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Genius to form new holding company for NYSE listing


Genius Sports Group will form a new holding company, Galileo NewCo, for the proposed business combination with dMY Technology Group II that will see the data supplier go public with a $1.5bn valuation.

Genius is set to merge with dMY II, a special-purpose acquisition company (SPAC) in order to go public on the New York Stock Exchange (NYSE), having announced the transcation in October 2020. The deal has already been approved by both boards, but still requires dMY shareholder approval.

However, the group has now revealed that dMY II will itself become a subsidiary of Galileo, a business incorporated in Guernsey.

The deal is partly funded by $276m held in dMY’s trust account and partly by a group of accredited and institutional investors.

These investors have subscribed to purchase a combined 33m shares in Galileo NewCo for $10.00 each, totalling $330m. This will be done via a common stock fully committed private investment (PIPE investment).

The deal will see Mark Locke, currently chief executive of GSG, hold the same role in the new business, while dMY chairman Harry You and chief executive Niccolo de Masi will serve on the board of directors.

In its merger prospectus, Genius also revealed it expects revenue of $145m for the 2020 calendar year. It noted that for the first nine months of the year, revenue was up 32% year-on-year with all product lines experiencing growth despite the effects of the novel coronavirus (Covid-19) pandemic. 

Media technology, content and services revenue increased the fastest at 96%, thanks to new customer acquisition in both the US and Europe. Betting technology, content and services revenue grew 26% thanks mostly to more revenue from existing customers while sports technology and services revenue was up 16%.

The most recent full-year revenue figures for Genius came from 2019, when it made $114.6m, up 30.8% from 2018.

However, Genius paid $89.3m in costs of revenue, giving it a gross profit of $25.3m.

In addition, it paid $61.5m in operating expenses. Of this total, general and administrative costs made up $29.5m, sales and marketing costs $17.8m, research and development $13.3m and transaction expenses $1.0m.

As a result, the supplier made a $36.2m operating loss in 2019, more than double the loss it made the year prior.

After $6.8m in interest expenses, $2.5m in foreign exchange losses and $9.4m in other expenses, Genius made a pre-tax loss of $45.6m.

The business received a $5.4m income tax benefit, resulting in a net loss of $40.2m, 59.5% more than 2018’s loss.

Looking to the future, Genius said it expects revenue of $190m for 2021, rising to $238m in 2022.

The data supplier added that it could be confident in its earnings going forward as much of it comes through long-term contracts with guaranteed minimum payments. In addition, it said it projects at least 70% of its expenses to grow at a slower pace than revenue as the business continues to scale up.

dMY Technology Group II is the second SPAC that You and de Masi have led, after the original dMY Technology Group acquired Rush Street Interactive, allowing the igaming operator that was previously a part of Rush Street Gaming to spin off and go public.

Last month, Genius agreed to acquire Sportzcast, a US sports data distribution system manufacturer. Sportzcast  delivers sports data to scoreboards within venues through its Scorebot product.