346282

fuboTV (NYSE:FUBO) Reports Bullish Q4, Stock Jumps 14.5%


Full Report / March 01, 2024

Live sports and TV streaming service fuboTV (NYSE:FUBO) reported Q4 FY2023 results topping analysts' expectations, with revenue up 28.5% year on year to $410.2 million. It made a non-GAAP loss of $0.17 per share, improving from its loss of $0.76 per share in the same quarter last year.

fuboTV (FUBO) Q4 FY2023 Highlights:

  • Revenue: $410.2 million vs analyst estimates of $397.8 million (3.1% beat)
  • EPS (non-GAAP): -$0.17 vs analyst estimates of -$0.24
  • Free Cash Flow was -$5.16 million compared to -$29.5 million in the previous quarter
  • Gross Margin (GAAP): 9.7%, up from 0.8% in the same quarter last year
  • Subscribers: 2.04 million
  • Market Capitalization: $606.1 million

Originally launched as a soccer streaming platform, fuboTV (NYSE:FUBO) is a video streaming service specializing in live sports, news, and entertainment content.

fuboTV's original focus on live soccer paved the way for a broader scope, and the company has since evolved into a versatile streaming platform that includes a wide array of major sports leagues, news, and entertainment content. This growth aligns with the increasing shift towards cord-cutting, positioning fuboTV as a comprehensive and flexible alternative to conventional cable TV. fuboTV's on-demand content is accessible across multiple devices, increasing convenience for its subscribers.

fuboTV primarily generates revenue through subscription fees and has various add-on plans to suit different content preferences. This strategy has enabled fuboTV to attract a demographic that values choice, convenience, and comprehensive coverage on a user-friendly platform.

Media

The advent of the internet changed how shows, films, music, and overall information flow. As a result, many media companies now face secular headwinds as attention shifts online. Some have made concerted efforts to adapt by introducing digital subscriptions, podcasts, and streaming platforms. Time will tell if their strategies succeed and which companies will emerge as the long-term winners.

Competitors in the live TV streaming market include YouTube TV (owned by NASDAQ:GOOGL), Comcast (NASDAQ:CMCSA), Charter Communications (NASDAQ:CHTR), and DISH Network (NASDAQ:DISH).

Sales Growth

A company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. fuboTV's annualized revenue growth rate of 78.8% over the last five years was incredible for a consumer discretionary business. fuboTV Total RevenueWithin consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. fuboTV's recent history shows its momentum has slowed as its annualized revenue growth of 46.4% over the last two years is below its five-year trend.

We can better understand the company's revenue dynamics by analyzing its number of subscribers, which reached 2.04 million in the latest quarter. Over the last two years, fuboTV's subscribers averaged 49.8% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company's monetization has fallen. fuboTV Subscribers

This quarter, fuboTV reported remarkable year-on-year revenue growth of 28.5%, and its $410.2 million of revenue topped Wall Street estimates by 3.1%. Looking ahead, Wall Street expects sales to grow 19.1% over the next 12 months, a deceleration from this quarter.

Operating Margin

Operating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Given the consumer discretionary industry's volatile demand characteristics, unprofitable companies should be scrutinized. Over the last two years, fuboTV's high expenses have contributed to an average operating margin of negative 36.1%. fuboTV Operating Margin (GAAP)

in line with the same quarter last year. This indicates the company's costs have been relatively stable.

EPS

Analyzing long-term revenue trends tells us about a company's historical growth, but the long-term change in its earnings per share (EPS) points to the profitability and efficiency of that growth–for example, a company could inflate its sales through excessive spending on advertising and promotions. fuboTV EPS (Adjusted)

Over the last four years, fuboTV cut its earnings losses and improved its EPS by 37.9% each year.

In Q4, fuboTV reported EPS at negative $0.17, up from negative $0.76 in the same quarter a year ago. This print beat analysts' estimates by 29.1%. Over the next 12 months, Wall Street expects fuboTV to improve its earnings losses. Analysts are projecting its LTM EPS of negative $1.00 to advance to negative $0.53.

Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, fuboTV's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 20.6%.

fuboTV Free Cash Flow Margin

fuboTV burned through $5.16 million of cash in Q4, equivalent to a negative 1.3% margin, increasing its cash burn by 77.6% year on year. Over the next year, analysts predict fuboTV will continue burning cash, albeit to a lesser extent. Their consensus estimates imply its LTM free cash flow margin of negative 12.9% will increase to negative 5.5%.

Key Takeaways from fuboTV's Q4 Results

We were impressed by how significantly fuboTV blew past analysts' EPS expectations this quarter. We were also glad its revenue outperformed Wall Street's estimates. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The stock is up 14.5% after reporting and currently trades at $2.37 per share.

Is Now The Time?

fuboTV may have had a good quarter, but investors should also consider its valuation and business qualities when assessing the investment opportunity.

We think fuboTV is a solid business. First off, its revenue growth has been exceptional over the last five years. And while its cash burn raises the question of whether it can sustainably maintain growth, its projected EPS for the next year implies the company's fundamentals will improve. On top of that, its EPS growth over the last four years has been fantastic.

Despite its flashes of high business quality, the state of its balance sheet makes us uncomfortable. We'd like to see the company reduce its leverage before recommending the stock.

Wall Street analysts covering the company had a one-year price target of $3.80 per share right before these results (compared to the current share price of $2.37).

To get the best start with StockStory, check out our most recent stock picks, and then sign up for our earnings alerts by adding companies to your watchlist here. We typically have the quarterly earnings results analyzed within seconds of the data being released, and especially for companies reporting pre-market, this often gives investors the chance to react to the results before the market has fully absorbed the information.