Q3 2021 Genius Sports Ltd Earnings Call
[music].
What can a genius boy Q3, 2021 financial results 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 today I'm pleased to present, Brendan Bosco Investor Relations manager. Please go ahead.
Good morning, everyone and thank you for joining us today 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 30.
During the call management will also discuss certain non-GAAP measures that we believe may be useful in evaluating G&A through the operating performance.
These measures should not be considered in isolation or as a substitute for G&A to financial results prepared in accordance with U S. GAAP.
A reconciliation of these non-GAAP measures to the most directly comparable U S. GAAP measure is available in our earnings press release and earnings presentation, which can be found on our website at investors that Jamie sports Dot com.
With that I'll now turn the call over to Mark lock.
Good morning, and thank you for joining us today.
We are thrilled to announce genius, whose growth is accelerating and unprecedented level and we have delivered another strong quarter with record revenues growing 17% year on year.
On today's call.
In addition to updating you on our performance in the quarter.
I'd like to focus on three key updates.
First we will provide quantitative detail on our recently announced agreement without sports book partners.
Off the back of our exclusive NFL contract restructured mutually beneficial partnerships, which fueled industry wide growth and accelerate our journey to meeting long term targets.
Second we plan to formally frame the size of the market opportunity for our media and engagement business.
On our previous earnings calls, we've outlined our differential fan engagement solutions and now we hope to round this out by articulating the total addressable market and our place in it.
Third we will discuss our vision for the future and highlight some of the incredible opportunities that we have in front of us.
We are excited to share the work, we've done and the areas of investment that will enable genius to continue to fulfill its place as the technology leader in the sports ecosystem.
I'll cover each of these topics in more detail shortly but first I'd like to quickly recap on some of the highlights from the third quarter.
We're very excited about the progress we've made since our last call and this quarter's strong results reflect our team's continued execution.
First we reported record revenue of $69 1 million in the third quarter. This represents another quarter of strong revenue growth increasing by over 70% year on year, driven by well balanced growth across all business segments, while adjusted EBITDA was broadly breakeven.
As we've mentioned in the past our core business strategy lies in our approach to efficient data and our deep long standing partnerships with leagues and federations worldwide.
This quarter alone we signed over 30, new rights deals with leagues is global and buried as Kazakhstan Football Federation Canadian Soccer Premier League Chinese Super League creation Basketball Federation Israeli vulnerable Association drone racing need International Poulos Aviation Swedish basketball Federation and the personal care.
My professional pick up <unk> I could go on.
Each new league partnership expands the breadth and depth of our coverage of high quality events and supports our customers' provision of content around the clock.
As Q3, a leading REIT portfolio includes 192000 events under official rights of which over 120000 are exclusive.
We are the leading technology provider to leagues and federations around the world.
As an example, we recently announced the second spectrum was appointed the exclusive official tracking data provider of Danish Superliga insert division. The second spectrum cutting edge technology genius will be able to provide Danish football fans with transformative new statistics, including player speeds access.
<unk> deceleration shop loss take pump comparability and expected goals. These insights will be made readily available across multiple platforms, combining tracking data visualization augmented reality and customizable graphics to deliver truly immersive fan experiences. This demonstrates our successful.
Integration of recent acquisitions, and our unique ability to create value across the sports and entertainment ecosystem.
We've also continued to leverage our exclusive NFL partnership to build upon our key sports but relationships.
These agreements enable us to provide a full range of official sports content and fan engagement solutions to help our customers better engage and monetize their users.
While we're still in the early stages. Our NFL partnership we are very excited about the vision to enhance the value of NFL, Wisconsin and re imagine the way the sports is conceived as.
As we'll discuss in more detail shortly our recently announced deals so brilliant foundation to achieve our longer term ambitions.
In addition to the key sports book announcement, we also announced our first team based partnership with the Philadelphia Eagles, while we deliver real time betting oleds to drive fan engagement and Lincoln financial field sports betting lounges.
A fundamental part of our NFL partnership is to provide innovative platforms. The teams to engage with legalized sports betting and so we're excited about this new development.
