Genius Sports Ltd (GENI) Q1 2026 Earnings Call Transcript

Good day and welcome to Genius Sports' first quarter 2026 Earnings Results Call. At this time, all participants are in a listen-only mode. Following the presentation, there will be an opportunity to ask questions. Please note that this call is being recorded. It is now my pleasure to introduce your host, Genius Sports. Please go ahead.

Thank you and good morning. 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 statement 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 20F filed with the SEC on March 17th. 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. The 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, everyone, and thank you for joining. Before I get into the results, a quick word on context. We're really pleased to share that we've successfully closed the Legend acquisition last week. Integration is well underway, and we're excited to share our progress into the quarters ahead. Q1 was another strong quarter, reinforcing the simple point that this is a reliable, compounding business model, and that we are executing on plan. We delivered group revenue growth of 31% and adjusted EBITDA growth of 21%, with meaningful contributions from both betting and media. Importantly, betting grew 33% this quarter, and that consistency is structural, and I want to spend a few minutes on why. Net revenue retention remains in the 120% to 130% range across our sportsbook customers year after year. We partner with circa 500 licensed sportsbook brands across regulated markets globally, and over half our revenue is generated outside of the United States. Our consistent growth comes from the same drivers that we have always communicated. Selling additional content and products to sportsbooks, winning new customers globally, sharing in market growth, and increasing the value of our partnerships as they come up for renewal. Each renewal is a pricing event. More content, more products, more geographies. And that's what compounds into the growth that you see year after year. What sets us apart is how deliberately this business is built. That repeated performance across a diverse set of customers, products and regulated geographies is fundamental to how this business compounds. Further, we are selective by design, working only with licensed operators in regulated markets. It is what makes our business model predictable and sustainable. That predictability is reinforced by our contracts, which are structured to protect against the downside. Volatility in handle or hold does not translate to earnings volatility for Genius. We have proven this through periods of industry-wide pressure, and this quarter was no different. While discussing our betting business, I want to spend a moment on prediction markets because, as we've mentioned before, this is a meaningful new ecosystem for genius sports. The regulatory framework is evolving. Leeds are establishing agreements with the CFTC and prediction market platforms, and well-funded operators are deploying significant new influxes of capital at scale. We are a beneficiary of this. Where we are different is that our position here is structural. We provide the data and the infrastructure that enables prediction market operators and the other stakeholders in the ecosystem to function at scale. We expect this to translate into both incremental data revenue and advertising demand as those operators ramp customer acquisition the way to think about this is simple we are applying the same proven model in the us online sports betting market to a new category as a concrete example of revenue during the quarter we onboard several high profile market makers using our low latency data feeds to help them participate in prediction markets that is the pattern our infrastructure becomes the foundation for new products as they emerge and as the industry continues to evolve we see a clear opportunity to execute that same proven strategy and effectively expand our addressable market we are at the very early stages of that journey today and are excited about our pipeline. That is the betting story. Now media. Media grew 22% in this quarter. Most excitingly for Genius was the launch of our Moment Engine that has already gained significant traction across the advertising industry and become the new standard. The Moment Engine identifies when fan engagement is likely to peak, not just from the scoreboard, but from momentum shifts, comebacks, and the kind of high-impact moments where customer attention is most valuable to advertisers. Genius IQ is what makes that possible, and importantly, it matches that moment to high-value audiences and activates them instantly. It's not just about identifying what is happening in the game. It's about understanding who it matters to and how they are likely to respond because not every fan reacts to the same moment in the game in the same way that signal the connection between the moment the fan and the response is what advertisers pay for what differentiates us is the combination of data and identity our fan hub id graph 250 million consumers combined with legend's intent signals drive better targeting and higher yields the result is enabling advertisers to target high intent audiences in real time which drives higher yields and increased spend over time that translates directly into high margin media revenue to accelerate the growth of this opportunity we have now integrated the Moment Engine with leaders representing approximately 90% of the programmatic market, agencies, broadcasters, and the major SSPs and DSPs. These integrations let us connect into existing advertising workflows and budgets with minimal friction, supporting our ability to scale efficiently. The product was already live during the tentpole events like the Super Bowl and March madness with nba finals and fifa world cup still ahead what we are executing here is a structural shift in how digital businesses create value the