Sportradar Group AG Q3 FY2025 earnings call

• Strong execution with record Q3 revenues of EUR 292 million, 29% growth in adjusted EBITDA and a record adjusted EBITDA margin of 29%.
• Raised full year '25 guidance and provided initial thoughts for '26, with Board authorizing a EUR 100 million increase to share repurchase program, totaling EUR 300 million.
• IMG Arena acquisition is highly strategic, aligning with growth strategy, fueling growth and enhancing content distribution.
• Innovations include deepening partnership with NBA, development of generative foundation model for basketball, and progress in managed trading services with 25% year-over-year turnover growth.
• Marketing services business performing well, with ads business delivering record volumes on DSP, and progress in media and technology partnerships.

Sportradar delivered record third quarter revenues of EUR 292 million, a 14% increase compared to the third quarter of the previous year. Adjusted EBITDA grew 29% to EUR 85 million, with a record adjusted EBITDA margin of 29%. Betting technology and solutions revenue was EUR 233 million, growing 11%, driven by managed betting services. Sports content, technology and services revenue was EUR 59 million, increasing 31%. U.S. revenue was up 21% and Rest of World revenue up 13%. Betting and gaming content saw 8% growth despite foreign currency headwinds, and managed trading services turnover was up 25% year-over-year with trailing 12-month managed volume of approximately EUR 48 billion.

• Raised full year '25 guidance: anticipates revenues of at least EUR 1.290 billion (17% y-o-y growth) and adjusted EBITDA of at least EUR 290 million (30% growth vs 2024).
• 2026 revenue growth, including IMG, expected to accelerate to 23%-25% range on constant currency basis. IMG acquisition expected to be accretive to adjusted EBITDA margins, with additional 250 basis points of margin expansion in 2026.

• Foreign currency movements, particularly the U.S. dollar relative to EUR, continue to be a headwind.
• Uncertainty regarding regulation of prediction markets in the U.S. and potential impact on business.
• Competition in the sports technology and betting markets may affect market share and growth.

Q: Clarify on full year '25 EBITDA raise and contribution from IMG Arena A: Craig Felenstein said majority of revenue increase relates to inclusion of IMG, with IMG expected to be margin accretive, including some contribution in Q4.

Q: Conversation with existing clients regarding IMG rights and financial results in '26 A: Carsten Koerl said early days of discussions with right holders, with optimism for innovations materializing in '26, and Craig Felenstein said significant revenue synergies expected from existing client uptake in 2026.

Q: Integrity services uptake and impact on MPS business A: Carsten Koerl said integrity service is an enabler for betting services, with some impact on MPS business in start of season due to soccer results but leveling out quickly.

Q: Thoughts on iGaming opportunity and capital ramp A: Carsten Koerl said iGaming is a natural element, with organic investments and potential M&A expansion, and it must be accretive to margin.

Q: Prediction markets participation, use case, and timing A: Carsten Koerl said actively involved in discussions, with potential flow-through not expected in '25, and prediction markets have limited share in regulated markets but may accelerate regulation in some states.

Q: Exposure to gray markets and data integrity A: Carsten Koerl said works with licensed operators, has 4-level process including KYC, internal audit, and vetting with league partners to ensure data isn't in unregulated markets.

Q: Headcount addition and efficiency A: Craig Felenstein said less about adding headcount and more about using existing talent efficiently, with focus on profitable growth opportunities