Over the past 2023, uncertainty in the external environment continued to impact market sentiment. Although the overall sentiment of the Hong Kong stock industry resumed upward at the end of the year, it did not change the overall pattern where pressure was still under pressure. Under these circumstances, the SaaS industry is facing an extreme stress test, and most SaaS companies face challenges in their operations.
However, in this context, digital content protection and transaction service provider Fubo Group (03738.HK) released its latest financial report. This financial report highlights a number of highlights, whether in terms of rising revenue quality at the same time as steady growth in performance, or the increasing prominence of global layout advantages, all of which show the company's steady steps towards high-quality development goals.
Looking back at the performance of Fubo Group since its listing, its sufficient growth has shown its strong ability to cross the cycle, and has also given the company some additional characteristics of “both offense and defense” in the current environment where uncertainty continues to rise.
Performance continues to achieve high certainty and has entered a stage of high-quality development
Judging from the financial data released by Fubo this time, its revenue has maintained rapid growth in the past 2023, and gross margin has increased steadily at the same time.
Among them, annual revenue exceeded HK$2 billion, up 39% year on year, and achieved a compound annual revenue growth of 76% in the 6 years since listing, a 16-fold increase, indicating that the company has been continuously opening up new business situations and maintaining momentum for development. In 2023, gross profit was HK$850 million, up 44% year on year, and gross margin increased by 2 percentage points year on year. Among them, the increase in gross margin was particularly significant in the second half of the year, reaching 45.8%, an increase of about 7 percentage points over the first half of the year. At the performance meeting, the company explained that the main reason for the increase in gross profit was to select business development and focus on developing high-quality businesses and customers with high gross profit. This is reflected in the fact that the company's subscription business achieved 58% year-on-year growth, and the share of subscription business increased to 43% of total revenue.
The company's adjusted net profit was HK$37.41 million, net profit loss of 210,000, basic break-even, and adjusted EBITDA reached HK$320 million. On the profit side, although net profit is basically flat, the Group's EBITDA accounts for 16% of revenue, showing good and sustainable hematopoietic capacity, reflecting that Fubo's current business can effectively generate operating cash flow and is larger in scale than in 2022, thus allowing the company to invest more resources to develop future business and invest in technology development in a timely manner.
At the performance meeting, the company also explained the three expenses. Among them, the administrative expenses ratio was reduced by 1.1 percent, the R&D expenses rate increased by 2.3 percent, and the sales expenses ratio increased by 3.7 percent. In addition to the impact of the acquisition of Particle Merger (Particles will be merged for only 8 months in 2022, and 2023 will be combined for 12 months for the full year, and the sales and administrative expenses of the Group will increase in 2023 due to the merger), the company took the initiative to accelerate investment in future key new business developments in the second half of 2023, including investment in AI such as the increase in technical investment and personnel at the AI R&D Center in Florida, and marketing expenses for developing new large-scale subscription customers and company brand enhancement in the Chinese market.
At the same time, in terms of human efficiency, the company's revenue increased by 39% to reach 2 billion, and the number of teams hardly changed. The number of teams increased by 6 to 578 people throughout the year. In addition to optimizing the original management team, the number of personnel increased at the Florida AI Operation Center, expanding the number of R&D personnel. This means that Fubo continues to unleash growth potential through scale effects and synergy effects, expands its business based on its core capabilities in technical services, and has more living space and development opportunities in industry competition
Judging from Fubo's global layout, the achievement of this achievement has deeper significance.
Last year, Fubo's revenue in the Chinese market was HK$1,002 million, a rapid increase of 44% year on year; while revenue from the North American market was about HK$993 million, up 33% year on year. Fubo's layout and implementation in fields such as copyright services, short dramas, and high-quality content overseas provided support for its rapid breakthrough in the Chinese market. At the same time, it continued to deepen cooperation after being deeply tied to leading content parties overseas, providing a solid foundation for overseas growth. Judging from the composition ratio of the business, Fubo is not overly dependent on the single market, and the certainty of performance growth has further increased.