Additionally, as part of our disciplined M&A strategy, we remain focused on the efficient integration of newly acquired businesses.
For example, spiral help companies like Hennessy, Pringles, and Heineken increased brand awareness with sports fans through deeply personalized dynamic video content.
<unk> technology allows brands to automatically deliver custom tailored data driven content to sports fans in real time, which we look forward to rolling out to an even wider range of partners as part of our broader genius platform.
Additionally, using fan hubs platform, we launched new free to play experiences for partners across different verticals, including sports leagues sports betting clients and even brands outside of sports betting such as Jersey, Mikes and Buffalo Wild wings.
With leading technologies like spiral in San hub genius is broadening the options available to a wide range of customers, who are seeking to connect with the sports audience and a purposeful and efficient way.
With the commercial progress we've made this quarter and the positive global sports betting market backdrop, we are raising our 2021 revenue guidance to a range of $257 million to $262 million equating to over 72% year on year growth.
Nick will cover the financial aspects in more detail shortly.
Our core focus of the business this quarter was to structure commercial agreements with our sports book partners to include the NFL offering.
As many of you know our partnership with the NFL is far more innovative than any other steel in the market.
Differentiated from the NFL as previous rights deals with its incumbent.
We are extremely happy with the commercial deal. We've made so I wanted to provide a bit more detail on our success.
These are all encompassing strategic deals that include a full suite of products. Let me give you. An example of a typical deal that exemplifies how we are engaging with U S sports books.
They typically include an absolute commitment to use genius data, where we had an issue rights.
Streaming.
Outsource managed trading and other value add technology services our COO.
Commitment to advertising spend across all media products, including fan hub and spiral.
And an average three year term, providing a perfect balance between short term visibility and medium term flexibility as the market evolves.
The NFL agreement has only increased our opportunities to successfully expand our commercial partnerships to include our all encompassing suite of solutions.
Yeah.
As we have partially through our first NFL season, we're happy to provide more color on the specific NFL component of these wide ranging deals.
To start over 97% of NFL best placed in the United States are powered by genius pools.
We have a great commercial terms that properly reflect the value of our premium data while our contracts include a full range of products. If we were to isolate specifics around NFL I'll take rate of pre match gaming is in line with our current global blended average while up in.
<unk> take rate.
Weighted average in excess of our stated goal of 5%.
<unk> genius up to benefit from both the growth of the NFL sports betting market and the continued shift to in play betting.
It's worth noting that the elements of the deal structure will vary by contract, but we often structure our deals to limit our downside exposure by creating minimum revenue guarantee floors, which allow us to reduce some of the inherent volatility.
So in periods with lower holds and significant promotional spend like we've seen recently these deal structures Guevara revenues some protection.
Overall these commercial agreements support an accelerated path to our long term target of an average of 5% take rate of global gaming revenue.
Lastly, our customers have committed to spending an initial minimum of $125 million across our media products, including fan hub inspirable over the average of the three year terms.
However, we have seen so much success at certain major customers, who spend their entire first year's commitment within the first four months of the contract.
The majority of these commitments come from customers, we were already working with and they have that will have the confidence to trust genius in the long term. Thanks to excellent results that we've delivered to date.
This confidence is proven by draft kings, making genius that preferred programmatic partner and bet MGM, making genius their exclusive programmatic partner.
As a reminder, genius was named the NFL exclusive sports betting and gaming advertising partner.
A new component of our rights deal that doesn't exist anywhere else in the market and is completely unique to our capabilities.
This gives us access to the NFL audience and select digital advertising inventory that when combined with our large data and deep understanding sports fans puts us in a unique position to drive better return on our partner's customer acquisition spend.
Again, the breadth and depth of the agreements we've reached or exactly what we envisaged when we first structured such an equally innovative and wide ranging NFL partnership.
So we touched on the committee to advertising spend through our NFL deals and now we'd like to provide more detail on the market opportunity and the key growth drivers for our business.
Our media business provide services that extend beyond just sports betting and allow us to capture share with digital marketing budgets across a range of customers representing an entirely new addressable market.
