Q2 2024 Genius Sports Ltd Earnings Call

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Operator: Thank you for standing by. My name is Liz and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Genius Sports second quarter 2024 earnings results call. All lines have been placed on mute to prevent any background noise.

Liz: Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Genius Sports 2nd Quarter 2024 Earnings Results Call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Genius Sports. Please go ahead.

Liz: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Genius Sports. Please go ahead.

Unknown Executive: 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 risk 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 statement 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 15, 2024.

Jeanne Eusports: 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.

Speaker Change: 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 annual report on Form 20-F filed with the SEC on March 15, 2024.

Unknown Executive: During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius' operating performance. However, these measures should not be considered in isolation or as a substitute for Genius' financial results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures is available in our earnings press release and our 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.

Speaker Change: During the call, management will also discuss certain non- GAAP measures that we believe may be useful in evaluating Genius' operating performance.

Speaker Change: These measures should not be considered in isolation or as a substitute for Genius's 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 our 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.

Mark Locke: Good morning, and thank you for joining us today. We're pleased to continue our momentum through the first half of the year. And we remain optimistic for the second half of the year as we expect to step up our growth in group revenue and adjusted EBITDA and cash flow. On today's call, I'd like to clearly cover a few topics which have been top of mind, including data rights, our unique technology scale, and our strong commercial position in the U.S.

Mark Locke: Good morning and thank you for joining us today. We are pleased to continue our momentum through the first half of the year and we remain optimistic for the second half of the year as we expect to step up our growth in group revenue and adjusted EBITDA and cash flow.

Mark Locke: On today's call, I'd like to clearly cover a few topics which have been top of mind, including data rights, our unique technology scale, and our strong commercial position in the U.S.

Mark Locke: But first, I'd like to quickly highlight our results from the quarter, with group revenue of $95 million exceeding expectations and adjusted EBITDA of $21 million, representing a 33% year-on-year growth and nearly 400 basis points of margin expansion to 22% for the quarter, which is in line with our guidance. The momentum behind the business has never been stronger, and our growth has been driven by our expanding technology footprint and our ability to sell value-enhancing products, services, and content across the entire sports ecosystem.

Mark Locke: But first, I'd like to quickly highlight our results from the quarter, with Group Revenue of $95 million, exceeding expectations.

Mark Locke: and Adjusted EBITDA of $21 million, representing a 33% year-on-year growth and nearly 400 basis points of margin expansion, to 22% for the quarter, which is in line with our guidance.

Mark Locke: The momentum behind the business has never been stronger, and our growth has been driven by our expanding technology footprint and our ability to sell value-enhancing products, services, and content across the entire sports ecosystem.

Mark Locke: This also gives us the confidence to raise our group revenue and adjusted EBITDA guidance to $510 million and $85 million, respectively. Next, we have officially extended our exclusive data partnership with Football Data Co, the rights holder of UK football, including the English Premier League, which is one of the most bet on sports in the world. We have now secured these data rights exclusively for the next five years through 2029 on commercial terms that are well within our range of expectation.

Mark Locke: This also gives us the confidence to raise our group revenue and adjusted EBITDA guidance to $510 million and $85 million respectively.

Mark Locke: Next, we have officially extended our exclusive data partnership with the Football Data Co, the rights holder of UK football, including the English Premier League, which is one of the most bet on sports in the world.

Mark Locke: We have now secured these data rights exclusively for the next five years through 2029 on commercial terms that are well within our range of expectations.

Mark Locke: This cost visibility, combined with our strength and positions in the sports betting supply chain, now gives us even greater confidence in our near and medium term outlook. It's also important to highlight that our Football Data Co. extension perfectly demonstrates the success of our commercial strategy, which is led by our unique technology offering.

Mark Locke: This cost visibility combined with our strength and positions in the sports betting supply chain now gives us even greater confidence in our near and medium term outlook.

Mark Locke: It's also important to highlight that our Football Data Co. extension perfectly demonstrates the success of our commercial strategy, which is led by our unique technology offering.

Mark Locke: Our next-gen data, which can only be captured using our AI technology, provides the foundation for an unmatched level of game analysis, immersive experiences, and infinite ways to reach and engage sports fans.