economy has moved from selling attention to capturing intent search engines did it retail media did it at the point of purchase in sports we are enabling that shift to happen in real time and the moment engine is built precisely for it at our new front event in new york a few weeks ago we partnered with nearly 70 new advertisers clear evidence of growing demand for outcome driven sports advertising that builds on existing partnerships that we have with publicist wpp doordash venmo and samsung samsung in particular tested our self-serve ctv product early and quickly graded genius as a tier one partner within its internal evaluation framework increasing spend by 220 percent from their test campaign to their most recent booking a remarkable signal given samsung's scale and selectivity in choosing advertising technology partners we expect more of these graduations as advertisers complete their first full season with the product as adoption continues to grow we expect the Moment Engine to be a meaningful driver of high margin media revenue over time. The core businesses, embedding and media, are on a strong footing. And now, I want to spend a few minutes on the three areas that are accelerating our margin expansion and profitability. Legend, Genius IQ, and AI. They're all connected and all running on the same platform. First, Legend. As you know, Legend adds the intent layer of the system that we have been building for two decades. Owned environments where 118 million unique users actively engage with sport and iGaming, with more than two-thirds returning regularly. combined with the official data and infrastructure that genius already provides the platform now connects context engagement and action all in one place as ai commoditizes information retrieval owned environments are where users come back to engage they become more defensible not less legend also extends the moment engine into the global i gaming market which is expected to grow at near 20% CAGAR over the next three years. On customer acquisition, as U.S. markets mature, sophisticated operators are shifting spend from the blanket promotional offers towards targeted, high-intent performance media. Channels where Legend is a proven leader. We're already seeing clear evidence of this shift. For example, Legend acquired customers delivered 60% higher yield for operators after one year. The category is moving towards Legend's model. Integration is underway and we'll share more on Synergy execution next quarter. Second, Genius IQ is replacing legacy systems across the sports league landscape. As we outlined at our Investor Day, Genius IQ is the operating system of modern sport, one platform that captures live game action, understands fans, distributes data, and powers every touchpoint where sport is consumed. Officiating, coaching, betting, fan engagement, advertising, all running on the same system. legacy manual data capture where humans key in events from television feeds is obsolete leagues are transitioning towards automated ai-driven solutions and we are winning that transition our recent expansion with leaguer mx is one example a single relationship covering officiating support performance analytics for clubs betting data and fan engagement all powered by genius iq we see a meaningful opportunity to take market share and drive incremental revenue with limited additional costs as more leagues make this transition this is the strategic shift that we anticipated and that we built for and we are now seeing the return on that investment in real time. Third, AI lowers our cost base and increases speed across the business. Genius IQ automates data collection in venues where it is deployed, delivering faster, more accurate data with reduced operational overhead. By the end of next year, we expect that automation to span our entire data rights portfolio that is a meaningful margin lever as we scale internally agentic ai has cut feature development time by more than 50 and we expect these gains to compound we're extending the same capabilities into partner workflows embedding our technology more deeply into customers operations which both creates stickiness and creates additional commercial opportunity we have also developed automated anti-piracy solutions to protect our most valuable asset the data itself ai is not just enabling innovation in our products it is structurally improving our margin profile and reinforcing the defensibility of our business the through line is this one platform three accelerants expanding operating leverage that is what gives us confidence in sustained margin expansion from here brian will take you through the financials but i'll leave you with this q1 extends a consistent pattern of execution on a durable model We are moving from a data provider to the operating system and monetization layer of global sport. We've built a competitive position and margin profile that few others in the sports ecosystem can replicate. Consider this against the backdrop of an industry that's being reshaped by AI. Every wave of AI progress increases the value of two things. data that can't be replicated, and destinations audiences actively choose. We own both, which puts us in a rare position. AI doesn't threaten our core, it compounds it. The opportunity is to use AI to make our data more useful, our destinations more essential, and the gap between us and everyone else even wider. i want to close with a direct comment we understand and appreciate that it's early days with respect to legend as i wrote to shareholders in february the gap between how we see this business and how some of the market currently sees it is where the asymmetric returns live the way we close that gap is by delivering quarter after quarter with the discipline that has defined this business for two decades. These results begin that process and every conversation between today and our next call will be about exactly that. And with that I'll turn the call over to Brian.

