Item 1A. Risk Factors 13
Item 1B. Unresolved Staff Comments 48
Item 2. Properties 48
Item 3. Legal Proceedings 48
Item 4. Mine Safety Disclosures 48
PART II
Item 6. [Reserved] 49
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62
Item 8. Financial Statements and Supplementary Data 62
Item 9A. Controls and Procedures 62
Item 9B. Other Information 64
Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections 64
PART III
Item 10. Directors, Executive Officers and Corporate Governance 65
Item 11. Executive Compensation 65
Item 14. Principal Accountant Fees and Services 65
PART IV
Item 15. Exhibits and Financial Statement Schedules 66
BASIS
OF PRESENTATION
As
used in this Annual Report on Form 10-K (“Annual Report”), unless expressly indicated or the context otherwise requires,
references to “fuboTV Inc.,” “fuboTV,” “we,” “us,” “our,” “the Company,”
and similar references refer to fuboTV Inc., a Florida corporation and its consolidated subsidiaries, including fuboTV Media Inc. (formerly
known as fuboTV Inc.), a Delaware corporation (“fuboTV Sub”). “fuboTV Pre-Merger” refers to fuboTV Sub and its
subsidiaries prior to the Merger (as defined herein) and “FaceBank Pre-Merger” refers to FaceBank Group, Inc. and its subsidiaries
prior to the Merger.
FORWARD-LOOKING
STATEMENTS
This
Annual Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements,
which are subject to a number of risks, uncertainties, and assumptions, generally relate to future events or our future financial or
operating performance. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,”
“will,” “estimate,” “continue,” “anticipate,” “design,” “intend,”
“expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,”
“would,” “target,” “project,” “contemplate,” or the negative version of these words and
other comparable terminology that concern our expectations, strategy, plans, intentions, or projections. Forward-looking statements contained
in this Annual Report include, but are not limited to, statements regarding our future results of operations and financial position,
industry and business trends, stock-based compensation, revenue recognition, business strategy, plans and market growth, and our objectives
for future operations, including related to investment in our technologies and data capabilities, subscriber acquisition strategies,
expansion of our gaming business and other adjacent markets, and expansion internationally.
We
have based the forward-looking statements contained in this Annual Report primarily on our current expectations and projections about
future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy
and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those
described in Part I, Item 1A, “Risk Factors” in this Annual Report. These risks are not exhaustive. Other sections of this
Annual Report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in
a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to
predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks,
uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Annual Report may not occur and actual
results could differ materially and adversely from those anticipated or implied in the forward-looking statements and you should not
place undue reliance on our forward-looking statements.
In
addition, forward-looking statements are based upon information available to us as of the date of this Annual Report, and while we believe
such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should
not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
The
forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake
no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of
this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law.
RISK
FACTORS SUMMARY
Our
business is subject to numerous risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in
this Annual Report. Material risks that may affect our business, operating results and financial condition include, but
are not limited to, the following:
● Our actual operating results may differ significantly from our guidance.
● We are subject to taxation-related risks in multiple jurisdictions.
PART
I
Item
1. Business.
Our
Mission
Our
mission is to build the world’s leading global live TV streaming platform with the greatest breadth of premium content, interactivity
and integrated wagering.
Overview
We
are a sports-first, live TV streaming company, offering subscribers access to tens of thousands of live sporting events annually as well
as leading news and entertainment content. Our platform, fuboTV, allows customers to access content through streaming devices and on
SmartTVs, mobile phones, tablets, and computers.
Live
TV streaming has disrupted the traditional pay TV model (linear video received through cable or satellite providers for a paid subscription),
which we refer to as “Pay TV.” This disruption has shifted billions of dollars in subscription and advertising revenue to
streaming platforms. The number of cable TV cord-cutting households (those that terminate their cable or satellite subscription) and
cable TV cord-never households (those that have never subscribed to traditional cable or satellite) continues to accelerate in the United
States, as cable and satellite subscribers increasingly favor the streaming experience. As consumers continue to spend more time streaming
content, we also believe that advertisers will allocate more dollars away from traditional linear TV advertising spend and towards streaming
services. Yet, despite being a growing share of TV consumption, streaming is still in the early stages of adoption. We believe this creates
a significant opportunity for us to capitalize on the cord-cutting movement.
We
offer subscribers a live TV streaming service with the option to purchase incremental features available for purchase that include additional
content or enhanced functionality (“Attachments”) best suited to their preferences. Our base plan includes a broad mix of
channels, including top 50 Nielsen-ranked networks, across sports, news, and entertainment. At the core of our offering are our proprietary
technology platform, purpose-built for live TV and sports viewership, and our first-party data. Our proprietary technology stack has
enabled us to regularly offer new features and functionality. Unlike other popular Video-on-Demand-only (“VOD”) streaming
services, live TV streaming requires sophisticated infrastructure and technology, given the nuances associated with an offering of live
programming that refreshes regularly. Today, our proprietary video delivery platform supports all major sports leagues and entertainment
content owner delivery requirements. We offer multi-view on Apple TV, which enables subscribers to watch four live streams simultaneously.