Mark Locke: UK Football Leagues rely on this technology to power several initiatives spanning betting, officiating, broadcast, fan engagement and more.

Mark Locke: As the most recent examples of this, we can, today, confirm that we have been selected by the English Premier League to deploy our semi-automated offside tracking technology in a landmark partnership designed to enhance the match experience of players, officials and fans.

Mark Locke: This offside technology is only available through Genius' complete, unique computer vision and AI capabilities, which will be showcased in much greater detail as we get closer to the season.

Mark Locke: We have also launched the first ever EFL Fantasy Football game, giving the English Football League another tool to engage fans and gain further insights on its digital audience.

Mark Locke: Within one day, our EFL Fantasy app became the number one downloaded sports app in the UK iOS App Store, and number two for all free apps.

Mark Locke: These technology-led initiatives further embed Genius Sports across the digital ecosystem of UK football. Importantly, this also unlocks new revenue streams beyond sports betting alone.

Mark Locke: We will give specific 2025 guidance in due course, but as a base case we want to be clear that this extended partnership now positions our business for continued margin expansion and cash flow growth on an annual basis through at least the end of the decade.

Mark Locke: As it relates to data rights moving forward, it is also worth noting that we are operating in an increasingly duopolistic competitive environment.

Mark Locke: As we sit here today, all the major global data rights sit with only the two largest players for the balance of the decade.

Speaker Change: This was not the case a few years ago, where a more fragmented market led to greater competition, with both rights holders as well as sportsbooks.

Speaker Change: We expect reduced competitive tension moving forward, which should support a more stable and predictable operating landscape.

Speaker Change: That said, technology is still a key reason why leagues and federations choose to work with Genius Sports, and this is how we successfully retain major rights agreements at improved prices over time.

Speaker Change: As the world of sports and fan engagement quickly shifts to the digital realm, we are empowering leagues to stay ahead of the technology curve.

Speaker Change: Our computer vision and AI technology, for example, enables new types of data which have never ever been collected, analyzed, and distributed at the speed and scale at which we are capable of today.

Speaker Change: This next-gen data has many use cases which are already being applied in the market.

Speaker Change: We are revolutionizing fan experiences, activating sponsorship opportunities, augmenting live broadcasts.

Speaker Change: Creating New Advertising Industry, Innovating Sports Betting Interfaces, Unlocking New Performance Insights and so much more.

Speaker Change: This is exactly why leagues and federations choose to extend, and often expand, their partnerships with Genius Sports. We have proven this strategy with the two most important data rights in the world, the NFL, and now with Football Data Co.

Speaker Change: Additionally, Genius Sports has become the trusted technology partner for top-tier organizations such as FIBA, the WNBA, and most recently, UEFA, which will see our computer vision and AI technology installed in over 140 European football venues.

Speaker Change: Creating the technical infrastructure, not just for UEFA, but for other European football clubs who also use these venues.

Speaker Change: With this, we are now turning a significant corner on the distribution of our technology, which categorically proves the wide-scale adoption from the most well-respected leagues and federations in the world.

Speaker Change: These deep technology integrations underpin the entire business model and set the foundation for continued monetization across the betting and media products I mentioned a moment ago.

Speaker Change: This brings me to the next topic, which is our US Sportsbook Partnerships.

Speaker Change: We understand investors have been focused on these contract renewals, so I would like to share my thoughts on this call.

Speaker Change: I will not get into specific details of individual contracts, some of which are signed.

Speaker Change: Some of which are ongoing as expected and a few that may be signed a few days into the NFL season as is typical

Speaker Change: But let me remind you that we have a monumental commercial position in the US sports betting ecosystem, given the importance of our data to US sports books.

Speaker Change: We have developed a strong suite of products to amplify the value of our data for the NFL, English Premier League, and the other events that we offer annually.

Speaker Change: Our ability to cross-sell additional content and services, increase our utilisation, and gradually grow our share of wallet over time is exactly how we've sustained 20% plus revenue growth over the last years, which we expect will continue for the foreseeable future.

Speaker Change: So, despite the increased investor focus on this topic, we would categorize this as business as usual, and we are happy with how these negotiations are progressing, and so far, nothing has surprised us.

Speaker Change: As always, our goal is to support the continued growth and success of our sportsbook partners and we are now providing more tools to help them acquire customers.

