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Genius Sports: EBITDA up 238.3% in FY23 – but net loss continues

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Full-year revenue at Genius Sports crept up 21.0% to $413.0m (£324.5m/€379.3m), beating the company’s prior guidance of $391m.

The revenue was bolstered by improvements in two of Genius’ operating segments. This was evident in the 31.1% rise in Genius’ Betting Technology, Content & Services segment, which accounted for $274.2m of the total revenue.

The Media Technology, Content and Services segment generated $91.6m in revenue, up by 10.8%. However, revenue dipped by 4.0% in Genius’ Sports Technology and Services segment, totalling $47.1m.

Aggregated, the notable performance of Genius’ Betting Technology, Content & Services segment ensured total revenue exceeded Genius’s prior guidance of $391m.

Mixed fortunes for FY23

Despite EBITDA almost tripling; the company’s net loss is still evidently a concern to the market.

At the time of writing, Genius’ share price was trading down by -3.26% on the New York Stock Exchange (NYSE).

Mark Locke, co-founder and CEO of Genius, remarked that the business is well positioned to implement its strategy for the year ahead.

“We are excited to report our eighth consecutive quarter of financial results above expectations, while demonstrating the increasing profitability of our business model and our ability to consistently execute on our strategic objectives,” said Locke.

“The business is now better positioned than ever to benefit from multiple structural growth drivers across the digital sports ecosystem, and we’re excited to continue our momentum into 2024.”

The year was eventful for Genius, with the company signing a number of data deals with global businesses and federations. In March, its data tracking business Second Spectrum extended its contract with the NBA.

In May, Genius and the Canadian Football League (CFL) launched data collection system CFL LiveStats. The following month saw Genius expand its integrity deal with the German FA and extend its data rights deal with the Premier League.

FanDuel and Genius dually launched their NFL BetVision streaming solution in November.

Net loss halves in FY23

Cost of revenue for Genius’ FY23 increased by 1.7% to $343.9m. This left the gross profit at $69m – a $66.1m rise compared to full-year 2022.

Genius’ highest operating expense for FY23 came from general and administrative costs. These added up to $85.1m, a decline of 30.6% yearly. Sales and market expenses hit $29.4m, and research and development costs were $26.0m. Transaction expenses of $2.4m brought the total operating expense to $143.1m for 2023, down by 22.9%.

This brought the loss from operations to $74.1m for FY23. Compared to the loss recorded in FY22, this was a 59.4% improvement.

Total other expense consisted of business functions such as $11.2m in loss on abandonment of assets and $291,000 in loss on disposal of assets. Total other expense came to $9.2m, bringing the pre-tax loss for the year to $83.3m.

Following $5.3m in income tax benefit and $3.1m in gain from equity method investment, the total net loss for the year was $85.5m, less than half the $181.6m net loss recorded in full-year 2022. Genius said the 2023 loss was due to “improved underlying performance”.

Adjusted EBITDA more than tripled, rocketing 238.3% year-on-year to $53.3m. This also surpassed the initial guidance of $41m.

For full-year 2024 Genius has projected revenue of $480m, which would represent a rise of 16.2%. Adjusted EBITDA is expected to hit $75m, which projects a 40.7% increase yearly. The company also expects positive cash flow in 2024.

Q4 revenue up 20.7% yearly

Turning to Q4, revenue spiked 20.7% to $127.1m. As expected, this was mostly held up by Genius’ Betting Technology, Content and Services segment, which brought in revenue of $86.7m. Media Technology, Content and Services generated $28.5m in revenue, up by 11.3%, while Sports Technology and Services saw a 15.8% dip to $11.9m.

Cost of revenue for the quarter was $115.6m, leaving the gross profit at $10.5m. Looking at operating expenses, general and administrative costs remained the highest of the quarter at $27.0m, despite dipping by 17.6%.

Operating expenses totalled $44.9m for the quarter. This resulted in a loss from operations of $34.3m. The other expense total was greatly minimised year-on-year, coming out at a $5.2m loss – $77.7m less than in Q4 2022.

The pre-tax loss of $39.6m was affected by $423,000 in income tax benefit and $749,000 in gain from equity method investment. After considering these, the net loss came to $38.4m, representing a 69.8% improvement on Q4 2022.

Adjusted EBITDA for the quarter was $11.9m, a sharp increase year-on-year from $2.6m. Genius projected group revenue for Q4 2024 to be $156m and adjusted EBITDA for the quarter to be $25m.

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