Genius Sports Limited

Welcome to the Genius Sport Q2 results call 2021. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. To ask a question during the Q&A, press star followed by one on your touchtone telephone. Please go ahead with your meeting.

Good morning, everyone, and thank you for joining. Before we begin, we'd like to remind you that certain statements made during this call may constitute forward-looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 20F, filed on April 30th. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius' operating performance. 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 earnings presentation, which can be found on our website at investors.geniussports.com. With that, I'll now turn the call over to Mark Locke.

Good morning, and thank you for joining us today. As we mentioned last quarter, we continue to be incredibly excited about the market opportunity ahead. We are better positioned than ever before to capitalize on the growth in the global sports betting market due to the strength of our partnerships with hundreds of sports leagues and federations, sports book operators, and media brands across the globe. Our strong performance this quarter demonstrates how genius is woven into the fabric of the ecosystem and that the unique value that we continue to provide to our partners, including sports, best-in-class technology and services that allow sports leagues to monetize their data, deepen fan engagement and support business operations, breadth and depth of event coverage, reliability of key services and integrated relationships with sportsbooks, and the deep, long-term relationships rooted in the scalable provision of mission-critical data and technology that are fundamental to our partners' success. Our position at the heart of the industry is vital to its successful operation as a whole. We're confident in the value that our products and services bring to the entire sports ecosystem and believe that our service quality and innovative technology secure our placement in the long term and protect our business from potential disintermediation risk. We believe that the operations of both leagues and sportsbooks would be significantly challenged without the key services that Genius provides. For instance, we possess best-in-class real-time data collection technology that we deploy at our sporting events every day around the globe. However, it is not the data alone that makes our service valuable. It is the software we wrap around that data that turns it into odds or lines that is vital for sportsbooks. Leagues lack this technology and the resources to continuously innovate to keep up with the evolving data requirements. Genius' solution is accurate, fast, and remarkably scalable, and our success is built on leading the innovation and keeping the leagues ahead of the curve. Genius also has a broad network of deeply integrated sportsbook partners, making it much more efficient for leagues to distribute live data to a wide global betting audience. It's also important to note that the long tail of events that Genius Sports provides Sportsbooks need content for users 24 hours a day, 7 days a week, 365 days a year, and we estimate that a professional sportsbook typically offers 250,000 to 300,000 live events annually. Our deep relationships with hundreds of non-tier one leads enable our sportsbook customers to access those events in a cost-efficient way without the burden of individual rights deals. Genius also standardizes the data so the sportsbooks can easily manage data from hundreds of different leagues without worrying about separate league integrations on their own. Our scalable platform improves operational efficiency for our sportsbook partners. Our position in the ecosystem has supported strong momentum in our business heading into the second half of the year, and we're continuing to execute on our long-term strategic objectives. Before we move on to the quarter, we would like to once again reiterate those long-term strategic goals and financial targets. We are continuing to add value to our customers with high-quality content and a range of services, accelerating us along the path to our long-term market share target of 40% and revenue target of 5% of industry gaming revenue. We continue to target a long-term adjusted EBITDA margin of 40%, reflecting the strong underlying unit economics of our model. Since going public, we've taken advantage of our window of opportunity to invest in various growth initiatives. And whether we're developing our official rights portfolio or making strategic acquisitions, each step is a building block towards those long-term targets. This quarter was all about execution and delivering on our strategic plan. First, we more than doubled our revenues year over year to $55.8 million, with a strong performance across all business lines. The $55.8 million reported in this quarter and the $110 million reported year-to-date represents a significant step-up from comparable 2019 results before the pandemic's impact were felt. This demonstrates the strong, consistent, and broad-based growth in our underlying business. Adjusted EBITDA also grew by 126% since last year to $5.2 million, highlighting the strong, inherent operational leverage in our business. As we discussed in great deal last quarter, our partnership with the NFL has massively increased the value of our full suite of products and services. We're thrilled to be partnering with the NFL's official sports betting partners and approved sportsbook operators. to provide a full range of official Sportsbook content and fan engagement solutions to help them better acquire, retain, and