Sportradar Shares Swell on U.S. Business Strength, Quarterly Earnings Beat

Sports data and analytics firm Sportradar reported third quarter financial results that beat Wall Street expectations, rallying shares up more than 25% in morning trading in New York on the Nasdaq. Business was particularly strong in the U.S., where revenues surged 61% and the segment reached operational profitability market sooner than expected.

“We were super happy about the results in the U.S. market,” Sportradar chief strategy officer Ulrich Harmuth said in a phone call. “We profit from underlying market growth and the increase toward in-play betting in the U.S. market.”

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U.S. segment revenue grew to €31.6 million (€1 equals about 98 cents) and allowed Sportradar to reach positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), its first positive result for the American market. The company’s adjusted EBITDA for the U.S. was €3.4 million compared to a loss of €6.6 million a year ago.

Sportradar makes a number of adjustments to EBITDA for its metric, including not counting the amortization of sports rights or foreign currency losses and adding back in depreciation and non-sports rights amortized items, among other calculations. The company didn’t provide unadjusted EBITDA for the U.S. market in its earnings release for comparison. The non-standard accounting nevertheless pleased Wall Street analysts on an earnings call with management Wednesday morning, with one noting the company hit U.S. positive adjusted EBITDA much sooner than expected.

Overall, Sportradar sales were up 31% to €178.8 million in the quarter ending on Sept. 30, with its adjusted EBITDA up 75% to €36.5 million. The business had net income of €14.7 million in the period, versus a net loss of €6 million a year ago. Shares opened trading $1.14 higher than Tuesday’s closing price of $10.15 and quickly surged on heavy trading volume to a high of $12.77 in mid-morning trading, a three-month high.

Analysts also seemed pleased by the previously announced deal with FanDuel, in which Sportradar will provide official NBA data to FanDuel for its sports book through the NBA’s 2030-31 season. The agreement will also see the two businesses collaborate on new offerings that incorporate certain player tracking data and in-game parlays. For the past year Wall Street has been critical of the high costs seen in segments of the sport betting industry—in Sportradar’s case, the amount of money it pays for official league data. Those concerns helped lop more than half the value from Sportradar shares in the past 12 months, which today’s action suggests could be reversing.

“I recall how much criticism I got when I announced [the NBA license] in September last year, that this was a landmark deal for us,” founder and chairman Carsten Koerl said on the Wednesday earnings call with analysts. “And now we demonstrate that we get the biggest operator in the United States on a 10-year commitment … We’re pretty confident that this will scale and follow the blueprint which we have in the rest of the world.”

The strength in the business globally allowed management to raise its sales guidance for the full year, to a range of €718 million to €723 million, which would be growth of at least 27% over 2021. The previous projection was for between €695 million and €715 million revenue.

“The revenue side we’re very excited to continue to deliver on,” Harmuth said on the phone call, who is also serving as the company’s interim chief financial officer. “On the cost side, whereas revenue grew 31%, our sports rights costs grew by 20%, and our personnel costs grew by 27%, if you normalize for M&A. That’s proof of our operational leverage.”

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