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Stock-based costs cause Genius losses to rocket in H1


Data supplier Genius Sports saw revenue grow 76.3% to $109.6m in the first half of 2021, but net losses shot up to $464.2m because of high stock-based compensation costs.

Betting technology, content and services represented by far the largest contributor to Genius’ revenue, bringing in $79.6m, up 73.8%. Of this increase, $15.8m was due to price increases on existing contracts or renewals, while $7.8m came from new customer acquisitions and $10.7m from “increased utilisation” of Genius content.

Sports technology and services revenue, meanwhile, grew 72.6% to $12.6m. Much of this growth was due to acquisitions of businesses such as Sportzcast and Second Spectrum

Revenue from media technology and services almost doubled to $17.4m.

Looking at revenue geographically, $81.7m of Genius’ revenue came from Europe, up 62.1%. The Americas were the fastest-growing region, with revenue up 155.1% to $19.9m, while revenue from the rest of the world was up almost exactly 100% to $7.9m.

However, costs of revenue grew much more quickly, rising 455.4% to $280.3m. This meant Genius’ gross income slipped from an $11.7m profit in 2020 to a $170.7m loss in 2021.

In addition, the business paid operating expenses of $261.5m, up 925.6%, of which $233.1m were in general and administrative costs, $10.9m in sales and marketing costs and $10.1m in research and development expenses.

The provider noted that $198.5m of its costs of revenue and $216.0m of its operating costs were share-based expenses. All of these were entirely new costs, as Genius had been private in the first half of 2020 before the SPAC merger taking it public closed earlier this year.

During the quarter, the business granted the NFL 22.5m Genius Sports warrants, each entitling the league to purchase one ordinary share of Genius for $0.01, as part of a deal for exclusive data rights.

After these operating costs, Genius was left with an operating loss of $432.2m. This was just short of a 30-fold increase from the $13.8m loss recorded in H1 of 2020.

In addition, the business recorded a $4.7m gain from foreign exchange changes, but also saw a $3.0m loss on interest expenses and a $38.9m loss from changes in fair value of warrants to purchase its shares for set prices.

As a result, Genius recorded a $469.4m pre-tax loss – 24 times the amount it lost before tax in the first half of 2020.

After paying $118,000 in taxes, the business made a net loss of $469.5m, which again was almost 30 times the previous year’s H1 loss.

Looking just at the second quarter of 2021, Genius brought in $55.8m, up 108.2%. However, costs of revenue and operating expenses dwarfed this figure, at $240.2m and $244.8m respectively. This led to an operating loss of $429.1m, which was more than 50 times the amount it lost the previous year. 

After non-operating costs and taxes, Genius reported a net loss of $464.2m, which was also more than 50 times the amount it lost in the comparative period of 2020.

In addition, Genius also revealed that it received a sports betting supplier license for the state of Arizona, the 16th US state in which it is now licensed to operate. Sports betting is set to launch in Arizona on 9 September, after a number of operators received licenses last week. A legal challenge from the Yavapai Prescott Indian Tribe to prevent the launch of sports betting in the state was defeated earlier this week.

In addition, Genius agreed a deal with online betting giant 888, to provide its data solutions to 888’s Sports Illustrated sportsbook, which is currently live in Colorado.

The supplier also recently announced NFL-centered deals with WynnBet and Caesars.