We see our addressable opportunity at the 60 billion dollar global digital sports advertising market.
Now this is obviously highly competitive.
It includes search engines traditional AD agencies and other solutions developed in house.
However, we believe that our unique access to the data and inventory through our exclusively partnerships leads to a differentiated offering with high rates of return for our customers.
That said.
Based on our penetration to date predominant EBIT sports book customers. We believe our market share of 75 to 100 bps is achievable in the long term for the entire digital sports advertising market.
In order to reach this long term market share and the $500 million revenue opportunity represents we believe we will need to broaden and diversify our media customer base.
Our advertising solutions are valuable to any brand seek to interconnect with sports audience using contextually relevant data driven content.
For that reason, we believe our media customer base today represents a fraction of what it can become.
Whilst it is most certainly early innings.
This is a business that has doubled year over year.
We've made strides in diversifying our customer base to include brands outside of sports betting that are interested in leveraging our unique access to sports audiences live data and content distribution capabilities.
I'd like to conclude my remarks by clearly defining our vision for the future.
Our goal is to create a business that takes a slice of every sports related transaction globally.
Whether that's a bet at ticket sale a live stream approach.
Purchase of a hot dog in a stadium or Josie style genius exist to provide the technology platform that both towers. These transactions and enables true global fan monetization.
The investments we've made both organically and through second sure fan hub and <unk> have created the world's leading sports technology platform.
Nothing in the market comes close to what we have and we are miles ahead of our competition.
As a result of that the commercial conversation that we're having with our existing partners such as the NFL have taken on an entirely new meaning.
Not a single conversation with the legal Federation goes by without discussing the massive opportunities for them to tap into our vision and cutting edge unique technology services that only we can deliver therefore.
Therefore, we have defined a more aggressive investment roadmap that will enable us to continue to put clear water between us and the rest of the industry through a truly differentiated cutting edge technology platform.
This strategy will not only deliver the worlds greatest integrated solution, but also give us a phenomenal advantage in our negotiations with leagues. They will strengthen our long term positioning and reduce the risk of Reits inflation too.
To reiterate one of the main reasons that the NFL chose to partner with US was because of the shared vision around our technology capabilities.
This shared vision is now coming to life as we are beginning to deliver on it we have absolutely no doubt if we invest now this vision can be delivered to every league and every fan worldwide.
This is such a unique opportunity that we simply must take advantage of it. Therefore, we plan to reinvest heavily in the business to continue delivering on our vision and strengthening our competitive advantage.
With that I'll now turn to Nick to discuss our financial results and outlook in more detail.
Thanks, Bob.
As Mark mentioned, our Q3 results reflect our solid execution in the underlying business.
Third quarter group revenues increased by over 70% year on year to a record $69 $1 million with.
With each business line increasing significantly.
Demonstrating another quarter of diversified and well balanced growth.
First our betting technology content and services grew 48% year on year to $43 6 million.
Growth in this segment was driven by increased pricing with existing customers.
New customer wins.
And increased utilization of available content.
In the third quarter, we also recognized revenue.
For the first three weeks of our inaugural NFL season.
Our major technology content and services revenue continues to increase at a phenomenal pace more than doubling year on year to $13 $9 million.
Strong growth in our media business was driven by new customer wins, both within sports betting and non sports betting sector.
And lastly, the sports technology and services revenue.
Increased 159%.
To $11 6 million.
Once again getting significant contribution from sports cost the second spectrum.
Our revenue to date is trending positively towards our full year outlook.
And we've made exactly the right kinds of commercial deals in the quarter to.
To continue our momentum through year end.
It gives us great confidence to increase our revenue outlook to a range of $257 million to $262 million.
Equating to over 70% year on year growth at the midpoint.
We are also revising our adjusted EBITDA target to be broadly breakeven for the year.
As we expect to reinvest in the business to achieve the long term vision. The Mark has just spoken about.
As Mark mentioned earlier.
We structured our commercial agreements in line with our expectations.
