Sportradar (SRAD) 10 May 232023 Q1 Earnings call transcript

Good day and thank you for standing by. And welcome to the Sportradar First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Hyder, conference Investor Senior like speaker to Relations. now Rima today, Vice would hand over the your I President for Please go ahead.

joining replay conclusion our interest the questions this call of XXXX. our will at of and Please website Good to A on thank that After today's webcast In of also the call call. website. open LeRay. on our everyone, will yourself limit prepared one note available be be the the us on please reference will accessed from we for the investors. to will during for plus of this you, investors.sportradar.com question earnings can follow-up. for we time, be website quarter the our call remarks, Thank one first at slides posted Sportradar's presentation morning, you and via

the that business or and discussion of may results will trends consist some note during regarding cause our materially uncertainties hear to and forecast. Please including, those our of involve from you actual risks today These limitation, statements revenue statements, information forward-looking that will differ without outlook. future

information, please our report the the obligation speak update with along which as Form release. assume risk refer factors earnings We annual X-K with and any discussed dates. no information, SEC to the XX-F in filed the of March or today, SEC to on in forward-looking Form more with For their furnished respective the statements associated

will financial measures. today's call, non-IFRS we Also both present and IFRS during

with website. included in Investor slides release, reconciliation posted of to non-IFRS a measures, of and the are regarding Relations which each supplemental these our is disclosures Additional earnings SEC, on IFRS measures, our filings including the non-IFRS

Carsten me and Chief Officer. Koerl, Uli Harmuth, Joining Officer, our Chief Strategy are Executive today our

over discussion Carsten. let to the turn me Now,

And Rima. to morning you, good everyone. Thank

We again, across execution produced pleased businesses. results all our start once in And we the XXXX. with with strong are solid great

and the Latin Asia across including America. the globe, Pacific US, had We wins

also new a a and new CEO, We Griffin, last with quarter, CHRO, strengthened new Riviere-Gerstner. Gerard Sokolovskii, Aleksandr mentioned CTO, Severine organization our as

revenue We year. quarter adjusted and EBITDA versus XXXX delivered XX% first growth growth the XX% of prior of

previous for are led and product profitability year. our the growth world mission in strengthened to core way the compared segments have that the they operators, are and or have the Once quarter, in critical US this to demonstrated As our sports rest we our best-in-class again, that teams. we clients, whether betting product media, last of

year-over-year, service the rest our product, XX% and value as value impact world XX% a as In well customers result acquisitions. recent of strategy up betting our grew our our respectively, add chain, live the from a managed positive and business, move as odds of service to

a strong and over products In our again sales growth year-over-year, the to US. with now larger US, surpassing very we XX% media across client the Apps was growing betting in apps. clients, media which and saw until betting, the once up

more sales as as The in fans. more product for higher engage solutions targeted betting increase result sales a our and states and ads look legalizing in an increase operators betting to of for in-play

engagement their and and US platforms. quarter are we sports Madness, OTT with many into big creates And fans. first – of broadcasters, playoffs The running facets MLB for all is the busy this March now – with our for business a for sports Superbowl, especially US opening period period this NHL day the deeper supports NBA,

betting in advertising investments also volumes and regulated operators in XX increases This states. actively digital more by

to robust us model the US Our a by of GGR in capture the share these sports. revenue generated all enables share

chain, how to to that we our deeper player and This capture value data partnerships data, a customers. solutions Additionally, offering have higher we serve we believe continue especially that, margin and the product. products into operators through leagues, with that is ability leverage our proprietary move data, up the

In renewal through expand the BXG+ with announced our into to space. college college XXXX Big down partnership our We XXXX the we to season. recently OTT also power US, of platform Xtheir athletic have on Ten efforts doubled Network to

the platform, we're ads growth media massive service. to now Snapchat, technology operators we paid for engage our acquire new ads have seen channel integrating a with using and Additionally, customers betting in into this advertising creating social

we execute While we we on growth, invest. where our costs focused and on our also how remain and

invest to leadership in advance leaders meet our the our are position, clients' by the we revenue. must sports of industry. in technology But We to measured continue needs maintain

content that valuable We and believe for continue and sports user customers we automate data partners. capabilities and that to handle with preferences, our ability our and products based to embedding the into and based technologies intelligence. our fan on big tech data Computer capturing as data time well on data in sports liquidity, become deep in enhancing as to liquidity in build real Therefore, athletics invest artificial and increasingly in time pairing real Vision

for our CTO, technology and our will drive stack engineering, and first, betting who We include, oversee new will to per hired investments tech which recently Sokolovskii, our revenue transformation. and us cost. Our upgrade overall engineering Aleksandr enable higher gaming upgrade this

