Genius Sports’ Q3 Revenue Growth Offset by Sky-High Expenses

Official supplier of sports betting data and content Genius Sports released today its third-quarter financial results posting an operating loss for the three months ended September 30, 2021 of $64.8 million as expenses soar across the board.

Unprecedented Growth Level

The operating loss was registered on the back of an over 70% increase in revenue year-over year to $69.1 million, as compared to $40.6 million in Q3 2020. For the nine months ended September 30, 2021, Genius Sports had $497 million in loss from operations, more than 35x higher than the first nine months of 2020.

Commenting on the results, Genius Sports CEO Mark Locke focused on the “unprecedented level” of growth acceleration at the company that surpassed “original expectations.” Highlighting the partnership with the NFL, Locke outlined the confidence at the company “of the long-term prospects of the partnership.”

Revenue from Betting Technology, Content & Services increased 48% year-over-year to $43.6 million as price increases, powered by official rights strategy, value-add services and new service offerings, on contract renewals and renegotiations with existing clients drove growth in the business.

Revenue from Sports Technology & Services jumped 159% year-over-year to $6 million, fueled by two acquisitions, Sportzcast and Second Spectrum, while Media Technology, Content & Services accounted for an increase in revenue of 114% to $9 million due to new customer wins for programmatic advertising services and revenues from recent acquisitions.

Genius Sports chief financial officer Nick Taylor outlined the business is positioned for “continued success,” prompting the company to raise its 2021 revenue outlook anticipating “continued strong revenue growth” alongside the expansion of the market, while at the same time having the option to fund new strategic growth initiatives.

Skyrocketing Expenses

Cost of revenue jumped nearly 3x to $86.4 million, from $29.1 million in Q3 2020, leading to a gross loss of $17.3 million, compared to a profit of $11.4 million in Q3 2020. On the cumulative side, the cost of revenue soared more than 4.5x to $366.7 million, extending the gross loss for the first nine months of 2021 to $188 million, compared to a profit of $23.1 million in 2020.

Operating expenses posted increases year-over-year across the board: sales and marketing 2.4x to $6.1 million, R&D 4.7x to $9.8 million, general and administrative more than 4x to $28.7 million and transaction expenses 54x to $2.9 million, leading to total operating expense of $47.5 million. This was an increase of more than 4x year-over year. Cumulatively, total operating expenses sky-rocketed to $309 million, more than 8x higher than in 2020.

Total loss from operations was the main contributor to the negative adjusted EBITDA of $392 million from a positive $9.4 million in Q3 2020, while cumulatively, it was $14.1 million, marginally up from $13.5 million in 2020.

Looking into the future, Genius Sports increased its full-year 2021 revenue projections from a previous $255-$260 million, to approximately $257-$262 million but revised its adjusted EBITDA forecast down to breakeven from a previous $10-20 million to reflect its intentions to fund organic growth with near-term earnings.