Genius Sports Ltd

NYSE:GENI

Earnings Call Analysis

Solid Growth and Positive Free Cash Flow Uptrend

The company continued to beat financial expectations for the seventh consecutive quarter and raised their full-year guidance for a third time to anticipate a 230% surge in adjusted EBITDA to $53 million, and a margin improvement of 830 basis points from the previous year, indicating a turnover into positive free cash flow shown this quarter. Quarterly revenue climbed to $102 million, a 29% increase year-on-year, and adjusted EBITDA for the quarter was $18 million, showcasing 2.5x growth from last year and demonstrating cost discipline by reporting lower operating expenses. The full year 2023 revenue and EBITDA guidance were lifted to $412 million and $53 million, marking notable EBITDA margin improvement from 5% to 13%. The launch of Bet Vision has driven user engagement and increased in-play betting revenue, contributing to profitability at nearly 100% margin.

Consistently Surpassing Expectations and Raising Guidance

The company has demonstrated significant financial strength, outperforming expectations for the seventh consecutive quarter. Highlighting this robust performance, the company increased its full-year 2023 revenue and earnings guidance, now expecting an adjusted EBITDA of $53 million, signaling over 230% growth, and suggesting an 830 basis point margin improvement compared to the previous year. This positive trend is further emphasized with the company stepping into positive free cash flow for the first time.

Quarterly Performance Indicating Robust Year-on-Year Growth

This quarter's financial results tell a tale of solid growth, with group revenue reaching $102 million, surpassing the $100 million guidance and marking a 29% year-on-year growth. Adjusted EBITDA achieved a remarkable approximate 2.5 times growth compared to last year, landing at $18 million and exceeding the $17 million guidance. These results are a testament to the company's operating efficiency and its ability to contain costs while expanding its top-line revenue by nearly 30%.

Outperforming Betting Product and Media Revenue Strength

The betting product segment has been a star performer, contributing $66 million in revenue this quarter with a 34% year-on-year growth, despite challenges like lower operator win margins. Meanwhile, media revenue slightly missed the target at $23 million against a $24 million guidance. However, the segment experienced a strong 28% year-on-year growth, showcasing the potential for continued revenue generation across different streams.

Operational Efficiency and Enhanced Profitability

The company's operational prowess is reflected in its consistent expansion of both adjusted EBITDA margins and gross margins quarter over quarter. With remarkable improvements of 1,200 basis points in Q1 to 770 basis points in Q3 in adjusted EBITDA margins and 1,500 to 1,600 basis point improvements in gross margins for both Q2 and Q3, the business has proven its ability to scale profitably. Moreover, a thorough grasp of operating leverage is evidenced by the reduction in costs, such as sales and marketing, R&D, and general & administrative expenses, while scaling up the business.

Earnings Call Transcript 2023-Q3

[Operator]

Good day. My name is Rob, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Genius Sports Third Quarter 2023 Earnings Conference Call.

After the speaker's remarks, there will be a question-and-answer session.

[Operator Instructions]

I will now turn the conference over to Genius Sports. You may now begin.

[Brandon Bukstel, executive]

Thank you, and 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 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 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 Annual Report on Form 20-F filed with the SEC on March 30, 2023.

During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Geniu's operating performance. These measures should not be considered in isolation or as a substitute for Genus' 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 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.

[Mark Locke, executive]

Good morning, and thank you for joining us today. We're happy to report quarterly financial results ahead of expectations for the Seventh Consecutive Quarter. And for the third time this year, we are once again raising our full year guidance. For the full year, we are now expecting adjusted EBITDA growth of over 230% to $53 million, an 830 basis point margin improvement over last year, along with a step into positive free cash flow territory as we start to demonstrate this quarter.

We have achieved these significant financial milestones ahead of expectations due to our disciplined execution throughout the year balancing growth and profitability whilst continuing to strengthen our long-term position with our most important partners.

Our position now even more secure through high-profile new partnerships and renewals that we announced recently, provides us with the opportunity to reiterate, with confidence, the near, medium, and long-term strategic and financial path forward.

On today's call, we will cover a few key topics to emphasize these points. We will discuss how our lead relationships are growing stronger through the deployment of new technology. We will provide more detail on our innovative product set, including the launch of [ Bet Vision ], which is completely unique in the market and revolutionizes the way sports betters engage with the NFL and its [ Sportsbook ] partners. And we will review how this accrues to our benefit in the form of steady revenue growth, EBITDA margin expansion and free cash flow generation.

