Genius Q1 revenue exceeds targets but stock-based costs mean losses grow

| By Daniel O'Boyle
Data provider Genius reported Q1 revenue of $85.9m, 59.9% ahead of Q1 of 2021 and 10% above expectations, but stock-based expenses meant its net loss widened almost eightfold.
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Betting technology, content and services brought in $49.7m, which was up by 27.4% from Q1 of 2021. The majority of the increase, $7.3m, was due to new customers.

Media technology, content and services experienced the fastest growth, up by 157.3% to $24.1m. This, Genius said, was “primarily driven by the acquisition of new customers in the Americas and Europe primarily for programmatic advertising services, and the inclusion of revenues from recent acquisitions”.

Sports technology and services brought in $12.1m, up 124.0%. Most of this growth was also acquisition-related, with Genius highlighting the acquisition of Second Spectrum.

Looking at a geographical breakdown of revenue, just over half – $44.2m – came from Europe, up 11.3%. The Americas brought in $36.0m, up 246.1%, while revenue from the rest of the world grew by 56.8% to $5.7m.

However, costs of revenue grew much more quickly, by 152.7% to $101.4m. A major reason for this growth was stock-based costs of revenue, which came to $22.5m in Q1 of 2022 after no such costs the year before. These stock-based costs of revenue refer to warrants that were issued to the National Football League (NFL) when Genius became the league’s data partner, allowing the NFL to purchase Genius shares for $0.01 each.

As a result, the business reported a gross loss of $15.5m, compared to a gross profit of $13.6m in 2021.

Like costs of revenue, operating expenses also grew more quickly than revenue did, by 196.7% to $49.6m.

This included sales and marketing expenses, which were up 138.3% to $9.2m, and research and development costs, up 126.7% to $7.4m, as well as general and administrative costs of $32.8m, a 270.2% increase. These general and administrative costs included $13.9m in stock-based compensation, which again was a new outgoing.

As a result, Genius made an operating loss of $65.0m, after a $3.1m operating loss a year earlier.

The business then paid $391,000 in interest expenses, but made a $4.4m gain from the fair value remeasurement of contingent payments related to the Second Spectrum deal, plus an $8.7m gain from the change in value of warrants issued when the business went public and a $12.6m gain from currency exchange changes.

As a result, the business made a $39.6m pre-tax loss in the quarter, after a $5.8m loss in Q1 of 2021.

After $576,000 in taxes, Genius made a net loss of $40.1m, compared to a $5.3m loss the year before.

The business also reported an adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $2.9m, which was 42% lower than the projected EBITDA loss.

“Our strong first quarter is a result of successful execution,” said Mark Locke, Genius Sports co-founder and chief executive. “We began 2022 with a comprehensive investor day, outlining our strategic plan and underlying assumptions supporting our financial outlook. 

“Our financial and operational achievements in the quarter demonstrate our ability to deliver on that plan and increase our competitive advantages through unique and proven technology.”

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