Genius Sports Limited (GENI) Earnings Call Transcript & Summary

Thank you for joining us, and welcome to Genius Sports Second Quarter 2026 Earnings Results. [Operator Instructions] I will now hand the conference over to Genius Sports. Please go ahead.

Good morning, and thank you for joining. Before we begin, we'd 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 forecast. We assume no responsibility for updating forward-looking statements. 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 annual report on Form 20-F filed with the SEC on March 17, 2026. During the call, management will also discuss certain non-GAAP measures that we believe may be 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 investors.geniusports.com. With that, I'll now turn the call to our CEO, Mark Locke.

Thank you, and good morning, everyone. Before we get into the quarter, I want to step back for a moment. Genius is becoming the operating system of modern sports. We own the official data, the technology and now the audience that regulated sports ecosystems run on. As we bring these capabilities together on one platform, they reinforce each other. And as AI becomes more powerful, the value of our data only increases. Since announcing the Legend acquisition in February, we have told the market consistently that success would be shown, not told. This quarter is the first real look at that combined platform in action and it delivered. Three takeaways today. First, we delivered on every single line of our guidance. Revenue of $196 million, up 65% year-over-year and ahead of our guidance. Adjusted EBITDA of $53 million, well ahead of the $45 million we guided. And cash came through our seasonal low point ahead of the range that we set out last quarter. Revenue, adjusted EBITDA and cash all ahead. Second, this quarter gives you a flavor of the margin profile that this business is built to deliver. Strong underlying profitability accelerated by the addition of Legend and synergies that we are already realizing in the early stages of integration. The combination of the businesses is doing exactly what we said that it would. Third, we sit at the center of the 2 things that this whole market is chasing, official data and live high-intent audiences. In a world that's being reshaped by AI, that position is worth more, not less, and it is already showing up in real deals. Let me take each in turn, and then Bryan will take you through the numbers. Revenue was $196 million, up 65%. Betting grew 28% and our media business, which now includes Legend from the 1st of May, grew 193% as reported. Our $11 million revenue beat in Q2 flowed through to an $8 million EBITDA beat, aided by the strong natural operating leverage in our business model, ramp of GeniusIQ and the initial Legend synergies, which, as we'll discuss in a bit, are just getting started. We outperformed across both betting and media, which now includes Legend. First, the core betting business continues to progress. We serve over 500 sportsbook brands across regulated markets. More than half our revenue comes from outside of the United States. And net revenue retention remains consistent with the range we share annually. Year-after-year, our customers spend more with us because our data and products only get more central to how they operate. Our 28% year-on-year growth comes in a quarter of customer-friendly results across sport, Championship runs, star players scoring, the kind of outcomes that typically result in low win margins for sportsbooks. Our business model is built differently. Our revenue is not driven by which way the ball bounces. We are paid on contractual guarantees and volumes across both sides of the house, and we continue to grow despite that operating backdrop. That is what durable growth looks like. In fact, in a sports betting ecosystem, which has shown volatility, our betting segment has delivered over 25% revenue growth in each year since 2023 and is on track to do the same this year. Again, that is what durable growth looks like. In addition to our outperformance in betting, we've also outperformed in media, reflecting continued momentum across our existing media business, driven by new brand and agency customers, increased spend and strong demand from prediction market operators. This performance was further strengthened by the addition of Legend. The market is shifting in the direction of the business that we have built. At Cannes Lion a few weeks ago, the industry's loudest conversation was live sport, one of the last places that a brand could reach a large emotionally engaged audience at scale. Genius is now a well-known name at Cannes because we own the data layer underneath that attention. This gives us a unique view of sports fans. Our data doesn't just tell us who the sports fans are. It tells us how they behave during key moments. As an example, it tells us that consumers spend 25% more on food delivery when their team loses. Ahead of the NBA finals, we knew the Knicks fans spent 7x more on live entertainment than spurs fans, while spurs fans are 3x more likely to be fishing enthusiasts. Our biometric research with media science has showed that an ad served immediately after a heightened moment in live sports can double unaided brand recall. Those aren't just interesting data points, they're signals that brands can act upon. Our advantage is the data layer behind the moment engine. We don't just help brands reach sports fans. We help them reach the right fans at the right moment with the right message. That's the difference between buying impressions and delivering outcomes. And we're proving this value as more brands buy in. On our last earnings call, we told you that we had won roughly 70 new customers since launching the Moment engine in March. In Q2 alone, we've added 174 new customers, including major brands like McDonald's, YouTube TV and DoorDash, who are shifting spend to our platform. This is not sponsorship. It is measurable attention sold on our own data. The World Cup showed exactly what that looks like in practice. Take the example on the screen. Argentina's comeback against Egypt was one of the defining moments of the tournament. Using GeniusIQ data, we not only tracked what was happening on the pitch, but what millions of fans were likely to be feeling as that match unfolded. That allowed brands to adapt their ad campaigns in real time, aligning spend and creative with the moments that mattered most. And that wasn't a one-off. We executed this throughout the tournament. One global consumer brand used GeniusIQ to activate campaigns around goals, penalties, VAR decisions and other pivotal moments. The result was roughly 3x greater CPM efficiency than planned and the lowest cost per click of any campaign that they ran during the World Cup. That is the opportunity. Official data is no longer just telling you what happened. It's helping brands to decide what to do next. While the World Cup was a great showcase of what our products can deliver, we expect this to scale across the entire sports calendar. As a result, Genius is in the middle of conversations that we simply were not in 12 months ago. We are serving as a strategic sports partner to agencies. We are