To start, let's recap the financial results from the quarter. We reported group revenue of $102 million, beating our guidance of $100 million and representing a 29% year-on-year growth. This translated to $18 million of group adjusted EBITDA, exceeding our guidance of $17 million and representing nearly 2.5x growth versus last year.

We have also consistently expanded our group adjusted EBITDA margin in each quarter this year. This quarter, our margins improved to 17% up from 10% in Quarter 3, 2022, further demonstrating the operating leverage of our business model.

Nick will cover in greater detail in his section, but you will see how we again, remain disciplined on costs and reported lower GAAP operating expenses in this quarter compared to the prior year, even as we grew top line by nearly 30%. This type of quarterly performance is exactly what makes the business model unique in the market.

Looking ahead, we are also raising our full year 2023 revenue and EBITDA guidance of $412 million and $53 million, respectively, well above our initial expectations of $391 million and $41 million at the start of the year. This represents meaningful EBITDA margin improvement from 5% in the full year 2022 to 13% in 2022.

Importantly, we have also reached a critical inflection point in free cash flow generation. Throughout the year, we have reiterated our expectation to become free cash flow positive in H2. And after reporting a positive group quarter we are reaffirming this outlook.

As we look ahead to the outer years, we also remain confident in our ability to achieve the long-term EBITDA margin target in excess of 30%. As I mentioned earlier, what gives us confidence is the high visibility of our fixed cost base going forward, particularly as we have just renewed and extended our NFL rights agreement through 2028, along with a growing demand for our products and services from all customer segments in our business: leagues, sports books, broadcasters and brands and sponsors.

As we discussed last quarter, it is critical to understand that Genius technology is the reason why leagues new, extend and expand our partnerships, often without even running a competitive tender process. To put it simply, the more deeply integrated we are within the lead digital ecosystem, the stickier we become as a partner to that league, offering them greater value beyond the fees we pay to data rights alone.

The more time we have to integrate technology, the stronger our position becomes, which gives us greater confidence in our ability to maintain those relationships over time.

Through the deployment of new technology, Genius is already an integral partner of the digital infrastructure supporting the sports ecosystem. Leagues like the NFL or English Premier League, for instance, are utilizing Genius tech-enabled solutions to drive forward their key initiatives across sports betting, plan engagement and broadcast innovation, to name a few.

This technological entrenchment is a key pillar of our partnership and reinforces our competitive advantage. It is exactly how we continue to strengthen our moat and gain more confidence in our ability to renew deals and deliver on our long-term financial model. Whenever you see us expand our technology offering and partnerships with leagues, you should understand this is not only incremental revenue, but also as Genius becoming even more deeply ingrained with our partners.

On Slide 6, you will find just a few examples of this from the quarter. For instance, with the NFL, we have added new features to each of the broadcast we have been working with this season, including Amazon Prime, CBS, TSN or the NFL streaming subscription service called NFL plus, who we recently announced a deal with to power AI-driven data visualization and graphics.

One example that you may have seen on [indiscernible] football is our AI and machine learning technology, now identifying potential defensive blitzes or open receivers, bringing even more insights into the viewing experience and all in real time.

At the start of the year, one of our goals was to distribute technology as wide as possible as we aim to make these features ubiquitous with live sports broadcast. We have executed on this plan throughout the year as Genius is now augmenting every single NFL game on one platform or another.

On one hand, this demonstrates the importance of our technology to the NFL broadcast. But equally, this represents a critical milestone for the broadcast distribution of this technology. Similarly, we have also signed a new partnership with Premier League production to enhance live forecast of English Premier League matches across 185 countries with rich insights and data-driven augmentations.

The alternate broadcast called Premier League Data zone allows viewers to see player names, parting accuracy, shot speeds and pitch maps, all into woven into the live broadcast through the unique [ atlas ]. This is currently being utilized by 19 different broadcasts across the EMEA and APAC regions as well as the Americas and reinforces our wide-ranging partnership with football [indiscernible].

We encourage anyone listening on the call to explore this new innovation in broadcast and see for yourselves how we're helping leagues and their broadcast partners better engage their fans in new creative ways. Each week brings a new wave of positive public responses to these innovations, which further validates the idea that fans enjoy having the option to watch live stores with these enhanced features.

