Good morning. And welcome to the Genius Sports Third Quarter Earnings Results 2022 Conference Call. My name is Abbie and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. At this time, I would like to turn the call over to Genius Sports. You may begin your conference. .

Good morning, and thank you for joining us. 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 last Annual Report on Form 20-F filed on March 18 of this year.

During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius's operating performance. These measures should not be considered in isolation or as a substitute for Genius's 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.geniussports.com. With that, I'll now turn the call over to our CEO, Mark Locke..

Good morning. And thank you for joining our third quarter earnings call. We're pleased to deliver another successful profitable quarter and remain on target to execute on the full year goals that we set out at the start of 2022 in our Investor Day.

On today's call, I will discuss key business highlights from the quarter, which include new customer wins across sports, betting and media, an update on our U.S. betting performance and an overview on key technology services we've delivered to the NFL and its partners.

I will then pass the call to our CFO Nick Taylor, who will discuss our financial results and outlook in more detail. To start, I'd like to commend our employees who are committed to driving revenue growth and profitability across the organization.

The strong execution of our strategic plan has led to our third consecutive quarter of financial results in line or ahead of our forecast. In the third quarter, we generated $79 million of revenue and $8 million of adjusted EBITDA up significantly from the adjusted EBITDA loss of $0.4 million last year.

This brings our year-to-date revenue and adjusted EBITDA to $236 million and $13 million, respectively, tracking ahead of our guidance. The execution was evident in our backend business, driving our performance in the quarter. This was largely as a result of a strong industry backdrop and an outstanding effort by our sales team to secure 27 U.S.

sports book customers in the quarter. This will serve as the basis for strong reoccurring revenue in the years ahead. Our media team also celebrating new wins of the quarter, having signed more than 10 new advertising customers in the consumer space.

We're continuing to support our customers by successfully engaging sports audiences while expanding our customer base beyond our traditional sports betting clients. And lastly, we've developed exciting new features to our Second Spectrum Technology, which we've successfully delivered to our broadcast partners in the quarter.

We'll review this in detail shortly and discuss how this differentiated technology's fundamental to achieving our long term strategic vision. Following a successful third quarter, we are confident in our ability to continue executing into the year-end and are maintaining our 2022 outlook of $340 million of revenue and $50 million in adjusted EBITDA.

Nick will cover this in more detail shortly. As many of you know, Tuesday marks the beginning of the season for several top tier leagues across the globe, enabling Genius to realize sequential growth where we have revenue share contracts with sports books.

You may recall in our last quarterly report, we outlined the operating leverage in the business and the multiple ways Genius generates EBITDA margin accretion alongside growth in betting revenues.

In other words, Genius is the premier picks and shovels company capturing multiple revenue opportunities in this rapidly expanding market at little extra cost.

While the reporting period or lean period three weeks over the 18 week NFL season, all of the betting KPIs we care about, namely growth of market in Phoenix and when margin were positive and contributed to our revenue and adjusted EBITDA growth in this quarter. Handle is an obvious one.

And the year year-over-year has been strong up 60% and despite a failed ballot initiative in California that we predicted, 2023 still looks promising with the launch of new states such as Maryland, Ohio, and Massachusetts, as well as healthy growth from more mature states.

The mix of in-play and pre-match betting in September has also been in line with our expectations. More importantly, we saw significant improvements in play win margins relative to our expectations and to last season's average. This is resulted in roughly 200% growth of in-play GGR compared to September of last year.

While we often emphasize improving in-play win margins as a significant growth driver, it's also worth noting that we've seen impressive growth in pre-match win margins as well.

As a reminder, Genius are the share of pre-match, and in-play gaming revenue, including for parlays, meaning our margins expand as growth and win rate improve across all bets types. Again, each of these factors have contributed to the growth of our U.S. betting business, which helped propel our overall U.S.

revenues by more than 70% year on year in the third quarter, including specifically U.S. betting, which has far outpaced a broader U.S. market growth in September 2022 compared to September 2021. As I caveat it earlier, these results reflect a small sample size of data covering only three weeks of the NFL season.

Therefore, these results may not be indicative of what to expect for the remainder of the season. However, our goal is to be as transparent as possible, so we will communicate how the data is trending over time. In the meantime, we feel comfortable maintaining our current assumptions through the end of the season.

We all use betting metrics, our sales team has done an excellent job of winning new business. In the third quarter alone, we signed 27 new sports but customers in regulated markets around the globe who have been done contributing revenue.