Thanks Mark. Three things I want to land today. Q1 was another quarter of well-balanced consistent growth. The Legend financing priced well, with strong lender support. And the combined company takes our 2026 EBITDA margin from 23% to 28%, pulling our long-term target forward by two years. Starting with Q1, we delivered well-balanced revenue growth across both segments. Betting was up 33% and media up 22%, translating to group revenue growth of 31% and adjusted EBITDA growth of 21%. Geographic balance was equally strong with over 25% revenue growth across Europe, the Americas, and rest of the world. Two housekeeping notes on the quarter. First, as outlined previously, we now consolidate our sports technology and services business into betting and media. This aligns with how we manage the business and reflects where expected growth and profitability will come from. Going forward, we will report on those two segments only. Second, on cash, we historically see outflows in the first half and inflows in the second half, netting positive for the full year. We expect that pattern to repeat in 2026. Now, on legend, the financing tells you what outside capital thinks of this business. Concurrent with closing last week, we funded an $825 million term loan A at SOFR plus 350 basis points. Better terms than where credit markets sat when we originally signed and a lower cost of capital than we initially expected. In a more selective credit environment, lender diligence reinforce the predictability of our cash flows, our low leverage profile, and the durability of the model. We also elected to size the debt $25 million below the original structure, reflecting our confidence in free cash flow generation and our commitment to disciplined deleveraging. This reduces upfront and ongoing interest, fees, and amortization while preserving ample liquidity, which brings me to guidance. Now reflecting the combined company beginning May 1st, for Q2, we expect one month of standalone genius and two months of combined group financials, delivering group revenue of approximately $185 million and group adjusted EBITDA of $45 million. For full year 2026, we expect group revenue of between $990 million and $1.01 billion and adjusted EBITDA between $270 and $280 million in line with the 2026 annualized estimates we provided in February. The headline number, this raises our 2026 adjusted EBITDA margin expectation from 23% to 28%. The acquisition is immediately margin accretive and accelerates our path to our previously stated long-term revenue and margin targets by two years. On cash flow, two points. First, this year. Q2 will mark the low point, consistent with the seasonality of prior years, while also having one-off acquisition expenses. In the second half, we expect the combined business to generate approximately $100 million of total cash flow, including all interest expenses and debt repayment. This equates to roughly 50% to 55% conversion of the approximately $200 million of adjusted EBITDA we expect in the period. Second, the trajectory. As we move into 2027, free cash flow conversion increases towards our previously stated 2028 target of at least 60% on an unlevered basis. And 2027 is also the year we transition to positive-gap net income on a sustained basis. One last point, and it's the most important forward-looking one. Today's guidance does not yet include the four revenue synergies we identified at the time of the transaction, and these are where we see significant upside potential. To recap them briefly, they are, first, customer cross-sell, uniting Geniuses' official data with Legend's high-intent acquisition funnel. Second, monetization of the combined audience asset across the advertising ecosystem. Third, scaling Legend's technology platform across our 400-plus league and team partners. And fourth, distributing Genius data and products through Legends channels. On that fourth synergy, work is already underway. Over the coming weeks, users on Legends properties will begin seeing Genius products integrated directly into their experience. This will be the first visible signal of integration progress. In 2026, the majority of Legend's value comes from consolidation, margin uplift, and cross-sell of Legend inventory into existing betting partners. Deeper data-driven media synergies build as we move into 2027 and beyond. One specific synergy worth calling out separately, prediction markets. As Mark covered, the ecosystem requires both official data and high-value audiences, capabilities we uniquely combine. Together, Genius and Legend create the only platform in our industry that delivers both at scale. We see this as one of the most attractive incremental revenue opportunities ahead and only the very early stages of this opportunity are reflected in today's guidance. To close, Q1 extended the track record. The financing validated the model. Legend pulls our long-term targets forward by two years. The combined business is set up to deliver sustained revenue growth, margin expansion, and cash flow. and meaningful long-term value for shareholders. With that, we'll open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. I would like to remind everyone for one question, one follow-up. If you would like to ask a question, please press star, followed by the number one on your touchstone phone, and you will hear confirmation that your hand has been raised. If you wish to withdraw your question, please press star followed by the number one again. If you're using a speakerphone, we can ask you to lift the handset before pressing any keys. Please hold for a moment while we gather questions. Our first question comes from the line of Ryan Sigdal from Craig Hallam Capital Group. Please go ahead.