Our technology enables us to meet blackout and geographical rights requirements with zip-code-level fidelity and deliver conforming streams
on a per-user, per-device basis, protected by industry-standard Digital Rights Management (“DRM”) technology. We leverage
our data throughout our organization to make data driven decisions on what content we acquire for our subscribers to influence product
design and strategy, to drive subscriber engagement, and to enhance the capabilities and performance of our advertising platform for
our advertising partners.
As
a result of our direct-to-consumer model, we gain further insight into customer behavior from the billions of data points captured by
our platform each month. This data drives our continued innovation and is at the core of our enhanced user experience, product and content
strategy, and advertising differentiation. The data also enables us to provide users with real-time personalized discovery of live and
on-demand programming and to surface relevant content for our users.
Our
growth strategy is to acquire subscribers who are attracted to our sports offering and can find with us a compelling sport, news, and
entertainment viewing alternative to a traditional Pay TV service. We actively engage those subscribers by providing a seamless Pay TV
replacement through a personalized easy-to-use streaming product at a significantly lower cost than traditional Pay TV providers. We
then monetize our audience through subscription fees and our digital advertising offering. In 2021, the majority of our revenue was generated
from the sale of subscription services and the sale of advertisements in the United States, though the Company has started to expand
into international markets, with operations in Canada, Spain and France.
We
are continuing to invest to accelerate our expansion into the sports wagering space, which we believe will be a complementary revenue
stream to our current business model. In February 2021, we completed the acquisition of Vigtory, Inc. (“Vigtory”), which
was renamed fubo Gaming Inc. (“fubo Gaming”), augmenting our video technology platform with Vigtory’s sportsbook capabilities
and pipeline of market access agreements. Throughout 2021, we introduced our intended online wagering strategy, including the roll-out
in the third quarter of 2021 of predictive, free-to-play games, which are integrated into select sports content on our TV streaming platform,
and the launch in the fourth quarter of 2021 of fubo Gaming’s business-to-consumer online mobile sportsbook (“Fubo Sportsbook”)
in Iowa and Arizona. We are planning to launch Fubo Sportsbook in additional states during 2022, subject to obtaining requisite regulatory
approvals. Fubo Sportsbook is purpose-built to integrate with fuboTV, creating a personalized omniscreen experience that turns passive
viewers into active and engaged participants.
Consistent
with our focus on interactivity, we completed the acquisition of Edisn Inc. (“Edisn”), an AI-powered computer vision platform
with patent-pending video recognition technologies based in Bangalore, India, in December 2021. With Edisn, we expect to expand our
data science and engineering organization globally, while strengthening our technology capabilities and accelerating innovation.
Additionally,
we further expanded internationally in 2021 through our acquisition of Molotov SAS (“Molotov”) a video streaming platform
based in Paris, France. With Molotov, we are augmenting our technology capabilities, enabling us to launch our interactive sports and
entertainment streaming platform more efficiently on a global scale.
Industry
Overview
Streaming
services have experienced rapid growth in adoption as consumers engage with streaming video and audio through a variety of devices, including
connected TVs, mobile phones, and tablets. Traditional live TV accounts for the majority of TV viewing hours for U.S. households, however,
the proportion is declining as customers continue cutting the cord. We believe consumers are increasingly favoring the superior customer
experience, lower cost, and better value of streaming services.
Sports
and news content have been a key driver for pay TV operators to retain and grow audiences. Most streaming subscription services have
primarily focused on entertainment content offerings, requiring sports fans to, until recently, remain tethered to the pay TV ecosystem.
This positions our offering well to provide a pay TV replacement service via streaming that also features an enhanced live sports and
news viewing experience.
Our
Business Model
Our
business model is “come for the sports, stay for the entertainment.” This consists of leveraging sporting events to acquire
subscribers at lower acquisition costs, given the built-in demand for sports. We then leverage our technology and data to drive higher
engagement and induce retentive behaviors such as favoriting channels, recording shows, and increasing discovery through our proprietary
machine learning recommendations engine. Next, we look to monetize our growing base of highly engaged subscribers by driving higher average
revenue per user (“ARPU”).
We
believe our expansion into wagering and interactivity is core to this model. We believe free-to-play predictive games enhance the sports
streaming experience - while also providing a bridge between video and our sportsbook. We expect the integration of gaming with our expansive
live sports coverage will create a flywheel that lifts engagement and retention, expands advertising revenue through increased viewership,
and creates additional opportunities for Attachment sales.