For context, that matches the number of new customer wins in Q1 and Q2 combined now doubling our count for the year. Additionally, we're continuing to expand our partnerships with existing sports bet customers as well.

We're constantly increasing the utilization of our efficient data and streaming content and offering new services as they become available. As a recent example, after the reporting period, Genius extended its partnership with bet365 to expand coverage of official data content.

Most notably, as part of the deal, bet365 will become the first sportsbook partner to explore the implementation of Genius's unique suite of immersive and real time betting experiences powered by Second Spectrum tracking and augmentation technology. In summary, we're satisfied with the betting results for the first few weeks of our second NFL season.

We are confident in our assumptions going forwards, and we are continuing to successfully execute our land and expand strategy with sports books by winning new customers and growing our partnerships with existing ones.

This is proof of our operating leverage and demonstrates that we can substantially grow revenues off of the fixed cost base of our current rights portfolio. Moving on to our media business.

We are continuing to find new and creative ways to engage fans on behalf of our sports betting customers, which has led to another quarter of significant year-on-year growth. We've seen a meaningful uplift in the month of September to start the NFL season.

This is as a result of more advertising customers spending with Genius, and our refined approach to buying media for NFL player acquisition. Importantly, our media customer base continues to expand as we're beginning to work with some verticals that offer huge potential for our business.

For instance, in ticketing, we have helped sports organizations like New York Liberty and Orange Bowl Games and target sports fans to optimize ticket sales.

Additionally, we're now working with large consumer facing brands such as Top Golf to help drive app downloads and determine water to advertise various flavors based on the mood of social communities.

While our customer base is mostly sports books today, the advertising services we provide are sector agnostic, and we are equally effective for any brand seeking to target a sports audience.

As we've demonstrated, again this quarter, our customer compensation is beginning to expand beyond just sports betting companies, and we're gaining traction with customers across industries. This represents a large growth opportunity for the business.

And we're focused on delivering strong results for our customers and expanding partnerships over time. Now you've heard us talk before about how our unique technology cements our position at the heart of a sports betting media and broadcasting ecosystem.

This is a true differentiator in our business model, and our technology was on full display this quarter. Let's take the NFL as an example in the U.S. First, you may have seen, we launched new free to play games to several NFL teams this season, including the Broncos, Colts, Raiders, and Rams.

In partnership with Genius, these teams utilize the suite of solutions to better engage fans grow audiences, activate sponsors and modernize in stadium experiences.

These free to play games are just another way Genius is driving the convergence of sports betting and media and further embedding is technology to the benefit of the NFL, its clubs and sponsors. We are also leveraging our Second Spectrum Technology to innovate the way NFL broadcasts are consumed.

You may recall last year's launch of our Emmy Award Winning RomoVision for the NFL on CBS Sports. The product was the success in our inaugural NFL season, and we made further enhancements to begin our second season.

For example, we developed new features such as player identification, and jersey numbers, adding meaningful new dimensions to the coordinates on screen. We expect this project will continue to evolve over time in partnership with the NFL and CBS Sports with a shared vision of changing the way fans interpret plays on the field.

Additionally, as published in our 6-K filings at September 16, we secured an agreement with Amazon to provide augmented video technology and data related services in connection with an old CD [ph] of prime videos Thursday night football NFL broadcast in the U.S.

This agreement underlines a holistic and accreted nature of Genius's partnership with the NFL, and demonstrates how our technology is bringing sports broadcasting one step closer to full personalization and optionality.

Let me spend a moment explaining why we're so excited about this, and why it's such an important development for Genius and its partners. First, as it relates to live sports broadcasts. This is truly a one of a kind feature.

The ability to identify players, track receiver routes, display quarterbacks time to throw all in real time is something that has never been done before. Front footed broadcasters are beginning to break new ground by giving their subscribers more ways to watch a game and in turn appealing to a wide and diverse audience.

Of course, the NFL benefits from this movement as well. We've now introduced innovative features as ultimate themes that fans enjoy, and we plan to continue building upon this foundation.

As a result, the value of the NFL media properties will naturally increase over time as they attract more viewers and create additional media assets off the back of these ultimate themes and visual overlays.

In Genius, the successful launch of this product is a clear proof of concept that we consume unlock a future value and capture additional revenue by integrating betting, brand activations and other merchandizing all in a single platform.

We [Indiscernible] that even deeper with our most important partners across sports betting, media and broadcasting, but it also brings us another step closer to achieving the vision we described in our January Investor Day.

This applies back to the unique partnership we have with the NFL and its largest customers, broadcasters and sponsors, giving us the opportunity to continue innovate with the biggest names in sports backing and believe in our vision.

