Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis by our management of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying related notes included in this Quarterly Report and our audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
We are a sports-first, cable TV replacement product, offering subscribers access to tens of thousands of live sporting events annually, as well as leading news and entertainment content, both live and on demand. Fubo allows customers to access content through streaming devices and on SmartTVs, mobile phones, tablets, and computers.
Our business motto is “come for the sports, stay for the entertainment.”
First, we leverage 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.
We drive our business model with three core strategies:
• Grow our paid subscriber base
• Optimize our content portfolio, engagement and retention
• Increase monetization.
Nature of Business
We are a leading live TV streaming platform for sports, news, and entertainment. Our revenues are almost entirely derived from the sale of subscription services and the sale of advertisements in the United States, though we have expanded into several international markets, with operations in Canada, Spain and France.
Our subscription-based services are offered to consumers who can sign-up for accounts at https://fubo.tv, through which we provide basic plans with the flexibility for consumers to purchase the add-ons and features best suited for them. Besides the website, consumers can also sign-up via some TV-connected devices. Our platform provides, what we believe to be, a superior viewer experience, with a broad suite of unique features and personalization capabilities such as multi-channel viewing capabilities, favorites lists and a dynamic recommendation engine as well as 4K streaming and Cloud DVR offerings.
On October 17, 2022, we ceased operation of our business-to-consumer online mobile sportsbook (“Fubo Sportsbook”) in connection with the dissolution of our wholly-owned subsidiary, Fubo Gaming Inc ("Fubo Gaming"). The results of operations of Fubo Sportsbook are presented as discontinued operations in the accompanying unaudited condensed consolidated financial statements.
Segments
In connection with the dissolution of Fubo Gaming and the termination of Fubo Sportsbook, assets and liabilities and the operations of our former wagering reportable segment have been reported in discontinued operations for all periods presented. With respect to our continuing operations, we operate as a single reportable segment.
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Key Factors and Trends Impacting Performance
Our financial condition and results of operations have been, and may in the future be, affected by a number of factors and trends, such as those described in Part II, Item 1A, “Risk Factors” and the following:
Brand Awareness
Building and maintaining a strong brand is important to our ability to attract and retain subscribers, as potential subscribers have a number of pay TV choices. We and our competitors must seek to attract a greater proportion of new subscribers from each other’s existing subscriber bases rather than from first-time purchasers of pay TV services. As a result, we continue to experience increased competition, including from larger companies with greater resources to promote their brands through traditional forms of advertising, such as print media and TV commercials, as well as Internet advertising and website product placement. We primarily rely on paid marketing channels (such as social media, search advertising, display advertising, radio, out of home and television) to grow our brand and reach new subscribers. If these channels become less efficient our growth could be adversely affected.
Subscriber Acquisition, Retention and Engagement
Our long-term growth will depend in part on our ability to grow and retain our subscriber base, as well as increase engagement by our subscribers. The relative service levels, content offerings, pricing and product experience of our platform will impact our ability to attract and retain subscribers versus our competitors. If consumers perceive a reduction in the value of our platform because, for example, we introduce new or adjust existing features, adjust pricing or platform offerings, or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain subscribers. To the extent that our competition pursues aggressive promotional campaigns, our value proposition may also be adversely impacted.
Acceleration or Deceleration of Cord-Cutting
In recent years, including as a result of the COVID-19 pandemic, we and other streaming services 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. Although traditional pay TV currently accounts for the majority of TV viewing hours for U.S. households; the proportion has declined in recent years as customers cut the cord. While we believe consumers are increasingly favoring the streaming services based on, among other factors, customer experience and pricing considerations, these positive trends for our business may not continue during future periods.