integrating with established ad tech businesses and brands are telling us our data is some of the most important infrastructure in their programmatic campaigns and we're only just beginning. This season, we expect to bring the moment engine capabilities to the NFL-related media activations, extending into one of the most valuable media properties in sport and unlocking another avenue for long-term growth. Underneath both the growth and the margin sits product. GeniusIQ turns our official data into faster, more automated, higher-value products, and it is a direct driver of the margins that you're seeing and will continue to see. These are still very early days. Our single connected platform is creating value across every point of the sports ecosystem, one platform, endless solutions. Every new capability we build creates another way to monetize the same infrastructure. Broadcasters like D Zone are using it to make live sport more immersive. Brands like Amazon and Enterprise are using it as real-time sponsorship opportunities during heightened moments of the match. Analysts at Sky Sport are using it to deliver rich insights and analysis. Leagues like CBS and Liga MX are using it to make fast, accurate and transparent officiating decisions. While these are different use cases, they all point to the same simple objective. GeniusIQ is turning official data into products that makes sport more valuable for every participant in the ecosystem. This is the operating system of modern sport. Now to Legend and the synergies specifically because this is the part that I want you to hear clearly. Legend is one layer in the Genius system, the demand layer, sitting alongside our data and our technology. It brings a durable owned audience, roughly 180 million users, 2/3 of whom return and customers acquired through Legend carry around 60% higher lifetime value for operators after their first year. Those audience characteristics aren't just theoretical. They have been consistent since the start of the year, and they are already showing up in our results. Group revenue increased $77 million year-over-year, yet sales and marketing expenses are only up $3 million. And that's with Legend only contributing since the 1st of May. If we'd acquired a business that depended on continually buying and reselling its traffic, then that sales and marketing expense line would have looked very different. In reality, however, we do not rent the audience, we own it. Here's what's new. When we announced the deal, we laid out a set of revenue synergies and said they would build over time. They're building faster than expected. Cross-selling across the combined customer base is underway, already delivering results. Prediction markets are our most visible example of this coming through. The first phase of audience data integration is complete, immediately benefiting our fan graph and delivering results for our media customers. And we have begun using Legends properties as media inventory, which benefits margin as we shift spend away from third-party platforms and onto our own. On the forward, the significant bulk of the synergy opportunity is still ahead of us, but it is no longer just a line on a slide. It has started and it is ahead of schedule. And on the AI question that we always get, an owned, returning first-party audience becomes more valuable as the open web fills with generic machine-made content, not less. As AI decides more of what people discover and buy, the businesses that own real data and a real audience are the ones that win. We own both. That is the position. Prediction markets are one example of how we're leveraging this position. In the second quarter, we generated meaningful revenue from the category. And after the quarter end, we reached another important milestone by signing direct commercial agreements with both Kalshi and Polymarket across official data and customer acquisition. At a high level, 3 things are happening at once. First, the data layer. Over the past few months, both Kalshi and Polymarket partnered with leagues like the Argentinian Football Association, Liga MX and SiriA, each built on official data and integrity from Genius. Building on those league partnerships, we've now established direct commercial agreements with both prediction market platforms, covering a wide range of content across our data portfolio. Official rights run league by league. That is the structure of this industry. And on the sports that we hold, settlement runs on our data. Leagues will move at their own pace in this category, and so will the scale of our platform relationships. As an example of this, look at what happened last week. The NFL filed formally with the CFTC and told the regulator in writing that markets on sport cannot operate with integrity without official settlement data, real monitoring and information sharing between the venues and the leagues. The largest league in America has put on record that this category runs on infrastructure and that infrastructure is what we have spent 2 decades building. For the avoidance of doubt, we do not expect the NFL to green light prediction markets in the near future and have not included this in our 2026 guidance. However, what is clear is that the direction of travel is towards more official data, not less. What we've established with Kalshi and Polymarket is a foundation upon which we will layer more content, more services and more territories over time. It is the same compounding playbook that you have watched us execute in sports betting, now applied to prediction markets. Second, the data layer also extends to market making. The reliance on our official data and models to price markets is essential to provide liquidity on these exchanges. This puts us in a uniquely valuable position. Third, the audience layer, as was part of our thesis when we first announced Legend in February, and this category is where Legend is already excelling and delivering in our Q2 results. We are sourcing new customers for prediction market operators in a very significant volume. Every one of those customers is acquired somewhere. With our organic media platform now turbocharged by Legend, we own many of the destinations where those customers are acquired and competition for those customers is only becoming more intense. That is why acquisition dollars flow to us in Q2 and why our combined media offering became a key part of our deals with Kalshi and Polymarket. Our role in this market is infrastructure. We supply everyone. All 3 of these elements come together to represent a sum larger than its component parts. That is exactly how we said the Legend acquisition helps us and exactly how we said prediction markets would expand our total addressable market. While sports moments will come and go, our prediction market revenue is beginning to structurally rise, and we expect significant upside in the years ahead, both in our betting and media segments from this important market segment. Two key questions about our stock asked frequently since the Legend announcement in February are now directly addressed in our results. More importantly, they leave us better positioned for the next phase of growth. And with that, let me hand to Bryan.

