Genius Sports lifts outlook as prediction markets expand

By Grace Kim

What did Genius Sports report?

Genius Sports (NYSE: GENI) generated $270 million of third-quarter revenue, beating its $260 million guidance by $10 million. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) reached $87 million, $2 million above the $85 million forecast.

The adjusted EBITDA margin reached 32%, up from 20% a year earlier. Free cash flow (cash generated after capital spending) totaled $54 million, equal to 61% of adjusted EBITDA, while GAAP (generally accepted accounting principles) operating profit reached $10 million.

CEO Mark Locke said: “Free cash flow would become a key measure of the combined company’s performance.”

Takeaway: Genius Sports beat both revenue and profit guidance while expanding its adjusted EBITDA margin by 12 percentage points.

What drove betting growth?

Betting revenue rose 33% year over year. CFO Bryan Castellani attributed the increase to the start of the NFL season, more in-play betting, improved operator win margins and higher pricing on recent contract renewals. Prediction markets also contributed.

Locke said approximately 70% to 80% of betting revenue comes from contractually fixed minimum revenue guarantees. During the first four weeks of the NFL season, gross gaming revenue (wagering revenue before payouts) rose nearly 60% year over year, while in-play gross gaming revenue increased nearly 50%.

The third quarter contained only three weeks of the NFL season.

Takeaway: Contractual revenue floors and an early NFL season supported 33% betting growth, with prediction markets adding another channel.

How do prediction markets contribute?

Genius Sports earns money through customer acquisition, data supplied to market makers (firms that set trading prices) and official data used to settle contracts, Locke said. The company charges market makers a data fee and takes a share of their profits.

Locke expects the regulatory structure for prediction markets to evolve, but argued demand for sports wagering would remain meaningful whether activity occurs through exchanges or traditional sportsbooks.

Asked about the NFL’s stance on prediction markets, Locke said he could not speak for the league. He also said the company’s guidance through 2028 did not assume NFL participation.

Takeaway: Prediction markets already generate revenue, while the company’s 2028 forecast assumes no NFL participation.

What has Legend changed?

Media revenue increased 126% year over year, supported by the Legend acquisition, spending by prediction markets and online sportsbooks, and adoption of the Moment Engine advertising platform, Castellani said.

A growing share of media revenue comes through Genius Sports’ self-service platform, which records revenue on a net rather than gross basis. That produces lower reported revenue than a gross presentation, but also a higher margin.

Locke said Legend’s integration was progressing ahead of schedule and cited deals with Kalshi and Polymarket as examples of commercial synergies. He also said customer acquisition costs in prediction markets had doubled since Genius Sports bought Legend. He said that trend benefited Genius Sports as operators competed for customers.

Genius Sports launched Prediction.com, combining Legend’s audience and technical capabilities with Genius Sports’ data. Locke said users who engage with a product combining live sports data and a feed of exchange trades are five times more likely to transact.

Moment Engine added 279 advertisers in the third quarter, following 174 in the second quarter. Third-quarter net revenue retention (revenue retained from existing customers) was 224%, compared with the second quarter, though Locke cautioned that growth could vary with advertiser adoption and spending patterns.

Takeaway: Legend now supports growth across media, market-maker services and advertising.

What changed in the outlook?

Genius Sports raised full-year revenue guidance to $1.015 billion to $1.035 billion and adjusted EBITDA guidance to $287 million to $297 million. The company expects an approximately $260 million year-end cash balance and more than $100 million of free cash flow in the second half of 2026.

CFO Bryan Castellani said: “Debt repayment remains the company’s capital allocation priority.” Net leverage (net debt relative to adjusted EBITDA) should fall to approximately two times by the end of 2026 and decline further in 2027.

The company reiterated its 2028 targets of a 35% adjusted EBITDA margin and more than 60% unlevered free cash flow conversion (cash conversion before financing costs). Castellani said annual interest expense of $50 million to $60 million would translate that unlevered target into free cash flow conversion of more than 50%.

Locke disclosed that he sold about 800,000 shares in September and arranged a collar (a share-sale and repurchase arrangement) over another 4.4 million shares for family and tax planning. He said he remained substantially invested in the company.

Takeaway: Management is pairing higher cash generation with debt reduction while keeping its 2028 targets unchanged.

Who does Genius Sports serve?

Genius Sports Limited (NYSE: GENI) is a sports technology and data company that provides official sports data, technology and digital media solutions. Its platform helps sports organizations collect, manage and distribute live game data while supporting fan engagement and commercial activities.

The company supplies real-time data and related products to sportsbooks, media companies, sports leagues, teams and brands. Its services include live statistics, betting data and trading solutions, streaming and video content, digital marketing, sponsorship activation, and tools connecting sports audiences with content and advertising.

It serves customers across international sports markets, including North America, Europe and other regions.

Takeaway: Genius Sports operates across the sports data chain, from official game feeds to trading, media and advertising tools.