monetize their users. Our partnerships with leading gaming operators in the U.S. signifies the adoption of official data and the all-encompassing nature of the Genius platform. I'm proud of our team's successful operational and commercial execution and the speed in which we were able to integrate with the sportsbooks ahead of tomorrow's regular season kickoff. We'll cover this in more detail later on in the call. We also strengthened our capital position in the second quarter through an upsized follow-on equity offering. We intend to use the $238 million in net primary proceeds for general corporate purposes with a particular focus on our official rights strategy, continued investment in our technology, and of course, strategic M&A opportunities. On our last call, we discussed the acquisition of two exciting and complementary technology businesses, FanHub and Second Spectrum. In a matter of weeks, we successfully closed both acquisitions and are thrilled to integrate their innovative services into our core offering. After the reporting period, we also announced the acquisition of Spirable, a leading creative performance platform that will enable Genius to combine official data-driven marketing with curated video content to deliver a much more personalized fan experience. The developments from the second quarter and momentum throughout the first six months of the year give us tremendous confidence in our ability to deliver at the high end of our previous revenue guidance of $250 million to $260 million. We now expect to generate revenue in the range of $255 million to $260 million, whilst reaffirming our previous EBITDA guidance of $10 million to $20 million. This quarter was characterised by the execution of our core business strategy and delivery of our key strategic objectives. As you may already know, one of our most important differentiating factors is our commitment to official data, which represents the live sports information that is directly sanctioned by leagues and federations as a single verifiable source of truth powering the sports betting market. As regulated sports betting markets worldwide shift towards live in-game betting, the speed, accuracy and provenance of live sports data underpins the sustainability and growth of these products, making access to official data a vital commodity. In fact, we've heard from one major US sports book that 40 to 50% of all wagering is now in-game. The industry is inevitably trending towards the use of official data as its most secure method of powering regulated sportsbooks, protecting customers and helping to fund its sports. As leagues and sportsbook operators increasingly commit to the use of official data, our leading portfolio of events under official data rights puts us at the forefront of this trend with high barriers to entry. We have grown our portfolio by 25% year on year to 189,000 events under official rights, and of which 116,000 of them are exclusive. This quarter, we've added exciting events to our coverage, including the NFL, Argentinian, Peruvian, Colombian, and Canadian soccer, and several others. As mentioned earlier, our exclusive NFL rights have propelled our commercial relationships. We are thrilled to have reached agreements with leading sportsbook operators, and we're continuing to demonstrate to our hundreds of other sportsbook partners the multitude of ways we can support their business through packaged offerings of premium content, bookmaking services, fan engagement solutions, and more. These agreements embody Genius' ability to execute operationally and commercially and further integrate our technology with our sportsbook partners. our media operations also continue to accelerate. Our unique understanding of the sports and sports betting audience, coupled with our exclusive ownership and control of live sports data and ad tech platform, enables us to offer a personalized suite of solutions for our entire ecosystem. This was evidenced by our new partnership with MediaPro Canada. Under the agreement, Genius will help grow the domestic and international addressable market for Canadian soccer. MediaPro's Canada dedicated socket streaming platform will now integrate Genius' sports live data and content into its live viewing experience of fans. Our data-driven marketing technology will also help expand MediaPro Canada's domestic audience by driving subscriptions through personalized promotions and offers that only Genius is able to support. These are just a few of the ways our media and engagement solutions have helped our customers engage their fans. And through the quarter, we continue to grow our sports betting presence globally. We then use it with clients, including Novabet, GameWise, and notably a permanent sports wagering license by the West Virginia Lottery Corporation. Genius Sports is now operational in 15 U.S. states, powering award-winning official data, streaming, and marketing solutions for leading sportsbooks and lotteries. After the reporting period, we also agreed to new deals with Canadian customers, including British Columbia Lottery Corporation. We're optimistic about the Canadian market following the bill amendment that now allows single-game sports betting. Our new partnerships mark an important step for Genius' growth in the North American region. Lastly, as part of our disciplined M&A strategy, we remain focused on the efficient integration of newly acquired businesses and are proud to officially welcome FanHub and Second Spectrum to the Genius family after closing both transactions in the quarter. We also recently announced our acquisition of Spirable, a leading creative performance platform whose