We
drive our business model with three core strategies:
● Grow our paid subscriber base
● Optimize engagement and retention
● Increase monetization
Our
Offerings
Our
offerings address the needs of the parties in the TV streaming ecosystem.
Subscribers
We
offer consumers a live TV streaming platform for sports, news, and entertainment. We provide basic plans with the flexibility for consumers
to purchase the Attachments best suited for them. Our base plan, fubo Starter, includes over 100+ channels, including many of the top
Nielsen-rated networks, dozens of channels with sports, double digit news channels, and some popular entertainment channels. Subscribers
have the option to add premium channels and additional channel packages, as well as upgrade Attachments such as more DVR storage with
Cloud DVR Plus and additional simultaneous streams with Family Share.
Advertisers
As
cord cutting continues and traditional Pay TV viewers decline, advertisers are increasingly allocating their ad budgets to Over-the-Top
(“OTT”) platforms to reach these audiences. fuboTV’s sports-first live TV platform offers advertisers a growing and
increasingly valuable live audience and provides un-skippable ad inventory on high quality content. Advertisers also benefit from combining
traditional TV advertising formats with the advantages of digital advertising including measurability, relevancy, and interactivity.
Content
Providers
Our
TV streaming platform creates the opportunity for content providers to monetize and distribute their content to our highly engaged audience.
In doing so, content providers are expanding their audiences, which have shrunk on traditional TV because of ongoing cord-cutting. By
aggregating a broad variety of content to deliver a comprehensive offering on our platform, we believe fuboTV is able to provide greater
engagement and value to subscribers than content providers would otherwise be able to deliver independently. Furthermore, our data-driven
platform enables us to capture valuable insights on consumer behavior and preferences, which are increasingly valuable to our content
providers.
Seasonality
We
generate significantly higher levels of revenue and subscriber additions in the third and fourth quarters of the year. This seasonality
is driven primarily by sports leagues, specifically the National Football League. In addition, we typically see the total number
of subscribers on our platform decline from the fourth quarter of the previous year through the first and second quarter of the following
year. We anticipate similar trends and user behavior for our recently launched Fubo Sportsbook given the seasonal nature of sports.
Our
Growth Strategy
We
believe that we are at the early stages of our growth and that we are at an inflection point in the TV industry where streaming has begun
to surpass traditional linear Pay TV in several key areas, including content choice, ease of access and use across devices, and cost
savings to consumers. We have identified potential growth opportunities, both in current markets and adjacent markets, that we believe
may provide additional upside to our business model. The key elements to our growth strategy include:
Intellectual
Property
Our
intellectual property is an essential element of our business. We rely on a combination of patent, trademark, copyright and other intellectual
property laws, confidentiality agreements and license agreements to protect our intellectual property rights. We also license certain
third-party technology for use in conjunction with our products.
We
believe that our continued success depends on hiring and retaining highly capable and innovative employees, especially as it relates
to our engineering base. It is our policy that our employees and independent contractors involved in development are required to sign
agreements acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated by them
on our behalf are our property and assigning to us any ownership that they may claim in those works. Despite our precautions, it may
be possible for third parties to obtain and use without consent intellectual property that we own or license. Unauthorized use of our
intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect
our business.
Patents
and Patent Applications
As
of December 31, 2021, we had four issued U.S. patents, three non-provisional U.S. patent applications, one U.S. design patent application,
18 granted international design registrations in three international design patents, three granted international patents and
seven international patent applications pending. The issued and granted patents expire in 2033 and 2038, and the international
design registrations have expiration dates ranging from 2035 to 2045. Although we actively attempt to utilize patents to protect our
technologies, we believe that none of our patents, individually or in the aggregate, are material to our business. We will continue to
file and prosecute patent applications when appropriate to attempt to protect our rights in our proprietary technologies. However, there
can be no assurance that our patent applications will be approved, that any patents issued will adequately protect our intellectual property,
or that such patents will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable.
Trademarks
We
also rely on several registered and unregistered trademarks to protect our brand. As of December 31, 2021, we had 37 trademarks
registered globally. “fuboTV” is a registered trademark in the United States and the European Union.
Competition
The
TV streaming market continues to grow and evolve as more viewers shift from traditional Pay TV to streaming. There is significant competition
in the TV market for users, advertisers, and broadcasters. We principally compete with Pay TV operators, such as Comcast, Cox and Altice,
along with other virtual multichannel video programming distributors (“vMVPDs”), such as YouTube TV, Hulu Live and
Sling TV. While the presence of these competitors in the market has helped to boost consumer awareness of TV streaming, contributing
to the growth of the overall market, their resources and brand recognition present substantial competitive challenges.
