Sportradar Group AG

Good day, and thank you for standing by. Welcome to the Sports Radar second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 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, Kristen Armacost, Manager, Investor Relations. Please go ahead. Thank you.

Good morning, everyone, and thank you for joining us for Sport Radar's earnings call for the second quarter of 2022. 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. These 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 outlook. 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 relief. We assume no obligation to update any forward-looking statements or information which speak as of their respective date. Also during today's call, we will present both IFRS and non-IFRS financial measures. Additional disclosures regarding these non-IFRS measures including 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 website. Joining me today are Carlson Carl, Chief Executive Officer, and Alex Gersh, Chief Financial Officer. And now I would like to turn the discussion over to Carlson Carl.

Thank you, Christine, and thank you to all of you for joining us today. We are pleased with our strong results in the second quarter, highlighted by a 23% revenue growth, which we believe showcases the power of our business model. The Sportradar team has delivered excellent results through the first half of the year, even in the face of a global adversity. We remain confident about our vision the quality of our execution and our multi-year growth strategy. On basis of our strong results year-to-date and the visibility of our business, we are increasing our revenue guidance for the year-to-year range from a 24% to 27% growth. That comes from an 18% to a 25% previously. As you know, we are the leading global sports technology company focused on the sports betting ecosystem globally. enabling immersive experience for sports fans. The combination of our unique experience, platform, network, and technology, along with the worldwide sport rights we have acquired over the past 20 years history, we have combined and built a business that we believe will deliver long-term shareholder value through, first, consistent, strong revenue growth. Next, growing profitability with business leverage and margin expansion over time. Third, exceptional operational execution by a senior management team with a proven track record to deliver outstanding results. And last, but not least, strong free cash flow and disciplined capital allocation. The highlights for the quarter two. Speaking of capital, in July we paid down 200 million euros of our 435 million euro, that's outstanding. Post the repayment, our cash position remains solid with over 500 million and over 600 million euros in available liquidity. We believe that our business model can achieve the 55 to 60% free cash flow conversion targets over the long term. Revenue in the second quarter increased by 23% compared with the second quarter 2021. Driven by the strong growth in the U.S., our managed betting services, and our global ads business. As you will recall, our revenue is a combination of subscription-based and revenue share products. Subscription revenue accounts for around about 70% of our total, and this is a stable source for growth for us. The rest, our revenue sharing solutions, include some of the fastest growing opportunities, such as the betting footprint in the U.S., our MBS segment and the ads advertising solution. Our success can be seen in the net retention rate or NRR, which is one of our most important client metrics. NRR for the second quarter was 115% and has been above 100% for the past two years. Total customer attrition in 2021 was less than 1%. The rest of the world business accounting to over 80% of revenue, continues to grow double digit for us. Last quarter we highlighted our managed betting services that includes managed trading services and the managed sportsbook services. Our MBS revenue increased 65% year over year. We estimate we handle over 8 billion euros in transactions in the first half of the year alone and remain on track to handle between 17 to 20 billion of transactions in 2022. This would make us one of the top five bookmakers in the world, including DraftKings and FanDuel as a comparison. I'd also like to highlight our ads business growing nearly 40% year over year. We continue to demonstrate our largest betting operators that we can offer more efficient customer acquisition, retention, and lower cost per customer. which is the CPA, than competing solutions by over 50%. We also announced a joint venture with Ringier in this quarter, one of the biggest media houses in Europe, to bring immersive experience for sport fans in Africa. Leveraging Ringier's media platform Pulse, we now have the ability to reach millions of African sport fans with an integrated 360 degree solutions odds risk management, interactive sports service, and marketing tools to connect with over 30 million existing African media profiles. This will mark a milestone and create a blueprint for future activities and partnerships with other large media operators in interesting betting jurisdictions around the globe. Now to the US business that grew 66% in quarter two. As you will recall, we have been investing in the U.S. since 2014, which we believe provides us a clear first-mover advantage in the States, building on our demonstrated success in other parts of the world. We have built an ecosystem of leagues, betting operators, and media customers second to none. SportRadar data and proprietary platform products support 70% of the in-play net gaming revenue in the US. Sportsbooks have over 275 digital media and broadcasting customers and cover over 90 sports every day in the year. Totally, the US business accounts for approximately 15% of our revenue and while the EBITDA margin is negative, it continues to improve each quarter. The US business has delivered a 57% revenue kicker between 2019 and 2021, driven by growth of online sports betting, acquiring key data rights from professional leagues, and the profileration of sports data used in the media. We see core industry growth across three key components. First, increase in the legislation of sports betting across the country. our ability to successfully negotiate long-term profitable deals and deliver more value from the customer relationship over time. And third, upselling services and products, which enable our customers to create more value and gain efficiency. Live betting services are key components for this strategy. Importantly, we have also invested in deepening our relationship with the league through prudent sport rights acquisition paired with actionable plans, which should drive future profitability over the life of the contracts. Our adjusted EBITDA loss margin profile has narrowed substantially, pointing us to a clear path to profitability in this region. As proof, in 2019, we had more than 100% negative adjusted EBITDA margin in the United States. which narrowed to a 32% loss in 2021, further down to an adjusted EBITDA loss of 19% in this quarter. This performance improvement is ahead of our expectation and bodes well with our long-term plan of building an attractive, profitable US business. This operating leverage we are seeing is a balance of accelerating revenues streamlining the organization and cost optimization. For example, we have reorganized our US sales team under one experienced sales leader and created enterprise and emerging accounts teams to better serve our customers and the market. Just this month, we made changes to our product and operation team, bringing us closer to our customers. These changes will net a more efficient and coordinated team, leading to a strong foundation in the future. Our custom optimization has focused on products and pricing strategies, allowing us to be more efficient in what we sell to our customers. In fact, we have recently engaged with some of our larger betting operator customers to develop a value-based pricing, which has been received very well. last in our focus on profitability acquiring sport rides which we believe is a differentiating strength of the company we have excellent visibility into our sport ride costs over the next two to three years and also we continue to expect rides to grow over time we fully expect to grow our revenues faster overall given the strong revenue growth market positioning and the increased level of cost discipline, we now expect to achieve profitability in the US at least 12 months ahead of the original 2025 target date. Last, I want to announce that after having led us through the IPO process and the first three quarters as a public listed company, our Chief Financial Officer Alex Gersch has decided that he and his family want to move back to the United States. He will be leaving Sportradar at the end of September to accept another position. I appreciate Alex's many contributions to Sportradar and invite you to join me in wishing him well as he embarks on the next chapter. We have launched a search for a new CFO and have named Ulrich Harmut as Interim CFO. Ulrich, who has been with the company since 2013, has served as chief strategy officer since 2020, and has been a member of my management team overseeing corporate development activities, including M&A, strategic partnerships, and ventures. I'm confident in Ulrich's leadership and support of Sportradar growth and contribution of the execution on the financial priorities. With that, let me turn the call over to Alex to talk about the financial results.