Sportradar Group AG Q4 FY2025 earnings call

• 2025 saw strong financial results with record revenue and adjusted EBITDA, and significant margin expansion. Adjusted EBITDA margins expanded approximately 400 basis points in the past two years. - Closed the IMG acquisition in November, hit the ground running, unlocked revenue synergies, and on track to unlock 25% revenue synergies for IMG in 2026. - Cover more than 1 million matches annually in sports coverage, renewed MLB partnership and strengthened soccer rights. - Upgraded Foresight streaming product, developed generative foundation model for basketball, plan to expand to other sports. - Managed trading services turnover was up 26% year over year to $52 billion in 2025. - Ads business delivered strong record volumes on DSP, partnered with NBC for Foresight and enhancing fan NBA viewing experience, secured agreements with Gen AI leaders. - Prediction markets is a rapidly developing opportunity in the US, uniquely positioned to capitalize, working with leagues to establish safeguards, and in detailed commercial discussions.

In 2025, total company revenue was $1.3 billion, an increase of $183 million or 17% compared with 2024. Record adjusted EBITDA was $297 million for the year, an increase of $74 million or 33% compared with a year ago, and adjusted EBITDA margins increased by over 290 basis points to 23%. For the fourth quarter, revenues were $369 million, an increase of $62 million, or 20%, compared with the fourth quarter a year ago. Adjusted EBITDA was $89 million, increasing 48% year on year, with adjusted EBITDA margin expanding approximately 450 basis points to 24.2%. Betting technology and solutions products had revenue of $305 million, growing 24% versus the fourth quarter a year ago. Managed betting services grew 5% in Q4. Sports content, technology, and services delivered revenues of $63 million, increasing 5% year-on-year, led by a 13% increase in marketing and media services. Sports performance declined year-on-year in the quarter, but full-year sports performance revenue growth accelerated to 8%.

• Anticipate total company revenue growth in 2026 to be in the range of 23% to 25% on a constant currency basis, with revenue of $1.56 billion to $1.58 billion. - Anticipate adjusted EBITDA growth to be in the range of 34% to 37% on a constant currency basis, with adjusted EBITDA of $390 million to $400 million and approximately 200 to 225 basis points of margin expansion in 2026. - Expect the strongest revenue growth in Q2 and Q3 of 2026. - Foreign currency will be a headwind, with FX headwinds most significant in Q1 and to a lesser extent Q2. - Anticipate growing free cash flow conversion rate above the 56% delivered in 2025.

• Foreign currency movements can impact revenue growth. - Regulatory uncertainties in prediction markets. - Potential impact of sports events being canceled or having rights issues. - Competition in AI technology application.

Q: Hi, Ryan. Carson here. I like this term of gift. So, well, there is a hard work in the gift. We have a very capable team on this and we are working now since many months and this work is paying off. So we hit the ground running. All the tier one operators are now converted to this content. And let me remind you, the scheme here is that we get content, We put this content into our engine, and this engine has a much broader distribution. So comparing it from IMG from 50, 60 operators to us with 600 operators or 800 if we extend that scope. And we have products based on this content. Most of those products have been not able or IMG was not able to distribute them, managed rating services, visualization products, et cetera, pp. So we see a strong pickup here. We are trending a little bit better than the plan. And our main focus here is the revenue synergies. So we measure the revenue synergies, how much can be achieved here by this bigger engine and the more products. And that's the second part of your question. We are a little bit ahead of the target. The target is a 25%. And we gave the number of 140 million already earlier, which includes that 25% revenue synergies. I hope that answers your question.

A: Yeah, helpful.

Q: Chad, we can't hear you if you're speaking. As a kind reminder, please press star six on your telephone keypad to unmute. Operator, why don't we go to our next question, or we'll circle back to Chad. Can you hear me now? Yep, we got you. Yep. Okay. Sorry about that. So just thinking about the guidance for 26, it's kind of what you laid out last quarter. You know, some small moves in the fourth quarter with betting technology and solutions versus the sports content. But as we think about the guide for this year versus how you were thinking about this before, given what we've heard from some of your partners out there, has there been any changes just given some of the reduction in volume that we've seen out there and differences in hold rates, just as you think of the makeup of how you get to that revenue guidance?

A: Thank you. Sure. Thanks, Chad. It really has not been a change from what we talked about when we reported our third quarter results in early November. Really, the only significant change, I wouldn't even call it significant, but the only change that has happened is that the U.S. dollar has weakened further versus the euro over the last several months. And because of that, the reported numbers get hit a little bit from a guidance perspective. But in terms of the business itself, the business continues to operate exactly as we had planned last when we reported our results in the third quarter.

Q: Hey, everyone. Can you hear me okay? Oh, yes. Great. Really appreciate it. You know, Karsten, you gave a little bit of a teaser around the prediction market piece, so maybe to go a little deeper. I think as we think about the different opportunities here. We kind of think about a broker layer, an exchange layer, as you kind of alluded to, and a market maker layer. You know, just having had a few months to work on it and starting to talk to partnerships or partners in the space, could you just talk to us a little bit more clearly about how you would maybe see or envision Sport Radar participating at kind of each of those three layers? I think that'd be really helpful for everyone.

A: Hi, Sean. So the real interesting thing is the life development in that sector. In-play parties, life opportunities, that needs real-time data. And like we all know, this is where we can monetize best with the real-time data. So the market maker segment is specifically interesting because they need real time data to price this and they need the models to lay the liquidity there. And even more at the real world is, can we predict the next movement better than anybody else? And we can, because we are sitting on this huge knowledge, we're sitting on the liquidity. And we're sitting on the deep data in real time. So our investment here, for example, in the foundation model where we can predict the next pixel, the next pixel, and we do this now seven seconds or an MBA batch is super helpful to predict potential moves. and to underlie them with liquidity. That's exactly where the speed support sits. So as you hear, that makes us very optimistic that we can help the market makers with a very superior product. At the moment, we are ready to click the button that we can distribute the live data for doing the settlement. We can do this for the exchanges, but of course we can do this also with the deeper data for the market makers. For both, we are aiming to strike a revenue share model based on the take rate. We have at the moment the negotiations around the three properties where we got the clearing from the leagues. That's NHL, Major League Soccer, and UFC. And like I said, you will be very soon hear about some deals in that space.