Q2 2021 Genius Sports Ltd Earnings Call
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Ladies and gentlemen, thank you for holding.
The call will begin shortly thank you.
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Okay.
Okay.
Yes.
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Welcome to the junior Sport Q2 results call 2021 throughout the call all participants will be in a listen only mode and afterwards, there will be a question and answer session to ask a question during the Q&A.
Press Star followed by one on your Touchtone telephone.
Go ahead with your meeting.
Good morning, everyone and thank you for joining.
Before we begin we'd like to remind you that certain statements made during this call may constitute forward looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast.
We assume no responsibility for updating forward looking statements.
Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on form 20-F filed on April 30th.
During the call management will also discuss certain non-GAAP measures that we believe may be useful in evaluating the operating performance.
These measures should not be considered in isolation or as a substitute for GAAP financial results prepared in accordance with U S. GAAP.
A reconciliation of these non-GAAP measures to the most directly comparable U S. GAAP measures is available in our earnings press release and earnings presentation, which can be found on our website at investors Dot GAA for dot com with that I'll now turn the call over to Marc lore.
Okay.
Good morning, and thank you for joining us today.
As we mentioned last quarter, we continue to be incredibly excited about the market opportunity ahead.
We are better positioned than ever before to capitalize on the growth in the global sports betting market due to the strength of our partnerships with hundreds of sports leagues and federations sports book operators and media brands across the globe.
Our strong performance this quarter demonstrates how genius is woven into the fabric of the ecosystem and that the unique value that we continue to provide to our partners, including best in class technology and services allows sports leagues to monetize their data deepened fan engagement and support business operations breath.
Breadth and depth of event coverage reliability of key services and integrated relationships with for stocks and the deep long term relationships rooted in the scalable solutions mission critical data and technology that are fundamental to our partner's success.
Our position at the heart of the industry is vital to the successful operation of the Hull, we're confident in the value that our products and services bring to the entire sports ecosystem and believe that our service quality and innovative technology to cure a placement in the long term and protect our business from potential disintermediation risk.
We believe that the operations of both leagues and sports books will be significantly challenged without the key services. The genius provides.
For instance, we possess best in class real time data collection technology that we deploy without sporting events every day around the globe.
However, it is not the data alone makes us service valuable. It is the software we wrap around that data that turns it into alts or lines that is vital for sports books leaks lack the technology and the resources to continuously innovate to keep up with the evolving data requirements.
<unk> solution is accurate fall and remarkably scalable and our success built on leading the innovation and keeping the leaks ahead of the curve.
<unk> also has a broad network of deeply integrated sports book partners, making it much more efficient for leased distribute live data to a wide global betting audience.
It's also important to note that the long tail of events the genius pools provides.
Both books need content to users 24 hours a day seven days a week 365 days a year and we estimate that a professional sports book typically offers 250 to 300000 live events annually.
Our deep relationships with hundreds of non tier one lead enable a sports book customers to access those events in a cost efficient way without the burden of individual rights deals.
Genius also standardizing the data so the sports book can easily manage data from hundreds of differently without worrying about separately integrations on their own.
Our scalable platform improves operational efficiency for us both deposits.
Our position in the ecosystem has supported strong momentum in our business heading into the second half of the year and we're continuing to execute on our long term strategic objectives.
Before we move on to the quarter, we would like to once again reiterate those long term strategic goals and financial targets.
We are continuing to add value to our customers with high quality content at a range of services accelerating us along the path to our long term market share target, 40% revenue target of 5% to the industry gaining revenue.
We continue to target a long term adjusted EBITDA margin of 40%, reflecting the strong underlying unit economics of our model.
Since going public we've taken advantage of all windows of opportunity to invest in various growth initiatives and whether it with developing our official rise portfolio.
Strategic acquisitions, each step is a building block towards those long term targets.
This quarter was all about execution and delivering on our strategic plan.
First we more than doubled our revenues year over year to $63.0 million with a strong performance across all business lines.
The $63.0 million reported in this quarter and $110 million reported year to date represents a significant step up from the comparable 2019 results before the pandemics impact without.
This demonstrates the strong consistent and broad based growth in our underlying business.
Adjusted EBITDA also grew by 126% since last year to $7.0 million highlighting strong inherent operational leverage in our business.
As we discussed in great detail last quarter, our partnership with the NFL is massively increase the value of our full suite of products and services, we're thrilled to be partnering with the NFL official sports betting partners and approved sports for coal prices to provide a full range of official sponsor content and find engagement solutions to.
Help them better acquire retain and monetize their users.
Our partnerships with leading guidance oil prices in the U S signifies the adoption of official data.
And the only encompassing nature of the genius platform.
I am proud of our team's successful operational and commercial execution and the speed in which we were able to integrate with the sports with borrowers.
Borrowers regular season kickoff will cover this in more detail later on in the call.
We also strengthened our capital position in the second quarter through an upsized follow on equity offering.