Based on these performance breakthroughs, Fubo's forward-looking strategic layout continues to deliver on operating results, and its leading position has been further consolidated. At the same time, under the premise of maintaining steady operation, the company spared no effort in R&D last year, which also meant that it had a strong momentum to achieve breakthroughs in business development and service innovation in the future, especially in AI. In the future, it will continue to move towards a higher quality stage of development, build stronger competitive barriers, and achieve greater business growth in global market competition.
The AIGC era is favorable, and Fubo Group welcomes significant growth opportunities
Fubo's success lies not only in its continued deep cultivation in the digital content industry, but also in its ability to continue to lead the industry in forward-looking judgment.
Now, with the advent of the AIGC era, the application of AI has penetrated into various fields. In this context, the company has shown a larger and more clear blueprint for value growth with its core competitiveness and layout advantages.
First, the explosion of “content productivity” led by Sora will enable generative artificial intelligence to play an important role in the film and television entertainment industry, greatly improving the production and dissemination efficiency of film and television entertainment content. Fubo has long been deeply involved in the film and television entertainment industry, covering leading content parties at home and abroad, and has rich cooperation resources and application scenarios, providing solid support for this industry transformation.
Second, the AIGC era will generate more massive digital content. From the UGC era to the AIGC era, this will surely bring about huge changes in the industrial ecology. Both the scale of the industry and the market's demand for efficient copyright management and authorization mechanisms are expected to usher in explosive growth. Even in the AIGC era, large content players will still be the most important stakeholders. Human creativity will still be the core value of the content industry, and the content ecosystem will be more responsible. Content parties and copyright parties need to ensure the core value of their digital content assets in the ever-changing content production and distribution pattern, and reliable technical services and guarantees will be essential.
For Fubo, its digital authority competitiveness will establish and maintain order in the new ecosystem where AIGC content is exploding. Through its own accumulated service model and operating experience, Fubo provides an effective copyright management and authorization mechanism, seizing unprecedented market opportunities.
In addition to this, as a leader in digital content asset protection and trading, Fubo is also making a forward-looking layout based on its deep understanding of the digital content industry and AI.
On the external side, Fubo has accelerated innovation in technology and solutions, set up an R&D center in Florida, and promoted the implementation of its technology and product development in the field of AI. Internally, Fubo has gradually optimized business process efficiency through AI large model products to improve the efficiency of text reasoning and understanding in automated content review scenarios. Furthermore, in the overseas business, the company is also actively improving the efficiency of the content monetization business by integrating AI tools.
Combining Fubo's long-term accumulation in technology, business and customers, it is expected that it will fully grasp the industrial transformation and innovation cycle promoted by the AIGC era. By continuously promoting the continuous implementation of the AI strategy and actively creating a new development curve, the company is expected to continue its high-quality development path.
epilogue
In the current environment of industry transformation driven by AI, Fubo is also expected to enter a new profit cycle, further showing high certainty and strong sustainability in growth.
The logic of this judgment can be viewed from the following three aspects.
First, technological innovation is the key to growth. In the AIGC era, technological innovation is the driving force for industrial development. Through continuous investment in the AI field, Fubo has continuously improved service levels and product innovation, laying a solid foundation for future growth.
Second, the global layout helps expansion. With the rapid growth of the Chinese market, Fubo's business layout at home and abroad is gradually being improved, bringing the company more room for development and a more stable source of revenue.
Third, by continuing to cultivate the industry and lead the way in development, Fubo has the ability to continue to lead the development of the industry and enjoy the dividends of the times of industry change.
According to forecasts, generative AI is expected to contribute nearly 90 trillion yuan in global economic value by 2035. It is undeniable that the AI field will also be an area where the “Matthew effect” continues to be unleashed. Whoever has a first-mover advantage and large-scale strength will also be more competitive. This also means that most of the industry's dividends will go to leading companies.
Currently, along with the continuous consolidation of the leading position of Fubo Group, with long-term industry accumulation and forward-looking strategic layout, the company has sufficient ambition to continue to lead the circuit in the future and is worthy of capital market attention.