Sportradar Group AG

Good day and welcome to Sport Radar's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question at that time, please press star 1-1 on your touchtone telephone. We ask that you please limit yourself to one question and a follow-up. As a reminder, this call is being recorded. I would like to turn the call over to Jim Bombassi, Head of Investment Relations and Corporate Finance. You may begin.

Thank you, Operator. Hello, everyone, and thank you for joining us for Sport Radar's earnings call for the fourth 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 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 will 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 Form 6-K filed today with the FTC, 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 and non-IFRS measures, are included in the earnings release supplemental slides in our filings with the SEC, each of which is posted to our investor relations website. Joining me today are Carsten Kuehrl, our chief executive officer, and Gerald Griffin, chief financial officer. And now let me turn the discussion over to Carsten.

Thanks, Jim. Good morning, everyone. We are excited to speak with you today to provide an overview of our performance in 2023 and our strategic outlook in 2024. As a global leader in sports technology, we continue to consistently deliver above market growth at scale. This reflects the depth of our content and the high value proposition of our product offering, supported by the breadth of our client and partnership relationships. In 2023, we continue to scale and refine our business strategically, delivering strong growth and revenues, profitability and cash flow. We also drove stronger operating leverage while continuing to invest in our content and technology capabilities. We plan to maintain this growth momentum in 2024 with a more agile and focused organization. In 2023, we delivered revenues and adjusted EVTA at a high end of our guidance range with revenues up 20% and adjusted EBTA increasing 33%. This marks the third consecutive year we delivered at least 20% revenue growth. We also improved our adjusted EBTA margins by 1.8 percentage points and grew net cash flow from operating activities by 54%. highlighting the operational leverage in our model. Now I will touch upon several operating highlights in 2023, illustrating our exceptional performance. First, we are thrilled to be selected as the successful bidder for the global ATP data betting and streaming rights for the next six years. We are truly excited about that this will bring the tennis fans around the world. Both Sportradar and ATP have great ambitions to plan and revolutionize sports betting and tennis, bringing to market innovative products and services, some of which I will discuss shortly. In addition to ATP, we strengthened our content portfolio with other long-term partnerships, including with NASCAR, Comniball, the South American Football Confederation, and Bundesliga, the premier German soccer federation. Collectively, these partnerships fuel our ambitious product roadmaps to transform the sports betting experience, foster more in-play betting, while drive more value to our clients and sport radar. With our NBA partnership, we expanded several of our commercial deals, including Teaser Sportsbook and BetMGM for official NBA data. With these, we now have agreements with all the major operators in North America, which represents nearly 100% of the US market, signing on for official NBA data. We were also selected to power Taiwan's sports lottery, the sixth largest sports lottery globally. We have fully integrated sport radars sportsbook solution across more than 2,600 retail outlets as well as web and mobile channels. This is another great win and we now work with nearly 50 lotteries around the globe and intend to sign additional partnerships in the near future. These achievements and the results this past year speak to the tremendous progress we are making to cement our position as the partner of choice in the industry. Given the strength of our business fundamentals and the confidence in the positive outlook for the future, our board of directors have approved a 200 million US dollar share buyback, underscoring our confidence in the long-term value proposition. I also want to take a moment to update you on our CFO search. We have been conducting our search progress and have some strong candidates under consideration. We are confident we will select a strong individual to take on this role. I'm excited about the strong foundation we established and the momentum we have against opportunities that await us in 2024. Core to this is the depth and breadth of our real-time sports content, data and technology, which are the key competitive advantages and serve as a foundation to our growth engine. We cover approximately 1 million events annually across approximately 70 sports and partners with approximately 400 sports leagues and federations. We are the