Shift of Advertising Dollar Spend from Traditional Pay TV to Connected TV
Our business model depends on our ability to grow ad inventory on our platform and sell it to advertisers. We operate in a highly competitive advertising industry and we compete for revenue from advertising with other streaming platforms and services, as well as traditional media, such as radio, broadcast, cable and satellite TV, and satellite and internet radio. Many advertisers devote a substantial portion of their advertising budgets to traditional media, and we expect advertisers may do so in the future. Although traditional TV advertisers have shown a growing interest in over-the-top (“OTT”) advertising, we cannot be certain that their interest will increase in the future. If advertisers do not perceive meaningful benefits of OTT advertising, the market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business. In addition, advertising spend is affected by broader macroeconomic conditions, and therefore economic downturns and recessionary fears may also negatively impact our ability to capture advertising dollars.
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Content Acquisition and Renewal
Our ability to compete successfully will depend, among other things, on our ability to obtain desirable content and deliver it to our subscribers at competitive prices. The addition or loss of popular content or channels, including our ability to enter into new content deals or negotiate renewals with our content providers on terms that are favorable to us, or at all, could affect our results and our ability to grow our business. Content costs represent the majority of our “Subscriber related expenses” and the largest component of our total operating expenses. We have seen an increase in these costs in recent periods, and we expect further increases in the future. Moreover, the renewal of long-term content contracts may be on less favorable pricing terms in the future. As a result, our margins may face pressure if we are unable to renew our long-term content contracts on acceptable pricing and other economic terms or if we are unable to pass these increased programming costs on to our subscribers. In addition, as content providers bring to market their own direct-to-consumer streaming services, the differentiated value proposition offered by our content mix may diminish.
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, especially 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. In addition, we typically see subscribers on our platform decline from the fourth quarter of the previous year through the first and second quarter of the following year.
Macroeconomic Factors
Macroeconomic factors, including mounting inflationary cost pressures and potential recession indicators, have created significant volatility, uncertainty, and economic disruption. We continue to monitor the effects of the macroeconomic environment and take appropriate steps to mitigate the impact on our business; however, the nature and extent of this impact in future periods remains difficult to predict due to numerous uncertainties outside our control.
Components of Results of Operations
Revenues
Subscription
Subscription revenue consists of subscription plans sold through the Company’s website and third-party app stores.
Advertising
Advertising revenue consists of fees charged to advertisers who want to display ads (“impressions”) within the streamed content.
Other
Other revenue consists of distribution fees and commissions earned on sales through a channel distribution platform.
Subscriber Related Expenses
Subscriber related expenses consist primarily of affiliate distribution rights and other distribution costs related to content streaming.
Broadcasting and Transmission
Broadcasting and transmission expenses consist primarily of the cost to acquire a signal and transcode, store, and retransmit it to the subscribers.
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Sales and Marketing
Sales and marketing expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, agency costs, advertising campaigns and branding initiatives.
Technology and Development
Technology and development expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, technical services, software expenses, and hosting expenses.
General and Administrative
General and administrative expenses consist primarily of payroll and related costs, benefits, rent and utilities, stock-based compensation, corporate insurance, office expenses, professional fees, and travel, meals, and entertainment costs.
Depreciation and Amortization
Depreciation and amortization expense includes depreciation of fixed assets and amortization of finite-lived intangible assets.
Other Income (expense)
Other income (expense) primarily consists of the change in fair value of financial instruments, interest income, interest expense and financing costs on our outstanding borrowings and amortization of debt discount.
Income Tax Benefit
The income tax benefit is driven by the change in deferred tax assets and liabilities and resulting change in valuation allowance.
Income (Loss) from Discontinued Operations
The income (loss) from discontinued operations primarily consists of operating expenses related to the launch and wind down of the wagering business, impairment expense associated with the write-off of goodwill, intangible assets, and other assets, and re-evaluation of certain contract termination costs.