We intend to use the $238 million and net primary proceeds for general corporate purposes, with a particular focus on our efficient strategy continued investment in our technology and of course strategic M&A opportunities.
On our last call we discussed the acquisition of two exciting and complementary technology businesses.
And second spectrum.
In a matter of weeks, we successfully closed both acquisitions and are thrilled to integrate that innovative services into our core offering.
After the reporting period, we also announced the acquisition of <unk>, a leading creative performance platform that will enable genius to combine official data driven marketing with curated video content to deliver a much more personalized experience.
The developments from the second quarter and momentum throughout the first six months of the year give us tremendous confidence in our ability to deliver at the high end of our previous revenue guidance of $250 million to $260 million. We now expect to generate revenue in the range of $57.0
$260 million, while reaffirming our previous EBITDA guidance of 10 million to $20 million.
This quarter was characterized by the execution of our core business strategy and delivery of our key strategic objectives.
As you May already know one of our most important differentiating factors is our commitment to official data, which presents a live sports information that is directly sanctioned by leagues and federations and the single verifiable source of truth power the sports betting market.
As regulation sports betting markets worldwide shift towards live in game betting the speed accuracy and provenance of live sports data underpins the sustainability of growth these products, making access to official data of volatile commodity.
In fact, we've heard from one major U S sports book that 40% to 50% of all wagering is now in guidance.
The industry negligibly trending towards the use of efficient data as is most secure method of patents being regulated sports books protecting customers and helping to fund its sports.
As leagues and sports book operators increasingly commit to the use of efficient data, our leading portfolio of events under official data Bryan puts us at the forefront of this trend with high barriers to entry.
We have grown our portfolio by 25% year on year to 189000 events under Fisher rights.
116000 of them are exclusive.
This quarter, we've added exciting events to our coverage, including the NFL, Argentinian Peruvian and Colombian and Canadian soccer and several others.
As mentioned earlier, our exclusive NFL rights and propelled our commercial relationships.
We are thrilled to have reached agreements with leading sports book operators and we're continuing to demonstrate to one hundreds of other sports book partners. The multitude of ways. We can support their business through packaged offerings of premium content bookmaking services filing data solutions and more.
These agreements and body genius, <unk> ability to execute operationally and commercially and further integrate our technology with US both of the partners.
All media operations also continued to accelerate.
Our unique understanding of the sports and sports betting audience, coupled with our exclusive ownership and control of live sports data and AD Tech platform enables us to offer a personalized suite of solutions for our entire ecosystem.
This was evidenced by our new partnership with media product, Canada under.
Under the agreement genius will help grow the domestic and international addressable market for Canadian soccer.
Medium price, Canada dedicated Sofie streaming platform will now integrate gene into sports live data and content into its live viewing experience found our data driven marketing technology will also help expand media pro tonnages domestic audience by driving subscriptions through personalized promotions and offers that.
Only genius is able to support.
These are just a few of the ways, our media and engagement solutions have helped our customers engage with fans.
And through the quarter, we continued to grow our sports betting presence globally with two clients, including north of that gain wise and notably a permanent sports wagering license by the West Virginia Lottery Corporation.
Sports is now operationally 15 U S States hiring award winning official data streaming and marketing solutions, the leading sports books in lotteries.
After the reporting period, we also would reach new deals with Canadian customers, including British Columbia Luxury Corporation.
We're optimistic about the Canadian market following the Bill Amendment that now allow us single game sports betting.
<unk> partnerships Mark important step for genius is growth in the North American region.
Lastly, as part of our disciplined M&A strategy, we remain focused on the efficient integration of newly acquired businesses and are proud to officially welcome found hub and second spectrum to the genius family after closing both transactions in the quarter.
We also recently announced the acquisition of <unk>, a leading creative performance platform, whose mission is to create the most useful and protecting data and video content for rights holders brands and agencies.
<unk> enables as partners to create automate and optimize highly personalized content at scale across major digital media channels, including platforms like Facebook Youtube Twitter and Snapchat.
<unk> platform is highly complementary to our rapidly expanding need your filing engagement solutions, improving our ability to deliver personalized contextually relevant content to fab.
I'd like to take a moment to provide an update on the tremendous progress we've made with our revolutionary NFL partnership.
In conjunction with our new rights to the NFL has announced three official sports betting partners Draft Kings Fanjuls and Cheetah.
With four additional approved sports book operators Fox bet, MGM pulling spec and win back.
Under the agreements with the NFL all seven of prices are committed to licensing official league data congenial falls.
The sports book partners in place to tissue data, which validates our long standing official data strategy and provides a strong foundation for <unk>.
Sustainable relationships with our customers.
Our commercial negotiations with the seven operators and many others are trending favorably towards agreements that benefit leaks sports books and their users.
And of course these deals support our long term revenue visibility and expanded partnerships with the leading sports books at collectively capture a majority of the U S sports betting market.