Thanks, Mark. Let me start by simply recapping our 3 key financial metrics. First, another quarter of solid revenue growth across the board, 65% overall, underpinned by 28% in Betting and 193% in Media, reflecting the effect of the acquisition, but also continued organic growth solidly above 20% for both Genius and Legend Media. Taken together, these demonstrate the strength of our combined business. Second, another quarter of solid adjusted EBITDA growth of 54%. This represents a 27% margin, which was over 250 basis points above the margin implied by our guidance. Let me be direct about that margin because I know the question, is this just acquisition mix? Mix helps just as we said it would, but it's not the whole story. Our organic growth is generating real operating leverage. GeniusIQ automation is improving our core economics and integration synergies are already landing ahead of schedule, with most of that opportunity still ahead of us. That's why we're confident raising guidance today. And third, quarter end cash of $155 million was above the range of $140 million to $150 million we set last quarter. To delve into cash flow a bit, Q2 is always our seasonal low point for cash. And in this quarter specifically, the transaction-related factors amplified that effect. First, our normal seasonality remains unchanged, where the second half of the year is naturally more cash generative. Second, we incurred the onetime costs associated with closing the Legend acquisition. Those costs are now largely behind us and will not repeat. To put this quarter in context, we finished Q1 with $197 million in cash and finished Q2 with $155 million. The change was predominantly driven by $41 million of debt financing costs. Excluding certain onetime transaction-related impacts, underlying operating cash flow would have been roughly breakeven. One additional accounting point that's worth calling out. The cash flow statement shows a $579 million use of cash for the acquisition of the business. That reflects the accounting presentation, excluding the repayment of shareholder loans, settlement of Legend's historic incentive plans and the cash acquired in the transaction. Taken together, those contribute to the $800 million upfront cash consideration paid. As we mentioned last quarter, from here, we expect cash generation to accelerate through the second half of the year. We expect to generate approximately $145 million of unlevered free cash flow in the second half. That represents 70% unlevered free cash flow conversion of the approximately $210 million of adjusted EBITDA, less roughly $30 million of interest and $10 million of debt repayment gets you to 50% levered cash flow conversion. So from the third quarter onward, you'll have a much cleaner view of the underlying cash-generating power of the business as we progress toward our 2028 targets for 60% unlevered free cash flow conversion. Importantly, we're now seeing capitalized software costs flatten just as we've said it would. As revenue continues to grow, this will continue to decline as a percentage of revenue, providing another structural tailwind to cash conversion over time. On the balance sheet, our only debt is the $825 million term loan used to fund the Legend acquisition. We have no revolver drawn and no other borrowings. As cash generation accelerates in the second half, we expect to exit the year at approximately 2x net leverage and continue reducing that in 2027, while maintaining ample liquidity throughout. Let me quickly comment on our GAAP net loss of approximately $77 million and remind you that this reflects the accounting for the close of the Legend acquisition. The result includes onetime transaction costs, acquisition financing and the noncash accounting associated with acquired intangible assets, not the underlying operating performance of the business. Looking ahead, we expect our earnings profile to continue improving as we progress toward sustained GAAP profitability. Taken together, the financial profile of the business is becoming increasingly clear, durable revenue growth, improving profitability, increasing cash generation and lower leverage. Now let me finish with guidance. We are raising our full year outlook. Revenue moves to a range of $1.005 billion to $1.025 billion, and adjusted EBITDA moves to a range of $285 million to $295 million, a margin of roughly 29%. The operating leverage is showing up in the numbers, driven by strong revenue growth, nascent rise in prediction markets revenues, ramping GeniusIQ automation and early synergy capture, all of it structural. That gives us tremendous optimism for Genius' path forward. 2027 is when the combined earnings power really starts to show, and it puts us squarely on track to achieve our 2028 guidance, which is more visible today than the day we set it. And with that, back to you, Mark.

