side, we're looking to continue to develop our inventory. We're starting to learn more about advertising in general in terms of what our partners are looking for and how they want to engage with our very premium audience. As you recall, we skew men 18 to 49. And so, that's a very difficult demo to reach. And I think we'll continue to develop opportunities with advertisers there. The last thing I'll mention is that we have been adding FAST channels, as you know, throughout the first half of the year. And the advertising revenue coming in from those channels has been quite strong, which as you can imagine, we have greater share of inventory there, and therefore, it's having a greater impact. So again, we're very focused on really developing the 100-plus hours of viewership on the platform to really drive monetization.

And Darren, I can add a couple more points to that. We added three sales resources during the second quarter and also added sales in the first quarter. When you combine those efforts, we significantly improved our market coverage and penetration. This progress really came together around the middle of the second quarter. The team was very effective as a unit in the third quarter, and we noticed that impact. I believe this has positioned us differently in the market. We have also concentrated on our direct and programmatic guaranteed sales. In the third quarter of this year, that number was about 20% of the total, compared to roughly a third of that in the third quarter of last year, indicating a substantial increase.

That's helpful. Two more for me. In terms of the operating leverage, it looks like you grew your sales and marketing about $5 million year-on-year, but sales were up $100 million. So, two questions there. One, like, is that sustainable from an operating leverage perspective? And then, two, with the whole Charter-Disney spat, like, has brand awareness for Fubo improved? Do you feel like that has legs beyond kind of current period?

Yeah, Darren, this is David. Brand awareness has significantly improved. Organic traffic to Fubo continues to grow, and we have more advertising partnerships in various categories. The Charter-Disney dispute has allowed us to reach more customers, and this trend is reflected in our quarterly results as Fubo shows strong growth in market share of new subscribers. I believe we will continue to make progress, largely thanks to our strong product. Other players in the market are not only replicating our features but also our naming and branding. We believe we are in a solid position for continued growth, and the Charter dispute is pushing the market closer to our vision of an aggregation space. Additionally, if you look at the engagement hours on our platform, they exceed 100 hours, while reports suggest other cable companies are around 60 to 75 hours. Overall, our key performance indicators indicate that our brand is developing well and efficiently. Given the competitiveness in September, with various Sunday Ticket offers ranging from 90% off to 50-60% off, it's impressive that we managed to compete on subscriptions and became the most downloaded app on Amazon Fire. These metrics highlight the positive development of our brand in the ecosystem.

Hey, Darren, I'll go to your first question on that. And, look, as you know, we don't guide by line item, but the team has just done a really great job of driving subscriber growth. And I don't want to get too specific for obvious reasons, but that includes investing in lower-cost channels and also we put in some headcount that drives higher returns. We don't do a significant amount of TV advertising, but some of the pressures you've heard about on linear have also helped us in terms of CPMs. And so, you've probably seen some of our spots on TV. And then, I'd say taking a step back to the spirit of your question, we expect our sales and marketing line to continue to demonstrate operating leverage on an annual basis going forward.

Yeah, and it has. As you follow the story, the last three quarters consecutively on a year-over-year basis, you've seen that decline. So, I think it's been relatively linear in that respect.

Yeah. Hey, guys, congrats on the report here. Just the subscriber count, obviously, a pretty significant beat. You had the Disney-Charter dispute, that was pushing users into the vMVPD channel. Can you just provide more detail on, just talk about the upside, where you think most of it came from, what do you attribute the Disney-Charter dispute to the growth that you experienced, and how sticky you expect those customers to be that did migrate over?

