Genius Sports Soars on Surprise Profit, Upped Outlook

Posted on: November 12, 2024, 03:22h. 

Last updated on: November 12, 2024, 03:22h.

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

Shares of Genius Sports (NYSE: GENI) surged Tuesday after the company posted a surprise third-quarter profit while upping its 2024 financial guidance.

Genius Sports
Genius Sports appears on the screens of the NYSE after it went public. The shares surged Tuesday after the company reported a third-quarter profit and lifted its 2024 guidance. (Image: Genius Sports)

On a day when most gaming stocks succumbed to some profit-taking, shares of the sports betting data provider were up almost 16% on quadruple the average daily volume in late trading. Genius told investors that it notched third-quarter net income of $12.5 million on earnings before interest, taxes, depreciation, and amortization (EBITDA) of $26 million. Revenue for the period was $120 million. The company previously forecast third-quarter EBITDA of $25 million on sales of $119 million.

The net income figure was likely a significant factor in today’s bullishness for Genius stock. That metric is a truer sense of a company’s profitability than EBITDA and in the case of the sports technology firm, its third-quarter net income figure this year was a $24.1 million reversal from the year-earlier period in which it lost $11.6 million.

During the quarter, Genius extended its data relationship with ESPN to bring more data to broadcasts of college sports, the NBA and the WNBA while also striking another social media deal, this time with Reddit. On that platform, users engaged in NFL-related threads can see enhanced data courtesy of Genius Sports.

Genius Lifts 2024 Guidance

Confirming that it is a catalyst-rich, high-growth story in the world of sports betting equities, Genius lifted its 2024 EBITDA and sales guidance, adding fuel to today’s surge by 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 previously told investors it expects to post 2024 sales of $480 million on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $75 million. The upped outlook implies 2024 will be the fourth straight year in which Genius grew its top line by at least 20%.

The company added that it expects margins to expand this year by approximately 400 basis points, indicating that it’s maximizing efficiencies. In the third quarter, Genius sported significantly loss from operation and transaction expenses than it did a year prior.

Expect Cash Flow Positivity

Another contributing factor in the Tuesday pop by Genius stock was the company reiterating expectations of being cash flow positive for 2024, but the company did not provide specific cash flow guidance for the 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.

On the call, CEO Mark Locke touched on growth in live betting on the NFL – the league to which Genius is the exclusive data provider. Increases in in-game wagering and same-game parlays lead to new data demands that can benefit companies such as Genius.