Good morning. My name is Christa and I'll be your conference operator today. At this time, I would like to welcome everyone to the Fubo Fourth Quarter Full-Year 2023 Earnings Conference Call. All 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 conference over to Alison Sternberg, Senior Vice President of Investor Relations. Alison, you may begin your conference.

Thank you for joining us to discuss Fubo's fourth 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, including, but not limited to, statements regarding our financial condition, anticipated financial performance, business strategy and plans, industry and consumer trends, anti-competitive practices among our competitors and our response plan and expectations regarding profitability. These forward-looking statements are subject to certain risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from forward-looking 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, which are accounted for as discontinued operations. 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 also available in our Q4 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 fourth quarter and full-year 2023 results. We are pleased to report that Fubo once again exceeded guidance across key financial and operating metrics in North America with double-digit year-over-year growth during the fourth quarter. We delivered a record 1.62 million paid subscribers, an increase of 12% year-over-year, and $402 million in total revenue, up an impressive 29% year-over-year. Average revenue per user also reached an all-time high of $86.65, an increase of 15% year-over-year. In the context of a challenging year for the advertising industry, the accomplishments of our ad sales team are indeed noteworthy. Delivering a record $114 million in annual revenue, a 14% increase over the prior year, demonstrates remarkable resilience and effectiveness in our strategy and execution. Our balance sheet is healthy, reinforcing our confidence in achieving our profitability target in 2025. In 2023, we improved free cash flow by $101 million and adjusted EBITDA by $122 million, both over the prior year. This $100 million plus adjusted EBITDA improvement was fueled by robust revenue growth, enhanced operational efficiencies, and stringent cost management. Our ability to efficiently and substantially narrow our losses has been outstanding, setting a benchmark for exceptional performance within our industry. Even with our significant momentum in 2023, had Fubo been afforded the opportunity to compete on fair market terms in line with other distributors such as Hulu, Comcast, Charter, and DirecTV Stream, we believe our results could have been even better. In fact, considering the estimated $200 million plus we were forced to pay last year to all of our media partners for content consumers don't want as well as outsized penetration rates and excess fees paid, we believe Fubo may have been able to breakeven in 2023. And most compelling of all, we would have had the opportunity to return these savings to customers in the form of promotions and future discounts. Instead, our customers are hit with annual price hikes because they are forced to buy content they don't want just to access sports. Last week, we filed an antitrust lawsuit against The Walt Disney Corporation, Fox Corporation, and Warner Bros. Discovery, who are forming a sports streaming joint venture expected to launch this Fall. We assert that this JV is an attempt to monopolize the sports streaming industry and eliminate competition. Their proposed venture is, we believe, just the latest example of the Sports Cartel's attempt to block and steal Fubo’s vision of what a sports streaming bundle should look like, resulting in billions of dollars in damages to our business. We consider the defendants' pernicious contractual terms and other anti-competitive practices borderline racketeering. As stated in our complaint, this Sports Cartel has levied content rates on us that are 30% to 50% plus higher than those of other distributors, forced us to license unwanted non-sports content to access their must-have sports programming, imposed above-market penetration rates for this content, and restricted our ability to offer certain features while permitting competitors and their own vertically integrated services to do so. This Sports Cartel further attempts to stifle and destroy competition by forcing Fubo to license content they don't even own, which bloats our bundle and further raises prices for consumers. We have been dealing with widespread and rampant misconduct from this group and the industry at large. It has to stop. Consumers deserve choice. They should only pay for the channels they want. They should be able to access delightful product features to enjoy the streaming experience the way they want to, and they should get all of this at a fair price. I want to be clear that despite these challenges, we remain focused on executing our operating plan. Our ability to improve our business top and bottom line in a persistently anti-competitive landscape underscores our team's capacity for sustained execution. We remain focused on offering consumers a dynamic sports-centric entertainment content service and continuing to demonstrate to investors that they can rely on Fubo's consistent performance in meeting our business goals. Delivering an unparalleled streaming offering means solving problems for consumers. As we have said for the past three years, friction and fragmentation in the streaming industry is forcing consumers to pay for multiple services to access must-have content. With exclusive content fragmented across many services and packaged alongside non-exclusive programming, customers are ultimately paying multiple times for much of the same content. It's a well-established fact that for the benefit of consumers and to maximize the monetization of sports leagues' intellectual property, sports needs to be broadly disseminated. This is the rationale behind our ambition to become a super aggregator which we believe addresses the challenge effectively for consumers while also serving as the optimal strategy for our media and advertising partners. Our goal is to engage consumers along the demand curve and deliver aggregated video bundles focused on the consumer experience at different price points. We are not trying to be an app store. Our vision is to offer different types of packages, including Free, FAST, AVOD, pay-per-view, TVOD, and a virtual MVPD channel bundle and provide consumers with a seamless experience that lets them access just the channels they want, when they want, and at a fair price. First in our super aggregation strategy will be the forthcoming launch of a free content tier to include the nearly 160 FAST channels we have launched since 2022. By providing these channels outside of the paywall, we plan to leverage this tier to retain and monetize consumers who sign up for Fubo but either don't convert into paying users or who cancel their subscription. Our goal is to keep customers inside the Fubo ecosystem. There's a lot to enjoy with Fubo, and we intend to deliver multiple content and product options, letting consumers choose the Fubo experience that's right for them. In summary, in 2024, we are focused on solidly executing our business plan even as we manage headwinds. Our Q4 and full-year 2023 performance reaffirms our belief that Fubo's aggregated video bundle delivered through a premium, personalized streaming experience offers value for customers, shareholders, and partners. Importantly, we strive to be champions of consumers who are entitled to choose a sports-first bundle that's right for them and at a fair price. We will fight for their right to do so. I will now turn the call over to John Janedis, CFO, to discuss our financial results in greater detail. John?