Thanks, Bryan. There's a lot in today's earnings, so let me summarize. We beat our guidance on every metric. Our largest ever acquisition is already delivering synergies ahead of schedule. We own the official data that the regulated ecosystem, sportsbooks, media and now prediction markets depend on, and we own the audience layer on top of it. We believe we are only just beginning to monetize the full potential of our platform within prediction markets. Thank you, and we will now open up for questions.

[Operator Instructions] Your first question comes from the line of Eric Sheridan with Goldman Sachs.

Maybe I'll kick us off with a big picture one. Obviously, with the close of the Legend acquisition, talk to us a little bit about what some of the key learnings have been as you went through the pre-close and now the integration process with the asset? And how you're thinking about potential for elements on both the monetization side and the synergy side to continue to evolve and what some of those key learnings have been?

Yes. Thanks, Eric. It's Mark here. Look, Legend started really, really well. We're super positive about it. And I think the synergies are coming through faster than we expected. You can see that and we announced in the last couple of days, Kalshi deal, Polymarket deal. And it's really proving the thesis that we had when we went out and bought Legend that there would be immediate and significant synergies. So, they're coming through immediately. From a operational point of view, the teams are merging really well. We've had some off-sites. The products are coming out the door in a really satisfactory way, and we're starting to get some technical cross-sell -- sorry, technical crossover as well with our product sets. So overall, it's been remarkably successful, and we're super excited about it.

Your next question comes from the line of Barry Jonas with Truist Securities.

Guys, decelerating OSB handle growth has been a factor for a competitor and a customer this week. And I think PM proliferation potentially could be a factor. Just curious, are there similar risks for your business once we get to NFL season?

Thanks, Barry. Look, the way we think about the market is that we're taking revenue from anything to do with sports betting. So whether that's from the traditional OSB operators or whether that's the expansion in the TAM that we're getting with the prediction market, it's all very net positive for us. The other thing that's worth focusing on, and we said it before many times is that we've got a business model that has that underlying floor. So the way that we do deals gives us the sort of minimum downside that protects us from the volatility. You've seen a number of times in our business when there's been sort of negative sports results for the OSBs that we've actually been protected. And again, we carry that philosophy forward in all the deals that we do.

