Jordan Bender: Great. And then, you guys are having several Board members leave the company. Can you just kind of talk to what you’re looking for to fill those seats? Thank you.
Mark Locke: Sorry, can you say it again? We’re looking…
Jordan Bender: Yeah. 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: Yeah, look, I mean, we’ve had 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 stuff, 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 an active process that we are now running, and we’re excited about some of the qualities of candidates coming through.
Jordan Bender: Thank you very much.
Operator: Your next question comes from a line of Joshua Marin from Oppenheimer. Your line is open.
Joshua Marin: Hi. Could you remind us on your exposure with European soccer holds that other sportsbook and competitors have called out? Is there any color down there?
Nick Taylor: Hey, Josh, it’s Nick. Our European business isn’t massively exposed to holds. 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.
Joshua Marin: Okay, thank you.
Operator: Your next question comes from a line of Mike Hickey from Benchmark Company. Your line is open.
Unidentified Analyst: Hey, Mark, Nick. [Charles Brennan] (ph). Good morning, guys. Good afternoon. Great quarter. Nice to see that free cash flow. Congratulations. Just two questions. One on BetVision. Just curious, if you could double-click there on how you think about scaling the product. Obviously, you can add more operators who [give valuable asset] (ph). 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 the NFL? Obviously, it’s a compelling product. And how you think about materiality as you scale it, whether it’s impactful for ’24 or we should think beyond that? Second question is on your model. Clearly, it’s working here.
Incremental margins off the charts. 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, they’re reducing headcount. Just curious how you’re thinking about your overall OpEx and if you think there’s efficiencies you can find? Thanks, guys.
Mark Locke: 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, yeah, you’re right, I mean, they’re coming through really nicely. It really is demonstrating, as I said before, I was sort of kind of beating myself, 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 right-sized. 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 right-sized, 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, 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. Probably over $250 million dollars, 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 onto in a second with BetVision. 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 operating at the moment, be potentially reducing some of those cost lines. On the BetVision product, there was a lock in that question, and it sort of gives me a bit of space to talk about it. I mean, look, in terms of scaling, I think there are two 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 BetVision product in the same way that we’re trying to do with the augmentation products, and frankly, having a lot of success with our 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 with 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 Productions, which is the commercial arm that distributes European — sorry, U.K. soccer to global broadcasters, they have taken Second Spectrum, and they have used it 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 BetVision, 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 final area that’s probably left sort of obvious with the BetVision 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, retarget, reactivate their own customers, but also potentially bring in partners of theirs.
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.
Unidentified Analyst: Yeah, Mark, the only other piece — thank you for that. 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 some level of impact, obviously, you’ve got the stickiness and the rights impact, that’s more qualitative, I guess, but we’ll 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: Yeah. Look, I mean, there’s sort of two parts to that, I guess. The first is the shift of U.S. sports betting to in-play is a clear focus for us. I mean, just to remind you, we take about 1.25% pre-match and somewhere between 5% and 6% of in-play betting. So, not only through the BetVision 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 times, 3 times 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.
