Sportradar (SRAD) 1 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to Sportradar's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Christin Armacost, Manager of Investor Relations. Please go ahead.

operator. you, Thank thank call and joining for us Hello, the you third earnings for quarter Sportradar's everyone, for of XXXX. the accessed on of this Please presentation on our and that slides the reference posted will note conclusion at during will can be be website via our webcast call. website the at investors.sportradar.com we this replay today's call our of will on A website. also be available we from prepared remarks, will investors. our call questions open After to the

follow-up. Please materially to this In involve X and actual the statements of risks These X or please information without the revenue yourself to of discussion including business those our limitation, cause consist during results trends that interest question note and from you time, limit will forward-looking hear forecast. uncertainties of statements, outlook. may differ future regarding some plus will today that

associated For on dates. We which their financial please with with Form IFRS statements non-IFRS discussed of today, the forward-looking the speak our call, XX-F risk SEC as to or respective obligation earnings SEC annual X-K and update in more factors assume filed refer during Form and March will present information, today's with measures. the on information, to furnished we both release. the report Also any no along

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

to Carsten. Chief Joining the over me Officer. let me Executive And turn our Chief Officer; and for call Financial Gerard Griffin, Karl, today's are Carsten discussion now

afternoon Thank and to you, Christin, good morning good everyone. and

laying dynamic performance to a This particular, expectations you teams. is strategic success durable as with as to XXXX and impressed from profitability our improve continued and revenue by for a and growing XXXX time base. taking growth we our the across for exhibited collective We have actions our of growth our our a focus In I'm lot ability in share execution beyond. XXXX In organization, our effort greater today well unlock and beyond. profitability are for on to our foundation

track to the to address XXXX, our and in growth market some updating performance reflect financial outlook recent on deliver strong remain date to we we While year-over-year are headwinds.

expect outlook While EBITDA of previous to short-term at we high our adjusted adjusted reducing deliver guidance, revenue challenges. of our some to we EBITDA end reflect stronger are margin, and these

XXX XXX XX.X% the growth representing and Now representing we expect million million the million million EUR EUR deliver XX in between million, XX% to margin range EUR range EBITDA of EUR and improved range EUR EUR of between XXX the to and revenue and in XX EBITDA Adjusted year-over-year XXX growth in million, of XX.X%. to XX%. year-over-year

the X first, during games especially betters Ridge euro due expectations; We and to revenue further those margin our start live U.S. on outlook favorites creating relative streak more mainly year have lowered football pressure reflect QX, factors: of soccer in pressure to the have has operators, U.S. season. betting our and of European our more winning the second, initial betting and experienced recently, of to primarily with revenue outside the winning Gold strengthened, dollar-denominated full to

the betting clients rest This sports outlook to our results softness our where in our MTS we in contributed and the QX for participate of revenues. year.

both initiatives adjusted we strategic through will and and margin EBITDA cost leverage ongoing to improving operations, outlook strong Our for through walk shortly. streamline which our business management reflects you operating adjusted EBITDA

XX%, an year-over-year with line our our softness Outside of XX% million, quarter. delivered and third EUR portfolio primarily profitability of in XXX revenues. to We margin XX This points results of due with up quarter record XX% expectations, adjusted revenues the this, in Turning EUR lower EBITDA improvement than million, to noted of of was basis year-over-year. up expectations. broadly were XXX delivered our adjusted year-over-year. the We EBITDA MTS

cash We EUR million up XX% up quarter equivalents, from of quarter-on-quarter. EUR and XX also cash cash generated the million operating EUR XX and activities net with million, XXX we XX% ended or year-over-year,

work out a we As in ensure a we strategic shareholders. and for company position part aim streamlining to of our structure, simplify initiatives the and our in improving This the reduction value optimization. leader action a broader workforce. to that company's deliver which to set product This we of our better is industry, and we growth, clients portfolio week, consistently operating initiated global to

the operating result leverage. positively to us. of company's completed, XX% capture also an It market XXXX priorities strategic in to should opportunities run approximate and of reduction intently When and focused be cost enable agile, on will more in labor reduction ahead rate contributes our this workforce future the to us