It's important to reiterate that our NFL partnership stems beyond just data and streaming rights for sports betting in media markets.
The NFL has also trusted us as their exclusive sports betting and gaming advertising partner.
Additionally, through genius and NFL joint Innovation Technology Center, we believe we will develop the next generation of products and services for the NFL to further improve the value of that content.
By partnering with the NFL and new and innovative ways, we feel confident that our successful execution and development of exciting new products services and insights will strengthen our relationship with the league and long term.
Importantly, this is drastically improved the unique ways in which we can potent partner with sports books, we're offering the highest quality NFL data fee to power the battery market, we using our unique data assets to help them acquire new customers retaining existing customers and develop new create.
Ways to engage the users with personalized content.
Developing the next generation of technology jointly with the NFL to highlight new data points create new betting market attract new fans and enhance the overall user experience.
Our goal is to partner with the leaks sports book operators immediate providers to develop the next generation of fan engagement solutions and ultimately use our unique position in the ecosystem to help our partners monetize on that site engagement.
We are confident that our partnerships with the NFL and our customers are beginning supercharge that goal.
Last quarter, we discussed how a suite of products and services are sold as a package and how the addition of the NFL will massively increase the overall value of our offering.
We expect new and existing customers to appreciate the step change in value of our official data rights portfolio and also allow us to showcase our unique and broad value added services I mentioned earlier.
As we approach the start of the NFL season, we're executing remarkably well on these expectations and we're starting to see this come to fruition with our sports partners.
The successful rollout of NFL products highlights, our all encompassing platform of data and technology solutions.
Through our commercial negotiations, we're increasing our utilization of services and events under official rights.
Sure as pre game ending game revenue, achieving significantly better pricing for value added services and activating our digital media and advertising solutions, all of which are being implemented by major sports with partners.
These mutually beneficial partnerships are propelling genius, along a sustainable path towards long term target of 40% market share, 5% gaming revenue and 40% of adjusted EBITDA margin.
Negotiations with our customers are progressing incredibly well as they are appreciating the value of the NFL official data.
As I mentioned previously on the call official data is the only way to guarantee the fastest most acura and secure data feeds for sporting events worldwide.
Our commercial agreements today alongside the NFL direct sports partnerships indicate the sports books are embracing a tissue data not only for the most crucial events like the NFL.
Okay advantageous to lease.
Sports books and media partners alike.
We're enabling sports book.
Utilized cost effective.
Fire and retain customers more efficiently.
And engage and monetize fans with personalized content.
A ship with the NFL has represented a huge and unique opportunity to change the way sports book.
Become more of a complete data technology and media partners.
I've spoken at length about our unique ability to help our customers engage fans, especially in the context of RNA.
Our partnership.
I'd like.
Some of our solutions.
Sizing capabilities were key differentiating component of our partnership with the <unk>.
NFL.
Our goal is to deliver personalized content to the ROI for audience.
Timing of sporting events dynamics.
Okay.
Our unique access to live sports data.
<unk> data.
Our tech platform and comprehensive understanding global best in behavior allows us to provide a range of solutions to sports books and other advertisers.
Our data access is unique to genius and King continues to enable brands to deliver innovative campaigns to tap into these highly covered.
Brands spend a proportion of Denmark.
French CHF solutions and has provided strong returns to greater campaign efficiency that would not have been possible without genius is technology.
A majority of the revenue earned media engagement business is driven by programmatic media buying where we buy targeted AD space on behalf.
At Teck and exclusive sports audience segments.
We help our partners engage acquire and retain sports fans through a broad spectrum of campaigns and media.
Using the NFL as an example genius has the view of the NFL audience and the ability to build profile is based on the type of content consumed.
When and where its consumed typical banking behavior and other rich data.
It's active.
Our our tech stack allows us to combine live NFL schools betting odds and audience profiles to serve.
Hospital partners with the goal of driving a transactions such as sports book sign up.
Debt placement or any other type of purchase.
This approach that give sports books, the confidence to make genius that preferred programmatic partner.
Given <unk> unique positioning at the heart of the sports betting and media market all platform benefits each of our partners.
Sports books, and other brands can optimize that customer acquisition and retention.
Their audience to drive sponsor activation merchandising for ticketing.
Publishers.
Thanks.
We're also excited about the opportunities beyond sports betting brands.
Mentioned hunting it helps brands.
And it isn't limited.
It's a sports books sports betting can be used as a barometer to find engagement for example, if genius see higher than average wages on the Rams our AD tech platform can automatically deliver rams focused content for advertisers, who want to engage with our fan base, while having no direct connection to Betsy.
While our media buying trading desk is delivering most campaign execution, we have a full suite of fan engagement tools that our customers to deploy.
For example, we use our lines data in order to create widgets designed to fit natively within content on a sports book website or App.
This solution will be used by the NFL for the upcoming season.
Potent to note that this isn't just limited divesting.
