Unidentified Analyst: Thanks, Mark. Thanks, guys.
Operator: Your next question comes from the line of Jason Bazinet from Citi. Your line is open.
Jason Bazinet: Hi, good morning. 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 and you offering up guidance for 2024, I’d be curious the one or two things that are swing factors next year. Like what are one or two things that could break your way or work against you as we think the ’24?
Mark Locke: Yeah. 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’ll make sure I get the right year, is an important year for us in terms of renegotiations with our bookmaker clients, the addition of new products such as BetVision, combined with the cycle of NFL renewals that we’ve talked about coming through with the U.S. sportsbooks. 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: Can I just ask one 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: 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.
Jason Bazinet: Okay. Thank you.
Operator: Your next question comes from the line of Clark Lampen from BTIG. Your line is open.
Clark Lampen: Thanks very much. Good morning. I’ve got two. I’ll ask another, I guess, sort of known unknown question. Nick, you’re back to generating free cash. You highlighted sort of value exchange with new services as part of that 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.
Nick Taylor: Yeah. Hey, 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 one of the great things about BetVision that Mark touched on the answer just earlier to Mike’s question was getting it out there and getting it used by all the sportsbooks is then enables us really to use that as a platform to then develop further products and ingrain ourselves and drive further revenues on it. So 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.
Clark Lampen: 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? Thank you.
Josh Linforth: Hi, Clark. 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 is big for the — is significant quarter for the sportsbook 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 for a lot of sort of traditional endemic brands around sport. And I expect the seasonality that we see in the betting 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. Your line is open.
Eric Martinuzzi: Yeah. 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 two numbers would be helpful.
Nick Taylor: Yeah. Hi, Eric. You’re right, we’ve been spending around about $10 million of capitalized development costs, really, for the last sort of two 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.
Eric Martinuzzi: Got it. Thank you.
Operator: Your next question comes from the line of Brett Knoblauch from Cantor Fitzgerald. Your line is open.
