Genius Sports Shares Jump, Buoyed by NFL In-Play Betting

Genius Sports reported third quarter revenue of $120 million and net income of $0.05 a share, each of which beat Wall Street consensus, rallying shares up 20% at the start of trading Tuesday.

The sports and advertising data and analytics business said sales rose 18% in the period, ending Sept. 30. Particularly strong was Europe, which saw gains of 22% for Genius. Approximately 70% of Genius’ business in the period came from outside the U.S. With the fourth quarter well underway, management said it was raising its guidance for the full year revenue to $511 million, some $31 million over its initial projections, despite a rough month for its sportsbooks, who were on the wrong side of many NFL bets.

“In-play wagering now represents 30% of total NFL handle—up from roughly 25% the prior season—representing a meaningful step in the right direction, which we always expected,” said CEO Mark Locke in prepared remarks on a call with analysts Tuesday morning. “In-play is becoming a crucial component for bookmakers’ product offerings to keep customers engaged,” he said, while noting in the call the sportsbooks’ performance is a headwind.

The results sparked investors to pile into Genius shares in early Tuesday trading on the New York Stock Exchange, sending shares as high as $9.66—the highest since November 2021, the year Genius went public. In particular, turning a profit was unexpected by Wall Street, which had been predicting Genius would lose a penny to as much as 4 cents per share, according to data compiled by S&P Global Market Intelligence. Profitability has been a consistent concern of equity analysts around sports betting data providers. Genius says it believes it will continue to widen its margins given the relatively fixed cost basis of its data right contracts with leagues, including the NFL and the English Premier League, and its ability to build new products on top of those rights.

As examples, Genius pointed to two introduced over the past year, BetVision and Fanhub, as generating good traction with NFL fans and advertisers. BetVision provides almost instant video feeds of games to bettors through a sportsbook app and combines it with data, graphics and recommend contextual bets. Fanhub is focused more on the company’s advertising and customer acquisition side, helping marketers pitch to sports fans, building off of Genius’ data and insights into sports fans profiles and behavior, including by sport.

As one example of the company’s data and marketing expertise, management said its sports-specific digital advertising effort has integrated in-stadium highlights at SoFi Stadium with data and graphics and woven in the Verizon brand, a Rams sponsor. “We have a huge amount of information on sports fans,” he said later, in answer to a question. “We understand how they are going to work, what makes them tick, that allows us to approach anyone who wants to be present in the sports space.”

While management emphasized the growth potential of its media technology and sports technology business lines, it was sports betting that continued to be the main driver last quarter. That arm’s revenue grew nearly 30% to $85.6 million, while media and sports technology each slipped about 3% from 2023’s third quarter. On the year, Genius sales are up 17% to $335.4 million overall, led by a 21% gain in its sports betting arm and a 20% rise in media technology. Sports technology and services, which provides non-betting data and analytics, is down 6% year-to-date.

Longer term, Locke emphasized that Genius has taken steps to mute fluctuations in its business overall by negotiating staggered deal lengths with sportsbooks. “We’ve listened to the market and got a much more balanced mixture with term length; the renegotiation periods in the future no longer have the cliff effect,” said Locke, in response to a question.