Sportradar Group AG Q3 FY2024 earnings call

• Strong financial performance: Revenue grew 27%, adjusted EBITDA 30%, and free cash flow up 140% year-to-date.
• Strategy execution: Built on core competitive advantages like sports coverage depth, product portfolio, and global distribution.
• Product innovations: 4Sight Streaming enhances audiovisual offerings, micro market betting taps into in-play gaming potential, Managed Trading Services grows with strong trading performance, Alpha Odds leverages AI, and marketing services expand with 360-degree value proposition.
• Margin expansion focus: Intensive on managing costs, driving efficiencies, and leveraging long-term sports rights visibility for operating margin expansion.

Sportradar delivered broad-based growth across product segments. Betting Technology & Solutions revenue was EUR210 million, achieving 32% growth compared to the third quarter of the previous year. This growth was driven by 37% growth in Betting & Gaming Content, including 56% growth in streaming and betting engagement products, and 24% growth in odds and live data. Managed Betting Services grew 18%. Sports Content, Technology & Services products had revenues of EUR45 million, a year-on-year increase of 8%, led by Marketing & Media Services growth of 10%. The U.S. market saw 46% year-on-year growth, representing 20% of revenues in the quarter.

• Raised full year 2024 guidance: Anticipates revenues of at least EUR1.09 billion (+24% y-o-y) and adjusted EBITDA of at least EUR216 million (+29% y-o-y).
• Expect margin expansion in Q4 2024 and 2025, driven by revenue growth, cost leverage, and sports rights amortization benefits.
• Free cash flow growth expected, though Q4 cash flow impacted by sports rights payment timing.

Risks include those related to forward-looking statements, market uncertainties, and factors discussed in the annual report on Form 20-F and Form 6-K filed with the SEC, such as potential differences between actual results and forecasted trends.

Q: Increment or guidance raise, implications on margins and cost plans for 2025?

A: Craig Felenstein noted strong revenue growth in 2025 will drive margin expansion, with leverage across cost categories including sports rights, personnel, and back-office costs.

Q: On 4Sight Streaming, impact on in-play betting uptick?

A: Carsten Koerl said 4Sight Streaming has less latency, with an uptick in live proportion, contributing to leverage.

Q: Update on MLB deal and margin implications?

A: Carsten Koerl stated MLB deal is margin accretive, with positive impact on margin and earnings profile.

Q: Brazil market plans and progress?

A: Carsten Koerl mentioned established office, early client conversions for MTS, and plans to complement product line in Brazil.

Q: Cash conversion, allocation, and acquisitions?

A: Carsten Koerl said cash conversion improving, with focus on product growth and complementary acquisitions like XLMedia being margin accretive.

Q: MLB contract margin accretive timeline and product/tech role?

A: Carsten Koerl indicated MLB deal is margin accretive over life of contract, with product and tech leveraging global expansion and sports betting sophistication.

Q: 4Sight Streaming adoption by clients?

A: Carsten Koerl said broad mix of clients using 4Sight Streaming, stimulating live betting and showing strong pickup.

Q: XLMedia acquisition benefits?

A: Carsten Koerl and Craig Felenstein explained XLMedia's affiliate business value for 360-degree proposition, margin uplift, and minimal 2024 impact with 2025 benefits.

Q: EBITDA margin target and drivers?

A: Craig Felenstein said revenue growth and cost leverage drive margin expansion towards 25%-30% target.

Q: NBA pricing, 2025 revenue growth, and customer engagement pain points?

A: Carsten Koerl and Craig Felenstein discussed NBA pickup, 2025 revenue growth driven by market growth and product innovation, and focus on easy integration and client engagement solutions.