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spk02: Ladies and gentlemen, thank you for holding. Welcome to the Genius Sports first quarter earnings results 2022 call. 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, please press star followed by one. Today I am pleased to present Genius Sports. Please go ahead with your meeting.
spk06: Good morning and thank you for joining us today. 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 March 18th of this year. 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 our CEO, Mark Locke.
spk03: Good morning, and thank you again for joining us today. For those who have followed Genius over the past few months, you may have heard us frequently reference our investor day, where we provided a deep dive on our business model and outlined our strategic plan, supporting a profitable outlook for 2022, 2023 and beyond. Our 2022 outlook also included detailed quarterly guidance on a segmental level to demonstrate near-term progress of that strategic plan. We are pleased to share that we are successfully executing on that plan to begin the year, and we have delivered financial results ahead of our expectations in the first quarter. Our group revenues increased 60% year-on-year to $86 million, exceeding our guidance of $78 million. Group adjusted EBITDA was negative $2.9 million in the quarter, also ahead of our expectations of negative $5 million. While we maintain a long-term view of the business and overall vision, this near-term milestone gives us confidence in our ability to execute against our profitable forecast for the full year. Much of our success this quarter came from the continued execution of our core strategy of expanding our tech partnerships with leagues, sportsbooks, media partners, and brands. To start, we continue to actively manage our portfolio of data and streaming rights in the quarter. But let me be clear. We have a deep portfolio of official content, including flagship assets that carry value in various regions across the world. the NFL in the US, English Premier League in the UK, CFL in Canada, or Argentinian and Colombian football in Latin America, just to name a few. This, along with the long tail of other events under our official coverage, gives us the competitive advantage and allows us to approach new rights deals from a position of strength. In other words, we aim to only acquire new rights where we see commercial value, particularly for sports or regions with strategic importance to genius. We obtain rights because we are increasingly deploying our technology as the core component of our partnerships. This is about much more than just data for betting. Leagues are becoming more sophisticated and see the value in our technology. Our full-scale platform of solutions helps leagues better engage and understand their audience, which enables additional monetization opportunities. Let me walk through a few real examples from the quarter to illustrate the ways we work with leagues beyond just sports betting. First, we expanded our capabilities with the NCAA by powering augmented broadcast of the men's and women's basketball tournaments in March. we'll cover this in more detail shortly also within college sports our deal with the mid-american conference will leverage our full suite of services including live data collection and integrations second spectrum tracking and various fan engagement marketing solutions and sponsorship inventory marks and logos in stadia signage digital media and customer acquisition platforms The NBA G League will also leverage Second Spectrum's optical tracking system and advanced analytics to support players, coaches, fans and broadcasters. We are also announcing a new partnership with Icelandic Football, where Genius will provide a suite of free-to-play games to deliver engaging digital experiences for fans. Collectively, we expect the partnership to help accelerate the growth of the sport in Iceland and internationally. Lastly, we announced our first tracking and video augmentation partnership in Latin America with Liga MX franchise Club Mexica. Through our second spectrum technology, we'll capture transformative new data points like player speed, expected goal conversion rates, shot velocity, and more, all of which powers immersive experience for fans and insights for players and coaches. So, why are these partnerships so important? Our unique tech capabilities gives us a differentiated approach and helps Genius secure long-term rights deals. They integrate our technology, making us a sticky partner. They enable us to monetize data in more ways than just sports betting. And our range of solutions diversifies our revenue streams generated from leagues and clubs, even when data rights are not on the table. While we are continuing to strengthen our league partnerships, we are seeing similar success with our sportsbook partners as well. In this quarter alone, Genius acquired 13 new sportsbook customers that contributed to our financial results. Importantly, we have also expanded our relationships with existing customers by successfully cross-selling various bookmaker services and content, which provides incremental revenue uplift. We also benefited from continued market liberalization, particularly in North America, which saw successful launches in New York and Ontario, which opened after the quarter. The ongoing legalization of online sports betting is an important and unique driver of profitability for Genius. Unlike B2C sportsbooks operating partners who have to invest heavily to acquire customers and win market share in new states, Genius' business model benefits from economies of scale. What this means is that as soon as people in New York, Ontario, Brazil, or any other state or province start wagering, Genius enjoys immediate revenue at little incremental cost, allowing those revenues to contribute meaningfully to our margins. It is what makes our business model so distinct in the sports betting ecosystem. We also deliver strong results in our media and engagement segment, This was primarily organic growth