Hey, good day, Mark, Brian. Nice to see the strong Q1 results. I want to start, Brian, with guidance, just because you ended on it. Are you able to break out the Legacy Genius Guide relative to your new guide and then what's included for Legend? I tried to do some reconciliation relative to the standalone expectations you'd put out It appears like maybe a little lower on the revenue and the same EBITDA, but hopefully hoping you can help me with that.

Hey, Ryan, thanks. On guidance, this is all in line with the earlier guidance we gave in February. And in February, we started with a genius standalone guidance that had 22% revenue growth and 36% EBITDA growth, which is really strong, and we're on track to achieve that. With Legend closed just last week, we now present it as a combined business. So the guidance you see is effective May 1st on the combination.

And you can see it's immediately accretive to margin and cash flow. uh potential synergies to drive upside and so we feel good about that guidance and again i just want to stress it's all in line with that earlier guidance in february helpful um nfl uh so there's it's reported the nfl does not have an official sports book uh they're in those negotiations previously drafting spanduel caesars that expired at the end of march um curious kind of what your view is of that i know it's a long time until the start of the season but just uh how that relates to you guys and what you expect to happen there hey ryan thanks for the question um yeah i mean

look it is a long time to start the season you're right and it's i mean this is nothing we we haven't really seen before uh you know i don't want to comment for the you know nfl or you know how those negotiations are going but from our point of view um you know we've got very strong visibility over our future revenues and our partnerships and our relationship with the nfl just to remind everybody is locked in until Super Bowl 2030.

Thanks, Mark. Good luck, guys.

Thank you. Our next question comes from the line of Clark Lampin from BTIG. Please go ahead.

Thanks very much. Morning, and thanks for really detailed thoughts around sort of legend and the opportunity sort of moving forward, maybe to drill down on that at a slightly more micro level. I wanted to see if you guys could talk about some of the ongoing work and the publicist and sort of moments integrations that you guys talked about in the March timeframe. Could you give us a feel for early commercial traction, what you're seeing with the integrations? Are those driving incremental revenue now, or are we still in the sort of activation and testing phase? And then a clarification on guidance. I think, Brian, you just said immediately accretive. There are potential synergies, but guidance should be considered basically in line. It sounds like you guys have a very nicely growing demand backlog from core and prediction customers. What would you want to see before maybe starting to underwrite or sort of embed those potential synergies that you just talked about?

Thanks a lot. hey clark um thanks for the question i look i'll let i'll let brian pick up the second part of it but i mean it's suffice to say i think we said a few times that the upside isn't isn't um you know priced in it's or isn't in in any of the guides um to answer your question sort of micro details as i think you called them we look we've got a few um main things we're going on the leg legend integration things are going really really well um from an operational point of view we've We've got a 60-person commercial off-site together, I think, next week or the week after, which is going to bring the businesses together. And we're going to address a lot of the inbounds that we're getting already, which is really a good sign for the combined offering is going down very well. From a product point of view, we're integrating BetVision into Legend at the moment, which gives us not only additional reach, but more inventory, which we should be able to immediately drive value from through our advertising partnerships. On the Moment Engine, you saw the comments or heard the comments in the pre-recorded script. We think we picked up 70 new customers and 90% of the SSP DSP market, and that's delivering immediate revenue. So we're extremely excited about the opportunities. It's going exactly to plan, and we feel very confident about the growth and the revenue numbers that we put out into the market previously. But I'll let Brian pick up the second part of your question.

I think that second part, just on what we would need to see to layer in those synergies. And we've always been consistent that the acquisition, we guided with what was in front of us. And as those synergies come to light, we will start to layer them in. We've said the nearest ones are the cross-sell opportunities. And as Mark said, the teams have started to get together. There's interest on both sets of customers and proposals going out, where we can now leverage the combined opportunity. So as those things start to layer in, we will update you as we go.

Thanks very much.

Thank you. Our next question comes from the line of Jordan Bender from Citizens GMP. Please go ahead.

Hey, everyone. Thanks for the question. Mark, you touched on onboarding the market makers to your platform. You know, broadly, can you maybe just help us think through the economics of what selling that data might look like? I know you're not going to be able to kind of give us contract by contract, but just kind of help us size the overall opportunity there for you guys. And maybe the second part of that is, you have the infrastructure in place. Would you guys ever consider market making yourselves?

Yeah, it's a good question, Jordan. I mean, these are fairly early days. Whilst we've got a great deal of experience of doing this in Europe, I think we've mentioned before that we've worked with market makers there for a long time on the exchanges. And I think from a technical point of view, we don't really see much difference over here. Saying all of that, the economics and the way it's going to wash out in the US is clearly something that we're keeping an eye on and watching the evolution of. As a result of that, the deals that we're running are short-term deals. uh we have various different economic structures um but fundamentally as time goes on we'll evolve those deals as we get more clarity frankly on what the best economic deal is but that's going to be on a case-by-case basis depending on the quality and the type of the market maker that we're working with we're leaving ourselves a lot of flexibility thanks um and then just on the follow-up brian i think i caught that you said a hundred million of free cash flow in the second half of the year, if I look at the one Q number, it kind of implies you have to not lose that much in the second quarter.

Is that to say that you might actually be free cash flow negative for the entire year? Did I catch that correctly?

Oh, sorry. No. So let me just give you a little bit of a walk on the cash flow. So Q1, seasonal pattern, that is part of our history. And just the way timing of rights payments versus revenue, right? We monetize our rights over 12 months, but the rights payments time into the season. Q2 will have a number of one-time impacts just given the transaction. So we will see the low point in Q2, probably around 140 to 150 million. And then that build back, that $100 million, and starting from really the second half of the year, you really start to get a clean read on the earnings and cash flow power of the combined business. And so that's 50% to 55% total conversion, just so that we were cleaner on where you might model that. And so that reflects basically the back half of the year, earning about $200 million of EBITDA that may be more Q4 than Q3, again, in line with the pattern of history here. But hopefully that answers your question as to how to think about the cash from here on.

Perfect. Thank you.

Our next question comes from the line of Barry Jonas from Tua Securities.

Please go ahead, sir. hey guys uh maybe just uh talk a little bit more about the prediction opportunity right now uh i don't believe the nfl has reached uh an agreement at this point so just curious what the opportunity is and then what you're sort of waiting on to to to proceed once you get more buy-in from uh the nfl or any other leagues thank you yeah it's a it's a good question and clearly a hot topic at moment.

So I think it's probably best to break it into three buckets because already the prediction markets are driving a lot of value for us. And the first one we touched upon a minute ago with the market makers, we're generating good revenues there early days, but we're seeing real positive opportunities there. You've got the second part of the second bucket, if you like. I'm sure you've all watched the valuations and some of the raises that have been going on at the moment, which you know frankly is going to be for marketing for product and we see a lot of that raise you know coming through to genius and legend as part of customer acquisition and the marketing so there's a you know significant opportunity there which we are already starting to capitalize on and then finally on the data side look we've got to have a very close eye on the regulators and the regulatory environment is something that we are obviously very sensitive to and our partners are very sensitive to. But you're seeing positive moves from the CFTC towards official data. A lot of our partners outside of the NFL are showing strong interest in engaging. So we expect that those sorts of deals will come in on a short-term basis. On a medium-term basis, the NFL and the US sports leagues, I'm sure, are considering their positions. But I think it's fair to say that But for the prediction markets to have a long and rosy future, they're going to want to work closely with those leagues and with the CFTC. So as a result of that, we expect in the medium term some progress.

That's helpful. Then just for my thoughts, can you talk about allocation? I think the company's bottom.

So we will have optionality to do those other types of things you're asking about. But our focus right now is to D-Lever. Thank you very much.

Our next question comes from the line of Chad Bainan from McClary. Please go ahead.

Hi, good morning. Thanks for taking my question. I'm wondering if you could expand a little bit just in terms of engagement in Syria as that season comes to a close.

And, you know, this was a big integration year with your new rights contract. in bet vision so any additional color just in terms of what you've seen from from that contract in this first year thank you yeah thanks for the question um look it's super interesting i mean the you know italy's the biggest betting market in europe it's often missed by people um our relationship with them is very strong uh we're very happy with the technology integration that we've done and the distribution of the products um and um you know we feel really good about the future of that relationship.

Great. Thank you, Mark. Um, and then as we think about the NFL admin ad inventory opportunities and kind of tying that back with, um, uh, with the event that you just had with new front, when, when will we start to see you kind of fill, you know, fill the bucket in terms of that inventory? Is that something that's closer into the season or is that a process that's going on right now? And, you know, any commentary there would be helpful.

Yeah, sure. We're already outselling the NFL inventory. And clearly with the addition of the Moment Engine and the improvement in ROI that our advertisers see a result of that, we are very confident that that's going to generate a very good result for us this year. Great.