to I'd expanded growth new our help drive into Now and like that update will a on few you and deals XXXX. profitability

partnerships strategic our our NBA when XXXX. profitability ahead First, well with our with in are and the revenue lifetime announced with value of original realizing expectations, teams latest we of estimates deal the our this underway

and client of track lifetime investment With agreements, be goals over of strong a highly to current can accretive confirm long-term on the trading newly the remains contributor revenue to the margin the closed EBITDA this we our deal. knowledge and that

through next XXXX, to the up [indiscernible]. XXXX. our the signed off we begins including [ BetMGM, the season for client with VTXXX, premium last season, and X and of the MVAD With years, now have week's DraftKings, content tip you, remind [indiscernible] runs U.S. To XXXX ] base

pleased accounts XX% the for engagement value. total base the We positive are also deal NBA premium our approximately content across incredibly this of that offering client with for international

that at the be to will the and forward I which great catalyst will of journey important additional with innovation our the growth clients look the deliver franchise and our company value the for our this company. of over beginning an term unlock to deal. just are we We

provider and XXXX. is thrilled the Sports government-approved Lottery. with through solution our about official This as We service I'm addition, their XXth In partnership Taiwan the lottery. selected technology

Lottery the Lifewat with We prematched of services and will be combining player multitude solution. MTS like management the platform Sports a account and book sports end-to-end providing Taiwan

over expand retail the and Provider Taiwan. to of winning Betting quarter to the of Sports which Provider Service our leaders will Year in XXX. the rollout, industry, in in X, including continues X,XXX This recognized Marketing Year, several value be top awards, commenced ultimately outlets in AI Last,

I Before are to reflect I to where turn our over a would we Gerard, journey. more like little on in

the ahead opportunity network, and driving about excited growing a the on motivating. is profitability market ever worldwide sustained us. I'm using together of fascinating by with prospects data scale the than growth power more of

valued partner innovative have partners relationships capabilities. leader with only clients our industry the we trusted our because deepen are and We and that with enduring developed and

revenue Our portfolio which creation. robust It's growth, value powers the and monetization and best-in-class for is deeper product recurring revenues. catalyst innovation, content fuel products our the further also core existing

for Our growth content drive ambitions a and sense. to the need profitability acquire level Put another our rights -- not years we is targets. growth deliver can it portfolio our is today do to more more a critical revenue we makes way, in ROI stable ahead. and at mass the if on critical while rights

in drive an scale agile are operating growth profitability strong to at years the Last, with ahead. organization we

let opportunities for the right into higher financial how the translates through revenue should enhance me context, into this We our raise. company. walk the capabilities margin also to put To you to growth further position have this and

our broadest of and products of across intelligence in-play sample, driver that adaptation leveraged European the U.S. betting sports is coverage, to U.S. a over our for the U.S. a foundation we XX% of or of media to accounts our analytics partnerships with and sport U.S. the core sports annually capture U.S. GGR. this the delivering approximately offer Using revenues or the the in assets X,XXX and more official based Whereas the and with We share of up GGR/in-play NBA, for for approximately markets the gross games partners accounts it In MLB revenues. gaming on chain as professional value NHL. U.S., the higher adaptation move advanced key XX% in XX% league

revenue XX% margin with gap the Last our our According our estimates, base closing in deeper to strong a result to in-play strength a in throughout map profile. road the current increase XX% product U.S. of NBA, would telecasting is markets AI-driven an to for betting partnership our and coaching with live drive the within Highlighting to fan solutions. immersive next-generation analytics live XD XXXX. experience, the bring and value and we intend

Gerard of results our in ecosystem. partner acquiring that, data call and and broadening micro new I the the opportunities existing more clients, over and stadium, reality, outlook leveraging to deepening You virtual detail. turn the states introducing mixed we like products summary, expanding betting, with the well AV and significant monetization real-time will and positioned to are see power and our discuss and ahead by us innovation insights augmented clients insights. With financial In the capture to growth drive