leading solution provider of unparalleled insights into sports. The continued enhancing and scaling of the real-time content and data fuels our innovative product development, helping to drive the future growth and leverage in our business. In 2023, we further strengthened these assets, most notably through our partnership with MBA and ATP. These global partnerships bring incredible reach and value to our overall content portfolio and product offering. As I have mentioned on previous calls, tennis boosts a global fan base of 1.6 billion eyeballs, making it the second most bet on sport, underscoring its enormous reach and appeal. Similarly, basketball is a huge followed global sport with 2.2 billion fans worldwide. ranked as the third most bet on sport. Our approach to our portfolio of rides is both strategic and deliberate, focusing on the rides that deliver the highest ROI and allow us to continue to invest, innovate, and deliver the best value for our clients, partners, and shareholders. We believe we have the right mix and scale of content. While we have an ability to acquire more rides, If the ROI makes sense, we do not need additional rights in order to deliver on our growth targets. Now turning to our product roadmap. It is backed with exciting innovations, leveraging our proprietary tech and deliver further value to our clients. From expanding live odds markets to enhanced streaming betting products to creating next level betting engagement tools. we continue to define the sports betting experience. As I mentioned, at the core of our strategy lies the productization and deep data and how it enables us to launch new and value-add products to the market that create a more immersive betting experience. Our partnerships with MDA and DATP are great examples of this. We are creating deeper insights from games and matches, driving innovation, enriching the fan experience, and simulating in-play betting. Let's talk about some of these innovations and new products. First, I'm excited to discuss our new Sportradar foresight streaming technology, which we launched initially with the ATP and went live earlier this month in Indian Wells. ProSight enhances our core audiovisual offering by seamlessly integrating animated overlays such as live broadcast graphics, statistics, and visualizations directly into the video stream of games for sportsbooks. This leads to an enhanced viewing experience and excites bettors about new in-play betting markets as we gear up to introduce micro-betting later this month. where we will provide sports fans with the opportunity to bet on key moments in the match. We are also very pleased to roll out our mBet product to the NBA's League Pass OTT platform. mBet, another industry-first product, integrates live betting content in real time into an OTT platform, offering a wide range of real-time data including point spread over on their insides and player props. MBAT creates the ultimate integrated bat and watch experience during live stream broadcast of a game and reduces friction when OTT viewers want to place bats. It is great to see that MBAT has already been significant uptake with unique users growing tenfold since it launched at the beginning of this year on League Pass. As we add additional betting functionality over the coming months, we anticipate usage to continue to climb. We are also very excited about our game-changing Alpha Odds offering, which builds on our market-leading core odds solution by generating odds tailored for individual sportsbooks based on their real-time liquidity. We are very excited how this has already proven itself in the marketplace, generating an approximately 10% higher margin for sportsbooks on their betting tickets. These are a few examples of products that have either launched or will launch in 2024. I feel great about our robust product roadmap and the opportunities it will unlock. Moving to our 2024 financial goals, we see a clear path to delivering robust growth. We expect another year of at least 20% revenue and adjusted EBITDA growth. Execution of our game plan in 2024 should position us for continued growth and meaningful operational leverage over the coming years, as well as strong free cash flow generation. Our growth in 2024 will be underpinned by our recurring business, which will benefit from underlying market growth and contractual increases in addition to unlock further value leveraging our best-in-class product and content portfolio. Furthermore, we will see a meaningful step-up driver by our newly acquired MBA and ATP rights. In conclusion, We are indispensable trusted partner of the sports industry delivering solutions at scale. Our exceptional leadership is laser focused on driving efficiency, excellence, and quality across the board. Underpinning this is our unwavering focus on client and shareholder value as we execute against our strategic priorities and 2024 growth plan. I will turn over to Gerald to review the financial highlights. Thank you.