And we're more excited than ever about our opportunity to generate solid returns on our groundbreaking NFL deal.
We have reached terms that allow us to add a significant share of gaming revenue.
We've leveraged our unique position to increased customer utilization and take market share.
And our partners have contractually committed to spending at least $125 million in marketing spend through our platform.
The business is poised for continued revenue growth at the sports betting market continues to expand and evolve.
Broadly speaking within the U S and globally.
We feel confident in our ability to continue taking market share achieving premium pricing for value added content and services.
And executing on our partners committed media spend.
This coupled with the dynamic growth and maturity of the global sports betting market should drive well balanced revenue growth over the next several years.
With meaningful contribution from multiple lasers.
As Mark just touched on.
We also recognize that we're in a unique stage early in our growth cycle.
Presents a window of opportunity to be front footed and financially flexible in order to fund the long term scale and build the infrastructure to achieve our vision that Mark described.
We think about those strategic investments in three categories.
Firstly technology development.
We are transforming global sports betting in media through our technology.
And we're focused on continuing improving our existing tech platform.
For example continue to innovate second spectrum technology to reduce latency improved tracking and expand to new sports such as American football.
Secondly.
We're also focused on accelerating our right strategy to continue building a best in class portfolio of data and streaming rights.
As noted previously many of our data and streaming rights generating generate meaningful near to medium term payback. So.
So we're investing ahead of the revenue curve in many instances.
And thirdly.
We continued to build out our U S infrastructure to support our expanding local operations.
Additionally, there may always be other opportunities outside of these three categories, while we see potential for shareholder return and to improve our competitive position.
To recap.
Our global business continues to perform strongly.
And we expect continued revenue growth through the year of 2021 and beyond.
On an adjusted EBITDA basis, we expect the business to be broadly breakeven or better on an ongoing basis in order to maximize the potential of our strategic reinvestments of underlying profitability.
To conclude.
We are excited and focused on the big picture opportunity ahead of us.
We believe the way or in a strong position to capitalize on this rapidly growing market.
We also believe that the disciplined reinvestment of near term earnings is the best use of capital at this stage in our growth cycle to position us for success over time and achieve our long term vision.
In fact.
Our current market position and thoughtful deployment of capital gives us even more confidence in achieving our previously communicated long term aspirational targets of 40% market share.
5% of gaming revenue and 40% adjusted EBITDA margin at scale.
Thank you again for your participation.
Wed now like to open it up to Q&A.
Thank you if you do wish to ask a question. Please press star followed by one telephone keypad. If you wish to wait till your question you may do so by pressing star followed by can't cancel.
That will be a brief pause my questions. Thank you Sir.
The first question is from the line of Jed Kelly from Oppenheimer. Please go ahead.
Hey.
Thanks for taking my question and nice quarter.
Two if I may just just Marc on your 5% comment on Global G. Jr. Can you kind of expand on how we should think about it we kind of hear from the operators.
That might be a little too aggressive that maybe we are over simplifying it and then.
Just on the guidance on the quarterly guidance can you give us an update on how youre betting revenue was trending in October and November relative to the guide.
Hi, Jeff It's Nick let me take the second one first and then perhaps.
Mark Dave to pick up the first bit.
On the second one.
Aye.
I understand the question and I don't know the market has been some noise around operating profitability in October I think Mark said on the call.
We certainly have some downside protection that we structure deals to such.
We have that in our deals.
Any views on where we sit in October and the first couple of weeks in November have been taken into consideration when we've upped our revenue guidance to the two $572 6 billion.
Hey, Jeff how are you.
Thanks for that.
On the <unk>.
On your first question, if you are asking a 5% of global gaming.
Revenue was too aggressive I think thats the question Ryan.
Yes, correct.
Yes, yes, yes.
Yes, yes, yes, I mean, we don't we didn't think that we think on a long term basis is eminently achievable.
We were saying in the in the earnings was really that we are on that.
We're on a sort of very strong journey, probably slightly ahead of where we thought we would be towards reaching that.