driven by higher than expected programmatic advertising spend around the Super Bowl and March Madness. Our unique access to real-time data and odds, combined with audience data obtained through our lead partnerships, helped to deliver strong results in our performance-based advertising campaigns for customers, which helped to drive increased spend in the quarter. We'll touch on this again shortly. Our execution in this quarter and momentum through the remainder of the year gives us confidence in reaffirming our guidance for 2022 and 2023. Nick will cover our detailed results and outlook shortly. I've already spoken at length about the importance of our tech-driven lead partnerships, and second spectrum is an important pillar of our offering. Our differentiated technology helps further embed genius in the sports, betting, and media ecosystem and increases our competitive advantages. Each quarter, we gather to show real-life examples of how this technology is being used by leagues and broadcasters. Our most recent and notable application is during the men's and women's Division I basketball tournaments during March Madness. You may have seen ESPN's megacast presentation of the NCAA Women's Final Four and National Championship Games, which featured real-time data visualizations and video augmentations powered by second spectrum. For example, viewers who turned into the ultimate broadcast could track real-time shot probabilities, player distances, and other data-driven graphical overlays. This live tracking and video augmentation tool was also used in the broadcast of the men's March Madness tournament, bringing fans even closer to the action on the floor. This all contributes to a more personalized and engaging viewer experience, which brings increased value to leads and broadcasters alike. In fact, the NBA on ESPN and NFL We're each nominated for Sports Emmy Awards with the support of Genius and Second Spectrum. We are proud of our partners for their nominations and we're delighted to have been part of it. I also discussed free-to-play games as another key tool for Leeds to digitally engage fans and broaden their reach. We've delivered this to Leeds in federations like the NFL, MLB, IOC and others. This is true not just for leagues and federations, but for any brand seeking to connect to a sports audience, such as Jersey Mike's, Buffalo Wild Wings, or News UK. Through the acquisition of FanHub, Genius has strengthened its total offering with a suite of best-in-class free-to-play games, and our solutions have driven success for our customers. We continue to deliver results that others in the space only talk about. This has not only helped us to secure long-term technology partnerships with leagues, but also diversified our revenue streams. I'd like to give you a closer look at how we drove success for our customers in this quarter. First, in partnership with the MLB, we launched a series of free-to-play games to start the season, which includes the well-known Beat the Streak game. This was designed to help the MLB engage fans, capture first party data, build holistic views of their fans and generate excitement to begin the season. With the addition of FanHub, Genius has expanded its relationship with the MLB by further ingraining itself in the MLB's wider tech ecosystem and strengthening its position as a trusted partner across multiple areas of expertise. We also launched the NFL Super Bowl Challenge, which has helped the league reach an international audience across nine countries. The NFL set out a goal to acquire and engage new NFL fans in international markets, and our free-to-play games are an important tool for them to achieve this. Like the MLB, the NFL can use this platform to better understand the international fan base, which can then be leveraged to better activate their own sponsors. As you can see in the images on the slide, Again, our partnership with the NFL expands well beyond just data for betting, and this is an example of the important role we play in the broader fan engagement objectives. Free-to-play games are just as valuable for brands as they are for leagues, and our work with BetVictor is an excellent example. This is a sportsbook brand that utilizes free-to-play games to convert a wider pool of potential betting customers. Free-to-play contributed meaningfully to our results in the media and engagement section, but the biggest organic driver of revenue was our performance-based digital advertisers. Genius is uniquely positioned to help brands acquire customers more efficiently. This is the result of our access to data, real-time sports data, live odds data, and audience data, all of which is obtained in partnership with the leagues. This enables us to deliver highly personalized content to the right audience at the right time, based on the unique understanding of that audience and the relevant context from live sporting events. This is what differentiates our programmatic advertising and how we have executed highly effective and cost efficient campaigns. This is exactly why Sportsbook customers continue to spend with us in the quarter, especially around key events like the Super Bowl and March Madness. To give you some context, during the 2021 and 2022 NFL season, Genius acquired one new first-time depositor every five minutes on behalf of our Sportsbook customers. In the 48 hours leading up to the Super Bowl, we acquired a new player every 24 seconds. Importantly, we've done this as an average CPA of $225, which is 25% below the industry average. In a world where brands are rationalizing promotional spend, Genesys performance-based digital marketing solutions present a cost-effective solution to acquire players with long-term value. This is separate and distinct from promotional sign-up bonuses or national television advertising. And this technology is as high-performing for customer retention as it is for customer acquisition. So we're optimistic about the opportunities ahead in this segment. With that, I'll now turn the call to Nick, who will cover our financial results in more detail.
