Executive Summary / Key Takeaways

• Fubo has completed a transformative business combination with The Walt Disney Company 's Hulu + Live TV, creating the sixth-largest pay TV company in the U.S. with nearly 6 million subscribers in North America.
• The company has demonstrated a clear path to profitability, achieving its first positive free cash flow quarter in Q4 2024 and its first two consecutive quarters of positive adjusted EBITDA in Q2 and Q3 2025.
• Fubo leverages proprietary technology, including AI-driven recommendations and interactive ad formats, to enhance user experience, drive engagement, and improve monetization, with interactive ads growing 37% year-over-year in the first half of 2025.
• The strategic focus on "super aggregation" and flexible content packages, including new skinny bundles and multicultural offerings, aims to expand its addressable market and cater to price-sensitive consumers.
• Significant synergies are anticipated from the Hulu + Live TV merger, particularly in programming efficiencies and advertising uplift, which are expected to drive Fubo towards its long-term targets of 30% gross margins and 15% EBITDA margins.

The New Era of Live TV Streaming: Fubo's Strategic Evolution

FuboTV Inc., established in 2009, has evolved from a niche live TV streaming platform into a significant player in the dynamic media landscape. Its core business centers on delivering a "sports-first" streaming experience, complemented by news and entertainment content, primarily in the United States and Canada, with growing international operations. This strategic focus has been instrumental in shaping its product development and market positioning. The company's overarching strategy, termed "super aggregation," aims to provide consumers with flexible content options at various price points, from skinny bundles to comprehensive live TV packages.

The streaming industry is characterized by rapid evolution, increasing fragmentation, and intense competition. Consumers are increasingly "cutting the cord" from traditional pay TV, driving growth in streaming adoption across various devices. However, this shift also brings challenges, including rising content costs and a proliferation of ad-supported video-on-demand (SVOD) services that compete for consumer attention and advertising dollars. Fubo's response has been to differentiate through a superior user experience and a disciplined approach to profitability.

A pivotal moment in Fubo's history occurred on October 29, 2025, with the completion of its business combination with The Walt Disney Company 's Hulu + Live TV business. This transformative merger has reshaped the competitive landscape, positioning the combined entity as the sixth-largest pay TV company in the U.S. with nearly 6 million subscribers in North America. This scale is critical in an industry where content licensing costs are high and bargaining power is paramount. The combined entity now stands as the second-largest virtual multichannel video programming distributor (vMVPD) in the market, a position that is expected to yield significant advantages in content negotiations and market influence.

Technological Edge and Innovation Driving Engagement

Fubo's competitive moat is significantly bolstered by its differentiated technology stack, which is designed to enhance the live sports viewing experience. The platform offers unique features such as multi-channel viewing capabilities, personalized favorites lists, a dynamic recommendation engine, 4K streaming, and Cloud DVR offerings. These features are not merely conveniences; they are integral to driving subscriber engagement and retention.

The company has made substantial investments in artificial intelligence (AI) and machine learning, particularly through its 2021 acquisition of Edisn, an AI-powered computer vision platform. This technology is actively deployed for "channel optimizations and creative testing" in marketing, contributing to more efficient subscriber acquisition. A notable in-house developed AI feature, "team channels capability," has rapidly gained traction with hundreds of thousands of users, demonstrating its effectiveness in personalizing content delivery. These innovations directly translate into tangible benefits for investors by improving operational efficiency and enhancing the perceived value of the service.

Fubo's commitment to innovation extends to its advertising technology. The company has expanded its suite of ad formats, including programmatic pause ads, which it was the first Connected TV (CTV) platform to offer in a programmatic biddable environment. This focus on interactive and dynamic ad experiences is yielding results, with interactive ads growing 37% year-over-year and overall ad products up 41% year-over-year in the first half of 2025. This technological edge in ad monetization is crucial, especially as Disney is set to take over advertising sales for the combined entity, promising "pretty strong results" once Fubo's inventory is integrated into Disney's ad ecosystem, targeted for Q1 2026.

Financial Performance: A Trajectory Towards Profitability

Fubo's financial performance in recent periods underscores a clear and consistent trajectory towards profitability, driven by strategic execution and disciplined cost management. For the nine months ended September 30, 2025, the company reported total revenues of $1.17 billion. While North America subscription revenue remained stable at $1.07 billion for the nine months ended September 30, 2025, advertising revenue in the region saw a decrease to $73.029 million from $80.106 million in the prior year, primarily due to the absence of certain ad-insertable content. However, management noted that, when normalized for these factors, ad revenue would have been up modestly year-over-year in Q3 2025, with demand indicators remaining constructive.

A significant highlight was the company's net income from continuing operations of $161.60 million for the nine months ended September 30, 2025, a substantial improvement from a net loss of $135.159 million in the prior year. This was largely bolstered by a $219.50 million gain on the settlement of antitrust litigation against Disney , Fox (FOXA), and Warner Bros. Discovery (WBD). Beyond this one-time gain, operational improvements are evident in profitability metrics. Fubo achieved its first quarter of positive adjusted EBITDA in Q2 2025, reporting $20.7 million, followed by a second consecutive positive adjusted EBITDA of $6.9 million in Q3 2025. This represents a year-over-year improvement of over $34 million in Q3 alone.