Can be used across traditional sponsors to drive fan engagement.
We were able to build content that generates engagement amongst fans and adds value to sponsors.
Advertisers also use our CRM tool to deliver personalized messages.
The messages can range from law.
Ex recommendations video.
That and more.
Data driven investments across.
Our social media channels, including Facebook, Twitter and Snapchat.
Our recent acquisition of spiral further.
It expands our capabilities in social media with personalized video content.
Finally, our free to play games offer a wide range of engagement solutions by the Phantom platform such as pickup.
Brackets trivia polls and more.
In summary.
To offer differentiated solutions.
For engaging fans in more meaningful ways, while generating incremental sponsorship revenue.
<unk> that we partner with.
Lastly, im delighted by that.
Successful outcome of our first half.
And unbelievably thankful for the support from our shareholders.
We anticipate using the primary proceeds from the offering into.
And to invest in growth initiatives that can accelerate the path towards meeting our long term strategic objectives.
Includes accelerating our official right strategy to continue including more leagues and federations into our ecosystem and rights portfolio.
It also includes enhancing our existing sports media investing technology solutions to customers.
Our existing tech stack and product offerings.
So many more useful to our customers and partners.
Part of it is also developing innovative new technology and building the next generation of products and services.
We are arming our balance sheet for strategic and accretive M&A opportunities similar in approach to what we've just accomplished with second spectrum fan hub inspirable.
These acquisitions strengthen and diversify the value of our overall platform and further cement our existing relationships with partners across sports betting in media.
These tuck in acquisitions also paved the way to win new business and formed partnerships with new customers that could greatly benefit from our comprehensive product offer.
We deeply.
Indication and look forward to the full integration of our recent acquisitions into the broader genius platform.
With that I'll turn it over to Nick to discuss our quarterly results in more detail.
Thank you Mark.
Thanks to everyone again for joining today's call.
As Mark mentioned, we're continuing to execute on our plan.
And the business is carrying on.
Second quarter revenue.
Tier one year to $63.0 million.
With each segment of our business once again growing.
Okay.
While last year's second quarter was plagued by a disrupted sports calendar with.
We've continued to grow the business well ahead of pre COVID-19 levels.
Just on <unk>.
The content and services revenue more than doubled year on year to.
The $47 million.
This growth has been driven by our increased market share.
Higher share of wallet through additional services to sports book.
And also new customer wins.
As well as by annualized growth.
And the overall global betting market.
The major technology content and services revenue.
As increased 62% year on year.
Going to $8 million in Q2.
This increase was driven by <unk>.
Increased.
<unk> spend in both the U S and Europe.
Longsight cut.
Customer wins.
And lastly.
<unk> technology and services revenue.
Increased to $9.0 million.
The main drivers for the sports technology increase.
Is the inclusion of the acquisitions of sportscast.
Acquired in December 2020.
As well as second spectrum co.
In June 2021.
Within this <unk> technology line.
Worth pointing out that there are a number of small revenue streams included here.
Being firstly sports costs, and second spectrum revenues, which contributed $2 <unk>.
In the quarter.
Also ancillary services to sports leagues, such as the NBA and the PTA.
$8.0 million in the quarter.
And lastly, noncash revenue.
Related to our contract strategy for the rights.
<unk>.
$8.0 million.
It's worth reiterating in relation to those noncash revenue stream.
This is no margin impact.
With Costa said.
We are anticipating noncash revenue to account for about 5% of total 2021 revenues.
And the only accounts for 3% of the 2020 to 2021 year over year growth as proportionately. This.
Revenue it becomes increasingly at the minimum.
Group adjusted EBITDA grew by 126% year on year to $7.0 million.
The result of our stronger economies of scale and disciplined cost control.
Which has allowed a healthy revenue growth.
It flowed through to adjusted EBITDA.
Through the first six months of the year.
Our underlying businesses performed strongly.
We firmly executed on the objectives, we set out at the start of the year.
Proven success in our M&A integration and strengthened our balance sheet to invest in growth initiatives.
As a result.
We've increased our year to date revenue by 76% compared to the first half of 2020.
Significant growth opportunities still ahead.
As discussed on our Q1 call earlier in the year.
Our Q2 revenue position is in line with that of Q1.
We expect continued quarterly growth in Q3, and Q4 and with that we're fairly confident in our ability to deliver on the guidance target of $255 million to $260 million.
And $10 million to $20 million in group adjusted EBITDA.
It's also worth reiterating that the multiyear agreements that we have done and continue to do with the sports and sports books.
It gives us strong visibility uncertainty of the future revenues.
Through the first half of the year with nearly half way to our full year revenue targets, which is in line with our expectations.
We anticipate power wins in the back half of the year.
Such as a more robust spot calendar, including the NFL NBA and major European football returning.
Having closed the acquisitions of <unk> health and second spectrum.