spk04: Thank you, Mark. As Mark mentioned, we are delighted to begin the year on a positive note, with first quarter group revenue and group adjusted EBITDA exceeding our expectations. Remember, on our investor day, we set out full year guidance for a profitable 2022 position. Within the annual outlook, we aim to provide more transparency on a quarterly basis to give a near-term view on how the business is tracking along our plan towards profitability. As a step further, we also provided a quarterly view of each reporting segment to show seasonal trends and contributions throughout the year. This quarter, each segment met or exceeded our expectations. Firstly, our betting revenues grew 28% year-on-year to $50 million. This growth was primarily driven by price increases in existing contract renewals and renegotiations, along with new value-add services and premium data and streaming content. including our expanded portfolio of US content. We also successfully executed on our cross-selling opportunities with several customers in the quarter, helping to lift revenues ahead of expectations. And of course, we've continued to acquire new customers, which also contributed to the revenues in the quarter. Our media segment was the most significant outperformer in the quarter. Revenues increased by over 2.5 times year-on-year to $24 million and represents the third consecutive quarter of 100% and above year-on-year growth. The success in this business continues to be driven by our performance-based programmatic advertising. which has proven to be an effective method for our sportsbook customers to acquire new players. Lastly, our sports revenue more than doubled year-on-year to $12 million, in line with our expectations. This was primarily driven by the ongoing integration and successful rollout of Second Spectrum technology. as well as expanded services provided to existing sport, league and federation customers. This all aggregates to group revenue of $86 million, which was 60% higher than the same period last year and 10% above our guidance for the quarter. Our group revenue performance contributed to group adjusted EBITDA of negative $2.9 million, which is roughly 40% better than our quarterly guidance. The first quarter results relative to our guidance demonstrates our progress along the plan we outlined on our investor day. And we remain confident in our execution as we look ahead to the remainder of the year. Our strong Q1 results enabled us to reaffirm our full-year 2022 guidance of approximately $340 million in revenue and $15 million in group-adjusted EBITDA. This is despite currency fluctuations and an escalating war in Ukraine, both of which impact our reported revenue. From a currency standpoint, the fluctuating GBP, U.S. dollar exchange rate, poses no operational risk to the business itself, but rather just the conversion of revenues in sterling to our presentational currency in U.S. dollars. Given our media business is predominantly U.S. and therefore U.S. dollar focus, most of the currency-related presentational risk is in our betting revenue, which you can see in the revised segmental guide we provide on the page. We believe on a constant currency basis, i.e. if we used a fixed exchange ratio of 1.35, as we presented at the time of our January investor day, our strong Q1 results would enable us to raise our guidance to approximately $348 million in revenue and $17 million in group adjusted EBITDA. So long as exchange rates remain volatile, we will continue to provide this constant currency view in our business to remove the presentational currency volatility. So to recap, despite this presentational currency and other headwinds, based on the strong operating performance to date, we are confidently maintaining our full-year revenue and adjusted EBITDA guidance. Before we conclude, I'd like to quickly touch on our liquidity position as well. You'll see in our financial statements, we finished the quarter with $174 million on the balance sheet. Approximately $28 million of the cash spent in the quarter related to various timing differences or non-recurring one-off events. For instance, We had a working capital outflow of approximately $17 million in the quarter. This was largely due to higher median revenues with direct variable costs and a larger proportion of U.S. betting revenues on profit share contracts, which is typically paid at the end of the period compared to fixed fee contracts paid at the beginning. We expect much of this timing to work back in our favor in quarter two. Additionally, it's worth calling out a one-off cash outlay of approximately $8 million relating to our investment in the CFL. And our cash position was also impacted by a further $3 million presentational reduction due to exchange rates as the US dollar continues to strengthen against the British pound. you'll notice $10 million of capitalized development costs in the quarter, which we expect to remain consistent through the end of the year as we continue to invest in our technology platform. We wanted to address this quarter's cash flow because it's primarily driven by timing, as expected, and we anticipate the net working capital to swing back in our favor next quarter. We expect net cash flow to broadly break even in quarter two, and project a closing cash balance of roughly $150 million by the year end, as EBITDA and cash flow are expected to increase. We are very comfortable with our capital position and have ample liquidity to continue funding the business under the plans that exist today, particularly as we expect to be adjusted EBITDA positive the remainder of the year and to generate positive cash flows by the second half of 2023. And with that, we conclude our prepared remarks and open the line to Q&A.