Thank you, David, and good morning, everyone. Our fourth quarter results reflect the ongoing improvement across our key performance indicators. The fourth quarter marks more than a full year of this trend, serving as proof that our operational initiatives around bringing added effectiveness and efficiency to the business have been working and that our customer acquisition actions have also had a positive impact. We continued to see healthy top-line and subscriber growth with Q4 revenue growth in North America up 29% and rest of world revenue growth up 18%. We are equally pleased with our overall subscriber growth, including 12% growth in North America, well ahead of our initial guidance of 5% growth at the start of 2023. This brings us to $1.37 billion in global revenues for the full year, representing 28% growth year-over-year. As we continue to grow subscribers and become more strategic around our pricing and packaging, we expect to see continued leverage on the subscriber-related expense line which in the fourth quarter decreased 662 basis points to 87% of revenue versus the prior year period. On the operational front, ARPU in North America reached $86.65, an all-time high, while rest of world ARPU was $6.81. The improvement in ARPU was largely the result of various pricing initiatives undertaken throughout 2023. Turning to advertising, we are pleased with the growth and trends we are seeing on this front, more so given the continued volatility many advertising businesses are facing. During the fourth quarter, global ad revenue totaled $39 million, or a 15% increase versus the prior year period. Taking a look at the operational side of the business, we continue to make meaningful progress in our efforts to lower expenses and increase efficiency. Starting with the gross margin, we saw a near 900 basis point expansion to 10%, marking our fifth consecutive quarter of positive gross margin and a record for the company. This is on the back of another near 900 basis point improvement in the prior quarter. The improvements across the income statement also led to a significant reduction in net loss with Q4 net loss of $71 million or a $25 million year-over-year reduction. This resulted in net loss margin improvement to negative 17%, favorably comparing to a negative 30% loss margin in the prior year period. This led to a fourth quarter 2024 net loss per share of $0.24, a significant improvement compared to a loss of $0.48 in the fourth quarter of 2022. These results demonstrate that we are making meaningful progress towards our 2025 positive cash flow goal. Fourth quarter adjusted EBITDA loss also improved to a loss of $50.7 million compared to a loss of $75.4 million in the fourth quarter of 2022. Adjusted EBITDA margin was a negative 12.4%, a significant improvement from a negative 23.6% in the prior year period. This resulted in an adjusted EPS loss of $0.17, an improvement compared to an adjusted EPS loss of $0.39 in Q4 2022. Moving to the balance sheet. We believe we have ample liquidity to both invest in the business as well as continue to support our path to profitability, ending the quarter with $251 million in cash, cash equivalents, and restricted cash. In addition, our ongoing efforts to identify efficiencies and maximize leverage across the business resulted in a $15 million improvement in free cash flow. We continue to focus on maintaining rigor and discipline around our companywide costs and are pleased with the progress we made throughout the year. Now, turning to guidance. For the full year 2024, we expect full-year North America subscribers of 1.665 million to 1.685 million, representing 4% year-over-year growth at the midpoint, and full-year 2024 revenue of $1.505 billion to $1.525 billion, representing 13% year-over-year growth at the midpoint. The subscriber outlook reflects some conservatism in our plan, in particular, our exposure to potential industry volatility. However, we expect significant revenue growth outpacing subscriber growth due to anticipated ARPU expansion, given our continued focus on unit economics and margin improvement. As for the first quarter, we expect subscribers of 1.415 million to 1.435 million, representing 11% year-over-year growth at the midpoint, and revenue of $365 million to $375 million, representing 17% year-over-year growth at the midpoint. For the rest of the world, our full-year 2024 guidance projects 390,000 to 410,000 subscribers, representing a 2% year-over-year decline at the midpoint, and revenue of $31 million to $35 million, representing 2% year-over-year growth at the midpoint. In the first quarter, we expect subscribers of 380,000 to 385,000, representing a 1% year-over-year growth at the midpoint, and we expect revenue of $6.6 million to $8.6 million, representing a 2% decline year-over-year at the midpoint. In summary, we are encouraged by our strong fourth quarter and full-year results and the progress we are making on our long-term plan. We are driving improvement across our business, including marked progress around ARPU, advertising revenue, and subscriber-related expense. This progress positions us well for future success and increases our confidence that Fubo has the foundation necessary to deliver enhanced value to shareholders.

