Sports-centric virtual MVPD FuboTV is exiting the online sports wagering business, disclosing Monday plans to shutter Fubo Sportsbook immediately, after a strategic review failed to produce a viable path forward.
FuboTV in August said it would be putting Fubo Sportsbook, an integrated online wagering platform that it was hopeful would drive revenue, under strategic review to potentially find a partner rather than go it alone in the face of more challenging economic conditions and investors’ desire for profitability. This week the company said that while there were multiple interested parties, none would’ve allowed Fubo to reduce its funding requirements and generate sufficient returns to shareholders. As a result, the company has decided not to move forward on Fubo Sportsbook without a strategic partner.
“Following our previously announced strategic review, we have concluded that continuing with Fubo Gaming and Fubo Sportsbook in this challenging macroeconomic environment would impact our ability to reach our longer term profitability goals,” said FuboTV CEO and co-founder David Gandler in a statement. “Therefore, we have made the difficult decision to exit the online sports wagering business effective immediately."
In an October 17 8-K filing, Fubo said it expects the move to result in immaterial charges primarily related to severance and other employee-related costs. Still there may be additional costs, “the amount and timing of which cannot be estimated at this time,” the company stated. Fubo also expects non-cash impairment charges of around $70 million, primarily related to market access agreements and certain cash charges for terminating contracts.
Fubo’s interactive live sports wagering had been seen as a new revenue stream opportunity that would complement live events carried on its sports-first streaming service with the ability to be further integrated into the platform. Since 2020 the company had been saying it believes sports betting could become a significant new revenue stream, and earlier this year, Gandler had outlined Sportsbook as one of five key areas FuboTV was focused on to help achieve its 2025 cash flow goal.
As recently as August, during Fubo’s investor day, executives said they were still dedicated to building out a live streaming TV service that combines live content with a native sports betting platform.
Alongside the disclosure of exiting the sports wagering business, Fubo on Monday also released preliminary third-quarter earnings results that project subscriber and revenue growth, but an approximately $100 million Adjusted EBITDA loss for the period. Fubo expects to have at least $300 million in cash as of September 30, 2022.
The company anticipates Q3 North American revenue of at least $210 million, reflecting about 34% year on year growth, with Rest of World (or ROW) revenue of at least $5.5 million. ROW includes Molotov, a French live TV streaming service that Fubo acquired last December. In addition to France and North America, Fubo also operates in Spain. Early third-quarter revenue results for North America are above the previous guidance Fubo gave of between $200-$205 million.
Paid subscribers in North America in Q3 also look to be better than Fubo had projected, as they’re expected to hit more than 1.22 million, up over 27% year over year and compare to the prior guidance of between 1.135-1.155 million paid subs. As of the end of the second quarter Fubo had around 947,000 North American subscribers. Fubo TV global subscribers outside of North America are pegged at around 350,000 for the third quarter.
“FuboTV’s strong preliminary third quarter 2022 results reflect meaningful advancements against our continued mission to profitably scale a leading global live TV streaming platform differentiated by the greatest breadth of premium content and interactivity,” stated Gandler. “We expect to deliver strong revenue and subscriber growth in Q3, exceeding our previously issued guidance in North America, against the backdrop of a highly competitive operating environment. We’re pleased with this expected performance, and our progress toward achieving our positive cash flow target in 2025.”
FuboTV will share more details when it reports Q3 earnings on November 4.