Welcome to Genius Sports Q3 2021 Financial Results. Throughout the call, all participants will be in a listen-only mode and afterwards there will be a question-and-answer session. [Operator Instructions] Today, I am pleased to present Brandon Bukstel, Investor Relations Manager. Please go ahead.

Good morning, everyone and thank you for joining us today. Before we begin, we would 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 statement. 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 maybe useful in evaluating Genius’ operating performance. These measures should not be considered in isolation or as a substitute for Genius’ 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 will now turn the call over to Mark Locke.

Good morning and thank you for joining us today. We are thrilled to announce Genius’ growth is accelerating at an unprecedented level and we have delivered another strong quarter with record revenues growing over 70% year-on-year. On today’s call, in addition to updating you on our performance in the quarter, I’d like to focus on three key updates. First, we will provide quantitative detail on the recently announced agreements with our sportsbook partners. Off the back of our exclusive NFL contract, we structured mutually beneficial partnerships, which fueled industry-wide growth and accelerate our journey to meeting long-term targets. Second, we plan to formally frame the size of the market opportunity for our media and engagement business. On our previous earnings calls, we have outlined our differential fan engagement solutions and now we hope to round it out by articulating the total addressable market and our place in it. Third, we will discuss our vision for the future and highlight some of the incredible opportunities that we have in front of us. We are excited to share the work we have done and the areas of investment that will enable Genius to continue to fulfill its place as the technology leader in the sports ecosystem. I will cover each of these topics in more detail shortly. But first, I’d like to quickly recap on some of the highlights from the third quarter. We are very excited about the progress we have made since our last call and this quarter’s strong results reflect our team’s continued execution. First, we reported record revenue of $69.1 million in the third quarter. This represents another quarter of strong revenue growth increasing by over 70% year-on-year driven by well balanced growth across all business segments, while adjusted EBITDA is broadly breakeven. As we have mentioned in…

Thanks Mark. As Mark mentioned, our Q3 results reflect our solid execution in the underlying business. Third quarter group revenues increased by over 70% year-on-year to a record $69.1 million, with each business line increasing significantly, demonstrating another quarter of diversified and well-balanced growth. First, our betting technology content and services grew 48% year-on-year to $43.6 million. Growth in this segment was driven by increased pricing with existing customers, new customer wins and increased utilization of available content. In the third quarter, we also recognized revenue for the first 3 weeks of our inaugural NFL season. Our major technology content and services revenue continues to increase at a phenomenal pace, more than doubling year-on-year to $13.9 million. Strong growth in our media business was driven by new customer wins, both within sports betting and non-sports betting sectors. And lastly, the sports technology and services revenue increased 159% to $11.6 million, once again getting significant contribution from Sportzcast and Second Spectrum. Our revenue to-date is trending positively towards our full year outlook. And we have made exactly the right kinds of commercial deals in the quarter to continue our momentum through year end. It gives us great confidence to increase our revenue outlook to a range of $257 million to $262 million, equating to over 70% year-on-year growth at the midpoint. We are also revising our adjusted EBITDA target to be broadly breakeven for the year as we expect to reinvest in the business to achieve the long-term vision that Mark has just spoken about. As Mark mentioned earlier, we structured our commercial agreements in line with our expectations and we are more excited than ever about our opportunity to generate solid returns on our groundbreaking NFL deal. We have reached terms that allow us to earn a significant share of…

[Operator Instructions] The first question is from the line of Jed Kelly from Oppenheimer. Please go ahead.

Hi. Thanks for taking my question and nice quarter. Two if I may, just Mark on your 5% comment on global GGR. Can you kind of expand on how we should think about it? We kind of hear from the operators, that, that might be a little too aggressive and maybe we are oversimplifying it. And then just on the guidance on the quarterly guidance, can you give us an update on how your betting revenue was trending in October and November relative to the guide?

Hi, Jed. It’s Nick. Let me take the second one first and perhaps Mark might be able to pick up the first. But on the second one, I understand the question, and I know the market has been some noise around operating profitability in October. I think Mark said on the call, we certainly have some downside protection there. We structured our deals to such that we have that in our deals and any views on where we sit in October and the first couple of weeks of November have been taken into consideration when we have upped our revenue guidance to the $257 million to $262 million.

Hi, Jed. How are you? Thanks for that. On your first question, if you are asking if 5% of global gaming revenue was too aggressive, I think that’s the question, right.

