Genius Sports Limited (GENI) Q2 2021 Earnings Report, Transcript and Summary

Welcome to the Genius Sports Q2 Results Call 2021. Throughout the call, all participants will be in a listen-only mode and afterwards there will be a question-and-answer session. [Operator Instructions] Please go ahead with your meeting.

Good morning, everyone and thank you for joining. 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 forecasts. 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 last annual report on Form 20-F filed on April 30. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius's operating performance. These measures should not be considered in isolation or as a substitute for Genius's 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 press release and earnings presentation, which can be found on our website at investor.geniussports.com. With that, I'll now turn the call over to Mark Locke.

Good morning and thank you for joining us today. As we mentioned last quarter, we continue to be incredibly excited about the market opportunity ahead. We are better positioned than ever before to capitalize on the growth in the global sports betting market due to the strength of our partnerships with hundreds of sports leagues and federations, sportsbook operators and media brands across the globe. Our strong performance this quarter demonstrates how Genius is woven into the fabric of the ecosystem and that the unique value that we continue to provide to our partners including best-in-class technology and services that allow sports leagues to monetize their data, deepen fan engagement in sports business operations, breadths and depths of the venue coverage, reliability of the key services and integrated relationships with sportsbooks, and the deep long-term relationships rooted in the scalable provisions, mission critical data and technology that's fundamental to our partners' success. Our position at the heart of the industry is vital to its successful operation as a whole. We are confident in the value that our products and services bring to the entire sports ecosystem and believe that our service quality and innovative technologies secure our placement in the long-term and protect our business from potential disintermediation risk. We believe that the operations of both leagues and sportsbooks would be significantly challenged without the key services that Genius provides. For instance, we possess best-in-class, real-time data collection technology that we deploy at our sporting events every day around the globe. However, it is not the data alone that makes our service valuable. It is the software we wrap around that data that turns it into odds or lines that is vital for sportsbooks. Leagues lap this technology and the resources to continuously in effect [ph] to keep up with the evolving data requirements. Genius' solution is accurate, fast, and remarkably scalable, and our success builds on leading the innovation and keeping the leagues ahead of the curve. Genius also has a broad network of deeply integrated sportsbooks partners, making it much more efficient for leagues to distribute live data to a wide global betting audience. It's also important to note that the long tail of events that Genius Sports provides, sportsbooks need content to use this 24 hours a day, 7 days a week, 365 days a year, and we estimate that the professional sportsbook typically offers 250,000 to 300,000 live events annually. Our deep relationships with hundreds of non-tier 1 leagues enable our sportsbooks customers to access those events in a cost efficient way without the burden of individual rights deals. Genius also standardized the data so that sportsbooks can easily manage data from hundreds of different leagues without worrying about separate league integrations on their own. Our scalable platform improves operational efficiency for our sportsbooks partners. Our position in the ecosystem has supported strong momentum in our business heading into the second half of the year and we're continuing to execute on our long-term strategic objectives. Before we move on to the quarter, we would like to once again reiterate those long-term strategic goals and financial targets. We are continuing to add value to our customers with high quality content and a range of services, accelerating those along the paths to our long-term market share target of 40% and revenue target of 5% of the industry gaming revenue. We continue to target our long-term adjusted EBITDA margin of 40%, reflecting the strong underlying unit economics of our model. Since going public, we've taken advantage of our window of opportunity to invest in various growth initiatives, and whether we are developing our official rights portfolio or making strategic acquisitions, each step is a building block towards those long-term targets. This quarter was all about execution and delivering on our strategic plan. First, we more than doubled out revenues year-over-year to $55.8 million with strong performance across all business lines. The $55.8 million reported in this quarter and the $110 million reported year-to-date represents a significant step up from the comparable 2019 results before the pandemic's impact were felt. This demonstrates the strong, consistent and broad-based growth in our underlying business. Adjusted EBITDA also grew by 126% since last year to $5.2 million, highlighting strong inherent operational leverage in our business. As we discussed in great deal last quarter, our partnership with the NFL has massively increased the value of our full suites of products and services. We are thrilled to be partnering with the NFL's official sports betting partners and approved sportsbook operators to provide a full range of official sportsbook content and fan engagement solutions to help them better acquire, retain and monetize their users. Our partnerships with leading betting operators in the U.S. signifies the adoption of our official data and the all encompassing nature of the Genius platform. I'm proud of our team's successful operational and commercial execution and the speed in which we were able to integrate with the sportsbooks ahead of tomorrow's regular [ph] season kickoff. We'll cover this in more detail later on in the call. We also strengthened our capital position in the second quarter through an upsized follow-on equity offering. We intend to use the $238 million in net primary proceeds for general corporate purposes with a particular focus on our official rights strategy, continued investment in our technology and of course strategic M&A opportunities. On our last call, we discussed the acquisition of two exciting and complimentary technology businesses, FanHub and Second spectrum. In a matter of weeks we successfully closed both acquisitions and are thrilled to integrate their innovative services into our core offering. After the reporting period, we also announced the acquisition of Spirable, a leading creative performance platform that will enable Genius to combine official data driven marketing with curates and video content to deliver a much more personal fan experience. The developments from the second quarter and momentum throughout the first six months of the year, give us tremendous confidence in our ability to deliver at the high end of our previous revenue guidance of $250 million to $260 million. We now expect to generate revenue in the range of $255 million to $260 million whilst reaffirming our previous EBITDA guidance of $10 million to $20 million. This quarter was characterized by the execution of our core business strategy and delivery of