I think thats, a knee, earning a lot of the deals with striking on the on the in play with the NFL over an acceptable long term. So we feel very comfortable with that.
Got it and then just as a.
I guess two quick follow ups I guess the November holds we've seen some mean reversion there and then one more question Nick Nick on the third.
Third quarter media revenue very strong.
<unk> third quarter going to be the peak quarter for you guys for media just given the.
Cadence on how the OSB Andrew.
The operators advertising thank you.
Yes Jed.
Yes.
I currently come until the November positioning I was just kind of revert back to my commentary I think I made on the October.
Position in terms of major yes, very strong revenues.
There was an element of inorganic inorganic growth in that but on the underlying basis.
The revenues are still significantly up year on year.
I am actually third quarter listen to high to us I'm anticipating actually our fourth quarter two base.
Slightly high position than where it would come out.
Q3, and all of that again is built into the two $572 six two cuts.
Thank you.
The next question is from the line of Stephen Grambling from Goldman Sachs. Please go ahead.
Hi, Thank you just wanted to clarify I guess, a couple of things one.
I guess is the NFL transaction training to the cash breakeven that you thought when you were referencing some of the reinvestments into the business where are the biggest buckets.
This is being allocated to and just to confirm I think you said that your commitment is to a breakeven.
Then going forward is that on an annual basis. Thanks.
Yes.
Yes, Hi, Stephen let me have circa that and then I guess Martin and the concentration and asked that one too. So yeah. There's a couple of questions that youre right.
On that last point.
We as a board management team.
United in managing the business in the short term to an EBITDA breakeven or better position and that will be on an annual basis that will obviously be ups and downs on a quarterly basis as we go.
In terms of where we're looking to invest in it I think very clear on the on the COO.
Yes.
Really early position in a growth cycle in the opportunities in front of us are really accelerating significantly and therefore being front footed and our ability to to invest now we think is the right decision now practically what that means.
Really three areas first of all I think we've called out rights.
This remains to even up the foundation of our growth will continue to and have done historically continue to invest in that area.
Unlike a lot of right sales not just in our industry and any industry.
Some of those rights sales means investing ahead of the revenue curve.
But we will only do so in REIT deals that we think is a long term value for the business.
Secondary attack.
And.
Again, you've heard from Mark about also the leading tech position in the market, but as you noted we currently stand still and we will look into turbocharge the investment in an outlook and a particularly call out our acquisitions is a great example of that.
Second spectrum technology, we're looking to invest in such areas as well.
Low latency improvement tracking building out the products and other sports. So they don't currently have a significant footprint in for things like U S. Football I guess, Good example, I guess to just being able to attention to show sort of early dividend of our investment that we're making that you might have seen on the Cps COO costs over the last couple of weeks.
Second spectrum visual overlays that are on that.
Obviously, the Reits will affect Cogs as you know that.
That will be a significant amount the technology will come into the R&D section and then really that last area is the investment in the U S operations.
We have been very careful over the last two years I think not to put too much infrastructure into the U S. On the ground too early.
But obviously given a phenomenal U S growth that we're seeing in <unk>.
Youll see when you get into the detail in the quarter. The U S is actually 21% of our revenues for the quarter. That's the first time that such significant and I expect that to grow again in Q4 and now the right time to really be putting in the infrastructure commercial team should have seen our announcement of <unk> bonds.
And we need to optimize that growth.
So that's the other way and that will really across the income state will be in a number of areas. Both in terms of sales and marketing.
But it also will impact SG&A, a little bit as well so that the areas that we're really investing in terms of your original question around NFL and her.
We are getting on Amit.
Yes, I think we said last time.
It's going to be increasingly difficult given the nature of these deals to separate has a particular sports on the individual profitability as you know how we go to market and I think this particular U S. <unk> sales because they are so wide and encompassed all encompassing right across our products and our suite of products hit media data trading streaming.
And then also across the whole portfolio not just 272 NFL events, it is going to be increasingly difficult.
I will say Stephen is we're learning every week.
What do we know I think we're up to week 11 of a six year deal. So it really is is still in the very much the foothills of this deal and we're learning a lot we're learning a lot about.
