Earnings call transcript Q1 2023

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Operator

Hello. My name is Jean-Louis. Welcome to the Genius Sports First Quarter Earnings Results 2023. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

turn to now Relations. Bukstel, conference the will Brandon over Investor I

Brandon Bukstel

you, good Thank morning. and

subject we'd results be for risk considered our begin, statements updating discussions in may SEC that with filed this materially no statements forward-looking cause this we to of responsibility statements. to results our with in made call that differ are forecast. our statements and assume Any actual forward-looking with year. XX cautionary our on filings our earnings our Before constitute should release Including like from annual during factor such in certain historical statements the remind SEC. Form March from risks conjunction the on could or report to you that We XX-F

accordance management for financial During operating evaluating in discuss considered in at in as in also be measures comparable is on can website A meters isolation should found non-GAAP be certain Genius' these release GAAP U.S. most may of believe that not Genius' available to be will reconciliation the or earnings earnings measures the results presentation directly press substitute call, prepared we useful performance. our and which measures U.S. These investors.geniussports.com. non-GAAP our with a GAAP.

that, now call turn over the to With I'll Locke. our CEO, Mark

Mark Locke

in EBITDA past generate momentum will point the we We're free begin XXXX our profitability XXXX to key from turning happy We on quarter thank flow today. note, positive business, And for us morning. positive continuing joining and as a cash Good our for you noted triple HX. mark a the how year. last

even ahead. are prove that already giving our ahead the year first in expectations confidence well Our results greater of we quarter me

confident revenue, $XX start in hold again we feel adjusted results of the to million million QX of EBITDA, full significantly to delivering of once at and to where standard shareholders and ahead XXXX. high year. expectations We the to year accountability guidance enough increase $XXX of for We ahead of our our ourselves a of guided

to but we will demonstrably as business wins, Genius ourselves back and strategic ever. strong position model in now come operating We of as the remains the ways our is the now find coming leverage multiple through for

To constant recap the quarter, to basis, on target XX% $XX ahead grew million. revenue million by of currency we well a of our $XX our

More dropped through delivered this to group growth importantly, operating an demonstrating XXX% near further EBITDA, adjusted last million of We of growth increase our group business leverage target revenue QX also at $X nearly million and million and year EBITDA in adjusted margin, the model. exceeding the representing XX%. year-on-year a the of $X from $XX

growth improvement multiple The a this that come cost. year profitability minimal function with drivers is the of

total in-play reminder, increased cross-sell existing bets of volume Growth higher or a these successful placed. sports include: operator drivers and handle betting, customers some growth customer renewals wins. win and with new book margins, As of of contract

our remained So in fueled and should relatively to need base these our not and fixed cost drivers worked favor revenue while growth, has increase. have growth

continue positive betting these solid where well market. online in as the trends by encouraged in across U.S. sports the to the are We we globe in rationalization as improvement see

been is mentioned more ecosystem. are that than the entire Genius. profitable, position at my and will last benefit technological the this financial it during becoming strategic best books sports Genius I our ever time Our quarter has

X%. adjusted guidance $XXX in our up EBITDA XX%, of than me our $XXX adjusted million we the more XXXX million of confidence in a results mentioned, of to margin million group revenue our margin quarter our And greater and double the even guidance Our EBITDA implying and as prior from from raising million $XX to give are from $XX XX% business. group

of objective In margins, plus on summary, we EBITDA long-term our plan XX% towards our of as are ahead excited about expectations. persistently our execute we trajectory

is and ways earnings to to cost no you prior our Moving quarter. accelerated we This that multiple worth version I from outperformance it this win levers. clear, accretion, these margin is X, list, we direct Genius are it and hope led remember may has Slide the incur of how a EBITDA along, revisiting absolutely is achieved growth growth pull as that we these growth. this increases, alongside exact presentation drivers considering

quarter, QX provide regulated online a the how few successful saw us launches setting starting just me the of sports in Handle. Let benefited this examples, and Massachusetts. in of with Ohio

received the agreements immediate, we sportsbook revenue US meant no revenue that at cost. Our uplift with additional operators, share

overhead rights launched. expenses had these to the Our whether states remained have regardless related that fees, operational two people same, would of and

the to addition is how also much driven betting. it we've overall In-Play by of tracked, handle In growth,