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Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (in thousands):
For the Three Months Ended
June 30, For the Six Months Ended
June 30,
2023 2022 2023 2022
Revenues
Subscription $ 288,994 $ 199,943 $ 589,869 $ 419,111
Advertising 23,070 22,020 45,791 45,172
Other 671 109 1,449 109
Total revenues 312,735 222,072 637,109 464,392
Operating expenses
Subscriber related expenses 270,953 218,900 572,331 464,561
Broadcasting and transmission 18,327 17,157 38,091 37,454
Sales and marketing 33,819 28,159 76,765 70,711
Technology and development 17,778 18,040 36,005 36,758
General and administrative 15,460 22,790 30,137 49,482
Depreciation and amortization 8,913 8,410 17,755 19,766
Total operating expenses 365,250 313,456 771,084 678,732
Operating loss (52,515) (91,384) (133,975) (214,340)
Other income (expense)
Interest expense, net of interest income (457) (3,511) (1,712) (7,112)
Amortization of debt discount (645) (619) (1,268) (1,219)
Change in fair value of warrant liabilities — — — (1,701)
Other income (expense) (713) 195 (857) 287
Total other income (expense) (1,815) (3,935) (3,837) (9,745)
Loss from continuing operations before income taxes (54,330) (95,319) (137,812) (224,085)
Income tax benefit 121 355 235 758
Net loss from continuing operations $ (54,209) $ (94,964) $ (137,577) $ (223,327)
Discontinued operations
Income (loss) from discontinued operations before income taxes 4,259 (21,310) 4,003 (33,764)
Income tax benefit — — — —
Net income (loss) from discontinued operations 4,259 (21,310) 4,003 (33,764)
Net loss (49,950) (116,274) (133,574) (257,091)
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Revenue
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized revenues of $312.7 million compared to $222.1 million during the three months ended June 30, 2022. The increase of $90.7 million is primarily due to an increase in subscription revenue of $89.1 million, comprising $55.5 million from increases in our subscriber base and $33.6 million from increases in subscription package prices and attachments sold. Advertising revenue increased $1.1 million primarily due to an increase in the number of impressions sold partially offset by a decrease in Cost Per Thousands ("CPMs").
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized revenues of $637.1 million compared to $464.4 million during the six months ended June 30, 2022. The increase of $172.7 million is primarily due to an increase in subscription revenue of $170.8 million, comprising $113.0 million from increases in our subscriber base and $57.8 million from increases in subscription package prices and attachments sold. Advertising revenue increased $0.6 million primarily due to an increase in the number of impressions sold partially offset by an decrease in CPMs.
Subscriber related expenses
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized subscriber related expenses of $271.0 million compared to $218.9 million during the three months ended June 30, 2022. The increase of $52.1 million was primarily due to an increase in affiliate distribution rights and other distribution costs primarily resulting from an increase in subscribers and contractual rates.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized subscriber related expenses of $572.3 million compared to $464.6 million during the six months ended June 30, 2022. The increase of $107.8 million was primarily due to an increase in affiliate distribution rights and other distribution costs primarily resulting from an increase in subscribers and contractual rates.
Broadcasting and transmission
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized broadcasting and transmission expenses of $18.3 million compared to $17.2 million during the three months ended June 30, 2022. The increase of $1.2 million was primarily due to an increase in expense due to a higher amount of linear feeds due to the launch of new channels offset in part by a reduction in expenses resulting from initiatives implemented by the Company to optimize our cloud infrastructure.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized broadcasting and transmission expenses of $38.1 million compared to $37.5 million during the six months ended June 30, 2022. The increase of $0.6 million was primarily due to an increase in expense due to a higher amount of linear feeds due to the launch of new channels offset in part by a reduction in expenses resulting from initiatives implemented by the Company to optimize our cloud infrastructure.
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Sales and marketing
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized sales and marketing expenses of $33.8 million compared to $28.2 million during the three months ended June 30, 2022. The increase of $5.7 million was primarily due to a $2.4 million increase in marketing expense to acquire new customers, $1.7 million increase in stock-based compensation and a $1.4 million increase in payroll expense due to staff additions.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized sales and marketing expenses of $76.8 million compared to $70.7 million during the six months ended June 30, 2022. The increase of $6.1 million was primarily due to a $3.6 million increase in marketing expense to acquire new customers and a $2.9 million increase in payroll expense due to staff additions partially offset by a $0.4 million decrease in stock-based compensation.