We
compete on various factors to acquire and retain users. These factors include quality and breadth of content offerings, especially within
live sports; features of our TV streaming platform, including ease of use and superior user experience; brand awareness in the market;
and perceived value relative to the price of our service. Additionally, we compete for user engagement. Many users have multiple subscriptions
to various streaming services and allocate time and money between them.
We
also face competition for advertisers, which in part depends on our ability to acquire and retain users. Providing a large and engaged
audience is crucial for advertisers on our live TV streaming platform. In the TV streaming market, the effectiveness of advertisements
and return on investments play a pivotal role. As such, we are also competing for advertisers based on the return of ads compared to
various other digital advertising platforms, including mobile and web. Additionally, advertisers continue to allocate a large portion
of spend to advertise offline. Therefore, we also compete with traditional media platforms such as traditional linear TV and radio. We
are increasingly leveraging our data and analytics capabilities to optimize advertisements for both users and advertisers. We need to
continue to maintain an appropriate advertising inventory for the growing demand for ads on our platform.
Furthermore,
we compete to attract and retain broadcasters. Our ability to license content from broadcasters is dependent on the scale of our user
base as well as license terms.
In
addition, our gaming business faces intense competition among online and mobile gaming and sports wagering providers. These industries
are characterized by increasing consumer demand and technological advances. A number of established, well-financed companies producing
online and mobile sports wagering products and services compete with our product and service offerings. These competitors may
spend more money and time on developing and testing products and services, undertake more extensive marketing campaigns, adopt more aggressive
pricing or promotional policies, or otherwise develop more commercially successful products or services than us.
Human
Capital
As
of December 31, 2021, we had approximately 530 employees, of which approximately 400 were located in North America and 130
were located in Europe and India. We consider our relationship with our employees to be good. None of our U.S. or Indian employees
is represented by a labor union or covered by a collective bargaining agreement. Our French employees are covered by the national collective
bargaining agreement for the consulting and engineering activities in France.
We
view our employees as central to the success of our business and achieving our mission. We are continuously focused on our culture, recruiting,
retaining and motivating our employees, employee development and engagement, diversity, equity and inclusion. As we expand globally,
including through our acquisitions of Molotov in France and Edisn in India during 2021, we are increasingly focused on these goals. We
believe the different backgrounds, traditions, views and talents each of our employees brings to fuboTV enrich the company as a whole
and help us achieve executional excellence. As part of these efforts, we also formed a Diversity Council in August 2020, comprised
of different team members throughout the organization, who work together to recommend and help drive diversity and inclusion initiatives
within the company. We also provide several programs and benefits to our employees designed to recruit, retain and incentivize high quality
talent, including stock-based compensation awards and cash-based performance bonus awards under our long-term incentive plans,
as well as health and welfare benefits and programs, and retirement savings plans.
In
response to the COVID-19 pandemic, we have taken a number of precautionary measures to protect the health and safety of our employees,
including by transitioning our workforce to remote working as we temporarily closed our offices beginning in March 2020. We have subsequently
reopened our offices on an optional basis, however, most of our employees continue to work remotely, and, in the long term, we expect
some personnel to continue to do so on a regular basis. We continue to monitor the ongoing COVID-19 pandemic, and the related impacts
and responses, and will adjust our current policies as more information and public health guidance become available.
Impact
of COVID-19
The
global spread of COVID-19 and the various attempts to contain it continued to create significant volatility, uncertainty and economic
disruption in 2021. The impact of the COVID-19 pandemic on our operations began towards the end of the first quarter of 2020, impacting
advertising markets and the availability of live sport events, as numerous professional and college sports leagues cancelled or altered
seasons and events.
During
2021, the ongoing COVID-19 pandemic continued to accelerate the shift of TV viewing away from traditional pay TV to streaming
TV and the on-going shift of advertising budgets away from traditional linear TV into streaming offering. While in 2021 we experienced
an increase in TV streaming and our overall business was largely unaffected by the COVID-19 pandemic there can be no assurance that these
positive trends will continue during the remainder of 2022 and beyond.
Merger
with fuboTV Sub
On
April 1, 2020, fuboTV Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub”) merged with
and into fuboTV Sub, whereby fuboTV Sub continued as the surviving corporation and became our wholly-owned subsidiary pursuant to the
terms of the Agreement and Plan of Merger and Reorganization dated as of March 19, 2020, by and among us, Merger Sub and fuboTV Sub (the
“Merger Agreement”). Following the Merger, we changed our name from “FaceBank Group, Inc.” to “fuboTV Inc.,”
and we changed the name of fuboTV Sub to “fuboTV Media, Inc.” The combined company operates under the name “fuboTV,”
and our trading symbol is “FUBO.” See “Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Merger with fuboTV Sub” in Part II, Item 7 in this Annual Report for a further description of
the Merger.