Yes, correct. I just, how you struck – yes.

I mean, we don’t think so. We think on a long-term basis, it’s eminently achievable. And what we were saying in the earnings was really that we were on a sort of very strong journey probably slightly ahead of where we thought we would be towards reaching that. I think I said in the earnings a lot of the deals we are striking on the in-play with the NFL are in excess of our long-term goal. So, we feel very comfortable with that.

Got it. And then just as a – I guess, two quick follow-ups, I guess the November holds, we have seen some mean reversion there. And then one more question, Nick, on the third quarter media revenue, very strong. I mean is third quarter going to be the peak quarter for you guys for media just given the cadence and how the OSD – OSPF operators advertise? Thank you.

Yes. Jed, I mean I can’t really comment on the November position, I will just kind of revert back to my comments I think I made on the October position. In terms of media, yes, very, very strong revenues. There was an element of inorganic growth in there. But on the underlying basis, the revenues are still significantly up year-on-year. I am actually circled to – I am anticipating actually our fourth quarter to be a slightly higher position than where we have come out on Q3 and all that, again, is built into the $257 million to $262 million guidance.

Thank you.

The next question is from the line of Stephen Grambling from Goldman Sachs. Please go ahead.

Hi, thanks. I just want to clarify, I guess a couple things. One, I guess is the NFL transaction trending to the cash breakeven that you thought and when you are referencing some of the reinvestments into the business, where are the biggest buckets that this is being allocated to? And just to confirm, I think you said that your commitment is to a breakeven going forward is that on an annual basis? Thanks.

Yes. Hi, Stephen. Let me have first go at that and then I guess Mark and the guys can check in there if they want to. So, there is a couple of questions there. You are right. Just on that last point. We as the Board and management team are united in managing the business in the short-term to an EBITDA breakeven or better position. And that will be on an annual basis, there will obviously be ups and downs on a quarterly basis as we go. In terms of where we are looking to invest and I think Mark will say clearly on the call, we are in a really early position in our growth cycle and the opportunities in front of us are really accelerating significantly. And therefore being front footed in our ability to invest now we think is the right decision. Now, practically, what that means is really three areas. First of all, I think I called out rights, this remains Stephen that’s the foundation of our growth. And we will continue to and I have been historically continuing to invest in that area. And like a lot of rights deals, not just in our industry, in any industry, some of those rights deals means investing ahead of the revenue curve. But we will only do so on right deals that we think has a long-term value for the business. Secondarily, tech and again, you have heard from Mark about sort of leading tech position in the market. But as you noted, we can’t be standstill there. We were looking to turbo-charge the investment. And look and I will particularly call our acquisitions as a great example of that. Second Spectrum technology, we are looking to invest in such areas as low latency, improving the tracking,…

And so perhaps one follow-up there, since you mentioned rights as being effectively the primary focus, maybe if you can just touch based on the NBA deal that was recently signed, how you thought about that potential partnership and the impact that that could have from the agreement with one of your competitors?

Yes. Hi, Stephen, it’s Jack Davidson, I am Chief Commercial Officer. And I think it’s a really interesting question, I mean just to give a bit of background on where we are and how we arrived to this point. I mean clearly, the NBA is important. And we were part of that process. And that’s something that, having the NBA as part of our stable of rights in that way would be something that would clearly be good for the business. The flip side to that is there has to be balanced process, balanced judgments around the viability of any deal we do with any rights holder, whether it’s the NBA or anyone else, and we have got to be prudent and smart about how we do that. I don’t want to talk specifically around elements that are prospects and perhaps a good way of articulating it would be to sort of compare it a little bit to the NFL and that relationship because we see some similarities but also quite a lot of differences really, and ultimately we have to find a way to make sure that we will make a smart decision for the business. So, good differences, the NFL deal that we have, it gives us as you have talked about, and Nick and Mark have articulated a lot of benefit in the media space. We got a lot of inventory. We got a lot of assets as part of that relationship. That enabled us to show the sort of growth that we have talked about today. And that’s a big part of the ecosystem. None of that stuff was really available as part of the NBA dynamic partly because I am sure everyone knows they have a JV with return of some of their digital assets.…

Got it. Thank you. I will jump back in the queue.

The next question is from the line of Mike Hickey from Benchmark Company. Please go ahead.

