Genius Sports Limited Q4 2023 Earnings Call

Operator: Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Genius Sports fourth quarter 2023 earnings results conference call. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the genius Sports fourth quarter 2023 earnings results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Genius Sports. You may begin your call. Thank you and good morning. 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.

Like to ask a question during this time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question again press star one.

I would now like to turn the conference over to Genius Sports you may begin your call. Thank you and good morning, 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 see 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 annual report on form 20-F filed with the SEC on March 32023.

Speaker: 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 annual report on Form 20-F filed with the SEC on March 30, 2023. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating the geniuses operating. These measures should not be considered in isolation or as a substitute for Genius' financial results prepared in accordance with U.S. GAAP.

During the call management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Gs and the operating performance. These measures should not be considered in isolation or as a substitute Virginia for financial results prepared in accordance with U S. GAAP.

Mark Locke: 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.geniussports.com. With that, I'll now turn the call over to our CEO, Mark Locke. Good morning, and thank you for joining us today as we conclude another year of consistent execution and outperformance. Over the last few years, we have carried out many strategic and commercial objectives to position our business for structural and sustainable success. The results of these objectives are now clear in our financials as we announce our 8th consecutive quarter ahead of expectations and present a business that is strong, well positioned, and profitable today as it has ever been. To recap, we reported Q4 revenue of $127 million, beating our guidance of $126 million and representing 21% growth year-on-year.

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 <unk> genius sports Dot com.

I'll now turn the call over to our CEO Mark lock.

Good morning, and thank you for joining us today as we conclude another year of consistent execution and our performance.

The last few years, we have carried out many strategic and commercial objectives additional business the structural and sustainable success.

The results of these objectives now player in all financials, as we announced our eighth consecutive quarter ahead of expectations and presents a business that is strong well positioned unprofitable today as it's ever been.

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To recap, we reported Q4 revenue of 127 million, beating our guidance of $126 million and.

Representing 21% growth year on year.

Mark Locke: This brings our full-year revenue to $413 million, which is $22 million ahead of our guidance at the start of the year and represents a 21% growth compared to full-year 2022, anchored to a cost base that does not grow in line with revenue growth. We converted 52% of every incremental dollar to our adjusted EBITDA in 2023, demonstrating the clear operational leverage of our business. Our Q4 Adjusted EBITDA of $12 million is also ahead of guidance, and it brings our full-year adjusted EBITDA to $53 million, representing nearly three and a half times growth and over 800 basis points of margin expansion compared to 2022. Importantly, this led to $11 million of positive free cash flow in the second half of 2023, as we have guided to throughout the year.

This brings our full year revenue to $413 million, which is $22 million ahead of our guidance at the start of the year and represents 21% growth compared to full year 2022.

And get to a cost base that does not grow in line with revenue growth. We converted 52 percentage of every incremental dollar to our adjusted EBITDA in 2023, demonstrating a clear operational leverage of our business model.

Our Q4 adjusted EBIT dollars $12 million is also ahead of guidance and it brings our full year adjusted EBITDA to $53 million, representing nearly three and a half tons gross over 800 basis points of margin expansion compared to 2022.

Importantly, this led to a $11 million of positive free cash flow in the second half of 2023, as we have guided to throughout the year.

Mark Locke: This marks a meaningful inflection point for the business as we expect to maintain positive free cash flow on an annual basis in 2024. There are several growth drivers that have contributed to our outperformance in 2023, and these same dynamics will continue in 2024. Therefore, we expect to grow our 2024 revenue by at least 16% to $480 million and our adjusted EBITDA by at least 41% to $75 million. We expect these near-term growth dynamics to persist over the long term as well, and with each passing year, we grow more confident in our long-term strategic and financial goals. Our league partnerships are growing from strength to strength as we expand our suite of technology solutions, empowering new forms of fan engagement and monetisation.

This marks a meaningful inflection point for the business as we expect to maintain positive free cash flow on an annual basis in 2024.

There are several growth drivers that contributed to our outperformance in 2023 and me.

Same dynamics will continue in 2024.

So we expect to grow our 2024 revenue by at least 16% to $419 million and our adjusted EBITDA by at least 41% to $75 million.

We expect these near term growth dynamics to persist over the long term as well and with each passing year, we grow more confidence in our long term strategic and financial goals.

Elite part ships going from strength to strength as we expand our suite of technology solutions empowering new forms of fan engagement and monetization.

Mark Locke: This ultimately gives us confidence in not only retaining but also expanding our technology-delivering relationships over time. A few notable examples from this year are the extensions of our NFL and Football Data Co partnership. Most recently, we also announced a 10-year strategic partnership with FIBA, where we plan to deliver our computer vision technology and AI-powered capabilities across the 200-plus national federations worldwide, covering tens of thousands of global basketball events per year.

It's ultimately gives us confidence not only retaining but also expanding our technology delivering relationships over time.

A few notable examples from this year are the extensions, although NFL and filter dike co partnerships.

Most recently, we also announced a 10 year strategic partnership with fever, while we plan to deliver our computer vision technology and AI powered capabilities across the 200, plus national federations worldwide covering tens of thousands of global basketball events to yeah.

Mark Locke: With our scale and best-in-class technology suite, we have a diverse number of channels to monetize our different league relationships. This includes opportunities unlocked with broadcasters, content distributors, sponsors, advertising, and, of course, sportsbook customers. For our sportsbook customers, this same technology creates new, value-enhancing products to better engage their audiences and drive more betting activity. That vision is a great example of this, which we will cover shortly.

With our scale and best in class technology suites, we have a diverse number of channels to monetize our different league relationships.

This includes opportunities unlocked with broadcasters content distributions sponsors advertising and course sports book customers.

Across both the customers the same technology creates new value enhancing products to better engage their audiences and drive more bashing activity.

That vision is a great example of this which we will cover shortly.

Mark Locke: Each of these different touch points solidifies our position at the heart of the digital sports ecosystem and, more importantly, translates to sustainable improvement in the financial metrics that we are most focused on. This includes consistent revenue growth, disciplined cost control, margin expansion, and free cash flow generation. Given the multitude of growth drivers and high visibility of our cost base, we are more confident than ever in achieving our long-term EBITDA margin target of in excess of 30%. Now, let's review how some of these fundamentals performed during the course.

Each of these different touch points solidifies our position across the digital sports ecosystem and more importantly translates to sustainable improvement in the financial metrics that we are most focused on.

This includes consistent revenue growth disciplined cost control.

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Given the multitude of growth drivers and high visibility of our cost base, we have more comfort in the NASA and achieving our long term EBITDA margin target in excess of 30%.

Now, let's review how some of these fundamentals performed in the quarter.

Mark Locke: We'll start with the positive trends we've seen in the U.S. sports betting market through the full NFL regular season. As a reminder, our revenue share agreements with U.S. sportsbook operators enable us to benefit from multiple growth drivers, including broader market expansion, improvements in operator win margins, and higher in-play betting, where we earn three times higher revenue share relative to pre-match betting. In our third NFL season, each one of these variables has fueled growth in our overall betting revenue and in the U.S., where we expect significant growth over time. The diverse multitude of growth drivers helped us exceed expectations in the quarter, which is the proof point of our rock-solid business model, which insulates us from unfavorable sports outcomes that you may have heard about from our customers.

We'll start with the positive trends, we've seen in the U S sports betting market through the full NFL regular season.

As a reminder, our revenue share agreements with U S Sports book operators enabled us to benefit from multiple growth drivers, including broader market expansion improvements in operating wind margins and high in play betting whether youre in three times higher revenue share relative to pre much guessing.

In our third NFL season, each one of these variables to fuel growth in our overall <unk> revenue and in the U S. While we expect significant growth overtime.

The diverse multitude of growth drivers helped us exceed expectations in the quarter, which is a proof point of our rock solid business model, which insulates us from unfavorable sports outcomes that you may have heard about from our customers.

Mark Locke: First, we continue to see impressive growth in the total US sports betting GGR, which increased by approximately 50% in 2023. This has come in the form of new state launches as well as continued growth in existing states. It is worth calling out that Genius is market share agnostic, meaning as long as the market grows, we will grow with it, regardless of which operator ultimately wins.