Thank you, Carsten. We delivered strong revenue and EBITDA growth in 2023, closing out the year with our financial results at the high end of our guidance range. Our business fundamentals are strong, and we are well positioned for continued growth and success in 2024 and beyond. Our fiscal 2023 financial results reinforce the durability and scalability of our growth profile, as well as our focus on profitability. Revenues were $878 million up $147 million or 20% year-over-year. Profit for the year from continuing operations was $35 million up $24 million or 230% year-over-year. Adjusted EBITDA was $167 million up $41 million or 33% year-over-year. Adjusted EBITDA margins were 19% and improvement of 1.8 percentage points year-over-year. Net cash flow from operating activities were 259 million, up 91 million, or 54% year-over-year. Our revenue growth was well ahead of our market growth rates, enabled by focused execution and the scale of our business. This was driven by strong growth from our recurring client base, including strong expansion in fast-developing markets like the U.S., and new global client wins such as the Taiwan Lottery. We made significant progress in driving profitability, improving operating leverage by 1.8 percentage points due primarily from leverage in our sports rights and personnel expenses, as well as a stronger revenue mix. We continue to maintain a strong balance sheet, closing the year with liquidity of $497 million comprised of $277 million of cash and cash equivalent and a 220 million revolving credit facility with no amounts outstanding. Today, we are pleased to announce that our board of directors has approved a US dollar 200 million share buyback program, justified by our strong business fundamentals and our confidence in the long-term profitability and cash flow outlook for the company. Now turning to the fourth quarter, we delivered revenues of 253 million euros up 46 million or 22% year-over-year. We are very happy with the market performance of all major product lines, with each generating at least 20% growth. Reservoir bedding was up 26 million or 25% year-over-year, with strong performances across all the main product lines. In particular, live odds and data was up 15% year-over-year. MBS was up 48% year-over-year, driven by the initial set of revenues for the Taiwan Lottery and a rebound in our MPS business in the latter part of the quarter. Rest of World AV was up 8 million or 20% year-over-year, supported by the addition of our new Commie Bowl and MBA rights and an uplift in services to existing and new clients. The United States was up 12 million or 28% year-over-year, driven by strong market performance, including the initial contributions from our MBA deal and an uplift from selling additional services to existing and new clients. In US dollar terms, our US business grew 37% year over year. All other revenues were broadly flat year over year. Offer for the quarter from continuing operations was 23 million compared to a loss of 33 million in the prior year quarter. This improvement was driven primarily by a 40 million positive year over year impact from foreign currency and a stronger revenue contribution in the current year. Looking at our adjusted EBITDA. Adjusted EBITDA was 40 million up 4 million or 13% year over year. Adjusted EBITDA margins were 15.7% down 1.3 percentage points on the leverage from higher sports rights partially offset by operating leverage primarily in personnel expenses. Personnel expenses were 89 million up 8 million or 10% year over year. Sports rights were 75 million up 25 million or 51% year over year, driven by the new rights, in particular, the kickoff of our MBA partnership in the current quarter. In summary, we delivered a strong Q4 financial performance to cap off a strong growth year in 2023, where we have delivered at the high end of our guidance ranges. With these strong business fundamentals, we are well positioned for continued growth and success in 2024. With that, let's turn to our 2024 outlook. For fiscal 2024, we expect to continue to scale our business globally, delivering at least 20% growth in revenue and EBITDA, which will equate to a base case of revenues of $1.05 billion, adjusted EBITDA of $200 million, and adjusted EBITDA margins of 19%. Some factors to consider when assessing our outlook for 2024 include Our outlook assumes a Euro to US dollar exchange rate of 1.07. Revenue growth will be driven primarily from our strong recurring client revenue streams, leveraging our best-in-class content and product portfolio, amplified this year by the addition of our ATP and MBA partnerships. As we've noted in the past, we will continue to challenge all aspects of our business to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage. We expect the strategic actions we have taken today, as well as our continued focus on sustainable profitability in 2024, will unlock approximately five percentage points of operating leverage, collectively in personnel, cost of sales, and other operating expenses. This should offset the impact on operating leverage resulting from the one-time step-up in sports rights costs primarily from the first full year of our NBA and ATP partnership deals. Accordingly, for the full year, we expect our adjusted EBITDA margins to be similar to 2023, progressing from the mid-teens in the first half of the year into the low 20s in the second half of the year. This seasonality is primarily a function of the facing of sports rights costs and the realization of the full year run rate benefits from our cost section. are very much focused on enhancing margins and free cash flow generation and as we look out beyond 2024 we expect to unlock operating leverage from all major expense line items as we continue to scale our business actively manage our operating cost run rates and benefit from a more stable sports rights portfolio call space as we reflect on our performance in 2023 and our outlook for 2024 We are well on track to deliver on the long-term financial targets we outlined at the time of our IPO, namely revenue growth of at least 20% and adjusted EBITDA margins in the 25 to 30% range. Before we open the call for questions, I want to note that we expect to enhance and simplify our financial reporting in 2024, better aligned with the changes we've made to our business organization. We will have more to communicate on this in advance of our Q1 earnings call. With that, we would like to open the call for questions. Operator, will you open the line for questions?

