Genius Sports Soars on Surprise Profit, Upped Outlook

• Gambling News
• 12 November 2024

Genius Sports (NYSE: GENI) saw its shares jump on Tuesday after announcing an unexpected profit for the third quarter and raising its financial outlook for 2024. 

On a day when many gaming stocks faced profit-taking, shares of the sports betting data provider rose nearly 16% on four times the typical daily volume in late trading. Genius informed investors that it achieved a net income of $12.5 million for the third quarter, with earnings before interest, taxes, depreciation, and amortization (EBITDA) totaling $26 million. The revenue during this period amounted to $120 million. The company had earlier projected third-quarter EBITDA of $25 million alongside sales of $119 million. 

The net income number probably played a major role in today's optimism for Genius stock. That measure provides a more accurate representation of a company's profitability compared to EBITDA, and for the sports technology company, its net income for the third quarter this year marked a $24.1 million turnaround from the previous year's quarter, when it experienced a loss of $11.6 million. 

In the quarter, Genius expanded its data partnership with ESPN to enhance broadcasts of college sports, the NBA, and the WNBA, while also securing another social media agreement, this time with Reddit. On that platform, users participating in NFL-related discussions can access improved data provided by Genius Sports. 

Genius Lifts 2024 Outlook 

Affirming that it represents a catalyst-rich, high-growth narrative in the sports betting equity sector, Genius raised its EBITDA and sales forecast for 2024, contributing to today’s increase in the stock.

"Genius Sports expects to generate Group Revenue of approximately $511 million and group adjusted EBITDA of approximately $86 million in 2024. This implies year-over-year group revenue and adjusted EBITDA growth of 24% and 61%, respectively,” according to a statement.

Genius had earlier informed investors that it anticipates $480 million in sales for 2024, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) projected at $75 million. The improved forecast indicates that 2024 will mark the fourth consecutive year in which Genius has increased its revenue by at least 20%. 

The firm stated that it anticipates margins will improve this year by around 400 basis points, suggesting that it is enhancing efficiencies. In the third quarter, Genius experienced notably higher losses from operational and transaction costs compared to the previous year. 

Anticipate Positive Cash Flow 

Another factor behind the Tuesday surge in Genius stock was the company's reaffirmation of expectations for positive cash flow in 2024, though it did not offer specific cash flow projections for that year. 

“Given the multiple growth drivers across the business, we remain confident in our Q4 guidance of 38% revenue growth, over 2.5 times growth of adjusted EBITDA, 900 basis points of margin expansion and significant cash flow, bringing us to a positive position for the full year,” said CFO Nicholas Taylor on a conference call with analysts earlier today.

During the call, CEO Mark Locke highlighted the expansion of live betting on the NFL – the league for which Genius serves as the sole data provider. Rising in-game betting and same-game parlays create new data requirements that can advantage firms like Genius.