Months into a historic partnership with the NFL, Genius Sports credited the landmark deal with the nation’s most prominent sports league for surpassing key revenue targets in recent months.
During its third quarter of 2021, Genius Sports generated revenue of $69.1 million, the company’s highest on record for the period, Genius said Tuesday in a statement. Genius Sports, a global sports betting data and technology company, increased quarterly revenue by more than 70% on an annual basis, which the company attributed to “well-balanced growth” across all of its business segments.
The strong quarter from a revenue perspective was tempered, however, by a volatile trading session Tuesday. During Tuesday’s pre-market trade, Genius initially jumped 5% on the strong revenue figures. By shortly after 1 p.m., though, Genius shares had plunged more than 30% to $9.31, falling to all-time lows.
Genius also reported a net earnings per share loss of minus $0.37, missing analysts’ forecasts of minus $0.12. The company reported adjusted (non-GAAP) EBITDA of minus $0.4 million, as its revenue growth was offset by strategic investments and data rights costs, according to Genius.
Genius Sports $GENI. Started a position at $11.00 after the major selloff – which could into the $10s. 70% rev growth, a ton of name-brand partnerships, & 97% of the US market uses NFL data exclusively through Genius. Target 1 is $18. Target 2 is $22. May take a while to rebound. pic.twitter.com/aU7GqTGlAD
— Nick's Analysis (@NicksAnalysis) November 23, 2021
Optimism surrounding NFL deal
In April, Genius outbid archrival Sportradar AG for exclusive rights to distribution of the NFL’s official sports betting data feed to U.S. sportsbooks. Tuesday’s quarterly earnings report came one day after Genius announced an expanded deal with FanDuel that includes access to the NFL’s official data content.
As of Tuesday, about 97% of the U.S. market is using official NFL data exclusively through Genius Sports, the company stated in a third-quarter earnings presentation. Genius supplies NFL official betting data to industry heavyweights DraftKings, BetMGM, and Caesars Entertainment, as well as PointsBet, WynnBet, and Barstool Sports, among other leading sportsbooks.
“Genius Sports’ growth is accelerating at an unprecedented level that far surpasses our original expectations,” Mark Locke, chief executive officer of Genius Sports, said in a statement. “We are capturing more opportunities than ever before, underpinned by the broad adoption of official data by the entire ecosystem.”
On Tuesday’s call, Locke gushed about last month’s partnership with the NFL’s Philadelphia Eagles that activated in-stadium betting opportunities inside Lincoln Financial Field. Under the agreement, ticketholders will receive real-time betting odds and unique betting promotions via the team’s sportsbook partners.
As part of April’s deal, Genius also became the league’s exclusive distributor of proprietary Next Gen Stats (NGS) data, which tracks advanced statistics such as a player’s maximum speed on a given play. At its booth at last month’s Global Gaming Expo in Las Vegas, Genius displayed Titans receiver Julio Jones’ highest career top-end speed of 24.8 mph, along with examples of accompanying in-play props on Jones.
Eventually, Genius hopes to enrich the in-stadium viewing experience beyond sports betting through its technological capabilities.
“Our goal is to create a business that takes a slice of sports-related transaction globally, whether that’s bets, ticket sales, a live stream, a purchase of a hot dog in a stadium, or a jersey sale,” Locke said. “Genius exists to provide the technology platform that both powers these transactions and enables true global fan monetization.”
— MichelleMcKenna (@nflcio) November 23, 2021
Stark differences between NBA and NFL deals
Addressing last week’s long-term partnership between the NBA and Sportradar, Genius Sports CCO Jack Davison admitted that the company “would have been thrilled” to land the NBA deal. Under the partnership, Sportradar will serve as the exclusive provider of NBA global betting data to international sports betting operators. The deal, which takes effect beginning with the NBA’s 2023-24 season, grants the league a 3% equity stake in Sportradar.
As it relates to U.S.-based sportsbooks, the NBA is transitioning away from a previous non-exclusive model for data distribution, a source familiar with the agreement told Sports Handle last week. At the moment, Sportradar and Genius maintain non-exclusive data partnerships with the association. The new agreement provides Sportradar with a “greater degree of exclusivity,” while still giving the NBA some flexibility to work with others in the space to help facilitate innovation, the source explained.
— Rick Horrow (@RickHorrow) November 22, 2021
Davison, though, questioned the benefit of certain aspects of that new NBA deal. While the NFL partnership provides Genius with ancillary benefits in the media space, plus a considerable amount of advertising inventory and other valuable assets, those advantages weren’t on the table with the NBA, according to Davison. That’s partly because some of those assets are locked up through a joint venture between the NBA and Turner Sports, he indicated.
More important, Davison noted that it is the company’s understanding that the NBA will continue to maintain a direct relationship with all downstream sports betting operators, even as the books are assessed a fee for data rights. As a result, Genius believes the deal is structured in a manner in which the NBA will take a “share from handle” directly from the sportsbooks, Davison said.
“From our point of view, that felt like operators getting charged twice,” Davison said, once for the data and once from the NBA directly.
Volatile stock movement
Genius topped Wall Street consensus revenue forecasts of $62.8 million by more than $6 million with the revenue beat. In the leadup to the company’s quarterly earning’s conference call at 8 a.m. ET, Genius shares hit $14.35, reflecting the increased revenue driven by the NFL commercial sportsbook partnerships.
Genius shares then entered free fall over the next few hours, erasing all of their gains over the last 12 months. The sell-off Tuesday could present a buying opportunity for institutional investors and exchange-traded funds (ETFs). Prominent investor Cathie Wood’s ARK Invest ETF bought more than 550,000 shares of Genius on Nov. 2, on a day when the company closed at $18.70 a share. At the session closing price, the purchase was valued at about $10.4 million.
$GENI Doubled my position here. Unless I missed the memo, congress didn't outlaw gambling yet. 🔔
— kansainingenz (@kansainingenz) November 23, 2021
Genius reached a high of $24.98 in May, weeks after the company’s public debut on the New York Stock Exchange.
Sports betting stocks, in general, are down considerably over the last month. The Roundhill Sports Betting & iGaming ETF (BETZ) traded on Tuesday around $26 a share, down 3% on the session. The exchange-traded fund, which tracks gaming and sports betting-related stocks, has fallen more than 15% since Oct. 26.
Over that span, DraftKings has plummeted 25%, while MGM Resorts is down about 10%. Penn National Gaming, which lost out on a lucrative New York mobile sports betting licensing bid this month, has plunged 30% since late October.