We're also expecting approximately $10 million to $15 million in revenue contribution for the remainder of the year as we noted last quarter.
Our recent acquisition of <unk> is also expected to contribute revenue this year.
Albeit minimal incremental level.
Where that 2021 annualized revenue.
Of about $5 million.
As mentioned in our previous call.
Our revenues will become more seasonal than they have traditionally thing too.
To principally to the NFL fixtures running from September through to January.
We also reported $14 million.
In group adjusted EBITDA guidance.
As the midpoint of our previously guided range.
We reaffirm.
Our prior EBITDA guidance.
As highlighted in Q1, we.
We expect to recognize higher costs in Q3 and Q4.
Principally paying the $15 million investment.
Which is predominantly streaming rights that we flagged to you in the last quarterly call.
The majority of this investment is being spent in the second half of 2021.
As discussed in Q1.
These types of investments.
We will do from time to time when the opportunity arises.
We believe there is significant shareholder return.
However, I'm not expecting it to be repeated at this level in 2022.
Going forward in 2022.
We expect revenue growth to outpace the growth in our cost base.
And therefore, we anticipate positive EBITDA from our underlying business.
Quickly on the NFL.
I'd like to reiterate while it's difficult to attribute it to the RLI to any one league.
Due to our packaged offerings and services.
We do expect our NFL deal to be broadly breakeven on a cash basis in calendar 'twenty to 'twenty one.
Generate positive cash flows beginning in 2022 thereafter.
We are also confident in our ability to generate profitability over the last of the contract.
Including the cash consideration and the warrant expense to be recognized over the life of the contract.
I'd like to touch on a few of the nonrecurring items in our financial statements.
First continuing on the NFL.
We plan to recognize the warrants issued to the NFL over their vesting period.
Stock based compensation.
You will notice an additional charge in Q2 of approximately $200 million in relation to the NFL.
Reflecting the accounting for the $11 $7.0 million tranche awards vested immediately upon signing in April.
Additionally, unrelated to the NFL.
The closing of our legacy management incentive plan, which was in place prior to the stacked nature.
Has resulted in another non recurring non cash equity charge in Q2.
This legacy charge crystallized at completion of the April destock.
And has resulted in a one off stock compensation stock based compensation charge.
Approximately another $200 million.
It is important to note.
Both of these transactions equity noncash transactions that will sit outside of our adjusted EBITDA position.
We are also cognizant of the fact that we may over the course of the next few months.
To redeem our outstanding public warrants.
Our strong capital position.
Allows us to be flexible and diligent in how we best move forward.
We want to be clear without retention.
Our decision as to when we redeemed the warrants will be very much guided by market conditions.
<unk> in our share price and liquidity.
Aimed to be as disciplined as possible in approaching redemption.
Kathleen reviewed these factors before taking any action.
Additionally.
It provides at the auction.
And again based on the aforementioned conditions.
We envisaged cash settling our public warrants.
Which will bolster our balance sheet cash position.
Further accelerating our long term growth plans.
Lastly.
We have a one time uptick in certain SG&A costs.
Including increased audit legal and professional fees, resulting from our T spot transaction.
Much of this increase is non recurring in nature and we expect these costs to return to normalized levels in the near term.
To conclude.
We're feeling more confident in our financial performance than ever before.
And this quarter's results illustrate the strength in our business.
Successful execution of our core strategy.
We're strongly positioned to continue capitalizing on the industry growth.
And we're very excited for what lies ahead.
And with that.
We'd be happy to answer any questions.
Thank you if you do wish to ask a question. Please press star followed by one on your telephone keypad.
If you wish to withdraw your question you may do so by pressing star followed by two to cancel there'll be a brief pause while questions are being registered please hold until we have the first question.
The first question is from the line of Stephen Grambling from Goldman Sachs. Please go ahead.
Hey, Thanks for taking the questions Stephen Grambling.
So you announced a number of partnerships with different operators throughout the quarter.
I'm just kind of trying to think through how many is typically ramp how should we think through the contribution from from some of us expected.
The first question.
Yes.
Hi, Stephen this is Nick.
So yes, I think obviously we've been in there.
<unk> seen quite a lot over the course of the last couple of weeks and.
Clearly that was being built into our.
Uh huh.
Material uplift in guidance that we did in Q1 to the $52.0 to 60.
What we've seen really over the course of that we've been doing these deals is the enrollment is exactly in line with what we're anticipating and that's why we have to tighten our guidance to $562.0
Clearly.
They ramp on a long term basis over the life of the NFL contracts in the U S market Liberalizes.
But they also as you've seen from the announcements.
Strong contributors.
And the important thing for US is not just the data deals and as we told you and it's about execution. It's also about.
The major deals.
<unk> deals and indeed pretty much as well.
And I guess, so a follow up on that so on the <unk>.
AD Tech side of that is there any way you can help us think about the economics of that business. I think you gave the example of buying AD space I guess, how are you being paid how you make money and how do you see the margins on that versus kind of the.