Thanks, not just handle but in terms of we're learning about revenue mix. We're learning a lot around sports book portion proportionality, which obviously has an impact.
We imply this is pre play.
Jets question, operator profitability as well all of this is what I can say is that this deal is driving that phenomenal U S growth quarter on quarter year on year upwards of 200% and this deal is the absolute cornerstone is and will be significantly profits.
The U S contracts over the course of the license.
Next three to five years.
And so perhaps one follow up there since you mentioned right is being <unk>.
Secondly, the primary focus.
Maybe if you could just touch base on the NBA deal that was recently signed how you thought about that potential partnership and the impact that that could have.
The agreement with one of your competitors.
Yes, Hi, Stephen It's Chuck Davidson Chief commercial officer.
I think it's a really interesting question I mean, just to give a bit of background on.
On.
I'll kind of where we are and how we arrived at this point I mean, clearly the MBA is important.
Part of that process and Thats something.
In a.
Having to MBIA as part of our stable.
Right and Thats, why you would be something that would clearly.
Clearly be good for the business.
The flip side to that is there.
It has to be balanced process balanced judgments around.
The viability of any deal, we do with any child or whether it's <unk> or anyone else and we've got to be prudent and smart about how we do that.
I don't want to specifically around.
Elements.
The offer us, but perhaps a good way of articulating it would be to sort of compare a little bit to the <unk>.
And that relationship because.
We see some similarities but also quite a lot of differences and ultimately we have to find a way to make sure that we were making small changes to the business. So good differences the NFL deal that we have.
It gives us as you've talked about a nickel Marc articulated a lot of benefit in the media space, we get a lot of inventory, we get a lot of assets as part of that relationship.
The enable us to show the growth that we've talked about today.
A big part of the ecosystem, none of that stuff was really available as part of the NDA dynamic.
Partly because I'm sure everyone noticed.
Debit JV turned off for some of the digital asset so that's <unk>.
Just wasn't on the table that made it quite difficult from our point of view.
The other part of it and we've talked at all about this is really the our innovation pace the relationship with the NFL is not just about the NFL, but it's actually about allowing us to move and do all of the things that we want to do in a wider sports technology ecosystem forward.
And do that.
Again wasn't really available.
The deal that's been.
It's been signed.
Final part and perhaps the most important part from our point of view and really where we.
Well, we wouldn't pretend that we wouldn't want the NPI as part of our portfolio, we Couldnt with square the circle on was the structure of the deal really our understanding.
The NBA will continue to maintain.
Direct relationships with all downstream sports betting operators that we'll see them continue to take.
Sure It was handled directly from those operators.
<unk> sits outside the ecosystem effectively from our point of view that very much felt like operators getting charged twice once for the data once.
From <unk>.
For me MDI directly to be part of our ecosystem and we just couldnt gratitude offer on those numbers and make it make sense from our point of view so.
We would be.
So to have the MBS portfolio.
That hasnt happened, but it's also true the opex and revenues for MBS environment extremely limited.
So the impact of not winning that deal on all business is very very small at this point.
Got it thank you I'll jump back in the queue.
The next question is from the line of Mike Hickey from Benchmark Company. Please go ahead.
Okay.
Hey, Mark MC Brandon and good morning, or afternoon, guys congrats on the quarter.
Just curious on the year.
Your view of the Canadian opportunity.
It looks like obviously, we're moving to a regulated market beginning with Ontario.
Sure.
How expansionary you think that could be obviously, there is a sizeable great market there.
And then also curious on the media side.
Operators going into the market.
Yes, Hi, yes, Chuck types, and again chief commercial about happened to pick this up.
Regulation has always been a good thing right.
What youre going to see is.
Our business is going to come out of the Shadows.
Is there and we know there is a great market to something that was going to become more mainstream up starting with Ontario.
For us.
Yes.
As those.
Terry.
In time.
Sites in Canada regulated and regulated in a more traditional way I guess is the U S semi the USP U S states recognizing that's a good thing from our point of view its opportunity set.