spk02: Ladies and gentlemen, if you wish to ask a question, please press star followed by one on your telephone keypad. If you wish to withdraw your question, you may press star followed by two. We kindly ask you to limit yourself to one question and one follow up. There will be a brief pause while questions are being registered. Please hold until we have the first question. First question is from the line of Bernie McTernan with Needham. Please go ahead.
spk00: Great. Thanks for taking the questions. I wanted to focus on the media part of the business better than expected results in the quarter. Just was hoping you can dive in a little bit deeper in terms of if it was new customer additions or existing customers sending more. I know that you called out the NCAA tournament, but any other details you could give on the outperformance? And then also just to follow up on some of the commentary that you gave, Mark, appreciate all the details with the CPA about 225, which is about 25% below industry averages. Can you talk about the sustainability of that, especially as you think that as operators appear to be pulling back in terms of how much that they're spending? how long you can keep that, you know, 25% discount or so. Basically, what's the run – is supply a factor you need to consider in terms of being able to continue to grow that business substantially but then also deliver the below-average GPAs? Thank you.
spk05: Hi, Bernie. This is Josh Limple, the managing director for the media business here at Genius. So just to answer your question in terms of growth in the quarter, really the growth was driven by two factors. One, us winning new customers, both in Europe and the US, as well as our existing customers increasing spend with us. That increase in spend is partly down to seasonality, but also partly down to us introducing new strategies with our customers to help them diversify their spend, so ultimately helping them spend more to drive further player acquisition. And in terms of those CPA numbers that we quoted, we see that as being sustainable. I mean, our marketing business is very successful in very mature markets where we continue to exceed customers' targets. And these are markets that have been around for many, many years. So we expect that success to continue in the U.S. as well. particularly with additional states rolling out. You know, each new state for us is a new market that our customers need to spend with us in. So, you know, that continues the growth for us there. And in terms of operators discussing pulling back marketing spend, I actually spent a considerable amount of time with one of the larger sports groups this week, and we were discussing the very topic, and they said, you know, When it comes to looking at promotional spend and things like that, the first thing they'll cut will be promotional offers as well as above-the-line marketing spend in TV and print and things like that. So the marketing that Genius offers to our customers is very performance-driven, so it's not something they would ever see them really cutting back in because it's directly attributable to new customer sign-ups and player value and things like that.
spk00: Makes a lot of sense. I appreciate the insight, Josh.
spk03: Bernie, hi, it's Mark. Thanks for joining today. I'm probably going to say this a few times today, but it's also worth highlighting where our business model is obviously very different to a lot of the operators. When new states come online, that gives us a huge opportunity to get more spend through our media business But that also applies to our sports betting side as well. One of the things that I think is sometimes missed, clearly not for you guys, but by a lot of the market, is that we are net benefiting from new states coming online because fundamentally we already have the technology in place and we don't need to spend more money to service them. So that's very high margin new business that flows through. Whereas if you're an operator, new states come online, you've got to spend marketing dollars, you've got to put more money to work. So I think as the states grow and as our you know, as the footprint of regulated states increases, we're going to be very well positioned to see that business flowing through and dropping through to our bottom line.
spk00: Mark, if you don't mind, just one follow-up on that, because we've been getting a lot of questions on this, and there's just some uncertainty in the market. Did New York generate positive revenue for you guys in the quarter in both media and betting?