Speaker Change: Engage them on the platform for longer and offer more innovative products than ever before.

Speaker Change: We are fully committed to their success and our revenue model is structured in a way that supports growth at least in line with USGDR and our sports book partners.

Speaker Change: If not, modestly outpacing that growth rate.

Speaker Change: So we have many reasons to feel confident about this process, not least of which is that we are completely aligned with the NFL, who own 8% of our business and who support us in the wide range of data-driven and tech-enabled products that we're offering.

Speaker Change: We suggest you keep this framework in mind as we progress through the renewal process with U.S. sportsbooks.

Speaker Change: With that in mind, we feel confident in the outlook for the remainder of this year as the business is well positioned to continue benefiting from multiple structural growth drivers.

Speaker Change: Our increased 2024 revenue and adjusted EBITDA guidance of $510 million and $85 million, respectively, represents an annual revenue growth rate of 23%, up from 21% last year, and 400 basis points of margin expansion.

Speaker Change: Bringing us a meaningful step closer to our long-term margin target in excess of 30%.

Speaker Change: Additionally, we reiterate our expectation to be cash flow positive for the full year 2024.

Speaker Change: Before turning the call to Nick, I want to reiterate that we now have much greater visibility and confidence in our ability to continue expanding margins and generating significant free cash flow per share in the years ahead.

Nick: We've solidified our most important rights deals through the end of the decade, strengthened our position in the sports betting supply chain, and continue to lay the foundation for future technology-driven products across the full sports ecosystem, thus reinforcing our long-term competitive advantages.

Nick: I will now turn the call to Nick to discuss our quarterly results and guidance in more detail.

Nick: Thank you, Mark.

Nick: As a reminder, Q2 is our most predictable quarter in the fiscal year.

Speaker Change: Give them the quiet of sporting calendar in the summer months.

Nick: and we manage lower overall media spend since this is also somewhat dependent on live sports content.

Nick: Therefore, most revenue in the quarter is derived from fixed-fee contracts outside of the US, where we have much higher predictability.

Nick: So our results were largely in line with our expectations for the quarter.

Mark Locke: with that in mind, this represents our highest quarterly margin in four years.

Nick: With that in mind.

Nick: Our group revenue growth was primarily driven by our betting revenue.

Nick: which represented 70% of our total revenue in the quarter and increased 18% year-on-year.

Nick: Media revenue was largely unchanged year-on-year, given the quieter sporting calendar, and lower overall marketing spend relative to other courses throughout the year.

Nick: Sports revenues were slightly lower year-on-year, and as we've mentioned in prior quarters,

Nick: Review sports technology as an enabler for the rest of the business, rather than a revenue driver on its own.

Speaker Change: Our suite of sports technology solutions helps us deepen our league partnerships, running several tech-enabled initiatives, which we then monetize as betting and media products.

Speaker Change: Moving on to our profitability.

Speaker Change: We delivered a 22% adjusted EBITDA margin in Q2.

Speaker Change: which represents our highest quarterly margin in four years.

Speaker Change: This was due to disciplined cost control and operating expenses.

Speaker Change: Inclusive of Cost of Revenue

Speaker Change: that were held relatively in line compared to our revenue growth.

Speaker Change: This also demonstrates the consistent margin expansion in our business model.

Speaker Change: as we have grown our margins from 9% in Q2 2021.

Speaker Change: to 12% in 2022.

Speaker Change: to 18% in 2023 and now 22% in 2024.

Speaker Change: Channing Pickett

Speaker Change: Hopefully, you now have a better appreciation for the underlying strength in the business.

Speaker Change: and the confidence we have for the remainder of the year.

Speaker Change: In fact,

Speaker Change: We believe the second half of 2024 is a strong demonstration of our profitability growth and operating leverage.

Speaker Change: This is because H2 and Q4 specifically,

Speaker Change: represents the peak sporting calendar.

Speaker Change: What this means is we realize the revenue benefit from a full sporting calendar inclusive of NFL, UK soccer, and many others.

Speaker Change: We also incur the full annual increase in rights fees, which are recognised during the seasons and contractually increased by a predetermined amount in each year.