Thank you. Your first question comes from the line of Laura Martin from Needham and Company. Please go ahead.

Good morning. So, I guess the first one is your gross margins were fantastic. Can you remind us who's coming up for renewal and how you think the lawsuit impacts your ability to actually get costs lower since you've now sort of sued your major suppliers?

Hey, Laura, this is John. I'll start with the gross margin and maybe David will take the second part of the question. So, look, to your point, I think we had a great year in terms of the gross margin improvement, around 1,000 basis points versus 2022. And I think we also feel good about further expansion in 2024 as well. In terms of renewals, I think that we don't call out specific renewals, but what we've said historically, and that hasn't changed, is that we typically have one to two renewals per year, but we don't comment specifically on who or when.

Okay, my other question is about the lawsuits. John, what do you think the overall cost of the lawsuits will be in 2024? Does it impact your goal to achieve free cash flow breakeven in 2025? In the worst-case scenario, you have competitors; there are many streaming sports options available like those from Paramount, Hulu, and YouTube TV. Essentially, these companies are just marketing a sports bundle, and there has always been sports content available. So, if you were to lose everything and the courts or the DOJ take no action, your decision to file the lawsuit suggests some uncertainty about competing against this type of skinny bundle. Can you elaborate on that? Also, what would happen if no injunctions are granted and you have to compete against this new player?

Yes, hey Laura. This is David. Well, I think that as you said, we've been competing with these very large companies for nine years now, and we have overwhelming evidence over these years that demonstrates the anti-competitive patterns that we've been dealing with. I think as we've said, a win for us is really outlined in the complaint. We just want parity. Parity means that they don't levy rates on us that are 30% to 50% above market. They don't force us to license unwanted content to be able to access must-have programming, and they don't impose on us penetration rates that are above market, along with some of these restrictions. Like for instance, we don't get to sell ESPN+, despite the fact that we offered to pay for it and Charter received it for free. So that's on the one side. On the law side, I guess it's very difficult to say, but ultimately, I think things will remain status quo. We'll continue to have to deal with unreasonable and above-market economic terms. And as you can see, historically, 11 out of 12 quarters, we're continuing to fight the good fight. And so, that's sort of where we land within these two situations.