Carsten. Thank you,

XXX delivered or year-over-year. million, revenues Turning $XX up quarter. third to EUR the We million XX% of

start line a in we expectations, our season. While betting most primarily with client to of we sports and of football to our participate from margin our revenues experienced revenue the betters European streak internationally lines broadly soccer in in with gold-rich revenue lower-than-expected weaker betting via had platform, In live which a during QX, the pressures, the MPS winning their operators their due due in share. games revenue segments winning more for were favorites

lines. the uplift the of with EUR new year-over-year. addition This of supported results. million perspective, U.S. portfolio All AV of segment charges XX% up was was revenues services million or States X by From our an adversely EUR World XX% a Net main XX% growth profit in was or in were product new by see in [indiscernible] up our solid was XX% XX.X Rest the and up the to In business. MTS of the the streamlining or were ads up year-over-year, Rest in quarter despite our up other particular, across primarily market. this data X from live business dollars, in rights as operations EUR XX% year-over-year, existing quarter. MTS year-over-year the impairment to Conmebol QX and year-over-year United million or performances driven and Betting product softness affected World developing million million XX million, clients. X X% was growth EUR in including In year-over-year, the up EUR The resulting continue XX% U.S. portfolio. for EUR we grew X

year, prior gains. net currency This the which EUR benefited in profit million compares foreign stronger XX from to

Looking at EBITDA leverage XXX or almost adjusted XX% mix lines. profitable we expense Adjusted EUR EUR all revenue strong to margins points more was adjusted operating and million result major XX.X%. our This by EBITDA XX delivered improvement million, was basis XX up driven across year-over-year. EBITDA, -- improved a

were compensation, run up were EUR XX% expenses year-over-year. XX million expenses up or expense X% Personnel million we Sports Personnel personnel X up particular, expenses, excluding million, EUR as driven stock-based rates or lower XX base. X rights million, X% In EUR year-over-year. by our or EUR manage actively EUR million, X XX million were EUR year-over-year.

ended or -- Turning and EUR a the liquidity XX We quarter XX% was XXX cash comprised to with cash outstanding. of this million with credit and XXX EUR in million EUR no million of EUR amounts up XXX equivalents, quarter-on-quarter liquidity. million facility revolving

liquidity our solid value shareholders, our enhance reviewing we on are and our to long-term position Given our to focus delivering capital options allocation. several

remarks turn future. we to better I on line the company to and the our actions the position views growth and XXXX, Carsten's for to outlook taking I are top leverage to growth related take revised like a would Before initial in moment operating for in XXXX expand to

are to and resources continuously As most are we we've business our growth profitable talent focusing aspects opportunities. the noted the in we on all of challenging ensure past, our

of action for to -- strategic which part initiatives to This workforce. our this initiatives week, are a a at Due aimed in the better of initiated position set company focus, is broader of we reduction global should the this approximate operating to contribute an portfolio streamlining optimization. reduction company's XXXX the positively XX% operating leverage. product action completed, result this labor cost in run ROI improving and future structure, simplifying and and When rates in company's growth,

ATP operating personnel, in XXXX. and the from the resulting operating complete fiscal In our strategic operating partnership the we of expect will costs other offset our costs this be deals. rights action pressure step-up from materially quarter the will by expect first and in sports of first We year expected full the leverage cost NBA initiatives of XXXX, be sales by onetime leverage unlock our to

our items there look to improved line operating expense cost we XXXX, As as stable manage is sports potential and the operating we to rights base. run major rates leverage all portfolio a more for continue to contribute actively cost beyond

revised Turning XXXX to outlook. our

address reflect are outlook While market our some financial to date we in to deliver year-over-year our performance remain to on strong and growth XXXX, headwinds. track we updating

the Our representing EUR and of growth XXX margins range million, updated the representing the to XX% Adjusted EBITDA of in as EUR outlook for fiscal XX%. between follows: XXX revenue growth to XX.X% Adjusted 'XX million year-over-year between and EUR year-over-year in in EUR million is EBITDA million to XXX of XX%. XXX range XX% XX.X%. range

primarily than MTS revenues year the greater reflects FX versus and year, pressure the the Lower QX. of for estimate the indicated, revenues strength cautious previously our Our given revised revenue given for outlook more softness a dollar. QX full U.S. U.S. experienced on the in euro