Speaker Change: As you can see, we have constantly demonstrated the operating leverage of the business model in Q3 and Q4 for each of the last two years and expect to continue this trajectory in 2024 as well.

Speaker Change: Look no further than our H2 guidance, which implies revenue growth of 29% compared to H2 of 2023, and our adjusted EBITDA nearly doubling over that same period.

Speaker Change: Importantly, we also expect meaningful cash flow in the second half of this year.

Speaker Change: particularly in Q4.

Speaker Change: We expect to grow revenues by over 30% year-on-year.

Speaker Change: and our adjusted EBITDA by two and a half times.

Speaker Change: Resulting in nearly 900 bits of margin expansion.

Speaker Change: On an annual basis,

Speaker Change: We expect this to culminate in our fourth consecutive year exceeding 20% revenue growth.

Speaker Change: Based on the fundamental business momentum and overall industry growth, we expect to sustain this pace for the foreseeable future.

Speaker Change: To conclude, Q2 marks another quarter of consistent execution, both strategically and financially.

Speaker Change: We have secured our most important rights agreements for a long period of time, expanded our technology footprint,

Speaker Change: and bolstered our product offering across the ecosystem of sports, betting, media and broadcast.

Speaker Change: We remain confident and excited for the remainder of the year, as we expect to benefit from multiple growth drivers, particularly in the U.S.

Speaker Change: and moving forward.

Speaker Change: Our business is now better positioned than ever for continued revenue growth, margin expansion and cash flow generation.

Speaker Change: With that.

Speaker Change: We'll now conclude our prepared remarks and open the line to Q&A.

Speaker Change: Hello operator, can we please open the line to Q&A? Thank you.

Operator: Well, can we please take our first question, operator, if you're there? Thank you.

Speaker Change: At this time, if you'd like to ask a question, press star 1. Our first question comes from the line of Ryan Sigdahl with Craig Hallam Capital Group. Please go ahead.

Ryan Sigdahl: Hey, good day guys.

Ryan Sigdahl: I want to start.

Ryan Sigdahl: On the guidance question, I know you're not talking specifically on customer renewals, but directionally, from an overall basis, it implies, given the acceleration of revenue growth in Q4,

Speaker Change: That pricing seems to be improving with those renewals or conversations.

Speaker Change: I guess, are you willing to comment on that? And then secondly, with BetVision, you had four customers last year, DraftKings said they're going to add Bet & Watch for the upcoming NFL season, I guess, given the customer.

Speaker Change: Said it. Are you willing to comment or talk about that relationship directly with that vision and maybe anybody else?

Speaker Change: Hey Ryan, it's Mark, how are you? So on customer renewals, I mean, I mean bluntly everything's going exactly as we expected, there's just no surprises here. We are progressing, some are signed, some are in progress, you know, as we've always said, some will, you know, probably be signed, you know, a little bit into the new NFL season, but there's, you know, we're not...

Speaker Change: surprised at anything that's going on.

Speaker Change: On TechVision, the product last year, as we said at the time, was our 1.0 product. It was a trial. We've been doing a lot of work on it, and there's a lot of improvements. We're rolling it out to a new set of customers over the next period, and there's also a lot of new, exciting features. So tune in when you see it live on the sites.

Speaker Change: And for my follow-up question, just curious if you can talk about Trend Genius and your partnership with X and how that maybe is starting, I know it's early, but with the Olympics and kind of where you see that product potentially going.

Speaker Change: Yeah, sure. I mean, look, this is, I mean, this is really just another way to monetize the data and, you know, another way of monetizing our platform. It also, frankly, opens up new opportunities to us for non-betting clients, which has been a big focus. You've heard me talk about it before. So it's really just the start of, you know, a rollout of new customer work. I mean, it's quite interesting that, you know, over, you know, over the last, I guess, couple of years, you guys have heard us and me especially talk about a lot of things, you know, investment in technology, investment in new products. And really, you know, what we're doing now is a result of our focus on execution for the last couple of years is rolling them out.

Speaker Change: [inaudible]

Speaker Change: Increased our betting tech revenue as a result of the launch of Edge. So, you know, really a lot of the investments we've been making in technology and a lot of the rollout are now coming to fruition, which is, you know, really sort of driving the business and, again, proving our investment and our thesis that we've so long talked about.

