Sportradar reported 38% adjusted EBITDA growth, but results were overshadowed by cuts to both staff and revenue guidance.
The reduction in its global workforce is part of the plan “to better position the company for growth, which we aim to simplify and streamlining the company’s operating structure, improving product ROI and portfolio optimization,” CEO Carsten Koerl said on the company’s third quarter earnings call Wednesday.
The reduction will result in savings equal to a 10% reduction in 2023 labor costs. Personnel expenses in the quarter were €75 million, up 10% compared to last year.
SRAD stock was down more than 6% as of 3 pm Eastern Wednesday. Volume was already more than three its daily average of 274,000 by then.
Why the guidance revision?
Sportradar called out two main factors for lower revenue. The first is the fact that Sportradar reports earnings in Euros, which have strengthened against the US dollar. Exchange rates had a €10 million impact on results, CFO Ger Griffin said.
The second issue is from unlucky soccer and in-play sports betting results during the third quarter for operators, especially those outside of the US. Sportradar now expects to report between (€1 = $1.06):
- €870 million and €880 million in revenue
- €162 million to €167 million in adjusted EBITDA
- EBITDA margin between 18.4% and 19.2%
Sportradar wants to grow in-play share
In-play betting is around 35% of all handle right now in the US. Sportsradar would like to see that number grow to 80%, which is the share of in-play betting in Europe.
Closing that gap would grow US revenue by 25% to 35%, Koerl said based on the company’s estimates.
Books lock in NBA content for 8 years
The NBA and Sportradar signed an expanded deal in 2021 to serve as the NBA’s exclusive data provider beginning with the 2023-24 season.
The agreement includes expanded distribution of player tracking, which opens up new types of data. Sportradar announced it signed up BetMGM last week for the new products.
Given that additional products will come online during that eight-year period, the deal becomes more EBITDA-accretive over its lifetime, Koerl explained.
Outside of a few tribal operators, most US operators are signed up for the new deal, Koerl said.
More data rights not needed for growth
Griffin said it is not the case that Sportradar needs to acquire more data rights in order to grow revenue.
From the company’s perspective, revenue will only grow if that deal is for a major data agreement or an adjustment of current agreements.
“But right now, we feel good about the portfolio of rights, and that portfolio, we believe, can sustain us,” Griffin added.