Suddenly there was a real opportunity.
Terms of.
<unk>.
From both the size of the market grow, but mostly from a trading point of view and all of those things. We obviously like our position in terms of the NFL the NFL.
In Canada, we lie.
Like that from that point of view, but also from a marketing point of view it creates a whole new opportunity for us to work with regulated operators, who can spend property on marketing and we can hopefully mirror a lot of the success that we've seen across the U S sites.
In Canadian sites as they open up so for Ross.
It's obviously good news the opportunity is.
<unk>.
It's more opportunity in areas that we feel very very good about the business.
Not only just in the sports betting space, but all of those relationships will be able to build with.
Media partners.
Wish is that all of that stuff to.
To execute.
In the U S. We hope to be able to not expect to be able to mirror the Canadian sites.
<unk>.
Hopefully that answers your question.
Yes, Thanks, guys best of luck.
The next question is from the line of David <unk> from <unk>. Please go ahead.
Great. Thank you my.
First question is if we're seeing a shift to longer term data rights agreements.
Given the length of some of the larger deals that we're seeing.
Can you speak to the potential disruption to league to perhaps displace an incumbent today versus what you envision three to four years from now with your technology and kind of tactical plan.
I mean could pricing with certain <unk>.
<unk> actually stay flat or even decline multiple years from now or how do you view that.
Hi.
Yes, it's a really good question and something we think about a lull and frankly, it's a lot of what's driving that.
Yes.
Our technology investments.
We believe that.
As this market evolves the sports leagues.
I'm going to need.
Much.
Different.
Different in tonnage.
Specialized technology sets and what we're seeing in our business actually since the acquisition of second spectrum.
We increasingly I think almost every single lead conversation were having now includes elements of second spectrum and some of that next Gen technology. So the way that we see this evolving over the time is <unk> is an increasing reliance on those technologies and again that will be reflected in <unk>.
Right things going forward.
Part of that is at that part of the drive in part of the thing. We said excited about the opportunity. We see is really getting our technology widely distributed making sure that we keep the considerable distance that we have in the market Aida technology advantage, we have both.
From the likes of second spectrum data the truck analytics, but also the marketing side as well, while we've got a really unique.
Views it.
<unk>.
And the continued investment in that should should give us that position in the future.
Sure.
Significant.
Leveraging his conversations around <unk>.
Okay great.
And my second one would be you mentioned very significant Tam in your prepared remarks that you are entering specifically the advertising market with non betting platforms.
Can you give us a little bit more color on what type of platforms. You are having traction with and is this something we can see a substantive deal on by say early next year or is this a longer term opportunity at this point.
Thank you.
Yes.
Hi, David This is Josh at the managing director for the media business.
The yes exactly about in terms of.
The addressable market for the media business, we're already seeing.
Seeing a lot of traction in that space in terms of the platforms that we're that we're branching out to it's really an expansion of what we're already doing for operators in the programmatic sphere and rolling in the technologies from fan hub and spiral essentially we believe that.
Ultimately that technology applies equally as well to major brands around sports.
Okay.
Bush.
It will ultimately drive to say fantastic results that our customers have seen.
Okay, Great and is that something we could see.
Sure.
Some substantive announcement on early next year or is this something we should think about having.
The real impact of the model.
Sometime in the next year or two.
I mean, we're already winning a number of contracts in this space are probably the most recent one.
Is jersey, Mike's, where we provided them with their tailgate trivia free to play game, we've provided a lot of advertising services around that to promote the game.
So there's already a few customers that are there and we've got a really strong pipeline as we head into 'twenty. Two so I expect us to be making making plenty of announcements around new wins in the sort of outside of the sports betting space.
Next year and beyond.
Okay, great. Thanks, so much.
Okay.
The next question is from the line of burning Mctiernan from Needham <unk> Company. Please go ahead.
Great. Thanks for taking the questions maybe just to start the $125 million committed advertising spend just wanted to clarify that thats in aggregate over the next three years and if it's only in the U S. And then I'm assuming these deals have basically been struck over the last three months. So just wondering how they came in versus your initial expectations.