We're excited about the journey towards our vision long term, but in the meantime, we're encouraged by the milestones that are happening today. I encourage all of you in the call to spend an afternoon watching the NFL and to take notes of our products in action.

I hope you will find that they provide significant enhancements to the NFL viewing experience. And you can better understand our multifaceted role in the NFL ecosystem.

We are reaching with the [ph] NFL team at a big stage to showcase our capabilities, and we're excited not only to continue evolving our NFL partnership, but also to pursue the opportunity to bring better imaging technology to other broadcasters and leagues around the world.

This represents tangible revenue for Genius today with significant growth potential over the years to come. And with that, I'd like to now turn the call over to Nick Taylor..

Thanks Mark. As mentioned at the start, we delivered another quarter of well balanced revenue growth and adjusted EBITDA profitability Before diving into the details, we'd like to remind you the foreign exchange rates remain volatile throughout the quarter and the U.S. dollar has appreciated even further against the British pound.

For context, our guidance at January Investor Day assume assumed a GBP-U.S. dollar exchange ratio of 1.35. During the third quarter, this exchange ratio fluctuated in a wide range between 1.05 and 1.25. Therefore, we have provided a prior constant currency view of our growth to remove this presentational currency volatility.

We've also referenced our financial results using the exchange rate at the time of setting our guidance to give you an apples to apples comparison of our performance. To begin, in the betting segment, revenues grew 30% on a constant currency basis to $49 million in the quarter.

Using the same exchange rate assumed as our initial guidance, betting revenue was $55 million in the quarter, exceeding our target of $53 million. This was predominantly driven by new customer wins as our business development team secured 27 new sportsbook customers in the quarter.

As Mark mentioned earlier, much of this growth was also supported by U.S. business as growth of Handle and in-play betting helps drive out performance along with improved win margins for the operators. And lastly, we continue to expand our partnerships with existing customers by increasing utilization of our content and services.

Overall, this was a strong quarter for the betting business setting positive momentum to start the busy sporting calendar. Our major segment purchases another quarter of strong constant currency growth, increasing 41% year-on-year to $18 million or $90 million, assuming our guidance exchange rate, which is right in line with our forecast.

This brings our year-to-date media revenues to $57 million, compared to our guidance of $49 million and outperformance of 16% and year-over-year constant currency growth of 93%. Looking into Q4, our customers are beginning to adapt to the headwinds that are impacting the broader media and advertising space.

Therefore, we expect to deliver results more closely in line with our forecast for the full year. Despite these headwinds, we expect to continue to taking market share not only with existing sportsbook customers, but also with advertisers outside of our traditional sports betting clientele, which Mark touched on earlier.

This represents a sizable opportunity to continue growing our media business over time. Lastly, our sports product group grew 6% in a constant currency, generating $12 million in revenue in the quarter. Also in line with our guidance.

Our revenue generated from Second Spectrum is becoming a more significant portion of our sports revenue and it's worth flagging that we're now lapping Q3, 2021, which was the first full quarter or Second Spectrum revenue post-acquisition.

Collectively, this aggregates to a group revenue of $79 million in the quarter, representing 28% year-on-year growth on a constant currency basis. Using the same exchange rate assumed at our initial guidance, group revenue was $86 million, beating our guidance of $85 million.

This is also translated to group adjusted EBITDA of $8 million in the quarter or $9 million using the exchange rate at the time of our initial guidance, which is in line with our expectations. This adjusted EBITDA figure represents a material improvement from our $0.4 million adjusted EBIT, da loss reported in the third quarter of last year.

We are pleased with our consistent performance throughout the year and remain steadfast in our commitment to executing our plans that happened January. Through the first nine months of 2022, we are tracking ahead of that plan. And this is despite the currency headwinds I mentioned to you earlier.

As you can see on the left hand side of Slide 11, we reported year-to-date group revenue and adjusted EBITDA of $236 million and $13 million, respectively, tracking ahead of our guidance of $231 million and $12 million. When removing the impact of exchange rates, you can also see we've exceeded our guidance by an even greater margin.

As we approach the final quarter of the year, we remain on target to achieve our full year goals as the business continues to execute as planned. We believe that by using the fixed exchange rate assumed as our guidance, our strong results in the first three quarters would enable us to raise that four year outlook.

Given the further appreciation of the U.S. dollar since last quarter, we are reaffirming our full year outlook of $314 million in revenue, and $15 million in adjusted EBITDA. We also remain confident in our 2023 guidance, and are maintaining our current outlook using the same exchange rates at our initial guidance.