our key strategic objectives. As you may already know, one of our most important differentiating factors is or our commitment to official data which represent the live source information that is directly sanctioned by league and federation as a single verifiable source of truth paramount to sports betting market. As regulated sports betting markets worldwide shift towards live in-game betting, the speed, accuracy and providence of live sports data underpins the sustainability and growth of these products making access to official data a vital commodity. In fact, we've heard from one major U.S. sportsbook that 40% to 50% of all wagering is now in-game. The industry is nervously trending towards the use of official data as its most secure method of powering regulated sportsbooks, protecting customers and helping to funds its sports. As the leagues and sportsbook operators increasingly commit to the use of officer data our leading portfolio of events under official data rights puts us at the forefront of this trend with high barriers to entry. We have grown our portfolio by 25% year-over-year to 189,000 events under official rights and of which 116,000 of them are exclusive. This quarter we've added exciting events to our coverage, including the NFL Argentinian, Peruvian, Colombian and Canadian soccer and several others. As mentioned earlier, our exclusive NFL rights have propelled our commercial relationships. We are thrilled to have reached agreements with leading sportsbook operators and we're continuing to demonstrate to our hundreds of other sportsbook partners the multitude of ways we can support their business through packaged offerings of premium content, bookmaking services, fan engagement solutions and more. These agreements embodies Genius' ability to execute operationally and commercially and further integrate our technology with our sportsbook partners. Our media operations also continue to accelerate. Our unique understanding of the sports and sports betting audience, coupled with our exclusive ownership and control of live sports data and Ad Tech platform enables us to offer a personalized suite of solutions for our entire ecosystem. This was evidenced by our new partnership with MEDIAPRO Canada. Under the agreement, Genius will help grow the domestic and international addressable market for Canadian soccer. MEDIAPRO is Canada dedicated soccer streaming platform will now integrate Genius' sports live data and content into its live viewing experience to fans. Our data driven marketing technology will also help expand MEDIAPRO's Canada's domestic audience by driving subscriptions through personalized promotions and offers that only Genius is able to support. These are just a few of the ways our media and engagement solutions have helped our customers engage their fans. And through the quarter, we continued to grow our sports betting presence globally. We [indiscernible] clients including Novibet, gameWise and notably our permanent sports wagering license by the West Virginia Lottery Corporation. Genius Sports is now operational in 15 U.S. States, powering award winning official data streaming and marketing solutions to the leading sportsbooks and lotteries. After the reporting period, we also agreed to media with Canadian customers including British Columbia Lottery Corporation. We're optimistic about the Canadian market following the bill amendment that now allows single game sports betting. Our new partnerships mark an important step to Genius' growth in the North American region. Lastly, as part of our disciplined M&A strategy, we remain focused on the efficient integration of newly acquired businesses and I'm proud to officially welcome FanHub and Second Spectrum to the Genius family after closing both the transactions in the quarter. We also recently announced our acquisition of Spirable, a leading creative performance platform whose mission is to create the most useful and contextual data and video content through rights holders, brands, and agencies. Spirable enables its partners to create, automate and optimize highly personalized content at scale across major digital media channels, including platforms like Facebook, YouTube, Twitter and Snapchat. Spirable's platform is highly complementary to our rapidly expanding league and fan engagement solutions improving our ability to deliver personalized and contextually relevant content to fans. I'd like to take a moment to provide an update on the tremendous progress we've made with our revolutionary NFL partnership. In conjunction with our new rights deal, the NFL has announced three official sports betting partners, DraftKings, FanDuel, and Caesars, with four additional approved sportsbook operators, FOX Bet, BetMGM, PointsBet and WynnBet. Our new agreements with the NFL, all seven operators have committed to licensing official league data from Genius Sports. These sportsbook partners have embraced official data, which validates our longstanding official data strategy and provides a strong foundation for sustainable relationships with our customers. our commercial negotiations with these seven operators and many others are trending favorably towards agreements that benefit leagues, sportsbooks and their users. And of course these deals support our long-term revenue visibility and expanded partnerships with the leading sportsbooks to collectively capture a majority of the U.S. sports betting market. It's important to reiterate that our NFL partnership stems beyond just data and streaming rights for the sports betting and media markets. The NFL has also trusted us as their exclusive sports betting and I-Gaming advertising partner. Additionally, through Genius and NFLs joint innovation technology center we believe we will develop the next generation of products and services for the NFL to further improve the value of their content. By partnering with the NFL in new and innovative ways we feel confident that our successful execution and development of exciting new products, services and insights will strengthen our relationship with the league in the long term. Importantly, this has drastically improved the unique ways in which we can partner with sportsbooks. We are offering the highest quality NFL data feed to power the betting market. We are using our unique data access to help them acquire new customers, retain existing customers, and development new creative ways to engage their users with personalized content. Developing the next generation of technology jointly with the NFL to highlight new data points, create new betting markets, attract new fans, and enhance the overall user experience. Our goal is to partner with the leagues, sportsbook operators and media providers to develop the next generation of fan engagement solutions and ultimately use our unique position in the ecosystem to help our partners monetize on their fan engagements. We're confident that our partnerships with the NFL and our customers are beginning to super charge that goal. Last quarter we discussed how our suite of products and services are sold as a package and how the addition of the NFL would massively increase the overall value of our offering. We expect new and existing customers to appreciate the step changing value of our official data rights portfolio and also allow us to showcase our unique and broad value added services I mentioned earlier. As we approach the start of the NFL season, we are executing remarkably well on these expectations and we're starting to see this come to fruition with our sportsbook partners. The successful rollout of NFL products highlights our all