Published on: November 12, 2024, 03:22h.
Last updated on: November 12, 2024, 03:22h.
Shares of Genius Sports (NYSE: GENI) saw a significant increase on Tuesday after the company unexpectedly reported a profit in the third quarter and raised its financial guidance for 2024.
Despite a general decline in gaming stocks due to profit-taking, Genius Sports’ stock rose by nearly 16% on high trading volumes at the end of the day. The company announced a net income of $12.5 million and an EBITDA of $26 million for the third quarter, with revenue reaching $120 million. The previous forecast for the quarter was an EBITDA of $25 million and sales of $119 million.
The increase in net income was a key driver of the stock’s positive performance. This metric provides a more accurate reflection of a company’s profitability, with Genius Sports reversing the previous year’s loss of $11.6 million to a profit of $24.1 million in the third quarter.
During the same period, Genius expanded its data partnership with ESPN to enhance data coverage for college sports, the NBA, and the WNBA. The company also secured a deal with Reddit to provide enhanced data for NFL discussions on the platform.
Genius Raises 2024 Guidance
By revising its EBITDA and sales forecasts for 2024 upwards, Genius demonstrated its potential as a high-growth stock in the sports betting sector.
Genius Sports projects Group Revenue of around $511 million and group adjusted EBITDA of approximately $86 million in 2024, signaling growth of 24% and 61% in revenue and adjusted EBITDA, respectively,” according to an official statement.
The company previously anticipated sales of $480 million and adjusted EBITDA of $75 million for 2024, suggesting continued revenue growth of at least 20% for the fourth consecutive year.
Genius also expects margin expansion by approximately 400 basis points in 2024, indicating operational efficiencies. In the third quarter, the company significantly reduced operating losses and transaction expenses compared to the previous year.
Positive Cash Flow Outlook
Reaffirming its goal of achieving positive cash flow in 2024, Genius contributed to the stock’s rise on Tuesday. Although specific cash flow guidance was not provided, CFO Nicholas Taylor expressed confidence in the company’s growth prospects during a conference call with analysts.
“With various growth drivers across the business, we are confident in our Q4 guidance of 38% revenue growth, over 2.5 times growth in adjusted EBITDA, 900 basis points of margin expansion, and significant cash flow, positioning us for a positive outcome for the full year,” said Taylor.
CEO Mark Locke highlighted the increase in live betting on the NFL, where Genius serves as the exclusive data provider. The rise in in-game wagering and same-game parlays creates new data demands that can benefit companies like Genius.