Topline numbers
Group revenue came in at $97.2m in Q1, up 13.2% year-on-year, or 19.1% on a constant currency basis.That saw the business exceed its previously stated quarterly revenue guidance of $92m by some 5.4%.
Adjusted EBITDA for the quarter totalled $8m, well ahead of previously stated guidance of $3m and a significant improvement on the $2.9m adjusted EBITDA loss reported in Q1 2022.
Still, the business posted a net loss of $25.2m for the quarter, down some 37.4% compared to the $40.2m net loss registered in Q1 2022.
News nugget
Genius Sports CEO Mark Locke (pictured) said: “2023 is the year in which Genius expects to significantly accelerate group adjusted EBITDA profitability and rapidly expand margins.
“Our first quarter results demonstrate the operating leverage of our business model, built to benefit from positive industry trends and support sustainable, profitable growth.”
Although the business has outperformed expectations and recorded significant growth across the group, its betting technology, content and services division was the only one of its three business segments to grow year-on-year.
Growth in that segment was driven by new customer acquisitions and growth among existing customers, as a result of price increases on contract renewals and renegotiations, Genius said.
In addition, growth in the betting technology segment was driven by a higher volume of total bets placed and increased in-play betting driving higher operator margins.
Those factors have helped to generate increased revenue for Genius while generating minimal or no additional costs.
Negative growth in the media technology, content and services segment was caused by lower advertising spend by its clients relative to the prior-year comparative period.
The sports technology and services segment suffered, meanwhile, due to lower revenues from non-cash consideration contracts.Still, the business achieved significant highlights in Q1 including expanding its partnership with the NBA, launching a suite of NFL free-to-play interactive games to help grow the league’s international fanbase, and introducing its Genius Marketing Suite fan engagement engine.
Analysts at strategic advisory firm Regulus Partners suggested that Genius is “finally” leveraging the value of the exclusive rights it holds in several professional sports leagues, putting the business “within touching distance of real profitability.”
Now, it added, Genius should seek to capitalise further on those rights by “showing to stakeholders how they are adding value to sports rights over and above” the core benefits of providing official data.
It suggested Genius should do this by further developing the ways in which sports data can be used by operators, which “could unlock the secret to making mass market betting customers become more engaged in a sustainable manner and growing the segment.”
Best quote
“One of the fundamentals about Genius is that given the number of sports, our long tail and the marquee products we have, if you run a legalised sportsbook globally, you have to work with Genius.”
– Genius Sports CFO Nick Taylor
Best question
Senior equity analyst for JMP Securities, Jordan Bender, asked management on today’s earnings call to clarify whether Genius’ US operations had been EBITDA positive during the quarter.
In response, CFO Nick Taylor explained that it’s difficult for Genius to provide geographical breakdowns of its revenue and earnings because many of its rights contracts are agreed on a multi-national basis.
With that said, Taylor added that the quarter was not EBITDA positive in the US, but that “the losses that we’ve found in the US have certainly got less and will continue to reduce through 2023″.“I said at the year-end that we’ll be looking at around a single-digit EBITDA loss in the US for 2023, which is considerably better than it was in 2022, and I expect that to continue to progress to a breakeven and positive position for 2024,” he concluded.
Current trading and outlook
Genius Sports has increased its revenue guidance for the full year 2023, from $391m to $400m.
Group adjusted EBITDA for the year is now expected to come in at $49m, up from previously issued guidance of $41m, on an EBITDA margin of 12%, revised upwards from 10%.