Thank you very much.

Our next question comes from the line of Eric Handler from Roth Capital. Please go ahead.

Good morning. Thanks for the question. I wonder in terms of your media business, is, would you be willing to sort of quantify either from a volume or dollar basis how interest is shaping up for the NBA finals this year?

And as well, when you look at the incremental opportunity with the world cup is you know is there any color you can give around that yeah the so so this this is this is um an interesting moment for us excuse the pun with our moment engine um you know we we the the great thing about it and the fact that we've distributed it so widely and um it's been picked up by so many clients is that we're part of the workflow of those clients and so when you combine that with the fact that we have a rolling set of events throughout the year you know you mentioned a couple and obviously the world cup's a big one the combination of that means that this product will automatically be used by our clients as part of their campaign management so effectively we we are now running our product sets on a 24 7 365 basis based on the events based on what's going on in the match and generating revenue from every campaign.

Great. Thank you. And I wonder if there's any sort of updates or color data you can give for BetVision in the quarter.

Yeah, look, BetVision, we're super happy with it. It's going really nicely at the moment. We've seen BetVision's growth in global football actually now, you know, certainly with the off-season, but now surpassed some of the NFL. So there's a huge amount of um opportunity that we're seeing outside of outside of the core you know us market there we're really happy with the output and the results that we're getting um are really strong and clearly we're winning result we would sorry we're winning rights um away from our competition and and that uh that product is really helping us do that so we feel we feel very very strongly about it and we're super happy with the roi that we're getting on that much appreciated our next question comes from the line of Bernie McTherman from Nidham and Company.

Please go ahead.

Great. Thanks for taking questions. Maybe to start, Mark, I know it's early days, but is official data holding that same demarcation that it had in online sports betting meeting?

Are you and your competitors staying in your own lanes in terms of selling data to prediction market stakeholders that only you have official data for, or is it more of the Wild West out there at this moment in time? yeah i mean it's certainly not the world west it's much more um you know the market's evolved it's much more rational than it used to be and i think you're seeing that in the results um you know we we we're pretty clear and i think our competitors are pretty clear about what rights we hold um and we're engaging with not only the rights holders but the prediction markets on that basis i think that i think the most important thing that that that people need to think about in terms of prediction markets is is as they evolve and mature and become you know move towards uh sort of stronger regulatory framework they're going to need to fall much more in line with the with the way um that they're you know i guess the more traditional uh sports betting markets work so they're going to look to mirror those um that that type of framework which provides them you know significant opportunity for for us and and also you know other players in the market who have access and the control over that data um and again if you look at the i think i mentioned this before, you look at what the CFTC have said about the need to move towards official data and the fact that the leagues are starting to align, you're just going to see more adoption on that basis. Again, we're very well placed for that.

Got it. Thank you. And then just a clarification, Brian, I believe you mentioned the full year kind of legacy genius guy was unchanged, but there was a pretty substantial beat in the first quarter.

So is this just a pull forward or just maybe some confusion that we had on seasonality thank you uh no confusion uh you know we're always mindful and managing to the full year guide and we're consistent with that uh and so again here with q2 just closing the transaction uh we want to come out of the gate here well and so really no change just managing the full year uh rather than quarter to quarter understood thank you both our Our next question comes from the line of Judd Kelly from Oppenheimer.

Please go ahead, sir.

Thanks for taking my question. I think when you acquired Legend, you were kind of calling for like 20% growth for the full year. You know, it seems like two of the largest sports books are increasing the amount they're willing to invest in prediction markets. you know, Kelsey has gotten funding. So it seems like we're ramping up for what one would call maybe a 22-23 advertising spend that we saw in OSD in prediction markets. So just how should we think about the back half advertising ramp for Legend?

Hey, Jed, thanks for that. Look, obviously we love that comparison and we agree with it as well. We're seeing a lot of the sort of um excitement that we saw in those in those early days um the you know the back half is going to be seasonal they're still going to be rational spenders and even though even though they've raised a lot of money and they're um you know they're they're uh you know being aggressive with their with their um acquisition however it's going to be based around sports events and um you know we would think it's likely to follow that calendar albeit it's a big opportunity for us and as i've said for a while we're extremely well placed especially well even more so now with with legend and the distribution network that they have got it and then just as a follow-up just with legends i guess just in the relationship with the llms you know when you go do and you

kind of go into some of these llms they are scraping you know covers and taking the sources is there any way to protect that data or protect what they have or maybe integrate with the llms can you just talk about that relationship in terms of preserving some of the uniqueness around you know, the Legends site portfolios. Thanks.

