Earnings Call Transcript - GENI Q4 2021

Operator, Operator

Welcome to the Genius Sports Limited Q4 2021 Earnings Call. Throughout the call, all participants will be in a listen-only mode and afterwards there will be a question-and-answer session. Today, I am pleased to present Genius Sports. Please go ahead with your meeting.

Unidentified Company Representative, Company Representative

Good morning, everyone. 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 forecasts. 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 April 30. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius’ operating performance. These measures should not be considered in isolation or as a substitute for Genius’ financial results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures is available on our earnings press release and earnings presentation, which can be found on our website at investor.geniussports.com. With that, I'll now turn the call over to Mark Locke.

Mark Locke, CEO

Good morning, everyone, and thank you for joining us today. Before we begin, we'd like to take a moment to acknowledge the humanitarian disaster caused by the ongoing war between Russia and Ukraine and the ripple effects across the region and throughout the world. Our first responsibility at Genius Sports is the safety and well-being of our colleagues and families in Ukraine. With the support of our Board, we will do everything in our power to support them. To this end, we remain in constant contact with our people in the region and continue to offer them direct support. In the meantime, we hope for a peaceful resolution to this unimaginable suffering. Our thoughts remain with the Ukrainian people during this tragic time. We will now cover the highlights from our fourth quarter and full year 2021. Before diving in, we want to remind you that we began 2022 by hosting our first Virtual Investor Day. If you haven't already viewed the presentation, I highly encourage you to watch the replay of the webcast, which is available on our Investor Relations website. But for those who missed it, I will briefly recap the key takeaways, as they are important for understanding our business as we execute our strategy over the next few years. First, we introduced our financial outlook for 2022 and 2023 group revenue and adjusted EBITDA. We expect to be profitable in 2022 and 2023, with group adjusted EBITDA of approximately $15 million this year, and $40 million to $50 million in 2023. This also included a detailed view of the businesses, highlighting the profitability we've already generated today in our underlying business, and the investments we're making in our high growth U.S. expansion business. We also hosted a few of our key partners and customers, including the NFL, Football DataCo, Sky Betting & Gaming and a board member appointed by Apax. This validates our competitive position in the heart of the industry and the long-term opportunity ahead. We also provided a deep dive into each of our three reporting segments, showcasing our unique technology capabilities, and the true depths of our customer solutions and the team powering them. And finally, we laid out our long-term vision as the technology enablement layer driving the convergence of sports betting and media. Now, to cap off an exciting year for the business, let's quickly discuss the highlights from the fourth quarter. First, we reported Q4 revenues of $84 million, representing a 79% increase year-on-year. This was once again driven by well balanced growth across each of our reporting segments. This brought our full year 2021 revenues to approximately $263 million, slightly ahead of our latest guided range and representing over 75% annual growth. This contributed roughly $2 million in group adjusted EBITDA, in line with our updated guidance for the year. We've also continued to expand and solidify our portfolio of official data and streaming content by signing 20 new or renewed rights deals in the quarter with leagues and federations around the world. This includes innovative partnerships with leagues like the CFL, and deals with federations in high-growth markets such as Brazil, India, and Africa. We've proven our capability to commercialize our high-quality content portfolio in the sports betting market, and we continue to execute on our strategy in the fourth quarter. We expanded our partnership with the leading sportsbook in the U.S. around our NFL content and recently built upon our existing relationships with global brands such as bet365 and Betway. I'll cover this in more detail shortly. In summary, the business is continuing to execute strongly against our plan, which gives us confidence heading into this year and beyond. In our Investor Day, we outlined our assumptions driving our new 2022 and 2023 guidance. This year, we expect approximately $340 million of revenue and $15 million in group adjusted EBITDA. In 2023, we expect continued growth and profitability with revenue of $430 million to $440 million and group adjusted EBITDA in the range of $40 million to $50 million. Our Investor Day also provided a detailed overview of our unique technology for sports, which is deeply embedded with our partner leagues and federations around the world. Our partnership with the CFL, which we announced in December, is a proof point of our technology stack and the role we play in driving