Genius Sports Forecasts 2022, 2023 Profitability, Significant Revenue Increases

Posted on: January 27, 2022, 10:25h. 

Last updated on: January 28, 2022, 01:05h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Genius Sports (NYSE:GENI) is hosting its investor day today, and in advance of that event, the sports betting data provider offered up bullish profitability and revenue forecasts for this year and 2023.

Genius Sports
Genius Sports stock highlighted on the floor of the New York Stock Exchange. The company presented encouraging 2022 and 2023 guidance today. (Image: Genius Sports)

The company said it expects revenue of $340 million this year on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $15 million. Next year, Genius sees those figures surging to $430 million to $440 million and $40 million to $50 million, respectively.

The original business is already delivering adjusted EBITDA margins of approximately 20 percent,” said Genius in a statement. “The US business is a key area of investment with strong growth opportunity and expected profitability by 2024 on an adjusted EBITDA basis.”

Genius shares aren’t responding to the news as the stock is lower by 3.11 percent in midday trading, extending a decline that’s seen it tumble almost 76 percent from the 52-week high.

Analyst Sounds Optimistic Tone on Genius

A major reason Genius stock is struggling are investors’ concerns regarding the substantial investments it needs to make to retain and expand market share. Today’s EBITDA and revenue forecasts could eventually allay those fears and at least one analyst remains bullish on the data provider’s prospects.

In a note to clients today, B. Riley analyst David Bain reiterates a “buy” rating on Genius with a $23 price target, implying the stock can nearly quadruple from current levels. The analyst says it’s a positive that Genius offered up a narrow range of guidance because it “demonstrates strong visibility.”

“We continue to believe sports data is at the heart of online sports content, particularly as the US begins to move further toward real-time betting,” said Bain. “The procurement of official data offers a scarce, sticky, immersive monetary opportunity across the entire sports betting and sports media ecosystem, in our view.”

Genius provides data in over 150 countries to more than 400 sports organizations, including the NFL, EPL, FIBA, NCAA, NASCAR, AFA, and PGA.

Keep an Eye on Competition

As is the case with the sports betting landscape at large, the data space is hyper-competitive, with Genius tussling with Sportradar (NASDAQ:SRAD), among others.

“However, a recent IPO by its largest competitor, Sportradar, has resulted in increased access to capital for the data, and its most recent deal with the NBA showcases an increasingly competitive environment, in our view,” adds Bain.

Investors and some analysts soured on Genius and Sportradar due to concerns the companies are giving up too much to land deals with various sports leagues. The bull case for sports betting data stocks largely centers around the data scarcity mentioned by Bain, as well as the expansion of regulated sports wagering. As sportsbook operators offer more unique and live wagering options, they’re likely to become increasingly data-dependent, potentially bolstering the case for Genius and Sportradar.