Our reflects stronger and business ongoing adjusted initial portfolio. improving the EBITDA from operations strategic active and through management to product actions the outlook streamline primarily leverage operating benefits cost continued our

the will deliver improved across least look XXXX. XX% expect to from revenue and at ATP Turning include and portfolio. rights we which XXXX, enhanced as the we to growth product monetization our forward portfolio, NBA content into

We in operating leverage in in of partnerships. sales new least step-up growth cost also at XX% deliver impact the costs offsetting from the operating rights to the other and and adjusted ATP EBITDA expect for personnel, improvement NBA the sports onetime with costs

In positioned and well for up we in With up continued are would on open for growth to in beyond. for call track questions? XXXX to questions. open deliver that, like your remain summary, the will robust line and the we Operator, you growth XXXX profitable

[Operator Our Group. of comes line Sigdahl Instructions] question from the with Ryan Capital Craig-Hallum first

on Curious the U.S.

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there? . So well what as specifically isn't going

this you as CFO? question want take Gerard, . do the to

Yes. No.

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euro guidance the in on part due for -- to the strengthening. just smaller part Then lowering year,

at As dollar I look conversion versus trading the it, at depreciated you guidance. year, lowest USD the U.S. gave euro actually it's since is and this last

missing . something there? I So am

that in you original last we're was what back our there that we guidance, pressure. which million. around in saw in we pressure, contribute Most blended revised increase. is the The of was guidance No. QX impact pressure did rate to flagged of felt the saying that quarter, $XX range now where flagged we more did this versus actual reflected All is that,

it you an I be QX, shouldn't think look . as into impact.

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Carsten. is Robin, this

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Carsten, start? to . do me you want

start please, Yes, Gerard.

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we a major So ATP. the be with expect to internationally, contributor it similarly

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Good.

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year-by-year So the of affected the Gerard comparison second over partly is you, hand I also to part. because . for this.

and about content think talked Yes. I'm say about actually applies think place what to deals we have like about remarks. going if of business, in you in of prepared NBA some you to When broader the our his major the the U.S. some Carsten

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comes the Jason Our Citi. with next question of Bazinet . from line

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to think up. means move consensus estimates I have that

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Gerard, that question would . from you take up Jason?

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if great. ask just And That's one could follow-up. I

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No, no, Gerard go . ahead,

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you might was? And maybe reduction also give So what org the can new on clarify workforce just other the just you for could impetus details look structure any the what like? again

Stephen,..

give quickly. that new take can't you I'll update I about structures. org X an

process more that are constant which the client-centric. a And to and reviewing we company more that are that do. are process, efficiently, think We we constantly needs is every I

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question next from the from Bender . Our comes line Jordan of Securities. JMP

Two me. of the some operators environment. out to for in the several U.K., relating the friction regulatory just called

quarter if third minus potential with next that the plus and changes the fourth And some of results any second, a I quarter, or well. the year, that During as be those for through had on was ongoing. flow XX% your impact just then risk quarter wondering during into could

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how mature guess, business? on right should that to through past way I about think that -- what's we a flow about So 'XX? the think

Jordan.

regulators, and believe really of then the regime, U.K. lot leave the first only I aspect we plus to be accountable And to yes, the they the take . I it's Gerard So because welcome player into the it's protection. a responsible outlook way we tightened question, -- to XXXX gaming. and which this. that's grow with

the So that's a might some operators measurement, of suffer. which

how opportunity. model this have our also U.K. very all not. and them Some we base, as on much an of using the with the it you're from It's recurring revenue you're depending how operators. interpreting might

revenue there risk is not base, We usually, accounts there, well that have client world. but the SaaS we distributed with little U.K. well a have too are running any here. see the And a in So and business worldwide thanks significant to in around many a there. we're we distribution our weakness don't we the share component spreaded

Gerard, XXXX. second to the please? Now piece, outlook .