<unk>.
Hi, This is Josh.
Hey, Ken.
Yes, that's correct the deals are structured over three years.
In terms of the.
Market.
Majority.
Our across the North American market. There is a few nuances where there's some international spend for the majority of it is focused on the North American market.
Understood and can you just remind us about how big the media revenue stream is outside of the U S. Currently.
Yes, Hi, Ben I mean traditionally we've been around about 50 50 in terms of U S versus.
And rest of the world on a major basis thats not heavily more slanted towards the U S. Right now and that's where the focus of growth for us over the course of the next <unk>.
18 months to two years is just just talks about those deals they are predominantly north American focused.
Understood, Thanks, Nick and Nick just a follow up.
On an <unk> struck an agreement with them yesterday that was that was great to see but I was just wondering if there is how you guys were I believe you were supplying them with NFL official data.
In the third quarter. So just wondering how that was booked from a revenue standpoint.
Yes, yes of course, yes, you're actually right.
And for everyone else benefit Nicole I mean, we continue to provide fungible with the services throughout the period is as.
As a long term sustainable partner.
With fine Joe.
The announcement.
That we issued 48 hours ago.
With respect to deals take us back to the start of the NFL season, and what we've done is there was an element of the deal that was recognized.
In the quarter, because we already had a pre agreed deal with them. So that has been recognized for the first three weeks of the NFL and then we will recognize the remainder of the deal retrospectively for those first three weeks.
Well I will say is obviously, it's one operated for three weeks is not a material number of burn in and the new deal.
Metrics have been built into the revised guidance with the two 570 <unk>.
Understood Thanks very much.
The next question is from the line of Ryan <unk> from Craig Hallum. Please go ahead.
Hello, guys. Thanks for taking my questions.
Curious on if theres been a trend towards in house sports trading services, but at the same time fan dual and that agreement you were just talking about expanded.
Of your live trading solution.
Where are you seeing the most headwinds as well as tailwind from a management trading services standpoint.
Okay.
Yes got it.
Davidson.
I think what we see here.
Is a kind of.
Yeah.
What youre seeing with the fine Joe Dale in particular is.
Yes.
A comfort of that.
Comfort and outsourcing element solve basketball expecting operations to a company like ours. So so you'll seeing will balance of some stuffing.
<unk> currently.
So I will focus on what is being sourced by an operator from an operational point of view. So we will focus as you can imagine with Android.
<unk> tried to be NFL, which we don't do for them.
At the same time that outsource elements of that so you will end up I think seeing.
Combination of these things.
The trajectory of the industry I think.
We'll be about much more efficient in terms of where they spend money where they get the most bang for that Buck.
Our view.
As played out with our customer agreements is increasingly large twice of that operational functions will indeed be outsourced.
And then on AD Tech do you have any comparative metrics or customer acquisition cost improvement or anything you guys can compare internally on how your solutions are carrying versus traditional sources and then secondly, how do you feel about your human and Technicolor.
Resources for AD Tech and marketing you guys must meant anything there. Thanks.
Okay.
Hi, Ryan this is Josh.
Yes happy to provide some context in terms of the.
So we've delivered I.
I can give you a specific example of.
One operator that we've been working with.
This NFL season, and the relative to the results that they've seen through geniuses AD Tech solution.
I have been really strong so to give you to give you an idea of that on average that customer fees.
First deposit value breakeven against the total ad spend.
To give you tend to see so far this season, a roundabout, 285% return on AD spend and subsequent deposit values off of those players acquired by by genius.
So needed.
Just to say that.
So first some pretty strong result, and the individual cost the customer is very happy about the results.
And I can think of.
Another operator, who by the end of the year is on track to exceed their minimum commitment and that first contract here with us on their on their media contract.
That speaks for the results to date that they've seen so fast Virginia.
Okay.
And then to waste of time.
The conference has now concluded and you may disconnect. Your telephone thank you for joining and have a pleasant.
Okay Goodbye.
Okay.
Okay.
Okay.
Okay.