FuboTV (NYSE:FUBO) has had a torrid year on the stock market. In fact, FUBO stock has lost more than 75% of its value in the past 12 months. With the re-opening of economies, investors felt that it would probably have a tough time retaining users and attracting new ones. However, the company has done exceedingly well in proving the naysayers wrong — shown by its stellar fourth-quarter results.

FuboTV is essentially a sports-first streaming platform focusing on customers preferring bundled offerings. Depending on a customer’s location, the platform typically costs much less than a cable subscription.

During the pandemic, the company was on a tear, posting double to triple-digit growth in revenues. As everyone knows, though, its margins are crummy, impacting its stock performance.

Moreover, the broad-market selloff of the more risky growth stocks has also weighed down FUBO stock. However, as we progress, we see greater visibility into the company’s future profitability potential.

Solid Fourth Quarter Results

FuboTV rounded off another incredible quarter and year in fiscal year 2021, delivering record annual revenues of $638 million in 2021. On top of that, it ended the year with 1.13 million paid subscribers, a 106% bump from the same period last year.

The top-notch results for the year had plenty to do with the company’s spectacular fourth-quarter showing. Its $230 million in revenues were up 119% from the prior-year period, with an addition of 185,000 subscribers during the quarter.

Furthermore, advertising revenues increased by 98% YOY to $25.9 million. Additionally, the company achieved higher unit economics through marketing discipline and lowered user acquisition costs.

Lastly, fuboTV forecasts its first-quarter revenue this year to fall in the range of $232 million to $237 million. Moreover, its full-year revenue guidance is expected to be $1.08 billion to $1.09 billion. Consequently, it will be the first time that the company will achieve the billion-dollar mark.

Margin Expansion

Collectively, perhaps the biggest concern with fuboTV is its lackluster profitability figures. Investors are concerned whether it could chalk out a path to profitability, considering its hefty operational costs. Revenues have contributed immensely to expanding company margins, but it must cut costs over time.

On that note, fuboTV CEO David Gandler discussed the company’s progress towards profitability during a CNBC interview. He said that “We have laid out a plan, and that plan was to expand our contribution margin every quarter between 100 and 200 basis points”. It closed out the year with an adjusted contribution margin (ACM) positive 9.7%, representing a 104 basis points improvement from the prior-year period.

The average revenue per user (ARPU) has been rising consistently over the past several quarters, which has helped expand ACM. However, ARPU growth is expected to slow down as subscriptions mature. Nevertheless, we see that expenses as a percentage of revenues drop at a healthy pace with every passing quarter. The figure declined from 207% from the third quarter of 2020 to 165.5% during the third quarter last year.

Bottom Line on FUBO Stock

FuboTV wrapped up another sensational quarter, which impressed across both lines. We see a marked improvement in its cost management and the expansion of its margins. And with strong gains in its subscriber base, it appears that the concerns surrounding user retention are highly overblown.

Furthermore, fuboTV aims to optimize its services for advertising, sports betting and other sports-friendly features. Nevertheless, it is a relatively risky investment with susceptibility to wild swings; hence, it’s only for investors having a long-term horizon with the investment. With its stock price in a free fall, it’s perhaps the best time to invest in FUBO stock.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.