fuboTV Q4 Earnings Preview: Profit Margins Will Take Center Stage


Jthe sports-centric streaming alternative for cable TV fuboTV (NYSE: FUBO) explosively increases its revenue and subscribers. But instead of growth, investors will focus on profit margins when fuboTV reports its fourth quarter and fiscal year 2021 financial results after the market closes on Feb. 23.

The company struggles to cut costs as a percentage of revenue, leading to massive losses on the bottom line. Will management be able to ensure they are managing this aspect of the business when they report later this week? Let’s take a closer look at what investors could expect on Wednesday.

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Triple-digit revenue growth expected for fuboTV in the fourth quarter

Interestingly, fuboTV already released preliminary results for the fourth quarter on January 10. Management said the company expects revenue to reach $217.5 million at the midpoint. This was $10 million more than management’s initial estimate of $207.5 million and a 107% increase over the same quarter a year earlier.

Impressively, fuboTV continues its robust growth despite the economic reopening. Some investors feared that as people had more options for what to do with their time and money, demand for home entertainment options like fuboTV would decline. While this has come to fruition for some companies, this is not the case for fuboTV.

Subscriber gains fuel revenue growth. In this regard, fuboTV said it will exceed 1.1 million subscribers by the end of the fourth quarter. Again, that’s over 100% growth over the previous year and above its own earlier estimates. Keep in mind that fuboTV is a sports-centric service. The economic reopening has brought fans back to stadiums, creating a more exciting viewing experience for those watching at home.

“fuboTV’s strong preliminary results in the fourth quarter of 2021 cap off a pivotal year in which we have made significant progress on our mission to define a new category of interactive sports and entertainment television,” said David Gandler, co-founder and CEO of fuboTV.

Yet crucial measures of profit margin were missing from the preliminary results. In the nine months ended Sept. 30, fuboTV lost $271 million in net income and $143 million in cash from operating activities. Those interested in fuboTV will be eager to see its progress on this front. Already, it has shown that it can generate growing margins through increased revenue. Subscription expenses represented 122% of revenue in Q3 2019, 100% in Q3 2020 and 91.5% in Q3 2021.

What this could mean for fuboTV investors

Wall Street analysts expect fuboTV to post revenue of $213.61 million and a loss in earnings per share (EPS) of $0.67. If it meets these projections, it would be increases of 103.30% and 70.74%, respectively, compared to the same period the previous year. Interestingly, analysts’ revenue estimates are lower than the preliminary revenue of $215-220 million announced by management on January 10.

The stock price is down about 18% in the past month as it has been caught up in the sell-off in growth stocks. An immediate catalyst that could boost the stock price will be progress in cost control and margin expansion.

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Parkev Tatevosian has no position in the stocks mentioned. The Motley Fool owns and recommends fuboTV, Inc. The Motley Fool has a Disclosure Policy.

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