Government
Regulation
Our
business and our devices and platform are subject to numerous domestic and foreign laws and regulations covering a wide variety of subject
matters. These include general business regulations and laws, as well as regulations and laws specific to providers of Internet-delivered
streaming services and Internet-connected devices. New or modified laws and regulations in these areas may have an adverse effect on
our business. The costs of compliance with these laws and regulations are high and are likely to increase in the future. We anticipate
that several jurisdictions may, over time, impose greater financial and regulatory obligations on us. If we fail to comply with these
laws and regulations, we may be subject to significant liabilities and other penalties. Additionally, compliance with these laws and
regulations could, individually or in the aggregate, increase our cost of doing business, impact our competitive position relative to
our peers, and otherwise have an adverse impact on our operating results. For additional information about the impact of government regulations
on our business, see “Risk Factors— Risks Related to Regulation” and “Risk Factors—Risks Related to Privacy
and Cybersecurity” in Part I, Item 1A in this Annual Report.
Data
Protection and Privacy
We
are subject to various laws and regulations covering the privacy and protection of users’ data. Because we handle, collect, store,
receive, transmit, transfer, and otherwise process certain information, which may include personal information, regarding our users and
employees in the ordinary course of business, we are subject to federal, state and foreign laws related to the privacy and protection
of such data. These laws and regulations, and their application to our business, are increasingly shifting and expanding. Compliance
with these laws and regulations, such as the California Consumer Privacy Act and the European Union General Data Protection Regulation
2016/679 (the “GDPR”) could affect our business, and their potential impact is unknown. Any actual or perceived failure to
comply with these laws and regulations may result in investigations, claims and proceedings, regulatory fines or penalties, damages for
breach of contract, or orders that require us to change our business practices, including the way we process data.
We
are also subject to breach notification laws, including the GDPR, in the jurisdictions in which we operate, and we may be subject to
litigation and regulatory enforcement actions as a result of any data breach or other unauthorized access to or acquisition or loss of
personal information. Any significant change to applicable laws, regulations, interpretations of laws or regulations, or market practices,
regarding the processing of personal data, or regarding the manner in which we seek to comply with applicable laws and regulations, could
require us to make modifications to our products, services, policies, procedures, notices, and business practices, including potentially
material changes. Such changes could potentially have an adverse impact on our business. For additional information about the impact
of data protection and privacy regulations on our business, see “Risk Factors—Risks Related to Privacy and Cybersecurity”
in Part I, Item 1A in this Annual Report.
Gaming
Regulations
The
Company is or is expected to be subject to various U.S. federal and state laws as well as foreign regulations that affect our ability
to launch and operate a sportsbook and offer other gaming-related products. These product offerings are generally subject to extensive
and evolving regulations that could change based on political and social norms and that could be interpreted in ways that could negatively
impact our business. The gaming industry, including any sportsbook product offering, is highly regulated and subject to extensive regulation
under the laws, rules, and regulations of the jurisdictions in which we operate. These laws, rules and regulations generally concern
the responsibility, financial stability, integrity and character of the owners, officers, directors, key management employees and persons
with material financial interests in the gaming operations along with the integrity and security of our sportsbook offerings and the
technologies supporting such offering. Violations of laws or regulations in one jurisdiction could result in disciplinary action in that
and other jurisdictions. As well, as a condition of operating in certain jurisdictions, we must obtain either a temporary or permanent
license, approval, or determination of suitability from the relevant gaming authorities. We seek to ensure that we obtain all necessary
licenses to develop and put forth our offerings in the jurisdictions in which we operate or seek to operate. Gaming laws and regulations
in certain jurisdictions require us, and/or our subsidiaries engaged in gaming operations, certain of our directors, officers, and key
management employees, and in some cases, certain of our shareholders, to obtain licenses, qualifications or findings of suitability from
gaming authorities. Such licenses, qualifications or findings of suitability typically require a determination that the applicant qualifies
or is suitable to hold the license, qualification or finding of suitability. Various factors are considered including, without limitation,
the financial stability, character integrity and responsibility of the applicant; the quality and security of the applicant’s gaming
platform, hardware and related software and the applicant’s ability to operate its gaming business in a responsible manner and
in compliance with all applicable laws and regulations. Gaming authorities have broad authority to, subject to certain administrative
procedural requirements, deny an application, or limit, condition, revoke or suspend any license or approval issued by them, or demand
that named individuals or shareholders be disassociated from a gaming business. Various events may trigger revocation of such a gaming
license or another form of sanction which may vary by jurisdiction. Examples of such events include, without limitation, conviction of
certain persons with an interest in, or key personnel of, the licensee of an offense that is punishable by imprisonment or may otherwise
cast doubt on such person’s integrity; failure without reasonable cause to comply with any material term or condition of the gaming
license; obtaining the gaming license by a materially false or misleading representation or in some other improper way; or violation
of an applicable gaming law or regulation or other law or regulation, such as anti-money laundering or terrorist financing laws or regulations.