mission is to create the most useful and contextual data and video content for rights holders, brands, and agencies. Spirable enables its partners to create, automate, and optimize highly personalized content at scale across major digital media channels, including platforms like Facebook, YouTube, Twitter, and Snapchat. Spirable's platform is highly complementary to our rapidly expanding media and fan engagement solutions, improving our ability to deliver personalized and contextually relevant content to fans. I'd like to take a moment to provide an update on the tremendous progress we've made with our revolutionary NFL partnership. In conjunction with our new rights deal, the NFL has announced three official sports betting partners, DraftKings, FanDuelz, and CESA, with four additional approved sportsbook operators, FoxBet, BetMGM, PointsBet, and WinBet. Under the agreements with the NFL, all seven operators have committed to licensing official league data from Genius Sports. These sportsbook partners have embraced official data, which validates our longstanding official data strategy and provides a strong foundation for sustainable relationships with our customers. Our commercial negotiations with these seven operators and many others are trending favorably towards agreements that benefit the leagues, sportsbooks, and their users. And of course, these deals support our long-term revenue visibility and expanded partnerships with the leading sportsbooks that collectively capture a majority of the US sports betting market. It's important to reiterate that our NFL partnership stems beyond just data and streaming rights for the sports betting and media markets. The NFL has also trusted us as their exclusive sports betting and iGaming advertising partner. Additionally, through Genius and NFL's Joint Innovation Technology Center, we believe we will develop the next generation of products and services for the NFL to further improve the value of their content. By partnering with the NFL in new and innovative ways, we feel confident that our successful execution and development of exciting new products, services, and insights will strengthen our relationship with the league in the long term. Importantly, this has drastically improved the unique ways in which we can partner with sportsbooks. We're offering the highest quality NFL data feed to power the betting market. We're using our unique data access to help them acquire new customers, retain existing customers, and develop new creative ways to engage their users with personalized content. developing the next generation of technology jointly with the NFL to highlight new data points, create new betting markets, attract new fans, and enhance the overall user experience. Our goal is to partner with the leagues, sportsbook operators, and media providers to develop the next generation of fan engagement solutions and ultimately use our unique position in the ecosystem to help our partners monetize on that fan engagement. We're confident that our partnerships with the NFL and our customers are beginning to supercharge that goal. Last quarter, we discussed how our suite of products and services are sold as a package and how the addition of the NFL would massively increase the overall value of our offering. We expect new and existing customers to appreciate the step-changing value of our official data rights portfolio and also allow us to showcase our unique and broad value-added services I mentioned earlier. As we approach the start of the NFL season, we're executing remarkably well on these expectations, and we're starting to see this come to fruition with our Sportsbook partners. The successful rollout of NFL products highlights our all-encompassing platform of data and technology solutions. Through our commercial negotiations, we're increasing our utilization of services and events under official rights, earning a share of pre-game and in-game revenue, achieving significantly better pricing for value-added services, and activating our digital media and advertising solutions, all of which are being implemented by major Sportsbook partners. These mutually beneficial partnerships are propelling Genius along a sustainable path towards long-term targets of 40% market share, 5% of gaming revenue, and 40% of adjusted EBITDA margins. Negotiations with our customers are progressing incredibly well, as they are appreciating the value of the NFL's official data. As I mentioned previously on the call, official data is the only way to guarantee the fastest, most accurate, and secure data fees for the sporting events worldwide. Our commercial agreements today, alongside the NFL's direct sportsbook partnerships, indicate that sportsbooks are embracing official data, not only for the most crucial events like the NFL, but for thousands of other events Genius covers. Our customers are also valuing Genius' holistic offering, which is simultaneously advantageous to leagues, sportsbooks, and media partners alike. We're enabling Sportsbook to provide broader coverage of events, utilize cost-effective bookmaking services, acquire and retain customers more efficiently, and engage and monetize fans with personalized content. Our partnership with the NFL has represented a huge and unique opportunity to change the way our Sportsbook customers partner with us as we become more of a complete data, technology and media partner. I've spoken at length about our unique ability to help our customers engage fans, especially in the context of our NFL partnership. I'd like to spend a few minutes briefly highlighting some of our solutions. Our media advertising capabilities were a key differentiating