Computer the for sports. this and a will tennis into to real Vision technology as automate fully other roll deep have Investments in technology basis product first of capture products, out developed advanced data we table time into automated

seen base. the automation in scout believe our match [indiscernible] soccer, already creates sport to in capturing, over network events data allow for opportunities and have more to more also matches we revenue will an scale this investment cost more per basketball. time And over leading and us betting tennis, increase greater This

Third, AI both we the here product, sports resulting The in our analyzers time using data. to our real improving can MTS, margin us growing of and clients. trading algorithms liquidity the over for improvement deep a fastest time the benefit for improve realize for trading is

by investment to straight in line quarter hyper our margins. positive growth before improved operating demonstrated of both US then growth the our adjusted already in US, in third showing market, investment this a the our in and top and And results continue EBITDA continue leverage, as is business key

margin US well continuously to and preventing to margin. This will federation operators today sportsbook, match fraud, and connected is keep to give investment And segment betting manage data that engage companies improvement, leads performance doping improve reach. results clean to the our smarter, detecting great tools teams margin expansion. and the they us finally, their their it data give analytics this evident as the by more yield top industry and is While both fans, company. the expand growth and line see will tomorrow to expansion as is leagues with their the to entire need fixing. positive goal for media It this for improve to It keep

we my I'm have to this Now coming pleased with started very In I'm summary, how year. closing remarks.

We that are gave for quarter. last XXXX our guidance we reaffirming

December in I for finance last turn the to I lead team interim Before over call since stepping to thank to our CFO. Uli, him as want

seen, Gerard you is our may a the to Uli transition with announced forward excited As and to will speak next welcome back. to Gerard Griffin new work looking a CFO have on all we I Sportradar. months. a Gerard investors. weeks few know I'm smooth few over

call I financial to to the over will turn Uli the results. now discuss

everyone. morning, good And Carsten. you, Thank

As prudent strategy demonstrating and key Carsten growth our fiscal stated, our a for start products. XXXX, our in markets already strong we investments into had and

first XXXX quarterly million the the all first from This was of the strong in with by increased XX% growth across the segments, in through detail. our Let me results our growth €XXX coming to versus you quarter XXXX. quarter driven take highest US. Revenue

revenues of grew last with primarily higher EBITDA and operating result as a year, over XX% we remain disciplined costs. the adjusted leverage as Our our

an increase XX%, in over almost EBITDA the Our of basis points was adjusted XXXX. same margin quarter XXX

We customer a base. sell and by driven of our existing customer ability also net to XXX%, had upsell to rate retention cross our

at revenue in looking segment Now the detail.

world €XXX primarily XX% Our the the betting our our which rest year-over-year. largest margin by and betting including grew in or was uptick segment, of higher million. managed highest value an to offerings, This in XX% MBS, quarter driven add revenue, services, grew growth

XX%. month Within and a adversely in growth Services was the rates Trading hold partners. results solid February operator product, annualized growth sports product, Managed our MBS, turnover saw having betting MTS trading shorter from our despite of affecting This

of X% as was result in million. in margin primarily betting a technology world EBITDA Rest EBITDA adjusted adjusted year, betting of and compared prior investments the our XX% Rest grew of to world XX% to products. €XX

We as some quarter, expect the the the margin of to improve to for the higher translate first full XXXX revenue year into leverage. investments compared operational and

segment Rest decreased AV to of the world year-over-year. million X% €XX

the Although both saw company expected completion customers, was and from starting its contract Tennis quarter. by impact impacted the with of Australia existing the this revenue new growth

the from for in world mainly Australia profitability of The adjusted our negotiations million to Rest XX% quarter contracts. the due our the comparable XX% and from contract rights. in prioritize remain year. XX% €XX EBITDA prudent improved was to aforementioned the improvement term adjusted long the and We AV sports to increased savings last of margin Tennis EBITDA completion

Turning second to States, growth a value products. the media seen surpassing revenues, segment. in saw we've indication our media This in Revenue we in in We and the growth XX% to the million. betting US. higher the the with growth is have and quarter €XX quarter of gaming our than XX% opportunity the US early our United our more an grew betting the in that business, gaming row outpace highest business business

and strong targeted as XX% of increase operators more expands online also same fan betting in mature market business more in growth betting more This experienced states advertising. to and advertising parlays states day Our through quarter. remains engagement the

the adjusted was the margin of was as quarter despite margin of in for the EBITDA year result represents adjustment prior XX% EBITDA a US The investments. growing XX% positive versus of continuous consecutive third adjusted scale the market. The a This US negative EBITDA business the of positive €X million.