And Laura, maybe I'll just wrap up on the lawsuit costs. What I can tell you is that it's factored into our budget, but it's too soon to give you a number in terms of the totality.

Your next question comes from the line of David Joyce from Seaport Research Partners. Please go ahead.

Thank you. On the advertising side, your 15% growth seems to be in line with other digitally native video peers. But I was wondering what you are seeing in the current quarter given that there's incremental inventory coming online from Amazon. And also, what do you think the impact could be on the ecosystem with Walmart acquiring Vizio, which has some of that connected TV verticality in their strategy? Thanks.

Yes, this is John. I'll begin with the advertising question, and then David will address the Vizio part. Actually, Q4 exceeded our expectations. A few months ago, I mentioned that we anticipated single-digit ad growth, but we actually achieved double-digit growth. In Q4, we experienced mid-single digits for October through mid-November, followed by significant acceleration in December. For Q1, I can share that we had a strong January, and we feel optimistic about February, so we likely expect double-digit growth in the first quarter as well. From a category standpoint for Q1, we are seeing strength in larger categories such as healthy home and garden, quick service restaurants, gambling and gaming, and autos, all demonstrating strong double to triple digit growth. David, would you like to address the Vizio question?

Yes, regarding Vizio, we believe this is a positive development for the industry. Fubo has a high-quality audience that focuses on sports. If Walmart is able to provide Vizio with retail data, we see this as a significant opportunity not only for advertisers but also for Fubo and Walmart.

Your next question comes from the line of Nikhil Aluru from JPMorgan. Please go ahead.

Hey guys, good morning. Thanks for taking the question. If I could drill in on the 1Q guide a little bit, is there anything baked in there from what you observed from the exclusive Peacock playoff game in January? Did you notice any incremental turn, or if it changed the usage behavior afterwards from your regular NFL fans?

Yes, hi. Very good question. We actually didn't see anything because most people that visit Fubo or use Fubo are using it for the vast portfolio of sports content we have. And based on some of the data that we've seen with respect to plus services, and this may be the reason why the JV has become a hot topic, is that three out of four customers prefer to watch their content on our platform versus a plus service. So, actually, I think we've also seen that people are confused. About 70% of our customers also prefer to use Fubo for content that is also streamed exclusively on these plus services. So, all-in, I think we're in a relatively good spot, and it's clear. People are concerned that customers are tired of friction and fragmentation.

Understood. And maybe if I could follow up on the plus services. I mean, I guess when you guys discussed Charter and Disney in the past, you've talked about how that suggests the industry is heading towards reaggregation, which should benefit the company. But I'm curious if you think that there's any longer-term risk from what Charter is doing or potentially other future similar DTC bundles in that it could slow the pace of cord cutting and if that might shift the magnitude of new customers entering your funnel? Just curious how you think about that. Thanks.

Yes, thank you. I don't think we really think about that. As you know, we've continued to take share now for eight years annually. So this is a very robust market. We are all for competition, and we think consumers should have choice. And we believe the product that we are distributing is a product that people enjoy. So we don't really see any impact on that front.

Your next question comes from the line of Darren Aftahi from ROTH MKM. Please go ahead.

Good morning. Thanks for taking my questions. Could you talk a little bit about, in general, some more near-term year-to-date ad trends you're seeing particularly in SAS and then CTV?

Yes. Hey, Darren, it's John. I'll start. Maybe I'll add a little bit on to what I responded to with David's question. And so we actually saw some good health again coming out of December. As you know, David and I spend a lot of time with our ads team. What I can tell you for Q1 is that we're actually seeing improvement in terms of the demand factor as the quarters progressed. And so, what I mean is that for January, February, we're seeing the demand coming closer to run date. I would say now we're at a point where we're actually seeing demand for beyond 1Q, meaning March, but also into 2Q and into the 3Q. So I think we feel relatively good about it. On the political side, off of a small base, we saw call it triple-digit growth in Q1. As a refresh, we put up about call it $4 million-plus in 2022. I'd expect meaningful growth off of that in '24. But the majority is going to come in and call it from August and beyond. And then, again, from a category perspective, I mentioned the stronger ones for Q1. I would say on the softer side, I'd call it maybe CPG and travel and tourism, if I call that two that were a little bit softer than the portfolio. But again, I still expect to see double-digit growth for Q1.