For additional information about the impact of gaming regulations on our business, see “Risk Factors— Risks Related to Our
Products and Technologies” and “Risk Factors – Risks Related to Regulation” in Part I, Item 1A in this
Annual Report.
Corporate
Information
We
were incorporated in 2009 as a Florida corporation under the name York Entertainment, Inc., and on August 10, 2020, our name was changed
to fuboTV Inc. fuboTV Sub was incorporated in 2014 as a Delaware corporation. Our principal executive offices are located at 1290 Avenue
of the Americas, New York, New York 10104, and our telephone number is (212) 672-0055. Our website address is at https://fubo.tv.
Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report, and you should not consider information on our website to be part of this Annual Report.
Available
Information
Our
internet website address is www.fubo.tv. At our Investor Relations website, ir.fubo.tv, we make available free of charge a variety of
information for investors, including our annual report, quarterly reports on Form 10-Q, current reports on Form 8-K and
any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the
Securities and Exchange Commission (“SEC”). The information found on our website is not part of this or any other report
we file with, or furnish to, the SEC.
We
announce material information to the public through filings with the SEC, the investor relations page on our website, press releases,
our Twitter account (@fuboTV), our Instagram account (@fubotv), our Facebook page (www.facebook.com/fuboTV), our LinkedIn page (www.linkedin.com/company/fubotv/),
public conference calls, and webcasts in order to achieve broad, non-exclusionary distribution of information to the public and for complying
with our disclosure obligations under Regulation FD. We encourage investors, the media, and others to follow the channels listed above
and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce
information will be posted on the investor relations page on our website.
Item
1A. Risk Factors.
You
should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report, including our condensed consolidated financial statements and related notes and the section titled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” Our business, financial condition, results of operations,
or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.
If any of the risks actually occur, our business, financial condition, results of operations, and prospects could be adversely affected.
In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
This
Annual Report also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking
Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth below.
Risks
Related to Our Financial Position and Capital Needs
We
have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability.
We
have incurred losses since inception. Our net loss for the year ended December 31, 2021 was $383.0 million. We expect our operating
expenses to increase in the future as we continue to expand our operations. If our revenue and gross profit do not grow at a greater
rate than our operating expenses, we will not be able to achieve and maintain profitability. A number of our operating expenses, including
expenses related to streaming content obligations, are fixed. If we are not able to either reduce these fixed obligations or other expenses
or maintain or grow our revenue, our near-term operating losses may increase. Additionally, we may encounter unforeseen operating or
legal expenses, difficulties, complications, delays and other factors that may result in losses in future periods. If our expenses exceed
our revenue, we may never achieve or maintain profitability and our business may be harmed.
We
may require additional capital to meet our financial obligations and support planned business growth, and this capital might not be available
on acceptable terms or at all.
We
intend to continue to make significant investments to support planned business growth and may require additional funds to respond to
business challenges, including the need to develop new features or enhance our existing platform, products and services, expand into
additional markets around the world, improve our operating infrastructure or acquire complementary businesses, personnel and technologies.
Accordingly, we may need to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt
securities, including pursuant to our shelf registration statement on Form S-3, our then existing shareholders could suffer significant
dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common
stock. Any debt financing we secure could involve restrictive covenants relating to our capital raising activities and other financial
and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including
potential acquisitions. If we were to violate the restrictive covenants, we could incur penalties, increased expenses and an acceleration
of the payment terms of our outstanding debt, which could in turn harm our business.
We
may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or
financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business
challenges could be significantly impaired, and our business may be harmed.
Our
revenue and gross profit are subject to seasonality, and if subscriber behavior during certain seasons falls below our expectations,
our business may be harmed.
Seasonal
variations in subscriber and marketing behavior significantly affect our business. We have previously experienced, and expect to continue
to experience, effects of seasonal trends in subscriber behavior due to the seasonal nature of sports. We generate significantly higher
levels of revenue and subscriber additions in the third and fourth quarters of the year, driven primarily by sports leagues, specifically
the National Football League. Our operating results may also be affected by the scheduling of major sporting events that do not occur
annually, such as the World Cup or Olympic Games, or the cancellation or postponement of sporting events and races. We also experience
higher advertising sales during the fourth quarter of each calendar year due to greater advertiser demand during the holiday season, but, on the other hand, also incur greater marketing expenses as we attempt to attract new subscribers to
our platform. In addition, expenditures by advertisers tend to be cyclical and are often discretionary in nature, reflecting overall
economic conditions, the economic prospects of specific advertisers or industries, budgeting constraints and buying patterns, and a variety
of other factors, many of which are outside our control.
We
anticipate similar trends and user behavior for our recently launched Fubo Sportsbook given the seasonal nature of sports as described
above.