Our driver revenue us for all pre-match. versus Again, the rate Genus. profit a with earn operators, same sportsbook higher share X base, cost times agreements this making US In-Play on significant a take the on

in-play this their gross as GGR. saw handle XX% further, which bet, increases In-Play bets. sportsbooks NFL gaming outpacing and revenue on we win full step our the of margins a also betting from approximately market. these is revenue season the broader by have proxy, Taking Using rate or in This a the season, called second actual earned increased the improved

is is season, over to Genius. converted Essentially growth of much driver we revenue, from operators full XXX% operator In is and margin. that metric, GGR saw for by NFL in-play year-on-year. being The measures grow the this the the hence win next how handle our second

talk and parlays. In-Play about addition to, improvement significant in shares the of also You'll a have heard this, in win by revenue. game margins, driven operators in Genius parlays largely success frequently same the

contract official entire something record year-on-year successful renewals. the its that renegotiations revenue. track and input, cannot much represents of Remember of has had take operate industry This a of betting that Genius data bookmakers betting rate without. crucial increasing our powers a sports Lastly, growth the and is simply in real-time

the runway, continue a our increasing market, decades mature product power. sports pricing while of data and have betting new And relatively in official to long for is has we existed

be years this XX expect and We growth of to over source months for next ahead. XX the substantial a to many

with the relationships. rights; founded of additional us, building past the one, principle years. two, on portfolio afforded was a Our high-quality This our leagues official revenue through obtain capture differentiated technology and to been has technology-driven and opportunities partnerships for business business, business position bedrock to data the of to: the of XX

in sponsors challenge their to sports teams, and the like the businesses. technologies rapid around accelerate world, AI face broadcasters, Today, leveraging leagues, many companies bookmakers of advancements the all

the proven within ecosystem. the our positioned be perfectly industry, shadow We of sports that leader Genius a in AI a to forefront doubt, technology innovation, have media the and our partners without at generative of clear is help

fully lend as spectrum second we None technological part will are on plan. investment detailed month, this where our our years current of moat Our behind are held in of costed, development we which and and already demo, a competitors anywhere to this, competitive last significant plus the itself is of us and close ahead. to that decade the

biggest platform their with names of NFL, they sportsbooks. This which a the are League, leagues sports data second this adopt model offerings, helps a as flow, like enter free and is leagues, of Premier why to broadcaster's with sponsors. around English and position of sports to a CBS all while AI others building ESPN, the the scale digital sticky will as NBA, ownership already accelerating to cash It our our to spectrum partner commercial technology age. a we profitability our secure transport rights a technological team's large Amazon, us us long-term in position business the and It's capture partners maintain reinforce layer growth. and a to our we generative makes global what beginning the helping leader why next clear books, our our brands are stage is journey, path operating to long-term across At

for it our While landscape incredible may are others on us as an we capitalizing. challenge which a changing already this and actively in one technological represents space opportunity see

continuing to drive win and contracts AI on will the are of at focus remains of our continuing our rapid that adoption We technologies. scale broad-based to a rate this opportunity improve generative

have financial us five the increased of targets you like on you see as conclude watch and continue adoption To technology. our past to our for deliver quarters

clear long-time should and we this targets. our on recognize exactly plan a to profitability signpost as and near-term that proceeding growth You are

that Nick discuss to our in hand on now detail. to note, more the I'll call financials And

Nick Taylor

Thank you, Mark.

at marks the we this plan. the have consecutive fifth start, strategic and mentioned consistently And or of As financial delivered beating meeting on quarter our expectations.

