• Revenue Growth: 27% increase, reaching $255 million for Q3 2024.
• Adjusted EBITDA: 30% growth, totaling $66 million.
• Free Cash Flow: Up 140% year to date, reaching $122 million.
• Net Retention Rate: 126% for Q3 2024.
• Betting Technology and Solutions Revenue: $210 million, 32% growth year-over-year.
• Sports Content, Technology and Services Revenue: $45 million, 8% increase year-on-year.
• U.S. Revenue Growth: 46% year-on-year, representing 20% of total revenues.
• Adjusted EBITDA Margin: Expanded to 25.8%.
• Sports Rights Expense: Increased 77% to $63 million.
• Net Adjusted Personnel Expenses: $69 million, up 21% year-on-year.
• Cash and Cash Equivalents: $368 million, with no debt outstanding.
• Share Repurchase Program: $20 million worth of stock repurchased at an average price of $11.42.
• Full Year Revenue Guidance: At least $1.09 billion, up 24% versus 2023.
• Full Year Adjusted EBITDA Guidance: At least $216 million, a growth of at least 29% versus 2023.

• Warning! GuruFocus has detected 9 Warning Signs with HBI.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sportradar Group AG (NASDAQ:SRAD) reported a 27% increase in revenue and a 30% rise in adjusted EBITDA for the third quarter of 2024.
• The company achieved a strong free cash flow growth of 140% year to date, highlighting its ability to generate substantial profitability.
• Sportradar Group AG (NASDAQ:SRAD) raised its full-year guidance, expecting further margin expansion and increased shareholder value.
• The company has secured long-term contracts for major sports content, providing significant visibility on cost structure and opportunities for innovation.
• Sportradar Group AG (NASDAQ:SRAD) is leveraging AI and proprietary technology to develop hyper-personalized products, enhancing fan engagement and opening new revenue streams.

Negative Points

• The company faces increased sports rights costs, which rose by 77% in the quarter, impacting overall expenses.
• There are uncertainties in the Brazilian market due to potential regulatory changes and advertising bans, which could affect operations.
• Sportradar Group AG (NASDAQ:SRAD) is experiencing higher sports financing costs, primarily related to new ATP and NBA deals.
• The company is dealing with the complexities of integrating new acquisitions, such as XLMedia, which may pose challenges in achieving expected synergies.
• There is a risk of being squeezed by leagues over time, as seen in ongoing discussions about the MLB contract, which could impact future profitability.

Q & A Highlights

Q: Are there any significant investment plans or cost changes anticipated for 2025 and 2026, given the margin improvements seen in recent years? A: Craig Felenstein, CFO: We expect significant margin expansion in 2025, driven by strong revenue growth and leveraging costs across all categories, including sports rights and personnel. The sports rights cost increase will be significantly less next year, allowing for better leverage.

Q: Regarding the 4Sight streaming product, are you seeing increased in-play betting uptake compared to traditional digital AV feeds? A: Carsten Koerl, CEO: Yes, there is less latency with 4Sight streaming, which stimulates live betting. We see an uptick in live betting, with the market at roughly 35% to 40% live proportion, positively impacting our balance sheet.

Q: Can you provide an update on the MLB deal and its impact on sports rights costs? A: Carsten Koerl, CEO: We are optimistic about extending the MLB partnership, which will be margin accretive. The deal is expected to positively impact our margin and earnings profile.

Q: What are Sportradar's plans and updates regarding the Brazilian market? A: Carsten Koerl, CEO: We have established an office in Brazil and converted 13 clients for our MTS product. The market is progressing, with the government increasing licensing demands. We see good early traction and opportunities in betting engagement tools and advertising.

Q: With current cash conversion levels, what are the aspirations for cash conversion from EBITDA, and how does this affect capital allocation? A: Craig Felenstein, CFO: We expect free cash flow conversion to continue growing, with significant cash flowing in ahead of performance. Our capital allocation priority is investing in long-term growth, with share repurchases and potential M&A opportunities considered.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.