Yeah, LLMs are a big opportunity for us through Legends. You know, we, you know, what I think I said in my prepared remarks, you know, what LLMs are good at is aggregating information. But really, this is all about destination sites, which Legends has in the new app that's just been soft launched as well. So we feel, you know, from an AI point of view and an LLM point of view, we're a net winner, and we're seeing record audience coming through the LLM's two legend at the moment, which is obviously translating to cash.

Great. Thanks.

Thank you. Our next question comes from the line of Mike Hickey from Stonex.

Please go ahead. hey mark brian uh congrats guys on a great one q and the closing of your deal here just two questions from us mark first one um renewals obviously you've had a lot of success in renewals historically just curious sort of how you're thinking about um any upcoming operator renewals in the u.s and what are the key levers you think in terms of driving uh incremental growth from these agreements yeah i mean look mike we're we're horizontally relaxed about this stuff we've been doing it for years and um we expect this to this to you know carry on in the same way that we've seen it historically we know what the levers are we know what our value proposition are is um and we've got an incredible track record of um customer renewals and net revenue retention and growth so we we feel very confident and very relaxed about that nice um then just curious on the the marketing opportunity you see mark uh international obviously uh the uk is a big area i think in terms of legend on gaming uh marketing um just the tax situation there's gotten nasty obviously that's already baked into your guidance just wondering the impact you're seeing there if you think it'll normalize or i guess how it'll trend through the year and then just broadly

speaking when you look at the moments engine which has been absolutely exceptional and now legend when you look international the biggest opportunities for growth that you guys see in the future thanks yeah thanks mike a good question look i mean legend obviously globally diversified and that's a super important part for it one of the things is might might be quite interesting is to think about the us you know if you remember look at flutter's results yesterday 19 of them 90% of the growth was iGaming versus 1% betting. Now, clearly, Genius is outperforming on the betting front in a very significant way, as you've seen from the results this month and going forwards. But I think the proportion of the money that's coming and growth that's coming from iGaming is very significant and a really good indicator for how well Legend's going to perform in the US market. Suffice to say, we're pretty excited about that, pretty excited about the new exposure that we've got to the iGaming market. that combined with the growth that we're seeing and the advertising product means that we expect some really strong results from that space. Thanks, Bonnie.

Our next question comes from the line of Trey Bowers from Wells Fargo. Please go ahead.

Hey, guys. Just first, a couple of guidance questions. Any seasonality to call out around Legend? The incremental EBITDA for Q2, just relative to two months, seems a little lower in that quarter if I just annualized the overall annualized EBITDA contribution of Legend? And then with that, any update to those long-term guide targets that you guys provided at the time of the acquisition? And then I have a quick follow-up.

Hey, thanks. While Legend is less seasonal than Genius, and you guys know our back half, just given the sports calendar and the advertising calendar, is significantly weighted to Q3, Q4. Legend is more even given that it is iGaming, but they still have their peak quarters in Q3, Q4. So there is some seasonality to it where the front half is notably less than the back half. And no change on the guide. We remain consistent. And, you know, I think you guys know me well enough that I keep saying we're consistent.

And then just on cash flow, just if we could put a finer point on this, if Q1 burned, you know, around 80 million in Q2, you guys expect that to be 140 to 150. And then a rebound in the second half of 100, you know, it's a negative cash flow year north of 100 million. And then you mentioned kind of conversion showing up at the 50% plus rate in the second half. But if you're usually in a cash draw position in the first half, you should be well north of that in the second half. So I think it'd be super helpful just to kind of try to quantify what the one-timers related to the deal, et cetera, were in the first half, just to get a better sense of what kind of underlying cash flows look like. Thanks so much.

The underlying cash flow, again, Q3, Q4 is the clean read, is about $100 million total. Uh, and you know, that Q2, you know, reminder that, uh, you know, given just the confidence in the business, we did reduce the loan balance, uh, in any transaction as any company would upon close, uh, you do have the financing and the closing costs. So, uh, you know, and, and as we end the year, uh, you know, we will have optionality on that cash balance in terms of delever or invest in the business. So again, the Q3, Q4 is the better read. And the guidance to 28, we expect 27 to build towards that 60% free cash flow conversion in 28. And so all of it remains consistent. And as you get through the second happen at 27 much cleaner than moving away from one-off transaction related costs.