grew Our outperformance $XX product, million. of The strong execution period outperformance XX% our where our by to year-on-year of betting another revenue relative in guidance led million to exceeding guidance. QX we was our to in $XX largest

On this a constant currency XX%. greater even growth of represents basis,

EBITDA it high-margin this meaningfully contributed us revenue the is to in Given quarter. our group adjusted for

million. of having expectations, of ahead our also was revenue guidance $XX generated revenue million versus Media of $XX Our

in for was as backdrop. advertising an out XXXX. monitored such of true This with macroeconomic more the a sports heightened launch pointed of of a promotional promotional events for books. has was year York last of their last we closely. of also have As which spend previously, marketing since who characterized This is QX handful the sports changed sports QX for landscape amidst overall instance New one-off particularly QX period year, betting customers, by evolving online unique intensity betting to

guidance XX% year, be Nevertheless, of that implies to of we're excess revenue media ahead tracking our growth and pleased in this forecast.

of in XX% revenue. line in for million representing to currency This PEC of the $XX well of $XX Lastly, group with our constant equates ahead earning revenue our year-on-year total and was million revenue $XX sports guidance growth. expectations million quarter our

margin. this million revenue Importantly, adjusted group and to contributed outperformance nearly XXX% EBITDA $X

versus leverage the As of scale increase The business $XX a results operating model. million $X year. result, are exists and of evidence quarter our from million, we of of reported an from EBITDA the $X the last that guidance adjusted group representing our QX in million

achieved our have to sizable growth materially revenue need increase the operating without We expenses.

excitement guidance today, our with can base the cost can raising revenue the feel therefore, of everything the you've accordingly. substantially and business have higher Going fixed forward on we heard business Based in you likely the XXXX are sense today. support we

and increasing $XXX we remainder from persist through expect in $XXX million the million to based will We positive our trends the guidance are outperformance year. of revenue our on QX, the

Similarly, million group guidance from adjusted to we are raising $XX million. EBITDA our $XX

this and anticipate incremental any our changes to our not drop we EBITDA of adjusted revenue to do base. cost much As additional should through

is fluctuate that from an ratio our our understand year. in US rates to guidance will We Just first foreign guidance, of clear, otherwise be assume dollars. X.X time exchange communicated issuing GBP the was the this consistent case typically that throughout will to exchange which unless

it However, fluctuations. as we relates public guidance, do these predict not intend to to our

we material we year, last in will on a consistent unless these a In on focused based are Therefore, other movements to we nature continue are short-term currency. the on experienced basis. like like-to-like words, guiding truly market much guide

the finished guided cash with we Looking position, slightly figure ahead $XXX $XXX of million is quarter of in into beyond our EBITDA and our cash which million.

our reminder, a typically an flow to As outflow CSL our seasonal cash first includes working quarter investment. payment capital cash related annual and

closing ahead year. to positive will should before balance cash roughly be QX, be we represent million in our Looking cash flow approximately QX. low expect to From expect cash QX which there point for the our flipping $XXX breakeven

Overall, the of free generate this we our increased XXXX form is guided about year have in as the momentum the year. and to demonstrate through QX half quarter progress positive of year the second flow in of the this potential the the remainder business Again this in begins accelerate model. strong guidance excited expect made expansion.We're we of cash the And outperformance quarter. rapid profitability and last in the margin from we've which to

conclude prepared our open remarks to line the Q&A. will and we that, With

Operator

begin now ahead. will Jordan the line go of the of We Your [Operator comes question Instructions] first Bender Q&A JMP session. Securities. Please from

Jordan Bender

and for quarter. Great. question nice Thanks my taking

kind As you're factors look updated kind that can us the on the we guidance thinking to the of play slide, about through of out Thank and six remind impacting the of page hold throughout you you walk how year. just some you. guidance, XXXX of shifting