First we continue to see impressive growth in the total U S sports betting G G L, which increased by approximately 50% in 2023.

This has come in the form of new state launches as well as continued growth in existing states.

It is worth calling out genius is market share agnostic, meaning as long as the market grows we will grow with it regardless of which operates a ultimately wins.

Mark Locke: For instance, in Florida, where Hard Rock is the only operator at the moment, we realized an immediate revenue increase off the back of their online sports betting relaunch in the quarter. For the NFL, more specifically, it has been another spectacular year across the board and particularly on the betting front, with in-play handle and GGR increasing by 60% and 140% year-on-year respectively. What's more encouraging is that we've also seen a meaningful improvement in in-play win margins compared to our first NFL season in 2021. We have always said that in-play betting would naturally increase as the market matures, and we are beginning to see that now. We also believe that this would be a product-led evolution, and our introduction of BetVision this season is now a proof point of a highly engaging product that activates more in-play betting on NFL games. Last quarter, when we first launched BetVision, we discussed how this project simplifies and enhances the discoverability of in-play betting. BetVision brings together many of Genius' best tech assets, live odds, players, and team stats, and next-gen augmentation, to name a few, to deliver a differentiated in-play betting experience.

Instance, in Florida, where hard rock is the only operates at the moment, we realized immediate revenue uplift off the back of that online sports betting relaunch in the quarter.

So the NFL more specifically it has been another spectacular year across the board and particularly on the banking front with in play handle and <unk>, increasing by 60% and 140% year on year, respectively.

What's more encouraging is that we've also see meaningful improvement in play when margins compared to our first NFL season in 2021.

We have always said that in flight testing with naturally increase as the market matures and we are beginning to see that now.

We also believe that this would be a product led evolution and our introduction of that vision. This season is now proof points of highly engaging product that activate more in play betting on NFL games.

Last quarter, when we first launched that vision, we discussed how this project simplifies and enhances the discover ability of in flight testing.

Okay fishing brings together many of genius is best Tech assets lie votes players and teams SaaS.

The nexgen augmentation to name a few to deliver a differentiated in play betting experience and we expect that this will be critical.

Mark Locke: And we expect that this will be critical for Sportsbook to attract and engage a valuable sticky customer base. We also provided some early data points to demonstrate how it helps sportsbooks increase their in-play betting volume. It was a small sample size then, but now, with a full season behind us, we're happy to say those numbers held up consistently throughout to the end of the season. To summarise, 50% of the total number of bets made by BetVision streamers were in play bets, of the Total Betting Handle or Dollar Volume Bet from BetVision Streamers.

Sports, but to attract and engage a valuable sticky customer base.

We also provided some early data points to demonstrate how it helps sports books increase that insight betting volume.

It was a small sample size, then but now with a full season behind US we are happy to say those numbers held up consistently throughout the end of the season to summarize 50% of the total number of beds that you bought that visions treatments were in play that as well.

While the total patheon handle or dollar volume that bet vision stream is 76% was from in play betting.

Mark Locke: 76% of the total betting handle was from in-play betting. And when comparing the first half of the season to the second half, we've also seen total betting handle and in-play betting handle triple over that time. We are very happy with the early success of this product and the value we have created for our sportswear partners and for the NFL. However, what excites us most is the innovation roadmap still ahead and the opportunity to develop new features for the NFL and expand this product to even more sports. We have created a platform that now generates millions of eyeballs, which presents a vast opportunity to monetize in many different ways. As the world of sports, betting, media, and broadcasts is rapidly converging, we are providing key solutions to keep our partners at the forefront of this trend. We expect to launch even more features in the BETtVision product to create a fully personalized and interactive experience. So stay tuned for much more to come.

And when comparing the first half of the season to the second half. We are also seeing total betting handle.

In play betting handle triple over that time.

We are very happy with the early success of this product and the value we have created for our sports partners and the NFL.

But what excites us most is the innovation roadmap still ahead and the opportunity to develop new features for the NFL and expand this product to even more sports.

We have created a platform that now generates millions of eyeballs, which presents a vast opportunity to monetize in many different ways.

As the world of sports betting media and broadcast are rapidly converging, we are providing key solutions to keep our partners at the forefront of this trend.

We expect to launch even more features to the best vision product to create a fully personalized and interactive experience so stay tuned but much more to come.

Mark Locke: FetVision is just one of the many initiatives that we have delivered on to empower our sportsbook customers to succeed. As such, we view ourselves as a true value-add partner to sportsbooks, providing more tools to help them win and grow their business. Consequently, our business model positions us to grow alongside our customers, and the output of this has been steady net revenue retention over the last few years. On slide 8, you'll find updated net revenue retention metrics, which highlight a successful track record of increasing customer value over time. It's important to remember that there are multiple inputs contributing to growth with each customer. For example, when we have revenue share agreements, predominantly in high-growth markets like the U.S., the values have naturally increased based on a handful of factors, including a large income, high in-play betting, and improving win margins.

That vision is just one of many initiatives that we have delivered on to empower all sports customers to succeed.

As such we view ourselves as a true value added partner to sports books, providing more tools to help them win and grow their businesses.

Consequently, our business model positions us to grow alongside our customers in the outset that this has been steady net revenue retention over the last few years.

On slide eight youll find updated net revenue retention metrics, which highlights a successful track record of increasing customer value over time.

It is important to remember that there are multiple inputs contributing to growth with each customer.

<unk> when we have revenue share agreements predominantly in high growth markets like the U S. The values of naturally increased based on a handful of factors include a larger Tam high in play betting and improving win margins have a growth has also come in the form of new product offerings that vision or digital.

Mark Locke: However, growth has also come in the form of new product offerings like BetVision or digital advertising services, for example, or simply just offering a wide range of content from our rights portfolio. We aim to provide differentiated tools and content to help our sportsbook partners grow over time. Our Commercial Arrangement then enables us to share in that growth. We have a long history of partnering with hundreds of sports books in this fashion, and we expect to continue to be successful over time.

Sizing services for example, or simply just offering a wide range of content from our <unk> portfolio.

We aim to provide differentiated tools and content help hospital partners grow at a time <unk>.

All commercial arrangements, then enable us to share in that growth.

We have a long history of partnering with hundreds of sports books in this fashion and we expect to continued success over time.

Nick: In the context of our frequent, ongoing contract renewals and new negotiations, you should view these as opportunities for us to provide new, value-added products and services to help Sportsbook enhance their offering to customers. This is exactly how we have achieved our strong net revenue retention historically and how we expect to sustain that success going forward. Importantly, many of these growth drivers I mentioned have resulted in immediate revenue benefits with little or no incremental cost, which is exactly how we've been able to improve our profitability and cash flow profile in 2023. Similarly, these same dynamics that supported our financial success in 2023 will continue to drive profitability growth in 2024, particularly as we continue developing innovative products and have many opportunities to bring them to market. With that, I'll now pass the call to Nick to discuss the financial results and initial 2024 guidance in more detail. Thank you, Mark. You've already heard the headlines from Mark.

In the context of our frequent ongoing contract renewals and new negotiations you should view these as opportunities for us to provide new value added products and services to help sports, but enhance their offering to customers.

This is exactly how we have achieved a strong net revenue retention historically and how we expect to sustain that success getting fluids.

Importantly, many of these growth drivers that I mentioned have resulted in an immediate revenue benefit with little or no incremental cost, which is exactly how we've been able to improve our profitability and cash flow profile in 2023.

Equally the same dynamics that supported our financial success in 2023, we will continue to drive profitability growth in 2024.

Clearly as we continue developing innovative products and have many opportunities to bring them to market.

With that I'll now pass the call to Nick to discuss the financial results and initial 2024 guidance in more detail.

Thank you Mark.

But where do you hit the headlines mark.

Nick: But it's worth reiterating the consistency of the results throughout the year. Each quarter this year, we have exceeded expectations and raised our four-year outlook. For Q4, we reported $127 million of revenue, which is above our initial guidance of $124 million and our updated guidance of $126 million. This was also true on an adjusted EBITDA basis as well, as we realize high incremental flow through from our revenue growth. We reported nearly 4.5 times growth in adjusted EBITDA, $12 million in Q4, also beating our guidance of $11 million throughout the year. You've also heard us reiterate our expectation for positive free cash flow in H2 of 2023. And we're happy to report that we have achieved this very important milestone after generating $11 million in cash in H2.