encompassing platform of data and technology solutions. Through our commercial negotiations we're increasing our utilization of services and events under official rights earning a share of pregame and in-game revenue achieving significantly, but surprising value added services and activating our digital media and advertising solutions, all of which are being implemented by major sportsbook clients. These mutually beneficial partnerships are propelling Genius along a sustainable path to both long term targets of 40% market share, 5% of gaming revenue and 40% of adjusted EBITDA margins. Negotiations with our customers are progressing incredibly well as they are appreciating the value of the NFL's official data. As I mentioned previously on the call, official data is the only way to guarantee the fastest, most accurate and secure data feeds for the sporting events worldwide. Our commercial agreements today, alongside the NFL's direct sportsbook partnerships indicate that sportsbooks are embracing official data not only for the most crucial events like the NFL, but for other thousands of other events Genius covers. Our customers are also validating Genius' holistic offer which is simultaneously advantageous to leagues, sportsbooks and media partners alike. We're enabling sportsbooks to provide broader coverage of events, utilize cost-effective bookmaking services, acquire and retain customers more efficiently and engage and monetize fans with personalized content. Our partnership with the NFL has represented a huge and unique opportunity to change the way our sportsbook customers partner with us as we become more of a complete data, technology and media partner. I’ve spoken at length about our unique ability to help our customers engage fans especially in the context of our NFL partnership. I'd like to spend a few minutes briefly highlighting some of our solutions. Our media advertising capabilities were a key differentiating component of our partnership with the NFL. Our goal is to deliver personalized content to the right audience at the right time driven by our understanding of sporting events dynamics and audiences’ engagement with them. Our unique access to live sports data, odds data, and audience data, combined with our Ad Tech platform and comprehensive understanding of global betting behaviour, allows us to provide a range of solutions to sportsbooks and other advertisers. Our data access is unique to Genius and continues to enable brands to deliver innovative campaigns to tap into these into these highly coveted audiences. These brands spend a proportion of their marketing budget with Genius because of our differentiated solutions and have provided strong returns to greater campaign efficiency that would not have been possible without Genuis’ technology. A majority of the revenue earned in our media and engagement businesses driven by programmatic media buying, where we buy targeted ad space on behalf of our customers through specialist Ad Tech and exclusive sports audience segments. We help our partners engage, acquire and retain sports fans through a broad spectrum of campaigns and media. Using the NFL as an example, Genius has a view of the NFL audience and the ability to build profiles based on the type of content consumed, when and where it’s consumed, typical betting behaviour and other rich data that’s incredibly valuable from marketing perspective. Our Ad Tech stack allows us to combine live NFL scores, betting odds and audience profiles to serve personalized and relevant content on behalf of our partners with the goal of driving a transaction such as a sportsbook sign up, a bet placement, or any other type of purchase. It's this approach that gives sportsbooks the confidence to make Genius their preferred programmatic partner. Given Genius' unique positioning at the heart of the sportsbooks and other brands can optimize their customer acquisition, retention, leagues can better understand their audience to drive sponsor activation, merchandising or ticketing. Publishers are supported by Genius to deliver relevant content. We're also excited about the opportunity beyond sports betting brands. I mentioned how Genius helps brands connect with their target audience using sports and it isn't limited to sportsbooks. Sports betting can be used as a barometer for fan engagement. For example, if Genius sees higher than average wages on the Rams, our Ad Tech platform can automatically deliver Rams focused content for advertisers who want to engage with that fan base while having no direct connection to betting. While our media buying-trading desk is delivering most campaign execution, we have a full suite of fan engagement tools that our customers deploy. For example, we use our live data and odds to create widgets that are designed to fix natively within content on a sportsbook website or app. This solution will be used by the NFL for the upcoming season. Important to note that this isn't just limited to betting, but can be used across traditional sponsors to drive fan engagement. We're able to build content that generate engagement amongst fans and add values to sponsors. Advertisers also use our CRM tool to deliver personalized messages and promotions to individual fans. The messages can range from live score and other updates, bet recommendations, video highlights and next Gen stats and more. We're also serving live data driven advertisements across social media channels, including Facebook, Twitter and Snapchat. Our recent acquisition of Spirable further expands our capabilities in social media with personalized video content. Finally, our free to play games offer a wide range of engagement solutions via the FanHub platform such as [indiscernible], Rackets, Trivia, Polls and more. In summary, our central placement in the market, unique ownership of data and proprietary Ad Tech platform allows us to offer differentiated solutions for engaging fans in more meaningful ways while generating incremental sponsorship leagues that we partner with. Lastly, I'm delighted by the successful outcome of our first capital raise as a public company and unbelievably thankful for the support from our shareholders. We anticipate using the primary proceeds from the offering to invest in growth initiatives that accelerate the path towards meeting our long-term strategic objectives. These include accelerating official rights strategy to continue including more leagues and federations into our ecosystem and rights portfolio. It also includes enhancing our existing sports media and betting technology solutions to customers, making our existing tech stack and product offering faster, more efficient and ultimately more useful to our customers and partners. Part of this is also developing innovative new technology and building on the next generation of products and services. And lastly, we are arming our balance sheet for strategic and accretive M&A opportunities similar in approach to what we've just accomplished with Second Spectrum, FanHub and Spirable. These acquisitions strengthen and diversify the value of our overall platform and further cements our existing relationships with partners across sports, betting and media. These tuck-in acquisitions also pave the way to win new business and form partnerships with new customers that could greatly benefit from our comprehensive product offering. We’re deeply focused on our M&A strategy and execution. I look forward to the full integration of our recent acquisitions into the broader Genius platform. And with that, I'll turn it to Nick to discuss our quarterly results in more detail.