Thank you. As a reminder, if you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Michael Graham with Canaccord. Your line is open.

Hey, good morning. Thank you, and thanks for all the detail. I wanted to ask about two things. One, in the press release, you talked about some nice initial contributions from the new NBA deal, and I just wanted to dig into that a bit and maybe see if there was anything incremental you could share about some of the customer conversations and what were they really excited about. And then I just wanted to ask more broadly, can you just make a comment on your product roadmap for the year? Should we expect this to be a relatively innovative year relative to 2023? Thank you.

Chair, thanks for the question. In terms of the MBA, as we said in our prior earnings call, this is a premium partnership we have that's worth over a billion in revenue to us over the lifetime. It's also a very strong start. We've locked in all of the major operators here in the States, and we've got really strong engagement internationally as well, given it is a global deal. So it's performing, as we said, ahead of our original expectations, and it's obviously implied in our guidance.

Well, and on the product roadmap, as you saw, we launched now Foresight. We launched Alpha and Embed. All has the idea, how can we convert quicker into life, and how can we collect more data? And yes, you're right. You can expect more of those products. We have a full run-up engine here, and we are focusing laser-sharply on those two topics, live conversion and collecting more data to put it into innovative products.

Okay, thank you very much.

Thank you. Our next question comes from Ryan Sigdahl with Craig Hallam Capital Group. Your line is open.

Hey, good morning, Karsinger. I want to start with sports rights. So looking at slide 22, very helpful. Appreciate that. But based on the existing contracts you have, any more specifics you can give on kind of sports rights leverage in 2025 and then the next several years as you season and get out into year two, three of the NBA and ATP, but also considering you have a renewal with Major League Baseball and others coming. Okay.

Hi, Ryan. Carsten here. So for the sport rides, like we said, we are focusing on return of investment by looking into them. We are sitting on a strong cash position. We are perfectly placed from our scale and the distribution power which we have. But we carefully evaluate for every ride what is the return of investment. If that fits into our long-term preposition, of course, we are ready to acquire new rights. For the moment, the numbers which we present are numbers which we can fulfill and deliver with the rights which we have. So we feel pretty strong and confident about where we are sitting, but we are monitoring the market actively.

And Ryan, just to build on Carson's comment, you know, when you think about 25 and 26, you know, as we stated in our prepared remarks, We have the ability to deliver operating leverage across all items, including sports rights. And this year, it's a meaningful step up because we're adding two very important premium rights in ATP and NBA. But as you know, the amortization of those rights is fixed over the lifetime. So as we go into outer years, that's a definitive. We know over the life of these deals what that sports rights number is. We also know that as these deals evolve, we see an evolution of the revenue, which means the contribution from these deals is more beneficial to the company in the latter half of these deals as it would be at the early years. So that in itself will enable us to have more confidence in operating leverage as we look out beyond 24.

Good. Then just for my follow-up question, Chris, about anything you have to say on Brazil, I think you guys do some business currently with your large customers like Bet365 there, but I guess how does regulating that market change those deals and any potential opportunities there? Thanks. Good luck, guys.