But it's worth reiterating the consistency of the results throughout the year.

Each quarter. This year, we have exceeded expectations and raised our full year outlook.

For Q4, we reported a $127 million of revenue, which.

Which is above our initial guidance of $124 million.

Our updated guidance of $126 million.

This was also to adjusted EBITDA basis as well.

As we realized high incremental flow through from our revenue growth.

We reported nearly $4 five times growth in adjusted EBITDA.

<unk> million dollars in Q4.

Also beating our guidance of $11 million.

Throughout the year.

You've also heard us reiterate our expectation for positive free cash flow in H two of 2023.

And we're happy to report that we have achieved a very important milestone.

Often generating $11 million of cash in H two.

Nick: In addition to the revenue and EBITDA growth, it's also worth drawing your attention to the consistent margin expansion throughout the year. Not only have we exceeded our revenue and EBITDA targets through the year, but we've also expanded our adjusted EBITDA margins by at least 600 basis points in each quarter, as illustrated on slide 11. This is truly on a gross margin basis as well. In each quarter, our gross margins have materially improved year on year. For the full year 2023, Our gross margins increased by nearly 1,600 basis points.

In addition to the revenue and EBITDA growth.

It's also worth drawing your attention to the consistent margin expansion throughout the year.

Well, Tony have we exceeded our revenue and EBITDA targets through the year.

But we've also expanded our adjusted EBITDA margin by at least 600 basis points in each quarter.

As illustrated on slide 11.

This is true on a gross margin basis as well.

In each quarter, our gross margins have materially improved year on year.

For the full year 2028.

Our gross margins increased by nearly 1600 basis points.

Nick: This is driven by a stable and highly visible cost structure that can support significantly higher revenue. We have long discussed the operating leverage of the business, which has now been demonstrated across the full year 2023. 2023 marks an important inflection point for the financial model, and fundamentally, these dynamics will not change in 2024.

This is driven by a stable and highly visible cost structure that can support significantly higher revenues.

We have long discussed the operating Leverages the business.

It has now been demonstrated across the full year 2023.

But equally marks an important inflection point for the financial model and fundamentally these dynamics will not change in 2024 so.

Nick: So we expect to continue this momentum in 2024. We expect to generate group revenue of $480 million, representing 16% growth, as we expect to benefit from the same building blocks that supported revenue in 2023. For Wins.

So we expect to continue this momentum.

For 2024.

We expect to generate revenue of $480 million.

Representing 16% growth as we expect to benefit from sustained building blocks that supported revenue in 2023.

For instance, we expect continued growth in the time.

Nick: We expect continued growth in the town, with new jurisdictions such as Florida, North Carolina, and potentially Brazil, representing entirely new revenue opportunities in 2024. Additionally, as you've heard Mark discuss... We continue to see encouraging growth in in-play betting, which can potentially be accelerated by new in-play products like DeckVision as an example, with a long track record of using contract renewals as opportunities to provide more value to our customers based on their needs, whether in the form of additional content, expanded services, or new products. Increased advertising spend, and more. We're excited about what this can mean for the growth of Genius as well as for our customers. And, of course, we're always winning, UK.

With new jurisdictions, such as Florida, North Carolina, and potentially Brazil, representing entirely new revenue opportunities in 2024.

Additionally, as you've heard Mark discussed.

We continue to see encouraging growth in in play betting.

Which can potentially be accelerated by new insight products like that patient as an example.

With a long track record of using contract renewals as opportunities to provide more value to our customers based on their needs whether in the form of additional content expanded services, new products increased advertising spend and more.

We are excited about what this can mean for the growth in GTS as well as our customers.

And of course, we.

Always winning new customers.

Nick: These can be sportsbooks who require our official data, advertisers who buy our media and fan engagement products, or broadcasters buying our augmentation solution. Again, each of these building blocks comes with little or no incremental cost. So we expect much of this revenue growth to contribute to our group adjusted EBITDA. In 2024, we expect group-adjusted EBITDA of $75 million, representing 41% growth and a 16% margin. That said...

These can be sports books, who require our official data.

Advertisers, who buy a major and fan engagement products.

Broadcast is buying.

Buying our augmentation solutions.

Again, each of these building blocks come with little or no incremental cost.

We expect much of this revenue growth to contribute to our group adjusted EBITDA.

The 2024, we expect group adjusted EBITDA of $75 million.

Representing 41% growth and a 16% margin.

That said.

Nick: I want to be absolutely clear about the pacing of our EBITDA profitability over the course of the year, as there's a bit of seasonality worth noting. As we've discussed in the past, our rights fees are fixed with predictable increases in each year, and the magnitude of those increases is slightly higher in 24 compared to 2023. Additionally, as part of our expanded NSL partnership... There are marginally higher rights fees associated with the domestic live video stream we use to power our BetVision products.

I want to be absolutely clear about the pacing of our EBITDA profitability over the course of the year.

As there is a bit of seasonality worth noting.

As we've discussed in the past.

<unk> fees are fixed with predictable increases in each year.

And the magnitude of those increases are slightly higher than 24 compared to 2023.

Additionally, as part of our expanded NFL partnership.

They were modestly higher rights fees associated with the domestic live video streams.

Used to power that patient product.

Nick: To be clear, that vision has been accreted in the business across the full NFL season, predominantly driven by our Q4 results, as we recognize three full months of NFL. Cowabunga.

To be clear.

That vision has been accreted in the business across the full NFL season, predominantly driven by our Q4 results as we recognized three full months of NFL.

However.

Nick: Given the fact that there were simply fewer NFL games in Q1 compared to Q4, the incremental flow-through to Eva Dahl won't be as meaningful as it was in Q4. As a result... We expect Q1 group revenue of approximately $117 million, and Ebert Dahl of $6 million. As you can see on slide 14.

Given the fact that there were simply fewer NFL games in Q1 compared to Q4.

The incremental flow through to EBITDA won't be as meaningful as it was in Q4.

As a result.

We expect Q1 revenue of approximately $117 million and EBITDA of $6 million.

Okay.

As you can see on slide 14.

Nick: We expect you and your EBITDA growth and margin expansion to accelerate in each quarter to the remainder of the year, as many of those key tailwinds and growth drivers I mentioned are recognized in the second half. Therefore, we are highly confident in achieving our four-year target. And finally... We expect our EBITDA to convert to free cash flow across the full year 2024. However, to be clear, there may be some fluctuations in net working capital and other one-off cash outlays in the first place. And as a result, we expect our Q1 closing cash balance to be approximately $100 million.

We expect year on year, EBITDA growth and margin expansion to accelerate in each quarter for the remainder of the year as.

As many of those T tell wins and growth drivers I mentioned are recognized in the second half.

Therefore, we are highly confident in achieving our full year targets.

And finally.

We expect our EBITDA to convert to free cash flow across the full year 2024.

To be clear there may be some fluctuations in net working capital.

The wall of cash outlays in the first half and as a result, we expect our Q1 closing cash balance to be approximately a $100 million.

Nick: Like 2023, we anticipate positive cash flow again in the second half of 2024, which should result in a net positive cash position for the entirety of 2024. Lastly, I've spent a bit of time discussing the stability of our cost base, and since it is highly predictable in any given year, it is worth taking a moment to review the approximate shape of our cash operating expenses for 2024. A true reminder.

Slide 2022, eight we anticipate positive cash flow again in the second half of 2024, which should result in a net positive cash position for the entirety of 2024.

Lastly.

I've spent time discussing the stability of our cost base.

It's highly predictable in any given year.

It is worth taking a moment to review the approximate shape.

Operating expenses for 2024.

As a reminder.

Nick: Our cost base is relatively fixed, and we don't expect a material increase in order to achieve higher revenues or adjusted EBITDA this year. Please don't.

Our cost base is relatively fixed.

We don't expect to materially increase in order to achieve higher revenues or adjusted EBITDA. This year.

For example, all else being equal outright phase and related direct costs are unlikely to deviate from our estimates whether we're selling to a 100 sports books or thousands of those books.