As we have more clarity on the direction of exchange rates and business performance, we may update this outlook accordingly. Looking beyond 2023, we believe we're on track to achieve EBITDA margins in excess of 30%, which remains our long term objective, or Northstar.

The operating leverage in the business enables us to capture a significantly larger revenue pool in this expanding market, with a robust portfolio that does not need to increase. Our execution from this point forward is often a relatively fixed cost base that should not grow in line with revenues, paving the way towards our long term target.

As a final matter of housekeeping, you may have seen a separate 6-K filing this morning relating to a forthcoming Amendment of our Form 20-F, which should be filed in the coming days. This is in response to a comment received from the SEC and relate to a restatement of our historical 2019 and 2020 earnings per share calculation.

To be clear, this adjustment relates to the accounting treatment of a previously disclosed type of preference share, which existed prior to our listing, and is a historic disclosure adjustment only. There is no impact on our profit loss assets, liabilities of cash in the group for any of the financial years.

That said, we plan to amend our latest Form 20-F to restate our EPS calculations for those fiscal years of 2019 and 2020. We view this as a matter of SEC housekeeping, I wanted to be fully transparent on the context and timing of the amendment and what it pertains to. Before we conclude, I'd like to quickly touch on our cash position as well.

I noted last quarter that we expected to finish the third quarter with $150 million of cash on the balance sheet, including restricted cash. As you'll see in our financials, we've finished the quarter with just over $150 million in the cash and restricted cash right in line with our forecast.

In fact, our closing cash balance would have been about $10 million higher if had not been the as fully effect of the presentational exchange rates.

As noted last quarter, we still expect our Q4 cash flow to be roughly breakeven and given continued currency volatility, we expect a total cash and restricted cash balance in the range of $140 million to $150 million at the year-end based on the exchange ratios at this quarter end.

To be clear, we are comfortable with our strong cash position have ample liquidity to continue funding the growth of the business under the plan as it exists today, particularly as we expect to accelerate profitability and generate positive cash flow by the second half of 2023.

On that final note, I'd now like to conclude our prepared remarks and open the line to Q&A..

[Operator Instructions] Your first question comes from the line of Bernie McTernan from Needham & Company. Your line is open..

Great, thank you for taking the questions.

Maybe to start, can you just talk about some of the structural verse one time headwinds and tailwinds in the quarter impacting sports betting revenue and GGR on your platform, thinking through some of the benefits of in play against higher hold in the third quarter?.

I think, Nick this is one for you.

Hi, Bernie. It's actually Jack speaking. Just on the thing that so, I think what you need to sort of until obviously operate at a very good quarter a very good sort of start to the NFL season under that. And so from our point of view, how that translates for us, it's a real kind of mixture of different things.

We see the things that the play for our revenues is really wide from the top, we started Handle with GGR, I would look at the margin, we look at the balance between in play and pregame margin and these things.

And all of that stuff spits out a number from us from a revenue point of view, all of those things are inputs into our performance as a business. What we saw at the very sort of start of the season for the NFL, and it's obviously a very short period, three weeks is it pretty good, we're pretty happy with where we are.

We're slightly ahead of where we are from a revenue point of view from that point of view. And so that's good and the good indications there. I definitely restate that it's three weeks of those season, it's very early to think about trends and things like that, and what that means, but let we're happy with where we started.

The other thing to state here is to be cognizant of the fact that, the NFL for us is important, but it isn't our betting business, our betting business is much wider than that, as you know. So the relative swings up and down on performance of NFL are there, they're not insignificant, but they're not the only thing that defines our success or failure.

So hopefully that answers your question. .

Yeah, no, that's great. And then on media revenue, we'd just love to get any color on where or how you guys are tracking against the $125 million of committed spending over three years.

I think as we're one year through those deals, are there any operators they're spending above their minimum threshold? And in likewise, are there any kind of like budget flushes that were just happening in the third quarter?.

Yeah. Hey, it's Nick. I think there's certain prepared marks, we had an exceptional performance in H1 of the year. And since then, in this last quarter, the broader media headwinds, we're really back in line with our expectations.

But let's be clear, but as back in line our expectations still gives us aggregate it's 41% year-on-year increase on a constant currency basis in the quarter and that's now 93% year-on-year, in the nine month position.

For Q4, we were anticipating to be in line with our guidance and be back in line with the guidance, but not the exceptional outperformance is that you saw in Q1 for example, this year or indeed Q2.

I think Mark said earlier in the prepared comments, the other thing is we're very competent to continue to take market share, I guess regardless of the wider media environment..