Yes, thank you for the question. Look, as you said, it was an extremely strong quarter. We anticipated a strong quarter; we typically do at the beginning of any sports season just given our brand positioning. I would say, the Charter dispute was very helpful in many ways. I think the least impact that it had is actually on sub growth, because the dispute lasted, I think, just under 10 days or 11 days, starting from August 31st and it was resolved right before Monday Night Football. Typically, the way our funnel works is once we get people inside the platform, the goal is to get them to use different feature sets and also to ensure that we're delivering content that makes sense for users to drive retention. So, we didn't really have a chance to do that given the nature of that dispute ending before football. So, in terms of just what's driven it, I think, and you guys know, we are very strong at the beginning of the fall sports calendar. I think this year, just like any year, the NFL is obviously a key driver, albeit that this year, I think, is quite special because the pressure from YouTube TV was extraordinary. And I just mentioned on the last question, the number of discounts, the amount of discounting, the amount of money that was poured into marketing, didn't really impact our ability to drive subs. I think another piece of it is that the college football season also picked up pretty quickly this fall. I think there were some interesting games that have also been strong drivers. But again, just to highlight the Disney dispute didn't drive as many as we had intended just due to the length of the dispute resolution.

Understood. Given everything and considering that the World Cup was a significant factor last year, it seems that your guidance for the fourth quarter exceeds expectations, which is encouraging. However, the projected sequential growth from the third to the fourth quarter suggests that there may still be opportunities for additional subscribers. I might have anticipated a more substantial forecast from the third quarter to the fourth quarter based on your historical performance. Additionally, I was wondering if the ongoing Charter dispute might have affected subscriber numbers and contributed to a less pronounced fourth-quarter forecast. Could you elaborate on your fourth-quarter subscriber guidance in light of your recent projections? Also, it’s worth noting that last year you gained 200,000 subscribers from the third to the fourth quarter, which may be pertinent to your current guidance.

Nick, why don't I start? This is John, and if David wants to come in at the end, obviously, feel free. But look, it's always hard to know in terms of the pull forward, but I would say, as you know, we've been focused on improving profitability. And so, we started the year expecting North America subs of about 1.52 million at the midpoint of the guide and revenue of about $1.2 billion at the midpoint. So, to your point, we are now forecasting 1.591 million subs at the midpoint, revenue of $1.32 billion. So, we are now expecting sub growth of about 10% for the year. To your point, the World Cup did benefit us meaningfully last year. So, if we adjust for that, it's more like low double-digits, low-teens type of growth year-over-year. And so, given the sub growth that we were seeing and how the cadence came throughout the year, we're being slightly less aggressive on marketing to further drive that profitability. But again, hard to know on the pull-forward.

Yeah, I would say, look, I think you've seen how we've guided throughout the year. I think, again, just thinking about how dynamic our industry is with all the different changes that are happening almost weekly, I think we want to be a little bit conservative going into the end of the year. And as we've said now numerously, we're very focused on profitability. The goal is to drive revenue over subs because that's always been the opposite. And in order for us to hit that '25 target, we want to ensure that we're focused on customers that are profitable versus just subscribers for the sake of subscription. So, there is some conservatism in that, and obviously, we'll do our best to continue to remain efficient.

Good morning. This is Pat on for Jim. I had a follow-up question with regards to FAST channels. Just wondering the extent to which those are tailored for Fubo, and then, kind of like, just regards to how engagement on those channels has fared relative to some of the other content relationships you may have walked away from given just your focus on more sports-first content?

Yeah. This is David. Why don't I start, John? Look, I think this was an area where we definitely wanted to experiment a little bit. I think, unlike other platforms that have FAST channels, we've limited them to about, I would say, under 150 or so. Most platforms have 300-plus. And it's exactly as you said, the goal was to augment our current entertainment lineup. I think from the onset, even back to the IPO, we've always said that the entertainment content on the platform was fungible. And what we've seen is, although we have removed certain entertainment content from the platform, we've seen the FAST channels really take some of that share of viewership. And as I said before, it's really allowed us to drive advertising revenue above and beyond where we would. It also gives us more inventory. So, if you think about broadcasting cable, with broadcast networks, you don't have any inventory. And then, on the cable side, you essentially have between two and three minutes of ad avails. In this case, with FAST channels, we're getting roughly around 50% of the inventory. And the interesting thing is we can use our platform to drive viewership to different pieces of content. And so, obviously, it's in our best interest to drive people to FAST channels when we know there are certain genres they really enjoy. So, which is what we've been doing. And then, I don't know, John, if you want to add anything there?