Nick: All else being equal, our rights fees and related direct costs are unlikely to deviate from our estimates, whether we're selling to 100 sportsbooks or 1,000 sportsbooks. Similarly, all other total operating expenses beneath cost of revenue, presented on a non-GAAP basis on slide 19, have remained relatively steady over the last year, even as we've significantly increased revenue in that time. To conclude, we feel a great sense of excitement about entering 2024 with multiple ways to win. We've established a highly defensible competitive position through the deployment of cutting-edge technology. We've strengthened our partnerships with leagues and federations across the globe. We've launched exciting new products to empower our partners to better engage their customers.

Equally.

Equally.

All other total operating expenses beneath cost of revenue as presented on the normally GAAP basis on slide 19.

Remained relatively steady over the last year.

Even as we significantly increased revenue in that time.

We expect this will be the case in 2024 as well.

To conclude.

We feel a great sense of excitement entering 2024 with multiple ways to win.

We've established a highly defensible competitive position through deployment of cutting edge technology.

We strengthened our partnerships with leagues and federations across the globe.

We launched exciting new products to empower our partners to better engage their customers.

Nick: And as a result, our business is poised to benefit from multiple growth drivers, which we expect will drive continued revenue growth, margin expansion, and cash flow generation in 2024. With that, we now conclude our prepared remarks and open the line to questions. Thank you. If you would like to ask a question, please press the star followed by the number one on your telephone keypad.

And as a result, our business is poised to benefit from multiple growth drivers, which we expect will drive continued revenue growth margin expansion and cash flow generation in 2024.

With that we.

We now conclude our prepared remarks.

And open the line to Q&A.

Thank you if you would like.

Jim Please press star followed by the number one on your telephone keypad and if you'd like to withdraw that question again press star one.

Ryan Ronald Sigdahl: And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself to one question and one follow-up. Your first question comes from the line of Ryan Sigdahl from Craig Hallam Capital Group. Please go ahead. Hey, good morning, guys. I want to start with BetVision.

Also ask that you limit yourself to one question and one follow up your first question comes from the line of Ryan signal from Craig Hallum Capital Group. Please go ahead.

Hey, good morning, guys.

I want to start with that vision. So appreciate the metrics on slide seven Q.

Ryan Ronald Sigdahl: So appreciate the metrics on slide seven. Curious what you can say about plans to launch a similar product across other sports and how difficult from a technological standpoint that is and how efficiently you can do that. And then what is the biggest challenge you're getting from the non-4 kind of original sports folks you have on that platform? Why can't you get others faster?

Curious what you can say on plans to launch a similar product across other sports and how difficult from a technological standpoint that is <unk>.

You can do that and then what is the biggest challenge you are getting from the.

The non fore kind of original sports folks you have on that platform why can't you get others faster.

Mark Locke: Hey Ryan, it's Mark. Obviously, the plan was always to build a scalable platform. That was the focus of what we did when we started this, and rolling out other sports is a clear focus for us. Technically, the integration and development of that are fairly straightforward, and we would expect to see a number of those sports rolled out over the next 12 months. In terms of the additional sportsbooks, I think one of the sort of challenges they have is the speed of integration, and I think there's a bit of a backlog in some of the integration pipelines. So what we've been doing is working with the sportsbooks to prove the concept. I think we've undoubtedly done that. It's a very clear, strong product, and there's a lot of proof out there that that is true.

Hey, Ron its mark.

Yes, I mean, obviously the plan was always to build a scalable platform that was.

The focus of what we what we did when we started this in.

Other sports as it is a clear focus for us.

Nearly the integration and the development of that.

Fairly straightforward and we would expect to see a number that I suppose rolling out over the next 12 months.

In terms of.

The additional sports books.

The I think one of the sort of challenges. They have is the speed of integration and I think there's a bit of a backlog in some of the integration pipeline. So what we've been doing is working with the sports Thats proof of concept.

Undoubtedly done that's very clear.

Strong product and Theres a lot of proof out there all of that so this is a case of working with our partners to manage their integration pipelines in E sports.

Ryan Ronald Sigdahl: So this is a case of working with our partners to manage their integration pipelines and get these sportsbooks live with the new product. That's great. Thanks, Mark. Nick, one for you.

With the new products.

That's great. Thanks, Mark Nick one for you when I look at the quarterly guidance cadence for this year Q4 is going to be the highest and highest ever quarter up triple digits.

Ryan Ronald Sigdahl: When I look at the quarterly guidance cadence for this year, Q4 is going to be the highest and highest ever quarter, up triple digits. So there's this ongoing concern with some that the NFL contract is uneconomical and will never be profitable for you guys. I guess that seems to contradict that, given Q4 is the NFL season.

So there is this ongoing concern with some but the NFL contract is an economical and will never be profitable for you guys. I guess that seems to contradict back given Q4 is the NFL. So I guess can you talk through the puts takes talked through the NFL and just maybe respond to that.

Nick: So I guess you can talk through the puts, takes, talk through the NFL, and just maybe respond to that. Risk. Thanks. Hey Ryan, I guess I'll just point everyone to our sort of performance over the last three years since we won the NFL, really Ryan, if you go back, you know, I think it was 2021, I think we were at EBITDA loss making at that point, 2022 we delivered a margin of 5%, this year I think we're knocking 13% EBITDA margin in 2023, and I think we're now going to about a 16% margin in 2024, and you're right, you can see that margin expansion, not just in the quarter we've just reported, but the quarter we're forecasting for Q4, so I guess Ryan, to counter that argument, I'll just point out to what we've already delivered and what we're guiding to and we're intending to deliver in 2024. Beautiful.

Risk thanks.

Hey, Ron.

I'll just point everyone to the performance of the last three years since we won the NFL really Ron if you go back to 2021.

I think EBITDA loss, making at that point 2022, we delivered a margin of 5%. This year I think we're knocking 13% EBITDA margin in 2023, and I think in our guidance of about 16% margin in 2024, and Youre right. You can see that margin expansion not just in the course, we've just reported.

But the quarter, we're forecasting for Q4, so I guess Ron to counter that argument I would just point out to what we've already delivered and what we are guiding to were intended to deliver in 2024.

Ryan Ronald Sigdahl: Maybe just a quick follow up. Is that a full cash contract assumed in Q4? Thanks. Good luck, guys. Yeah, Ryan, that's exactly right. As you know, there were warrants in the outer years of the original contracts, and as part of our contract extension that we did mid-year 23, we exchanged that for full cash, so that's all baked into those numbers. Your next question comes from the line of Bernie McTernan from Needham & Company. Please go ahead.

Beautiful maybe just quick follow up is that a full cash contract assumed in Q4. Thanks. Good luck guys.

Yes, yes, yes, Brian Thats exactly right because you know that.

Warrants in the out years in the original contracts and as part of our contract extension that we did midyear.

Midyear 'twenty three we exchange that for full cash so that's all baked into those numbers.

Your next question comes from the line of Bernie Mcternan from Needham and company. Please go ahead.

Bernard Jerome McTernan: Great. Thanks for taking the questions. To start, maybe just to follow up on BetVision, it was a minority of betting operators had access to BetVision during the 23 NFL season. What do you think the revenue uplift would be given all the nice detail you provide on slide seven, if BetVision was rolled out to all US sportsbook operators for next season? Yeah, I mean, maybe a minority in terms of numbers, but probably not in terms of market share. You know, we've had I think, you know, when we think about BetVision, it's, you know, it's really about the way that the revenues and the profit from that compound. So obviously, we're taking shares, as you know, well, we're taking a pre-match share, we're taking a live share at roughly three times, three times the amount. And the fact that BetVision is really focusing people on a lot of the in-play, it's a lot of a lot of the live betting really helps that, you know, three times the multiple that we're getting on the in-play comes through, on top of the fact that the in-play is growing rapidly.

Great. Thanks for taking the questions to start maybe just to follow up on that vision.

Minority of bedding operators had access to bet vision during the 23 NFL season, what do you think the revenue uplift would be given all the detail you provided on slide seven.

Yes, if that vision was rolled out to all U S Sports book operators for next NFL season.

Yes.

I think I think maybe a minority in terms of numbers, but probably not in terms of market share.