Speaker Change: Thanks, Mark. Nice job, guys.

Speaker Change: Your next question comes from the line of Brittany McTernan with Needham & Company. Your line is open.

Speaker Change: Great, thanks for taking the questions.

Speaker Change: Both Mark and Nick, you guys both made comments just in terms of the outlook for revenue growth and maintaining these strong rates.

Brittany McTernan: If you're able to maintain 20% revenue growth even just next year, that's above our expectations.

Speaker Change: Could you maybe talk about what the major drivers are, whether it's the expected U.S. renewals, whether, you know, what you guys are seeing internationally, just to help us wrap our heads around, you know, if this business can really sustain 20% plus growth.

Speaker Change: Yeah, um...

Speaker Change: Good to hear from you. Look, we're really pleased with how things are going and we're obviously, as you can probably tell, super optimistic about the future. Really, where it's coming from is everywhere. All of the investments I just sort of talked about are starting to come through. Obviously, our renegotiations are going well. We're just really nicely positioned and, as I said, the focus that we've had over the last couple of years on execution is really looking to drive both revenue and margin growth over the coming period. So, we're feeling good.

Speaker Change: Understood. It may be at the risk of opening Pandora's box again, but with the the two largest deals now in place, any kind of parameters that you guys could provide in terms of what you expect rights costs to grow at through 28?

Mark Locke: Yeah, it's a really good question. I mean, I'm going to be slightly, slightly dull and just repeat what I've said.

Speaker Change: Yeah, it's a really good question. I mean, I'm going to be slightly dull and just repeat what I've said probably, you know, dozens of times before on these calls is that we've really got everything we need, you know, so on the right side, you know, we've got the, you know, probably the two most important global rights.

Speaker Change: Locked up now for a really long period and we've got another set of strategic rights that we feel very, very strong about including things like FIBA on a very long-term basis as well. So from the rights space as I look at it, we're not really compelled to do anything in terms of new rights deals or adding. So as far as I'm concerned, our main focus is on driving cash flow, driving margin and really focusing on doing deals that make sense to the shareholders and what that really means is that means doing deals that make sense.

Speaker Change: and make sense being that they're profitable, they're creative, and they really drive margin. So we're very, we're in a very fortunate position now where we can be very, very picky and really be laser focused on shareholder value.

Speaker Change: Great, thank you.

Speaker Change: And your next question comes from the line of Robin Farley with UBS. Your line is open.

Speaker Change: Great, thank you. Two questions. One is, I saw in the filing this morning you've changed your functional currency. I'm just wondering how did that change the

Robin Farley: Revenue, and EBITDA guidance this morning, the impact from the change in your functional currency. And then my other question, I just wanted to dig a little bit into EBITDA. Just looking at your net loss widens by $10 million year over year, but your adjusted EBITDA went up by $6 million. And so looking at kind of what was added back.

Speaker Change: Your stock-based comp line was up significantly year over year, and I think about 10 million more stock-based comping added back than what you had kind of suggested would be the quarterly cadence. So just since some of your

Speaker Change: vendor expenses you pay with equity, you know, giving equity and shares to vendors or equity instruments, I guess, as your footnote says, can you just clarify how much of

Speaker Change: That stock-based comp ad back is employee stock-based comp versus, you know, using it to pay vendors just to kind of think about Why that line may have come in so much higher. Thanks

Speaker Change: Hey Robin, it's Nick. I'll kind of take this in reverse order. First of all, there's no stock-based comp for vendors at all. That's zero in that number. You're right, the number is higher in Q2 this year than it was last year, and that's really substantially a timing issue.

Speaker Change: We've issued the LTIT Management Programme in 2024, we actually issued that in Q2 this year, we issued it in April , but when you compare to 2023 we actually issued it in Q4, so it's not quite comparing like with like.

Speaker Change: So what this means is that a lot of that Q2 increment is actually reversed in Q4. For example, I'm forecasting Q4 this year stock-based comp to be around about an $8 million charge, where last year it was a $16 million charge, so you can see that reversing out.

Speaker Change: on the functional currency. So I will restrain from getting too accounting technical, but first of all, it has no impact on EBITDA or revenues at all in the numbers. All it really is, is as we become more of a dollar denominated business with our switch to U.S.

