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Genius Sports Revenue Rises 30%, But Shares Drop on 2023 Guidance

Genius Sports (NYSE: GENI) revenue rose 30% in 2022, hitting $341 million on the year as U.S. sports betting and Second Spectrum offerings led gains, according its earnings release Friday.

Sports betting provided the bulk of revenue—$210 million for the year—thanks to expanding sports betting in the U.S. and the acquisition worldwide of 71 new sportsbook customers. Media technology, content and services added the most dollars in the year, up $34.4 million (71%) to $82.7 million on stronger ad spending and advances in using its Second Spectrum subsidiary, which offers personalized, data-enhanced viewing experiences. Genius’ third operating division, sports technology and services, was up 32% to $49.1 million on the year.

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“In our second full year in the high-growth U.S. market, we’ve established ourselves as the dominant player with market-leading competitive advantage and revenue growth of 108%, far outpacing the growth of the broader industry,” CEO Mark Locke said on a call with analysts Friday morning. U.S. revenue figures weren’t otherwise broken out from overall results.

“Our media business has also outperformed, and we’ve achieved our objective of not only growing in excess of 50%, but diversifying our client base to include long-term partnerships with major global brands, including Pepsi, American Express, Audible, Destination Canada and much more,” Locke added later in the call.

Total annual revenue slightly exceeded Wall Street consensus expectations, according to data compiled by S&P Capital IQ. Genius also reported a narrowed net loss for the year, at $181.6 million, down from a net loss of $592.8 million in 2021. The net loss underperformed consensus, according to S&P data. In the fourth quarter, Genius sales were up 25% to $105.3 million, with a net loss of $127.7 million, up from a net loss of $53.3 million in the comparable quarter of 2021. The company noted that on a constant currency basis—excluding negative moves in foreign currency exchange—the business’ revenue for the quarter and the year showed even greater strength year-over-year.

For 2023, Genius said it expects revenue to rise $50 million to $391 million, but the outlook didn’t satisfy traders. Genius Sports shares on New York Stock Exchange on Friday opened sharply lower following the report, down as much as 22% to $4.03 after closing at $5.19 Thursday. While the $391 million revenue guidance equals the published consensus of Wall Street analysts, it is lower than unpublished expectations that 2023 sales would be projected to be well over $400 by the company, according to newswire reports.

Management sounded a strong outlook for the longer term, noting that real-time sports betting data continues to be a strong growth area even in established markets like Europe, which is a more mature betting market than North America, but one with plenty of opportunity to expand in-game wagering.

Growth is also seen coming from Second Spectrum, which Genius bought about two years ago. Locke championed the AI capabilities of the subsidiary “to autonomously understand sport at a level far beyond even the best pundit or commentator.”

Locke pointed to Second Spectrum’s role in Super Bowl statistics-focused alternative broadcasts, as well as personalization capabilities for bettors and casual fans alike in other NFL games, NBA and English Premier League broadcasts. Second Spectrum specializes in turning video in to data and augmenting broadcast viewing experiences.

“This is the end of one-size-fits-all and the beginning of personalization for all,” Locke said on the call. “Genius Second Spectrum is the sports equivalent of ChatGPT. … While AI has only just taken center stage, Second Spectrum has developed its strategy and technology for over a decade.”

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