Accordingly,
given the seasonal nature of our business, accurate forecasting is critical to our operations. We anticipate that this seasonal impact
on revenue and gross profit is likely to continue, and any shortfall in expected revenue due to macroeconomic conditions, a decline in
the effectiveness of our promotional activities, actions by our competitors, or for any other reason, would cause our results of operations
to suffer significantly. A substantial portion of our expenses are personnel-related and include salaries, stock-based compensation and
benefits that are not seasonal in nature. Accordingly, in the event of a revenue shortfall, we would be unable to mitigate the negative
impact on margins, at least in the short term, and our business would be harmed.
We
might not be able to utilize a significant portion of our net operating loss carryforwards.
As
of December 31, 2021, we had federal net operating loss carryforwards of approximately $811.3 million, a portion of which will
expire at various dates if not used prior to such dates. Under legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act,
as modified by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, federal net operating losses incurred in
2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses in tax years
beginning after December 31, 2020 is limited. Other limitations may apply for state tax purposes.
In
addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of
state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by
value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards
to offset its post-change income may be limited. We have experienced ownership changes in the past, and therefore a portion of our net
operating loss carryforwards are subject to an annual limitation under Section 382 of the Code. In addition, we may experience ownership
changes in the future as a result of subsequent changes in our stock ownership, including as a result of conversions of the 2026 Convertible
Notes, some of which may be outside of our control. A past or future ownership change that materially limits our ability to use our historical
net operating loss and tax credit carryforwards may harm our future operating results by effectively increasing our future tax obligations.
Our
financial condition and results of operations could be adversely affected if we do not effectively manage our current or future debt.
As
of December 31, 2021, we had $408.9 million of outstanding indebtedness on a consolidated basis which included $402.5 million
of convertible notes and other notes outstanding with an aggregate principal of approximately $6.4 million.
Our
obligations related to our outstanding or any future indebtedness could adversely affect our ability to take advantage of corporate opportunities,
which could adversely affect our business, financial condition, and results of operations, including, but not limited to, the following:
We
may also incur additional indebtedness to meet future financing needs. If we incur any additional debt, the related risks that we and
our subsidiaries face could intensify.
Finally,
we may in the future be in non-compliance with the terms of certain of our other debt instruments. To the extent we are in non-compliance
with the terms of such debt instruments, we may be required to make payments to the holders of such instruments, those holders may be
entitled to the issuance of stock by us, and the holders of such stock may be entitled to registration or other investor rights.
Servicing
our indebtedness will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial
indebtedness.
Our
ability to make scheduled payments of the principal and interest when due, or to refinance our borrowings under our debt agreements,
will depend on our future performance and our ability to raise further equity financing, which is subject to economic, financial, competitive
and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to
both (i) satisfy our existing and future obligations to our creditors and (ii) allow us to make necessary capital expenditures. If we
are unable to generate such cash flow or raise further equity financing, we may be required to adopt one or more alternatives, such as
reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms
that may be onerous or highly dilutive. We may need or desire to refinance our existing indebtedness, and there can be no assurance that
we will be able to refinance any of our indebtedness on commercially reasonable terms, if at all. Our ability to refinance existing or
future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any
of these activities or engage in these activities on desirable terms, which could result in a default on our current or future debt agreements.
Our
operating results may fluctuate, which makes our results difficult to predict.
Our
revenue and operating results could vary significantly from quarter-to-quarter and year-to-year because of a variety of factors, many
of which are outside of our control and may not fully reflect the underlying performance of our business. As a result, comparing our
operating results on a period-to-period basis may not be meaningful. In addition to other risk factors discussed herein, factors that
may contribute to the variability of our quarterly and annual results include:
● our ability to effectively manage our growth;
● our ability to attract and retain existing advertisers;
● seasonal, cyclical or other shifts in revenue and expenses;
● our revenue mix, which drives gross profit;
● the impact of general economic conditions on our revenue and expenses; and
● changes in regulations affecting our business.
This
variability makes it difficult to forecast our future results with precision and to assess accurately whether increases or decreases
are likely to cause quarterly or annual results to exceed or fall short of previously issued guidance. While we assess our quarterly
and annual guidance and update such guidance when we think it is appropriate, unanticipated future volatility can cause actual results
to vary significantly from our guidance, even where that guidance reflects a range of possible results.
If
we fail to effectively manage our growth, our business, operating results, and financial condition may suffer.
Our
rapid growth has placed, and will continue to place, significant demands on our management and our operational and financial infrastructure.
In order to attain and maintain profitability, we will need to recruit, integrate, and retain skilled and experienced personnel who can
demonstrate our value proposition to subscribers, advertisers, and business partners and who can increase the monetization of our platform.