Thank you, Ryan. So I'm flying to Brazil in four weeks' time. There is a big conference there. It is a very exciting market. It is a priority for us and for me. The market, how we see it at the moment is it's still in the gray zone. So we still see adaptations. There is a piece of law, which was introduced in December last year. Still, there are no licenses given. We expect that this will happen quarter two, beginning of quarter three. So the market is ramping up here. From a size perspective, the online gray market with the big players, which you mentioned, is maybe 2 billion GGR. We expect with regulation that market is growing on a 5 billion GGR per year. To put that into a comparison, the U.S. is around about a 10 billion. So that shows you it's a very scalable and sizable opportunity. And it's an opportunity which is driven on soccer. Our common ball deal here is very supportive. We are looking into strengthening this portfolio to attack Brazil 40 years

But it's a focus area for us.

Thanks, Carson.

Good luck, guys. Thank you. Operator, we'll take our next question. Operator?

It looks like Robin may have left the queue. Our next question comes from Bernie McTernan with Needham & Company. Your line is open.

Great. Thanks for taking the questions. To start, the 20% plus revenue growth expected this year, we'd love just to get a sense in terms of how much of that is driven by rate versus volume, trying to get a sense in terms of the new rights deals, how much that's contributing to the top line. And then as a follow-up, just If you could talk about the visibility into future revenue of the business, the 20% plus revenue growth, how sustainable is that into future years? And I guess given the context of the $200 million buyback authorization as well too.

Yeah, in terms of looking at the 20% growth and the largest element of that growth is coming from what we call business as usual. In other words, it's contractual increases year on year, market growth, Our focus on client centricity and, you know, adding new clients into our core business. So you could, you could sort of estimate that broadly at, you know, roughly 60%. The balance to your point is sort of the step up from ATP and MBA from a revenue perspective. Obviously from a, from a sports rights perspective, we talked about that. That's, that's the, the, the leverage factor that you see in 24. So, that's the basic shape of 24. As we look out into 25 and 26, you obviously are going to see a continual evolution of the revenues, as I said in the last question, from our ATP and MBA deal. In addition to, we have consistently grown organically over 20% in terms of our core business. And so as we think about the out years, you know, we do expect to continue to grow. We're not given long range guidance on this call, but, you know, if you look at our historical performance and the investments we're making into new technology and new products, we have confidence that we've got the levers to continue to grow our top line and more importantly unlock, you know, operating leverage as we think about, you know, 25, 26 and beyond. The buyback, obviously from a, When we look at our stock price and we look at the value, we believe that there's obviously significant more value in the fundamentals and the future of this company than we're currently getting credit for. So we thought it was appropriate to put a buyback in place so that we can obviously enter the market and address the purchasing back stock at lower levels. And it's just a nice lever to have within our capital allocation strategy as we move forward. If you think more broadly about capital allocation, obviously we believe in the future of our business, so we will continue to invest in areas where we feel we can scale our capabilities and the opportunity further. So, you know, the buyback is just one aspect of our capital allocation strategy.

Got it. Thanks, sir.

Thank you. Our next question comes from Robin Farley with UBS. Your line is open.

Great, thank you. I wonder if you could give us some color on how U.S. EBITDA fits into your guidance for 2024 in terms of the overall EBITDA target.

Yeah, the U.S. is profitable in 2024, and it's continuing to evolve. It's growing, obviously, top line, and we are seeing operating leverage in the U.S., So from that perspective, it's expected to be profitable. Obviously, it came in in Q4 with, you know, compressed because of the MBA deal, but with the benefits of the revenues from the MBA, plus, you know, growth in the rest of the portfolio, plus our focus on managing profitability and run rates, you know, the U.S. will be a profitable contributor to our business in 2024.

Maybe I can add, we will, Robin, maybe I can add, we expect to outperform the market growth in the U.S. according to the statistics which we all have. So we think we have a leverage here. We will grow stronger than the market in the U.S. And so to repeat, yes, we expect to be profitable in the U.S., more profitable than we have been this year.