spk03: Yeah, I mean, look, New York coming online is hugely beneficial to us in two ways. Through the spend that we put through the media business and obviously the data that we're selling to the sports books. There's no incremental cost to Genius. No, there's tiny incremental costs to Genius to service that. So they're enormously beneficial. You know, if another major state comes on, you know, if California happens to come through or, you know, there's a few bits and pieces going on with Florida, Massachusetts, Minnesota. If any of that comes through this in the next period, what we will see is we will see great opportunities, not only to bag more marketing spend to help those guys acquire new customers, but also we will be selling that data in those new states, which will give us access to new betting handles, which fundamentally we benefit from. And the key point to understand is that we do that without any real additional cost, because we already had it all. So from our point of view, New York was enormously beneficial, as were all these other states that are coming through. Does that answer the question?
spk00: Yeah, and the question was stemming from, you know, a lot of the B2C operators were saying that New York was either net neutral to revenue to them or negative just because of the promotional aspects. We just wanted to make sure that, you know, that difference between NGR and GGR was, you know, it was still beneficial to you guys. I know there's the caps. We just wanted to see if that was impacting anything.
spk01: Yeah, sure. Hi, Bernie. It's Jack Doveson. I think we've spoken before. You're exactly right to focus down on the cap. So that's our protection there. So, you know, are we totally immune from marketing spend? No. But we want our customers to spend marketing, as we've discussed before, because that drives turnover and handle and all of these sort of good things. But we are protected from the scale of that by the caps we have in our business. So, you know, don't get me wrong. You know, if the tax was, you know, better tax from an operator point of view in New York, that would be beneficial for us and it's high and that's challenging for us and challenging for the operators. But it doesn't mean that we are unable to make money in that market where clearly we are.
spk00: Understood. Thanks for taking all the questions.
spk02: Next question is from the line of Ryan Sickdahl with Craig Callum. Please go ahead.
spk07: Great. Thanks for taking our questions, guys. Maybe just following up on that, New York, just to be abundantly clear, was it positive revenue in the quarter and then positive incremental to bottom line?
spk03: Yes, Ryan. Hey, it's Mark. Yes, it was. Thank you.
spk07: Appreciate that clarification. uh moving on so looking at fx i mean pretty material negative uh down about 10 relative to a couple months ago when you gave that guidance so i guess uh a lot of good things happen at the business we're expecting a lot of good things as we're new back then so i guess incrementally what is going better relative to that plan to help offset uh that unfavorable fx translation
spk01: yeah the high line is it's jack again i mean like we're i think we sort of touched on some of the things really like we you know from from a marketing point of view we're ahead of where we thought we would be with some of our sports relationships which is delivering revenue in the media business some of the family health and family engagement part of it but fundamentally a lot of the outperformance is driven by the performance of the media business and and and you know it's performance-based marketing so if we continue to do a job our customers continue to spend more we continue to deliver results for them so that's been a big driver of it but the betting business is also outperform guidance as well that's really a combination of all the sort of key levers that we have in our business to to to execute against some of that is New customer wins. Some of that is existing customers utilizing our services more than we expected in the quarter. And those are the two main levers that we have in the vet business. New customer wins and ensuring our customers use us to the maximum. That's always a battle because we battle with the competitors on a regular basis on that stuff. But if we do a good job and our customers receive benefits, good results from the services we provide that allows us to outperform expectations. And that's really happened despite the currency headwinds and the situation in Russia.
spk04: Yeah, hi, Ron. It's Nick here. You wrote call-out currency, but I think I talked about it on the call, but it's worth just reiterating. This is a presentational issue, not an underlying issue in the business. This is only really impacting us because we happen to present our numbers to the street in dollars. as opposed to our functional currency, which is obviously GBP sterling. And therefore, the underlying business doesn't actually change, and hence why I called out earlier that actually our underlying constant currency guidance is up to 348 and 17. It's just the presentational currency position that brings it down to the 340 and 15 again.
spk07: Yeah, absolutely. No, that's helpful. and understood. Curious, just to drill down on the media business a bit more, I guess, very strong quarter. How much of that was organic growth in the performance-based marketing, kind of the ad tech side versus media versus you made a couple of smaller acquisitions. How much did those contribute?
spk05: Hi, Ryan. This is Josh. So the majority of the growth was all organic through our core programmatic business. The majority of the growth was through that, through, as I said before, existing customers spending more and us winning new customers. That core business continues to grow really, really well for us.