Speaker Change: Revenues continue to increase, as do our cost base continues to increase in US dollars. It just means of how we actually build up our numbers, but the answer itself when you get there is the same, whether you do it as a functional currency for sterling or dollars. So there's no difference at all to both actuals or indeed to our ongoing guide. And let's just mark it, just before anyone runs away with our US base increasing content, what we've actually been doing is actively moving a lot of our staff base from the European side across to the US, which is one of the reasons you're seeing that switch.

Speaker Change: Okay, thanks. And so just in your schedule of ABACs, you refer to equity classified awards to suppliers. Is that a dollar amount you can clarify that?

Speaker Change: You know, when I called it Stock Based Competitive Vendors, just to clarify, to use your language, the equity classified awards to suppliers, is that a dollar amount you can clarify? Thanks.

Speaker Change: Hey Robin, I'm just checking which, you're talking about which line in there Robin?

Robin Farley: It's the footnote where you, it's the dollar amount of stock-based comp that we were talking about increasing year-over-year. It includes, in your filing, it says that what you add back as stock-based comp includes...

Speaker Change: Some equity classified awards to suppliers. So just wondering how much of it is that versus employee stock-based awards?

Speaker Change: Yeah, yeah, understood. That's referring to the prior year, not not to the current year. So that's the last part of the the NFL warrants that were pushed through in 2023. So the whole award for 2024 is all in relation to employee based.

Speaker Change: Great, thank you.

Speaker Change: And your next question comes from the line of Jordan Bender with Citizens JMP. Please go ahead.

Unknown Questioner: Morning everyone, thanks for taking my question. Mark, you reiterated your 30% EBITDA margin target as attainable or even beyond that, but I'm just trying to, I'm piecing some of the comments together that you made. Is it fair to assume that you have everything within the business today that you need and that you just need to grow in line with USGGR to get to your 30% EBITDA margin target?

Jordan Bender: Morning, everyone. Thanks for taking my question. Mark, you reiterated your 30% EBITDA margin target as...

Jordan Bender: [inaudible]

Speaker Change: Yeah, great question. Growing in line with GDR is obviously one of the reasons that the business has incredibly good visibility going forward. But it's not only that, as I sort of refer back to my slight monologue at the beginning of this call where I was talking about new product delivery and the finishing of a lot of the version ones of those products and getting that distribution, which is what we're doing at the moment. Things like SOAT, the X deal, in play, all of those things are driving that growth. So it's not just one thing, which is GDR. It's sort of the wider business. And again, we're feeling good about it.

Speaker Change: Okay, thank you. And then I know the second quarter for the U.S. is seasonally the slowest period, but from a year-over-year perspective, that was down, I guess, high single digits. Can you just kind of walk us through what happened or what's going on in the U.S. during the second quarter?

Speaker Change: Hey Jordan, it's Nick. Yeah, you're right, I think it was ten million dollars, I think, in total, year-on-year. And that's really in relation to the media programmatic spend, and as you know, that relates to things like new states opening up.

Speaker Change: and Pace of Spence and Sports Brookes, actually betting, I think, you and you're slightly up when you look at the US, but you're right to call out that Q2 is the quietest quarter for us, both in terms of media and betting in the US, and then you can see by our guide that that accelerates in Q3 and Q4.

Speaker Change: Great. Thank you.

Speaker Change: Thank you. And your next question comes from a line of Jed Kelly with Open Heighten. Please go ahead.

Chad Kelly: Hey guys, great. Thanks for taking my question. Just going and looking at the increase in 4Q

Chad Kelly: Can you kind of give us a little more color how much of that is being driven by pricing versus more maybe live betting engagement or You know benefiting from from Florida being live. Can you just just talk about what's going on there?

Speaker Change: Yeah, hey Jed, it's Nick. First of all, the Q4 isn't just in relation to betting. I mean, the ones you just referred to, which by the way, are all helpful, but it's also media increases. It's actually also sports tech. You know, we've announced, as you can see, in the last few weeks, a couple of sports tech deals that will feed into that growth.

Jed: You know, you've heard me, Jed, talk before about all the different levers of growth and the talents we have, and frankly, it's all of those adding in. So you name-check Florida.