Okay. Thanks, guys.

Thank you. Our next question comes from the line of Jeff Stanchel from Stifel. Please go ahead.

Hey, good morning, everyone. Thanks for taking our questions. Maybe just starting off by following up on, I think it's Bernie's question earlier. So, the CFTC just wrapped up in an engagement process for some potential rulemaking, we know there's some understandably mixed responses regarding whether or not the CFTC should require the use of official data. I think it's specifically from the exchanges. Mark, can you just help us think about sort of sensitivity to the addressable customer mix and the TAM here for your data if the CFTC does require the usage of official data versus the scenario where it's really more a function of latency that determines official versus non-official data?

Yeah, I think the key thing is that quality of data. You need to have an official result to settle by, otherwise you've got the Wild West. And I think that's well understood. And you're only going to get the official result from the official holder of data. And that's fundamentally the leagues and genius or the leagues and whoever holds those rights. so i think that's a fairly clear relationship um that's out there um in terms of the tam um the way i um think about the way we we think about it the way we model it is we think of each of the major prediction markets being like one of the top u.s sports books so you know we we see the economics of you know flutter or draft kings or cowshi or polymarket or robin hood we see all of them being you know equal in terms of their you know their their size so when we think about the TAM and then we think about the opportunity for revenue from us that's our sort of base case you've then got you've then got you know marketing around the edge you've got the addition of legend which obviously you know over indexes on customer acquisition which in the current market is extremely good for us because they've got the opportunity to go outside of the current states where you've seen potential saturation from the existing OSBs. So we see an outsized opportunity in the prediction market, but ultimately we think that the underlying data piece will settle down, as I said, around the large OSB players' size.

That's great. Thank you for that. And in switching gears, Mark, you touched on this briefly in your prepared remarks, but just double-clicking here into some of the focus on specifically or only regulated markets and operators. I just want to clarify, does any of your betting business or material, any material portion of your betting business revenues come via B2B resellers or is it only direct relationships with regulated licensed operators?

And then if you could just sort of broadly refresh us on your compliance processes that are in place to ensure that customers are behaving according to commercial terms and conditions, that'd be helpful as well. yeah sure look i mean i think it's i think it's a good question and obviously we expected to talk about this but um i've been doing this for 25 years and we've always taken very deliberate steps to avoid any exposure to any sorts of these risks um and you know the way we operate is that we're very very selective by design and what that means is that we structurally set ourselves up to only work with operators that meet our very high probity standards which is why we've limited ourselves to such a carefully curated list of only about 500 operators.

That's great. Thanks very much.

Thank you. And our last question comes from the line of Greg Gibbous from Northland Securities. Please go ahead.

Great. Good morning, Mark and Brian. Thanks for taking the questions. You mentioned being flexible with respect to market maker contracts and them being fairly shorter term relatively as a result.

So I was wondering if you could, maybe how you expect those contract terms to evolve over time as prediction markets mature sure it's a good question um there's look you've got a couple of leaders right you've got liquidity um and you've got breadth of market and then you've also got regulatory change and we've got to we've got to be focused on all three of those um so taking short-term contracts gives us a bit of a view and flexibility around that as liquidity in those markets grow clearly the value of our data and the need for low latency, high quality specific data becomes more valuable. And that's something that we've got a very clear eye on. So we see a very, very clear path to revenue, significant revenue growth in that space as the natural evolution of that market values the high quality data that's available.

Got it. Very helpful. And, you know, as a follow up, I wanted to just see with your Moment Engine now generally available or greater availability now integrated across, you know, partners that represent 90% of programmatic advertising ecosystem. How would you maybe characterize early adoption or engagement with those advertising partners relative to your early expectations?

Yeah, look, we're super excited about this. The adoption rate that we've seen is really, really good. And more importantly, the results that we're getting are very, very strong. As I think you heard in the prepared marks, we mentioned Samsung, you know, outspending by 220% and it's early days. So there's, I mean, I mean, look, there's a number of test campaigns that we're running at the moment and are still to finish. But if the initial results, you know, maintain at the level that we've seen, this is going to be a very strong product in the market. That's great to hear.

Thanks.

Thank you, everyone. That concludes our conference call for today. You may now disconnect.