The technology integration with leads across the globe is the most effective way for us to protect our data rights, strengthen our competitive moat, create more ways to lead to better activate their partners and fans and, of course, drive new pools of revenue for our business.

This brings us to bat vision. Bat vision is a first of its kind product that is differentiated from anything else in the market. While live streaming has existed on Sportsbook apps for several years, the key difference in bat vision is the combination of all our best technology assets that are unique to Genius. Real-time NFL stats, live betting markets, computer vision and augmentation capabilities and integrated bat slips. This sets us up on the path to revolutionize sports betting experience and represents the first genuine example of the convergence of sports betting, media and broadcast.

For those who have yet seen the product, bat vision is a single platform where users can view the lowest latency stream of NFL games, find real-time data, control the level of broadcast enhancements and place bets or from within the video player. In other words, users can find everything they need, all in 1 place, giving our sportsbook customers and lead partners a critical tool to attract the sticky engaged fans that they all want.

Importantly, it also simplifies and enhances the discoverability of in-play betting. That vision now delivers many of the features that users want to see alongside their in-play betting experience. And although it's still in early days and early in the season, the initial results in September have been very encouraging.

First, 54% of the total number of bets made by Bet Vision streamers were in play bets. Of the total betting handle or dollar volume [ back ] from bet vision streamers 83% was from in-play betting. This compares to the 20% to 25% we have seen historically in the U.S.

We've also seen that in-play handle from streamers increased by 121% since week 1 and overall handle per streamer has increased by 87% in that same time period. These data points should highlight how bet vision drives higher engagement and more betting volume for our Sportsbook partners.

The growth of in-play volume from Bet Vision is a clear demonstration that we can achieve our longer-term expectations of 70% to 80%, like we have seen in more mature markets. This is important to us because we own 5% to 6% share of in-play gaming revenue, which is roughly 3x higher than our prematch revenue share.

So as we continue to increase the in-play betting, we directly benefit from this higher revenue share at no incremental cost, therefore, contributing to our profitability at near 100% margin.

To close, you should hopefully have a better understanding of how our technology is solidifying our position within leagues and helping all of our partners better engage fans and drive profitability. We're delivering on our strategic objectives, and this is translating into consistent financial results ahead of expectations. I'll now hand the call to Nick to cover these financial results in more detail.

[Nicholas Taylor, executive]

Thank you, Mark. You've already heard that the group level numbers from Mark, and we're pleased to report revenue and adjusted EBITDA ahead of expectations for the third time this year.

Much of the outperformance was in our betting product, which contributed $66 million of revenue in the quarter. This exceeded our guidance by $2 million and represented 34% year-on-year growth, the highest annual growth rate in almost 2 years. We exceeded our expectations despite operator win margins being lower than the comparable period last year, as you have heard them discuss over the previous few weeks.

Our performance was driven by multiple talents in the sports betting industry across the globe, new customer wins and continued growth with our global sportsbook partners through the cross-sell of additional services and higher utilization of content.

Our media revenue was $23 million in the quarter, only slightly behind our guidance of $24 million, mostly due to sports books, pulling some of their advertising forward in Q2, as we mentioned on the last call. That said, our major segment returned to the type of strong growth we expected against more normalized comps with growth of 28% year-on-year.

On a group adjusted EBITDA basis, we've reported $18 million, beating our guidance of $17 million and representing nearly 2.5x growth compared to Q3 of 2022. On the right-hand side of Slide 10, I'd like to highlight the consistent growth in adjusted EBITDA we have demonstrated throughout the year. Year-to-date, we have grown our adjusted EBITDA by $28 million compared to last year, representing a 56% incremental margin of the revenue growth of $50 million.

You will see how our adjusted EBITDA margins have expanded in each quarter this year, beginning in Q1, where we improved by nearly 1,200 basis points year-on-year, to the Q2 improvement of over 600 basis points and the Q3 improvement of 770 basis points. This is true on a group margin basis as well. In each quarter, our gross margins have materially improved year-on-year.

Most recently, in Q2 and Q3, we improved our gross margins by 1,500 to 1,600 basis points. This is driven by a cost structure that, as we've said before, can support significantly higher revenues.

If you look at Page 15, you will see for the 9 months ended the 30th September, our cost of revenue, sales and marketing, R&D and G&A are all down on a GAAP basis over the comparable time frame from 2022. We have long discussed the operating leverage of this business, and we are now proving this in our year-to-date results.

Looking ahead, we expect to finish the year well ahead of where we initially guided, and now aim to deliver $412 million in group revenue and $53 million in group adjusted EBITDA. And this assumes an exchange rate of 1.25, consistent with our assumptions last quarter.

Importantly, we also finished the quarter with $116 million of cash on the balance sheet, ahead of our closing balance in Q2, and we maintained our expectation to be cash flow positive in H2. And with that, we will conclude our prepared remarks and open the line to Q&A.

[Operator]

[Operator Instructions]

Your first question comes from the line of Ryan Sigdahl from Craig Hallam.

[Ryan Sigdahl, analyst]

I want to start with Florida. So the seminal tribe via the Hard Rock app relaunched last week. Are they a Genius data customer? And how do you think about that opportunity?

[Mark Locke, executive]

It's Mark. Yes, they are a data customer. And obviously, it's very good news. We reported in this weekend, with their launch. They've -- some sort of nuance to the launch at the moment. They've gone live only with customers that have historically downloaded their app.

So at the moment, we're sort of viewing it very, very positively a significant opportunity, but we've just been cautious to begin with. And overall, we think this is very positive. The other thing that's probably worth just mentioning is it really sort of demonstrates our operational leverage and the underlying business model as a new state comes on board. We are immediately able to support that state with additional products at virtually no extra cost, so it drops through at near 100% margin for us.

[Ryan Sigdahl, analyst]

And then just on bet vision, I appreciate those first couple of week metrics you gave in the prepared remarks. Given that, I guess, has that changed your asking price or negotiating leverage with the other sports books besides that original 3 that you launched with? And then kind of second to that, I guess, what needs to happen to get the big 2 sports books to use it?

[Mark Locke, executive]

Look, I've said right at the beginning, this is about not only with bet vision, but with our wide augmentation products, it's about ubiquity and it's changing the user behavior. I think this is a really positive start and we've got close relationships with those sports books. I've said a number of times that we're going through a process at the moment of contract renewals that will be coming up over the next period. And obviously, any negotiations we have are going to be part of those wider renewals.

The other part of your question was -- sorry, remind me the second question you had?

[Ryan Sigdahl, analyst]

Yes, you kind of answered it. It was mainly just the big 2 sports books. And if there's anything, I guess, to put in you answered I think.

[Mark Locke, executive]

Yes. Look, we feel super positive about our position. We're feeling good about that.

[Operator]

Your next question comes from the line of Bernie McTernan from Needham & Company.

[Bernard McTernan, analyst]

Maybe just a follow-up on the hard rock question, same thing, but for ESP and bets launching. Any thoughts on how that will impact the business and what's contemplated in the 4Q guide?

[Mark Locke, executive]

Yes. I mean, good question again, and thanks for sort of highlighting that, but bluntly the same answer. They are a customer, and we see the opportunity as very exciting for the business. And again, underlying operational leverage that we've got.

[Nicholas Taylor, executive]

It's Nick. And specifically on the Q4 guide, and Mark alluded to it in the last call, these were very positive long-term trends for us. They don't make any significant difference in the short term being we're dealing with, what, 5 or 6 weeks of the season when as you know as well, 70% of our revenues are still outside of the U.S.

[Bernard McTernan, analyst]

Understood. And then with the hire of [ many Tintos ] former CTO of [ Mediabas ]. Can you just talk about some of the changes or developments that's going to be happening in the advertising product?

[Mark Locke, executive]

Yes. Look, I mean, I think I've been fairly clear about our strategy in the advertising market over time. It's obviously growing very nicely. You've seen that come through in our results. [ Manny ] is, I mean, a fantastic hire for us. He's very well respected in the ad tech market, it's been the pioneer of a number of the ad tech platforms out there. And he's a big part of what we're focusing on.

Clearly, brands, agencies are a big focus for us, for the business and the development of our tech platform and the development of our ad tech platform and development of the technology and that really is incremental growth in the business. There's no sort of big bangs we're expecting is a big part of our strategy. And again, we're seeing real value coming from it. So we're -- frankly, [ Manny ] is a great hire, and we're really excited to be working with him.

[Operator]

Your next question comes from the line of Jordan Bender from JMP Securities.

[Jordan Bender, analyst]

Are you seeing for bet vision, are you seeing -- the incremental players -- those people watching? Are they coming from traditional cable viewing? Or is there kind of enough evidence to say those are 2 screen watching betters?

[Mark Locke, executive]

Yes. I mean, just to be clear, we obviously don't have any specific data about the crossover between cable and Bet vision. But this is about a second screen experience. There's a lot value -- a lot of incremental additional product sets that we rolled out with Bet Vision with the augmentation. And whilst we're treating it cautiously because they are sort of small sample sizes, and we want to -- we want to be very cautious about what we're saying that the initial results are incredibly positive.

One thing that's probably worth I think is a sort of interesting take that you may not sort of be too focused on is. We've obviously talked historically about the shift of in play. We expect a much higher. The U.S. market to be a large in-play market in the same way that the European market is just to remind people on the call, roughly sort of 78% of all bets in a mature market are made in play.

And what we've sort of said consistently is that a lot of the growth is going to come from product-led growth. And if you remember, [ Angel ] announced in their results a few months ago, 87% of their NFL bets were made from -- by people who didn't leave the home page. My comment at the time, I think, was that we're very much focused on helping the bookmakers, helping the sports books to drive their players to in-play betting through better products. That's how we're helping that transition. And this is a really good example of that, and frankly, also a really good proof point that the bookmakers are taking transition of players from pre-match or from even homepage betters to sort of more sophisticated in play -- players is something that we're sort of seeing very positively.

So we're incredibly excited about this product. It demonstrates the strength of the augmentation product line, strength second spectrum. And again, we're seeing it very well received in the market.

[Jordan Bender, analyst]

Great. And then you guys are having several board members leave the company. Can you just kind of talk to what you're looking forward to fill those seats?

[Mark Locke, executive]

Sorry. Can you say again, we're looking...?

[Jordan Bender, analyst]

Yes. Can you guys just kind of talk to who you're looking for, the qualities of the people that you're looking for to fill those board seats?

[Mark Locke, executive]

Yes. Look, I mean, we have a very strong board, and it's done a very good job for the company. This is a natural transition as board members come to the end of their terms. Going forward, we're looking for, I guess, all the sort of obvious people to support the growth of the company, provide us with the continued ability to scale and leverage the business in public markets and continue to mature as a public company.

So I mean, it's is an active process that we are now running, and we're excited about some of the quality of the candidates coming through.

[Operator]

Your next question comes from the line of Joshua Maran from Oppenheimer.

[Unknown Analyst]

Could you remind us on your exposure with European soccer holds that other sports books and competitors have called out? Is there any color to add there?

[Nicholas Taylor, executive]

Josh, it's Nick. Our European business isn't massively exposed to hold. As you know, most of our European business is on what's known as a sort of fixed fee basis. And therefore, individual results or individual weekends don't have any significant issues for us in terms of our revenue recognition.

[Operator]

Your next question comes from the line of Mike Hickey from Benchmark & Company.

[Michael Hickey, analyst]

Guys, good afternoon, great quarter. Nice to see that free cash flow congratulations. Just 2 questions. One on bet vision. Just curious if you double-click there on how you think about scaling the product, obviously, you can add more operators to get that you asked that. But how you think about, I guess, scaling within the operators that you have and/or maybe other sports leagues, Mark, you could add over time besides obviously, it's a component product and how you think about materiality as you scale it, whether it's impactful for '24, what we should think beyond that?

Second question is on your model. I mean, clearly, it's working here. Incremental margins off the charts. So margins are growing, obviously, but curious how you think about efficiency, your primary peer here is taking another look at their OpEx, they're optimizing the reducing head count. Just curious how you're thinking about your overall OpEx and if you think there's efficiencies you can find?

[Mark Locke, executive]

Okay. Let's sort of take those backwards. -- because there's quite a lot in there. So look, in terms of incremental margin, I mean, yes, you're right. I mean they're coming through really nicely. It really is demonstrating, as I said before, sort of kind of [indiscernible] the operational leverage in the business, and we're really happy about that. In terms of the scale of the business, we feel we're rightsized. We've been very careful about cost control. We've managed the business very well. over the period.

And I think at the moment, we're seeing the underlying cost base and rightsize if anything, we may even look at sort of potentially a small reduction in some of the capital outlay. And a lot of the reason that we're able to do that is because a lot of the growth in the future, a lot of the focus in the business is second spectrum and what we've been doing there. And really when we bought that business, we bought a business that had an awful lot of investment in it.

So there's a lot of companies out there that are trying to move into the AI machine learning and computer vision space. I think it's very difficult to do that. But certainly, it's the case if you are even trying to do that, you need to spend a lot of money.

Now we've already spent a lot of money. We know -- probably over $250 million, I think, has been invested in second spectrum that computer vision, machine learning, AI, augmentation, technology that's now really delivering hard revenues and really delivering growth, which I'll come on to in a second of bet vision. But I think that from our point of view, we're not foreseeing any sort of major material changes in the way we're operating the business.

We feel we're doing it in the right way. We feel we're right sized and we will, if anything, be with the way it's operated at the moment, we'd be potentially reducing some of those cost lines.

On the Bet Vision that, there was a lot in that question, and sort of give me a bit of faith to talk about it. I mean, look, in terms of scaling, I think there are 2 main areas -- and you correctly highlighted them, that are obvious, one is the number of operators. And again, our model here is about making sure that we distribute the Bet Vision product in the same way that we're trying to do with the augmentation products and frankly, having a lot of success with that augmentation product to as many different customers as possible. And again, that changes customer behavior, it gets ingrained and people are starting to see real value. And that value again, has been highlighted in some of the metrics that we've shared today, the results, although we are being cautious about that.

In terms of the sports, clearly, our technology is not only focused on the NFL. I mean, obviously, the NFL is a huge part of our partnership base. But also the work that we've done with Premier League productions recently is worth highlighting because it's maybe not always obvious to people. We have a very sophisticated soccer product that, again, Premier League production, which is the commercial arm that distributes European -- sorry, U.K. soccer to global broadcasters they have taken second spectrum and they have used -- or they are using second spectrum to augment that soccer broadcast to multiple different jurisdictions that they're selling their streams in, including in the states, you'll see on [ Peacock ].

So the reason that's interesting is, firstly, it goes to our second spectrum technology, which is, again, the broadcast market is good for us. But also in terms of specifically that vision, it gives us -- it shows you the capabilities that we have with additional sports. So soccer is something that we've done.

Basketball is obviously something we're very sophisticated in as well and is available to us. So we've got the ability to augment there. The sort of 1 area that's probably left sort of obvious with the Bet Vision stuff is around some of the advertising and sponsorship work. Now clearly, putting out these augmented streams gives us the ability to create new content, and that new content is open for either the bookmakers to advertise effectively to themselves.

We target, we activate their own customers. but also potentially bringing partners there. So that's another stream of business that we'll be looking into over the coming period. Hopefully, that sort of answers the question on that, Mike.

[Michael Hickey, analyst]

Yes, Mark, the only other piece -- that was great. The only other piece was how you think about -- maybe it's too early days here, but if we should be thinking about same level of impact. Obviously, you've got the stickiness and the rights impact. That's more qualitative, I guess, but will obviously [ feed ] math. But just how you're thinking about whether or not this can be a driver for you in '24 or if we should be thinking more medium term?

[Mark Locke, executive]

Yes. Look, I mean, there's sort of 2 parts to that, I guess. The first is the shift of U.S. sports betting in play is a clear focus for us I mean, just to remind you, we take about 1.25% prematch and somewhere between 5% and 6% of in-play betting. So not only through the Bet Vision product, do you see an increase in the volume or increase in handle as I went through in my remarks. But we're also taking somewhat 2, 3x the amount of share of that.

So there's a compounding effect there that's obviously material to our business. And in terms of what -- some of the growth that's coming out of the business and some of the numbers that we'll indicate in the future, that will obviously be contained within that.

[Operator]

Your next question comes from the line of Jason Bazinet from Citi.

[Jason Bazinet, analyst]

You guys have a very good track record in terms of delivering financials that are consistent or ahead of your guidance. And I guess my question is, as we think about sort of next quarter you offering up guidance for 2024. I'd be curious the 1 or 2 things that are swing factors next year. Like what are 1 or 2 things that could break your way or work against you as we think the '24?

[Mark Locke, executive]

Yes. Look, there's a number of sort of, I guess, the underlying business is reasonably predictable. And I appreciate you saying that we've got a good track record. And I think that's a function of us having really strong visibility over the underlying cost base, but also really over the way that we structured our contracts. 2024 -- I'm not sure right you're right year is an important year for us in terms of renegotiations with our bookmaker clients, the addition of new products such as that vision, combined with the cycle of NFL renewals that we've talked about coming through with the U.S. sports books.

So those contract negotiations are very important to us. Again, we've got a very good track record with our partners of doing deals. We've been doing this a very long time. So we understand how to structure mutually beneficial partnerships on an ongoing basis. So that pricing is a function is a focus of us.

I think on the cost side, it's reasonably straightforward. Again, we've got a very good grip of our underlying cost base. We've got incredibly good visibility. And I think One of the important things to highlight again here is that our rights deals that we've got they go out into the future, and we've got really good visibility.

We know how much we're going to be paying our partners over the coming years. And what that allows us to do is to be very diligent with our cost management. And I think that, combined with the fact that we don't need to do any other rights deals. We've got everything we need. I've said it many, many times, I'll say it again. Means that we don't expect there to be -- if a rights deal comes up or something comes up that we think is particularly important, then obviously, we'll participate in it. But frankly, we're only going to do that if it marries with the strategy of generating profitable growth.

So again, we feel quite good about that. So at the moment, we feel like 2024 is a highly predictable year for us. We understand where we are in our commercial partnerships. It's not without some risk around some of the renegotiations. But equally, we've got an incredible strength of product. So I would think that we will have a lot of success in that -- on that basis.

[Jason Bazinet, analyst]

Can I just ask 1 follow-up. The timing of those contract renewals on the revenue side, will those contracts sort of be known knowns by the time you give '24 guidance? Or it will be known unknown?

[Mark Locke, executive]

They are known unknowns. We will not -- we know that we don't know. So -- and that will be the case, frankly, until a lot further into the year.

[Operator]

Your next question comes from the line of Clark Lamb from BTIG.

[Unknown Analyst]

I've got 2 -- I'll ask another, I guess, sort of unknown question. Nick, you're back to generating free cash. You highlighted sort of value exchange with new services as part of partner renegotiation process. I guess I'm just curious, as we're thinking about the sort of future stages of renegotiation approaching how you might think about product and that sort of value exchange. Would you look to build more of this sort of incremental product internally with your own resources? Is this something you could use the balance sheet to boost and sort of improve over time? That's question one.

[Nicholas Taylor, executive]

Yes. Clark, it's Nick. It's about balance, I guess, is probably the headline to that answer. We absolutely will continue to develop new products. We are a technology business. I mean 1 of the great things about that vision that Mark touched on the answer just earlier to Mike's question was getting it out there and getting it used by all the sports books is then enables us really to use that as a as a platform to then develop further products and ingrain ourselves and drive further revenues on it.

That's kind of how we're looking at it from the betting side. And it's exactly the same really from the media side. Indeed, Again, Mark answered the question earlier about our recruitment in the senior leadership of that area. And that's a really good example where we're looking -- we will develop more products. But going back to my headline is it's going to be about balance, making sure that we're financially disciplined in doing so and making sure we live within our means.

[Unknown Analyst]

Understood. And then maybe on the ad business for Josh, it sounds like the Third Quarter was a little bit more front-loaded in terms of endemic customer spending. As we're thinking about the sort of implied acceleration for the current quarter, have you seen a pickup in customer spend that sort of underpins or supports that? Are you seeing maybe more of a seasonal push with brand customer cohorts.

[Josh Linforth, executive]

It's Josh here. Yes, to answer your question, I mean, it's pretty consistent in terms of the spend that we're seeing. I mean Q4 outside -- Q4, I think for the is a significant quarter for the sports book business for advertising. It always has been and continue -- will continue to be so. And then as we look to continue to grow the sort of brand space and as people have touched on the hiring there and us sort of very much focused on that.

We're seeing some good progress in that area of the business, particularly with it being Q4 and a big spend quarter, a lot of sort of traditional endemic brands around sport. And I expect the seasonality that we see in the bedding business around sports to be in that area as well because that's our specialism.

[Operator]

Your next question comes from the line of Eric Martinuzzi from Lake Street.

[Eric Martinuzzi, analyst]

Yes. On the cash flow projections, I was just curious to know what your expectation is for CapEx for the year. And I think the capitalized software number you've said historically around $40 million for the year, but those 2 numbers would be helpful.

[Nicholas Taylor, executive]

Yes, you're right. We've been spending around about $10 million of capitalized development costs, really, for the last sort of 2 or -- certainly probably 24 months has been running at that and expecting this quarter to be at a similar level on that position. So it's going to be around about $40 million. CapEx for the quarter is going to be relatively -- it might be $1 million or $2 million in the quarter, but nothing more than that.

[Operator]

Your next question comes from the line of Brett Knoblauch from Cantor Fitzgerald.

[Brett Knoblauch, analyst]

I guess I have 2. First, on the Bedding Technology segment, the kind of revenue outperformance there. Could you maybe parse out the drivers behind that a little bit more? Was it maybe NFL performing better from a GGR perspective? Or was it a win rate perspective? Or were there other factors at play? And then on the Ryder Cup and the Rugby World Cup announcements, could you maybe just highlight what that means for your business over maybe the medium to long term? Is that maybe more of building a base to drive additional media revenue? Or how should we think about that?

[Nicholas Taylor, executive]

I'll take the first part, and I'll hand over to Josh for the second piece. On the first piece, look, we've always talked about, particularly in the betting business about the multiple levers of growth, and you've heard us talk about that before. And we've seen -- really seeing those right across 2023. So it's -- and the encouraging thing for us is also growth across the world as well. I think both the European and Americas business are up 30% year-on-year. And that's really coming from a mix of things that's coming from new customer wins, it's coming from pricing in the European markets, but it's also coming from additional services and utilization that we're seeing.

So we're seeing it right across the board, and we're very happy with that growth. There's a small benefit of tailwind of foreign exchange within the international business. that accounts for a small proportion from the growth, I think the underlying growth is around about 26% once you strip out foreign exchange. And I'll let Josh pick up the specifics around those biannular events.

[Josh Linforth, executive]

Yes. I mean, it's really for us, those relationships with Rubbery World Cup and Ridout are just a continuation of us having sticky relationships with our sports partners. As a reminder, we built the FIFA World Cup platform, we do a ton of stuff for the NFL. And there's a whole host of reasons that people take those products from us. but around helping our partners understand their audience and feeding that back into the sponsorship models and being able to communicate to their fans better. It's all part of our overall strategy.

[Operator]

[Operator Instructions]

Your next question comes from the line of Robin Farley from UBS.

[Robin Farley, analyst]

I had 2 questions. One is, last quarter, you had updated the FX rate that you use in your revenue guidance, and I think it had added to your full year outlook. This quarter, you didn't change, you didn't update for current FX rates. And so I'm just wondering if you did, can you quantify what impact that would have on the revenue guidance, which I guess at this point would just be for Q4?

And then also to clarify the earlier comment about the known unknown. You were talking about that you won't know new negotiated terms until later in 2024, are those terms that would not be effective until 2025? Or would they impact 2024? And we just wouldn't know in your initial guidance? In other words, when do those new terms become effective?

[Nicholas Taylor, executive]

Robin, I'll just take this around the other way while I remember the second part of the question. Mark's right, in terms of the unknown unknowns, I think Jason's question was talking around about Easter, around about the end of Q1. Most of the negotiations, the contracts roll out mid-summer, really for start of the new NFL season.

So they will be effective to '24, but it will be the last few months of '24 rather than knowing about them when we give '24 guidance, which we'd anticipate doing at the full year results.

On the FX piece, Robin, your question was -- so we are given the guidance right now to around about 1.25. Actually, current foreign exchange is actually below that now to around about 1 22. So there's a sort of $1 million to $2 million risk on those numbers in relation purely to foreign exchange, which is why we've not moved position.

When I look at the Q3 position that we've just reported, I think we originally had it at 97% with the original guide at the start of the year. And we've got that to 100, I think, over the course of the last couple of quarters, which I think I called out was mainly foreign exchange related. So the outperformance to 102 to [ 103 ] as the underlying outperformance of the business.

[Operator]

And there are no further questions at this time. This concludes today's conference call. Thank you for your participation. You may now disconnect.