Sportradar Continues US Momentum In Q1, Raises Guidance

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Sportradar stock surged in early trading Wednesday after the company posted another quarter of growth driven by US expansion and raised guidance for the rest of the year.

Sportradar reported revenue of $288.8 million (€265.9 million) for Q1, up 28% year-over-year and on par with consensus estimates. That revenue growth, along with spending cuts, produced $51.3 million (€47.2 million) in adjusted EBITDA, up 29%.

Sportradar posted a break-even quarter on an earnings-per-share basis, missing consensus estimates of $0.06.

Sportradar stock surges on guidance raise

SRAD closed up 10% Wednesday to $10.46 a share, trading on about four times its average daily volume. Before the market opened, shares had been down 14% year-to-date.

The price swing comes as the company raised guidance for 2024. Adjusted EBITDA is now expected to be at least $218 million (€202 million) with revenue guidance at $1.15 billion (€1.06 billion).

Both figures represent a 21% increase over 2023.

“Our confidence in the year ahead is backed by our consistent track record, having achieved profitable revenue growth of at least 20% for each of the last three years as well as being cash generated,” CEO Carsten Koerl said during the company’s earnings call. “We believe there are no other companies in our peer group, public or private, that have achieved this.”

US revenue sees record growth

US sales accounted for 25% of revenue, the highest proportion of quarterly revenue derived from that market since Sportradar prioritized expanding its US betting operations at the end of 2022.

Revenue from betting technology grew 35% year-over-year, propelled by data partnerships with ATP and the NBA, driving pricing and customer uptake of additional services. The increased interest in ATP content and solutions was ahead of schedule, with more than 50% of ATP clients signing up for core audiovisual products, Koerl said.

US sales rose 65% year-over-year, the largest quarterly increase since 2022. Meanwhile, the company’s business in the rest of the world grew by 19%.

Sportradar core products to see expansion

Managed trading services demonstrated a 28% increase in turnover year-over-year to $9.78 billion (€9 billion) during the quarter, qualifying Sportradar as the global marketplace leader based on liquidity, Koerl said.

The company announced a long-term partnership with UTR Sports. It is centered on using AI technology to enhance fan engagement and create new opportunities for in-play experiences within the tennis ecosystem.

Koerl added that AlphaOdds, which the company has been vocal about as a performance driver, will expand to basketball and three additional sports by 2025.

Future of league partnerships

Koerl mentioned that as contracts like the ATP and NBA progress, he anticipates seeing better results over time, leading to improved margins in the future.

“Again, we’re giving you an extra point,” Koerl said. “We’re holding the margin. We’ll see how we land middle of the year, and yes, we’ll take it from there. But the key point I’d like to re-emphasize is we love where our fundamentals are, and we like the way the year is unfolding.”

He noted that the company hopes to extend its relationship with MLB in the near future, though no additional material partnerships are on the table for the next couple of years.

Cost-saving measures remain key

Operational expenses remained flat year-over-year, a result of strategic cost-saving measures previously announced following Q3 of last year. While personnel expenses saw a slight uptick, Sportradar enhanced operating leverages across personnel, cost of sales, and other operational facets.

The company anticipates further leveraging operational efficiencies in those areas to mitigate the impact of one-time sports rights costs incurred through partnerships and to sustain its overall profitability.

That approach is aimed at progressing adjusted EBITDA margins from mid-to-high teens in the first half of the year to low-20s in the second half.

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