Sportradar Group AG Q3 FY2026 earnings call

• IMG Arena Integration: One year post-acquisition, the largest sports rights portfolio in the industry has been fully integrated, exceeding the initial 25% revenue synergy target. New products like Premium Golf and MMA have been added across the client base.
• Prediction Markets Expansion: Sportradar is now the leading data and technology partner for the prediction market ecosystem, with partnerships including Polymarket (covering 20 leagues), Novik, and Robinhood. The NBA recently authorized prediction markets requiring official data, signaling strong regulatory tailwinds.
• Strategic Divestitures: Sold Atrium Sports (formerly Synergy Sports coaching/scouting) for $170 million to streamline focus on core betting, gaming, and media businesses. Proceeds will strengthen the balance sheet and support share repurchases.
• Media and AI Growth: Demand for official data is growing beyond betting as AI platforms and large language models require accurate real-time data for sports information delivery.
• PlayRadar iGaming: Progressing toward a Q1 launch of a 24-7 live betting and casino-style game destination, leveraging video streaming and live data capabilities to extend player journeys.
• Brazil Regulatory Landscape: The Brazilian government issued a provisional measure to wind down sports betting; however, the company remains engaged with regulators and partners, advocating for a regulated framework to protect fans and leagues.

Total company revenues increased 24% year-over-year to $363 million. The Betting Technology and Solutions segment generated $297 million in revenue, a 27% increase year-over-year, driven by a 37% rise in betting and gaming content (bolstered by IMG Arena integration and prediction markets) and stable managed betting services (which declined 3% due to lower trading margins from unfavorable UEFA/European soccer outcomes). Sports Content, Technology, and Services delivered $66 million in revenue, an 11% increase, fueled by growth in marketing and media services from prediction market customer acquisition campaigns.

• Full Year 2026 Revenue: Maintained guidance for constant currency revenue growth of 19-21%, translating to reported revenue between $1.518 billion and $1.533 billion at current FX rates.
• Full Year 2026 Adjusted EBITDA: Maintained guidance for adjusted EBITDA growth of 24-27% on a constant currency basis, expected to be $360 million to $368 million reported.
• Margin Outlook: Anticipates adjusted EBITDA margin expansion in Q4 and for the full year as IMG seasonality normalizes and prediction market contributions grow.
• Free Cash Flow: Expects free cash flow conversion to exceed last year’s rate of 56%, excluding non-routine legal payments, though Q3 was impacted by timing of rights payments.

• Brazil Regulatory Uncertainty: The provisional measure to halt sports betting creates significant uncertainty; if enacted, it could result in loss of approximately $60 million in annual revenue, though cost savings are expected long-term.
• MLB Lockout Risk: Potential MLB lockout poses operational risk to content availability, though mitigated by alternative Tier 1 sports content (ATP, PGA, WNBA).
• Trading Margin Volatility: Managed betting services revenue is sensitive to sporting outcomes, as evidenced by lower margins in Q3 due to UEFA/European soccer results.
• Legal Settlement Costs: Non-routine legal expenses impacted cash flow metrics, requiring adjustments when analyzing free cash flow conversion trends.

Q: Analyst asked about Brazil strategy and Q4 assumptions given the $60M annual run-rate context. / A: CFO stated that while $60M is the annual run-rate, cost savings won't appear until 2027. For 2026 modeling, assume straight-line revenue (approx. 25% in Q4). CEO noted the situation is fluid pending Supreme Court ruling, emphasizing commitment to regulated frameworks and responsible handling of 50 local employees.

Q: Analyst asked about prediction market contribution to US growth and NBA contract impact. / A: CEO confirmed positive first-quarter impact from prediction markets, highlighting three segments: exchanges, brokers, and market makers. Market makers represent the biggest opportunity due to demand for ultra-low latency feeds. NBA compliance requirements favor official data, but uplift numbers were already implied in prior guidance.

Q: Analyst asked how management views the business algorithm for 2027, excluding MLB uncertainty. / A: CFO reaffirmed that the long-term growth algorithm remains intact: steady revenue growth, significant margin expansion, and robust free cash flow generation. The core thesis of leveraging scale and technology to drive operating leverage continues to hold true for 2027.

Q: Analyst asked about PlayRadar ramp and materiality, plus implications of state bans on prediction markets. / A: CEO described PlayRadar as a deliberate, long-term play connecting live sport with iGaming, not expecting hundreds of millions next year. Regarding state bans, contracts allow exclusion from specific markets, so far no material impact seen as excluded states aren't significant contributors currently.

Q: Analyst asked for a post-mortem on IMG acquisition performance relative to the 25% synergy target. / A: CFO stated IMG is a significant success, delivering revenue synergies well above the 25% target and margin accretion. Additionally, the company received $50M payments from IMG in 2026 and expects another $50M in 2027, effectively getting paid to acquire the rights while expanding distribution to 800+ clients.