SBC News Voice of the Sports Betting Industry
Sportradar AG has projected a strong outlook for 2023 after reporting revenue growth across all markets last year, exceeding its all 2022 expectations.
The Global Nasdaq sportstech firm saw total group-wide revenue increase both for the full year and during the final quarter, and profitability has continued in the face of mourning costs.
Investment heavy year pays dividends
Sportradar reported that group-wide full year revenue increased by 30% to €730.2m (2021: €561.2m), surpassing predictions made at the start of the year which placed revenue between €718m to €723m.
Meanwhile, adjusted EBITDA rose by 23% to €125.8m (€102m) at a margin of 17%, slightly down from 18% the year prior, as operating expenses rose sharply, heavily driven by sports licencing costs.
Despite this rise in operating costs, Sportradar’s high revenue margins meant that the firm remained profitable, although the figure dipped 18% to €10.5m from €12.8m the year prior.
Carsten Koerl, Sportradar CEO, said: “I am very pleased with our strong results driven by exceptional execution this past year. We saw excellent performance across all of our key performance metrics despite challenging macroeconomic conditions including a second consecutive quarter of positive Adjusted EBITDA in the US.
“Our continued long-term partnerships with leading global sports bodies, and innovation across new technologies such as artificial intelligence and computer vision and as important, a team passionate about delivering solutions to our clients, make us very excited about our growth in 2023 and beyond.”
Full-year profit results were dragged by increases in expenses in the fourth quarter, with aforementioned sports rights costs increasing by 22% to €49.7m (Q4 2021: €38.5m), whilst personal and other operating expenses combined for the full year stood at €361.9m (€271.1m).
Additional fourth quarter costs were for purchased services and licences at €48.4m (€33.5m) – of which €10m was sports rights – accompanied by personal expenses of €81m (€46m) and other operating expense of €34.9m (€27.2m), the latter attributed to €13m in litigation costs.
However, although contributing to heightened costs, the acquisition of media rights for prominent sports organisations such as the NFL and UEFA has played a significant role in Sportradar’s business’ growth.
Personal expenses were also heavily related to an expansion of its business via acquisitions – associated costs for the latter were €9m – notably including the takeover of AI firm Vaix.
As such, Sportradar’s Q4 2022 performance remained strong and momentum was carried over into the new year. Total revenue for the final three months of last year rose 35% to €206.3m (€152.4m).
Quarterly adjusted EBITDA also increased by 64% from €21.4m the year prior to €35.1m, with an improved margin of 17% from 14% in Q4 2021.
Growth across all geographies and metrics
Having exceeded 2022 expectations with 30% full year revenue growth, Sportradar revealed that the momentum in the US continues whilst retaining a strong position in Europe and other regions.
A year and a half after solidifying its US standing via a listing on the US Nasdaq, Sportradar revealed that income from its US segment increased 78% for the full year and 77% in Q4 to €41.2m ($44m).
Betting revenue from the US rose 101% against 2021 comparatives, driving stateside segment Adjusted EBITDA in Q4 to €4.3m against a loss of €7.6m the year prior, coupled with an improved positive margin of 11% against a loss of 33%.
The US performance was bolstered by 26% growth for its Rest of World (RoW) betting segment covering all 12 months, and in Q4 revenue for this unit grew 29% to €105.9m ($113.3m), accounting for 51% of total group-wide revenue.
For RoW betting, Q4 revenue increased 29% to €105.9 (€75.2m), attributed to growth of 83% for Managed Betting Services (MBS)- aided by the FIFA World Cup in Qatar – to €38.3m (€6.5m).
On the other hand, RoW adjusted EBITDA of €46.3m was impacted by increased investment in AI technology for Sportradar’s Managed Trading Services (MTS) and Computer Vision products, which saw the margin drop from 56% to 44%.
Investment in MTS did prove fruitful, however, as volume for this vertical grew 84% to €19.4bn, whilst volume for the ad:s digital advertising product increased 69%.
Lastly, quarterly RoW Audiovisual revenue increased year-on-year from €34.7m to €41.8m, a growth rate of 17%, with adjusted EBITDA up 20% to €11.9m (€9.6m) with a margin of 28%.
Seizing the 2023 opportunity
After exceeding its 2022 revenue expectations by between €7m and €12m, Sportradar closed the year with cash and cash equivalents of 243.8m and total liquidity, including overdrawn credit facilities, of €463.8m.
Additionally, as well as remaining profitable and recording high revenues in the face of mourning expenses from media rights and acquisitions, the firm was able to repay €420m of outstanding term loan debt.
Sportradar projects continued momentum throughout the remainder of 2023, based on a foundation of new partnerships signed last year, including – Australian premier cricket, NASCAR, Turkish basketball, Tennis Data Innovation (TDI) and an NBA data deal with FanDuel – as well as pre-existing longstanding arrangements.
Ulrich Harmuth, Interim Chief Financial Officer remarked: “Our fourth quarter financial results illustrate the momentum we’ve built throughout 2022. We demonstrated operational leverage in our business model, despite making significant investments in our products and technology, streamlined our organisation to be more customer-centric, and strengthened our balance sheet by repaying our debt.
“Our 2023 guidance of revenue growth and margin expansion reflects the investments we have made to date and the growing global sports market opportunity.”
Setting its 2023 targets, Sportradar expects revenue growth of between 24% and 26% to €902m- €920m, along with an uptick in EBITDA of around 25%-33% to €168m-€178.7m with a margin of 17%-18%.