Understood, thanks for taking questions..

Your next question comes from the line of Jason Bazinet from Citi. Your line is open..

Congratulations on your accurate cash balance forecast. I just had a quick question on free cash actually. If Iwas thinking about 2023 and I was thinking about improvements in EBITDA from this year to next year.

Is there anything that you know of today that would not cause that growth in EBITDA to translate to better free cash, free cash just being defined as cash from ops less capitalized software and CapEx?.

Hey, Jason. Thank you for the calculations. No Jason, there isn't anything from any value. Our working capital is randomized quarterly swings as you know we've guided to that this year and expect that to be similar quarterly swings next year in terms of working capital.

But with certainly within the intra year, there's no reason why EBITDA doesn't drop through to cash.

You've called out the two sort of CapEx areas which are capitalized software which are not expecting to increase and indeed, over the course of time expect that to reduce certainly in an absolute basis as well and then a small level of for tangible CapEx is the other piece..

Your next question comes from the line of Robin Farley from UBS. Your line is open..

Great, two questions. One is looking at the stats for U.S. revenue in the first few weeks, NFL up 70% and the in play handle at 70%.

Should we conclude that the mix of in play it was kind of consistent year-over-year? Is that the way to think about that? And then also wanted to just clarify on the two pieces of guidance? One is your year-end cash balance being $140 million to $150 million previously was $150 million? Is that all just FX, that sort of $10 million range is that just all due to FX? And similarly, for your 2023 guidance.

You're reaffirming at the rates that you had given in January/ I think last quarter, you gave sort of a mark to market like that the 430 to 440 would be 400 to 410 FX rates at that time. I wonder if you could sort of update that for today's rates as well just so investors can kind of anticipate in with current rates what your expectations would be.

Thanks..

Hey, Robin, it's Nick. I'll take I guess, questions two or three. And I'll let one of the guys pick up specific NFL piece. So on the on the cash 140-150, that's exactly right. Well, when you've called it out, when we talked about 150, we're around about sort of 1.21, which I think was the rate around sort of mid-August rates.

And now what are they today about 1.12. So it's purely just an FX position. And indeed, you can see in our cash flow statement, that if we'd stayed at 1.35, throughout this year, our cash balance actually will be around $25 million higher, purely from FX presentational bid.

On the on the 2023 position, I guess the first important thing, Robin is to call out just to reiterate what we said in the prepared remarks is that based on the sort of strong performance of the business, we've reiterated the 2023 revenue unit adjusted EBIT guidance at that 1.35, which was the currency back in that Investor Day back in January.

You're right to say that the biggest variable, therefore on our guidance is that movement of currencies. And anywhere between 1.1 and 1.15 over the course of the last sort of couple of weeks.

Again to remind everybody that this -- yeah, that's really a purely presentational impact on our revenues, and a much more minimal presentational impact on our EBITDA. But we're very conscious of and what I'm keen not to do is to constantly change our official guidance based on moving exchange rates.

So what I've been looking to do is to come back to the market with an updated 2023 view, based on where the exchange rates probably likely to be in and around the New Year, Robin. I'll hand over to one of the guys to pick up your first question on the NFL in play..

Yeah, hi, Robin. It's Jack. Basically, your assumptions about online. As I said to Bernie's question earlier on, there's a real mixture of ways for us to make the revenue and the mix and the margin and the Handle and all other things are there.

But in short, we bought in line our assumptions as previously stated our board, where we thought they will be and that's what we're seeing at the moment on the trends we've had in a very short period of time..

Okay, great. Thank you..

Your next question comes from the line Ryan Sigdahl from Craig-Hallum Capital Group. Your line is open..

Hey, guys. I want to start with Second Spectrum, so nice showcase on Thursday night football with Amazon nice integration with bet365, that's now happening.

But can you talk about what that's going to look like to the consumer within the betting experience within bet365? And then secondly, talk about the opportunity to bring the technology to a much wider audience within the NFL, but also other sports leagues?.

Hi, it's Mark. So bet365 partnership is an exploratory partnership. And where they're coming from is if you look at the bookmakers sites and the innovation that you've seen over the last sort of 10 or 10-plus years.

We think there's room for improvement, that we can use Second Spectrum to really drive that user experience, things like pose recognition, interactivity with some of the streaming and just generally the interface that the punters are using to place the bet.

And frankly, some of the other activities that we think that we'll be doing over time, whether that's interacting with ticketing or interacting with sort of merchandizing, other things that are coming. We think that user experience and that that that presentational layer can be improved.

