Genius Sports Limited

Thank you for standing by. My name is Karen, and I will be the conference operator today. At this time, I would like to welcome everyone to the Genius Sports fourth quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by the number one on your telephone keypad. To withdraw your question, you may press star followed by the number one again. I will now 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 release and earnings presentation, which can be found on our website at investors.geniussports.com. With that, I'll now turn the call to our CEO, Mark Loss.

Good morning, and thank you for joining us today as we conclude another successful year across the business. Over the course of 2024, we've carried out many strategic, commercial and financial objectives to deliver a great year for our business and position ourselves for continued structural and sustainable growth. The results of these objectives are now clear in our latest set of financials and in our guidance for 2025. To quickly recap, we reported year on year group revenue growth of 38% in Q4 to $176 million. This brings our full-year group revenue to $511 million, representing a 24% growth in the year right in line with our increased guidance and well ahead of the $480 million we guided to at this time last year. Our group-adjusted EBITDA increased by over 2.5 times year-on-year to $32 million in Q4, bringing our full-year EBITDA to $86 million, also in line with our guidance, and also well above our expectations at the start of the year. This translated to 900 basis points of margin expansion in Q4 and 390 basis points for the full year. Importantly, we have also reported our first year of positive net cash flow, just as we communicated we would throughout the year. We generated $82 million of operating cash flow in 2024, increasing more than five times from just $15 million in 2023. This amounted to a year-end net cash balance of $135 million, a $9 million increase year on year. This marks a critical inflection point as we expect to increase our annual cash flows each year going forwards. By this point, I hope we have demonstrated a clear operating leverage that exists in our business model, which we will continue to benefit from in the years ahead. This momentum should continue in 2025, as we expect to deliver $620 million in group revenue and $125 million in group EBITDA. This represents yet another year of 20% plus top line growth, margin expansion to 20% and increasingly positive cash flow. Further to this, we believe our balance sheet strength will be the key to unlocking the next phase of growth and profitability for our business. We sit here today with a strong balance sheet and a predictable cash generative business model that affords us the flexibility to allocate capital in a prudent manner to support additional growth and scale. For instance, much of the $82 million in operating cash flow this year was reinvested in our continued rollout of Dragon and our next generation computer vision, AI and machine learning technology platform. This tech is capturing next generation data, which enables our new innovative products that creates value for our partners across the entire sports ecosystem. This technology platform and set of products are extremely difficult to replicate, thus widening our moat and strengthening our competitive differentiation. Now that we have reached this cash flow inflection point, we expect to have more capital to put to work to further solidify our position and execute on this strategy. We expect to maintain our current pace of discretionary investment in technology and product development, while also having greater flexibility for potential M&A to further support this strategy. As Genius is achieving greater scale, the broader sports technology industry is becoming more fragmented. As a result, we are seeing many high quality yet subscale technology companies come under pressure. Asgenius is a large scaled business touching so many parts of the ecosystem, leads and teams, betting operators, sponsors and advertisers, and broadcasters and content distributors all on a global basis. We believe we are well positioned as a natural consolidator of businesses that provide back end mission critical technology and can further support our strategy to widen our moat and differentiate our product set. To be absolutely clear, we will be opportunistic about any potential M&A and maintain very tight guardrails. There are no gaps in our business model or technology. So we'll remain disciplined and focused on generating high ROI for all shareholders, meaning we will only consider opportunities that are margin and cash accretive and aligned with our strategic objectives. Additionally, we believe the underlying business is on a clear path to organically achieve our long-term EBITDA margin of at least 30%. In fact, we believe that any potential M&A may even help us reach that long-term target in a quicker timeframe. We're excited about this next phase of our journey and the opportunity to become an even stronger and more profitable business than we already are. Additionally, we have built a high powered team of people to lead us through this next phase of our journey, including new senior hires in New York, as we have previously announced, and I anticipate that this will continue as the gravitational center of the business will continue to move from London to New York as the US becomes an increasingly important part of the business. And while the opportunities ahead of us are exciting, in the meantime, we are very happy with how the business is performing today. To begin, the biggest contributor to our growth in profitability and cash flow in the quarter was the betting business. As you know, our betting revenue has multiple levers of growth, including growth of total betting volume, new customers in new markets, growth of in-play betting, improvement in operator win margins, price increases and cross-sell of additional content and services as part of our contract renewals and renegotiations. Despite the pressure on bookmakers' win margins that we've seen this NFL season, our results were still exactly in line with our guidance and we believe that this is a good opportunity to remind you of our differentiated, resilient business model. Of course, we always prefer better game outcomes for bookmakers. However, given our unique position, we are far less exposed to any volatility in bookmaker performance and not overly reliant on weekly or monthly win margins, since we benefit from several other growth drivers. For instance, we continue to see strong momentum of in-play, which represented 30% of the total NFL betting volume in the quarter. Growth of in-play remains an important revenue driver for us, given that we earn a premium share of each of the in-play revenues versus pre-match revenues. This, combined with higher overall pricing in our recent contract renegotiations, led to betting revenue of a growth of 48% year on year, making it our strongest quarter of growth since Q4 2021. In the US specifically, our total revenue increased 51% year on year, primarily