Chad Kelly: There, it is possible to give abortions in the Southern Hemisphere, according to calculations with the sport on the south side, as well as less medium or the training, so no lines, not only, is for people of the vision of those who develop these groups, when the rebellion has been this. SNRS are there any other questions from the panel? TER). Yes, there is another question from Dan Texterman. I wrthu.

Speaker Change: And then just on BetVision, I mean this is going to be the second full year. Can you just talk on some of the products you think we should be expecting that some of your sports providers might introduce that could create an uptick in live betting? Thank you.

Speaker Change: Yeah, I mean, look, we're rolling out, as I said earlier, lots of new features on this, including a lot more personalization. You know, obviously, we've got a lot of the ad set technology across the business, which really helps to drive that side of it as well. So there's quite a lot of focus on making sure that the product is being driven as efficiently on a customer-by-customer basis, but I mean on a user-by-user basis as possible. You know, the necessity to, you know, really make it immersive and really sort of

Speaker Change: Thank you.

Speaker Change: Capital Allocation. Obviously some pretty volatile markets here, Mark, and no doubt you're confident here in your growth opportunity and driving cash flow. How are you thinking about...

Mark: Maybe a buyback here, given sort of the environment that we're in, and I'll have to follow up.

Speaker Change: Yeah, I don't think markets are a lot of fun for anyone, so I kind of feel for you.

Nick: Nice. Thanks, Nick. I guess next topic on your media ad business, you know, U.S. operators are sort of pointing out a pretty big reduction in CAC and correspondingly most of them it looks like have also...

Speaker Change: Yeah, we're pretty relaxed about it. We've got, you know, our ad product, remember, is about...

Nick: more than just customer acquisition. You know, one of the things people don't talk about often is once you've got the customers, you've got to keep them. And the way that you keep them is you keep them with product and with, you know, with good retention and making sure you're advertising to those customers. And actually, fundamentally, that's where a lot of this technology originally came from in the European markets. You know, we were really about retention and making sure that people were, you know, engaging and using their customers better. So we're pretty relaxed. You know, the product works both ways. And again, we expect to see a strong rollout of that product across our customer base, you know, on top of a lot of the additional functionality that we've introduced.

Speaker Change: Nice. Thanks, guys. Good luck.

Speaker Change: And your next question comes from the line of Chad Beynon with Macquarie. Please go ahead.

Chad Bainin: Morning, thanks for taking my question.

Chad Bainin: Mark, I wanted to ask about the NFL just expanding. It seems like every year internationally, I know this year there's more games in Brazil, in Germany, in London. So what does this mean for your business, I guess, firstly, as...

Speaker Change: You know, viewers in these markets continue to just appreciate the NFL. And then I guess secondly, in markets where gambling could be legal like Brazil, what does this do to kind of set you up for future success? Thanks.

Mark: Yeah, so the first thing I was going to say is Brazil is obviously very exciting from a betting opportunity. We've been incredibly well positioned there and have been for a long time. I think if you recall, I think my call two quarters ago, there was a lot of buzz about Brazil and I said, I wouldn't hold your breath, I think it will probably be towards the end of the year and I think that's...

Speaker Change: [inaudible]

Speaker Change: It's a really good base to be starting from.

Speaker Change: Great, thanks. And then, with Apex exiting their position, does this change, I guess, you know, anything strategically, anything kind of how you look at the equity? I know you're always looking at small M&A deals, but...

Speaker Change: Yeah, does anything change kind of within the organization how you're thinking about the business over the next several years? Thanks.

Speaker Change: Now look, Apex are a great partner and certainly when it came to the execution of the business they were incredibly supportive of everything that we wanted to do and so it doesn't really impact our strategy in any way, shape or form. We're just carrying on doing what we were doing before. I think from a position of XE, I think it materially improves the technical base of the stock and I think that's a really good position for us to be in especially with people looking to take longer positions and certainly the Apex sell-down was very over-subscribed and I think that's a really positive thing. On top of that, the capital base that we have

Speaker Change: [inaudible]

Speaker Change: I had a question regarding the upside on the revenue and it...

Speaker Change: Yeah, hi Eric, it's Nick. Yeah, no, nothing unexpected. I think we beat by one in terms of the guidance and that.