Thank you, Mark. And thanks to everyone again for joining today’s call. As Mark mentioned, we are continue to execute on our plan and the business is carrying on its momentum from the prior quarter. Second quarter group revenue moved year-on-year to $55.8 million with each segment of our business once again growing at a phenomenal pace. While last year's second quarter was plagued by disruptive sports calendar, we’ve continued to grow the business well ahead of pre-COVID levels. To start, our betting technology content and services revenue more than doubled year-on-year to $40.7 million. This growth has been driven by our increased market share, higher share of wallet through additional services to sportsbooks and also new customer wins, as well as by annualized growth in the overall global betting market. The major technology content and services revenue have increased 62% year-on-year growing to $8 million in Q2. This increase was driven by increased advertising spend in both the U.S. and Europe alongside the customer wins. And lastly, the sports technology and services revenue increased to $7.2 million. The main drivers for the sports technology increase is the inclusion of the acquisitions of Sportzcast, acquired in December 2020, as well as Second Spectrum acquired in June 2021. Within the sports technology line it's worth pointing out that there are a number of small revenue streams included here, being firstly those Sportzcast and Second Spectrum revenues which contributed $2.0 million in the quarter. Also, ancillary services to sports leagues such as the NBA and the PGA being $1.7 billion in the quarter. And lastly, non-cash revenue relating to our contra strategy for the rights being $3.5 million. It’s worth reiterating in relation to those non-cash revenue stream, this has no margin impact with cost of sales grossed up by an identical value. We are anticipating non-cash revenue to account for about 5% of total 2021 revenue and to only account for 3% of the 2020 to 2021 year-on-year growth as proportionately this revenue becomes increasingly de minimus. Group adjusted EBITDA grew by 126% year-on-year to $5.2 million, the result of our stronger economies of scale and disciplined cost control, which have allowed our healthy revenue growth to flow through to adjusted EBITDA. During the first six months of the year, our underlying businesses performed strongly. We firmly executed on the objectives we set out at the start of the year, proven success in our M&A integration, and strengthened our balance sheet to invest in growth initiatives. As a result, we’ve increased all our year-to-date revenues by 76% compared to the first half of 2020 with significant growth opportunities still ahead. As discussed on our Q1 call earlier in the year, our Q2 revenue position is in line with that of Q1. We expect continued quarterly growth in Q3 and Q4, and with that we're very confident in our ability to deliver on the guided target of $255 million to $260 million including and $10 million to $20 million in group adjusted EBITDA. It's also worth reiterating that the multiyear agreements that we have done and continue to do with both sports and sportsbooks is the strong visibility and certainty of the future revenues. During the first half of the year, we are nearly halfway to our full-year revenue targets, which is in line with our expectations. We anticipate tailwinds in the back half of the year, such as a more robust sport calendar, including the NFL, NBA and major European football returning. Having closed the acquisitions of FanHub and Second Spectrum, we're also expecting approximately $10 million to $15 million in revenue contribution for the remainder of the year as we noted last quarter. Our recent acquisition of Spirable is also expected to contribute revenue this year albeit a minimal incremental level with a 2021 annualized revenue of about $5 million. As mentioned on our previous call, our revenues will become more seasonal than they have traditionally been due principally to the NFL's fixtures running from September through to January. We also reported $14 million in group adjusted EBITDA to date which is the midpoint of our previously guided range and we reaffirm our prior EBITDA guidance. As highlighted in Q1, we expect to recognize higher costs in Q3 and Q4, principally being the $15 million investments, which is predominantly streaming rights that we flagged to you in the last quarterly call. The majority of this investment is being spent in the second half of 2021. As discussed in Q1, these types of investments are something we will do from time-to-time when the opportunity arises and where we believe there is significant shareholder return. However, I'm not expecting it to be repeated at this level in 2022. Going forward in 2022, we expect revenue growth to outpace the growth in our cost base and therefore anticipate positive EBITDA from our underlying business. Quickly on the NFL, I'd like to reiterate while it is difficult to attribute an ROI to any one league, due to our packaged offering of events and services, we do expect our NFL deal to be broadly breakeven on a cash basis in calendar 2021 and generate positive cash flows beginning in 2022 and thereafter. We are also confident in our ability to generate profitability over the life of the contract, including the cash consideration and the warrant expense to be recognized over the life of the contract. I'd like to touch on a few of the non-recurring items in our financial statements. First, continuing on the NFL, we plan to recognize the warrants issued to the NFL over their resting period as a stock-based compensation. You'll notice an additional charge in Q2 of approximately $200 million in relation to the NFL, reflecting the accounting for the 11.25 million tranche of warrants divested immediately upon signing in April. Additionally, and unrelated to the NFL, the closing of our legacy management incentive plan, which was in place prior to the SPAC merger, has resulted in another non-recurring non-cash equity charge in Q2. This legacy charge crystallized at completion of the April leaseback and has resulted in a one-off stock-based compensation charge of approximately another $200 million. It's important to note that both of these transactions are equity, non-cash transactions that will fit outside of our adjusted EBITDA position. We are also cognizant of the fact that we may, over the course of the next few months, have the option to redeem our outstanding public warrants. Our strong capital position allows us to be flexible and diligent in how we best move forward. We want to be clear with our intentions. Our decision as to when we redeem the warrants will be very much guided by market conditions, ability in our share price and liquidity. We aim to be as disciplined as possible in approaching redemption and will carefully review these factors before taking any action. Additionally, if provided the option and again based on the aforementioned conditions, we envisage cash settling our public warrants, which will bolster our balance sheet cash position, further accelerating our long-term growth plans. Lastly, we have a one-time uptick in certain SG&A costs, including increased audit, legal and professional fees resulting from our de-SPAC transaction. Much of this increase is non-recurring in nature and we expect these costs to return to normalized levels in the near term. To conclude, we're feeling more confident in our financial performance than ever before and this quarter's results illustrate the strength in our business and successful execution of our core strategy. We're strongly positioned to continue capitalizing on the industry growth, and we're very excited for what lies ahead. And with that, we'd be happy to answer any questions.