Core software kind of aligns setting business.
All right.
Paul.
I mean the AD.
The AD tech deals.
We envisaged are coming through very very nicely.
<unk> seen the.
The advertising business growing very very satisfactory.
<unk> over the period.
The way that those deals work is we get commitments from sports books on their marketing spend and what we do is we then spend those marketing dollars on behalf of those sports books in order to.
Acquire new customers for them and there's other things that we can do in the future in terms of reactivation and re targeting but at the moment. The main focus, especially around the start of the season is around customer acquisition. So we have the deals that we're doing and the ones that we are announcing that include the marketing spend are really about getting.
Commitment from the sports books on those marketing dollars and that gives us really good long term visibility at Opus revenues again, it helps us be very confident in the numbers that we are.
We're putting out into the market.
It gives us the ability.
Sure.
To forecast absolute growth very very well, yes, Stephen's taken it's worth just pointing out in terms of the blend of our revenue. So the rest of the year I think media is running it.
Round about 15% of our revenues.
Given the deals that we've been doing I'm expecting that to increase as a proportion probably narrowed around about the 20% of our revenue by the time, we get to the end of the year.
And then that will probably likely to increase proportionately.
Through 2022 as well.
And maybe there's one more.
And I'll yield the floor on the official right strategy Youre referencing that it's kind of playing out in a big part of that seems like it's the NFL I think one of the pieces of the pushback that we get from investors is hey.
Is it really been as relevant.
In Europe and in particular, the U K, where it's.
As a more mature market relative to the U S. So I'm curious are you seeing any change in behavior from the operators in Europe as well as it relates to the official rates.
It's a great question Im delighted you asked actually.
And it's and it's definitely going in exactly the direction that we said it would.
It was a couple of year's guidance. If you recall the story, we really started to enforce our rights that we had after spending a very long time building a portfolio and what we what we saw in Europe. As we saw a very aggressive adoption of that I think within maybe to sort of first six to 12 months of us.
Starting to enforce our rights over 70% of our customers that signed up in one way or another to what.
To committing to taking a tissue data where it's available.
Clearly that was the majority of all prices.
And a huge proportion of that was was.
UK and European operators, what we've seen.
Throughout the deal with the NFL again, and you'll see through the announcements we've been making is it continued.
Embracement of that.
Okay.
Contracts that we doing obligate sports books to work with us on official data, where we hold the rights and again the rights portfolio as I've said during the.
The initial.
The initial part of this call.
Half growing very very nicely.
Overall, the official data strategy is working exactly as we expected exactly as planned we're incredibly pleased with.
How well thats.
Dropping through in terms of the contracts the revenues that we're seeing in the business.
Awesome. Thanks, so much for all the detail jump back in the queue.
Next question is from the line of Jed Kelly from Oppenheimer. Please go ahead.
Great. Thanks for taking my questions.
On the NFL profitability can you just kind of dive into some of the key drivers is it going to be more driven by the wide bodies from in game betting or.
Virginia and unique data can you just answer some of the questions around profitability because.
Yes.
Most interested in.
I'll just take the sort of the.
I guess the number side of that and then I'll hand over to Mark you can talk a little bit about <unk>.
Just wanted to reiterate we said that I think at the end of Q1 guidance.
On a cash basis.
Can be broadly breakeven, we would anticipate to be broadly be breakeven in 2021, and then cash generative from 2022 onwards, and also if we look at the contract as a whole.
We expect it to be profitable as a whole contract. If we look out to the end of the six year period, but I'll, let mark take that did drive a fixed yes, that's right and really.
Certainly.
Yes.
I think part of this COVID-19 very typical I think mixed I'd actually.
To breakout the.
Roy of the NFL or indeed, any particular sport on it on its own basis, but because of the way that we sell it as a business we can.
And to look to add services.
Yeah.
That will include the NFL data, but it will also include other official data that we have other other.
Writes partnerships.
We will look to include provision of <unk> services Division of our suite of marketing services.
The combination of all of those things.
Is the basis upon which the deals.
That we're doing in the beginning of the renewals of the contracts and the update of our contracts are being done.
In terms of.
Yes.
Yes.
Some of the metrics, we're seeing we're seeing large.
For products that were seeing.
And again.
I've said this before.
Our business is about flat.
A fair degree of this.
Our leverage in and having the NFL allows us to increase the amount of.
Brian.
Products and services that we're able to provide to our sports with partners and really.
So to help drive that growth.
Got it that's helpful and then the media.
In fact your revenue your meeting.
Normal seasonality trends in advertising.
Hi, Thank you.
Should we think about the long term growth in that business.
Yes.
I mean, let's be clear.
<unk> grew 63% year.
I think we said at the time the end of Q1 announcement, you had such a strong year strong quarter in Q1, 2021 and that was principally as you know from the U S. Sporting events with both March Madness, and the Super Bowl off the back of our tangible announcement that we announced back in the <unk>.