spk04: Yeah, that's right, Josh, spot on. Let me just add a bit of data behind that as well. I think the media business growth was 150% and over 100% of that is in the organic media.
spk07: One more quick one for me, and then I'll turn it over to the others. So, Nick, appreciate your comments on the cash burn kind of structural versus timing items there. And I realize there's some nuance with accounting recognition of the equity granted to the NFL and some amortization, et cetera, within COGS. But are you willing to comment when you think GAAP gross margin will inflect positively?
spk04: Hey, Ryan. When you talk about influx policy, you're talking about the cash position.
spk07: I'm talking about reported financials, the gross margin.
spk04: Yeah, and the first thing to say, and you're absolutely right, there's some nuances around simply accounting. The first thing to say on a gross margin position is that I'm expecting the NFL warrants to reduce in the next quarter and Q3 and Q4 on an ongoing basis. They're currently running at around about $22 million, as you'll see in our backup. That will reduce the next quarter to about $6 million. So we're going to have a $16 million improvement there. on a COGS basis simply because of the non-cash NFL position. So that will make a significant difference. This is obviously the depreciation and amortization. That will reduce over time. It won't reduce significantly over the next couple of quarters, but obviously the acquisitions that we made, we amortized over a short period of time, and therefore we're expecting those to come back.
spk07: Thanks, guys. Good luck.
spk02: Next question is from the line of Jed Kelly with Oppenheimer. Please go ahead.
spk09: Hey, great. Thanks for taking my question. You look at the media business as a strong B, and then you apply, like, you know, normal seasonality you see in advertising, and it looks like, you know, that business could do well over $100 million in revenue this year. Okay. Can you just talk about, you know, what's implied sort of in your back half guide with media? Is there anything you're talking, like, is there anything you're kind of being conservative around in terms of, like, inflation, potential political advertising that could boost up CPM? And then I appreciate, like, the betting operators are really leaning into your solutions, but can you talk about your success with, you know, other sports-related entities that might not be tied to betting. Thank you.
spk04: Hi, Jen, it's Nick. I'll take that first bit, and I'll leave Josh or Jack to take the specifics around the non-sports book operators. Yeah, on the foot of it, you're right, there is seasonality, and there's two parts to play to that, I guess. First of all is the natural strength of Q1 sports calendar. I think we've already called that, obviously, Super Bowl and playoffs and NCAA March Madness all fitting into the last quarter. And you can see that in our media business last year as well. You can see that that's getting to Q2 season. Q3 and then rises again in Q4, it's a natural sports calendar. I think previously in our segmental position, we talked about media, I think it was, I think we pulled out, obviously this is on a 1.35 constant currency basis, that was about 18, then down to 12 and then 1926. So that will absolutely play a part. And although you're right, obviously very strong, very happy with the Q1 performance, we are expecting it to drop in Q2 naturally because of the seasonality. The second part, which is a little bit more of an unknown for us, is just around the actual annualization of our contract positions with the US sports books. As you know, we signed a lot of the sports books up mid to late summer last year. They had minimum committed spends in the media. I think we've quoted $125 million over that three-year period. obviously we're still only eight twelfths of the way through a lot of those contracts and therefore you know we've estimated the timing around those media spend but we almost need to do a full year to understand exactly what that looks like in reality now so there's still a lot that we're learning on that basis but rest assured we're obviously very happy with the q1 performance And as you've heard from Josh already, the rationale of how we continue to be successful in that place. I'll hand over to Josh or Jack to take the second part. Josh, I think.
spk05: Hi, Jed. Just to add some extra information, context on that i mean one thing a lot of people probably don't realize is that we also do a lot of advertising for casino um so you know when sports events drop we also continue to do a lot of casino advertising for our customers as well um and then on the on the non-vetting side of things um we've had great success in the quarter we had a number of new customer wins give you a few names Hennessy, Destination Canada, Truly Seltzer, Audible, Rocket Mortgages, a number of other customers that came through to us over the course of the quarter. So the non-betting side of things continues to grow for us.
spk09: Got it. And then, Mark, you mentioned the MAC conference. It seems like the Power 5 college football conferences clearly see a way to use their data to get paid. Can you talk about how those contract negotiations are going with some of the larger college football conferences?