And the Second Spectrum technology really gives us an opportunity to do that. So that's kind of where we're heading with this..

Is it -- maybe it's a follow up, is it more within the AVs functionality, or is it more throughout the whole betting experience in the app?.

Well, yeah, what do you mean, the whole betting experience, you talk about sports betting. We've said in the investor video, that we put out at the beginning of the year, we kind of gave a bit of a vision about how we think it's going to work longer term.

We believe there are huge opportunities to cross sell, not only new bet types and more bets to the punters, but other products within that user interface.

So we think that the future of sports betting and the future of that that user experience is going to be based around having further products cross sold into it, whether they're betting products or external products, as the users involved in the game, whether that's AV in the traditional way, or whether that graphical representations of the game is going to -- that will evolve, but we think initially it will be both.

And over time, that will change..

Great, then just one for Nick. Appreciate the update on guidance, but given kind of the macro challenges various crosswind I guess, how do you feel about the cost structure today, the operating leverage in the model going forward? And then my math implies incremental margins, EBITDA margins of about 30% at constant currency between 2023 and 2022.

Is that a good rule of thumb going forward in future years? Thanks. .

Yeah. Hi, Ryan. The headlines really is that the total cost base can support much higher revenues. And actually, if you look at our numbers this year, you're seeing and if you look at the operating expenses in the business, actually quarter-on-quarter as well as year-on-year you're seeing that in fact, in some areas, they're decreasing, not increasing.

And yeah, our revenues obviously increasing steadily year-on-year. So we're actually at that inflection point now. And we're just saying to Robin, a second ago, we're very confident with our EBITDA position for next year on a constant currency basis, that sort of 40 to 50. So the way you're thinking about that incremental margin is correct..

Thanks, good luck, guys..

Your next question comes from Jed Kelly from Oppenheimer. Your line is open..

Hey, great. Thanks for taking my questions. Just to start off, Nick, looking at the cost of revenue, you did drive really nice leverage in your data cost So I think your data cost associated with sports betting.

So can you kind of talk about some of the puts and takes there? And then, you know, we have been hearing some softness in the broader advertising market. Are you seeing that with your media segment? Thank you..

Hey, Jed, thanks for the questions. On the first one, absolutely. And it kind of mirrors what I've just said to Ryan, really is that the current cost base can support much higher revenues. Now on the cost of revenue and there's a little bit of seasonality in that in relation to the NFL rights and the NFL revenues that we try and match.

So Q2 and Q3, we're always like to have a slightly higher gross margin in Q4. But the point that you make is right, that the cost base that we have today, I don't envisage it growing significantly or and certainly in the operating line significantly, as we continue to grow our revenues at a decent click.

On the space, well, I guess I think I commented a little bit this Jed in the prepared remarks, but the exceptional performance in H1. And there are obviously broader media headwinds. So we're not outperforming our expectations in Q3.

We are always in line with our expectations in Q3, but we take no -- we don't apologize for that as that's a 41%, constant currency year-on-year growth. And let's also remember Jed, that now we're lapping acquisitions that is almost all entirely organic growth, not inorganic growth. And year-to-date, we're now at 93% year-on-year.

And the other thing I think that Mark said earlier, is that what we are continuing to do, and we expect to continue to do regardless of what the wider media environment looks like, as we expect to continue to take market share in [indiscernible]..

And then just as another question. I think, a couple of weeks ago, there was an announcement around one of your competitors and other sports book kind of tracking NBA data. I believe, second spectrums involved with the NBA.

So can you talk about that relationship? And then sort of as more sports books, I guess lean into this player tracking around prospects. Just how are you positioned from a technology standpoint, relative to your competitors? Thank you..

Jed, sorry, it's Jack speaking again. So from a technology point of view, like we feel very, very good compared to the competition in Second Spectrum, I think is well understood to be a market leader and what it's doing. And we feel great about the technology and the use cases for that wide across the base.

Some of the stuff Mark talked all about user experience. So as Mark touched on earlier when talking about bet365. But on top of that, and you're right to illuminate, there are opportunity around different types of bet types, player props, new bits of data coming out, that stuff we feel great about. With respect to the NBA. Specifically, you're right.

We are a tracking provider, and more than that to the NBA. And I think we've spoken about this before. The way that we can work with sports leagues is multifaceted. So in some instances, we are purely we buy their rights, and we distribute their rights.

In some instances, we are technology providers, in some instances, like the NFL we are all of those things. And it's a weird combination that with respect to the NBA and a couple of capacities, we're just technology provided there. So we're thrilled to be part of that really good relationship.

