Sportradar held its earnings conference call today, which was hosted by Christin Armacost, CFA Manager Investor Relations, Carsten Koerl CEO and Gerard Griffin, CFO.
Starting off the call, Koerl brought up how Q3 had brought updated guidance when it comes to anticipated revenue and adjusted EBITDA.
He explained that Sportradar now had revenue guidance of €870-880m ($917-928m), which is a year-on-year increase of 19%-21% respectively.
Adjusted EBITDA guidance was €162-167m, a year-on-year increase of 29%-33%, which marks an adjusted EBITDA margin of 18.4%-19.2%.
The panel on the earnings call brought up two major points that contributed to this.
First of all, the Euro has strengthened throughout the year, which has in turn put pressure on the Dollar - the rates peaked at €1 to $1.12 in May, which has since fallen to $1.06.
The second aspect that has affected the expected revenue was a little less predictable - the European football leagues have been particularly ‘goal rich’ this season which has led to a ‘winning streak’ with many football fans. So far, numerous goals have been scored in the 2023–24 UEFA Champions League and 2023–24 UEFA Europa League tournaments.
As such, many of the European sports betting companies have reported lower profits and increased margin pressure, which has had a knock-on effect on companies such as Sportradar.
“In a dynamic time of our organisation, I’m impressed by the focus and execution exhibited across our teams, in particular, our ability to unlock greater profitability from our growing revenue phase” - Koerl, Sportradar CEO
Third Quarter Highlights
- Revenue €201m - Revenue growth +12% YoY growth
- Adjusted EBITDA €50m- Adjusted EBITDA Growth +38% YoY growth
- Adjusted EBITDA margin 25%- Adjusted EBITDA margin expansion +471bps YoY
- US Betting and Gaming AV +19% YoY growth- Live Data and Live Odds + 18% YoY growth - MBS +7% YoY growth
While the company has delivered the highest levels of profitability to date, the team on the earnings call did emphasise that this is still lower than expectations.
To combat this, the company will reduce its global workforce to improve its labour costs by 10% and streamline its operating structure, improve product ROI and portfolio optimisation.
On this decision, Griffin explained: “We expect this action to be materially complete by the first quarter of fiscal 2024.
“In 2024, we expect the operating leverage our strategic initiatives will unlock in personnel, cost of sales and other operating costs will be offset by the pressure in operating leverage resulting from the one-time step-up in our sports rights costs expected from the first full year of our NBA and ATP partnership deals.”
Of course, this detail was also brought up in the Q&A section from investors too. While Sportradar refused to comment on how this would affect the structure of the company, the leadership team emphasised that they believed it was ‘the right thing to do’ to ‘focus on clients’.
“While we can acquire more rights, we do not need more rights” - Koerl, Sportradar CEO
Sportradar Q3 company highlights
- BetMGM and Sportradar extended their partnership for official NBA data- The Taiwan Sports Lottery Company selected Sportradar to power its product- Nascar and Sportradar extended their partnership by four years- The Tennis Channel also selected Sportradar to power its platform.
Looking forward, Koerl explained that Sportradar had signed up its US client base to premier content for the next eight years, including DraftKings, BetMGM, bet365, FanDuel and Caesars.
Also, the company now covers 95% coverage on the official analytics and intelligence of core US professional sports, on 5,000 games annually, through its partnerships with the NBA, MLB and NHL.
“This collective effort is laying a durable foundation for our continued growth and success in 2024 and beyond” - Koerl, Sportradar CEO
Koerl went on to explain that one of the biggest things that distinguish the European and US betting markets is in-play betting.
In the more advanced European markets, in-play betting accounts for approximately 80% of the revenue, while in the US, it accounts for approximately 35% of the US GGR.
According to reports from Sportradar, closing the in-play gap in the American markets would see an increase of 25%-35% in the current US revenue.