spk03: Hi, Jed. Yeah, look, obviously the NCAA, you know, reinterpreting their bylaw was a very big moment for us and a very positive thing. You know, to recap, you know, we signed a deal, I think about three years ago, with the NCAA, which was a 10-year deal. where, in essence, what we were doing or what we are doing is digitising their entire estate. And that means that we're putting our technology solutions, which predominantly consist mainly of live stats, which is our live data collection tools, into all of the NCAA schools and colleges. And that's been a... a period of very heavy execution on our part. We've done an awful lot of work. We've got it in, I think, over 5,000 schools now. And I can say with absolute confidence that we are in an incredible position as a result of the distribution and the utilization of that technology stack. Clearly, the Mac deal is very good for us. We're very, very happy with that. Obviously, it seems a natural thing for conferences to look to partner with their technology providers, and that's not only a deal that involves the technology deal that we did earlier, three years ago, that is also a big part of second spectrum and us pulling second spectrum, that technology stack that we've already got, pulling it into one deal and really leveraging the real strength of the full genius offering across across those commercial deals. So I'd be no surprise to say that we've obviously got a keen eye on other conferences, and it will be no surprise I can't comment on what's going on there. But suffice to say, we have an absolutely unbelievable position. It's completely unrivaled. And the deals that we will consider will be deals that will be profitable for Genius, and they will be the right deals. And we're feeling very good about where we are. Thank you.
spk02: Next question is from the line of Robin Farley with UBS. Go ahead.
spk10: Great. Thanks. I wanted to ask a similar question about what percent of revenue growth was organic versus from acquisitions. I know you addressed that for the media piece of the business, but I wonder if you could give some color on the other segments too. Thanks.
spk04: Yeah. Hi, Robin. It's Nick. Yeah, that's quite straightforward to give. So it's all in the betting business. There is no inorganic growth in there. So that is all organic. I think I gave Jed or Ryan earlier the media business. The sports business is almost entirely inorganic. As you know, that's much more of an enabler for us, and we report our second spectrum revenues in there. So the growth year-on-year is almost entirely second spectrum. I think you took that up. I think it's just shy 40% organic growth in the quarter year-on-year against the 60% growth on a total basis.
spk10: Okay, great. That's helpful. Thank you. And also just wanted to clarify, looking at your full year guidance and you mentioned the FX issue, sort of very rough back of the envelope. Looks like maybe that would be a little less than a million a difference FX at this point. You also called out, I think in your release, you mentioned exiting business in Russia. Would that be another sort of million or two that comes out? And that's what keeps the guidance for the full year unchanged? Is that how we should think about the Russian impact? Thanks.
spk04: Yeah, hi, Robin. Yeah, I think I gave possibly the last quarterly earnings call an indication of the sort of impact that we rushed around. I think it was about $2 to $6 million. I think I called out the time. I think we're beginning to sort of cut us around the sort of midpoint of that being the impact that's included within these forecasts. Clearly, it's been our job over the last couple of months is to look for substitutional content on that basis, which we've had some success in doing, but any impact on Russia is also included in the guidance we've set out today.
spk10: But that would have been in your guidance a quarter ago, right? So it's sort of maybe a million, like a slight, just a hair more impact than a quarter ago from Russia?
spk04: I think I said at the time, I mean, we set out the guidance that we've given here on our investor day, if I remember rightly, and that was back in January, where we hadn't made the decision in Russia. Indeed, I remember my timing, because I think we announced and we made the decision to pull out of Russia in March, I believe, early March. So actually, the impact of Russia for the quarter was relatively minimal in the Q1 position, and we're reaffirming the 340 as of today.
spk10: Okay, great. Thank you very much. Thanks.
spk02: Next question is from the line of Mike Hickey with Benchmark. Please go ahead.
spk08: Hey, Mark, Nick, Brandon, Josh, Jack, good morning, good afternoon, guys. Nice quarter. Thanks for taking my questions. First one, Nick, just on the first quarter beat versus your guidance, I think you guided the quarter, middle of March, March 12th or so, and looking at your other two segments, you're pretty much in line. But you're sort of curious why there's such a variance with most of your quarter fully baked when you guided in the media side, if there was sort of a spot by at the end of the quarter or you're being conservative for some reason. Just sort of curious the variance given when you actually provided guidance. And then follow up on that, just your ad spend. It feels like there's some longevity here just hearing you this morning in terms of maybe a source of upside to your business in the remainder of the year. Just want to sort of clarify that that's sort of the right read through and follow up.