Technology and development
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized technology and development expenses of $17.8 million, and was flat compared to $18.0 million during the three months ended June 30, 2022.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized technology and development expenses of $36.0 million compared to $36.8 million during the six months ended June 30, 2022. The decrease of $0.8 million was primarily due to a $1.8 million decrease in payroll expense partially offset by an increase of $0.9 million in stock-based compensation.
General and Administrative
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, general and administrative expenses totaled $15.5 million compared to $22.8 million for the three months ended June 30, 2022. The decrease of $7.3 million was primarily due to a $2.4 million decrease in sales tax expense, $2.3 million decrease in payroll expense, $1.8 million decrease in stock-based compensation and $0.5 million decrease in professional fees.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, general and administrative expenses totaled $30.1 million compared to $49.5 million during the six months ended June 30, 2022. The decrease of $19.3 million was primarily due to a $7.0 million decrease in sales tax expense, $5.3 million decrease in payroll expense, $4.1 million decrease in stock-based compensation and $2.6 million decrease in professional fees.
Depreciation and amortization
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized depreciation and amortization expenses of $8.9 million compared to $8.4 million during the three months ended June 30, 2022. The increase of $0.5 million was primarily due to amortization on additional capitalization of internal use assets.
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Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized depreciation and amortization expenses of $17.8 million compared to $19.8 million during the six months ended June 30, 2022. The decrease of $2.0 million was primarily due to the full amortization of certain intangible assets in prior periods.
Other Income (Expense)
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized $1.8 million of other income (expense) (net), compared to $3.9 million of other income (expense) (net) during the three months ended June 30, 2022. The decrease of $2.1 million was primarily due to an increase in interest income.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized $3.8 million of other income (expense) (net), compared to $9.7 million of other income (expense) (net) during the six months ended June 30, 2022. The decrease of $5.9 million was primarily due to an increase in interest income.
Income tax benefit
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized an income tax benefit of $0.1 million compared to $0.4 million during the three months ended June 30, 2022. The decrease of $0.3 million in the income tax benefit was primarily due to an increase in the valuation allowance related to our deferred tax assets.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized an income tax benefit of $0.2 million compared to $0.8 million during the six months ended June 30, 2022. The decrease of $0.6 million in the income tax benefit was primarily due to an increase in the valuation allowance related to our deferred tax assets.
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Income (Loss) from Discontinued Operations, net of tax
Three Months Ended June 30, 2023 and 2022
During the three months ended June 30, 2023, we recognized income from discontinued operations of $4.3 million primarily due to the re-evaluation of certain contract termination costs compared to a loss from discontinued operations of $21.3 million during the three months ended June 30, 2022 primarily due to the launch of the wagering business and impairment expense associated with the write-off of goodwill. We discontinued the operations of our wagering business in October 2022.
Six Months Ended June 30, 2023 and 2022
During the six months ended June 30, 2023, we recognized income from discontinued operations of $4.0 million primarily due to the re-evaluation of certain contract termination costs compared to a loss of $33.8 million during the six months ended June 30, 2022 primarily due to the launch of the wagering business and impairment expense associated with the write-off of goodwill. We discontinued the operations of our wagering business in October 2022.
Key Performance Metrics
We use certain key performance metrics to monitor and manage our business, including to measure our operating performance, identify trends affecting our business and make strategic decisions. We believe these key performance metrics provide useful information to investors in evaluating our operating results in the same manner management does.
Paid Subscribers
We believe the number of paid subscribers is a relevant measure to gauge the size of our user base. Paid subscribers are total subscribers that have completed registration with FuboTV, have activated a payment method (only reflects one paying user per plan), from which FuboTV has collected payment in the month ending the relevant period. Users who are on a free (trial) period are not included in this metric.
