Sportradar Group AG

Good day, and thank you for standing by. Welcome to Support Radar's third quarter 2023 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 the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kristen Amacost, Manager of Investor Relations. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining us for Sport Radar's earnings call for the third quarter of 2023. Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at investors.sportradar.com and will be posted on our website at the conclusion of this call. A replay of today's call will also be available on our website. After our prepared remarks, we will open 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 will hear during this 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 on our annual report on Form 20F, filed with the FCC in March, and 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 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 website. Joining me for today's call are Karsten Karls, our Chief Executive Officer, and Jer Griffin, Chief Financial Officer. And now let me turn the discussion over to Karsten.

Thank you, Kristin, and good morning and good afternoon to everyone. We have a lot to share with you today on our performance for 2023, strategic actions we are taking to improve profitability, as well as our growth expectations for 2024 and beyond. In a dynamic time of our organization, I'm impressed by the focus and execution exhibited across our teams. In particular, our ability to unlock greater profitability from our growing revenue base. This collective effort is laying a durable foundation for our continued growth and success in 2024 and beyond. While we remain on track to deliver strong year-over-year growth in 2023, we are updating our outlook to reflect the financial performance to date and address some recent market headwinds. While we expect to deliver adjusted EBITDA at high end of our previous guidance and stronger adjusted EBITDA margin We are reducing our revenue outlook to reflect some of these short-term challenges. Now we expect to deliver revenue in the range of 870 million to 880 million euros, representing year-over-year growth between 19 and 21 percent. Adjusted EBITDA in the range of 162 million euros to 167 million. representing year-over-year growth between 29 and 33 and improved EBITDA margin in the range of 18.4 and 19.2%. We have lowered our full year's revenue outlook mainly to reflect two factors. First, the euro has further strengthened, creating pressure on our US dollar denominated revenue relative to our initial expectations. Second, and more recently in Q3, betting operators, especially those outside of the US, have experienced margin pressure, primarily to live betting and soccer due to winning streak of batters with more favorites winning and goal-rich games during the start of the European football season. This contributed to softness in our Q3 MTS results, and our outlook for the rest of the year where we participate in our sports betting clients' revenues. Our strong outlook for adjusted EBITDA and adjusted EBITDA margin reflects improving operating leverage through both cost management and ongoing strategic initiatives to streamline our business operations, which we will walk you through shortly. Turning to the third quarter. We deliver revenues of 201 million euros up 12% year over year. This was lower than our expectations, primarily due to the noted softness in MTS revenues. Outside of this, our portfolio results were broadly in line with our expectations. We delivered record quarter profitability, which adjusted EBITDA of 50 million euros up 38% year over year, and adjusted EBTA margin of 25 and improvement of 471 basis points year over year. We also generated net cash from operating activities of 76 million euros up 19% year over year and we ended the quarter with 290 million cash and cash equivalents up 26 million or 10% quarter on quarter. As a leader in our industry, we work to ensure that we consistently deliver value to our clients and shareholders. This week, we initiated a reduction in our global workforce. This action is part of a broader set of strategic initiatives to better position the company for growth, which we are aimed to simplify in streamlining the company's operating structure, improving product ROI, and portfolio optimization. When completed, this reduction in workforce should result in an approximate 10% reduction of the company's 2023 labor costs run rate and contributes positively to future operating leverage. It will also enable us to be more agile, intently focused on our strategic priorities, and to capture the market opportunities ahead of us. Now I'd like to update you on a few new and expanded deals that will help drive our growth and profitability into 2024. First, our teams are well underway with realizing the value of our strategic partnerships with the MBA with our latest lifetime revenue and profitability estimates ahead of our original expectations when we announced this deal in 2021. With the knowledge of the current trading and newly closed long-term client agreements, we can confirm that this investment remains on track to be a strong revenue contributor and highly accretive to our EBITDA margin goals over the lifetime of the deal. To remind you, the MBA deal begins with 2023-2024 season and runs through 2031. With last week's tip-off of the season, we have now signed up our U.S. client base to the premium content for the next eight years, including DraftKings, BetMGM, Bet365, FanDuel, and Caesars. We are also incredibly pleased with the positive engagement for this premium content offering across our international client base that accounts for approximately 40% of the total MBA deal value. We are just at the beginning of our journey with this great franchise that will be an important innovation and growth catalyst for the company. I look forward to unlock the additional value which we will deliver to our clients and our company over the term of the deal. In addition, I'm thrilled about the partnership with the Taiwan Sports Lottery. We selected as their official technology and service solution provider through 2033. This is our 14th government-approved lottery. We will be providing the Taiwan Sports Lottery with a platform combining a multitude of services like MTS pre-match live lots and the end-to-end sportsbook and player account management solution. This rollout, which commenced in quarter three, will ultimately extend to over 2,600 retail outlets in Taiwan. Last, our value continues to be recognized in the industry, winning several awards, including Sports Betting Provider of the Year, Marketing Service Provider of the Year, and Top Leaders in AI100. Before I turn over to Jer, I would like to reflect a little more on where we are in our journey. I'm excited about the market prospects ahead of us. Driving sustained profitability growth on scale by using the power of a worldwide network together with the growing data opportunity is more than ever fascinating and motivating. We are the industry leader and trusted partner because we have developed enduring and valued relationships with our clients and partners that only deepen with our innovative capabilities. Our best-in-class content portfolio is the fuel which powers our existing products and robust recurring revenues. It's also the catalyst for further core revenue growth, product innovation, deeper monetization, and value creation. Our content portfolio today is at a critical mass and stable level to drive our revenue growth and profitability ambitions for the years ahead. Put it in another way, While we can acquire more rights if the ROI makes sense, we do not need more rights to deliver on our growth targets. Last, we are operating at scale with an agile organization to drive strong profitability growth in the years ahead. We also have the financial capabilities to enhance our position further should the right opportunities arise. To put this into a context, let me walk you through how this translates into revenue growth and higher margin for the company. Using the U.S. as a sample, we offer the broadest sports coverage delivering official analytics and intelligence to 95% of the core U.S. professional sports or over 5,000 games annually based on our partnerships with NBA, MLB and NHL. We leverage this foundation of assets across our media, league, and sport partners to move up the value chain with our products and capture a higher share of U.S. gross gaming revenues, or TGR. In-play adaptation is the key driver for that in the U.S. Whereas in more advanced European markets, in-play adaptation accounts for approximately 80% of the betting revenues, in the U.S. it accounts for approximately 35% of the US GGR. According to our estimates, closing the in-play gap would result in a 25 to 35% increase in our current US revenue base with a strong margin profile. Last is the strength of our product roadmap throughout 2024. Highlighting our partnership with the MBA, we intend to drive deeper value within the live betting markets and to bring live and immersive fan experience, next-generation telecasting, and AI-driven and 3D analytics for coaching solutions. You will see us introducing products like microbetting, virtual stadium, mixed reality, augmented AV, and real-time states and insights. In summary, we are well positioned to capture the significant growth opportunities ahead by expanding, monetization with our existing clients, acquiring new clients, leveraging the power of data and drive insights and innovation and broadening and deepening our partner ecosystem. With that, I turn over the call to Jer to discuss the financial results and outlook in more detail.