NFL Genius Sports Betting and Tech Revenues Spur Stock Jump
Genius Sports revenue rose 13% in the first quarter to $97.2 million on strength in its sports betting technology, content and services division. The report beat Wall Street analysts’ expectations and allowed Genius to raise its sales guidance for the year.
“The operating leverage we’ve always talked about having in our business is coming through,” Genius Sports vice president of capital markets and strategic initiatives Charles Scherr said in a phone call. “We’re seeing a lot of traction with our Second Spectrum and AI work we’re doing around broadcast and with fan engagement…. That gives us really sticky relationships, solidifies our rights portfolio, and we’re able to go out and monetize that [in] the global regulated sports betting market in a pretty significant way.”
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The betting division’s sales grew 30%, to $64.7 million, swelled by new customers and contracts renegotiated at higher rates. The division’s strength was more than enough to offset weakness in the media technology and sports technology divisions. Due to the general advertising slump and non-revenue-producing work for clients, sales eased in the divisions by 10% and 11%, respectively. Unfavorable foreign currency comparisons also dinged results. Overall, London-based Genius showed a net loss in the quarter ended March 31 of $25.2 million. While that mark was slightly worse than consensus expectations as compiled by S&P Global Market Intelligence, it was much narrowed from last year’s $40.2 million.
Genius said it expects revenue to come in about $8 million higher for all of 2023 than had been expected, at $400 million. The company also expects to be positive free-cash flow in the second half of the year, something investors in the fast-growing business want to see as a step toward profitability. Taken altogether, investors sent Genius shares as much as 24% higher in heavy volume morning trading on the New York Stock Exchange. Shares finished at $4.65, up 16% on the day. Genius shares are up 30% year-to-date.
Second Spectrum, which Genius acquired two years ago for $200 million, sits across Genius’ three operating divisions and continues to highlight Genius’ operations. The NBA and Genius are working to add innovation to NBA League Pass and develop a next generation platform on Second Spectrum technology, while, with the NFL, Genius launched a group of free-to-play interactive games meant to grow the NFL’s international fan base.
Second Spectrum’s augmentations also expanded to include TSN+ direct-to-consumer streaming product, and feature data-driven overlays for the NFL playoffs. Similarly, Genius began augmenting broadcast of the English Premier League with NBC, Optus and Premier League Productions, according to the company’s earnings release.
“The relationships available to us because of Second Spectrum are second-to-none and are open to every league, even ones we don’t have exclusive data rights to,” Scherr said. “The NBA is a perfect example of that.”
The executive also pointed to results that showed the company improved performance in both sales and earnings before interest, taxes, depreciation and amortization (EBITDA, a closely watched barometer of performance) over its quarters from the latest NFL season compared to the prior one. Scherr said this shows the company’s deal with the league, which has been viewed as costly by some investors is beneficial to the business.
“There has always been this question around if Genius can make money while paying the NFL,” Scherr said. “Genius group-level businesses can make money because of the NFL, not in spite of the NFL.”
(This article has been updated in the fourth paragraph with Genius shares' closing price and gains.)
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