Sports technology firm Sportradar has posted a buoyant set of Q1 results for 2023, delivering growth in revenue and adjusted EBITDA during a trading period that saw further big investments in AI and CV. Total Q1 profit, however, was lower at €6.8m compared with €8.2m year-on-year.
Speaking to SBC News, CEO Carsten Koerl said that the company had “delivered again” during the quarter. On the Q1 highlights, he noted: “I’m super proud about ad:s. It’s a new product and we are showing a performance that was surprising. It’s probably explainable by the high broadcast coverage which we saw with March Madness and Super Bowl. For us that was really remarkable and we are very proud of the team.”
Key Q1 metrics in the report indicated revenue ahead by 24% to €207.6m year-on-year, while adjusted EBITDA was up 37% to €36.7m. Growth in the latter, said the firm, demonstrated operational leverage from higher revenue “despite increased investment into Artificial Intelligence (AI) for liquidity trading, and Computer Vision technology”.
RoW betting, accounting for 52% of total revenue, grew 25% to €108.5m in the quarter. This growth was driven primarily by increased sales of the company’s higher value-add offerings including MBS, which increased 40% to €37.1m as well as Live Odds services which increased 29% year over year.
Segment adjusted Q1 EBITDA increased by 6% to €47.4m, while segment adjusted EBITDA margin decreased to 44% from 51% year-on-year due to increased investment in AI technology for MTS and Computer Vision technology.
There was growth, too, for Sportradar’s US segment which saw revenue rise by 55% to €39.7m year-on-year, with positive adjusted EBITDA for a third consecutive quarter. The upwardly mobile results were driven, said the firm, by higher sales of betting products as well as its digital advertising (ad:s) product.
US segment adjusted EBITDA for Q1 was €6.8m compared with a loss of €6.4m year-on-year. This, said Sportradar, is the third consecutive quarter with positive adjusted EBITDA indicating “the strong operational leverage in the US business model despite continuous investments”. Segment adjusted EBITDA margin also improved to 17% from (25%) compared with the first quarter of 2022.
In RoW Audiovisual (AV), Q1 segment revenue fell 3% to €44.6m year-on-year due to the “expected completion of the Tennis Australia contract partially offset by growth in sales to new and existing customers”.
Segment adjusted Q1 EBITDA did, however, increase 27% to €11.3m, while adjusted EBITDA margin during the quarter improved to 25% due to savings associated with the completion of the Tennis Australia contract.
Koerl, updating investors, commented: “We started fiscal 2023 on solid footing, as we continued to deliver strong top-line growth, predominately by growing our value add products such as MBS and Live Odds in the Rest of World business, and strong, profitable growth in our US segment.
“We are also demonstrating operational leverage as we continue to focus on cost discipline across the organization and invest prudently to grow our top line. We are confident that our ongoing product innovation in AI and computer vision will enable us to remain a market leader and increase shareholder value for our investors.”
While Sportradar has demonstrated growth in Q1 2023, there have been significant costs and expenses. Purchased services and licenses in the first quarter of 2023 increased by €11.6m to €48.4m year-on-year, reflecting “continuous investments in content creation, greater event coverage and higher scouting costs”. Of the total purchased services and licenses, approximately €14m were expensed sports rights.
Personnel expenses in Q1 increased by €25.2m to €77.5m, primarily as a result of increased investment for growth which was driven by higher headcount associated with investments in AI and Computer Vision, increased share based compensation, and inflationary adjustments for labor costs.
The firm also saw further hikes in operating expenses by €1.7m to €21.2m as a result of higher software license costs, higher audit fees and implementation costs for a new financial management system. Total Q1 sports rights costs decreased by €2.8m to €51.2m year-on-year, primarily due to savings from the expected completion of the Tennis Australia contract.
Turning to the annual financial outlook, Sportradar told investors that it expects revenue for fiscal 2023 to be in the range of €902m to €920m, representing growth of 24% to 26% over fiscal 2022.
Adjusted EBITDA meanwhile, is expected to be in a range of €157m to €167m, representing 25% to 33% growth versus last year. Adjusted EBITDA margin is forecast to be in the range of 17% to 18%.