Nick Taylor

operators just to a through of thinking it their seen earnings NFL year. it's how course seen this sportsbook in season a Jordan, weeks the Nick. answer and we've QX really the the about for half we've strong you've last the tailwinds over that to that remind we're rest in we've is QX. our everybody is and guess, really through done favor. what the There's season. Yes, a Hi, lot QX own it of year I the And And of heard from headline

that what Just to for give like you of idea NFL. an growth looks

a actually been seen up we've growing NHL on up in What the season it GGR has the in-play metrics. We've total is at was XX% total at XXX%. XX% has look play basis, on you is been season remarks, different and yet When the was and of GGR touched in I fastest basis. this the on that got betting up imply from GGR NFL think, all XX% handle total Mark prepared

that the in are of not our not to sort through our numbers looking in they -- So the of season, end any underlying the but we're revised in at hit key order material we're changes guidance metrics. tailwinds we're forecasting those to

Jordan Bender

want my I Great. I that were US. well. the follow-up think to there? you. as throughout guys how And then maybe Thank then EBITDA business. the should for guess you in about year talk positive trend about first quarter And we kind of the

Nick Taylor

mean still very losses we partly obviously it I reduce mean split our a we continue found geographical I today we weren't difficult is the are of multinational. US and what is We a rights I the that Yes. got will contracts because think lot on at our it's said year through because of don't less lot give to in a EBITDA that positive. have the end true XXXX. and certainly entirely

I think considerably single-digit a and about better I US I EBITDA at than to the loss progress think a continue breakeven at for XXXX. a year-end, positive to I which And we'll position in looking that's it XXXX, be the and was around for that is expect said XXXX comment. in to fair

Operator

Thank you.

go of comes the question next of Your Oppenheimer. from Jed line Kelly Please ahead.

Jed Kelly

Thanks Hey, question. my for great. taking

two if may. Just I

on had the spectrum. lot tech a with a back technology. March of And announcements demo had in the You've nice very nice you second

should the Thank that or you remind of? renewal just how or start there us, next bid XX revenue some can items, aware for where the see and looking And over months, up then the of contracts that we out to we'll up you. how other are impact help line So that will for any financials? be just

Mark Locke

a question it's on Hi, Jed, Yes, second it's good Mark. spectrum.

on to spectrum is phase. second just mean really we've an our spent I So what focusing recap, the doing time investment

worth second mean that in budgeted that's and of I factor that is things fully both costed really numbers years the important spectrum on we for our that or put investment is guidance. now think focusing had out is a of think XX-plus So important the And spectrum differentiating and one Genius. second fully we I

in sports of way got a and that to The aspects way spectrum used of of we've impacts the for business. similar technology rest our the second that us using delivering our very is and We've and acquire technology that history business. drive building to all long rights revenues in

and what result more again increases So is period revenue a what now be of all significantly second our and as you're already aspects of dropping seeing spectrum. coming you'll in a business the seeing through over

now. lot or renewals are rights spectrum we potential deals have those our by driven of of new deals a as rights second relationship well So that may

that again, a the areas. The with ago. leagues of relationships we've the in all over betXXX drop And got through way time. while something sorts we will with different the engage we announced That start to sports with books,

is is final the to the the clear one second I've that as pretty area possible. to technology broadcast side. the broadcasts made for into spectrum, of in guess many media second focus focus distribute it I my And our spectrum

I done good a of think we've job that.

business far that and Premier enormous and coming our through And side in in stuff an well. So with revenue of gives we're League. all CBS really potential Amazon nicely we've the and doing that us from is got UK as

have lead we've on and space and pretty made. commercial the So the feeling that think good investments we're this feeling that about basis I already we where we're good pretty are in we about a

was rights the conversations. think renewal the is mean Yes, renewals. one I That's question? co-rights conversation. there's second your main question few your Sorry, around renewal shortly. I a rights up So data second Jed,

lots So you. holders. again where feeling lot referring we've have major spectrum good really got position answer rights slightly renewals we're any to different got We've given horizon. their pretty the think strategy we're second back I of a And their about in the to very the on drive sitting and with the just with growth. that we of I've relationship We're rights strong using of a

Operator

Thank you.