the growth of the sport. As part of the agreement, Genius obtained the rights to commercialize CFL's official data worldwide, and its video content with sportsbooks in international markets. In the U.S., beginning in 2023, this agreement is exclusive for 10 years, starting this upcoming season. We believe this will be an important data and streaming rights deal in the emerging Canadian market. More importantly, this partnership represents so much more. The CFL partnered with Genius because they believed in every single product in our tech stack across data collection, advanced tracking, data visualization and augmentation, second screen experiences, digital advertising, fan engagement, integrity services, and more. The CFL is no different than any other league in the world, intently focused on growing their sport internationally and engaging the next generation of younger and more diverse fans. They saw Genius as the technology enabling layer to do exactly that. We believe this type of all-encompassing partnership will set a precedent for how we work with sports leagues going forward. Throughout the quarter and into the New Year, we've continued to support our partners across sports betting and media. For instance, you or your children may have seen Nickelodeon's broadcasts of the NFL Wild Card Game, which featured components like slime trails, powered by Second Spectrum's real-time player tracking and augmentation technology. This, along with features like RomoVision on CBS broadcasts throughout the season, is an example of how Genius is supporting the personalization of sports content. We're only just beginning to scratch the surface of what's possible, not just for the NFL, but for leagues around the world. We've also successfully acquired new sports betting customers in the quarter, and more importantly, built up the partnership with our existing customers. I'd like to call bet365 and Betway as the two most recent and notable examples of our expanding partnerships. Genius will provide a comprehensive package of streaming and official data solutions, including our full NFL product suite with access to the league's real-time statistics, proprietary next-gen stats, and the official sports betting data feed. Bet365 and Betway are the latest sportsbooks to implement our live streaming service, delivering premium, low latency broadcasts from various sports and thousands of events per year, including live NFL streams to customers outside the U.S. Our agreement with Betway also includes live trading solutions, delivering real-time data and pinpoint pricing for the NFL and NCAA basketball, alongside the English Premier League and Euroleague Basketball. Lastly, both customers will benefit from our official data-driven marketing campaigns, driving deeper engagement and lower costs of acquisition across display, video, and connected TV. In fact, we've already started delivering strong results. For example, Betway wanted to attract new players by promoting real-time betting markets across social media, including live odds and dynamic content. Genius used its unique data access and customizable social templates to automate ads and visitor delivery across Facebook, reaching fans with relevant data-driven content to their favorite teams. As a result, Betway experienced a 31% reduction in cost per app download, a 186% increase in click-to-install rate, and a 116% increase in app downloads via Facebook compared to its prior campaigns. This is just another example of Genius successfully empowering our partners across a wide range of solutions from live data trading and customer acquisition to retention. Remember on our Investor Day, we talked about how we drive growth through increased utilization of events under coverage, which leads to stronger dollar-based net revenue retention among our top customers. In 2021, we achieved dollar-based net revenue retention of 144% for our top 25 customers. Lastly, we also partnered with brands outside of betting, who are seeking to leverage real-time sports data to connect with consumers. The Captain Morgan Super Bowl Punch Bowl was a fun example of that. The Punch Bowl not only served Captain Morgan Rum, but also integrated live score updates from the Super Bowl, along with other relevant lights and sounds. This is another example of how Genius is broadening its customer base and expanding its solutions. Before handing it over to Nick, I just want to express our confidence and excitement as we enter 2022. We've outlined our plan and growth drivers for the near, medium, and long term on our Investor Day, and we look forward to keeping you updated on each of our quarterly calls throughout the year. We have an incredible technology platform, which we highlighted in our Investor Day, that supports a growing network of partners across sports betting and media. We have deeply integrated data and technology partnerships that position us at the heart of the ecosystem with strategic and technology-driven competitive advantages. We've expanded our operations in the high growth U.S. market with the biggest name in sports backing our vision and enabling several strategic initiatives. All of this leads to continued growth in group revenue and group adjusted EBITDA in 2022 and 2023 and beyond. With that, I'll now turn the call over to Nick to discuss our financial results and outlook.

