Sportradar Sales Jump 24% Led by U.S. Sports Betting Gains
Sportradar reported a first-quarter revenue jump of 24%, led by sizable gains in U.S. sports betting services.
“We are delivering strong results, we are delivering higher organic growth, and we are … showing a strong cash conversion, which is something we got a lot of critical comments [previously], and we confirmed our guidance,” Sportradar founder and CEO Carsten Koerl said in a video call with Sportico Wednesday.
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The Switzerland-based data and analytics company tallied sales of €207.6 million (equal to $226.2 million) in the period ending March 31, nearly a quarter higher than the same period in 2022. Net income was $7.4 million (€6.8 million), which was $1.5 million (€1.4 million) less than the comparable period, but the company noted its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a closely watched measure of financial performance, outpaced sales growth. That indicates Sportradar is gaining economies of scale in its operations.
In the quarter, Sportradar’s business benefited from a strong showing in sports betting, especially managed betting services and live odds. Its global sports betting business outside of the U.S. accounted for slightly more than half of sales and grew just about in line with the overall business. The increasingly important U.S. market saw much faster growth, rising 55% to $43.3 million (€39.7 million) on the strength of betting offerings as well as Sportradar’s ad:s service, a digital advertising product.
“The U.S. is getting into a range now where it is really significant for us,” Koerl said. “We are seeing about 20% of our revenue on a yearly basis [in the country], and we are seeing very strong performance with betting services, growing more than 80%. What is also remarkable is that the ad:s business in the U.S. is growing higher than 80%.”
Koerl said the results show how Sportradar’s strategy of building up its segments deliberately is starting to pay dividends. The executive explained that Sportradar’s earlier investments in creating systems to measure and analyze table tennis partly led to its deal for data and streaming rights of the global Association of Tennis Professional (ATP) starting next year. Also in the quarter, the company expanded its work with the Big Ten to provide technology and data to the conference’s streaming service and added ad:s marketing capabilities for Snapchat.
Similar investments in technology and partnerships with leagues means that more broadly, Sportradar is setting up well in the North American market, according to Koerl.
“Looking at our main partners—NBA, NHL and MLB—we have around 5,000 matches, including preseason, regular season and the playoffs. We are creating 365 days of entertainment and products for our clients,” Koerl said on the video call. “That leads more and more into the tech space of using deep data to create micro markets, player markets etc…. You see the portfolio strategy and that plays out in the performance of the [U.S.] segment.”
The strength of the first quarter also allowed Sportradar to confirm its full year 2023 revenue guidance, projecting €902 million to €920 million revenue (about $1 billion on the top end), which would be about 25% growth, with better gains seen in other closely watched financial metrics such as EBITDA.
However, Wall Street was initially disappointed with the guidance, sending Sportradar shares down as much as 17% in early trading Wednesday on the Nasdaq Stock Market. Volume, however, wasn’t exceptional, and shares clawed back some of the losses by mid-morning, finishing the day off 11.5% at a closing price of $11.55 per share.
Koerl acknowledged analysts were likely disappointed in the full year guidance. Wall Street typically wants to hear unabashed bullishness from companies, while executives are required by the SEC to provide a reasonable best guess.
“Every coach I talk to in basketball is saying, ‘Don't judge the final outcome with the result of the first quarter’—it's always dangerous,” Koerl said. “And when we are confirming our guidance, it looks like the market sees it as something negative.
“This company has a clear strategy of what we want to do.”
(This article was updated with Wednesday's closing share price.)
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