After a positive Q1 earnings report, Genius Sports seems to be on a trajectory toward long-term value for shareholders. The company shared its first quarter earnings for 2023 on Tuesday morning, bearing some of those details.
The stock price increased in the immediate aftermath of that earnings report but had already started regressing to a mean as Tuesday waned. If Genius can build on its performance, though, that just might signal good value for investors.
Genius Sports says it surpassed its Q1 revenue forecast
Genius Sports, a data company that services many of the prominent online gambling companies in the United States, issued a press release regarding its Q1 financials on Tuesday. The data that the company pointed out included better-than-expected revenue for the quarter.
- While Genius forecast $92 million in revenue, the actual total revenue came to $97.2 million.
- Genius said it is adjusting its full-year projection for revenue to $400 million.
- Positively adjusting its guidance to include $49 million of adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Genius wasn’t the only one touting its performance. SeekingAlpha reported that Genius missed its GAAP EPS (Generally Accepted Accounting Principles Earnings Per Share) by a mere penny.
Zacks Equity Research also analyzed the report for Yahoo! Finance, stating that Genius “has topped consensus revenue estimates three times over the last four quarters.”
Zacks had an even more attractive accolade for Genius in its analysis, though. It pointed out that while the S&P 500 has gained 7.8% since 2023 began, Genius Sports shares are up 13.7%. That trend continued in the immediate aftermath of Tuesday’s numbers.
Genius stock price jumps, but is it sustainable?
As the market was in its early hours Tuesday, the price for GENI shares on the New York Stock Exchange went up over 20%. As of 1 p.m. ET on Tuesday, however, the market waned back down to a 15% increase.
The jump in price might be attributable, at least somewhat, to Genius’ gain in its gaming division. Genius says revenue from its sports betting content, data, and technology services for the quarter came to $64.7 million. That represents an increase of almost a third compared to the first quarter of 2022.
That was also the segment of the business that saw the strongest growth over the past year by far. Revenue from Genius’ media and sports content, technology, and services decreased by at least 10% compared to Q1 2022.
Over the next year, it’s fair to question whether Genius can replicate that level of growth in its gaming sector. Genius’ gaming services are essentially reliant upon legal sports betting activity. Genius provides data and video streaming to sportsbooks in the United States.
Over the next year, the only likely new markets to go live in the US include Kentucky and Maine. Vermont remains a possibility but legislation to legalize sports betting there still requires a signature from Gov. Phil Scott, so it’s in the extremely early stages.
Between the end of Q1 2022 and the end of Q1 2023, Genius benefitted from online sportsbook launches in Kansas, Maryland, and Massachusetts. Kentucky and Maine might not be able to deliver such strong results.
On a longer-term basis, substantial growth in this aspect will depend on similar expansion. Should states like California, Florida, and Texas eventually legalize online sports betting, paying less than $5 per share for Genius today might look like, well, a genius move.