Nicholas Taylor, CFO

Thanks, Mark. To start, our group revenues increased 79% year-on-year to $84 million in the fourth quarter. This is once again driven by well balanced growth across all three reporting segments. Our betting revenues grew 53% year-on-year in Q4 to $53.9 million in the quarter, benefiting from increased utilization with the existing sportsbooks, new customer wins, and our first full quarter of NFL-related revenues. Our major business continues to grow at a strong pace, with revenues more than doubling year-on-year in Q4 to $17.1 million in the quarter. Major revenues continue to benefit from both betting and non-betting customers, with particularly strong advertiser spend in North America in the quarter. Lastly, our sports revenue more than tripled in the quarter to $13 million, with contributions from our recent acquisitions of Sportzcast and Second Spectrum, in addition to the existing suite of tech services. As we outlined in our Investor Day, our recent acquisitions, Second Spectrum, FanHub, and Spirable, have contributed approximately $20 million in calendar 2021. The Second Spectrum revenues are being recognized in our sports segment along with other tech services provided to leagues and federations around the world. As you'll see on the next slide, our 2021 group revenues increased over 75% to $263 million, slightly ahead of our latest guidance range. As I've noted in each quarter this year, revenue growth is well balanced across each reporting segment, as our growth drivers delivered results consistently throughout the year. In our betting business, we've expanded our partnerships with existing customers by increasing utilization of available content, taking a greater share of wallet, and of course, winning new customers throughout the year. This has translated to full year revenues of $177 million, equating to 60% annual growth. In our major business, we've supported our customer base, primarily through programmatic advertising services, helping them acquire and retain customers in a cost-effective manner. You heard all about our differentiating products on our Investor Day, and this has contributed to 110% annual revenue growth in this segment to $48 million in the year. Lastly, in our sports business, we continue to deploy our technology with leagues and federations around the world, which has been bolstered by the additions of recent acquisitions like Sportzcast and Second Spectrum. This has lifted our revenues by over 130% year-on-year to $37 million. On a group adjusted EBITDA basis, we're reporting $2 million for the year, which is roughly in line with our expectations at a broadly breakeven level. Our core original business, as defined on Investor Day, remains profitable and allows us to invest in our U.S. expansion while maintaining profitability at a group level. As outlined in detail on our Investor Day, the second half of 2021 and into 2022 is an accelerated investment phase, particularly in our U.S. expansion business, which presents the highest opportunity for growth as we enter this region. Let me be clear, we have a high degree of conviction around the investments we are making in the U.S. We are disciplined in our investment and capital allocation strategy and expect the U.S. business to flip profitable beginning in 2024. As Mark mentioned earlier, we're carefully monitoring the Russian situation and its impact on our 2022 position. Our initial view is that the risk to 2022 revenues is in the range of $2 million to $6 million. Given the rapidly changing situation, it's too early at this stage to adjust our financial outlook. However, we wanted to lay out any potential implications as we see it today. We will be sure to update you accordingly as things progress. As such, our 2022 full year and quarterly guidance remains unchanged from the Investor Day a few weeks ago. As a reminder, we expected to achieve group revenue and adjusted EBITDA of approximately $340 million and $50 million, respectively. We introduced this guidance and the underlying assumptions on our Investor Day, and we will keep you updated on how we're progressing on a quarterly basis throughout the year. We also introduced our 2023 guidance on the Investor Day, and we expect to deliver group revenue in the range of $430 million to $440 million and group adjusted EBITDA in a range of $40 million to $50 million. As noted on that day, we expect Genius to be profitable in 2022 and 2023, and highly profitable thereafter. This is due to the massive growth opportunities that you've heard us describe in detail on the Investor Day, the contractual building blocks that are already in place, and a controllable cost base that does not need to and should not grow as fast as our revenue position. As we enter this New Year, we are incredibly excited to execute on the plan we've outlined in January, and look forward to keeping you updated as we advance through the year. In the meantime, we'll now conclude our prepared remarks and open the line to Q&A.

Operator, Operator

Thank you. The first question comes from Stephen Grambling at Goldman Sachs. Please go ahead.

Stephen Grambling, Analyst

Hi. It’s Stephen. Thanks for taking the question. I see that you got a slide kind of walking through the quarterly cadence on the guidance between the segments. And then group adjusted EBITDA, I'm wondering if you could give us a couple of the puts and takes to think about on gross margin expenses that are kind of leading to that EBITDA. And then any color you could give on how sensitive that guidance could be to the promotional environment and/or mix of in-game betting? Thanks.

Jack Davison, Chief Commercial Officer

Hi, Stephen, it's Jack Davison. And I really don't, so the other way around, if that's okay, and so let's talk about the promotional spend first and a bit on the in-play mix. So, when we think about promotional spend, we kind of think about it in three buckets, if you like: operated promotional spend, which includes offline marketing, TV ads, all of this sort of stuff. And we think about the free bets and the bonuses that operators are pushing out there. And we think about performance marketing and performance digital marketing. What we've seen, and what we think is quite likely, and what the market is saying is that, the future outlook is that, there could be some reduction in some of this promotional stuff. But really, the main focus of that reduction will be on the first two buckets, specifically the enormous signup bonuses especially in New York, which we think will run its course. However, that kind of reduction does not impact our business. That's not the area that we work in. Our sense is quite clear, the marketing teams that are focused on performance marketing should continue for a long time. We feel pretty good about being insulated from those trends.

