Sportradar Group AG

Good morning, and thank you for standing by. Welcome to the Sport Radar 4th Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'd need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rima Haider, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Catherine, and good morning, everyone. And thank you for joining us for Sport Radar's earnings call for the fourth quarter and full year of 2021. Before we begin, I would like to point out that the slides we will reference during this presentation can be accessed via the webcast on our website at investors.sportradar.com. The slides will be posted on our website at the conclusion of this call. A replay of today's call will be available via phone and on our website. After our prepared remarks, we will open the call to questions from investors. To be fair to everyone, please limit yourself to one question plus one follow-up. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation those regarding revenue and future business outlooks. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in our annual report on Form 20F and the Form 6K furnished with the SEC today, along with the associated earnings release. We assume no obligation to update any forward-looking statements or information which speak as off their respective dates. Also during today's call, we will present both IFRS and non-IFRS financial measures. Additional disclosures regarding these non-IFRS measures, including a reconciliation of IFRS to non-IFRS measures, are included in the earnings release, supplemental slides, and our filings with the SEC, each of which is posted to our investor relations websites. Joining me today are Karsten Korl, Chief Executive Officer, and Alex Gersh, Chief Financial Officer. And now I'd like to turn the discussion over to Karsten.

Thank you. Thank you, Rima. Thank you all for joining the call today. Before I talk about the results, let me begin by sharing our thoughts, remaining those who are impacted by the heartbreaking events in Ukraine. From day one, this conflict is our top priority. and we have helped to ensure safety of our employees and the families in the region. We have created an emergency relief fund to allow the company to provide financial assistance to colleagues and their families which are facing a hard time because of the conflict. We have donated $1 million in total, half of that from the company, half of that from me, going to the Red Cross, UNICEF, and our emergency relief fund. We are complying with all sanctions and we have decided to suspend any new investments in Russia, including signing new customers. We are and will continue to monitor the ongoing situation. Having said this, let me look into the year 2021. Turning into this financials and looking on the slides, I have to say the past year was historic for us. It is an understatement to say historic. It was truly a landmark year in which we achieved many, many milestones. Our full year revenues in adjusted EBITDA exceeded our guidance for the year and we saw robust growth across all our business segments. We surpassed first time the 500 million euro mark for the annual revenues, first time in a company's history. and we continue to close multi-year deals with some of the world's largest leagues and federations. There are many, many other achievements that we celebrated this past year. First, we acquired Interact Sport and Synergy Sports, which enables Sportradar to meet its customers' support technology needs. In less than nine months, both acquisitions have been fully integrated, enabling and creating a new vertical. This is called Sport Solutions, and it leverages the power of automation through cutting-edge use of computer vision and camera technologies to help sport organizations performing better on the field and increasing profitability off the field. With Synergy and Interact Sport, Sportradar now has a strong presence in the world of coaching and analytics, dominating both the professional and the college spheres in basketball, baseball, ice hockey, as well as cricket. Second, we signed major deals with sport leagues and federations globally. We extended deals with the NBA, NHL, and ITF. We signed a new deal with UEFA and the ICC, which is the International Cricket Council. This is continuing to undermine our strong position in basketball, soccer, tennis, and cricket, with all their large batting handles. Soccer is the most bad on sport in the world with a handle of 850 billion euros each year. For those who might be not familiar with this terminology, handle is defined as the amount of money in wages accepted. Third, we announced the multi-year extension of the ITF, the International Tennis Federation, to serve as the official data provider partner. Second only to soccer, tennis is the second most bad on sport in the world with a handle of 140 billion euros. We are proud that we are continuing our 10 years plus partnership with the ITF. These are just a few samples how we are disrupting the market and applying our data-driven approach to the global sports universe. In the US, we announced the 10 years deal extension with NHL and the eight years extension with the NBA, which is basically also a 10 years deal since we have two years left on the present agreement. Both leagues turn to us not only as their exclusive data provider, but also as their partner to develop technologies that will help them engage sport fans one-on-one in the future, transforming and personalizing the experience of their legions of fans in the U.S. and globally, where both leagues have enormous fan bases. We partner