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Expansion into new verticals aids Genius Sports growth in Q3

| By Robert Fletcher
Genius Sports saw revenue jump 70.5% year-on-year in the third quarter of 2021, though the business’ expansion also higher costs hit its bottom line.

Revenue for the three months to September 30 amounted to $69.1m, a significant improvement on the $40.6m reported for the third quarter of 2020.

The biggest contributors to this total were Genius’ betting technology, content and services operations, accounting for $43.6m , an increase of 63.6% on last year. This, it said, was the result of price rises on contract renewals and renegotiations with existing clients, as well as new customer wins and increased utilisation of its content.

Media technology, content and services, meanwhile, more than doubled year-on-year to £13.9m, driven by new customer wins for programmatic advertising services and the inclusion of revenue from recent acquisitions. 

Genius in Q3 agreed to acquire creative performance platform Spirable, while earlier in the year it also struck deals to purchase data tracking and visualisation solutions provider Second Spectrum and free-to-play games and fan engagement solutions business FanHub Media Holdings.

Sports technology and services revenue hiked 104.9% to $11.6m, which the supplier said said was a direct result of the inclusion of revenue derived from Second Spectrum and Sportzcast, the latter of which was acquired in December last year.

The third quarter also saw Genius agree a series of strategic partnerships to provide its National Football League (NFL) offering to Caesars, DraftKings, Entain and BetMGM, Golden Nugget Online Gaming, Penn Interactive, WynnBet and 888. 

In addition, the supplier secured a temporary event wagering supplier license by the Arizona Department of Gaming, and was certified by the State of Connecticut, Department of Consumer Affairs as an online gaming service provider.

Turning to spending and revenue related costs rose significantly, and at $86.4m were 196.9% higher than the prior year. Total operating expenses, meanwhile, jumped from $11.6m to $47.5m.

This higher outgoings offset the growth in revenue, leading to operating loss of $64.8m for the quarter.

Finance costs amounted to $5.7m, with a $10.5m change in fair value of derivative warrant liabilities partially offset by a $4.9m gain on foreign currency. This resulted in a pre-tax loss of $70.5m, significantly more than Q3 2020’s $2.0m loss .

When certain items were factored back into Genius’ net profit figures, the supplier’s loss before interest, tax, depreciation and amortisation came to $392,000.

Genius received a $497,000 income tax benefit, resulting in a net loss of $70.0m.

Looking at how this impacted year-to-date figures, revenue for the nine months through to the end of September was $178.7m, up 74.0% year-on-year.

Revenue costs climbed 360.1% to $366.7m and operating expenses rocketed by 735.1% to $309.0m, leaving an operating loss of $497.0m. Other expenses reached $42.9m, resulting in a pre-tax loss of $539.8m, though adjusted EBITDA increased 4.3% to $14.1m.

After accounting for a $379,000 income tax benefits, Genius ended the nine-month period with a net loss of $539.5m, compared to a $16.8m loss at the same point in 2020.

Despite wider losses, Genius increased its full-year 2021 revenue projections to between $257m and $262m, up from a range of $225.0 to $260.0m. However, adjusted EBITDA is now set to be broadly breakeven, whereas Genius previously said it would be between $10.0m and $20.0m. 

“Genius Sports’ growth is accelerating at an unprecedented level that far surpasses our original expectations,” Genius co-founder and chief executive Mark Locke said. “We are capturing more opportunities than ever before, underpinned by the broad adoption of official data by the entire ecosystem. 

“While only months into our first NFL season, we are even more confident of the long-term prospects of the partnership. We are transforming the global sports betting market through our progressive investment in technological innovation, and we will continue to do so for years ahead.”

Genius chief financial officer Nick Taylor added: “We’ve positioned the business for continued success, giving us great confidence in raising our 2021 revenue outlook. We anticipate continued strong revenue growth as the market continues to expand and evolve, while preserving the option to reinvest in the business to fund strategic growth initiatives and drive long-term sustainability and scale. 

“This early stage of our growth cycle presents a window of opportunity to invest in the future success of the business, and we’re excited to continue building towards our strategic vision.”

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