We had some good success with the rollout of <unk> financial.

I think when we think about that vision.

It's.

It's really about the way that the.

The revenues and the.

And the profit from that come out and so obviously, we're taking share.

As you know well, we're taking a pretty Matt Sherwood taking life share at roughly three times three times the amount.

And the fact that that vision is really focusing people on a lot of the game play is a lot of a lot of the live betting.

Really helps that.

A three times multiple that we're getting on the implied come through on top of the fact that the implied is growing rapidly.

Nick: Thanks, Mark. And then media technology revenue has been swinging around a lot. You know, as we're, you know, fine-tuning our models for 24, should we be thinking about this more as like a 10% grower, a 20% grower, or just kind of any puts and takes you think we should be contemplating as we think about 24? Hey Benny, it's Nick.

Got it thanks, Marc and then immediate technology revenue has been swinging around a lot.

As we're fine tuning our models for 'twenty four should we thinking about this more as like a 10% grower, 20% grow or just kind of any puts and takes you think we should be contemplating as we think about 'twenty four.

Yeah, Hi, Ben it's Nick.

Bernard Jerome McTernan: You know that media can be just a question of timing of spend. We saw that in Q4 where some of the sports books saved some of their spend over the Christmas NFL games and spent it on the playoff games instead in Q1, as you know, with the quarterly cadence. That can have a couple of million dollar swing one way or the other. I think the way we're forecasting 24 at the moment is, you know, we're not giving specific guidance, but we're thinking about around about sort of 15% growth year-on-year for 2024. And I would suggest we're being conservative in that area. But as we stand here today, you know, there's still lots of things to happen in 24 hours to make that the case. I understand. Thanks. Your next question comes from the line of Jed Kelly from Oppenheimer. Please go ahead. Hey, great. Thanks for taking my questions. Just two, if I may.

You know the media can be just a question of timing of spend.

We saw that in Q4, where some of the sports book save some of that spend over the Christmas NFL games in expenses in the in the playoff games. Instead in Q1 as you know with the quarterly cadence that that can be cut.

A couple of million dollars swing, one way or the other.

I think the way we're forecasting 24 at the moment as you know, we're not giving specific guidance, but we're thinking about around the path for the 15% growth year on year.

For 2024.

<unk>.

I would suggest whooping.

Conservative in that area.

But as we stand here today, there's still lots of things to happen in 2014 to make that the case.

Understood. Thanks, Nick.

Your next question comes from the line of Jed Kelly from Oppenheimer. Please go ahead.

Hey, great. Thanks for taking my questions just two if I may.

Jed Kelly: I'm going to go into the slide. It looks like the data right costs are about $195 million. It looks like they're growing, you know, I don't know, maybe, I know we don't have it, but maybe like 30%, so slightly faster than revenue. Can you talk about what's going on? And then bigger question for you, Mark, we're seeing a lot of technology innovation around streaming, particularly with the Apple headset, you know, YouTube TV. Where does Genius and your technology fit in what's going on in the streaming landscape? Hey, Jed, I'll take the first one.

Well go into the slide it looks like the data rate costs, I think are like $195 million it looks like theyre growing.

I don't know maybe I don't know you will have it but maybe like 30% so slightly faster than revenue can you talk about what's going on and then a bigger question for you Mark we're seeing a lot of.

A lot of technology innovation around streaming, particularly with like the Apple headset.

Youtube TV, where does genius and your technology fit and what's going on in the streaming landscape. Thanks.

Thank you Ed I'll take the first one on all our cost about six months to the second part so look I mean, I guess it doesn't say Jed is look we're delighted with the drop through that was experienced in 2022 eight I think is when they run about 53%.

Nick: I'll pass the baton to Mark to take the second part. So look, I mean, I guess the first thing to say, Jed, is look, we're delighted with the drop through that we experienced in 2023. I think it's running around about 53%. And you can see on a cash basis, you've heard us talk about operating leverage a lot, and you can see that that's really motoring along over the course of the last 36 months. When you look at 23 to 24, and I'll stop right there for a second, but I'll come back to that, you can see that the cost of space remains pretty flat year on year. I think it's something like $208 million to $210 million.

And you can see on a cash basis, we've talked you've heard us talk about operating leverage loss and you can see that that's really really motoring over the course of the last 36 months. When you look at 23% to 24 hour right. So second I'll come back to that you can see that the cost base remains pretty flat year on year I think it's something like 208.

$210 million, so again that operating leverage is coming through the business clearly and to be clear that some.

Nick: So again, that operating leverage is coming through the business clearly. And to be clear, Jed, that's something that should continue to be the case beyond 2024 as well. Now, specifically on rights, you know, let's remember, I guess, first of all, rights are fixed and we have great visibility, but I guess inevitably they're not linear, you know, that there is a, you know, they're sometimes lumpy over a right cycle, and you're right, there's a slightly higher step up in rights from 23 to 24 than there was in 22 to 23, hence why we're estimating a drop through in our guide at around about 33%, you know, but to be clear, Jed, that, you know, that's still, you're delivering an even bit down margin expansion in 24 to around about 16%. They will be lumpy.

That should continue to be the case beyond 2024 as well now.

Now specifically on right.

I guess first of all I'd like to fixed and we have great visibility, but I guess inevitably they're not linear.

Yes, sometimes lumpy as the rate cycle and you are right. There is a slightly higher step up in rights from 'twenty three to 'twenty. Four then that was in.

'twenty two 'twenty three hence why we are estimating a drop through in our guided around about 33%.

But to be clear.

We'll deliver.

Delivering an EBITDA margin expansion in 2004 to around about 16%.

Yes, they will be lumpy.

Mark Locke: I think a sustainable position probably beyond 2025 is probably somewhere between the drop-throughs of 2023 and where we're estimating for 2024, and that EBITDA margin expansion will probably continue beyond 2024. Hey Jed, it's Mark. In terms of your second question, I mean, look, this is super exciting, some of these developments that are coming through, and clearly the future is where we've really been investing. Investing sort of ahead of the curve over the years, and a lot of the work that we've done with Second Spectrum positions us really, really well. This is part of a wider digitization of the sports ecosystem, which, again, is exactly where we play. It brings in our media business very strongly and gives us really further outputs for sports and another way for the fans to engage. There's some exciting stuff that you should probably be thinking about. Content rights are still a big part of what's required to get this stuff, so there's still a fair bit of work to be done in terms of the way that I think Apple is going to be displaying sports.

I think a sustainable position totally beyond 2025 is probably somewhere between the drop throughs, all 23, where we're estimating for 24th.

And that EBITDA margin expansion, we'll expect to see continued beyond 'twenty four.

Hey, Chad its mark <unk>.

Your second question is super exciting some of the developments that are coming through clearly.

The future is where we really been investing.

Investing sort of ahead of the curve over the years and in a lot of the work that we've done the second spectrum positions us really really well.

This is part of a wider digitization to the sports ecosystem, which again is exactly where we pay it brings in our media business very strongly and it gives us really further.

Output school sports in another way for the fans engaged.

Some stuff that you should probably be thinking about.

Content rights is still a big part of what's required to get this stuff. So.

Still fabric.

<unk> work to be done on in terms of the way that I think <unk> going to be displaying sports in a cautious caution you a little bit on on getting too excited about sort of revenue flight crews at this stage. This is really about positioning ourselves well, having a partnership with people like alcohol in what we did in the Apple sports App as well.

Jed Kelly: I caution you a little bit about getting too excited about sort of revenue flow-throughs at this stage. This is really about positioning ourselves well, having a partnership with people like Apple and what we're doing with the Apple Sports app as well, where we're providing them with a lot of data. I think it puts us in a strong position for when this stuff becomes more mainstream, when the data rights market and the sort of distribution of this becomes a bit more widely featured. Thank you. Your next question comes from the line of Jordan Bender from Citizens JMP. Please go ahead. Good morning, everyone.

What we're providing them with a lot of the data I think it puts us in a strong position.

So when this stuff becomes more mainstream when the data rights market and they are.

Sort of distribution of this becomes a bit more widely.

Widely widely features.

Thank you.

Your next question comes from the line of Jordan Bender from citizens JMP. Please go ahead.