with NBA and NHL on existing future solutions, and three business verticals. It's batting, it's the sport entertainment, and the sport solutions. These deal extensions and expansions are significant validators of the quality of our partnership and their confidence in sport radar. Fourth, we made our UFDS match fixing monitor service free to leagues across the world. In 2021, our UFDS detected more than 900 suspicious matches across the globe. We are running integrity as a break-even business and providing UFDS for free because of our strong conviction that the fair playing field is essential foundation for the sport ecosystem and for sports betting. This shows our strong commitment to sports integrity as we believe that sports betting needs clear rules and monitoring practices And our integrity service with UFDS is providing this. Before I go further, we may have some new listeners on the call. So I wanted to take a moment to give you a brief overview who we are and our value proposition in the sport ecosystem. SportRadar offers one of the most robust and fully integrated sports data and technology platforms. We serve as a critical data infrastructure provider and content layer to sports betting and media industries. We have well-established profitable business in Europe and other parts of the world. For over 20 years, we have demonstrated operational and execution excellence in creating one of the largest sports technology businesses in the world. As we expand our business in the U.S., a critical growth opportunity for us, we provide sports data, in many cases as a sole provider, to 70% of the total in-play market in the United States, who in turn manages nearly every legal sports bet placed in the US by sports bettors. Our data and technology is used by betting operators, media companies, and leagues and teams. We have four main pillars of our business. First, we fuel the sports betting industry, providing data, insights, enabling operators to do everything from the set of odds to attracting customers and manage the platform. Worldwide, our betting customers number more than 900 and we cover close to 900,000 live events in more than 90 sports. Second, our data feeds are the source for live scores and statistics to all the top traditional and digital media leaders. Third, we serve teams and leagues with real-time analytics and video breakdowns to help improving coaching and performance. And finally, we monitor the data to detect critical patterns to show everything from potential match fixing to problem gambling. Let us have a look on the U.S. and the growth. We believe we have massive secular tailwinds propelling our growth, particularly in the U.S., where the sports betting market is expected to grow significantly as media, sports, and betting converge. Betting operators and sport teams are becoming media companies who are becoming betting operators. We also expect to see a shift in the U.S. market from a pre-match betting to a more in-game betting, allowing us to upsell and cross-sell more of our live data products. A shift we have already experienced in established markets and a win for us in the European markets. We believe we can achieve profitable and faster growth in the U.S. as more states legalize sports betting and launch mobile platforms. Our ability to achieve this growth is rooted in our deep relationship and understanding of this market and also because the U.S. market has some very interesting differences and benefits to our product strengths. For example, the market here is player-focused, driven by the legacy of fantasy sports, and fans are very sophisticated and want data as much as possible. We predict that sports betting will increasingly be part of entertainment activities, and that placing bets will be as much as a part of the social fabric as watching a game by itself. Our vast amount of data and the ability to provide it real-time position us very well in that sphere. Now I'm coming to the growth drivers and the products. Our success in 2021 has been a result of strong growth in our core and new businesses. It has enabled us to beat our expectations in 2021, and we are excited about the good momentum going forward in 2022. We saw very strong growth in our international markets coming from our MTS products, that's the managed trading services, which grew almost 80% for the fiscal of 2020. for the physical of 2021 versus 2020, of course. And we saw record turnover growth of 81% in this comparison. Our MTS offering is sophisticated turnkey trading, risk management, life odds, and liability management solutions that help betting operators boosting the margins and profits while increasing their efficiency in the risk management. Our LifeWorks product also had a great year. We increased the number of matches covered by 22%, resulting in a year-over-year growth by almost 30%. We are very pleased to see the growth and momentum in our audiovisual and ads business. AV is the visual content we product to interest sport fans in a sporting event and give them a betting opportunity. ADDS is our technology that helps betting operators find people who want to bet. Both of those technologies are critical in helping betting operators finding fans more efficiently. As you can see on this slide, both AV and ADDS saw tremendous growth in their respective key metrics. In the US, we are incredibly pleased by the strong uptake of AV and ADDS. Our USAV business nearly doubled in 2021 over prior year, and the ads business grew tremendously year over year from just a few hundred thousands to over $6 million. And we see very significant