Sportradar Group AG

and welcome to the Sport Radar 3rd Quarter 2022 Earnings Conference Call. At this time, all participants are in listening mode. After the speaker's presentation, there will be a question and answer session and instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Kristen Armacost, Manager, Investor Relations. You may begin.

Thank you. Good morning, everyone, and thank you for joining us for Sport Radar's earnings call for the third 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 on our website. After our prepared remarks, we will open up the call to questions from investors. In the interest of time, 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 FCC today, along with the associated earnings release. 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 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 website. Joining me on the call today are Carsten Karl, Chief Executive Officer, and Ulrich Harmuth, Interim Chief Financial Officer. And now I'd like to turn the call over to Carsten Karl.

Thank you, Christine, and thank you all for joining us today and welcome to Sport Raiders Q3 Earnings Call. We are pleased to report a very strong quarter with strong revenue growth as well as an expansion of profitability and cash conversion, showcasing our sustainability, scale, and operating leverage of our business model. Now I'm touching on the operational goals. We are proud of these results, and we remain focused on our core operational objectives, expanding our high-margin rest-of-the-world business based on our upsell and cross-sell strategy to move customers up the value chain. Second, leveraging our significant investment into people, technology, and league relationships in the U.S. market. That is to say, we expect to grow our revenue base and the underlying market growth, which is further accelerating by the growth share in in-play betting. Number three, drive efficiency across the organization by leveraging our global footprint, streamlining processes, and optimizing our resources. And Last one, continue to make investments into strengthening our market position and expanding our addressable market. The execution against these objectives has resulted in solid operational performance and financial results through the first nine months of this year was exceeded our expectations. For our third quarter, we delivered strong year-over-year revenue growth of 31%. We delivered an adjusted EBITDA margin of 20% this quarter compared to 15% in the third quarter last year and 16% in the second quarter 2022. 400 basis percentage points uplift. Let me remind you that these strong results have been achieved beside significant adverse market conditions in some of the regions that we serve as well as the potential of global recessions. We further managed to generate strong operational cash flow with a conversion rate of 93%. While this cash conversion has been favorable impacted by foreign exchange rates this quarter, we continue to generate cash to invest into organic and in-organic growth opportunities. This remains one of our business priorities and has enabled us to prepay 200 million of our bank debts this quarter. Our revenue growth was predominantly driven by rest of the world betting business, where we continue to expand our business with existing customers. This is reflected in a 117% net retention rate this quarter compared to the same period last year. Strongly driven by our ability to move customers up the value chain. Managed betting service as our highest value service in the data value chain. grew 84% compared to last year, attributed to cross-selling new products into existing customer base. Our advertising business, which is a relatively new product in our portfolio, grew by 62% versus last year. During the quarter, our managed trading service generated an annualized batting turnover of 19 billion run rate. To put this into perspective, This compares to approximately 11 billion British pounds in stakes that FanDuel accepted in the first six months of 2022. The second strong growth contributor in our US business, which reached profitability in the third quarter of 2022 for the first time ever. Our CFO will go into more details, but I'm very excited to report the first positive adjusted EBITDA margin of 11% for our U.S. business segment in this quarter, the first time since we became a public company. Based on the continuous growth in the U.S. betting, the number of states will have regulated betting as well as the good adoption of inflate betting. We see that our early investment into people, product, technology, and sport rights are paying off. The positive adjusted EBITDA results further demonstrate that sport rated business model of generating profits in growing markets because of operational leverage and increasing share of in-play betting also works very well for the U.S. marketplace. Revenue in our U.S. segment grew by 61% compared to last year's quarter. This remains largely a result of the growth of the underlying betting volume as we are participating in the NGR of our customers. However, when we look at the rest of the world business, we see the biggest growth driver for Sport Raiders revenue is in-play betting. More than 90% of our rest of the world revenues are driven by in-play. We believe we can see similar success in the U.S. with this segment. The U.S. market is still in a very early inning of the in-play betting and the real-time shares of GGR between 15 and 35% depending on the sport compared to an in-play share of 80% in the European markets. With the development of live betting products