spk04: Yes. Hi, Mike. I guess on the first one, you're right on Q4 results, we reaffirmed guidances, which is what, again, we're doing today. March is a significant month for us, obviously, from a media perspective. You've heard Josh and Jack talk about the NCAA, March Madness. And therefore, you know, that was a particularly good month for us. And therefore, also given the time, given the Russian impact on things, we felt it was the right thing to reaffirm guidance at the time and obviously very pleased to outperform guidance as at today. In terms of the rest of the year, I think it goes back to what we were saying, I think, in the prepared remarks. On a constant currency basis at 1.35, we would be upgrading our guidance to 3.48 as opposed to sticking at 3.40, but we're sticking at 3.40 predominantly because of the presentational currency on a position. In terms of any upside on that from the media business, I'll defer to Josh and Jack to talk about the specifics, but we've had a very good quarter, I mentioned earlier, a little bit around timings and going to a full annual position for contractor position to mid-summer. So we're watching that very carefully. But we're very happy with the way the media business is performing. And given the foreign exchanges, we feel delighted to be reaffirming guidance on a presentational basis, given the change in the underlying currencies.
spk08: Nick, did you reiterate your 2Q guide 68 over 8?
spk04: You'll see in the back of our presentation that we haven't given that quarterly split. It's a little bit more nuanced around the presentational currency position. Obviously, given the currency is right now at whether 1.24 or a little bit less than that, we're expecting Q2 on the intra quarter to probably be most impacted by the foreign exchange position. Not least of which Q2 actually a nuance obviously is the quarter that we anticipate to have least U.S. revenues because clearly where we've got a mix of U.S. revenue and non-U.S. revenue, the course is going to be most impacted are the ones with the high proportion of non-U.S. revenues which is Q2. So the $8 million position from the 348 on a constant currency to 340 on a presentational currency, I'd anticipate Q2 to be most impacted on that basis.
spk08: Okay. Thank you. Last question for me on Canada. It feels like obviously it had a substantial impact gray market, now transitioning at least Ontario is to regulated market. And some initial feedback that we've been hearing from operators is that there's, you know, some restrictions on the marketing side that may be sort of impacting some of your partner's ability to sort of get off the the starting line here and running from restrictions on marketing. So just sort of curious what you're seeing in Canada, how many marketing restrictions are impacting your initial view on how that market would take shape now moving to a regulated market. Thanks, guys.
spk01: Yeah, hi, Mike. It's Jack Davison here. Yeah, I mean, we touched on this a bit earlier, how we think about Ontario on previous calls, about how we think about Ontario as another state, as Mark touched on earlier, as new states open up. uh you know that that gives us new opportunity for revenues without adding a ton of additional costs so that's opportunities across the betting business but also across the um uh across the media business look i'm sure what operators are telling you is right like sometimes you know um what they're able to do from an advertising point of view will impact the size of the state. And there's not a huge amount we can do about that on a kind of macro level. What we can do about it is ensure that we give them the different sorts of marketing tools and opportunities for them to acquire players and and acquire handle in lots of different ways. So, you know, we do that a lot in the marketing business. Obviously, the core betting business gets the benefit of more turnover, and as long as our commercial deals are set up right, which they are, then we get that immediate benefit as it pushes through. So, interestingly enough, in Ontario, actually, we've just launched a tool about how operators can acquire players and use content and product to do so. We've actually just launched a process around marketing kind of AV streaming rights for operators in Canada for the NFL. So that's quite an interesting thing. NFL is a big part of Canadian Sports Handel and Handel in Ontario. We think that's going to drive Handel. We think it's going to drive in-play Handel. We think it's going to help them drive acquisitions. So you're right, some of the macro things, some of the macro regulatory things do impact the success of a market. But, you know, there's plenty for us to do and plenty for us to work with when we talk to operators in those markets to help them. Nice.
spk08: Thanks, guys. Good luck.
spk02: Ladies and gentlemen, that concludes today's session. You may now disconnect your telephone. Thank you very much for joining and have a pleasant day. Goodbye.
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