20 May: Genius ups guidance, but quiet on NFL costs +More
Genius Sports, Acroud Q1s and Gamesys Q1 update
Welcome to an afternoon edition of the Earnings +More newsletter. From earlier this morning we have an expanded Q1 trading update from Gamesys, the results from listed gaming affiliate Acroud and then from this afternoon the debut quarterly figures from data supplier Genius Sports.
With the first-quarter earnings season drawing to a close, our newsletters will become less frequent for a while though we will aim to publish at least once a week in the next month or so covering everything from the jurisdictional data releases through to some of the upcoming digital conferences.
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Genius Sports Q1
The top line
Q1 revenues increased 52% YoY to $53.7m, net operating loss of $5.3m was $2.2m less than in 2020. The group raised its revenue guidance 35% from $190m to $250m-$260m.
On a constant currency basis, revenue increased 40% YoY to $15.6m. Genius’s betting technology and content division increased revenue 42% to $39m, driven by price increases with existing customers, contract renewals and client wins.
Sports technology revenue increased 41.6% YoY to $5.4m, driven by new services to sports league and federations. Media tech and content revenues increased 127% YoY $9.4m, mainly driven by the acquisition of new customers in the Americas and Europe for programmatic advertising services.
Locked into NFL: Many of the analysts’ questions centred on the group’s agreement to be the official data distributor for the NFL. CEO Mark Locke was at pains to point out that it was much more than a simple data supply agreement and that his group will leverage the deal through many different initiatives. “Sports streaming, betting and fan engagement are all converging,” he said. The acquisitions of the data tracking specialist Second Spectrum and free-to-play games developer FanHub were all part of increasing player engagement, targeting and optimising marketing.
Staying on radar: Genius Sports won the NFL contract from its main rival SportRadar. When asked about the latter’s plan to continue distributing publicly available data to operators, CCO Jack Davison said: “Conversations are still in their early days. We always expected ‘Radar and others to offer unofficial products, (but) the market is such that there is real demand to work with official data.” He added that the NFL’s betting partners were required to use official data. The Genius-NFL agreement was not a “direct swap for the incumbent” data supplier and “we’re not asking sportsbooks to just buy our data,” added Locke.
“It’s about helping with the whole customer journey: how they acquire and engage players, use free-to-play products and drive retention metrics, as well as streaming rights for international markets.”
The core objective is to “use official data to drive betting markets” and encouraging a “holistic view of the GS product.”
Big bucket plans: The Genius product portfolio divides into “four buckets: official data for sports betting, official data for media outlets, international markets and streaming and additional revenue streams”. Locke added: “We don’t go with just NFL data, we show how we can add value with the NFL, cross-sell other sports, help extend reach and access different pots of budget with those operators. It’s a different type of deal to what has been widely reported because it gives us broader access to more revenues.” Sports betting generates most of the revenues and “advertising and the adtech business is growing really strongly and we’re adding lots of value there,” added Locke.
Margin aims: The group is aiming for 40% EBITDA margins, Second Spectrum and FanHub would generate revenues of $10-$15m and $7m in 2021 respectively, said CFO Nick Taylor. The cost of the NFL deal and its impact on EBITDA will be scheduled to run from September to January to align with the NFL season. While the company side-stepped the direct cost question, it did say that its adjusted EBITDA figures excludes the impact of the non-cash share payment to the NFL of 11.25 million warrants valued at around $170m, which will vest in the current quarter. Recall, the deal with the NFL was rumoured to be worth up to $120m a year. It is not known if the equity component forms part of that figure.
Acroud
The top line
Revenues rose 75% to €5.8m helped by the addition of recent acquisitions. Organic revenue growth was down to minus 10% due to the exit from Acroud’s previously biggest market of the Netherlands.
EBITDA was down 17% YoY to €1.4m while EBITDA margin fell to 26% from 55% in the prior year period.
NDCs rose 230% to 31,787. It should be noted that this is the first time Acroud (formerly Net Gaming Europe) has disclosed absolute NDC numbers having previously only reported an NDC change percentage.
Moving parts: Recent M&A has reshaped Acroud from a basic affiliate business to something more ambitious. On the earnings call, CEO Robert Andersson spoke about the addition of the software/business-as-a-service segment from the Matching Visions and Voonix acquisitions as bringing revenue diversification alongside the growth from the more clearly affiliate-led deal for Swedish-facing Gambling Cabin. This diversification includes geographic expansion - Acroud received a Pennsylvania license recently - as well as other verticals though Andersson didn’t divulge what these might be.
Live the Dream: One organic innovation during the period was the launch of the Dream Stream offering, which is based on the Matching Vision affiliate network technology. Andersson said the new offering had already generated over 1,000 NDCs in March. “Now we have streaming content, we are reaching a new generation of players, via Twitch and YouTube.
“Of course, it has lower margins - about 7-10%. We take the commission from the operator and we pay commission on to the streamer. The nice thing is we can add as many streamers as we want and it really is one-to-many.”
Canal turn: Despite the hit taken from the Netherlands markets exit ahead of the newly-regulated market in October, Andersson was optimistic about the company’s prospects in the country. “This will be a good market for us and we are adding a Dutch sports brand to our portfolio as well,” he said. “It’s very dependent on when they launch. It was our largest market before and that’s why we took a big hit. Now we are just waiting and maintaining a lot of good rankings. It should quite quickly generate some good cash but I can’t give a forecast.”
Gamesys trading update
Gamesys reported Q1 revenues of £197.8m and net income of £23.8m. Total current assets were £319m, consisting of £29m in cash and £38.6m in player deposits. Recall, the group’s US partner company Bally’s Corporation reported Q1 revenues of $192.3m and EBITDA of $52.5m earlier this month.
Newslines
Top floor conversion: Gaming Innovation Group has agreed to convert its December 2020 €8.5m convertible loan into 6.6m of new shares in a sign of growing confidence in the company’s prospects. With the new share, the company behind the original loan Symmetry Invest will now become one of the largest shareholders in the company. Andreas Aaen, CEO of Symmetry Invest, said that as a further vote of confidence his company has agreed to a 12-month lock-up on the shares.
What we’re reading
The last resort: The chances of any integrated resort and casino moving ahead in Japan appear to be fading after some high-profile potential bidders have pulled out, according to this piece in Asia Gaming Brief.
Musk v Portnoy: John Authers from Bloomberg Opinion takes a look at yesterday’s crypto gyrations and discusses the battle of opinion between Elon Musk and Dave Portnoy. Only one of them can be right.
Video nasty: A classic movie review from 10 years ago of the execrable Pirate of the Caribbean: On Stranger Tides. Warning: this article contains swearing and maggots.
What we’re writing
Back, SPAC and crack? Scott Longley examines the boom in betting and gaming-related SPACs in the latest Market Monitor report iGB.
And finally… pea milk. Yes, you heard. Pea milk. From Axios this afternoon:
Earnings calendar
24 May: New Jersey Q1
25 May: Gamenet/Lottomatica
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com