Okay, thank you. And maybe just as a follow-up, just as you were sort of talking about how your sports rights costs are fairly fixed now, and there'll be this operating leverage, and with the growth in new markets coming on, is there a thought that you guys might at some point, not on the call today, but that you might give through your targets at some point, given that, you know, maybe some of these expenses you have pretty good visibility on and there's also pretty good visibility on some of the revenue growth in the U.S.? I'm just curious if that's something you think you might do in the next few quarters or any thoughts on that.

No, there is thoughts on that in terms of giving more long-range outlook and a deeper look into the company, but there'll be more to come on that in future calls.

Okay, thank you.

Thank you. Our next question comes from David Katz with Jefferies. Your line is open.

Hi, morning. Thanks for taking my question. I appreciate it. And I think this is a similar vein to the prior question. But with respect to the NBA sort of cost weight and its impact on, you know, margins, can you just talk a bit about what the trajectory of that is as we move out, you know, into the little longer term, just so we can start to envision how the profitability there works?

Yeah. The actual sports rights cost is fixed. All those projections are done, so we know exactly how much we're amortizing every quarter because it's on the balance sheet and it's amortized over the life of the deal. The variable part is obviously the evolution of the revenues, which are projected to grow over a lifetime. So as you think about that, you're starting in the you know, you're starting in the teens in terms of the flow through from an EBITDA point of view, growing into the 20s, and by the end of the contract, you're north of the 30s, just because of the nature of the lifetime. Lifetime on that deal, and similar for the ATP deal, you're looking at margins lifetime that are in the realm of our long-term goals of 25 to 30%. So, again, It's math, and as you think about a fixed line for the sports rights and a growth curve for the revenue with no real meaningful incremental OPEX considerations, you're looking at a higher return on these deals in the latter years than you are in the early years.

Maybe I can add one element on it. That's the life conversion. That's a benefit for us. When we manage to convert more pre-match into live betting, that means from every percentage point which we can convert, it's a 1.2 million flow through on our revenues without costs. We are sitting on this property.

Perfect. And if I can just follow up a little bigger picture question, which I suppose also seconds the appetite for some long-term targets, but we think about the next three years. Can you just talk a bit about how much of the path to profitability and revenue growth is within your control through new product introductions on the roadmap versus growth in just the underlying markets?

I think... Yeah, I'll start in terms of, you know, if I look at it from an operating spend point of view, sports rights are completely within our control. It's our decision if we want to add, you know, incremental sports rights into the portfolio, and we will only do that where we see the kind of return that will contribute to our profitability and our growth. When you look at our expenses outside of people costs, they've grown in single-digit range, and we expect to continue to manage that line very tightly. Similarly, when you look at what we've done last year and our focus on run rates and profitability for people costs, that's also within our control. It's our decision where we're investing our talent and where we're deploying them. In the end of the day, there is variability in the future, but we've got very much a visceral focus on run rates, how we're deploying capital and investments going forward. On the revenue side, year in, year out, the depth and scale of our portfolio, both our content and product portfolio, enables us to deliver significant value to our client base. We've got over 900 plus sports betting clients globally. So from that point of view, we feel good about us addressing a growth rate that's in line with the market. And then incrementally to that, given the investment we have in new products and the innovation within the company and our pricing capabilities, that's how we can index above market growth rates. And again, if you look at the history of the company, we've delivered on that and we continue to deliver on that based on the guidance we're giving this year. Again, the future is not defined, but when I look at the capabilities we have within this company, more than any other, I think, company in our space, we have the ability to scale and grow.

Thank you very much.

Thank you. Our next question comes from Jordan Bender with Citizens JMP. Your line is open.

Good morning, everyone. Jerry, I want to follow up on the share repo comments you made earlier. Is there a way to think about cadence, whether it's dollar amount or just number of shares once that trading window opens here in a couple months?