January 2021, so we we're fully anticipating it to be marginally by.
Quarter on quarter, what I'm Anthony.
So <unk> really is now coming back of U S sport and indeed, the coming back of European soccer as well the season as Tom anticipating the major business.
To grow significantly.
Significantly in in the next couple of quarters.
And as I say actually I think proportionately I think I'd just had to Stephen is that I am expecting media to be in and around about the 20% proportionate of our revenue.
So a little bit more long term.
Particularly given on the back of the deal. So we're now announcing on the NFL.
Therefore, I would say it continued to proportionally grows our business that'll be the majority of our business by any stretch, but it'll be a more significant minority.
Look through a crystal ball to the next two or three years.
Got it.
And just a follow up before I get back in queue, where are you taking.
Advertising share from is it from the traditional programmatic players or is this just a new category for the sports books.
Sorry.
Take that and sort of give a bit of a high level and then I'll pass across to Joshua who runs that business to give you.
A bit more detail on the specifics so I'd say.
One of the things that I think it's worth just reiterating Europe done it before is the fact that when we're talking about these advertising dollars. It's really worth again, just making really really clear that we were talking about a new Tam for genius, Nick and I have talked to adding pheno item I'm sure you're sick of hearing us talk about.
The Tam that we're targeting a 40% of revenue 5% of gaming revenue.
40% long term margins when we're talking about these advertising dollars.
Advertising.
Revenue that's coming into the business. This is a brand new Tam for US we've never quoted so we're not trying to effectively screen.
<unk> advertising revenue into the original figure as we still believe that we can get to those numbers that we stated through the original Tam the new Tam that we're talking about is really is really those advertising dollars that the sports books are spending to acquire and ultimate and re engage their customers.
Josh ill give a brief overview of <unk>.
How the deals that are structured if you like hi, there yeah, just just to add to that.
Okay.
Where were the marketing spent essentially coming from its two avenues. One is were winning marketing budgets of sort of traditional agencies and we're also.
Working with operators to help them understand the efficiencies of their various marketing channels in house.
Some of that involves moving budgets from other channels into the services that genius the genius office, so thats essentially.
The two main areas, where we have a security budgets Rob.
Thank you.
The next question is from the line of Bernie Mcternan from Needham <unk> co. Please go ahead.
Great. Thanks for taking the question, maybe just a follow up to that last one you mentioned audience protein with ads, where do you get the data from and how differentiated is that relative to a traditional agency or others that are directly advertising spend that you're competing with.
Hi, This is Josh again, yes.
Yes.
Where we get the audience data from essentially all the different points that were distributing hospital stay.
And we have totally unique views of those fans of how they're engaging with our content.
Habits of how often they're reading a sports hospital.
The team did a colo checking team rosters watching video highlight we assess and when we then feed that into into our AD Tech business and we essentially assigned spans four to value that band so that we can.
Okay totally unique genius, just through our relationship with the sports bodies in place.
Thanks to the ecosystem.
Thanks for that and then do you have a sense just in terms of how big the programmatic budgets are for sports books relative to other <unk>.
Advertising means and then maybe what your share is inside of that and where you expect it to go over time.
Okay.
Yes.
We are we are working on providing at some point.
In the coming period.
Some information on the Tam that we're working from programmatic budget typically.
A minority.
But one of the things that comes from this is a highly efficient return that you get and you get it right.
Alright targeted advertising and very high returns, which is why this programmatic part of our business is being successful. So I think over time, we will release. It also other ways that we're looking at accessing those marketing dollars.
Another drive is that going to give us more access to the rest of the marketing dollars that are available.
Okay.
Great and then maybe lastly, Mark you mentioned earlier in the call.
Can you remind us on how quickly you think.
The U S can you reach European level.
<unk>.
And as Europe.
For in game penetration the ceiling, we should be thinking about it or do you think you can go even higher in the U S.
Yes.
Yes.
I think in the U K I mean, we.
I think we often quote I think it was about 365, 79% of their of their wages.
<unk> were made during the game and again.
The 40% to 50% with an anecdote from from one of the sports book, We believe and we're seeing evidence that the amount of insight wagering is increasing rapidly.
Thing I guess that we're thinking about here.
The rate at which it will increase and again to answer sort of final part of your question how much of the market can really engage is getting is really going to come to on the call.
Quality of the products that you are putting out into the market and the way that you've engaged fans so as a business.
We invested money in our own tech stack, that's providing all of the data and they also are aligned services, but also acquisitions such as second spectrum fan hub.
<unk> all of the businesses that we're acquiring and bringing in really help us focus on our product development and it's about product development and the way that that product.
It presented to the sports fan of sports book customers alongside the targeted advertising and targeted offers that you are going to put in front of these guys. That's the thing that's going to drive that growth. So do I think there is a ceiling I think there is.
There is.
I don't think 100% of all bets are going to be place to play.