Your ahead. next from McTernan of question go Company. the Please Bernie line Needham of comes

Bernie McTernan

some the for a spectrum. follow-up revisit And to Thank second spectrum to about recent advanced talks any the in bringing maybe love higher that? by with Great. on renegotiations, I what get drove contract contracts? part investor those take contracts? not if stakeholders In with industry it Has of it benefiting would the driven was letter XQ those technology thoughts early you from for taking second presentation this renegotiation questions. catalysts the to in on just conversations to and market the rates

Mark Locke

mean, I'll I of the like. you Yeah. I of the questions renegotiations front part contracts if mean of course normal back of those take sort business. are

operates contracts for that the that So been consistent we're pretty business has renegotiating constantly the way and our in years.

we're So that's what doing. really

Obviously, of it when and becomes core have we've spectrum second conversations. got then part it those business new differentiating big a in of that technologies, such advantage factor really as does sort

So and significant it closely a expand those more gives with us relationships clients. our work to opportunity really

of that On we're question, the some sort about way of thinking the previous the sports.

on Sorry so sort of we're as last way with I answer second mean rights well. thinking – basically spectrum on the the negotiation that the I touched about

our part of second spectrum all having All of partners core I our we're holders, a without rights conversations include become business. we conversations the the with It's technology. uses that of and exception that have that think of the rollout with of really

is it's it's it those already and strong in that that's driving technology there that things of of a that that one position the lot out relationships. Obviously, driving market about the so exists, the it's real,

become it's at strategy the and of strategy and really an our of part integral an moment. working really become revenues that's integral it's our delivering yes, part So

Nick Taylor

Nick. Bernie, Hey, it's

and to that non-US revenues remembering mid-XXXX. the know just US. the in to on It's exactly renegotiations where that contract. of and are lot play sports of new QX worth books, A additional position as as leagues It's have it's that sort broadly into global additional product renegotiation. It's following XX% the those classic relation contracts the of services. well second the the a any they're US renegotiation just in as are from you new Just with comes Mark's also contracts, answer sports adding we expand that's not with actually our of run where spectrum our technology in federations. one the additional interested about and And

Operator

Thank you.

from BTIG. Please Clark comes the go of Lempen question ahead. line of next Your

Clark Lempen

question it's morning. ad with non-sports year? customer maybe markets? for on demand Hi, also and – growth thanks. now between how some feel Do respective and Good trending? trends you when Josh, like hoping improved was betting on of you're broader Mark what that's right I what you seeing guidance I sports, you're had set in a weakened in you guess line the non-betting – the betting market, programmatic the guys on on update sort if And context business how earlier us to relative or or ad seeing maybe could I he's you the the

Josh Linforth

Hi, Josh here. Clark, it's

happy how advertisers win base. that's programmatic and Sportsbook our the we from progressing. new of business revenue To very a things but reminder we still happy In low terms the its overall to continue non-betting coming as side the that's business majority of progress. of continue to a on be aligned with the with are really, date, really I mean we're with really

area of It's with the to very strength. a continues number brands it's months Obviously, advertisers. was course course that very, I that over months these brought of strength with we from for to the and early last ago us the we're mean start happy XX XX of days. go the over and new on that new the

feeling the good strategy business we're a about much sports really like have we here, So land-and-expand it. betting and

In ad jitters in terms cash the seeing initial to a some overall market brands. come from starting we're think I ease budgets bit. those of And of are various little new

market We from progressing. us happy certainly see it. about don't stopping So the we're

Nick Taylor

Yes. Hi, Clark, Nick. it's

guidance happy back have on dollars where just a that pretty then well which because Josh at of to the time, it conservative because Media, visibility Just around still that in given relation at year-on-year the rate we've with is our QX just in when for couple of to media overall about our of you what on some numbers example by position. we're have to that favorable I and to add – look space. just relatively set of million that the sports that particularly media guidance of that upped if the XX%, said is we US because be interesting start as implies Josh initially a think market particularly conversations season why starting pretty said, we'll growth the we we're in