We had 1.2 million and 0.9 million paid subscribers in the United States and Canada ("North America" or "NA") as of June 30, 2023 and 2022, respectively, and 0.4 million and 0.3 million paid subscribers in the remaining territories in which the Company operates ("Rest of World" or "ROW") as of June 30, 2023 and 2022, respectively.
Average Revenue Per User
Beginning in the third quarter of 2022, Average Revenue Per User (“ARPU”) is calculated using GAAP Subscription revenue and GAAP Advertising revenue. Previously, ARPU was calculated using Platform Bookings, which consisted of GAAP Subscription revenue and GAAP Advertising revenue, adjusted for deferred revenue.
We believe ARPU provides useful information for investors to gauge the revenue generated per subscriber on a monthly basis. ARPU, with respect to a given period, is defined as total Subscription revenue and Advertising revenue recognized in such period, divided by the average daily paid subscribers in such period, divided by the number of months in such period. Advertising revenue, like Subscription revenue, is primarily driven by the number of subscribers to our platform and per-subscriber viewership such as the type of, and duration of, content watched on platform. We believe ARPU is an important metric for both management and investors to evaluate the Company’s core operating performance and measure our subscriber monetization, as well as evaluate unit economics, payback on subscriber acquisition cost and lifetime value per subscriber. In addition, we believe that presenting a geographic breakdown for North America ARPU and ROW ARPU allows for a more meaningful assessment of the business because of the significant differences in both Subscription revenue and Advertising revenue generated on a per subscriber basis in North America when compared to ROW due to our current subscription pricing models and advertising monetization in the two geographic regions.
Our NA ARPU was $81.62 and $72.19 for the three months ended June 30, 2023 and 2022, respectively, and our ROW ARPU was $6.91 and $5.97 for the three months ended June 30, 2023 and 2022, respectively.
Our NA ARPU was $79.11 and $71.81 for the six months ended June 30, 2023 and 2022, respectively, and our ROW ARPU was $6.74 and $6.68 for the three months ended June 30, 2023 and 2022, respectively.
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Gross Profit and Gross Margin (GAAP)
Gross Profit is defined as Revenue less Subscriber related expenses and Broadcasting and transmission. Gross Margin is defined as Gross Profit divided by Revenue. We believe these measures are useful because they represent key profitability metrics for our business and are used by management to evaluate the performance of our business, including measuring the cost to deliver our product to subscribers against revenue.
Our Gross Profit was $23.5 million and $(14.0) million for the three months ended June 30, 2023 and 2022, respectively. Our Gross Margin was 7.5% and (6.3)% for the same periods, respectively.
Our Gross Profit was $26.7 million and $(37.6) million for the six months ended June 30, 2023 and 2022, respectively. Our Gross Margin was 4.2% and (8.1)% for the same periods, respectively.
The tables below provide a reconciliation of NA ARPU and ROW ARPU to GAAP Subscription and Advertising Revenue (in thousands, except average subscribers and average per user amounts):
Reconciliation of GAAP Subscription and Advertising Revenue to North America ARPU
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
As-Reported As-Reported As-Reported As-Reported
Subscription Revenue (GAAP) $ 288,994 $ 199,943 $ 589,869 $ 419,111
Advertising Revenue (GAAP) 23,070 22,020 45,791 45,172
(Subtract):
ROW Subscription Revenue (7,906) (5,540) (15,523) (10,702)
ROW Advertising Revenue (250) (303) (456) (685)
Total 303,908 216,120 619,681 452,896
Divide:
Average Subscribers (North America) 1,241,218 997,979 1,305,642 1,051,193
Months in Period 3 3 6 6
North America Monthly Average Revenue per User (NA ARPU) $ 81.62 $ 72.19 $ 79.11 $ 71.81
Reconciliation of GAAP Subscription and Advertising Revenue to ROW ARPU
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
As-Reported As-Reported As-Reported As-Reported
Subscription Revenue (GAAP) $ 288,994 $ 199,943 $ 589,869 $ 419,111
Advertising Revenue (GAAP) 23,070 22,020 45,791 45,172
(Subtract):
North America Subscription Revenue (281,088) (194,403) (574,346) (408,409)
North America Advertising Revenue (22,820) (21,717) (45,335) (44,487)
Total 8,156 5,843 15,979 11,387
Divide:
Average Subscribers (ROW) 393,601 326,162 395,277 284,265
Months in Period 3 3 6 6
ROW Monthly Average Revenue per User (ROW ARPU) $ 6.91 $ 5.97 $ 6.74 $ 6.68
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Liquidity and Capital Resources
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. See Note 13 in the accompanying unaudited condensed consolidated financial statements for a further discussion of our cash commitments and contractual obligations as of June 30, 2023, including lease obligations and sponsorship agreements, in addition to our discussion below regarding the dissolution of Fubo Gaming in October 2022.