Hey Mark, Nick, Brandon and good morning, good afternoon, guys. Congrats on the quarter. Just curious on your view of the Canadian opportunity, it looks like obviously, we are moving to a regulated market beginning with Ontario, to sort of thinking how expansionary you think that could be, obviously, there is a sizable growing there. And then also curious on the media side, a lot of operators going into the market?

Yes. Hi. It’s Jack Davison, Chief Commercial Officer, I have to pick this up. I mean for us, regulation has always been a good thing, right every day. What you are going to see is a business that’s going to come out of the shadows, and we know that they exist there. And we know there is a growing market, something that’s going to become more mainstream obviously starting with Ontario. For us, we like as those – as Ontario and in time other states in Canada regulate and regulate in a more traditional way, I guess is the U.S. something like the U.S. sports, the U.S. states some regulating, that’s a good thing, from our point of view. It’s opportunity, like suddenly there is a real opportunity in terms of from both sides the size of the market that can grow, but mostly from a data and trading point of view and all of those things. We obviously like our position in terms of the NFL, in some way in Canada. So, we like that from that point of view. But also from a marketing point of view, it creates a whole new opportunity for us to work with regulated operators who can spend properly on marketing and we can hopefully mirror a lot of the success that we have seen across the U.S. states, in Canadian states as they open up. So, for us, it’s obviously good news, the opportunity is, it’s more opportunity in areas that we feel very, very good about the business. Not only just in the sports betting space, but all of those relationships we will be able to build with media partners there, publishers there, all of that stuff that we are able to execute. In the U.S., we hope to be able to and expect to be able to mirror up in the Canadian states as they open up. So, hopefully that answers your question?

Yes, nice. Thanks, guys. Best of luck.

The next question is from line of David Bain from B. Riley. Please go ahead.

Great. Thank you. My first question is, if we are seeing a shift to longer term data rights agreements, and just given the length of some of the larger deals that we are seeing, can you speak to the potential disruption to a league to perhaps displace and incumbent today versus what you envisioned 3 years to 4 years from now your technology and kind of tentacle plan? I mean could pricing with certain partners actually stay flat or even decline multiple years from now, or how do you view that?

Hi, yes, it’s a really good question. And it’s – we think about it a lot. And, frankly, it’s a lot of what’s driving our technology investments. We believe that as this market evolves, the sports leagues are going to need much difference in kind of specialized technology sets. And what we are seeing in our business, actually, since the acquisition of Second Spectrum, we are increasingly, I mean, I think almost every single lead conversation we are having now includes elements of Second Spectrum and some of that next-gen technology. So the way that we see this evolving over the time is an increasing reliance on those technologies. And again, that will be reflected in those rights fees going forward. So part of the drive – as I said, part of the drive and part of the things we are so excited about and the opportunity that we see is really getting our technology widely distributed making sure that we keep the considerable distance that we have in the market, i.e., the technology advantage that we have both from the likes of Second Spectrum and data and the tracking analytics, but also the marketing side as well, where we have got really unique views of audience and the continued investment in that should give us that position in the future to have significant leverage in those conversations around right fees.

Okay, great. That’s helpful. And my second one would be, you mentioned a very significant TAM in your prepared remarks that you are entering, specifically the advertising market with non-betting platforms. Can you give us a little bit more color on what type of platforms you are having traction with? And is this something we can see a substantive deal on by, say, early next year or is this a longer term opportunity at this point? Thank you.

Hi, David. This is Josh here, the Managing Director for the Media business. The – yes, exactly that, in terms of the addressable market for the media business, we are already seeing a lot of traction in that space. In terms of the platforms that we are branching out to, it’s really an expansion of what we are already doing for operators in the programmatic sphere and rolling in the technologies from FanHub and Spirable. Essentially, we believe that [Technical Difficulty] ultimately that technology applies equally as well to major brands around sports be it Coca-Cola and Anheuser-Busch, it will ultimately drive the same fantastic results that our sportsbook customers have seen.

Okay, great. And is this something we could see some substantive announcement on early next year or is this something we should think about having really impacted the model sometime in the next year or two?

Yes. I mean, we are already winning a number of contracts in this space probably the most recent one is Jersey Mike’s where we have provided them with their Tailgate Trivia free to play game. We have provided a lot of advertising services around that to promote the game. So there is already a few customers that are there. And we’ve got a really strong pipeline as we head into ‘22. So I expect us to be making plenty announcements around new wins in sort of outside of the sports betting space over next year and the years beyond.