Good morning, everyone.

Jordan Maxwell Bender: I want to follow up on Jed's question. So the incremental margins dropping from 53 into the mid-30s for 24, is that all related to the rights increase? Or is there any more investment in the business that you guys are kind of stepping back, you know, investing in the business outside of those rights costs in 24? Yeah, hey, Jordan.

And a follow up on <unk> question, so the incremental margins dropping from 53 into the mid <unk> for 'twenty four is that all related to the rate increase or is there any more investment in the business that you guys are kind of stepping back.

Investing in the business outside of those rate costs in 'twenty four.

Yeah, Hey, Joe.

Nick: No, I think we gave a slide specifically in the deck looking at the cash basis, looking at the cost base. And if you look at that year on year, you can see, I think, if you include everything outside of rights, I think our cost base goes from $280 to $210 million year on year. And indeed, it's broadly in line with if you want to go back to 2022 as well. So you've got very little incremental cost in the business driving those additional revenues.

I think we can.

The slides specifically in the deck on a cash basis look at the cost base and if you look at that year on year. You can see I think if you include everything outside of right. So I think our cost base goes from 200 <unk> $210 million.

Yes.

<unk> is broadly in line with if you want to look go back to 2022 as well so you've got you've got very little incremental cost in the business.

Sure.

Driving those additional revenues as I say the right position.

Nick: As I say, the rights position is driving that. We're going from, I think, 154 to the 190 odd that we've guided to. And that's just, as I say, it's a function, really, of the rights aren't linear. There are lumpy years.

<unk> is driving that we are going from I think a 154 to the 190 <unk> that we've guided to and that's just as said, it's a function really of the Reits aren't linear there are.

Yes.

Nick: It was a slightly bigger jump from 22 to 23. And we'll be sure to guide you when we get beyond 2024 and any years that are either slightly more or slightly less than the mean. And then in play, you know, on your slide, it says in play represented over 20% of your GGR, which tying that back to the outlook or the guidance that you gave at your investor day back in 22 would represent a significant improvement over those projected levels. You know, I know there's no crystal ball, but is it fair to assume that the shift to in play is accelerating faster, just driven by the product rollout? And I guess the second part of that question, Mark, you kind of alluded to it in the prepared remarks. Does that help with the ongoing price negotiation?

It was a less big a jump from 22% to 22 eight slightly pick it jumped to 'twenty three 'twenty four.

We will be sure to guide when we get beyond 2024 and in the years that there is a slightly more slightly less than the mean.

Understood and then in play in your slide It says in play represented over 20% of your GTR, which tying that back to the outlook or the guidance that you gave at your Investor day back in 'twenty, two would represent a significant improvement over those projected levels.

No. There is no crystal ball, but is it fair to assume that the shift to in play is accelerating faster just driven by the product rollout and I guess the second part of that question. Marc you kind of alluded to it in the prepared remarks does that ongoing price negotiations.

Nick: Sure, I mean, look, I think I'm cautiously optimistic about this, and you know, we are seeing good growth. I mean, again, if you look at the sort of bet vision numbers and the proportion of in-play betting, it's really being product-driven. And I think that's a really good thing for us and puts us in a really, really strong place. You know, I think the other thing that's worth, you know, just having in your mind when you're, you know, considering these things is the improvement in margin as well.

Sure.

I think I think I'm cautiously optimistic about about their <unk>.

We are seeing good growth I mean again, if you look at this is that vision numbers and the proportion of in flight that day.

It's really being product driven and I think that that's a really good thing for us and puts us in a really really strong place.

I think the other thing that's worth just having in your mind when you can.

<unk> these things is <unk>.

Improvement in margin as well.

Mark Locke: You know, obviously, one of the things we've always been very focused on and very excited about with in-play is the fact that, you know, you generate materially better margin, or you should do anyway, and we're seeing that come through as well. So, again, I talk a lot about this compounding effect of, you know, the shift to in-play, the increase in margin, and, you know, again, the addition of, you know, new products like Bet Vision or really sort of, you know, pushing things in our favor. In terms of contract renegotiations, you know, look, we as a business have built this over being good partners, you know, to our sports, our sports books, and it's something we take very seriously. And, you know, when we think about, you know, our contract renegotiations, obviously, we want everybody to be successful.

Obviously, one of the things we've always been very focused on and very excited about with implies about that you generate.

Materially better margin, we should do anyway.

We are seeing that come through as well. So again I talk a lot about this compounding effect of the shift to an implied increase in margin and again. The addition of <unk>.

Cotton, new product like that vision already sort of pushing pushing things.

In terms of contract renegotiations look we.

We as a business built.

<unk> built this over being good partners.

Our sports or sports books and.

It's something we take very seriously when we when we think about.

Our contract renegotiation renegotiations, obviously, we want everybody to be successful.

Mark Locke: And, therefore, you know, the way we help our bookmaker partners be successful is through new product launches such as BetVision and Edge, which are increasing margins, you know, even though that product's, you know, very young, you know, and it puts us in a position to be, you know, deeper integrated with our bookmakers and generally to do a better job and, hopefully, share from the upside in the industry. So I think, yes, you know, all of these things support the business and the investment strategy we've had over time, and we feel, as I said, cautiously optimistic. Thank you very much. Your next question comes from the line of Chad Benon from McQuarrie. Please go ahead. Morning, Mark.

And therefore, the way we help off bookmaker partners be successful new product launches such as that vision, such as edge, which is increasing margins margins, even though that products are very young.

And it puts us in a place to be deeper integrated with our bookmakers and generally to do.

Do a better job.

<unk> from from the upside in the industry. So I think yes, all of these things to Paul.

The business and investment strategy, we've had over the time and we feel we feel as I said cautiously optimistic.

Thank you very much.

Your next question comes from that line of Chad benign from Macquarie. Please go ahead.

Good morning, Mark Nick team. Thanks for taking my question.

Chad Benon: Nick, team, thanks for taking my question. For 24, I wanted to ask about the guide, particularly the sports betting guide. I think, Nick, you said for 23, North American GGR rose 50% for the market. You obviously benefited from that given the NFL contract.

For 24 wanted to ask about the guide.

Particularly the sports betting guide I think Nik you said 423, North American <unk> rose, 50% for the market you obviously benefited from that given given the NFL contract I think for 'twenty four we're all expecting north American <unk> to be up well into the teens or the 20th but how are you thinking about that non NFL.

Nick: I think for 24, we're all expecting North American GGR to be up well into the teens or the 20s. But how are you thinking about that non-NFL piece of the betting market? Can that continue to grow, let's call it high singles, low doubles, outside of the U.S.? Thanks. Hey Jed, it's Nick.

<unk> piece of the bedding market can that continue to grow let's call. It high singles low doubles outside of the U S. Thanks.

Hey, Chad it's Nick.

Nick: I mean, yeah, I'm... Europe's shown some really strong growth, as you can see in our numbers this year, and we've commented on quite a lot of it, I think, in our Q3 earnings call. Q4 as well, it slowed down a little bit in Q4 in Europe because it was competing against a much bigger Q4 in 2022. I mean, the way we're looking at it is broadly, I'd say that we're expecting our US business to probably grow at around about 20% year-on-year and our European business to be growing at around about 15%, so still very healthy growth coming from Europe. And I think the sort of macro, sorry to jump in, one of the macros in Europe is quite interesting at the moment. You know, even though you know there's the growth is sort I mean, Belgium coming online and legalizing betting for people over 21 is a good sign, and I think, I think that there's still a lot of potential left in the market. Great, thank you.

You have a sense since really strong growth as you can see in our numbers. This year and we've commented quite a lot of it I think in our Q3 earnings call Q4 was while it slowed down a little bit in Q4.

In Europe, because it was comping against a much bigger Q4 in 2022, I mean, the way we're looking at it as broadly I would say that we're expecting our U S business to probably go out around about 20% year on year and our European business to be growing at around about 15%. So still very healthy growth coming from Europe, and other thinking of sort of macro sorry to jump in there what are the macro.

And Europe is quite interesting at the moment.

Even though.

Yes.

Great drug pricing sort of I guess less aggressive than in the states, you're still seeing positive signs in Belgium coming online in legalizing batting for peak load 'twenty. One it is a good sign and I think.