Our primary sources of cash are receipts from subscribers and advertising revenue as well as proceeds from equity and debt financings. Our primary uses of cash are content and programming license fees and operating expenses, including payroll-related, marketing, technology and professional fees. In addition, prior to the dissolution of our subsidiary, Fubo Gaming, on October 17, 2022 and the concurrent termination of operations of Fubo Sportsbook, as previously announced, our primary uses of cash included expenses related to the launch and operations of our wagering business.
We raised $389.4 million, net of offering expenses, through the sale of 3.25% senior convertible notes in February 2021. We currently have an effective shelf registration statement on Form S-3 (No. 333-258428) initially filed with the SEC on August 4, 2021, as amended (the “2021 Form S-3”), pursuant to which we may offer, from time to time, in one or more offerings any combination of common stock, preferred stock, debt securities, warrants, purchase contracts and units of up to $750.0 million in the aggregate. We also have an additional effective shelf registration statement on Form S-3 (No 333-266557) filed with the SEC on August 5, 2022 under which we may offer, from time to time, in one or more offerings any combination of common stock, preferred stock, debt securities, warrants, purchase contracts and units of up to $750.0 million in the aggregate.
On August 4, 2022, we entered into an at-the-market sales agreement with Evercore Group L.L.C., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and Needham & Company, LLC, as sales agents, under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $350.0 million through the sales agents (the "ATM Program") under our 2021 Form S-3.
During the six months ended June 30, 2023, we sold 81,694,729 shares of our common stock under the 2021 Form S-3 and the ATM Program, resulting in net proceeds of approximately $116.9 million, after deducting agent commissions and issuance costs. As of June 30, 2023, we had cash, cash equivalents, and restricted cash of $299.7 million.
As a result of the dissolution of Fubo Gaming and termination of Fubo Sportsbook operations, we incurred immaterial charges for certain wind-down costs and severance and other employee-related expenses. We may incur other cash charges, the amount and timing of which cannot be estimated at this time.
Based on our current outlook, we have no plans to conduct further sales under our ATM program. However, we may seek additional capital in the future under our ATM program or otherwise in the event we engage in repurchases of our debt or equity securities.
No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Issuing additional shares of our capital stock, other equity securities, or additional securities convertible into equity may dilute the economic and voting rights of our existing shareholders, reduce the market price of our common stock, or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing, or nature of our future offerings. As a result, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their percentage ownership. If we are unable to raise additional capital due to unfavorable market conditions, including rising interest rates, or otherwise, or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition.
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Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully attract and retain subscribers, develop new technologies that can compete in a rapidly changing market with many competitors and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings. We believe our existing cash and cash equivalents will provide us with the necessary liquidity to continue as a going concern for at least the next twelve months.
In addition to the foregoing, based on our current assessment, we do not expect any material impact on our long-term development timeline, revenue levels and our liquidity due to macroeconomic factors, including inflationary cost pressures and potential recession indicators. However, we are continuing to assess the impact that macroeconomic factors may have on our operations, financial condition and liquidity, which depends on factors beyond our knowledge and control. See Note 10 in the accompanying unaudited condensed consolidated financial statements for further discussion regarding our outstanding indebtedness.