Thank you. [Operator Instructions].The first question is from the line of Stephen Grambling from Goldman Sachs. Please go ahead.

Hey, thanks for taking the question. It’s Stephen Grambling. So you announced a number of partnerships with different operators throughout the quarter. I'm just kind of trying to think through how do these typically ramp? How should we think through the contribution from some of these expected? This is the first question.

Hi, Steven, this is Nick. So yes, I mean, obviously, we've been announcing quite a lot over the course of the last couple of weeks and clearly that has been built into our material uplifting guide that we did in Q1 to the $250 million to $260 million. What we've seen really over the course of the year, we've been doing these deals is they're almost exactly in line with what we're anticipating and therefore that's why we have stacked our guidance to $255 million to $260 million. Clearly, they ramp on a long-term basis over the life of the NFL contracts and as the U.S. market liberalizes. But they're also as you've seen from the announcements, strong contributors. And the important thing for us is they are not just the data deals, and as we told you, it's about execution. It's also about the media deals, streaming deals, and indeed pre-match as well.

And I guess we'll follow up on that, so on the Ad Tech side of that is there any way you can help us think about the economics of that business? I think you gave the example of buying ad space, I guess, how are you being paid? How are you making money? And how do you see the margins on that, versus kind of the core software kind of line setting business?

Hi, there it’s Mark. I mean the Ad Tech deals that we envisaged are coming through very, very nicely, I mean, as you've seen the advertising business grow very, very satisfactory over the period. Well, the way that those deals work is, we get commitments from sportsbooks on their marketing spend and what we do is we then spend those marketing dollars on behalf of those sportsbooks in order to acquire new customers for them and there's other things that we can do in the future in terms of reactivation and retargeting. But at the moment, the main focus, especially around the start of the season is around customer acquisition. So we have the deals that we're doing and the ones that we're announcing that include the marketing spend, are really about getting a long-term commitment from the sportsbooks on those marketing dollars. And that gives us really good long-term visibility about the revenues. Again, it helps us to be very confident in the numbers that we are, that we're putting out into the market and it really gives us the ability to sort of to forecast that sort of growth very, very well.