I think that is.

There's still a lot of potential left and left in the market.

Great. Thank you and then as you look at additional technology kind.

Chad Benon: And then as you look at additional technology, kind of tuck-ins or bolt-ons, what are you seeing in the public-private valuation spread? Are there still opportunities to kind of add on to, you know, second spectrum, bet vision, etc. Just kind of overall, in the market, what are you seeing? Yeah, it's a great question, actually.

Tuck ins or bolt ons, what are you seeing in the public private valuation spread are there still opportunities to kind of add on to <unk>.

Second spectrum that vision et cetera.

Just kind of overall in the market what you are saying.

Yes, it's a great question actually.

Mark Locke: Look, we, you know, as the business has moved to a cash flow positive, and, you know, we continue to execute, obviously, our, our mind is, you know, much more, you know, focused on, you know, potential growth through acquisition. You know, one of the, one of the challenges we have is, to be honest, we sort of have a ton of technology. I mean, we've got, you know, when we acquired Second Spectrum and some of the other acquisitions, as well as our own internal development, we've got an awful lot of stuff that we need. So we're not seeing any sort of screaming gaps in our, in our technology stack. So, you know, when we look at the M&A market, it's got to be quite compelling on a few fronts.

<unk>.

That's a business that moves to the cash flow positive.

We continue to execute obviously all our markets.

Much.

We're much more focused on.

On potential breakthrough through acquisition.

One of the challenges we have is in HB to be honest as we sort of have a ton of technology and then we'd go.

Second question is on the other acquisitions as well as our own internal development, we've got an awful lot of stuff that that.

That we need so we're not seeing any sort of screening gap at all in our technology stack. So when we look at the M&A market.

It's got to be quite compelling on a few fronts has got to be compelling on that on the basis that the technology is really required and we can deploy deploy it well and generate generate real real profitability from it we've got to have a bit of a focus on auto.

Mark Locke: It's got to be compelling on the basis that the technology is really required, and we can deploy it well and generate, you know, generate real, you know, real profitability from it. We've got to have a bit of a focus on, on, on, you know, the level of distraction and stuff. And so, and, and ultimately, the price that this technology, you know, some of these technology companies are going for. And when we see what we're seeing, we feel, you know, very strong, you know; we feel like we're in a really good place.

The level of distraction and stuff in it.

And ultimately.

The price that this that this technology.

Some of these technology companies are going forward.

We are seeing.

We feel very strong.

We're in a really good place and we're seeing I think other other parts of the market I think a.

A bit of opportunity may be there is a bit.

Areas that are struggling but unless the prices of these is really compelling and combined with the technology at other off rates.

Chad Benon: And we're seeing, I think, other parts of the market. I think, you know, a bit of opportunity, maybe there's a bit, you know, a few areas that are struggling. But, but unless the price of these is really compelling, combined with the technology that they're offering, these are harder deals to justify. Thank you both.

These are hard deals to justify.

Thank you both I appreciate it.

Your next question comes from the line of Robin Farley from UBS. Please go ahead.

Great. Thank you.

You are in play.

In a very high rate and Youre NFL GTR I'm curious too I think we only see that the total TCR growth for you I'm just wondering if you could break out the <unk>.

Robin Margaret Farley: Your next question comes from Robin Farley from UBS. Please go ahead. Great, thank you. So your in-play is growing at a very high rate, and your NFL GGR, I'm sure, is too. I think we only see the total GGR growth for you. I'm just wondering if you could break out the in-play as a percent of total NFL GGR.

In play.

Of total.

And Jerry I see that it's over 20%.

Taking about.

This period versus last year to see the change in kind of shares GTR, that's coming from in play. Thanks.

Nick: I see that it's over 20%. I was thinking about this period versus last year to see that change and the kind of share GGR that's coming from in-play. Thanks. Hey Robin, it's Nick.

Yes.

Hey, Robyn, it's Nick Yeah, the proportionate to round about 20% of NFL bets.

<unk>, yes.

Yes, the <unk> I think was up 140%.

Nick: Yeah, the proportion, it's around about 20% of NFL bets were in play. Yeah, the GGR up to the year on in play, I think was up 140%. And the margins, as well, I think we called out in the prepared remarks, win margins were up by 23 compared to 2022 as well. Did the share of NFL GGR coming from in-play grow year over year? Or is it pretty much sort of in line with the growth of GGR overall for the NFL? Yeah, I think the in-play GGR outgrew the other backing on GGR on NFL, and therefore, inevitably, the mix will have shifted towards the in-play position.

And the margins as well I think we called out in the prepared remarks.

When margins.

<unk> 23, compared to 2022 as well.

Did the share is NFL.

NFL G Jarrod coming from employee grow year over year is it is it pretty much sort of in line with.

TCR overall for the NFL.

Yeah, I think the implied TGI outgrew the other backing on GTR and NFL and therefore, obviously the mix will have will have shifted towards in play position.

Thanks, and then if you could just clarify how much FX movement since Q3 added too.

Your Q4 revenue thanks.

Nick: Okay, thanks. And then could you just clarify how much the FX movement since Q3 added to your Q4 revenue? Thanks. Actually, foreign exchange was a slight headwind, not a tailwind, in Q4. I think when we guided in Q3, we were at 1.25, and I think the average rate for Q4 was around 1.24, 1.24 and a half, so it was around about 300,000 to 400,000 of a headwind, not a tailwind, for Q4.

Yes actually.

Foreign exchange was a slight headwind tailwind in Q4, I think when we guided in Q3 $1 two five.

I think the average rate for $2000 for Q4 was around one point to pull one to four and a half it was around about 300 to 400000 headwind not a tailwind for Q4.

Great. Thank you.

Your next question comes from the line of Aaron Martin Newsy from Lake Street Capital markets. Please go ahead.

Yes, I wanted to talk about some of the emerging opportunity so.

What's your take as far as election year 2024, with any new states that you could potentially.

Nick: Okay, great. Thank you. Your next question comes from the line of Eric Martinuzzi from Lake Street Capital Markets. Please go ahead.

Kind of a green light to sports betting.

Eric Martinuzzi: Yeah, I wanted to talk about some of the emerging opportunities. So what's your take as far as election year 2024 with any new states that you could potentially, you know, kind of green light sports betting? Yeah, hi Eric.

Yes, Hi, Eric.

We.

Take a market view in terms of new states coming on board and we take an average of that.

And therefore, we're not we're not particularly to hold until requiring one, particularly a state as we say is that I think North Carolina opens up I think it's next week I think so thats, obviously baked into our numbers.

Nick: Look, we take a market view in terms of new states coming on board, and we take an average of that. And therefore, we're not particularly beholden to requiring one particular state, you know, as we say. I think North Carolina opens up, I think it's next week, I think. So that's obviously baked into our numbers. Florida, we continue to be cautious with, but that's baked into 2024 if that continues. And also, to be clear, we're also looking at TAMS on a global basis, and Brazil is something I think we mentioned in the prepared remarks, and that's a really interesting opportunity. Again, we're being very cautious given the fact that it's Brazil, and that's not always the most straightforward place to do business.

Florida, we continue to be cautious with that.

So that's baked into 2024 that continues and also to be clear. We also looking at comes on a global basis.

Brazil is something I think we named checks in the prepared remarks in that.

Really interesting opportunity with Gan, we're being quite cautious given the fact, it's Brazil and that's not always the most straightforward a place to do business, but we expect to hit the moment passing to beat to be like broadly around this was September time onwards.

And what's the size of that opportunity in the Brazilian market, just maybe in comparison to the U S market percents of scale.

Nick: But we're expecting, at the moment, betting to be live from broadly around the September time onward. And what's the size of that opportunity for the Brazilian market, you know, just maybe in comparison to the US market for a sense of scale? Yeah, I mean, the great thing about Brazil, I'll give you the exact numbers, we think it's going to be around about a $2 billion opportunity in 2024. So when we look for Genius, it's not significantly material for us, given the fact that they would only be probably included in our numbers in really anything meaningful in Q4. But it's also worth just remembering that Brazil is a really interesting opportunity for us because it really plays into our natural business model in terms of having additional revenues without any really significant additional costs that go with it, given the fact that the events that we have are also relevant for sports book bettors in Brazil.