Great. And then, maybe just one more philosophical question as it relates to the lawsuit. So, there's a lot of examples of monopolistic practice with Big Tech out there, and antitrust regulators have done nothing about it. So, I'm just curious, in the spirit of the lawsuit given you don't have unlimited resources, what is your propensity to, I guess, dig in kind of defend your ground here? Is this to the depth or is it something where if you don't see progress you might relent, given there's a very competitive product out there, and legal bills are not going to be cheap? Thanks.

Yes, well again, good question. I think that this is a duel to the death. It has been when we started this company. We are fighting for consumers. We are fighting for our customers. We are fighting for the tens of billions of dollars that are wasted annually by consumers paying for the same content multiple times. This is a very important process. We are sticking to our principles, to our guns, and we're continuing to be able to chew gum and walk at the same time, as you can see from our numbers. We're continuing to execute very well. We're continuing to see revenue growth. We're operating efficiently. And again we think that we can handle both of these things at the same time.

Your next question comes from the line of Shweta Khajuria from Evercore ISI. Please go ahead.

Thank you for taking my questions. Can you provide insight into the subscriber churn you experienced from Q4 to Q1? Additionally, what projections are included in your guidance for the year, and do you anticipate continued improvement compared to previous seasonality trends? My second question is a follow-up to your earlier response, David, about the lawsuit. If the outcome is not favorable, how do you envision the future of Fubo? You've mentioned that you're committed to this challenge, but it might become more difficult. Could you elaborate on that? Thank you.

Shweta, hey, it's John. I'll start with churn. And what I would say is that we don't disclose exact churn numbers, but I could say a couple of things to that. One is, as a reminder, there is seasonality by quarter for the churn. And so, I would say, hard to give you kind of a differential from Q1 to Q4 because I don't know if it's overly relevant. What I can tell you, though, directionally, when we look at it year-over-year, it's been relatively stable.

Sorry, Shweta, could you just repeat the litigation question? I think there were a few questions within the overall comment.

Sure. I was just wondering what you think if the lawsuit goes against you, I mean you mentioned that you've been fighting the fight, but that fight could get a little bit tougher in the event that you lose the lawsuit. So how does the business change, and what are your thoughts for that event happening?

Right, as I mentioned, we are committed to our customers. Losing the lawsuit won't significantly impact our situation, as we've indicated. If things stay the same, we would still face unreasonable pricing and terms that are higher than market rates. Therefore, I don't think these companies would retaliate against us for filing what we consider a legitimate complaint.

Your next question comes from the line of Clark Lampen from BTIG. Please go ahead.

Thanks for taking the question. Good morning. John, I wanted to follow up on some of the ad comments. You mentioned that you were seeing momentum and sort of demand persist beyond 1Q and into 2Q and 3Q. Could you help us understand, I guess, what's sort of baked into guidance for the year and how much, I guess, the lift that we've seen in the back half of 2023 is systematic or maybe conversely a function of some of the improvements in the go-to-market that you implemented?

Yes, of course, Clark. We don't provide specific advertising guidance. Starting with Q1, we experienced double-digit growth. It's difficult to predict specifics for Q2 to Q4, but we still anticipate growth. I prefer not to be more specific due to limited visibility. From a direct and programmatic guarantee perspective, we need to observe progress in terms of improving the mix. That number has tripled, moving from around 6.5% of the total being programmed to over 90% programmatic. In the fourth quarter, it was about 20%. I expect that number to improve in 2024. However, I want to note that a significant portion of political spending comes through programmatic channels. If I exclude that for a direct comparison, direct spending should be in the low to mid-20s, which also offers pricing benefits. This segment has a higher CPM compared to the programmatic business. Although you didn't inquire about this, there is some pricing weakness due to the increased supply. We see this primarily affecting undifferentiated supply in the long tail. However, because we focus on sports, we remain relatively unaffected by this issue.