going to than 'XX. talk I'm more broadly Yes,

initiatives we're other costs. every we from way XX% -- meaningful unlock portfolio, and think personnel it variety I deliver operating at will a at the growth XX% that the we've 'XX, EBITDA to challenging continually flat. that's it's believe sales the business. holding today and the leverage look for announced operating of we're That top our cost about true, all of And margins And is, -- implies of 'XX, aspect is in growth, we to 'XX. think that least reason actions Jordan, broadly that around bottom. product meaningful if you going the and

should on the at all environment than covering onetime items absolutely it's revenue 'XX growth, step-up step-up and you sports 'XX have be is and out that rights. objective continued assumption of in 'XX the of mind. a 'XX, your strong a growing into pace lesser in a revenue. in a those in And But line stable look When we

will you leverage across all line of So 'XX. as operating likely we 'XX, expansion those evolve most stronger see items margin 'XX, and

up dynamic we've essentially value to what whether drive continue to it's or a of where to you're what base, going stable if do rights that So we structurally our can words, view, for in point last a years, set from way in revenue the business is other drive our growth, been client doing continuing saying a the your from our portfolio, it's personnel costs, flow-through up operating sports from premium to see until improved we've see now. change base you're in revenue leverage. that's going And been for whether

bit will the in it grow little MBA. you ATP up like material company clearer the premium in profile the the But taking, just view We bring because essentially you different make coming tried over for P&L of as time and this expense clearly to that further crisper when operating we're a see from is a rights a 'XX an actions set point given years. X . transition year unlocking and is operating leverage at we

next the line of Crist . Needham from Company. Stefanos comes Our question with &

This Bernie. Steph for calling in is

BetMGM NBA ask in to new the extra MBA to have and products addition season. -- sports last any . to capabilities or in deal new the been reflect the up wanted sign Just on the then books other NBA you're bringing able that the to And the you week? to

of all We signed them. up

other them operators content additional the on new for up the we and the here, do tribe, it's years. U.S. which are but So of account count all our There deal the might signed next package for moment, be in X or the X not for the XX at

deal is with in up that into interesting whole with a a operators live there. around with and all partner that's all U.S experience our the deal over future, from this the things clients. more NBA in gaming immersive the unlocks States . deployed So we United are here moving and operators The data solution much betting the but potential which and were is consistently experience, the this provider highlighted piece there.

lock . question Shaun with Kelly Bank the of of America.. comes from Our next

So for me. X

as to past fourth the on the would hold we look of out or sports kind First just issues. and outcome-related we moved quarter be

trying out guidance, to think still implies Just of through revenue to reaccelerate. the kind as laid

So in. of the season? also be -- sporting start hit to outlook -- seasonality NBA the of issues, if XQ seasonally, sort uplift I outcome-related rate enough these kick we that didn't are see expecting and know to your implies? you're would Or the that the some contracts roughly some XX% of from you growth have what some

part revenue in first that question. of . fourth reaccelerate is the why So That's quarter? should my

So the Gerard. Go Go guide ahead. ahead,

do a view at it indicated than in against as the -- a be see reacceleration it as business benefit we a of as kick we so do the some look QX pressure taken which -- still was the in, a his in we MTS, expect cautious Carsten rollout expect relates we more have From in QX we've remarks, -- and to we and growth. of Taiwan to in will also, while seasonality do lottery, will QX, of expect more

from Gap] perspective, a maybe into you're at [Audio 'XXs look so So when you it back year-over-year -- the

perspective, XXXX, we Let important. says an and The midpoint top it's The midpoint X this. because for very me XX% add deliver this. I we are on from are year-over-year will EBITDA line we growth think a thing and guidance guidance we says XX% deliver will

perspective. we question, Shaun. growth a that, that leveraged your and second from profitability . it's showed business. we I have So a and managed With think strong please,

vendors. But of question working second I with for maybe remind kind been payment conversion. my broadly? bit is medium know an us can about just with on to this area is really conversion your a or flow to cash business way little and free what's things flow other . you've some And just free terms think long you the term, EBITDA the right cash on