Barry, the only other thing I would add to that is just a reminder on the global nature of our business and the Americas being roughly 50%. And so there's diversity there that we're not necessarily hinged to one geography or one sport.

Got it. And if I could just ask a follow-up on the guide, $15 million increase to both revenue and EBITDA, which would be about 100% flow-through. I see that Q2 revenue beat by 11% and EBITDA by 8%. But just curious how we get to 100% flow-through for the full year.

Yes. Again, just the continued momentum, the momentum year-to-date, you see it in the numbers in the quarter, exceeding margin there and then just continued build for the rest of the year. That's the execution of the underlying business, the Legend integration tracking well and just new deals and partnerships as exemplified by the recent ones in the last couple of days with Kalshi and Polymarket So multitude of factors there factoring into the guide.

Your next question comes from the line of Steve Pizzella with Deutsche Bank.

I think you mentioned that 2027 is when the combined earnings power really starts to show in the prepared remarks. Can you talk about some of the biggest drivers of acceleration next year?

Yes. Again, our -- you've seen it before, just this compounding playbook we have across the business, both betting and media. We are tapping into a rising market, growth of prediction markets is nascent, the continued opportunities as we bring on new operators, sportsbooks. Legend also gives us exposure to iGaming. So there's a number of factors there as we continue to just grow our portfolio of products and get more penetration and uptake with our partners to help them grow as well.

Okay. And then in the prediction market revenue drivers in the presentation, you mentioned the liquidity. How are you seeing demand for your pricing models in addition to the official data?

Yes. So, just to remind everybody with the prediction markets, we make money in lots of different ways. We've said it for a while. But obviously, on the marketing side, especially with the addition of Legends, we're helping the prediction markets acquire new customers, bring them in. We've said for a long time that we sell to market makers and the market makers take both the data and the pricing services. And finally, now we're cutting deals as you've seen with Kalshi and Polymarket with either directly with the prediction markets. And there's some significant upside in a number of those prediction markets out there. So, the demand for our products and services is growing. It's something that we think there's some significant upside in over the period, but we've been very cautious with the way that we've forecast. For example, the NFL is not and never has been included in any of our numbers. So, the opportunities across the prediction market space is significant for us.

Your next question comes from the line of Mike Hickey with StoneX.

Mark, Bryan, Brandon, congrats guys on a great quarter and seeing that Legend deal come through. So, kudos to you guys. Just maybe as a quick follow-up to the last question. You're obviously delivering the data and pricing to market makers. That's -- can you just maybe talk about real quick why that's so valuable for them? And then Mark, do you see an opportunity in the future that maybe Genius could eventually participate more directly in market making on PN platforms?

Yes. Good questions, Mike. Look, we've traded on the regulated exchanges for the last 20 years or so, and we really don't see any difference in the U.S. with prediction markets and the emergence of the prediction markets is just more opportunity for us to keep leveraging our pricing, our risk capabilities and really sort of drive revenue. It's no additional cost for us. So, we're seeing good results from our engagement with that, the market makers, and we feel very optimistic about the future.

Nice. The one last one on prediction market deal economics. Awesome to see the framework here in partnership with Kalshi and Polymarket. To the best you can, can you give us some color maybe on how these agreements, the economics of these agreements compare with your traditional sportsbook deals? And I guess, specifically on the data pricing and services, if those structures are broadly similar or if PN platforms are maybe paying less for data while you can sort of make up the economics through bundled services like integrity, liquidity and customer acquisition?

Yes. I mean, so I think I said last quarter that we see those players as being large tier operators for us going forward. And I think the deals that we've seen coming through are more than satisfying that requirement. The deal structures, again, are very similar. We have fixed minimums. There's upside as well as part of it. And clearly, especially seeing the -- I guess that, where they are in their stage of evolution around products and customer acquisition, we actually see significant opportunities there in terms of providing product, providing data, providing services as they evolve their business in quite a rapid way.

Your next question comes from the line of Jed Kelly with Oppenheimer.

