{ "docId": "019dd923-622c-750b-8b99-1b3c88355559", "docSlug": "08d6aefbccb5", "documentTitle": "Genius Sports Limited (GENI)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2021-08-05 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 37, "pageCount": 61, "prevPage": 36, "nextPage": 38, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 5, "notes": "Uses callouts to highlight the financial burden and the competitive nature of the rights acquisition.", "elementsJson": [ "headline_text", "paragraph", "callout_box" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-1b3c88355559/37", "deckHref": "/decks/019dd923-622c-750b-8b99-1b3c88355559", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-1b3c88355559.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-1b3c88355559#slide-37", "components": [ { "bbox": { "h": 0.1, "w": 0.45, "x": 0.28, "y": 0.85 }, "kind": "callout", "text": "In the long-run, how sticky is the Premier League contract if they have a history of switching data relationships?", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "463112e1-6fea-4118-9b1a-fa5da139484d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.25, "x": 0.72, "y": 0.75 }, "kind": "callout", "text": "Exclusive rights are highly sought, requiring data providers to pay high prices in competitive bidding processes", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "800acac3-256f-44df-8435-7794966ba80d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.2, "w": 0.25, "x": 0.72, "y": 0.4 }, "kind": "callout", "text": "Data rights costs increased $11.5 million for the 9-month period. Combined with a y-o-y increase of $3.8 million in Q4’19, the total annual increase in rights costs is ~$15.3 million", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f120c896-a154-4acc-99c5-4af3950a036f", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Data rights costs increased $11.5 million for the 9-month period. Combined with a y-o-y increase of $3.8 million in Q4'19, the total annual increase in rights costs is ~$15.3 million", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6ec-7186-b7c3-cbe6c456feb6", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "data rights costs: $15.3 million", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-e6ec-7186-b7c3-d03b67aa177a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.65, "x": 0.05, "y": 0.75 }, "kind": "paragraph", "text": "Genius were selected after a competitive bidding process which saw the company oust Perform Group, which last renewed its deal with Football DataCo ahead of the 2016/17 season.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7cddcc2b-01bd-4bff-a0de-919e4cb9fa52", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "paragraph", "text": "It appears Genius was required to invest a large amount (~$15 million annually) to receive the English Premier League’s exclusive rights. From our conversations with industry experts, an opinion surfaced that Genius’ exclusive rights for the Premier League is its only competitive advantage. These rights were the driving factor to Genius’ 2020 revenue growth and Genius will likely need to continue buying costly, desirable rights to demand higher revenue from sportsbook customers.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9053bd24-20c8-4daf-bc75-a69c7bfbda14", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.65, "x": 0.05, "y": 0.35 }, "kind": "paragraph", "text": "Cost of revenue was $60.3 million for the nine months ended September 30, 2019, compared to $77.0 million for the nine months ended September 30, 2020. The $16.7 million increase in cost of revenue is primarily driven by increased data rights costs and increased amortization of capitalized software development costs. Data rights costs were $14.3 million for the nine months ended September 30, 2019 and $25.8 million for the nine months ended September 30, 2020. This increase is driven primarily by the U.K. soccer data rights contract Genius entered into in 2019. Amortization of capitalized software development costs was $2.8 million for the nine months ended September 30, 2019 and $7.8 million for the nine months ended September 30, 2020. This increase is driven primarily by Genius’ continued investment in new product offerings which has resulted in increased capitalization of internally developed software costs since the Apax Investment.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f35ca0c8-29d5-4dda-b976-fea0eac15f99", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Genius were selected after a competitive bidding process which saw the company oust Perform Group, which last renewed its deal with Football DataCo ahead of the 2016/17 season. — Sports Pro Media (May 2019)", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6ec-7186-b7c3-cd04e0548e63", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.05, "y": 0.87 }, "kind": "source-note", "text": "Source: Sports Pro Media (May 2019)", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "550e95d7-f2c2-4d8f-bfa3-e18b3db81ccc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.05, "y": 0.66 }, "kind": "source-note", "text": "Source: Genius Sports Form F-4", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "eb5b388e-3165-4ebd-ae94-714f3f541098", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.4, "x": 0.305, "y": 0.05 }, "kind": "title", "text": "High Cost For Premier League Rights", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "369e5e90-e194-4e1e-a969-8db60bfebe02", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 53, "from": 8, "beatId": "f3e1ffe1-c3ed-402d-bf3c-dc6cefa18b8e", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitation", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "The deck agitates the problem by detailing various concerns, including unrealistic growth assumptions, questionable revenue recognition practices, and financial strain.", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }