Genius Sports Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2026

Key Takeaways

  • Positive Sentiment: Q2 exceeded guidance across key metrics: revenue rose 65% year over year to $196 million, adjusted EBITDA increased 54% to $53 million, and quarter-end cash of $155 million topped expectations.
  • Positive Sentiment: Management raised full-year guidance to $1.005–$1.025 billion of revenue and $285–$295 million of adjusted EBITDA, citing operating leverage, GeniusIQ automation, prediction-market growth, and early Legend synergies.
  • Positive Sentiment: The Legend acquisition is reportedly generating synergies ahead of schedule, including cross-selling, use of Legend-owned media inventory, and direct agreements with prediction-market platforms Kalshi and Polymarket.
  • Positive Sentiment: Genius added 174 Moment Engine advertisers in Q2, including McDonald’s, YouTube TV, and DoorDash, while management expects further expansion through NFL-related activations and increasing demand for live-sports advertising.
  • Negative Sentiment: The company ended Q2 with a $77 million GAAP net loss and $825 million of acquisition debt; although management expects approximately $145 million of unlevered free cash flow in the second half, interest and debt repayment will reduce levered cash-flow conversion to about 50%.
AI Generated. May Contain Errors.
Earnings Conference Call
Genius Sports Q2 2026
00:00 / 00:00

There are 17 speakers on the call.

Operator

Thank you for joining us and welcome to Genius Sports' second quarter 2026 earnings results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Genius Sports. Please go ahead.

Speaker 1

Good morning, thank you for joining. Before we begin, we'd like to remind you that certain statements made during this call may constitute forward-looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. Any such 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 17th, 2026. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius's operating performance. These measures should not be considered in isolation or as a substitute for Genius's financial results prepared in accordance with the US GAAP.

Speaker 1

A reconciliation of these non-GAAP measures to the most directly comparable US 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 to our CEO, Mark Locke.

Speaker 2

Thank you, good morning, everyone. Before we get into the quarter, I want to step back for a moment. Genius is becoming the operating system of modern sport. We own the official data, the technology, and now the audience that regulated sports ecosystems run on. As we bring these capabilities together on one platform, they reinforce each other. As AI becomes more powerful, the value of our data only increases. Since announcing the Legend acquisition in February, we have told the market consistently that success would be shown, not told. This quarter is the first real look at that combined platform in action, and it delivered. Three takeaways today. First, we delivered on every single line of our guidance. Revenue of $196 million, up 65% year-over-year and ahead of our guidance. Adjusted EBITDA of $53 million, well ahead of the $45 million we guided.

Speaker 2

Cash came through our seasonal low point ahead of the range that we set out last quarter. Revenue, adjusted EBITDA, and cash all ahead. Second, this quarter gives you a flavor of the margin profile that this business is built to deliver. Strong underlying profitability accelerated by the addition of Legend and synergies that we are already realizing in the early stages of integration. The combination of the businesses is doing exactly what we said that it would. Third, we sit at the center of the two things that this whole market is chasing, official data and live high intent audiences. In a world that's being reshaped by AI, that position is worth more, not less. It is already showing up in real deals. Let me take each in turn and then Bryan will take you through the numbers. Revenue was $196 million, up 65%.

Speaker 2

Betting grew 28%. Our media business, which now includes Legend from the 1st of May, grew 193% as reported. Our $11 million revenue beat in Q2 flowed through to an $8 million EBITDA beat, aided by the strong natural operating leverage in our business model, ramp of GeniusIQ, and the initial Legend synergies, which, as we will discuss in a bit, are just getting started. We outperformed across both betting and media, which now includes Legend. First, the core betting business continues to progress. We serve over 500 sportsbook brands across regulated markets. More than half our revenue comes from outside of the U.S. Net revenue retention remains consistent with the range we share annually. Year after year, our customers spend more with us because our data and products only get more central to how they operate.

Speaker 2

Our 28% year-over-year growth comes in a quarter of customer-friendly results across sport. Championship runs, star players scoring, the kind of outcomes that typically result in lower win margins for sportsbooks. Our business model is built differently. Our revenue is not driven by which way the ball bounces. We are paid on contractual guarantees and volumes across both sides of the house, we continue to grow despite that operating backdrop. That is what durable growth looks like. In fact, in a sports betting ecosystem which has shown volatility, our betting segment has delivered over 25% revenue growth in each year since 2023 and is on track to do the same this year. Again, that is what durable growth looks like.

Speaker 2

In addition to our outperformance in betting, we have also outperformed in media, reflecting continued momentum across our existing media business, driven by new brand and agency customers, increased spend, and strong demand from prediction market operators. This performance was further strengthened by the addition of Legend. The market is shifting in the direction of the business that we have built. At Cannes Lions a few weeks ago, the industry's loudest conversation was live sport, one of the last places that a brand can reach a large, emotionally engaged audience at scale. Genius is now a well-known name at Cannes because we own the data layer underneath that attention. This gives us a unique view of sports fans. Our data does not just tell us who the sports fans are, it tells us how they behave during key moments.

Speaker 2

As an example, it tells us that consumers spend 25% more on food delivery when their team loses. Ahead of the NBA Finals, we knew the Knicks fans spent 7 times more on live entertainment than Spurs fans. While Spurs fans are 3 times more likely to be fishing enthusiasts. Our biometric research with MediaScience has showed that an ad served immediately after a heightened moment in live sport can double unaided brand recall. Those aren't just interesting data points, they're signals that brands can act upon. Our advantage is the data layer behind the Moment Engine. We don't just help brands reach sports fans, we help them reach the right fans at the right moment with the right message. That's the difference between buying impressions and delivering outcomes. We're proving this value as more brands buy in.

Speaker 2

On our last earnings call, we told you that we had won roughly 70 new customers since launching the Moment Engine in March. In Q2 alone, we've added 174 new customers, including major brands like McDonald's, YouTube TV, and DoorDash, who are shifting spend to our platform. This is not sponsorship. It is measurable attention sold on our own data. The World Cup showed exactly what that looks like in practice. Take the example on the screen. Argentina's comeback against Egypt was one of the defining moments of the tournament. Using GeniusIQ data, we not only tracked what was happening on the pitch, but what millions of fans were likely to be feeling as that match unfolded. That allowed brands to adapt their ad campaigns in real-time, aligning spend and creative with the moments that mattered most. That wasn't a one-off. We executed this throughout the tournament.

Speaker 2

One global consumer brand used GeniusIQ to activate campaigns around goals, penalties, VAR decisions, and other pivotable moments. The result was roughly 3 times greater CPM efficiency than planned, and the lowest cost per click of any campaign that they ran during the World Cup. That is the opportunity. Official data is no longer just telling you what happened. It's helping brands to decide what to do next. While the World Cup was a great showcase of what our products can deliver, we expect this to scale across the entire sports calendar. As a result, Genius is in the middle of conversations that we simply were not in 12 months ago. We are serving as a strategic sports partner to agencies, we are integrating with established ad tech businesses. Brands are telling us our data is some of the most important infrastructure in their programmatic campaigns.

Speaker 2

We're only just beginning. This season, we expect to bring the Moment Engine capabilities to the NFL-related media activations, extending into one of the most valuable media properties in sport and unlocking another avenue for long-term growth. Underneath both the growth and the margin sits product. GeniusIQ turns our official data into faster, more automated, higher value products, and it is a direct driver of the margins that you're seeing and will continue to see. These are still very early days. Our single connected platform is creating value across every point of the sports ecosystem. One platform, endless solutions. Every new capability we build creates another way to monetize the same infrastructure. Broadcasters like DAZN are using it to make live sport more immersive. Brands like Amazon and Enterprise are using it as real-time sponsorship opportunities during heightened moments of the match.

Speaker 2

Analysts at Sky Sports are using it to deliver rich insights and analysis. Leagues like CBF and Liga MX are using it to make fast, accurate, and transparent officiating decisions. While these are different use cases, they all point to the same simple objective. GeniusIQ is turning official data into products that make sport more valuable for every participant in the ecosystem. This is the operating system of modern sport. Now to Legend and the synergies specifically, because this is the part that I want you to hear clearly. Legend is one layer in the Genius system, the demand layer, sitting alongside our data and our technology. It brings a durable owned audience, roughly 118 million users, two-thirds of whom return, and customers acquired through Legend carry around 60% higher lifetime value for operators after their first year. Those audience characteristics aren't just theoretical.

Speaker 2

They have been consistent since the start of the year, they are already showing up in our results. Group revenue increased $77 million year-over-year, yet sales and marketing expenses are only up $3 million. That's with Legend only contributing since the 1st of May. If we'd acquired a business that depended on continually buying and reselling its traffic, then that sales and marketing expense line would have looked very different. In reality, however, we do not rent the audience, we own it. Here's what's new. When we announced the deal, we laid out a set of revenue synergies and said they would build over time. They're building faster than expected. Cross-selling across the combined customer base is underway, already delivering results. Prediction markets are our most visible example of this coming through.

Speaker 2

The first phase of audience data integration is complete, immediately benefiting our Fan Graph and delivering results for our media customers. We have begun using Legend's properties as media inventory, which benefits margin as we shift spend away from third-party platforms and onto our own. On the forward, the significant bulk of the synergy opportunity is still ahead of us. It is no longer just a line on a slide. It has started, it is ahead of schedule. On the AI question that we always get, an owned, returning, first-party audience becomes more valuable as the open web fills with generic machine-made content, not less. As AI decides more of what people discover and buy, the businesses that own real data and a real audience are the ones that win. We own both. That is the position.

Speaker 2

Prediction markets are one example of how we're leveraging this position. In the second quarter, we generated meaningful revenue from the category. After the quarter end, we reached another important milestone by signing direct commercial agreements with both Kalshi and Polymarket across official data and customer acquisition. At a high level, three things are happening at once. First, the data layer. Over the past few months, both Kalshi and Polymarket have partnered with leagues like the Argentine Football Association, Liga MX, and Serie A, each built on official data and integrity from Genius. Building on those league partnerships, we've now established direct commercial agreements with both prediction market platforms, covering a wide range of content across our data portfolio. Official rights run league by league. That is the structure of this industry. On the sports that we hold, settlement runs on our data.

Speaker 2

Leagues will move at their own pace in this category. So will the scale of our platform relationships. As an example of this, look at what happened last week. The NFL filed formally with the CFTC and told the regulator in writing that markets on sport cannot operate with integrity without official settlement data, real monitoring, and information sharing between the venues and the leagues. The largest league in America has put on record that this category runs on infrastructure. That infrastructure is what we have spent two decades building. For the avoidance of doubt, we do not expect the NFL to green-light prediction markets in the near future and have not included this in our 2026 guidance. What is clear is that the direction of travel is towards more official data, not less.

Speaker 2

What we've established with Kalshi and Polymarket is a foundation upon which we will layer more content, more services, and more territories over time. It is the same compounding playbook that you have watched us execute in sports betting, now applied to prediction markets. Second, the data layer also extends to market making. The reliance on our official data and models to price markets is essential to provide liquidity on these exchanges. This puts us in a uniquely valuable position. Third, the audience layer, as was part of our thesis when we first announced Legend in February. This category is where Legend is already excelling and delivering in our Q2 results. We are sourcing new customers for prediction market operators in a very significant volume. Every one of those customers is acquired somewhere.

Speaker 2

With our organic media platform, now turbocharged by Legend, we own many of the destinations where those customers are acquired. Competition for those customers is only becoming more intense. That is why acquisition dollars flow to us in Q2. Why our combined media offering became a key part of our deals with Kalshi and Polymarket. Our role in this market is infrastructure. We supply everyone. All three of these elements come together to represent a sum larger than its component parts. That is exactly how we said the Legend acquisition helps us and exactly how we said prediction markets would expand our total addressable market. While sports moments will come and go, our prediction market revenue is beginning to structurally rise, and we expect significant upside in the years ahead, both in our betting and media segments from this important market segment.

Speaker 2

Two key questions about our stock, asked frequently since the Legend announcement in February, are now directly addressed in our results. More importantly, they leave us better positioned for the next phase of growth. With that, let me hand to Bryan.

Speaker 3

Thanks, Mark. Let me start by simply recapping our three key financial metrics. First, another quarter of solid revenue growth across the board, 65% overall, underpinned by 28% in betting and 193% in media, reflecting the effect of the acquisition, but also continued organic growth solidly above 20% for both Genius and Legend Media. Taken together, these demonstrate the strength of our combined business. Second, another quarter of solid adjusted EBITDA growth of 54%. This represents a 27% margin, which was over 250 basis points above the margin implied by our guidance. Let me be direct about that margin, because I know the question: Is this just acquisition mix? Mix helps, just as we said it would, but it's not the whole story. Our organic growth is generating real operating leverage. GeniusIQ automation is improving our core economics, and integration synergies are already landing ahead of schedule.

Speaker 3

With most of that opportunity still ahead of us, that's why we're confident raising guidance today. Third, quarter-end cash of $155 million was above the range of $140 million-$150 million we set last quarter. To delve into cash flow a bit, Q2 is always our seasonal low point for cash. In this quarter specifically, the transaction-related factors amplified that effect. First, our normal seasonality remains unchanged, where the second half of the year is naturally more cash generative. Second, we incurred the one-time costs associated with closing the Legend acquisition. Those costs are now largely behind us and will not repeat. To put this quarter in context, we finished Q1 with $197 million in cash and finished Q2 with $155 million. The change was predominantly driven by $41 million of debt financing costs.

Speaker 3

Excluding certain one-time transaction-related impacts, underlying operating cash flow would have been roughly break even. One additional accounting point that's worth calling out. The cash flow statement shows a $579 million use of cash for the acquisition of the business. That reflects the accounting presentation, excluding the repayment of shareholder loans, settlement of Legend's historic incentive plans, and the cash acquired in the transaction. Taken together, those contribute to the $800 million upfront cash consideration paid. As we mentioned last quarter, from here, we expect cash generation to accelerate through the second half of the year. We expect to generate approximately $145 million of unlevered free cash flow in the second half. That represents 70% unlevered free cash flow conversion of the approximately $210 million of adjusted EBITDA. Less roughly $30 million of interest and $10 million of debt repayment gets you to 50% levered cash flow conversion.

Speaker 3

From the third quarter onward, you'll have a much cleaner view of the underlying cash-generating power of the business as we progress toward our 2028 targets for 60% unlevered free cash flow conversion. Importantly, we're now seeing capitalized software costs flatten, just as we've said it would. As revenue continues to grow, this will continue to decline as a % of revenue, providing another structural tailwind to cash conversion over time. On the balance sheet, our only debt is the $825 million term loan used to fund the Legend acquisition. We have no revolver drawn and no other borrowings. As cash generation accelerates in the second half, we expect to exit the year at approximately two times net leverage and continue reducing that in 2027 while maintaining ample liquidity throughout.

Speaker 3

Let me quickly comment on our GAAP net loss of approximately $77 million and remind you that this reflects the accounting for the close of the Legend acquisition. The result includes one-time transaction costs, acquisition financing, and the non-cash accounting associated with acquired intangible assets, not the underlying operating performance of the business. Looking ahead, we expect our earnings profile to continue improving as we progress toward sustained GAAP profitability. Taken together, the financial profile of the business is becoming increasingly clear. Durable revenue growth, improving profitability, increasing cash generation, and lower leverage. Let me finish with guidance. We are raising our full-year outlook. Revenue moves to a range of $1.005 billion-$1.025 billion. Adjusted EBITDA moves to a range of $285 million-$295 million, a margin of roughly 29%.

Speaker 3

The operating leverage is showing up in the numbers, driven by strong revenue growth, nascent rise in prediction markets revenues, ramping GeniusIQ automation, and early synergy capture, all of it structural. That gives us tremendous optimism for Genius's path forward. 2027 is when the combined earnings power really starts to show, and it puts us squarely on track to achieve our 2028 guidance, which is more visible today than the day we set it. With that, back to you, Mark.

Speaker 2

Thanks, Bryan. There's a lot in today's earnings, let me summarize. We beat our guidance on every metric. Our largest-ever acquisition is already delivering synergies ahead of schedule. We own the official data that the regulated ecosystem, sportsbooks, media, and now prediction markets depend on, and we own the audience layer on top of it. We believe we are only just beginning to monetize the full potential of our platform within prediction markets. Thank you. We will now open it up for questions.

Operator

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are unmuted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open, Eric. Please go ahead.

Speaker 4

Thanks so much for taking the question. Maybe I'll kick us off with a big picture one. Obviously, with the close of the Legend acquisition, talk to us a little bit about what some of the key learnings have been as you went through the pre-close and now the integration process with the asset, and how you're thinking about potential for elements on both the monetization side and the synergy side to continue to evolve, and what some of those key learnings have been. Thanks.

Speaker 2

Yeah. Thanks, Eric. It's Mark here. Legend started really, really well. We're super positive about it. I think the synergies are coming through faster than we expected. You can see that. We announced the last couple of days, Kalshi deal, Polymarket deal, it's really proving the thesis that we had when we went out and bought Legend, that there would be immediate and significant synergies. They're coming through immediately. From an operational point of view, the teams are merging really well. We've had some offsites. The products are coming out the door in a really satisfactory way, and we're starting to get some technical crossover as well with our product sets. Overall, it's been remarkably successful, and we're super excited about it.

Speaker 4

Great. Thank you.

Operator

Your next question comes from the line of Barry Jonas with Truist Securities. Your line is open, Barry. Please go ahead.

Speaker 5

Great. Thank you. Guys, decelerating OSB handle growth has been a factor for a competitor and a customer this week. I think PM proliferation potentially could be a factor. Just curious, are there similar risks to your business once we get to NFL season? Thank you.

Speaker 2

Thanks, Barry. Look, the way we think about the market is that we're taking revenue from anything to do with sports betting. Whether that's from the traditional OSB operators or whether that's the expansion in the TAM that we're getting with the prediction markets, it's all very net positive for us. The other thing that's worth focusing on, and we've said it before many times, is that we've got a business model that has that underlying floor. The way that we do deals gives us the minimum downsides that protects us from the volatility. You've seen it a number of times in our business when there's been negative sports results for the OSBs that we've actually been protected. Again, we carry that philosophy forward in all the deals that we do.

Speaker 3

Barry, the only other thing I would add to that is just a reminder on the global nature of our business and the Americas being roughly 50%. There's diversity there that we're not necessarily hinged to one geography or one sport.

Speaker 5

Got it. If I could just ask a follow-up on the guide. $15 million increase to both revenue and EBITDA, which would be about 100% flow-through. I see that Q2 revenue beat by 11 and EBITDA by eight. Just curious how we get to 100% flow-through for the full year.

Speaker 3

Oops, sorry. Yeah. Just the continued momentum year to date. You see it in the numbers in the quarter, exceeding margin there. Just continued build for the rest of the year. That's the execution of the underlying business, the Legend integration tracking well, and just new deals and partnerships, as exemplified by the recent ones in the last couple of days with Kalshi and Polymarket. Multitude of factors there factoring into the guide.

Operator

Your next question comes from the line of Steven Pizzella with Deutsche Bank. Your line is open, Steve. Please go ahead.

Speaker 6

Hey, good morning, everyone, and thank you for taking the questions. I think you mentioned that 2027 is when the combined earnings power really starts to show in the prepared remarks. Can you talk about some of the biggest drivers of acceleration next year?

Speaker 3

Yeah. You've seen it before, just this compounding playbook we have across the business, both betting and media. We are tapping into a rising market. Growth of prediction markets is nascent. The continued opportunities as we bring on new operators, sportsbooks. Legend also gives us exposure to iGaming. There's a number of factors there as we continue to just grow our portfolio of products and get more penetration and uptake with our partners to help them grow as well.

Speaker 6

Okay. Thank you. In the prediction market revenue drivers in the presentation, you mentioned the liquidity. How are you seeing demand for your pricing models in addition to the official data?

Speaker 2

Yeah, I'll talk. Yeah. Just to remind everybody with the prediction markets, we make money in lots of different ways. We've said it for a while, but obviously on the marketing side, especially with the addition of Legend, we're helping the prediction markets acquire new customers, bring them in. We've said for a long time that we sell to market makers and the market makers take both the data and the pricing services. Finally, now we're cutting deals, as you see with Kalshi and Polymarket, directly with the prediction markets. There's some significant upside seeing the number of those prediction markets out there. The demand for our products and services is growing. It's something that we think there's some significant upside in over the period, but we've been very cautious with the way that we've forecast.

Speaker 2

For example, the NFL is not and never has been included in any of our numbers. The opportunities across the prediction market space are significant for us.

Operator

Your next question comes from the line of Mike Hickey with StoneX. Your line is open, Mike. Please go ahead.

Speaker 7

Hey, Mark, Bryan, Brandon. Congrats, guys, on a great quarter and seeing that Legend deal come through. Kudos to you guys. Just maybe as a quick follow-up to the last question, you're obviously delivering the data and pricing to market makers. Can you just maybe talk about real quick why that's so valuable for them? Mark, do you see an opportunity in the future that maybe Genius could eventually participate more directly in market making on PM platforms?

Speaker 2

Good questions, Mike. Look, we've traded on the regulated exchanges for the last 20 years or so, and we really don't see any difference in the U.S. with prediction markets. The emergence of the prediction markets is just more opportunity for us to keep leveraging our pricing, our risk capabilities, and really sort of drive revenue. It's no additional cost for us. We're seeing good results from our engagement with the market makers, and we feel very optimistic about the future.

Speaker 7

Nice. One last one on prediction market deal economics. Awesome to see the framework here in partnership with Kalshi and Polymarket. To the best you can you give us some color maybe on how the economics of these agreements compare with your traditional sportsbooks deals? I guess specifically on the data pricing and services, if those structures are broadly similar or if PM platforms are maybe paying less for data while you can sort of make up the economics through bundled services like integrity, liquidity, and customer acquisition. Thanks, guys.

Speaker 2

I think I said last quarter, we see those players as being large tier operators for us going forwards. I think the deals that we've seen coming through are more than satisfying that requirement. The deal structures, again, are very similar. We have fixed minimums. There's upside as well as part of it. Clearly, especially seeing where they are in their stage of evolution around product and customer acquisition, we actually see significant opportunities there in terms of providing product, providing data, providing services as they evolve their business in quite a rapid way.

Operator

Your next question comes from the line of Jed Kelley with Oppenheimer. Your line is open, Jed. Please go ahead.

Speaker 8

Hey, great. Ben, thanks for taking my question. Just getting back to the increase in the guidance and specifically in the media segment, is that coming strictly from some of the higher prediction market advertising you're expecting to see, or are you seeing other brands outside of sports coming as well, and that's also benefiting considering all the agency partnerships?

Speaker 2

Yeah. It's a good question. It's sort of everything. If you take the World Cup, for example, the World Cup was great for us. We managed to add a significant number of new brands to it, which is a great way to kickstart relationships with new players there. We see significant upside there. You've seen obviously the cross sell from The Legend, the synergies coming through there in terms of the marketing. That's coming through. It's a sort of combination of all of those things. What's going on in the advertising world and the focus that I mentioned in my remarks that the world now has on sports as a sort of sector, we saw that at Cannes Lions. All of that's really contributing to some of the significant growth and demand that we're seeing for the product sets.

Speaker 8

Great. Just as a follow-up, when you look at the prediction markets trading and where volume is, and it's heavily weighted in game and it's popular with certain sports such as tennis, college basketball, how does that make you think sort of your rights portfolio? Is there some opportunities you kind of look at given the user behavior in that market? Thank you.

Speaker 2

Obviously our business has grown up on live betting, live data. It's having the best data, having the best collection technology is becoming increasingly important. One of the things that we're getting with GeniusIQ that we're rolling out, and we're doing this across global basketball with FIBA, we're doing it with global soccer again, where there's a lot of live betting, is really the ability to upscale and to take new, higher quality, faster data feeds, which are highly relevant to the prediction markets. That's a big opportunity, and again, we're pretty unique in our technology that allows us to do that. Certainly, that technology as a slight aside, we're rolling out additional faster collection technology with the NFL at the moment.

Speaker 2

There's better ways of collecting data using the technology that we've invested in and the money that we've spent over the last few years, which are highly relevant to prediction markets. Separately to that, obviously, pricing the volume of events that are happening now and creating those models that we mentioned before is something that we have a huge amount of history in. We've got all of the data. We've got those pricing models. We've been doing it for a long time. We see it as a big growth opportunity to actually have our models and our data out there being used to create those new market opportunities.

Operator

Your next question comes from the line of Josh Nichols with B. Riley. Your line is open, Josh. Please go ahead.

Speaker 9

Thanks for taking my question. Great to see a solid first quarter with the Legend acquisition under your belt now. You've talked a lot about the synergies. I realize it's still early days and a little bit hard to quantify. Any kind of framework that you could maybe put around some of the opportunities that you're seeing thus far? Maybe at least name and size one or two things that you've been able to get done thus far and opportunities as we head into the seasonally stronger second half.

Speaker 2

Yeah. Again, if you just look at the Kautsky deal and the Polymarket deal that we've just agreed, they're really two significant proof points that have come through, and there's plenty more to come. You've got real evidence of faster synergy delivery in the business and in the numbers now. We're extremely pleased to see how that's operating.

Speaker 9

Thanks. Last question from me. A big step up in the Moment Engine advertisers this quarter. It's ramping up quite quickly. You're probably going to get more traction headed into the NFL season coming up. How should people think about the opportunities there, whether it's contract size, renewal expectations, and how that business is going to grow and how that advertising base has been expanding thus far?

Speaker 2

Yeah. I guess there's two parts to it. You've got the advertisers and the brands. The World Cup has been a fantastic test case for that. We've brought on, I think, 174 new clients which we tested over the World Cup, and clearly those clients have had a lot of success in a lot of ways, and that's a great base to build from. That's one sort of vector that we've got. The other vector is clearly around the prediction markets, with the upcoming NFL season, with frankly, just with the number of prediction market operators coming into the space and also with the OSB, some of the major ones talking about their prediction market aspirations.

Speaker 2

There's an enormous requirement for new customers, customer acquisition, customer engagement, and again, part of the logic behind the Legend acquisition and what we're now seeing through Legend with the product sets that we're putting out there is very focused on that. We see that sort of as the other vector in that space. We're pretty confident about how that market's going to evolve. Again, we've now got real empirical evidence which allows us to have real confidence in our future growth forecasts.

Operator

Your next question comes from the line of Bernie McTernan with Needham & Company. Your line is open, Bernie. Please go ahead.

Speaker 10

Great. Thanks for taking the question. Maybe just to start, Mark, understand the commentary that you're not expecting the guidance doesn't include the NFL to sign a deal with prediction market operators, is there any way to frame what that would mean for your deal or the potential monetization of those contracts if a deal were to come through between the NFL and either Kalshi and/or Polymarket?

Speaker 2

Look, as I've said, I want to be very clear, we don't expect that, as you said, it's not in our numbers. Clearly it would be very significant. There's a number of factors. There's a financial significance that comes directly with the sale of the data for the most important league. There's obviously the value of the affiliation that they get, which has a real monetary value as well. We've got a very close eye on it. Again, we've been conservative in the way that we've forecast. We've never included it. If I were you, I wouldn't be expecting that to come through this season.

Speaker 10

Understood. Then I was just hoping maybe to dive in a little bit deeper on the Moment Engine. I think it really launched in March of this year, this is the first NFL season. I think there's a lot of success with the World Cup. Can you just talk about maybe cross-selling or having those advertisers, especially the 174 that just came on board, staying on board and having them advertise during the NFL season as well?

Speaker 2

Look, it's a big industry trend that's coming through. We launched, as you rightly said, in March. We had Cannes, which has been frankly very successful, and the advertisers that have trialed it over the World Cup, we fully expect to take into the beginning of the NFL season. We've got some pretty big names that we're now working with, some pretty big agencies. The technology's deployed. You've got to remember, it's in over 90% of the platforms that the agencies are using. Overall, we're extremely well-positioned, and the best thing about where we are at the moment is that we've actually got that empirical evidence. We've got that data that tells us what the results are, so we can be very confident in our forecasting going forwards and our ability to cross-sell to the client base.

Operator

Your next question comes from the line of Trey Bowers with Wells Fargo. Your line is open, Trey. Please go ahead.

Speaker 11

Hey, guys. Just a couple of modeling questions. First, on the Legend side of things, you guys talked about the 20% organic growth at both Legend and internally. Would that say that you guys did about $45 million of Legend in the second quarter?

Speaker 3

Trey, we operate the businesses as one. We don't break out Legend separate from Genius. As I said earlier, the underlying business across betting and all of media has been strong and solid, and that execution continues to be ahead of where we thought for the quarter and on the full year guide as well. We're excited about that.

Speaker 11

Okay, perfect. Just on the cash flow side of things, helpful to get the expected cash balance by year-end. Can you guys just maybe break down a little more detail around that, just expectations for operating cash flow, capitalized software and PP&E spend. Against that, just any kind of feel for Q3 versus Q4. Will Q3 be a positive quarter? I assume Q4 is going to be quite a bit bigger because of seasonality. Just any breakdown around all that would be great. Thanks so much.

Speaker 3

Yeah. Thanks. There was a lot of movements in cash for the quarter. Not everything, or I should say it's spread in various lines on the cash flow statement, just given the accounting. For the rest of the year, as we've said, we're going to be at about 70% unlevered free cash flow on the back half. Then it nets down to about 50% after the interest and debt repayment. You're right that it will scale. Q4 will be ahead of Q3. You will see that progression towards the year-end balance of over $100 million in improvement.

Operator

Your next question comes from the line of Jordan Bender with Citizens. Your line is open, Jordan. Please go ahead.

Speaker 12

Everyone, good morning. I want to start maybe back to the day one thesis for the company, not the shift towards in-play betting. Can you just talk about if you could maybe rank some of the initiatives that you're working on into the NFL season that we should be watching out for as we watch your in-play mix?

Speaker 2

The first one that I would be focused on is the improvement of the betting data and the betting quality, the work we're doing with the NFL to improve that. That then has a knock-on flow, not only into the sportsbooks, then being able to leave their markets open for longer and offer better service to their customers, but also, especially now with the prediction market evolution, that people are going to be pretty focused on data speed and data quality. I think that world is evolving pretty quickly as you go into the NFL season.

Speaker 12

Mark, following up, I think you said you generate meaningful prediction market revenue in the second quarter. Going back to your investor day back last year, you added some level of contribution to your long-term guidance from prediction markets. Now that we're starting to see those actually come to fruition with Kalshi and Polymarket, is there a way to think about what prediction market revenue could represent as a % of total revenue over time? I know you're probably not going to give a firm number, but just directionally how we should be thinking about that.

Speaker 2

Look, I think the best way to think about it is thinking about the addition of the major prediction market guys, like additional tier 1 operators. That's really how we think about it. When we did our investor day in, I think, late November, early December last year, we pointed to the marketing revenues from prediction markets, and we pointed to market making. That's come through almost exactly as we thought it would. The addition of the data through the Kalshi, the Polymarket deal, that's come through around about the same time. I think, our numbers going forward, we're feeling very good about. It includes what we think is a prudent amount of money for prediction markets.

Operator

Your next question comes from the line of Jeff Stantial with Stifel. Your line is open, Jeff, please go ahead.

Speaker 13

Good morning, everyone. Thanks for taking our questions. Starting off on the betting business, Mark, could you just update us on some of the upcoming renewals for customer contracts? In particular, what's in the pipeline in the U.S. ahead of NFL season and how you're thinking about that in the context of guidance? Thanks.

Speaker 2

Yeah, sure. Look, we're constantly renewing contracts. As you know, the way that we operate the business is we don't have everything coming through for renewal at the same time. We stagger that, we're always under renewal conversations. As the NFL season draws in, there'll be some renewals that need to get completed by then. We've seen this movie 1,000 times. We will get the deals done. Everybody needs the data. Everyone needs the relationships with the NFL. The deals will get agreed, and we expect to carry on as usual.

Speaker 13

That's great. Thanks. For our follow-up, just a super quick housekeeping item. Bryan, just want to be clear because I think there was a decent bit of confusion here on the last call. The $100 million-plus cash flow guidance for the back half, the definition there is change in net cash position on the balance sheet, correct? Your unlevered free cash flow, you talk about 70% conversion. You could just clarify that definition as well to not see it in the release. I'll add a third part to that if I can, which is, it seems to imply bridging your unlevered free cash flow to that $100 million. You listed two items out that seem to suggest there's no real, at least no material, one-time drags in that conversion.

Speaker 13

Just want to be clear on that because obviously there's been some litigation costs and stuff of that nature over the last few quarters. Thanks.

Speaker 3

That's right. The unlevered is essentially operating cash flow minus the CapEx and the cap software in the business. We said we expect cap software to flatten at that high teens, low $20 million mark a quarter, including the acquisition of Legend. The difference between the unlevered and the levered is, as I said, that roughly $40 million combined between interest payment and debt repayment. That's the difference, where we're saying levered is after those two things and the unlevered is your traditional operating minus CapEx.

Operator

Your next question comes from the line of Ryan Sigdahl with Craig-Hallum. Your line is open, Ryan, please go ahead.

Speaker 14

Hey, thanks, guys. Q4 margin, normally. I know you guided to Q3, you guided for the year. If I back into Q4, it normally seasonally steps down due to the timing of rights costs, which makes sense. Your guidance implies something like 200 basis points improvement versus Q3 exiting the year at 35%. That is your 2028 target, despite that seasonal drag from rights costs. I guess, talk through that exit rate at 35%. Is there anything one time in there? If your structural operating leverage assumptions are materializing better, which you've indicated, but why not assume that for a good run rate in 2027?

Speaker 3

Again, our margin usually increases through the year as that back half is more revenue and cash generative. We also have the effect of the acquisition, the exit rate does end up higher. That improvement you see in the guide and puts us solidly on the path and optimistic about our 2028 guide.

Speaker 14

If I look at slide five, the Genius Moment Engine, 174 new advertisers in Q2. How many of those were legacy Legend customers? Or I guess asked differently, how many of those 174 are new incremental to both the combined Genius and Legend?

Speaker 2

They're almost all new and incremental. I think on one of the slides we put some of the names. We've got McDonald's, YouTube TV, DoorDash, Qualcomm, Airbnb, SEEK, Wayfair, Whoop, Kroger. There's a lot of new brands that are coming to the business and trying the services and getting good results from it. We're super excited about it.

Operator

Your next question comes from the line of Chad Beynon with Macquarie. Your line is open, Chad. Please go ahead.

Speaker 15

Hi, good morning. Thanks for taking my question. Two quick ones from us this morning. Just on the World Cup or the second quarter, were you able to parse out what you think the benefit was maybe versus your expectations from the World Cup overall in the two different business segments? Secondly, related to that, I saw in the release you mentioned semi-automated offside technology deal. Where are we in terms of just doing more deals with leagues, kind of on the back of everything that we learned from the World Cup, and where your technology is versus some of your peers? Thanks.

Speaker 2

Just on the World Cup, remember we didn't buy the data rights. The World Cup effect is really around the marketing and the advertising, and it was pretty much almost exactly in line with our expectation. I think that answers that. On the data side, we're doing quite a lot of deals. We just launched, I think you probably saw with Brazil, the semi-automated offside. That's a pretty significant deal. We've got the Liga MX, we've got some stuff in college that's coming out. We're rolling the technology out pretty quickly, and we're getting very good traction. In terms of the technology itself, we still have a massive head start on anything else out in the market. If you look at one of the metrics, for example, might be the mesh tracking that we have.

Speaker 2

The business that we have with the GeniusIQ product is to have skeletal tracking. I think we're at 10,000 points on a human body, 200 times a second versus the number, I think the second player in the market that's at 26 points on a human body. The fidelity of the data, the quality of the product, the speed at which we're capturing it, and then we're using that technology to do things like the automated event capture, faster data that we're using in the prediction markets. The whole strategy is coming together brilliantly. We're extremely pleased about it. We're rolling new products off the back of it, and it's becoming a real incremental driver of our growth.

Speaker 15

Thanks, Mark. Appreciate it.

Operator

Your next question comes from the line of Eric Handler with Roth Capital. Your line is open, Eric. Please go ahead.

Speaker 16

Yes, good morning. Thanks for the question. Two questions. First, other than the NFL, are most of your league partners have deals with prediction market companies? What's left? Are any of them consequential?

Speaker 2

Sorry, I didn't get the last bit of that. Can you say that again?

Speaker 16

If there are any leagues that do not have deals with prediction market companies, are any of those consequential or of size?

Speaker 2

Yeah, I think in the U.S., the notable ones are obviously, as you said, the NFL, college, and NCAA is the other one. Globally, I think there's an evolution and a move towards it. Partners like Serie A, Liga MX, they've all moved into the prediction market world. Expect that trend to continue and there to be additional opportunity. Again, just to sort of make the point, we see this as a real growth opportunity for us. We believe there's plenty of upside here for us still to come, which we haven't baked into our numbers, but we're excited about where that's going to take us.

Speaker 16

Okay. Then how has customer acquisition spend changed with prediction market companies now coming into the picture? Do you see, is there a big battle between sportsbooks and prediction market companies over customers?

Speaker 2

Yeah. The short answer is yes. There is a battle and clearly that's causing the premium space to be elevated in price. Obviously, through Legend, we now own the hands down the best customer acquisition platform out there for any of the prediction markets or sportsbook operators. We're reaping rewards on that really in quite an immediate and aggressive way. We're seeing strong growth in the space as a result of it.

Operator

We have reached the end of the Q&A session. I will now turn the call to Mark Locke, Co-Founder and CEO, for closing remarks.

Speaker 2

Yeah, just a quick one from me. I just want to say thanks very much for all of you joining today. We're looking forward to talking to you again in Q3. I just wanted a quick note on the timing of that call. It might become a little later in the month as I'm expecting another baby around that time. I just wanted to give you a bit of a heads up so there were no surprises.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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