<unk>.
La <unk> during the game, but I do think that if you.
If we get the product right and if we if we deploy all of the services that we've got our finger tip over time, we will end up taking the very vast proportion of night and I can definitely see that being in excess of the 79% in the battery six five.
Yes.
Great. Thanks for taking the questions.
Next question is from the line of Ryan <unk> from Craig Hallum Capital Group. Please go ahead.
Great. Thanks for taking my questions.
Curious.
If you can quantify the number of sports books that have signed up for official NFL data with genius and then secondly, along those lines you alluded to fan dual MGM points about box about once you haven't officially announced but.
Can you talk through those negotiations are those do you have contracts there or still actively discussing.
Yes.
I think.
The way that we're approaching this is Adam.
We're looking for long term wide ranging partnership to dispose. The thought is and again, we've announced we're announcing the partnership says.
Clearly, we as a business focused on being a good partner, we've got long term relationships with global to the sports books.
We're looking to make sure that we're not putting them in difficult in difficult situations at the beginning of the season, but we are very focused and having a lot of success of getting the right deals for us in the business going forwards.
In terms of.
In terms of the sort of.
The NFL the NFL have obviously announced seven partnerships with.
With various sports books, and there is an obligation of positive obligation on all of those partners.
And we are very very much.
So on track.
From where.
We were we thought we would be.
And again, that's allowed us to narrow the guidance and give us a huge amount of confidence.
We are going to come out of the end of the year.
And then for the once you have an ounce draft gaming Caesars Wynn et cetera.
NFL English Premier League several other soccer leagues.
This.
Churn or an expansion of weeks are those I guess incremental events outside of the NFL or you previously providing those and this is just an extension multi.
Multiyear.
Spansion et cetera.
Hi, Brian I'll, just can introduce Scott <unk>, our chief commercial space getting he's going to give you a bit of an update on that.
Hi, Rod.
Thanks for the question.
With each of these deals obviously most of these operators we have relationships with in some shape or form and have done as you know for a long period of time.
In each of these deals that we're announcing none of them are the same but all of them are focusing on more than one product I would say so.
Yes.
Let's see too.
How we think about this stuff is the NFL back to is obviously, a big part of it but all the other assets that we're able to bring as part of our NFL relationship with digital marketing stuff, but also all of the other content in the official date, because we have so I'm not going to talk about specific deals.
But all of those deals that we do.
All very much on strategy in terms of moving.
So official products for example.
Moving spend from.
Making sure we get a larger share of wallet and.
And those conversations so without going specific on each deal and then not all the same at all.
A level of maturity with each customer is slightly different in terms of where we are but all of them are moving us forward on that strategy to make sure.
Operators that we work with them.
Just some of the products of the day the NFL, but also work with us in all of our assets all of our official data assets.
Hopefully that answers the question.
Yeah helpful. Thank.
Thanks, Jack Mark MC.
Is it for me thanks.
Next question is from the line of Robyn <unk> from UBS. Please go ahead.
Thanks, It's Robin Farley.
So I heard your comments about the NFL and maybe I'll try and ask it a slightly different way.
I Wonder if you could give us a sense of just ballpark how much of the revenue. The return expectation you have for the NFL deal is from.
Our other sports data and advertising that are certainly tighter package, Dan if you could if there's a ballpark way to give us a sense of how youre expecting that return. Thanks.
Yes.
Unfortunately no.
Not to be very helpful to you.
But the reason I Columbia health, which is not how it's not how we sell our products we package things together.
It's almost unreasonable.
Unheard of that we would at a sports, but would only choose to buy just the NFL data from us. So we don't we don't break this out like that.
It's not how our business model works I.
I am sorry to be unhelpful, but.
But we just can't do that.
Okay, I guess I'm just thinking about.
Those that didn't buy some other sports from you that we'll know by those other sports from you and package it and even if you Couldnt break Altice Europe revenue differential is there a way to think about.
Well.
You've got to think about it.
We really want to find operators partners, who.
Buy into that strategy top to bottom. So we're not really shouldnt doing having operating partnerships pick and choose if you like so.
I'll answer your question really but all customer conversations were happening.
Always about all of our official exclusive data without file about Andi don't include that stuff. So yes.
Slightly different in terms of that might have on how they fit together and all of the different packages and how we work with them on a international basis as well as in the U S. Because a lot of these customers are long standing customers.
Customers of genius for many years, but they're all slightly different in that way.
The strategy of the business is one that's based around our customers backing our official data strategy.
And those are the customers we want when we're not really interested in others.
That doesn't give you specifics on percentages, but.
Certainly from a commercial point of view.
Yeah.
That is a primary focus of all discussions that we have with all customers.
Okay.
And that have been announced or that we don't know about or with any incremental <unk>.
M&A at this point.
We would add to your guidance in other words hitting your guidance does not require any acquisitions that you have.
Having already announced as of now.