Okay.

Great thing about Brazil, I mean, I'll give you the exact numbers. We think we think it's going to be around about a 2 billion dollar op.

<unk> in 2024, so when you look at continuous it's not it's not significantly material to us given the fact to say, we'd only be probably included our numbers and really anything meaningful in Q4.

But it's also worth just from in Brazil.

It's a really interesting opportunity for us because it really plays into our natural business model in terms of.

Having additional revenues without any really significant additional costs that go with it given the fact that the events that we have are also relevant for the sports books competitors in Brazil.

Is that a lot of the customers that we've got in Brazil sports books will be already customers that we have on a global basis. So it's a classic example of the operating leverage that we talked about earlier in the call. The other thing is obviously worth noting as wireless.

Nick: The likelihood is that a lot of the customers that we get in Brazil, the sports books, will already be customers that we have on a global basis. So it's a classic example of that operating leverage that we talked about earlier in the call. Yeah, the other thing that's obviously worth pointing out as well is the NFL is pretty focused on Brazil. There's a September NFL game, and I think they're all in on that.

That was pretty focused on Brazil.

As of September <unk>.

NFL game, and I think I think they're all in on that.

I think it's quite a big focus on that market required of course, it takes us about it.

Got it thanks for taking my question.

Your next question comes from the line of Mike Hickey from Benchmark Company. Please go ahead.

Mark Locke: So I think there's quite a big focus on that market, and we're cautiously excited about it. Got it. Thanks for taking my question. Your next question comes from the line of Mike Hickey from The Benchmark Company. Please go ahead, and Mark, Nick, Brandon, and Charles.

Hey, Mark Nick Brandon Charles.

Congrats on 23, guys. Thanks for taking our questions just two on the bed vision product just looking at the U S market obviously shares.

On a consolidated across.

Two primary.

Michael Joseph Hickey: Congratulations on 23 days. Thanks for taking our questions. Just to, on the BetVision product, is looking at the U.S. market, obviously shares, kind of consolidated across Q Primary, operators here, and it seems like from an innovation standpoint on the product in play, getting a lot of heat and, of course, bad vision. So just curious.

Operators here and it seems like from an innovation standpoint on product in play.

It's getting a lot of heat and of course that vision fits perfectly there. So just curious.

As you sort of think about scaling the product if you thought about selling it exclusive.

Versus selling it across multiple operators.

Michael Joseph Hickey: Thank you. As you sort of think about scaling the product, if you think about selling it exclusively versus selling it across multiple operators. And then the second question is a follow-up on the M&A. I think the question was directed more towards potential add-ons on tech.

And then the second question is a follow up on the M&A I think the question was directed more.

Towards potential add ons on tech, but obviously I think there's at least one asset.

Ultimately for sale that would be more of an addition to your core business and somewhat transformative.

Michael Joseph Hickey: But obviously, I think there's at least one asset that, openly for sale that would be more of an addition to your core business and somewhat transformative, which is curious, your appetite for a deal like that versus just sort of tech advertising. Hey Mike, so on the sort of exclusive non-exclusive I mean our model is to work you know with our partners you know we've got to remember that one of our core focuses is to distribute sports products as widely as we possibly can you know we're looking to get fan engagement and we're looking to really sort of drive the growth of the sport so you know from an exclusive non-exclusive point of view that's not something we really consider we're not going to be doing that you know from a, From an M&A opportunity, look, as I think I said, you know, the tech is, you know, the tech is something that, you know, we feel pretty comfortable with, we're in a good place on, and, you know, we'll obviously, you know, look at opportunities as and when they come up, but, you know, we're, you know, we're pretty price sensitive, you know, you know, we, you know, we're pretty price sensitive when it comes to buying rights, we're pretty price sensitive when we come to, you know, buying, buying other companies. So, you know, if it makes sense, if we can, you know, you know, you know, make those sort of acquisitions, whether it's rights, or whether it's companies, you know, you know, profitable way, you know, we'll do that. But, but, you know, they've really got to make sense on a, on a, you know, on a, on that sort of basis.

So just curious.

Your appetite for a deal like that versus just sort of tech add ons. Thanks guys.

Hey, Mike.

So on the sort of exclusive nonexclusive I mean.

Our model is to work with our partners.

You've got to remember that one of our core focus is to distribute sports products as widely as we possibly can and we're looking to get found engagement that we're looking to really sort of drive drive the.

Growth of this fall so.

From a from a exclusive nonexclusive point of view, that's not something we really considered way.

We're not going to be doing that.

From a.

If I may.

So I mean M&A offer of opportunity.

As I think I said that the tech is the tech is something that we feel pretty comfortable with where we're at.

We're in a good place.

And we'll obviously look at opportunities as and when they come up.

We're pretty price sensitive.

Yes.

We're pretty price sensitive when it comes to buying rights, we're pretty price sensitive let me concept by buying other companies.

If it makes sense if we can.

Make those sort of acquisitions, whether it's right or whether it's companies.

Optical way.

We'll do that.

You got to make sense on a on a.

On that sort of basis.

Thanks, Thanks, guys. Good luck.

Your next question comes from the line of Brad No back from Cantor Fitzgerald. Please go ahead.

Hi, guys. Thanks for taking my question and congrats on the quarter.

Mark Locke: Thanks guys, good luck. Your next question comes from the line of Brett Knoblauch from Cantor Fitzgerald. Please go ahead.

Just curious as Youre thinking about 2024 looking at 2023, we've seen when rates do very well, particularly.

Brett Anthony Knoblauch: Hi guys, thanks for taking my question, and congrats on the quarter. Just curious, as you're thinking about 2024, looking at 2023, we've seen win rates do very well, particularly for the NFL. But, I guess, what is factored in your guidance in terms of win rates for this year? Do you guys just assume that they maybe remain constant, or do we see some marginal uplift given in-plays' increasing percentage of total

The NFL.

But I guess what is factored in your guidance in terms of win rates for this year do you guys assume that they need to remain constant or do we see some marginal uplift given the in place increasing percentage of total handle thank you.

Yes, Hey, Brett I would just say it's worth just remembering that.

U S is around about 30% of our revenues and therefore specific win rates on particular month, so either up or down although they do have an impact on on always material impact for genius is position.

On the specific question, we've forecast isn't built in a win rate that's pretty consistent from 'twenty one 'twenty three.

Nick: Thank you. I would just say it's worth just remembering that the US is around about 30% of our revenues and therefore specific win rates on particular months or either up or down, although they do have an impact, are not always material for Genius' position. But on the specific question, we've forecasted and built in a win rate that's pretty consistent from 24 to 23. Yeah, I mean, it's actually quite interesting if you think about it if you think about the win rates. I mean, one of the things we've been quite focused on as a business and one of the things I guess we think a lot about is making sure that we have predictability and stability in our numbers, almost regardless of the win rates. And the Super Bowl is a good example of that.

It's actually it's actually quite interesting. If you think about if you think about the win rates that would be one of the things we've been quite focused on as a business and one of the things I guess, we think a lot about is is making sure that we have predictability and stability in our numbers through Ms regardless, regardless.

The win rates in the Super Bowl is a good example of that.

I think I'll take it.

Industry wide I guess, it was a little bit challenging, but as you can see from our numbers.

Come through very strongly for us hasnt really negatively affected us and I think that shows the underlying business model that we've got in the way that we make money and the way that we partner with or without with all our clients in a really good light.

Mark Locke: I think industry-wide, I guess it was a little bit challenging, but as you can see from our numbers, it's come through very strongly for us. It hasn't really negatively affected us. And I think that shows the underlying business model that we've got and the way that we make money and the way that we partner with our clients in a really good light. Thank you, guys. I really appreciate it. We have no more further questions in our queue at this time, and with that, that does conclude today's conference call.

Perfect. Thank you guys really appreciate it.

And we have no more questions in our queue at this time and with that that does conclude today's conference call. Thank you for your participation and you may now disconnect.

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Yes.

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Sure.

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Okay.

Yes.

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Operator: Thank you for your participation, and you may now disconnect. Thank you for joining us. Thank you for joining us.

Okay.

Yes.

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