Sportradar AG(SRAD)2024-11-09 14:33Financial Data and Key Metrics - Revenue growth of 27% YoY, with Q3 2024 revenue reaching EUR255 million, up EUR54 million from Q3 2023 [6][22] - Adjusted EBITDA increased by 30% YoY to EUR66 million, with adjusted EBITDA margin expanding to 25.8% [6][27] - Free cash flow surged 140% year-to-date, reaching EUR122 million [6][34] - Net retention rate for Q3 stood at 126%, indicating strong client relationship growth [22] Business Line Performance - Betting Technology & Solutions revenue grew 32% YoY to EUR210 million, driven by 37% growth in Betting & Gaming Content, including 56% growth in streaming and betting engagement products [23] - Sports Content, Technology & Services revenue increased 8% YoY to EUR45 million, with Marketing & Media Services growing 10% due to increased ad business [26] - Managed Trading Services (MTS) managed turnover of EUR35 billion over the trailing 12 months, achieving a 10% margin and 37% GGR growth [15] Market Performance - U S market grew 46% YoY, representing 20% of total revenue in Q3 [26] - Micro market betting, introduced in ATP and soccer, is expanding to basketball, football, baseball, and ice hockey by early 2025, offering up to 1,500 new betting opportunities per tennis match [14] Strategic Direction and Industry Competition - The company is leveraging its global sports content and proprietary technology to drive multiyear operating margin expansion and significant cash flow generation [7] - Partnerships with major sports leagues like the NBA and ATP are key to scaling innovative products such as 4Sight Streaming and Alpha Odds [11][16] - The company is expanding its marketing services, including programmatic paid social, paid search, and affiliate channels, to provide a 360-degree value proposition for clients [17][18] Management Commentary on Operating Environment and Future Outlook - Management highlighted the company's strong foundation, long-term sports content agreements, and focus on driving ROI through product innovation [9] - The company raised its full-year 2024 guidance, expecting revenue of at least EUR1 09 billion (up 24% YoY) and adjusted EBITDA of at least EUR216 million (up 29% YoY) [36] - Management emphasized the importance of free cash flow as a key driver of shareholder value and expressed confidence in continued margin expansion and cash flow growth [6][38] Other Key Information - The company repurchased 200 million share repurchase program, with an average price of $11 42 [35] - The company plans to host an Investor Day on March 25, 2025, in New York City to share more about its strategic plans and opportunities [20] Q&A Session Summary Question: Margin expansion expectations for 2025 and beyond [40] - Management expects significant margin expansion in 2025, driven by strong revenue growth and leverage across cost categories, including sports rights, personnel, and back-office technology [41][42] Question: 4Sight Streaming adoption and impact on in-play betting [43] - 4Sight Streaming has been adopted by 25% of audiovisual clients, with less latency driving increased in-play betting activity [44][45] Question: MLB partnership update and margin impact [48] - The company is optimistic about renewing the MLB partnership, which is expected to be margin accretive from the start and improve over the contract term [48][63] Question: Brazil market opportunities and challenges [49] - The company has established an office in Brazil and is seeing early success with 13 clients adopting MTS, despite regulatory challenges [49][50] Question: Cash conversion and capital allocation [53] - Free cash flow conversion improved from 30% in 2023 to over 50% in 2024, with expectations for further growth [55][56] - The company prioritizes organic growth and M&A opportunities that are margin accretive, such as the XLMedia acquisition [58][60] Question: MLB contract and margin expectations [69] - Management confirmed that 2025 EBITDA margins are expected to be higher than 2024, even with the MLB contract [69][70] Question: 4Sight Streaming adoption trends [72] - 4Sight Streaming adoption is broad across geographies and sportsbook sizes, with the product aimed at stimulating live betting [73][74] Question: XLMedia acquisition synergies [77] - The XLMedia acquisition is expected to enhance the company's 360-degree value proposition, particularly in the U S market, and be margin accretive [77][79] Question: NBA pricing and 2025 revenue growth outlook [83] - The NBA partnership is performing slightly better than expected, with strong client adoption and long-term leverage potential [84][85] - Revenue growth in 2025 is expected to outperform the market, driven by content, product innovation, and market expansion [87][88] Question: Technology and customer engagement trends [89] - Key focus areas for 2025 include easy product integration, stability, and leveraging AI to enhance client engagement and growth [89][90]