Betting business drives Genius’ Q3 revenue jump but net loss hits $11.6m

(Shannon Finney/Getty Images for MGM National Harbor)
(Shannon Finney/Getty Images for MGM National Harbor)

A 34-per-cent jump in revenue in its core betting business helped Genius Sports report increased third-quarter revenue of $101.7m (€95.2m) but foreign currency headwinds contributed to an $11.6m net loss.

The data, technology and broadcast services group listed on the New York Stock Exchange today (Monday) reported revenue up by 29.3 per cent year-over-year and outstripping its guidance of $100m.

Third-quarter revenue of $65.9m in the betting technology, content and services sector accounted for the lion’s share of business.

Genius said the segmental uplift was driven by “new customer acquisitions, increased customer utilisation of available content, and growth in business with existing customers due to price increases on contract renewals and renegotiations alongside the expansion of value-add services, and new service offerings”.

The group net loss was narrowly higher than the $10.3m figure reported in the second quarter.

The third-quarter loss from operations was slashed from $33.4m in the equivalent period 12 months ago to $8.9m but was offset by a $29.8m reduction in gain on foreign currency. Despite revenue growth, a third-quarter net loss of $9m was lodged 12 months ago.

Genius’ share price also continues to languish, closing at $5.14 today. At its height, Genius stock was trading at $24.10 in May 2021.

Quarterly revenue in Genius’ media-related division was up 27.9 per cent to $22.9m driven by growth in the Americas, primarily for programmatic advertising services.

Revenue in Genius’s sports technology and services division also increased year-on-year, by 11.6 per cent, to $12.9m.

Nick Taylor, Genius’ chief financial officer, said that the company has reached a “critical turning point” as it has “realised consistent margin expansion in each quarter this year and now have much higher visibility into our long-term model following the renewals and extensions of key rights partnerships”.

Third-quarter group adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) of $17.7m was up by 131.1 per cent. Full-year group adjusted Ebitda of $53m is predicted, including $11m in the fourth quarter. Full-year group revenue of $412m is forecast.

Speaking on an earnings call today, Genius chief executive Mark Locke expressed confidence in achieving a long-term Ebitda margin target of over 30 per cent.

He said: “What gives us confidence is the high visibility of our fixed cost base going forward, particularly as we have just renewed and extended our NFL [National Football League] rights agreements through 2028, along with a growing demand for our products and services from all customer segments in our business, leagues, sportsbooks, broadcasters, and brands and sponsors.”

Locke claimed that Genius’ technology prompts rights-holders to renew deals “often without even running a competitive tender process”.

Revenue from all three business segments is forecast to increase in the fourth quarter, including a predicted $80m from the betting unit.

Locke also today played down the chances of sizeable job cuts following a recently introduced redundancy programme at rival Sportradar.

“In terms of the scale of the business, we feel we’re right-sized”, he said. “We’ve been very careful about cost control. We’ve managed the business very well over the period.

“And I think at the moment, we’re seeing the underlying cost base right-sized, if anything. We may even look at potentially a small reduction in some of the capital outlay.”

In July, Genius kept hold of one of its flagship contracts by extending the NFL data and betting video rights deal until the end of the 2027-28 season. Genius originally landed the rights in 2021 in a deal that also includes the exclusive distribution rights to official NFL play-by-play statistics and proprietary Next Gen Stats data.

This came on the back of Genius securing a one-year extension to another flagship deal, with Football DataCo, the data rights-holder for the English Premier League, English Football League and Scottish Professional Football League. The contract is one of the most lucrative data agreements in sport and was the subject of a legal dispute with Sportradar that was only settled in October last year.

Speaking at the presentation of Endeavor’s financial results last week, president and chief operating officer Mark Shapiro conceded that IMG Arena would remain “number three” in the betting rights space behind Genius and Sportradar.

Shapiro warned major sports rights-holders that IMG Arena will not be overly-aggressive in forthcoming tenders, noting: “We have been very disciplined to this point. We don’t play at tier-one, trojan horse money-losing properties. Often it is a rights fee-fest to try to get the sports data from some of these major leagues, and frankly the margins are just too tight, there’s too much risk, and we can’t make money on that.

“We play in the tier-two, tier-three properties and often package it with our media division at IMG where we can get all kinds of efficiencies and synergies to make these profitable and strong margins. That is where we’ll continue to stay so we are very content being the number three player in this marketplace behind Genius and Sportradar, which have been doing it longer than anyone else.”