for the U.S. sports and the growing customer acceptance, we strongly believe that the in-play betting will become the biggest future growth driver for the US betting market and Sport Raiders revenues in the United States. Continuing with the US, I want to highlight a few of our successes and recent developments. Last month, we signed a landmark deal with our partners at FanDuel, an early extension of our existing relationships as the preferred data and odds supplier throughout the 2030-2031 NBA season. The early extension of this is a testimony of how long-term league deals provide us with the ability to expand the relationship with our customers and move them from a pure content distributor to an embedded technology provider. Under the new contract, we will work closely together with FanDuel to develop products leveraging the NBA's state-of-the-art player tracking technology to create new opportunities for same-game parlays and in-play betting, highlighting SpotRater's strength in live betting. We will also provide our live channel trading and content distribution platform, providing video streaming eight seconds faster than a TV broadcast. This broadening our relationship with FanDuel fully aligns with our US strategy to leverage our long-term legal relationships to support our key US customers with their product development and creating exciting user experiences. Another innovative relationship we announced is Tennis Data Innovations. We expand the distribution of ATP Tour official data to betting operators. The partnership is creating new secondary feed directly from the umpire chair to provide the fastest, most reliable, and most accurate data in in-play betting markets and enhance fan experience. We also announced our largest rest of the world paid social advertising deal with Kindred, our large international online gaming operator. Kindred will use Sport Raiders AI and machine learning technology to engage more efficiently with sport fans and bettors across the meta platforms of Facebook and Instagram. Last, we are pleased to mention that we have won the American Gambling Award for Data Supplier of the Year. This award is presented by Gambling.com and recognizes excellence in data service delivery, a true statement to the service we provide to our customers and the successful year we had so far in 2022. The American Gambling Awards are highly competitive and we are excited to receive our exclusive Golden Eagle Trophy. On the previous earning call, we mentioned the reorganization of our management team. From January 2023 onwards, Sportradar will globally organize content creation and acquisition, product development, and commercial execution, while retaining a dedicated go-to-market approach for the United States. This new structure will lead to a streamlined organization allowing a more efficient process, faster decision-making, and the ability to serve our global customers even more efficiently. Finally, after having spent the better part of October meeting with investors and analysts, I want to address a key concern many of you have told us, the possibility of a recession and the impact on Sportradar. To address that, I would like to spend a few minutes on Sportradar's growth model, which is based on four levers. Number one, Sportradar serves a global betting market that is expected to grow 11% annually throughout 2027. Historically, the global betting markets have grown throughout all crises, with the only exception being in 2020, when due to the pandemic, a large number of sports competitions were suspended. Second, Sportradar consistently managed to grow almost three times faster than the underlying market due to our ability to up and cross-sell customers, moving them higher up the value chain and expanding into new regulated markets. Our model enabling us to grow 6% in 2020, despite the underlying betting market contracting by around about 11%. Number three, based on the growing revenues, We can expand our margin by leveraging significant scale in our business model with a streamlined organization for global content acquisition, global product development, and global technology and infrastructure. And lastly, our profitability generates significant growing cash flow that we invest into our future, expanding our product portfolio, geographical reach, and increasing our addressable market. We have built this model over the last 20 years. And while the question about impacting of a potential recession looms in investor minds, it is also on top of the mind of Sportradar's management team. I want to leave you with some of the history as you think about our Q4 and beyond. Despite various economic recessions in the past, including the pandemic events, Since inspection, this company, Sportradar, has always had a positive growth year over year. Further, despite the turbulent market and the economic conditions, we exceed our expectations for the first three quarters of this year. Because of this foundation and our continued innovation as a market leader, we believe there are many reasons to be optimistic about our future for continued profitable growth. With that, I would like to turn the call over to Ulrich Helmuth, our interim CFO. Uli has been working very closely with me at Sportradar over the last 10 years. Uli was previously responsible for corporate development and M&A, and was instrumental in driving all aspects of our IPO last September. Uli has a deep understanding of the company and its financials, and I have no doubt that he will lead the financial organization to achieve greater success in the months to come. Over to you, Uli.