Mark Locke, CEO

It's also worth picking up - hi, Stephen, it’s Mark. It's also worth picking up how some of the spend rotation will come. The products we offer obviously in the States at the moment focus heavily on customer acquisition. Over time, that focus will shift toward customer retention and reactivation. From our point of view, the product sets that we offer do the same thing. Even though the target of the spend will over time change towards retention and reactivation, we actually see that as an opportunity as an increasing focus on operator profitability.

Nicholas Taylor, CFO

Hi, Stephen, it's Nick. I'll pick it up. First of all, in relation to how you talked about the quarterly position and particularly around the cost base. Firstly, we have included a detailed quarterly bridge in the deck. You can see where we've pulled out the various items to go to an EBITDA in relation. For example, if you look at the comp number, you've got $17 million worth of amortization in there, and you've got $42 million of share-based payments. This should provide some clarity around the cost base that wraps to our EBITDA. For 2022, we've given our position. If you look at our cost base, it's relatively fixed in nature. We have pretty good visibility of that. Most of our rights are fixed, subject to any opportunities to sign up new rights in due course. We have visibility not just in 2022, but beyond 2022 to 2023 and 2024 as well. The only cost where there will be an impact is really the mix of revenues that Jack just talked about around media and betting. If that leans more towards betting, that will help our margin drop-through just based on the profile of our cost base. We're pretty confident with our number for 2022 and have strong visibility on our cost base.

Stephen Grambling, Analyst

Yeah, that's helpful. And maybe one other follow up. I guess how do new states that could legalize in the U.S. impact the business as well? If we look out to 2023, could we anticipate any kind of impact from California, for example, if that gets legalized? Is there anything soon for that? Thank you.

Mark Locke, CEO

We look at the way we do our forecasts based on various reports about how we see state legalization coming. We take the view that’s somewhere in the middle of those states. Therefore, the numbers we put out are based on effectively a consensus view on how states regulate and legalize. This can both positively and negatively impact us if a particular state with high-betting propensity, such as California, comes on board earlier than expected. However, fundamentally, the way we calculate it is by following a consensus view.

Operator, Operator

Next question is from the line of Bernie from Needham. Please go ahead.

Bernie McTernan, Analyst

Great. Good Morning. Thanks for taking the question. I was wondering just taking a step back if the focus for the company in 2021 was launching the NFL, Mark, what's the focus for '22? And what should investors be expecting?

Mark Locke, CEO

Good to hear from you. Thanks for tuning in. Look, 2021 was a big year for us. We went public in April, acquired three businesses, raised just under $450 million, and won the NFL rights. So, it was a pretty big year. For 2022, we feel very comfortable and well-positioned. There’s a lot of operational execution focusing on driving value out of the acquisitions we've made. There’s also an increasing focus on product as the market drive towards profitability. Our business is about putting products into the market that helps operators become more successful, which drives margins and increases in-play opportunities. So, we're looking forward to 2022, and in summary, it's about execution.

Bernie McTernan, Analyst

Got it. And then just one follow up on the ingredients with Betway and Bet365, two of the largest operators in Canada. Would love just to hear your insights on the market and what you think regulation will look like post-regulation in Ontario, along with the opportunity.

Jack Davison, Chief Commercial Officer

The way we think about the ad market is that it's not dissimilar to how we think about other U.S. states with regulations. Ontario coming alive or California, they create new opportunities for revenue streams. In Canada, you're likely to see promotional spend similar to New York's early land grab for market share. The mix of operators is likely to be different, including local players like Score, as well as Betway and Bet365, who are yet to have a significant market share in the U.S. Expect to see these operators push hard in Canada. We fundamentally have the ability to resell all the products that we have into that market. We have to ensure we differentiate ourselves with relevant content, especially with partnerships like the CFL.

Bernie McTernan, Analyst

Great. Appreciate the insight. Thank you.

Operator, Operator

Next question is from the line of Jason Bazinet from Citi. Please go ahead.