Gross Profit for Q3 2025 reached $78.40 million, translating to a gross margin of 20.8%, a notable increase from 14% in Q3 2024. For the nine months ended September 30, 2025, gross profit was $225.30 million, with a margin of 19.2%. This margin expansion is a direct result of disciplined cost management, particularly in subscriber-related expenses, which decreased by $28.2 million in Q3 2025 due to fewer subscribers and expired content agreements. Broadcasting and transmission expenses also saw a $5 million reduction in Q3 2025, attributed to cloud infrastructure optimization initiatives. Sales and marketing expenses decreased by $13.2 million in Q3 2025, reflecting a more efficient approach to subscriber acquisition, with trial starts and conversions improving year-over-year while churn declined by nearly 50%.

From a liquidity perspective, Fubo ended Q3 2025 with a solid cash position of $280.30 million in cash, cash equivalents, and restricted cash. Net cash provided by operating activities for the nine months ended September 30, 2025, was $120.30 million, significantly up from a net cash outflow in the prior year, largely due to the antitrust settlement. The company also secured a commitment for a $145 million senior unsecured term loan from a Disney affiliate, available in January 2026, further strengthening its financial flexibility. These financial improvements, including the achievement of positive free cash flow in Q4 2024, demonstrate Fubo's commitment to sustainable growth and its ability to execute on profitability targets.

Competitive Landscape and Strategic Positioning

The live TV streaming market is fiercely competitive, with Fubo contending against a diverse array of players, including traditional pay TV providers, other vMVPDs, and a growing number of SVOD services. Key direct competitors include YouTube TV (Alphabet Inc. (GOOGL)), Sling TV (DISH Network (DISH)), and DirecTV Stream (AT&T Inc. (T)), alongside the newly integrated Hulu + Live TV (The Walt Disney Company ).

Fubo's strategic positioning is rooted in its "sports-first" identity, which differentiates it from Hulu + Live TV's "general entertainment bundle that has sports." This specialization allows Fubo to cater to a dedicated segment of sports enthusiasts, offering unique features like multiview and game highlights that enhance the live sports experience. While YouTube TV, with approximately 10 million subscribers, holds a larger market share, Fubo's combined subscriber base with Hulu + Live TV of nearly 6 million positions it as a formidable competitor, particularly as the second-largest vMVPD.

The company's "super aggregation" strategy, offering flexible packages from skinny bundles to full content bundles, directly addresses consumer price sensitivity and market fragmentation. This approach is validated by the industry trend of competitors like Comcast (CMCSA) and DirecTV introducing their own sports-focused skinny bundles, following Fubo's lead. Fubo's decision to drop Univision due to high-rate increases and subsequently lower the price of its Latino plan by 55% exemplifies its commitment to delivering value to subscribers, even if it means adjusting content offerings.

However, Fubo faces vulnerabilities, including its historical dependence on sports rights, which can lead to increased content costs and potential revenue volatility. The integration with Hulu + Live TV, while transformative, also presents challenges in combining business practices and operations, requiring significant management attention and resources. Furthermore, Hulu's 70% economic and voting interest in the newly formed Newco means its interests may not always align with those of other Fubo stockholders, and Fubo's status as a controlled company exempts it from certain NYSE corporate governance requirements.

Outlook and Guidance: Amplifying Growth and Profitability

Fubo's outlook is significantly shaped by the recent business combination and its continued focus on operational efficiencies. Management has articulated clear long-term financial targets: approximately $100 in average revenue per user (ARPU), 30% gross margins, and 15% adjusted EBITDA margins. With current gross margins around 20%, the company aims to achieve the remaining 10 percentage points through a combination of "300 basis points of programming efficiencies, 200 to 300 basis points of advertising uplift, [and] 100 or 200 basis points in G&A and technology."

The integration of Fubo's advertising inventory into Disney 's ecosystem and ad server is expected to yield "pretty strong results" and "CPM upside," with the transition targeting completion by Q1 2026. This collaboration, along with leveraging ESPN's extensive ecosystem for marketing, is anticipated to drive subscriber growth efficiently. Fubo's "skinny sports and broadcasting service," set to launch for the fall sports season, is another key initiative aimed at expanding the subscriber funnel by offering a lower-priced, focused sports option.

Internationally, Fubo remains bullish, with plans to migrate Molotov onto its unified platform and partner with Disney (DIS) to expand into 3-4 new markets within the next 18 to 24 months. This global ambition, coupled with the domestic scale achieved through the Hulu + Live TV merger, positions Fubo to pursue its goal of becoming a global leader in live TV streaming.

Conclusion

Fubo stands at a pivotal juncture, having successfully executed a transformative merger with Hulu + Live TV and demonstrating a clear path to profitability through disciplined financial management and technological innovation. The combined entity's scale, coupled with Fubo's sports-first differentiation and "super aggregation" strategy, positions it strongly in the evolving live TV streaming market. While challenges remain, particularly around content costs, competitive pressures, and the complexities of integration, management's focus on programming efficiencies, advertising uplift, and leveraging AI for enhanced user experience and marketing effectiveness provides a compelling investment thesis. The company's consistent progress towards its long-term financial targets, amplified by the strategic benefits of the merger, suggests a promising future for Fubo as it redefines the future of live sports streaming.