Genius Sports Limited

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 Cheney Sports second quarter 2024 earnings results call. All lines have been placed on mute to prevent any background noise. 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.

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. 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 20F filed with the SEC on March 15, 2024. 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 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 Loss.

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. 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 US. 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. 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 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. 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. This cost visibility, combined with our strengthened 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. 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. UK football leagues rely on this technology to power several initiatives spanning betting, officiating, broadcasting, fan engagement and more. 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. 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. 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. 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. 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. 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. As it relates to data rights moving forward, it is also worth noting that we are operating in an increasingly duopolistic competitive environment. As we sit here today, all the major global data rights sit with only the two largest players for the balance of the decade. 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. We expect reduced competitive tension moving forward, which should support a more stable and predictable operating landscape. 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. 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. 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. This next-gen data has many use cases which are already being applied in the market. We are revolutionizing fan experiences, activating sponsorship opportunities, augmenting live broadcasts, creating new advertising inventory, innovating sports betting interfaces, unlocking new performance insights and so much more. 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. 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, creating the technical infrastructure not just for UEFA, but for other European football clubs who also use these venues. 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. 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. This brings me to the next topic, which is our U.S. Sportsbook partnerships. We understand investors have been focused on these contract renewals, so I would like to share my thoughts on this call. I will not get into specific details of individual contracts, some of which are signed, some of which are ongoing as expected, and a few that may be signed a few days into the NFL season, as is typical. 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 sportsbooks. 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. Our ability to cross-sell additional content and services, increase our utilization 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. 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. 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, engage them on the platform for longer, and offer more innovative products than ever before. We are fully committed to their success, and our revenue model is structured in a way that supports growth at least in line with USGGR and our sportsbook partners, if not modestly outpacing that growth rate. 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. We suggest you keep this framework in mind as we progress through the renewal process with U.S. Sportsbooks. 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. 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, bringing us a meaningful step closer to our long-term margin target in excess of 30%. Additionally, we reiterate our expectation to be cash flow positive for the full year 2024, 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 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. We are excited to continue this strong business momentum, which will support our financial flexibility for many years to come. I will now turn the call to Nick to discuss our quarterly results and guidance in more detail.