Operator

form Thank ahead. Craig-Hallum you. Capital question Instructions] Your Sigdahl Please of next comes [Operator the go Ryan line Group. of

Ryan Sigdahl

guys. morning, Good

part of price that contract you negotiation? book if there on mentioned in any customers You increases that renewals. churn was those global Curious of took the sports as several

Nick Taylor

Hey Yes. Ryan. No churn.

that to As and of from Jack drive is the make provide. you continue team the know, Genius book sports have the legalized done the that Genius with have work services fundamentals XX months is over the and to we the sure you we our globally, if one given and and do, we a have you value is last continue to sports commercial and market what about given run number long of products given tail

as a is not certainly about on also just this just pricing key going five about to expanding taking the forward in our expand it's not our Mark but lever improvement, be six services, is on large or books obviously global although growth a basis. about talked prepared remarks, US but going and London This price sports the of

Ryan Sigdahl

reconciliation see then of that. is I bit raised cash are guidance the the year. cash you kind what guidance? what takes were now follow-up, for expecting And guess puts The quarter. than lower previously to a you a last point the your low the EBITDA on for so versus Good EBITDA

Nick Taylor

give cash actually Yes, point number. Ryan. previous hey didn't a we Yes, flow

line in said. previously So with we what have actually pretty it's much

we a And and then, in what million. we'll think then positive last that quarter be to as is year. the in expecting and quarter we that be are I XXXX $XXX probably about indeed around in before forming cash positive said HX they're So cash

Operator

you. Thank

Your next the line Michael go Please ahead. question Hickey of Benchmark. comes of from

Michael Hickey

Hey, and like guidance I you did guys. quarter if Good strong online had that I here. getting about up on just your raised talk curious Congrats morning, looks you every Mark, you quarter but XQ, Nick, about a updated trouble didn't why Nick. right here XQ, bump XQ? saw

Nick Taylor

Hey Mike. Yes.

You're right.

obviously at of of So betting again we've a sector seeing raised by tailwinds of two. business we're in the QX visibility million play in have much dollars. the couple that We particularly quarter some in two and seeing, out QX we're quarter

I the think talked of season around the increasing QX. spend of about answers media just one at in start confidence the our sports previous

it's the bag We're of discuss like. We're looks our in. the XX just once now, performance those in quarter our continue confident purely visibility back to year pretty We're what to raise and Mike. QX just to QX only monitor, numbers. we'll of rest guidance is we'll right one delighted come the to

Michael Hickey

And I quarter mean then Okay. exceptional. the for XXX% Cool. also, contribution margin

raised here EBITDA controlling of have for and maybe control? into like sort your the of your sort expenses XQ you remaining success think year. so XX% from the just talk Can of margin the sort contribution here guide how terms the quarters in expense for progression year in You your you about of about you

Nick Taylor

and have zero levers increase in lot mean to we cost operating past our to scale, else EBITDA position the $XX is quite the million said I we've are at in you increase our disposal business in going And that come that heard XXXX. leverage and Yes. revenues Mike, and around in tipping that with requires talk the position base. a has a from why a million us we certain to we're now, go level that always $XX which a of everybody EBITDA a point

those conditions from see continue to and exist XXXX we should And beyond.

at expenses, look look this $XX million year. are quarter you you in quarter $XX position cash last the previous in at actually QX If million operating year-on-year total, versus it's our

expecting driving very and to is and on year. profitability the focused profitability the we're through quarter So this driving happen that continue cash really business the well see of for in to and as rest that beginning

Operator

conference concludes no are There time. you. This this Thank today's call. at further questions

now disconnect. may You

Genius Sports Limited (GENI) 9 May 232023 Q1 Earnings call transcript