Yes and Stephen this is Nick, it's worth just pointing out in terms of the blend of our revenues for the rest of the year, I think media is running at around about 15% of our revenues. Given the deals that we've been doing, I'm expecting that to increase as a proportion, probably near around about the 20% of our revenues by the time we get to the end of the year. And then that will probably likely to increase proportionately in 2022 as well.

And maybe one more, and then I'll yield to the floor, on the official rights strategy, you're referencing that it's kind of playing out and a big part of that seems like it's the NFL. I think one of the pieces of pushback that we get from investors is, hey, has it really been as relevant in Europe, and in particularly the UK, where it's a more mature market relative to the U.S.? So I'm curious, are you seeing any change in behavior from the operators in Europe as well as it relates to the official rights?

I think it's a great question. I'm delighted you asked it actually. We -- I mean, we are seeing a change and it's definitely going in exactly the direction that we said it would. So it was a couple of years ago, if you recall the story, we really started to enforce the rights that we had after spending a very long time building a portfolio. And what we saw in Europe is, we saw a very aggressive adoption of that. And I think within maybe the sort of first six to 12 months of us starting to enforce our rights, over 70% of our customers have signed up in one way or another to what we -- to committing to taking official data where it's available and clearly that was the majority of operators and a huge proportion of that was UK and European operators. What we've seen throughout the deal with the NFL, again and you'll see through the announcements that we've been making is a continued embracement of that official rights strategy, the contracts that we're doing obligate sportsbooks to work with us on official data where we hold the rights. And again, the rights portfolio as I've said, during the initial part of this call, have grown very, very nicely. So overall, the official data strategy is working exactly as we expect it to, exactly as planned and we're incredibly pleased with how well and that's dropping through in terms of the contracts, the revenues that we're seeing in the business.

Awesome, thanks so much for all the details and I’m back in the queue.

Next question is from the line of Jed Kelly from Oppenheimer. Please go ahead.

Thank you. Great, thanks for taking my questions. On the NFL profitability, can you just kind of dive into some of the key drivers, is it going to be more driven by the live ads from in-game betting or leveraging your unique data, can you just answer some of the questions around profitability because it seems to be what investors are kind of most interested in?

Hi Jed, this is Nick. I'll just take the sort of the -- I guess the numbers side of that, and then I'll hand over to Mark, who can talk a little bit about the drivers. And I just want to reiterate, we said that I think at the end of Q1, was that again, is that, yes on a cash basis, and it's going to be broadly breakeven, we're anticipating it to be broadly breakeven in 2021, and then cash generative from 2022 onwards. And also, if we look at the contract as a whole, we're expecting it to be profitable as a whole contract, if we look out to the end of the six-year period, but I'll let Mark take the driver piece.

Yes, that's right. And really, if you recall, with our go-to-market strategy, it makes it very difficult, as I said in the opening part of this call, very difficult, I think Nick said actually, to break out the ROI of the NFL or indeed any particular sport on its own basis. But because of the way that we sell it, as a business we tend to look to add services on a much broader basis to our customers. So that will include the NFL data, but it will also include other official data, we have other rights partnerships. It will also include provision of odds services, it will also include the provision of obviously the marketing service. The combination of all of those things and is the basis upon which the deals that we're doing, and the renewals of the contracts and the update of the contracts are being done. And as I said, when I was speaking to Stephen a second ago, they're going very, very well. And in terms of, the sort of, some of the metrics we're seeing large proportions of our customers taking more than one or two products and increasing the number of products that we're seeing. And again, I said this before, our business is about adding value added services to our sportsbook partners, but there's also a fair degree of business, it's about leveraging, and having the NFL allows us to increase the amount of products and services that we're able to provide to our sportsbook partners and really sort of help drive their growth.

Got it. That's helpful. And then on the media content, we're still in early days. however, revenues did decline sequentially. I mean, would you expect your revenue, your media tech to outgrow normal seasonality trends in advertising? And, how should we think about the long-term growth in that business?

Yes, I mean, let's be clear, it grew 63% year-on-year as well Jed, so but I think we said at the time, the end of Q1 announcement, we had such a strong year, strong quarter in Q1, 2021. And that's principally from the U.S. sporting events, with both March Madness and the Super Bowl off the back of our FanDuel announcement that we announced back in the, I think it was January 2021. So we were fully anticipating it to be marginally back quarter, when you look at it on quarter-on-quarter. What I'm anticipating really is now with the coming back of U.S. sports and indeed coming back of European soccer as well, the season is that I’m anticipating the major business to grow significantly in the next couple of quarters. And as I say, actually, I think proportionately, I think I just said to Stephen is that I'm expecting media to be in around about the 20% proportion of our revenues by the end of the year. I don't see that business slowing down. If I were to look a little bit more long-term, particularly given on the back of the deals that we're now announcing on the NFL, and therefore I see it continue to and proportionally grows our business. I mean, it will never be the majority of our business by any stretch, but it will be a more significant minority if we look through a crystal ball to the next two or three years.