So with that -- does that answer your question, Jed?.

Yes, thank you..

Next question comes from the line of David Bain from B. Riley Securities. Your line is open..

Great, thanks so much. I guess my first question would be with regard to the settlement of Sportradar litigation, and how that would change the landscape for Genius strategically, or generally for European sports rights moving forward..

Hi. Yeah, so limit limits to what I can say about this. But, I'm very happy to sort of give you the lines from the press release. We've basically -- we've resolved the litigation resolution enables database to continue to license the market football data code data, as it deems fit.

Genius shall maintain the ability and the exclusive right to provide low latency official football data, co-betting data through the rights through 2024.

Sportradar has therefore agreed to refrain from unofficial in stadia staffing the Premier League football league and Scottish Professional Football League matches, and has purchased a sub license from Genius Sports for delayed fee to be marketed as the official football date code, secondary feed through 2024.

And the remaining terms of our settlement are very confidential. But I'm very happy with the outcome. And I'm very happy with the position that we've reached..

Yeah, now I understand that.

But is there a general like a bigger picture way to think about this for European sports going forward? Or is this just the one like that?.

I don't think the market has really changed. I mean, this is sort of -- the way that the business has been operating and the way that we have we have worked basically forever. I think that's pretty much the accepted and adopted view of the leagues, the sports books now and, and the rest of the industry.

So I think for us, it doesn't really change how we operate. And I can't comment on whether our competitors will operate differently or not, but for us, the cost of our rights are built into our model. We understand how and where our data is coming from and things aren't really going to change very much for us.

It's just a positive affirmation of what we're doing. .

Got it. Okay. And then, Nick if just I know this is kind of following up on Robin and some others, but just so that we understand the FX.

Can we take like 0.1 differential change example, using the mix in your guidance to understand what that would do to revenue EBITDA or free cash flow? I know those buckets are different just given, you have some certain CapEx dollars or in dollars versus pounds or OpEx.

Could we get just kind of a mechanical view?.

Yeah, hey, David. I guess, I mean, looking at those two individual buckets into revenue, EBITDA, and cash. So, perhaps I can take on reverse order. So cash, I think as I said in one of the previous answers $25 million less just because of the exchange rate for based on the level of cash we've got in the business.

So $150 million that we've imported this quarter had we remained at 1.35 would have been SERCA $175 million. And you can see that in the bottom of the cash flow, given where exchange rates are. I guess you can kind of do the math on that bit.

I mean the better said about revenues and EBITDA is the EBITDA is far less impacted by revenues, because inevitably, there are some costs within our P&L that are dollar denominated, and therefore don't suffer any foreign exchange mix on that. So it's relatively minimal impact with our EBITDA revenues.

Obviously, we've seen it this year, we've seen a reduction, but one of the I guess nuances, David, and why are you keen to not only let exchange rate settles is actually the mix of our revenues or how much of your dollar denominated revenues and non-dollar denominated revenues? I mean, of course, with this card was strong in the U.S., I think 30% of our revenues are our U.S.

related. And that's probably like to go up as in Q4, and Q1, but obviously dropped significantly in Q2, and Q3 with a quieter U.S. sports calendar. So that also has a significant impact.

What I would say, David, is just to reiterate, really, what Robin has said is that, at our guidance rate we are confident with the underlying performance of the business at 430 to 440. And we're likely to update that view purely from an FX example probably early in the new year..

Real quick So if I were to say like a 3Q as an example, the mix next year should be more U.S. generally one would think..

I think that's a good sum, David. I think that's right. I mean, as I say, the seasonality quarter on quarter, but yeah I mean, the trajectory of the business and the growth in the U.S. market naturally would expect to be a slightly higher U.S. mix going forward. .

Perfect. Thank you..

Your next question comes from the line of Mike Hickey from Benchmark Company. Your line is open..

Hey, Mark, Nick and Jack. Good morning, guys, good afternoon. Thanks for taking my questions. I guess the first one just on the trend here of live sports, going to streaming services obviously you guys are very visible on the Amazon side. And it seems like that's been a great win for you.

Just curious when you look at the transition of betting, the streaming services is there's anything incremental that you see on betting behavior in terms of maybe ultimate GGR or anything in play, versus pre-money trends that's incrementally positive for you or not? And then I guess, same question, but looking at sort of Tier 2, maybe Tier 3 sports.

Now you hear of Netflix looking to get into live sports, obviously tennis which is a great betting sport already. But also sports like surfing, can you imagine that Netflix gets surfing viewership is going to spike here? I would think and with that, maybe that also think you can bet on sports market or surfing? I don't know, I'm not sure.