million the adjustments our QX same compensation to share €XX increase Computer associated into higher increased with €XX investments last for compared to annual inflationary Turning the however, costs. was our XXXX. quarter costs driven was Personnel down to costs. almost increased Vision headcount based and compared intelligence and million with €X labor The by for technologies, million in artificial by year, quarter

the we we continue costs same in of and investments medium growth ability needed the operational core to to if As to have obtain to leverage curb products to At betting deliver before, are time, outlined the the support long maintain growth margin. these and term. future have

The system. higher software certain increase over year. of events audit travel financial the exhibition €X Other and major operating a increase expenses the as was and result to or and were employees, more of management ice higher marketing expenses million, licenses new for we paid X% like €XX costs hire of an prior million implementation

costs primarily Australia Tennis the the contract €XX million sports quarter of our sports almost by to decrease first rights The our completion result and decreased XXXX. rights million optimize mix. of the the in Total €X was to of efforts

of revenue, guidance. line XX% were quarter, rights the in with For our sports our

remained liquidity the €XX adjusted cash and of undrawn free the with Our generated cash flow in cash for in bonus facilities effect. strong equivalents quarter €XXX million and our liquidity. the plus credit payout some adverse March over at end XXXX our resulting with even We million

year quarter prior was the improvement conversion compared cash XX% last and XX% The cash the a in conversion quarter. significant to in the negative over

to focus continue conversion improving on We our cash cycle.

are products, a our whereas based as our revenue a US As more live model. Trading on model, Services like our such subscription are on based growing products our live and reminder, Managed data, services mature segments faster odds, share a betting audiovisual

the delay has period. at the beginning service Revenue service are in can an payment while subscription services inherent only invoice after you the of receipt periods customers invoiced of as share

Our working are undertaking effectiveness capital early to flow initiatives first we several of our conversion. the indication is cash improve quarter result an of

our reaffirming and XX%. of are million annual of growth €XXX range €XXX We revenue XXXX, between in be with to to guidance million, XX% for reflecting annual the

EBITDA, year-on-year adjusted a to of representing guiding For increase are of XX% we million, and €XXX a million between range to €XXX XX%.

CFO been pleasure you. the excited him at as has serve a am I to it to and to transition to all of Gerard begin interim introduce the Lastly, Sportradar.

discipline a growth our Carsten are value stated, we focused and and our to maintaining strategy, to As on financial start in remain strong shareholders. returning off executing XXXX. We

please for call questions. questions? are for open that, can to line you now we Operator, happy the up With the open

Instructions]. [Operator

the comes Needham Bernie of question from line of first Company. Your & McTernan

how trend positive tennis and US into on how as costs for additional of will you to can has the new year margins for potentially quarters specifically and been the NBA consecutive expect for any with just the the should color three and XXXX EBITDA recognized. contract well? just rest now, contract be And NBA, we provide the revenue

Uli, I question that's for think a you.

expect We the revenues continue overall the base. US as will that profitability to the we segment grow cost show fixed over see

new the fourth deals we to rights as and calls amortize have fourth contracts And NBA it's accounting the previous entire the issue in will bigger of on reflected also that in communicated quarter period. since we've stated be more will As quarter, over the we in. kick an rights

bigger beginning amortizations expect life the to make to have to average the fourth potentially will rights over eight we But, slightly expect and a amortize that the leagues at segment we to in therefore, in the payments And US already have remain period the overall we US basically in years so, in to the positive. down, that negative. therefore, will capitalize method, we that that have rights rights the the quarter because compared will the And of the period. deals then year, have amortize profitability we we to the will period, cash in of the higher and straight it rights the useful the have of beginning line we see go

out just love to long quarter, those on what impacting get net thoughts be guys revenue that maybe to investments you timeframe? a terms Computer You and your P&L, drive of would growth called how the over expect are and drag to in AI Vision how going the

a in process. is transformation industry The

are replacing sport information systems. with human digital So we collecting beings

it it So clients. be rolled that What over what products creating will can deeper continuous provides process. of our into we the that's is value for most sport, out provides it And is insights a new create the much sport.

products serve on it's the are So clients going to creating with investment, to of the them. you're to it do to value and answer need which for here the and is continuous a technology be top

record background do the of our this can on we we data partner, And National You that see the creation table this Basketball new massive which data innovative now, We tennis, – and demonstrated in get. with sports. insight. it for course, It's heavily in can out this NHL for Association, the using will tennis, probability drive we first, creating new it we which in working us roll with products. in we deep are

very So transformation and is hungry which for an industry the is answer that's market based the on data the products this. and are for