Cash Flows (in thousands):
Six Months Ended June 30,
2023 2022
Continuing operations:
Net cash used in operating activities $ (148,067) $ (202,629)
Net cash used in investing activities (8,671) (102,911)
Net cash provided by financing activities 114,400 224,401
Discontinued operations:
Net cash used in operating activities (1,232) (14,369)
Net cash used in investing activities — (4,255)
Net decrease in cash, cash equivalents and restricted cash $ (43,570) $ (99,763)
Continuing operations:
Operating Activities
For the six months ended June 30, 2023, net cash used in operating activities was $148.1 million, which primarily consisted of our net loss of $137.6 million, adjusted for non-cash movements of $47.2 million. The non-cash movements primarily include $17.8 million of depreciation and amortization primarily related to intangible assets, $26.7 million of stock-based compensation, $1.3 million of amortization of debt discount and $1.4 million of amortization of right of use assets. Change in operating assets and liabilities resulted in cash outflows of approximately $57.7 million primarily due to an increase in accounts receivable, prepaid expenses and other current and long-term assets of $10.0 million, a decrease in prepaid sports rights of $1.1 million, a decrease in accounts payable and accrued expenses and other current and long-term liabilities of $43.6 million and a decrease in deferred revenue of $4.7 million.
For the six months ended June 30, 2022, net cash used in operating activities was $202.6 million, which primarily consisted of our net loss of $223.3 million, adjusted for non-cash movements of $54.6 million. The non-cash movements included $19.8 million of depreciation and amortization expenses primarily related to intangible assets, $30.3 million of stock-based compensation, $1.2 million of amortization of debt discount and $1.7 million of change in fair value warrant liabilities partially offset by $0.8 million of deferred income tax benefit. Changes in operating assets and liabilities resulted in cash outflows of approximately $33.9 million, primarily due to a decrease in accounts receivable and prepaid expenses and other current and long-term assets of $16.1 million, an increase in prepaid sports rights of $38.7 million, a net decrease in accounts payable, accrued expenses and other current and long-term liabilities of $9.4 million due to timing of payments and an decrease in deferred revenue of $2.0 million.
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Investing Activities
For the six months ended June 30, 2023, net cash used in investing activities was $8.7 million, which consisted of capitalization of internally generated software of $8.4 million and $0.3 million of capital expenditures.
For the six months ended June 30, 2022, net cash used in investing activities was $102.9 million, which primarily consisted of purchase of short-term investments of $100.0 million, capitalization of internally generated software of $1.9 million and $1.0 million of capital expenditures.
Financing Activities
For the six months ended June 30, 2023, net cash provided by financing activities was $114.4 million. The net cash provided is primarily related to $116.9 million of net proceeds received from the ATM Program. These proceeds were offset by a redemption of non-controlling interest of $2.1 million and repayments of $0.3 million of outstanding debt.
For the six months ended June 30, 2022, net cash provided by financing activities was $224.4 million. The net cash provided is primarily related to $220.2 million of net proceeds received from the ATM Program and $5.6 million of proceeds received from the exercise of stock options and warrants. These proceeds were offset by repayments of $1.4 million of outstanding debt.
Discontinued operations:
Operating and Investing Activities
For the six months ended June 30, 2023, net cash used in operating and investing activities was $1.2 million due to the wind down of Fubo Sportsbook which was terminated in October 2022.
For the six months ended June 30, 2022, net cash used in operating and investing activities was $14.4 million and $4.3 million, respectively, due to the launch of Fubo Sportsbook.
Off-Balance Sheet Arrangements
As of June 30, 2023, there were no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”). The preparation of these consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Those estimates and assumptions include, but are not limited to, allocating the fair value of purchase consideration issued in business acquisitions, recoverability of goodwill and intangible assets, valuation of warrants, and equity instruments and accounting for income taxes, including the valuation allowance on deferred tax assets.
There have been no material changes to our critical accounting policies and estimates from those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report.
Recently Issued Accounting Pronouncements
See Note 3 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for a discussion of recent accounting policies.
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