Continued growth could also strain our ability to maintain reliable service levels for our customers, effectively monetize the content
streamed, develop and improve our operational and financial controls, and recruit, train, and retain highly skilled personnel. If our
systems do not evolve to meet the increased demands placed on us by an increasing number of advertisers, we also may be unable to meet
our obligations under advertising agreements with respect to the delivery of advertising or other performance obligations. As our operations
grow in size, scope, and complexity, we will need to improve and upgrade our systems and infrastructure, which will require significant
expenditures and allocation of valuable technical and management resources. If we fail to maintain efficiency and allocate limited resources
effectively in our organization as it grows, our business, operating results, and financial condition may suffer.
We
are expanding our operations internationally, and as our international offering evolves, we are managing and adjusting our business to
address varied content offerings, consumer customs and practices, in particular those dealing with e-commerce and streaming video, as
well as differing legal and regulatory environments.
We
have experienced rapid growth rates in both the number of subscribers on our platform and revenue over the last few years. As we grow
larger and increase our subscriber base and usage, we expect it will become increasingly difficult to maintain the rate of growth we
currently experience.
Risks
Related to Our Relationships with Content Providers, Customers and Other Third Parties
The
long-term nature of certain of our content commitments may limit our operating flexibility and could adversely affect our liquidity and
results of operations.
In
connection with licensing streaming content, we typically enter into multi-year agreements with content providers. These agreements have
sometimes required us to pay minimum license fees for content that are not tied to subscriber usage or the size of our subscriber base.
Given the multiple-year duration and sometimes fixed cost nature of content commitments, if subscriber acquisition and retention do not
meet our expectations, our margins may be adversely impacted, and we may not be in a position to make the minimum guarantee payments
required under certain content licenses. In the past, we have failed to make minimum guarantee payments to certain key programmers and
may not be in a position to make similar payments in the future. If we do not make these payments, then we may lose access to such content,
which in turn may further depress subscriber acquisition or retention, cause other programmers to exercise termination rights due to
the content mix available through our service, or impact our ability to obtain content from other programmers.
We
also enter into multi-year commitments for content that we produce, either directly or through third parties, including elements associated
with these productions such as non-cancelable commitments under talent agreements. Payment terms for certain content commitments, such
as content we directly produce, will typically require more up-front cash payments than other content licenses or arrangements whereby
we do not fund the production of such content.
To
the extent subscriber and/or revenue growth do not meet our expectations, our liquidity and results of operations could be adversely
affected as a result of content commitments and payment requirements of certain agreements. In addition, the long-term and fixed cost
nature of certain of our commitments may limit our flexibility in planning for or reacting to changes in our business and the market
segments in which we operate. If we license and/or produce content that is not favorably received by consumers in a territory, or is
unable to be shown in a territory, acquisition and retention may be adversely impacted and given the long-term and fixed cost nature
of certain of our content commitments, we may not be able to adjust our content offering quickly and our results of operations may be
adversely impacted.
Our
results may be adversely affected if long-term content contracts are not renewed on sufficiently favorable terms.
We
enter into long-term contracts for both the acquisition and the distribution of media content, including contracts for the acquisition
of content rights for sporting events and other programs. As these contracts expire, we must renew or renegotiate the contracts, and
if we are unable to renew them on acceptable terms, we may lose content rights or distribution rights. Even if these contracts are renewed,
the cost of obtaining content rights may increase (or increase at faster rates than our historical experience). Moreover, our ability
to renew these contracts on favorable terms may be affected by consolidation in the market for content distribution, the entrance of
new participants in the market for distribution of content on digital platforms and the impacts of COVID-19. With respect to the acquisition
of content rights, particularly sports content rights, the impact of these long-term contracts on our results over the term of the contracts
depends on a number of factors, including the strength of advertising markets, subscription levels and rates for content, effectiveness
of marketing efforts and the size of viewer audiences. There can be no assurance that revenues from content based on these rights will
exceed the cost of the rights plus the other costs of producing and distributing the content.
If
we fail to obtain or maintain popular content, we may fail to retain existing subscribers and attract new subscribers.
We
have invested a significant amount of time to cultivate relationships with our content providers; however, such relationships may not
continue to grow or yield further financial results. We must continuously maintain existing relationships and identify and establish
new relationships with content providers to provide popular content. In order to remain competitive, we must consistently meet customer
demand for popular streaming channels and content, particularly as we enter new markets, including international markets. If we are not
successful in maintaining channels on our platform that attract and retain a significant number of subscribers, or if we are not able
to do so in a cost-effective manner, our business will be harmed.
We
enter into agreements with our content providers, which have varying terms and conditions, including expiration dates. Upon expiration
of these agreements, we are required to re-negotiate and renew them in order to continue providing content from these providers on our
streaming platform. We have in the past been unable, and in the future may not be able, to reach a satisfactory agreement with certain