Got it and just a follow up before I get back in queue. Where are you taking advertising share from? Is it from the traditional programmatic players or is this just a new category for the sportsbooks?

So, I'll take that and sort of give a bit of a high level and then I'll pass it across to Josh who runs that business to give you a bit more detail on the specifics. So one of the things that I think it's worth just reiterating, yes, I've done it before, but is the fact that when we're talking about these advertising dollars, it's really worth making, again just making it really, really clear that we're talking about a new TAM for Genius. We've -- Nick and I've talked ad infinitum, I'm sure you're sick of hearing us talk about the TAM that we're targeting our 40% of revenue, 5% of gaming revenue, 40% long-term margins, when we're talking about these advertising dollars and this advertising revenue that's coming into the business, this is a brand new TAM for us. We've never quoted. So we're not trying to effectively squeeze advertising revenue into the original figures. We still believe that we can get to those numbers that we've stated of through that original TAM. The new TAM that we're talking about is really those advertising dollars that the sportsbooks are spending to acquire and ultimately reactivate and we engage their customers. But Josh, give a brief overview of how the deals are structured, if you like.

Hi, there. Yes, just add to that, where the marketing spend is essentially coming from is two avenues. One is we're winning marketing budgets off the sort of traditional agencies and we're also working with operators to help them understand the efficiencies of their various marketing channels in-house. And some of that involves them moving budgets from other channels into the services that Genius offers. So that's essentially the two main areas where we're securing budgets from.

Thank you.

Next question is from the line of Bernie McTernan from Needham and Co. Please go ahead.

Great, thanks for taking the question. Maybe it's a follow up to that last one. You mentioned audience profiles before in media, what do you, what exactly do you know about the consumers that you're hitting with ads? Where do you get the data from? And how differentiated is that relative to a traditional agency or others that are directing advertising spend that you're competing with?

Hi, there. Josh again. Yes, so where we get the audience data from essentially all the different points that we're distributing our sports data, and we have totally unique views of those fans of how they're engaging with our consumption habits of how often they're reading a sports article. What teams do they follow, checking team rosters, watching video highlights. We essentially aggregate all of those data points to create an individual view of each fan and when -- we then feed that into our Ad Tech business, and we essentially assign a fan score to value that fan so that we can highlight into the advertising campaigns. But it's totally unique to Genius just through our Genius relationship with the sports bodies and our place in the ecosystem.

Thanks for that. And then do you have a census in terms of how big the programmatic budgets are for sportsbooks relative to other advertising means? And then maybe what your share is inside of that and where you expect it to go over time?

Yes, I mean, we are working on providing at some point in the coming period some information on the TAM that we're working for. Programmatic budgets typically don’t form the majority of these sports budget by any means. I mean, it is definitely a minority. But one of the things that comes from this is a highly efficient return that you get and then you get very targeted advertising and very high returns, which is why this programmatic part of our business is being so successful. So I think over time, we will release more information about the TAM. There's also other ways that we're looking at accessing those marketing dollars, and other drivers that are going to give us more access to the marketing dollars that are available.

Great. And then maybe lastly Mark, you mentioned earlier in the call, U.S. 40% to 50% of that being is in-game. That's still below Europe, I think that's closer to about 70%. But can you remind us on how quickly you think the U.S. can reach European levels? And is Europe for in-game penetration the ceiling we should be thinking about or do you think it can go even higher in the U.S.?

Yes, look, I think in the UK, I mean, we -- I think we often quote, I think it was that 365 or is it 79% of that of their wages were made during the game. And again, there's the 40% to 50% was an anecdote from one of the sportsbooks. We believe, and we're seeing evidence that the amount of in-play wagering is increasing rapidly. But the thing I guess that's worth thinking about here is that you know, the rates at which it will increase and again, to answer sort of final part of your question, how much of the market can re-engage is getting -- is really going to come to and the quality of the products that you're putting out into the market and the way that you engage those fans. So as a business, we invested money in our own tech stack that's providing all of the data and they also have the line services, but also acquisitions such as Second Spectrum, FanHub, Spirable, all of the businesses that we're acquiring and bring in really help us focus on our product development. And it's that product development in the way that that product is presented to the sports fan or sportsbook customers, alongside the targeted advertising and the targeted offers that you're going to put in front of these guys, that’s the thing that's going to drive that growth. So do I think there's a ceiling? I think there's a -- there is, I don’t think 100% of all bets are going to be placed live or during the game, but I do think that if you -- if we get the product right, and if we deploy all the services that we've got at our fingertips over time we will end up taking the very vast proportion, and I could definitely see that being in excess of the 79% of that 365 quote, yes.

Great, thanks for taking the questions.

Next question is from the line of Ryan Sigdahl from Craig-Hallum Capital Group. Please go ahead.

Great, thanks for taking our questions. I'm curious, if you can quantify the number of sportsbooks that have signed up for official NFL data with Genius? And then secondly, along those lines, you alluded to FanDuel MGM points that box that ones you haven't officially announced, but can you talk through those negotiations, are those, do you have contracts there or still actively discussing?

