SBC News Voice of the Sports Betting Industry
Genius Sports expects to achieve positive cash-flow by the second half of this year after further shrinking its net losses during Q1 2023, continuing upward trajectory from 2022.
Group wide quarterly revenue rose 13% to $97.2m (Q1 2022: $86.9m), alongside adjusted EBITDA of $8m, a substantial increase of 378% on a corresponding Q1 2022 loss of $3m, whilst the margin stood at 8%.
Most significantly for the London-based, NYSE-listed sportstech and data firm, its group-wide net loss has been further cut down to $25.2m, a decrease of 37% from $40.2m the year prior, and another step towards full profitability.
This has prompted the company to reevaluate its expectations for the remainder of the year, according to the Group’s CEO Mark Locke, projecting positive free-cash flow by H2 and FY23 revenue of $400m and Adjusted EBITDA of around $49m.
Locke further said: “Following a strong year of execution in 2022, we are pleased to continue our momentum to start the new year, with the first quarter of 2023 marking another period of outperformance relative to our guidance.
“2023 is the year in which Genius expects to significantly accelerate Group Adj. EBITDA profitability and rapidly expand margins.”
Genius explained that the net loss consistent chiefly of internet income, the loss of disposal assets – which increased from $6m to $11m – loss on fair value remeasurement of contingent consideration and changes in fair value of warrant liabilities.
Meanwhile, a breakdown of operating expenses saw sales and marketing costs fall from $9.2m to £7.4m, research and development from £7.4m to £6.3m, and general and administrative from $32.8m to $18m, although transaction expenses rose to $828,000 ($128,000).
Evaluating the group’s divisions, however, some hurdles were encountered for the Media Technology, Content & Services, and Sports Technology & Services units, which saw revenue fall 10% to $21.8m ($24.1m) and 11% to $10.7m ($12m).
This was attributed by the company to lower advertising spend relative to the first quarter of 2022 for Media Technology and lower revenues from non-cash consideration contracts in the case of Sports Technology.
The bulk of group-wide revenue was instead driven by the Betting Technology, Content & Services division, which saw its own income rose by 30% from $49.7m to $64.7m, attributed by the firm to customer acquisitions and growth among existing ones as a result of price increases on contact renewals and renegotiations.
Specific business highlights for Genius during the first quarter included the partnership between its Second Spectrum division and the NBA for the NBA League Pass, as well as the Portland Trail Blazers franchise and separate streaming and free-to-play deals with the NFL.
Additionally, the firm launched Premier League broadcasts on NBC, Optus and Premier League Productions, introduced its fan engagement Genius Marketing Suite, and became a founding member of the Brazilian Integrity Association.
Despite revenue drops for two of its segments, Genius maintains that all three divisions will see revenue growth by the end of the year, projecting revenue of $256m (current $209.2m) for Betting Technology, $96m ($82.7m) for Media Technology and $49m for Sports Technology – consistent with $49m in 2022 – out of the aforementioned group wide revenue expectation of $400m .
“Our first quarter results demonstrate the operating leverage of our business model, built to benefit from positive industry trends and support sustainable, profitable growth,” Locke concluded.
“As a result, I have a greater sense of confidence in our ability to achieve full-year financial targets beyond our initial expectations, leading us to raise our 2023 outlook.”