Speaker Change: [inaudible]

Eric: Got it. And then, as far as the congratulations on the UEFA...

Speaker Change: [inaudible]

Speaker Change: Is there going to be a cost offset by the stadiums or by UEFA?

Speaker Change: Yeah, we will gain revenues initially as part of this specific deal from UEFA.

Speaker Change: and you'll see that there's a smaller level of capex that has gone through the numbers in Q2 which is essentially putting those cameras in those grounds.

Speaker Change: The reality is it's a very exciting and strategic deal for us, not because of those revenues from Wafer, which is great in terms of player tracking.

Speaker Change: and therefore, as you know, the various multiple user revenue opportunities that that brings us.

Speaker Change: [inaudible]

Speaker Change: Dragging technology and putting dragging technology into major sports stadiums and leagues and federations for 18 months. This is just a great demonstration of executing on that strategy.

Speaker Change: Got it. Thank you.

Speaker Change: Thanks. Good morning, everybody. I have to, Mark, I wanted to follow up, I guess, on, you know, as we think about sort of the 20% medium-term top-line CAGR for the business and renewals contributing to that.

Speaker Change: Have you seen so far through the negotiations, I guess, to date, that your clients or your partners, I guess, are willing to pay you or looking to pay you differently, meaning ad commitments have been higher as opposed to

Speaker Change: Your partner's meeting or exceeding your minimum threshold solely off of a share of GGR. And then Nick, I guess, secondarily, as we think about, I guess, what that sort of 20% plus top line figure translates to from a free cash basis.

Nick: Is there a CAGR that we should think about or, you know, does 20% translate to something higher on a free CAF basis because of working CAF and other dynamics? Thank you.

Nick: I don't have a massive amount of extra to say about the Sportsbook Renewals. We've got must-have products, must-have relationships, and I think the bookmakers need to continue providing it. So it's our job to work as good partners with those clients to make sure that we're doing the right deals, and we've got the interest of both them and the shareholders of Genius at the heart of what we're doing. For more information visit www.genius.com

Speaker Change: Yeah, Clark, just on your second one, I mean, first of all, as you know, our cost base is pretty predictable and certainly hugely visible, particularly now having done the UK soccer deal as we'd anticipated all the way out to the end of the decade.

Speaker Change: And naturally, as EBITDA's margin continues to improve, and you've seen that again in this announcement with the guidance for 2024.

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Speaker Change: Your final question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Speaker Change: Hi guys, this is Thomas Song. Thanks for taking my question. I guess just one for me. Considering the macro pressures, you know, inflation and even a potential recession with the current jobs numbers, do you anticipate any impact on betting activity coming into the EPL and NFL seasons?

Mark Locke: I mean, we sort of, you know, we've been through these cycles before, and, you know, often it's sort of kind of cyclical, but, you know, we're pretty conservative with the way that we, that we, that we forecast. Sorry. And, you know, we're not expecting anything, you know, particularly unusual, to be honest with you. The overall TAM's growing, the macros are growing, states that have been coming online in a better way.

Speaker Change: I mean we've interviewed cyclists before and often it's kind of skeptical but it's

Speaker Change: Yeah, we're pretty conservative with the way that we, that we, that we,

Brandon Bukstel: Unusual, to be honest with you, the overall time is growing, the macros are growing, states are coming online in a better way, but by that I mean not only the new states, it's the improvement in the quality of the products within the states that have gone online. So all of the tailwinds for the industry are really strong, hold, should improve over time, as the products improve, as the quality of the trading improves, as the quality of the data improves, as the quality of the advertising improves, and you should see bookmakers operating in a more efficient, more rational market in the same way that, frankly, we are as our industry becomes much more duopolistic.

Mark Locke: And by that I mean, not only, you know, this in the new states, it's the improvement in the quality of the products within the states that have gone online. So, you know, all of the, all of the tailwinds for the, for the industry are really strong holds, you know, should, should improve over time, you know, as the quality, as the products improve, as the quality of the trading improves, as the quality of the data improves, as the quality of the, the, the advertising improves, and, and you should, you know, and you should see bookmakers operating in a more efficient, more rational market, in the same way that, you know, frankly, we are, you know, as our industry becomes, you know, much more geopolistic.

Speaker Change: Awesome, thanks.

Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.