potential and momentum ahead. Given the high acquisition costs facing the batting operators in the U.S., it's safe to say that these products will continue to be on high demand and further leveraging them is a priority for us in this year. Looking now to the exciting technology and the data collection of the future, fully leveraging the power of the integrated sports solutions vertical is another massive priority for us. We want to serve our largest partners like NBA, NHL, and MLB holistically, which means continuing to involve our coaching and analytic platform for players and team performance, Through our synergy suite of products, we plan to continue growing our team and computer vision experts both organically and through M&A, like we did through the addition of synergy of the computer vision experts there. With over 20 years' experience in sport, we know what our market needs, and we are covering that. where we need to provide super fast and super deep data and contextual data. This is the key ingredients to unlock future commercial benefit, whether that be from punter looking for competitive advantage, the media companies wanting to show in-depth analysis as to the reason a team won, and for the sport fan themselves who want to understand both the what they have seen But more important, why? We believe computer vision is the enabling technology for this future benefits. And our vision is to use technology to understand sport on a much more detailed player-related level. Computer vision enables multiple data sets to be ingested at the same time. This allows for the data to be contextualized, whether it be sharing data with a team pressure index for Generation Z fans, prompting them to come back and watch the match to drive the future of fan engagement and involvement with the creation of the metaverse. Bringing together the offline and the online worlds to create a virtual reality space in which fans can interact with each other. To unlock the future of fan engagement, we have identified strategic sports partnering with top leagues. These are, for us, eight sports, such as soccer, tennis, basketball, and others, driving the highest return for us. And we can use our already scalable solution, which we created for 90-plus sports, which we cover globally, to create an even more fan-focused solution. We already have a strong in-house team with many outstanding AI experts and data scientists, and we will be looking to grow the number through focused recruitment as well as M&A. Computer vision will be complemented by new innovative ways of automating data collection. With the acquisition of Synergy Sports and Interact, we have the best-in-class camera technology that we have used throughout basketball and cricket globally. Going forward, we look to expand these capabilities both organically and inorganically. With computer vision, we can harvest more data points versus with a live human being. And in any business, the more data you have, the better you can understand your market. Continuing to gather more data, harness the insights, and apply them throughout all our businesses is the foundation pillar of our 2022 strategy. Closing remarks before I hand it over to my colleague, Alex, our CFO. We provided annual guidance for today's call, which reflects the momentum of the growth in our high value products and our expected results from the first quarter of 2022. We are also evaluating any potential impact from the Russian-Ukraine conflict. Today, in 2022, we have not had a meaningful impact on our financials from this conflict. It is important for you to understand that any potential financial impact is limited to the affected regions at this time. We do not believe it will have a downstream impact on other parts of our business. We have a resilient business model and years of experience in continuing to innovate and pivot our products and services when faced with an adverse situation. In fact, even in this current Russian-Ukraine conflict, we were able to move our content collection from the Ukraine to other countries, ensuring that we have as little disruption as possible in our operation. Our 2022 revenue guidance range from 665 million to 700 million euro. It's based on our global scale and growth, and we believe we can absorb potential revenue losses from our business in Russia and Ukraine within that range. On the adjusted EBITDA guidance, we have provided a guidance range from 123 million to 133 million. Based on what we know as of today, including our current mitigation plans, we believe in the very worst case, the adjusted EBITDA for 2022 could be 110 million. As I said earlier, we continue to monitor the conflict and its related impact to our business, and we extend as good as we can, and we will take necessary actions to preserve the growth in margins. Before I turn to Alex, I want to remind investors that our investment thesis is fully intact. We are the leading B2B provider of technology solutions to sports betting and the sports betting market. We have a proven record of consistent long-term growth and strong cash generation, as well as a very strong customer retention. We are poised to continue to take market share in a global growing market. We have the data and proprietary technology to provide our clients with best-in-class AI and machine learning powered by our solutions. And finally, we have ample liquidity on our balance sheets, we are disciplined in how we deploy our capital, and we are using it for maximizing our growth potential. With that, I'll turn it over to Alex to discuss the numbers. Alex, the stage is yours.