Capital comes Ryan of question from Sigdahl of line the next Group. Your Craig-Hallum

[Technical Difficulty].

that based financials any it opportunities contracts profitable guys on have? are the the low/no appears margin Tennis contract, Australia And the like that Is any So, to more then there wasn't for just here. movement correct? rates in business you optimize

these good are costs. how we think I well Well, demonstrating pretty we are managing

So lot on doing think the we the are sport proportion had last the year, costs. spend, flat. debate we this to from we looking If are what revenues now a about inflation with are of on I sport rights, rights we

we results. can with manage very this this well think that demonstrated we quarter I

sport reach case. Looking Tennis now return not whenever we deals, results. a reflected have it for now we to That right margin. we into goal are to in you investors want see closing specifically Australia, our and this in our our want possible was And

this it was year, right last be to we to done. year decision So comparing the that by so the than X% margin quarters more the increased shows

the into within Facebook, how's social Snapchat, into opportunity Tok, far? there cetera? ads question, Instagram, other thus Secondly, that that second to integration gone et is expand thinking networks, my For Tik

integrating. exactly. are perspective for Yeah, and from And in in this lot here. Thinking very a talks an exciting us Snap direction. technology adopting of It's is a There quick area.

social But is, and So besides here. us, a rollouts for see in interesting that will partner advertising, segment for very us good programmatic paid a this. was more the naturally very the you

from Graham And next Canaccord. of your line of comes question the Michael

I you sort your in how on services around your college There refresh product have could portfolio. just and that athletics. a lot if integrity is of been wonder in important gambling And of allegations us

the expected. broad like into a it's seems to going go question, ask economy US to wanted widely also it's just recession, I

is soft to around Just those perform perform of what how comment customers? or just how either economic can do world, on your in from in activity, typically you business tend you business expected the to see And in US periods? pockets your does the the

two Let's it recession first then the go let's and Uli into the take will pieces. over split on I piece.

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Now you, on for over I Uli, to answer the recession. hand the

when growth the expected And not simply like betting annually XX% market, at global the US look did through through And specific is number large We available. global crises, place. of exception more more historical impact recessions basically all XXXX. the with market only XXXX a seen betting when competitions perspective, that because to underlying grow actually at on the not take the to sports there's our a has looked market, grown being have pandemic, from the in of data due we we rates, global the

we underlying revenues, our the look the markets that in sell our these and due on our due that chain. consistently at obviously betting X leverage move And company's to based higher the expand managed the we cross to them when And than times our grow model, almost to compared into to growing to revenue we to performance, that profitability. market, have margin our and up we growth our operational and customers value see turns ability up we faster

betting of underlying but in also led business particular example the our resilience consistent that of global will in to XX%, will markets, also Sportradar is when even XXXX, year that growth probably, of the perform in how therefore, Sportradar confident the a contracting but despite grow its how And markets crisis And of perform a all A has X%. company the good we've underlying recession. seen. to were model, our actually inception, managed since by about are in by market in a pretty still particular, crisis, our of we

of next of Your Jefferies. David the from question Katz line comes

already. like my I'd just you a quite go to the answered. lot But covered mind question further, one the You've is And please. frankly, on a step

about to maybe guidance be issues in are within If pivotal downside, not are and/or the that factors balance hanging you to just may your your upside control? could this year talk you lead or that puts versus the may and the takes that the may which

company. sports a are we David,

coaches I So lot a let sport. hear which in from something with me of answer

guidance. we on why in We are It's we That's the what on You outcome change early we quarter. taking an reason indication. do. we was I confirmed judge Based And guidance. plan. that too we first it's do on And word, think data, the exactly this. result the the in that our our confirm should something never the it final sport match the

Griffin expectation this this. CFO very changes a now in is and review it Gerard in But will there no the process in already. happening. coming new But the did older have numbers. onboarding critical no We be can with new CFO expect always I here. We

the in of what confirming confidence So developed we a guidance which plan business think show quarter signal and the one. and we the is in I our have strong

I would now back Carsten conference Instructions]. there are closing to turn to presenters, [Operator further like And no remarks. the for questions.

joining for you today. Thank us

first execution the we year. Our solid rest reflect quarter the results to the of also expect for see

long invest flow Thanks against high our continue that growth to our higher we deliver for and generation will term shareholders. long our revenues, are client We confident call. term for growth business cash recurring joining value and retention, and opportunities this strong

you, ladies gentlemen, today. joining and Thank This today's conference concludes call. for us

may now You disconnect. day. Have great a