Yes, why don't I take that question? So, I think over the last year and a half since our acquisition of Molotov, we've been very focused on the platform. This is a very forward-thinking company. We've been ahead of the curb now on multiple fronts for many years. And the three areas that we've really focused on is developing a backend-driven platform that enables us to rapidly and seamlessly release product features. That's important because we collect a lot of data, and we're doing a lot of A/B testing. Hundreds of A/B tests are running simultaneously. And that will inform us on the direction we're going to take. Some will be larger bets, some smaller bets. The second piece is the advanced data and AI platform that we've really developed. We started to release some features. I think we've announced the instant headlines that we're starting to see some traction with. If you're not familiar with that feature, it's a feature that allows overlaying the thumbnail on the homepage that will immediately recognize what is being discussed on a newscast. So, if you're talking about the elections, you'll quickly see a headline change to whatever is there, so consumers are more apt to click on that. And the last thing is just the flexible architecture that we've built that allows us to rapidly make changes to configurations, which enable very quick rollouts efficiently across the globe. Right now, we're very focused on our U.S. plan in achieving our profitability targets in 2025, but the baseline on the back end of the platform is prepared. We're running some tests, as I said, and we're looking forward to starting to roll out features toward the back half of the year. The first feature, as I mentioned in my opening remarks, was our premium platform, which will give us an opportunity to collect even more data. So, we're very excited. We've always said that we wanted to compete on a non-exclusive basis on fair terms. And we look forward to doing that.

Thank you. I will now turn the call back over to Alison.

Thank you, operator, and thank you to everyone for your very thoughtful questions. We look forward to speaking with all of you next quarter. Before I turn it back to the operator to close out the call, I did want to surface some questions related to our Say Technologies investor platform. One question that got a lot of votes, I think this is really appropriately directed to you, David, is sort of a meta question, a very high-level question, which is what long-term strategies do you have in place to ensure sustainable growth and success of the company?

Yes, very good question. I tried to hit on that during my opening remarks. One of our key goals as part of being a video aggregator is to really drive a super aggregation strategy. I think we've said many times that we are not, we have no plans to be an app store. We want to create a seamless and premium experience for customers, and we look to target those customers at different points on the demand curve, which by the way will change given the seasonality of content that's available. As we said, we're going to start to build on our strong advertising business and launch a free tier sometime in the back half of the year to leverage the roughly 160 FAST channels that we already have behind the paywall. We're focused on continuing to develop some technology in-house that will allow us to create more personalized experiences and upsell customers on things like TVOD and pay-per-view initially. As we work through our content deals, we'll hopefully get to a place where we can unbundle some of the programming, the same way the media companies would plan to do so. I think that's going to drive a lot of value both for customers, for our media partners as well, driving revenue for them, and our shareholders.

Excellent. And one other question that received quite a few upvotes, not surprisingly, and you've addressed this throughout the course of the call, but will this new JV and sort of the associated impact or anticipated impact change our path to profitability by '25?

Well, the answer is no. As you know, the last four quarters, we've really delivered on the bottom line. This last quarter was a really impressive move. An improvement of $100 million of free cash flow really demonstrates our commitment to achieving our profitability targets. That doesn't mean it's going to be an easy road, but this company has demonstrated time and time again its resilience. If that's all, I'd like to ask one thing of all of our friendly listeners and the majority of the people that follow us is I really encourage you to visit savemysports.com in support of consumer choice. There's a letter out there that I've posted, and you'll be able to find your local congressmen and women. Feel free to reach out to them because this is a really important topic, and you'd be saving customers tens of billions of dollars a year. Thank you.

Thank you, David. Again, thank you to everyone on the call for your thoughtful questions. I'll turn it back over to you, operator, to conclude the call.

This does conclude today's conference call. Thank you for your participation. And you may now disconnect.