Look, I think the way that we're approaching this is, we're looking for long-term, wide ranging partnerships with the sportsbook partners. And again, we're announcing the partnerships as they go. Clearly, we as a business are focused on being a good partner. We've got long-term relationships with a lot of the sportsbooks, and we look -- we're looking to make sure that we're not putting them in difficult situations at the beginning of the season, but we are very focused and having a lot of success in getting the right deals, for us in the business going forwards. In terms of the sort of the NFL, the NFL has obviously announced seven partnerships with various sportsbooks, and there's an obligation, a positive obligation on all of those partners to buy official NFL data from Genius Sports. So, I think things overall are going extremely well. I mean, we are very, very much on track from where we thought we would be. And again, that's allowed us to narrow the guidance and give us a huge amount of confidence for where we're going to come out at the end of the year.

And then for the ones you have announced, DraftKings, Caesars, Wynn, et cetera, so NFL English Premier League, several other soccer leagues, was this an extension or an expansion of leagues or were those, I guess, incrementally events outside of the NFL or were you previously providing those and this is just an extension multiyear expansion, et cetera?

Hi, Ryan, I'm just going to introduce Jack Davison. Jack is our Chief Commercial, so he's going to give you a bit of an update on that.

Hi, Ryan. Good, thanks for the question. And really with each of these deals, obviously, most of these operators we have relationships with in some shape, or form and have done as you know, for a long period of time. In each of these deals that we're announcing, none of them are the same, but all of them are focusing on more than one product, I would say. So that ability to how we think about this stuff is the NFL data is obviously a big part of it. But all of the other assets that we're able to bring as part of our NFL relationship, the digital marketing stuff, but also all of the other content and official data that we have. So I'm not going to talk about specific deals there, but all of those deals that we're doing are very much on strategy in terms of moving operators spend from unofficial products onto official products, for example, and that is moving spend from making sure we get the largest share of wallet in those conversations. So without going specific on each deal, and they're not all the same and our level of maturity with each customer is slightly different in terms of where we are, but all of them are moving us forward on that strategy to make sure the operators that we work with don't just work with us on the products that they, that the NFL, but also work with us and all of our assets, all of our official data assets, so and hopefully that answers your question.

Yes, helpful. Thanks, Jack, Mark, Nick. That’s it from me. Thanks.

Next question is from the line of Robin Farley from UBS. Please go ahead.

It's Robin Farley. I've heard your comments about the NFL and maybe I'll try to ask it in a slightly different way. I wonder if you could give us a sense of just ballpark how much of the revenue, you know the return expectation you have for the NFL deal is from just deals related to the NFL data directly versus other sports rights data or other sports data and advertising that are sort of tied or packaged in, if you could, and if there's a ballpark way to give us a sense of how you're expecting that return? Thanks.

Yes and I'm going to unfortunately not be very helpful to you. But the reason I can't be help with you, it's not how, it's not how we sell our products. We package things together, we -- it's almost unheard of that we would that a sportsbook would only choose to buy just the NFL data from us. So we don't break this out like that and it's not how our business model works. I'm sorry to be unhelpful, but we just can't do that.

Okay, I guess I'm just thinking about those that didn't buy some other sports from you that will now buy those other sports from you and package it. And even if you couldn't break out the sort of revenue differential, is there a way to think about kind of what percent of your customers have switched other sports to you in an NFL package deal?

Sure. I'll pass to Josh again.

Yes, hi Robin. I think without being a bit more, I think we should refer to the previous answer, but look, when we do any deals with any customer, we're very clear all the way through that we have an efficient data strategy that's the strategy of the business and that's the thing. So what you've got to think about like this, we really want to find operators, partners who buy into that strategy top to bottom. So we're not really interested in doing having operating partnerships that pick and choose if you'd like. So I think that answers your question, really, but all customer conversations we're having are always about all of our official exclusive data without fail, there are any that don't include that stuff. So, they're all slightly different in terms of their makeup and how they fit together and all the different packages, and how we work with them on an international basis as well as in the U.S. because a lot of these customers are long standing customers of Genius for many years. But they're all slightly different in that way. But the strategy of the business is one that's based around all customers backing our official data strategy and those are the customers we want. Well, we're not really interested in others. So that doesn't give you specifics or percentages, but it's certainly from a commercial point of view that is a primary focus of all discussions that we have with all customers.

Okay. And one other, in terms of your revenue guidance, does that include any further acquisitions that have not yet been announced or that we don't know about or would any incremental M&A at this point would add to your guidance? In other words, hitting your guidance does not require any acquisitions that you haven't already announced as of now, is that right?

Yes, that's exactly right, Robin it’s Nick. Yes it includes a obviously, the two transactions that closed in June will contribute and I think we're talking about to continue around about $15 million to $20 million of revenue in the year. Spirable we announced is frankly sort of inconsequential really from a revenue perspective, but no, there's nothing else built into what was already announced.

Okay, great. Thank you.

And at this time, we have to stop the Q&A session. If you have any leftover questions, please direct them to Genius Sports. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.