Sportradar AG(US:SRAD)2022-11-16 19:08Financial Data and Key Metrics Changes - The company reported a strong year-over-year revenue growth of 31%, reaching €179 million in Q3 2022 compared to the same quarter in 2021 [9][24] - Adjusted EBITDA increased by 69% year-over-year to €37 million, resulting in an adjusted EBITDA margin of 20%, up from 15% in Q3 2021 [9][24] - The operational cash flow conversion rate was 93%, with a strong cash position of over €0.5 billion after prepaying €200 million of bank debt [10][25] Business Line Data and Key Metrics Changes - The "rest of the world" betting revenue grew by 28% to €101 million, contributing significantly to overall growth, with managed betting services (MBS) revenue increasing by 84% year-over-year to €38 million [26][27] - The U.S. segment saw a remarkable 61% revenue growth to €32 million, marking its first profitable quarter with an adjusted EBITDA margin of 11% [28][29] Market Data and Key Metrics Changes - The U.S. betting market is still in its early stages, with in-play betting expected to become a major growth driver, as evidenced by a 144% year-over-year growth in betting and gaming revenues [12][28] - More than 90% of the rest of the world revenues are driven by in-play betting, indicating a strong market trend that the company aims to replicate in the U.S. [13][14] Company Strategy and Development Direction - The company is focused on expanding its high-margin business through up-selling and cross-selling strategies, particularly in the U.S. market [7][8] - A significant deal with FanDuel was signed, extending their partnership and enhancing product offerings, which aligns with the company's strategy to leverage long-term league relationships [15][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of U.S. profitability, driven by the conversion of pre-match to live betting, and highlighted the positive impact of their media business [43] - The company remains optimistic about future growth despite potential recession concerns, citing historical resilience in the betting market [20][21] Other Important Information - The company raised its full-year revenue outlook to a range of €718 million to €723 million, reflecting a growth rate of 27% to 29% [38] - The adjusted EBITDA guidance was also raised to a new range of €124 million to €127 million, representing a year-over-year increase of 22% to 25% [38] Q&A Session Summary Question: Sustainability of U.S. positive EBITDA - Management confirmed that U.S. profitability is expected to be sustainable, driven by the conversion of pre-match to live betting, with confidence in continued growth [43] Question: Impact of litigation settlement on operational focus - The settlement with Football DataCo allows access to data that will enhance product offerings without changing the operational focus on leagues with official rights [45] Question: Details on value-based pricing model - The company is implementing a value-based pricing model to better serve larger clients while uplifting smaller clients, which is already showing positive results [49] Question: 2023 guidance and free cash flow conversion outlook - The company anticipates strong momentum in key growth segments, with confidence in revenue growth and margin expansion despite adverse market conditions [50] Question: Flow-through impact on guidance - Adverse market conditions and a shift in product mix have affected the flow-through to EBITDA, with lower-margin advertising business growth impacting overall margins [54] Question: U.S. margin expansion pace - Management indicated that the U.S. segment is expected to see continued margin expansion, driven by real-time betting innovations and strong growth in audiovisual products [57] Question: Long-term margin outlook in the U.S. - The company is confident that U.S. margins will approach international levels as they continue to develop innovative products and strengthen partnerships with leagues [63]