component of our partnership with the NFL. Our goal is to deliver personalized content to the right audience at the right time, driven by our understanding of sporting events dynamics and audiences' engagement with them. Our unique access to live sports data, odds data, and audience data combined with our ad tech platform and comprehensive understanding of global betting behavior allows us to provide a range of solutions to sportsbooks and other advertisers. Our data access is unique to Genius and continues to enable brands to deliver innovative campaigns that tap into these highly coveted audiences. These brands spend a proportion of their marketing budgets with Genius because of our differentiated solutions and have provided strong returns through greater campaign efficiency that would not have been possible without Genius' technology. A majority of the revenue earned in our media and engagement business is driven by programmatic media buying, where we buy targeted ad space on behalf of our customers through specialist ad tech and exclusive sports audience segments. We help our partners engage, acquire, and retain sports fans through a broad spectrum of campaigns and media. Using the NFL as an example, Genius has a view of the NFL audience and the ability to build profiles based on the type of content consumed, when and where it's consumed, typical betting behavior, and other rich data that's incredibly valuable from a marketing perspective. Our ad tech stack allows us to combine live NFL scores, betting odds, and audience profiles to serve personalized relevant content on behalf of our partners with the goal of driving a transaction such as a sportsbook sign-up, a bet placement, or any other type of purchase. It's this approach that gives sportsbooks the confidence to make Genius their preferred programmatic partner. Given Genius' unique unique positioning at the heart of the sport. And other brands can optimize their customer acquisition and retention. Leagues can better understand their audience to drive sponsor activation, merchandising, or ticketing. Publishers are supported by Genius to deliver relevant content. We're also excited about the opportunity beyond sports betting brands. I mentioned how Genius helps brands connect with the target audience using sports, and it isn't limited to sports books. Sports betting can be used as a barometer for fan engagement. For example, if Genius sees higher-than-average wages on the Rams, our ad tech platform can automatically deliver Rams-focused content for advertisers who want to engage with that fan base while having no direct connection to betting. While our media buying trading desk is delivering most campaign execution, we have a full suite of fan engagement tools that our customers deploy. For example, we use our live data and odds to create widgets that are designed to fit natively within content on a sportsbook, website, or app. This solution will be used by the NFL for the upcoming season. Important to note that this isn't just limited to betting, but can be used across traditional sponsors to drive fan engagement. We're able to build content that generates engagement amongst fans and adds values to sponsors. Advertisers also use our CRM tool to deliver personalized messages and promotions to individual fans. The messages can range from live score and audit updates, bet recommendations, video highlights, and next-gen stats and more. We're also serving live, data-driven advertisements across social media channels, including Facebook, Twitter, and Snapchat. Our recent acquisition of Spirable further expands our capabilities in social media with personalized video content. Finally, our free-to-play games offer a wide range of engagement solutions via the FanHub platform, such as Pick'Em, brackets, trivia, polls, and more. In summary, our central placement in the market, unique ownership of data, and proprietary ad tech platform allows us to offer differentiated solutions for engaging fans in more meaningful ways while generating incremental sponsorship revenues that we partner with. Lastly, I'm delighted by the successful outcome of our first capital raise as a public company, and unbelievably thankful for the support from our shareholders. We anticipate using the primary proceeds from the offering to invest in growth initiatives that accelerate the path towards meeting our long-term strategic objectives. This includes accelerating our official rights strategy to continue including more leagues and federations into our ecosystem and rights portfolio. it also includes enhancing our existing sports media and betting technology solutions to customers making our existing tech stack and product offering faster more efficient and ultimately more useful to our customers and partners part of this is also developing innovative new technology and building on the next generation of products and services and lastly we are arming our balance sheet for strategic and accretive M&A opportunities, similar in approach to what we've just accomplished with Second Spectrum, FanHub, and Spirable. These acquisitions strengthen and diversify the value of our overall platform and further cement our existing relationships with partners across sports, betting, and media. These tuck-in acquisitions also pave the way to win new business and form partnerships with new customers that could greatly benefit from our comprehensive product offering. We're deeply focused on our M&A strategy and execution and look forward to the full integration of our recent acquisitions into the broader Genius platform. And with that, I'll turn over to Nick to discuss our quarterly results in more detail.