. please? Gerard,

figure metric, out have the help a in actually, Yes. we which year-to-date, we're We while progressing -- . XX% But it's to through we're for a as XX% it good to stronger cash drive conversion. both because And cash to conversion. to more bit disclose that we compressed. XX%. don't the for past, QX, you to it overall, And quarter. was we was targeting it year you a details least around said QX, above very a the be expect at

. question next David Katz of comes Jefferies. from Our line the with

that and it, does completely discrete a the cost would growth? some common of coupled outlook, restructuring Thanks has for how opportunities? call these characterize symptomatic different growth enable in kind these side with of back or, This X want issues or cutting at separate evolved? has in or just is asked a in. are does those it, a the dial just not way restructuring squeezing me because to we it's we a been however, that cost Or X ways the way, cutting growth business unique -- look a Or should for is it. all . better few get fashion? you Or high or cost the it the that

out not the connected [indiscernible] David. taking with is each more workforce like year, A company examples this. every restructuring. and revenue can give a is and of many I the of is Restructuring you other, XX% the Microsoft costs.

are I here is mature we doing business. more a think we what are getting

We are delivering focusing on our returns for stakeholders.

the are next of focusing growth. us for level to prepare We

are We have. our cash strengthening we abilities, which

we are growing So this.

our workforce, we And that structure. run I for not to came but conclusion converting it to our reviewing from responsible operate for also would us with the to stakeholders it organization business think And our these what processes we is me, but just cash. I the are install products are that and way. you for announced and we responsible then and And We can this how workforce. in measurements. restructuring, deliver belongs we call a the

So how that's we see it.

if line XX% the I'm other to in of a not is out businesses tax the think base. I something totally many looking

Gerard, choice. is the probably refinement apologize I word, for better a

I so the of winning. my product about are is at just us, follow-up, wanted is level, to ask at For what's focused all industry-wide operator because what product on least

operators you to insights next there? like. parlays you past . for how and of you can year, it's Talk and about what's thing, the yourselves you're next The terms positioned been If might could share of enable much that being how so be just positioning the same to that right? in degree big some

that betting in XXX EUR That's up business. which by cross-selling, If the you upselling clients that's look our it now all -- agree value chain. cash a global quarter. the revenues, lifting delivers think and profitability to this million cow, done XX% and we the That's I

content, or on live see finally platform we proportion. that's meaning overbookings bigger the product with not a some with into Where trading It's very products. direction. the now going? clearly services with bit [indiscernible] platform is little into the the It's So going very yes, the from data data than And a the you also partly lottery going that stage but into clearly a going Taiwanese which are or deal. services, the

the We you optimize platform optimize the users a churn on directionally, after to user see the the and acquired with different also more So into the company journey, which push will a risk trying called optimize [indiscernible] of platform. a you to sports now betting management working to goes to trying ago, the the it what that is motivate to to the users, understand him but use trying into channels, growth to performance. can in cross-sell this year

platform elements, to in but XXX there? Or is want look what to platform managed the in have? a gives wanted knowing to they of provider of which a is it that with might solutions kind they big Is all with the tribes. the that in variety the business, future, it tribes U.S. the is platforms, more options which And and it's more by a solution,

which thing first. more the is it -- I think mentioned I

good a that's opportunity. So

good with going are world the There direction. businesses this broadcast opportunities around major into

that vision products, clear So that's the into the a putting beginning. and we're and it's consistently with And what we're telling that's We it a from have. content, start but clear journey. mission we

line comes question Craig-Hallum Group. from final Capital our of And Ryan Sigdahl the with

they'll be that year quantify follow-up help year-over-year how next costs and next sum much that what accounted up will X But to year might Just then of of kind for? operational efficiencies? up . X years deals I the us from you similar be quick and assuming the can the rights forward. kind offset think new And cost how you know those with the

X at and look sports points in in will characterize leverage the growth operating somewhere I'll in to that XXXX, offsetting we're between be operating unlock it of Ryan, rights. and going -- Yes, We that leverage. the we believe X

in into sports the -- you XX% into rights. between So about back talking . can growth somewhere if if that, reverse work you're you to in work and XX%

call. today's you your conference concludes This Thank participation. for

have Everyone, disconnect. wonderful may a You now day.