The other thing I would add to that, actually, Pat, is that the team spends a lot of time looking at per-subscriber viewing metrics and the like. And what I could share with you on that front is that the viewing hours on a per-subscriber basis are up somewhere in the high double-digits to around 100% year-over-year.

Okay. Thank you. And then I guess the last question I had was how you guys see distribution relationships evolving as more content is incorporated onto some of the SVOD services?

Yeah. This is David. Look, as you can imagine, it's a very interesting industry, right? It's not like the airline industry where Boeing manufactures planes, American Airlines buys planes and sells tickets and so forth. This is where an industry where everyone is distributing, everyone is producing, and everyone is at the same time partnering and competing. So, it's a very complex space. I think our relationships continue to improve on multiple levels with distributors. The Charter-Disney dispute is a great example of two companies that compete for customers in the pay TV space but at the same time have found ways to work with one another. As time goes on, many in the industry believe that we not only have a strong technology platform, maybe the strongest in the world, but we also have a wonderful product and a fantastic team, and we're able to really execute well and very quickly. I anticipate that relationships with large tech companies could be on the horizon as well as other distributors and content partners. Our job is to ensure that customers get the best content at the right time for the best price. On the opposite side, we want to make sure that our content partners are monetizing their portfolio and sports contracts. What you're starting to see, potentially, with this Charter dispute is that we are, in fact, that partner. So, I do anticipate better relationships, stronger relationships, more executions, and different types of treatments as we go forward.

Great. This is Alison Sternberg. I just want to thank everybody for your time this morning and your thoughtful questions. We are looking forward to speaking with everyone again when we report the fourth quarter in February. Before we conclude the call, I did want to take a few questions that came in through our Say Technologies portal. The first of which I think comes as no surprise, and I'll direct it to both David and John, which is, how are you progressing towards profitability?

This is John. Why don't I start with that? Look, I'd say we're progressing very well. If you look at Page 3 of the release, there's a bar chart that actually shows that progress. But to dig a little deeper, let me share a couple of KPIs that our teams are really focused on. On a year-to-date basis, through the third quarter, adjusted EBITDA for our global streaming business has improved by nearly $100 million. Our EBITDA margin has improved by nearly 20 percentage points. Our incremental EBITDA margin, meaning EBITDA over revenue, is about 22%. So, I'd say we feel really good about where we're headed directionally.

I would say, I think one of the big areas of focus for most investors and specifically for the company is our content costs, which is a $1 billion line item. One of the things that I look at is contribution profit. If you look back, the last six quarters consecutively, we've seen an expansion of contribution profit. That will continue as we work through our agreements. We're looking forward to achieving our 2025 goal, and I think we're pacing well towards that goal.

Excellent. Thank you both. The second question is more of a macro question, and I'll direct this to you, David. What is the company's strategy when it comes to dealing with companies like Amazon and Apple entering the streaming of sports?

Yeah, look, again, this is very similar to an analyst question that was just asked. Again, everybody is competing and working together to drive results. One thing is clear, in order to be successful in the streaming space, you have to distribute your content to as many people as you can. What has become clear over time is if you look at all the Plus services in aggregate, they have lost, I think now it's north of maybe $10 billion. The model we continue to promote, which is aggregation, is a model that we think ultimately allows all participants in the ecosystem to create value. With respect to the two players mentioned, again, we have wonderful relationships with both of them. We still have over 50,000 sporting events on the platform. The fact that we lost Thursday Night Football, I think it's now in its second year, had very little impact. I would say no impact if you look at the net adds on a year-over-year basis and the double-digit growth we've been able to experience. We're very comfortable with where we are today and the sports content that we have on the platform. We look forward to continuing to build relationships both with customers and tech platforms.

Great. Thank you, David, and thank you, operator. This concludes our third quarter call for today. Again, thanks to everyone for your thoughtful questions, and we look forward to speaking with everybody soon.