due to our successful contract renewals with every major sportsbook in the US. Our results from this quarter prove our ability to outplace the growth of the broader market and doing so with less downside risk relative to other participants in the sports betting industry. We hope this also demonstrates our commercial capabilities, considering our success through a heavy contract renewal cycle with every major sportsbook customer in the US. On slide eight, you'll see how this resulted in a strong dollar based net revenue retention for the year. As you can see, our 2024 net revenue retention was 146% for our top 25 global customers, highlighting the growth we continue to achieve even in the most mature markets. This growth is even more pronounced among our top 10 US customers, where net revenue retention was 163% in 2024. So while we cannot disclose exact pricing terms on each individual contract, We believe this is a helpful metric to measure and share the success of our latest renewal cycle, of course, in addition to the strong financial results from the quarter. We believe these contract renewals offer us frequent opportunities to provide new value add products and services to help sports, but enhance their offerings to consumers, especially as we have developed exciting new products to drive more engagement. This is exactly how we have achieved strong net revenue retention historically and how we expect to sustain that success going forwards. One of the most exciting new products that has proven to drive engagement is BetVision, which brings me to slide 9. As a reminder, BetVision is a highly engaging interface where users can find low latency streams of NFL games with fully interactive betting and view experiences all integrated into the video player. This is a one-of-a-kind watch and bet experience, and also a key driver of in-play betting, making it a valuable fan engagement and monetization tool for bookmakers. Importantly, we are continuing to enhance the features and functionality to make BetVision unique and further differentiated. For instance, this year's Super Bowl featured a touch-to-bet functionality with a few of our Sportsbook customers. This new feature allowed users to actually touch on a player directly from the video stream to access that player's statistics and betting markets. From there, users could seamlessly place a bet on that player, all within the BetVision interface while still watching the live stream. This was an important milestone in our product development and adds a new layer to the BetVision experience. The distribution and product innovation has led to another successful year for BetVision, and we are encouraged by the results from its second full season. First, the product has gone global as we have streamed NFL games via BetVision in 13 different countries. More importantly, we continue to see significant growth in overall viewership. First, the weekly average number of unique streams this season has more than doubled compared to last season. We have also seen increased viewership within the most recent NFL season. From the first half of the season to the second half, we have seen weekly average numbers of unique streams increased by 33% and the weekly average number of unique devices increased by 19%, indicating strong product adoption through the season. This implies not just an increase in the total number of users, but also suggests that users are increasingly accessing multiple unique NFL streams. And lastly, in-play betting represented 76% of the total handle through BetVision platform, which compares favorably to the roughly 30% mixed across all NFL wagering this season. To put it simply, BetVision is gaining significant momentum. The level of user engagement and interactivity is extremely valuable to every partner that we serve. Sportsbooks, of course, but the leagues who want to deliver the content in new and exciting ways, as well as the advertisers who want to find captive audiences during moments of live sporting event. So you can appreciate how BetVision is becoming a platform that ties together our most important strategic objectives. and one of the ways we benefit from touching so many parts of the sports technology ecosystem we outlined earlier. Thanks to the success of BetVision for the NFL, we are now expanding this product to other sports across the globe. We aim to launch BetVision for international sports like soccer, which is expected in Q2 of this year, and basketball, expected in Q3. This product expansion represents another key milestone as we aim to make BetVision ubiquitous and look forward to sharing more exciting updates soon. BetVision is obviously an exciting opportunity and we're still in the early stages of the development and distribution. However, our tech distribution stems well beyond the scope of betting alone and we approach our legal relationships much more holistically. We are leveraging our technology to provide solutions for some of the biggest challenges that the leagues face. For instance, by utilizing our proprietary computer vision, machine learning, and AI technology, we're empowering alternate telecasts of live sporting events, semi-automated officiating, coaching insights platforms, bet vision, and much more, all built on Genius IQ, a single data capture system enabling a wide range of products. As always, the use of this technology is not something we're just talking about, but actually something we're executing. See slide 10 for a few exciting examples from this quarter alone, including the EA Sports Madden cast on Peacock, the NBA 2K data cast on TruTV and Max, Premier League data zone, or the augmented telecast of the German Cup match with Sky Deutschland. And we've already kicked off our new year with even more executions built on Genius IQ. For instance, just last week, our technology was used to automate offside decisions for the fifth round of the FA Cup, marking an extension of our existing technology partnership with UK Football. This is a landmark moment for Genius Sports, developing a cutting-edge system that combines mesh tracking, 3D renders and Genius IQ to power automated offsides for the biggest league in the world of soccer. Additionally, we delivered an augmented data-driven broadcast for key matchups in Lithuania basketball last month, which featured dynamic ad placements on behalf of a local consumer brand. We consistently communicated this as a logical next step to broadcast augmentation, and I'm happy to share that we're now executing exactly on that plan we outlined just a couple of years ago, and we believe there is much more to come as this technology becomes the new standard. The wide scale distribution of this technology remains core to our strategy and our mission to be the must have digital technology partner for all leagues, sports content distributors, sports books and brands. 2024 marks another successful years of executing that mission, and we're excited to be continuing with that journey in 2025. With that, I'll now turn the call to Nick to discuss how this execution has translated to 2024 financial results and to our 2025 forecast.