Jason Bazinet, Analyst

I just had two unrelated questions for Nick, on the Ukraine revenue explosion, the two to six. Is it reasonable to assume given your commentary about most of the costs are fixed that it's a comparable risk to EBITDA? That's the first question, so two to six. And then second, I was just looking at the deferred revenues as a percentage of your total revenues. It used to be sort of mid to high teens and it's come down to about 11, I think 11.5 or so. Can you just remind us what influences the deferred revenue balance? And do you anticipate that to continue to fall as the mix shifts in your business? Thanks.

Nicholas Taylor, CFO

Yeah, hi. We wanted to give you an early view on the Russian situation and we expect the whole situation to be a question that gets posed. The situation continues to move quickly, hence the range. We're doing whatever we can, as Mark talked about in relation to our teams that are directly impacted. Also, we're doing what we can in terms of content and maintaining relationships with our customers and sports leagues. In terms of the impact on EBITDA, it’s probably not like-for-like; you're right, there will be drop-through if that revenue reduction comes through. It's too early to say exactly what that looks like right now. On the second part, in relation to deferred revenue, yes, it has come down. If you think about our heritage model in the European market, it has tended to be on a fixed fee bill in advance basis. Media tends not to be in this case. Where we are on profit shares, particularly in the U.S., we tend to bill in arrears once the numbers have been finalized, which causes a slight balance sheet mix change. I would expect deferred revenue to continue to reduce as our business becomes a bit more variable revenue-focused and media continues to grow the segment.

Operator, Operator

Next question is from the line of Jed Kelly from Oppenheimer. Please go ahead.

Unidentified Analyst, Analyst

Hey, guys. This is actually Shannon for Jed. Thanks for taking my questions. Two if I could. Is there any update you could provide us on the U.S. versus the core business and how it's tracking towards your 2022 goals versus your outlook at the Investor Day? And then the sports tech segment has done really well since you guys acquired Second Spectrum, so I was wondering if you have any updates on how you're thinking about M&A? Should we expect more in that segment? Thank you.

Nicholas Taylor, CFO

Hi, it's Nick. In terms of the information we gave on the Investor Day, the results you see are in line, so there are no specific material changes from what we provided earlier. I'll let one of the other guys pick up the specific question.

Mark Locke, CEO

On M&A, as you would expect, we've got a strong balance sheet and about $230 million on our balance sheet at the moment. There's a lot of opportunity in the market, and some significant price corrections provide opportunities. We’re open, we're working hard, and we're assessing various opportunities. We're obviously taking comfort from how well the acquisitions that we've made have integrated into the business. We'll study and be opportunistic, where available, but there's nothing specific that's worth updating in terms of individual targets.

Operator, Operator

Next question is from the line of Leon Sigdahl from Craig Capital Group. Please go ahead.

Ryan Sigdahl, Analyst

Curious guys, you talked a little bit about Canada. Does it matter who wins market share? Do you have relationships with all the main operators that are planning to be there? So ultimately, is it more of a market uplift and you guys win, no matter who wins there?

Jack Davison, Chief Commercial Officer

That's a great question, Ryan. We feel very good about our position in that regard. As you know, we're a supplier to many, and we work with all the major operators there. As the Canadian market opens up in December, we believe we'll be in a strong position. We’re not too concerned about who wins on that basis since we have great relationships and contract structures with all of them. We have exclusive content, which we believe they will want from the CFL.

Ryan Sigdahl, Analyst

Yeah, thank you. And then can you talk about performance in the Super Bowl, any issues, and the feedback from customers considering it was your first go-around?

Jack Davison, Chief Commercial Officer

We had a really good first season, and we are very happy with where we are. Looking back, we had a lot to do before the start of the season to get all of the deals done and get operational. We were very pleased with our success there. As we look into next year, as Mark touched on earlier, our focus is on providing more products and getting the right product to help our operator partners drive their business. We were thrilled to get through our first NFL season but are excited about what next season and beyond will bring.

Operator, Operator

Next question is from the line of Robin Farley from UBS. Please go ahead.

Robin Farley, Analyst

Great, thanks. I just wanted to clarify from what you were talking about earlier about new states legalizing: do you need California to pass the referendum to hit your 2023 targets? Or could it actually involve more upfront losses? Could new states, such as California legalizing, actually push profitability out a little bit further because of some needed investment? If you could clarify that outcome? Thanks.

Mark Locke, CEO

Hi, Robin. Firstly, there's no needed investment. As new states come on, we're extremely well positioned to activate them. We have a very robust licensing division managing that. In terms of whether we need California to come online, the answer is no. We look at the consensus view about how states are rolling out, which helps shape our projections. We welcome California, and it might present some upside, but it's not strictly necessary for our growth.