Seems like that'd be good. But if you do see the sort of Tier 2 Tier 3 sports going to these larger streaming services and a pickup here in viewership, is that an opportunity for you -- incremental opportunity for you on the betting side. Thanks, guys. .

Hey, Mike's, it's not. I'll take the tennis questions backwards. I think our business I mean we spend a ton of time and you guys here and on these calls and investor meetings talking about the NFL. But our business is a business that is really about not only in the NFL but enormously about the longtail of sports.

So we cover hundreds of thousands of sporting events from everything from the NFL all the way down to things like pickleball and surfing. And we always have.

That longtail of sports is so important because, we tried to explain into the Investor Day, it's all about the time of day, it's about having content always available, it's having the sharp window open for betters to engage with. So the longtail sport is something that we are -- we're real experts with and in lots of ways I think we pioneered.

Adding streaming to it is is really just about improving fan engagement.

And for improving fan engagement, whether that fan engagement comes because the fans are more interested because Netflix is promoting it or whether that fan engagement comes because the bookmakers start streaming on their own site, we kind of indifferent to because ultimately it's about making the fans more interested and getting them more engaged.

Our job and what we were talking about earlier with the deal the exploratory work we're doing with 365 and some of the stuff that we do in a Second Spectrum, our job is to do a better job of making sports fans engage with broadcast.

So we welcome broadcast in any way we can, whether that's on Netflix or an Amazon or on a bookmaker site The Second Spectrum acquisition was really focused on making sure those broadcasts are more interactive, that they make more sense and more interesting for the viewers.

And over time that that technology stack that we have will play us unbelievably well into the next generation of integrated sports betting content, whether that's only on the sports book sites, or whether that's on a Netflix or an Amazon, the world is still to sit to see. But from our point of view, we're incredibly well placed.

And I think a lot of that answer probably covers your first question, I think. The streaming on the betting side, it's really -- again, it's about fan engagement. It's about making sure that the fans are getting what they want.

We think we can help bookmakers do a better job of cross selling, not only additional bets but other products, making those fans more interested more interactive, and really appealing to some of the new generation of sports betting players in sports betting -- for sports betters that come online who were interested in more information, more detail, more data.

So we sort of see this as a really exciting and really valuable part of the ecosystem. And we're I think fairly uniquely placed to really drive value from it as we're proving with some of the deals that we've talked about..

Nice. Thanks, Mark. One more for me. Nick not to squeeze you too much here, because we've gotten a lot of questions on the media side, the ad side. But no doubt you look at the average ad tech stock here in the U.S. it's not trending well and business has been very challenging.

So obviously, you've heard your prepared remarks, but I guess you reaffirmed the '23 guide. But given you're seeing some near term headwinds here, just your confidence on your original media assumption for '23. Because I think that sort of embed a larger stand above the minimums that you had baked into your '22 guide.

So I realize you're not changing your guidance, but I'm just curious why you feel that media here for you be resilient in '23 given the headwinds that you've noted and your peers that have yet to sign. Thanks, guys..

Yeah, hey, Mike. Actually it might be helpful to get Jack to color on this from a sort of operators commercial side. But just to be pedantic, we didn't actually give any specific media 2023 projections.

But what as reiterated previously is that what we are comfortable is this the guidance at 2023 for the whole of the revenues based on a constant currency. But let me answer with Jack because he might be able to give you a little bit more color that might be helpful. .

Yeah. Hi, Mike. I guess some things you stated obviously true, obviously some headwinds for some other players in the market really. I think from our point of view, I think we're in a slightly different place, Mike. Because, we're beginning to offer many more products to this market.

And those products are very relevant across not just our core market, sports betting operators and those they were historically, but actually much wider than that. I don't remember in front of me, but I think we've got some in the [indiscernible]. We signed a lot of deals with brands who weren't sports betting operators this year.

I think the number was there this quarter, I think the number was 10 some of that. And so we're beginning to really drive into that space, which doesn't mean that there's not pressure coming from them. But we know we're able to expand in a market because we've got good products and a good offering from our current position.

We're not starting from a mature place where we've maxed out all the opportunities in front of us, which I guess some of these other people not entirely familiar with their businesses might be in that place. Are they seeing those headwinds? Whereas that's not how we see it. We see it was very foothills here.

And we've got massive amounts of opportunity right across the world in this space..

Thank you, gentlemen. Good luck..

There are no further questions at this time. This concludes today's conference call. You may now disconnect..