Okay, great. Thanks so much.

The next question is from the line of Bernie McTernan from Needham & Company. Please go ahead.

Great. Thanks for taking the questions. Maybe just to start the $125 million committed advertising spend, just wanted to clarify that, that’s in aggregate over the next 3 years and if it’s only in the U.S.? And then I am assuming these deals basically been struck over the last 3 months, just wondering how they came in versus your initial expectations?

Hi, this is Josh Linforth again. Yes, that’s correct. The deals are structured over 3 years. In terms of the market, the majority, are across the North American market. There is a few nuances where there is some international spend, but the majority of it is focused on the North American market.

Understood. Can you just remind us about how big the media revenue stream is outside the U.S. currently?

Yes. Hi, Bernie. I mean, traditionally, we have been around about 50-50, in terms of U.S. versus rest of the world on a media basis. That’s now heavily more slanted towards the U.S. right now. And that’s certainly where the focus of growth is over the course of the next 18 months to 2 years, as Josh just talked about those deals, they are predominantly North American focused.

Understood. Thanks Nick. And, Nick, just to follow-up on FanDuel, we struck an agreement with them yesterday. That was great to see. But I was just wondering if there was how you guys were I believe you were supplying them with NFL official data in the third quarter? So just wondering how that was booked from a revenue standpoint?

Yes, yes, of course, you’re absolutely right and for everyone else benefit in the call. And we continue to provide FanDuel with the services throughout the period as a long-term sustainable partner with FanDuel. The announcement that we issued 48 hours ago that is a retrospective deal to take us back to the start of the NFL season. And what we have done is there was an element of the deal that was recognized in the quarter, because we already had a pre-agreed deal with them. So, that’s been recognized for the first 3 weeks of the NFL and then we will recognize the remainder of the deal retrospectively for those first 3 weeks. What I will say is obviously it’s one operator for 3 weeks. That’s not the material number, Bernie and the new seal metrics have been built into the revised guidance of the $257 million to $262 million.

Understood. Thanks very much.

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

Hello, guys. Thanks for taking our questions. Curious on there has been a trend towards in-house sports trading services, but at the same time FanDuel in that agreement, you were just talking about expanded its take rate of your live trading solution. So I guess where are you seeing the most headwinds as well as tailwinds from a management trading services standpoint?

Yes, hi, Ryan. It’s Jack Davison. I think in what we see here is a kind of what you are seeing with the FanDuel deal in particular is a comfort of their comfort in outsourcing elements of their sports betting operations to a company like ours. So you are seeing a wheel balance of some stuff being in in-sourced currently, but also we will focus on what is being in-sourced by an operator from an operational point of view. So we will focus as you can imagine on FanDuel on trading the NFL, which we don’t do for them, but they at the same time, they will outsource elements of that. So, you will end up I think seeing a combination of these things. The trajectory of the industry, I think will be about much more efficient in terms of where they spend money, where they get the most bang for their buck. And I think that our view and as played out with our customer agreements is increasingly large range of their operational function will indeed be outsourced.

And then on Ad Tech, do you have any comparative metrics or customer acquisition cost improvement or anything you guys can compare internally on how your solutions are faring versus traditional sources? And then secondly, how do you feel about your human and technical resources for Ad Tech and marketing? Are you guys missing anything there? Thanks.

Hi, Ryan. This is Josh Linforth gain. Yes, happy to provide some context in terms of the results that we’ve delivered. I can give you a specific example of one operator that we have been working with this NFL season and the results that they have seen through Genius’ Ad Tech solution have been really strong. So to give you an idea of that, on average, that customer sees the first deposit value breakeven against the total ad spend. So, to give you an example, if we spend $100 to acquire a player on average, their first deposit value is $100. And actually, within the first 30 days, we tend to see so far this season around about a 285% return on ad spend in subsequent deposit values off of those players acquired by Genius. So, needless to say, those are some pretty strong results and that individual customers, is very happy about the results. And I can think of another operator who by the end of the year is on track to exceed their minimum commitment in their first contract year with us on their media contract. And that speaks to the results that they have seen so far through Genius.

Great. Thanks, guys. Good luck.

Ladies and gentlemen, in the interest of time, we have to stop the Q&A session. So the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.