Robin Farley, Analyst

Okay, great. And then lastly, I wonder if in the sort of six weeks since your Investor Day, if you've seen an increase in metrics. You talked about I think 13% of GDR coming from in-play betting; has that evolved? Or is it too soon to see a change in that? Thanks.

Mark Locke, CEO

It's a great question. We're obviously studying it carefully. At the moment, we don’t think we've got enough data to assume any trends. So for now, we're still taking a conservative view and not altering our numbers from what we presented on Investor Day.

Operator, Operator

The next question is from Mike Hickey at Benchmark. Please go ahead.

Mike Hickey, Analyst

Hey, Mark, Nick. Good morning, guys. Congrats on the quarter. Just a couple questions for me. Obviously, a lot is happening here early in 2022. I'm just thinking about your advertising business. Are you seeing any sort of moderation in spend from the sportsbooks yet, or is that business usual? There seems to be a sense overall that there may be a pullback here in spending, and I'm curious how that impacts your ad business. Then on the non-sportsbook advertisers, how is the economy and inflation impacting their desire to spend as well? Thanks, guys.

Jack Davison, Chief Commercial Officer

Hi, there. It's Jack here. When we think about the sports scenario, the short answer is no; we’re not seeing any negative impact on our business in response to potential trends of slowdown in marketing spend. We believe that performance-based digital marketing is one of the areas that operators are now focusing on and, therefore, expect that part of the business to remain strong, unlike offline and traditional promotional spending. As we've mentioned earlier, our focus is also on retention and customer reacquisition, which are key areas we can help with.

Josh Linforth, MD of Media Business

In the non-sports side of things, it's early days, but we're seeing continued strong growth. We see more brands looking to advertise around sports, just because it's a brand-safe environment. Additionally, more products and deeper integrations with various sports leagues create better engagement possibilities. We see this as a massive growth opportunity and presently don’t see any risks impacting our direction.

Mike Hickey, Analyst

Nice. Thanks, guys. I guess the flip side is on the consumer side; historically, you've been in this business a long time Mark, obviously built it over 20-plus years. Historically, when you have recessionary implications, players within sportsbooks adjust operations. How do you see that playing out in this kind of environment? Is there any specific trend or prediction you're seeing announced?

Mark Locke, CEO

I would say that the businesses involved tend to be more recession-resilient than recession-proof. We’ve been through cycles now, and you're right, typically, these businesses do stand up well even in difficult economic conditions. Given the high growth in the U.S. market, I think those dynamics are somewhat muted now; therefore, we don't expect significant effects beyond general market fluctuations that we really cannot predict.

Mike Hickey, Analyst

Thanks, guys.

Operator, Operator

Mr. Hickey, are you done with your questions?

Mike Hickey, Analyst

Yeah, thanks, guys. Good luck.

Operator, Operator

Next question is from the line of Ben Chaiken from Credit Suisse. Please go ahead.

Ben Chaiken, Analyst

Hey, how's it going? When we think about the transition from '22 to '23, your guide implies just over 30% EBITDA flow through. When we get to '23, are those fixed costs for the business relatively set? How would you frame EBITDA flow through in years '23 and beyond?

Nicholas Taylor, CFO

Yeah, hi, it's Nick. The 2023 dynamics on the cost basis are no different than 2022 or 2021. The cost base is relatively fixed. The rights we sign are long-term deals, so we have great visibility of those costs and very few have any kind of profit share element. The demographics regarding media, sports, and betting are the only areas where revenue mix could impact margins. In summary, the 2023 cost dynamics will be consistent, allowing for a fixed cost base to grow slower than our revenue.

Ben Chaiken, Analyst

Got you. I appreciate that. I just thought you were suggesting an investment in the business over the next 18 months might drive the overall expense higher. Thank you.

Jack Davison, Chief Commercial Officer

When we discussed in-play betting on the Investor Day, we specifically addressed NFL in-play because that's a major focus for us. Expectations were a bit understated, where many stakeholders are aligned across the business to improve in-play engagement. It's early to tell where we sit with these metrics, but we have a conservative view for this season moving forward.

Ben Chaiken, Analyst

Great, thank you.

Jack Davison, Chief Commercial Officer

There’s an enormous push across the industry for product development that enhances in-play engagement. We're excited about our projects here and the energy they generate.

Operator, Operator

Ladies and gentlemen, that concludes today's session. You may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.