Just getting back to the increase in the guidance and specifically in the Media segment, is that coming strictly from some of the higher prediction market advertising you're expecting to see? Or are you seeing other brands outside of sports coming as well, and that's also benefiting considering all the agency partnerships?

Yes, a good question. It's sort of everything. So, if you take the World Cup, for example, the World Cup was great for us. We managed to add a significant number of new brands to it, which is a great way to kick start relationships with new players there. So, we see significant upside there. You've seen, obviously, the cross-sell from the Legend, the synergies coming through there in terms of the marketing. So, that's coming through. It's a sort of combination of all of those things. What's going on in the advertising world and the focus that I mentioned it in my remarks that the world now has on sports as a sort of sector, and we saw that at Cannes Lion, all of that's really contributing to some of the significant growth and demand that we're seeing for the product set.

Great. And then just as a follow-up, when you look at the prediction market is trading and where volume is and it's heavily weighted in game and it's popular with certain sports such as tennis, college basketball. How does that make you think sort of your rights portfolio? And is there some opportunities you kind of look at given the user behavior in that market?

Yes. So obviously, our business has grown up on live betting, live data. So, it's having the best data, having the best collection technology is becoming increasingly important. One of the things that we're getting with GeniusIQ that we're rolling out, and we're doing this across global basketball with FIBA. We're doing it with global soccer again, where there's a lot of live betting is really the ability to upscale and to take new higher quality, faster data feeds, which are highly relevant to the prediction market. So, that's a big opportunity. And again, we're pretty unique in our technology that allows us to do that. And certainly, that technology as a slight aside, we're rolling out additional faster collection technology with the NFL at the moment. So, there's better ways of collecting data using the technology that we've invested in and the money that we spent over the last few years, which are highly relevant to prediction markets. Separately to that, obviously, pricing the volume of events that are happening now and creating those models that we mentioned before is something that we have a huge amount of history and we've got all of the data. We've got those pricing models. We've been doing it for a long time. So, we see it as a big growth opportunity to actually have our models and our data out there being used to create those new market opportunities.

Your next question comes from the line of Josh Nichols with B. Riley.

Great to see a solid first quarter with the Legend acquisition under your belt now. You've talked a lot about the synergies. I realize it's still early days and a little bit hard to quantify. Any kind of framework that you could maybe put around some of the opportunities that you're seeing thus far, maybe at least maybe name and size 1 or 2 things that you've been able to get done this far and opportunities as we head into the seasonally stronger second half?

Yes. I mean, again, if you just look at the Kalshi deal and the Polymarket deal that we just agreed, there are really 2 significant proof points that have come through, and there's plenty more to come. You've got real evidence of faster synergy delivery in the business and in the numbers now. And so we're extremely pleased to see how that's operating.

And last question for me. A big step-up in the momentum in advertisers this quarter. It's ramping up quite quickly. You're probably going to get more traction headed into the NFL season coming up. How should people think about the opportunities there, whether it's like contract size, renewal expectations and how that business is going to grow and how that advertising base has been expanding thus far?

Yes. So, I guess there's 2 parts to it. I mean you've got the advertisers and the brands and the World Cup has been a fantastic test case for that. We've brought on, I think, 174 new clients, which we tested over the World Cup. And clearly, those clients have had a lot of success in a lot of ways, and that's a great base to build from. So, that's one sort of vector that we've got. The other vector is clearly around the prediction market with the upcoming NFL season with, frankly, just with the number of prediction market operators coming into the space and also with the OSB, some of the major ones talking about their prediction market aspirations, there's an enormous requirement for new customers, customer acquisition, customer engagement. And again, part of the logic behind the Legend acquisition and what we're now seeing through Legend with the product set that we're putting out there is very focused on that. So, we see that sort of as the other vector in that space. So, we're pretty confident about how that market is going to evolve. And again, we've now got real sort of empirical evidence, which allows us to have real confidence in our future growth forecasts.

Your next question comes from the line of Bernie McTernan with Needham & Company.

Maybe just to start, Mark, I understand the commentary that you're not expecting the guidance doesn't include the NFL to sign a deal with prediction market operators. But is there any way to frame what that would mean for your deals or the potential monetization of those contracts if a deal were to come through between the NFL and either Kalshi and/or Polymarket?