Yeah, Jordan, as you know, with these 10b51 plans, obviously, we will be working with an investment bank in terms of the execution And under the plan, you know, we'll be managing the level of spend based on, you know, the trading volume of the stock and where the stock price is landing. We obviously will be only doing a percentage of the trading volume. We have a low liquidity in the market. But as you know, with these kind of plans, you generally, you're looking at a 10 to 15% as sort of governor on the kind of purchasing you would do just so you're not influencing the stock in an abnormal way. Outside of that, it'll be opportunistic. It'll depend on where the stock is and the trading volumes. So the plan is governed by its parameters. Their standard parameters. There's nothing unusual in there. So we'll see how it evolves over the coming quarters.

Understood. And then just on the net retention ratio, that seems to have fallen off in the back half of the year. Is there anything to kind of call out on that?

No, I think it's scale. It's still a very strong, any ratio above 100 is really strong. What I would say is when you think about The additional adds to our portfolio with the MVN ATP rights and some of the focus on clients' interest, I'd say to put it in my own parallel, same-store sales should be stronger in 24 than they were in 23, so that will obviously help the ratio going forward.

Understood. Great quarter. Thank you. Thank you.

Thank you. Our next question comes from David Karnofsky with J.P. Morgan. Your line is open.

Hi, thanks for the question. Carson, with AV streaming, it's a fairly developed market internationally, more nascent in the U.S., but we have started to see products come through from some of the leagues like MLB and NHL or NFL with your competitor. Curious first what you're seeing in terms of engagement with these live streams, and then maybe with the NBA specifically, just given they're going to negotiate overall media rights soon, do you see an opportunity coming out of that process for more dedicated betting streams that you could powerful?

Yeah, that's a good question because it looks into the future. And I think where this is going to is hyper-personalization. So you're going to need to know the sports fan. You're going to need to know which team, which player, and then you need to give him a customized experience. That's where this is going. Foresight is touching on this first. We are using already deep data to show some information about the match. which you can't see. So you visualize the performance, you anticipate, what is the ball speed, and you're giving this experience to the user. The next step is to really customize this for the user and then to stimulate the user for whatever you want to do with monetization. It can go into sports betting, but it's not limited. It's merchandising, it's ticketing, it's sponsoring. Now, speaking to our partners on the NBA side, that's exactly what they are looking for. So the future of this is hyper-personalization, trying to embed all the data points and all this information and giving a very enriched digital product to the sports fan. The competition here is globally for the Tier 1 sports, and the NBA prides themselves to be the most innovative sport. So for us, that was one of the big decision points why we chose NBA as our premium partner for this to be innovative, but that's where the market is going. And I think for the Tier 1 rights holders, That's a very important aspect to use technology to distribute their product further. Yes, there is a good side aspect for us in sports betting. Given the size of the global media market, you see where this is trending to. And Sport Radar is embedding itself as a technology partner, premium partner for the NBA.

Thank you.

Thank you.

Our next question comes from Steven Grambling with Morgan Stanley. Your line is open. Our next question comes from Steven Grambling with Morgan Stanley. Your line is open.

Hi there. Thanks. Can you hear me? Yes. So I guess a couple follow-ups on the RE-ORG. One, I guess where are we in terms of the labor savings, achieving those, Where have they generally come from so far? And is the business right now being operated the way that the segment results are currently disclosed, or is it much more centralized? Thanks.

Yeah, the majority of the actions that we announced at the latter half of last year are complete. You'll see the benefit of those flow through in 2024 more in the second half of the year than the first half of the year. As we indicated in our prepared remarks, as you're thinking about your models and you're thinking about EBITDA margins, think about sort of mid-teens for the first half of the year and then growing into the 20s in the second half of the year. It's just a function of the sports rights and obviously getting the benefits from the actions we took in 23, but also our continued focus and profitability in 24. So from that point of view, that's how you should think about it.

Maybe if I can add more on the CEO personal note here. The teams are feeling extremely empowered with the reorganization. We focus razor sharply on the product, on the ROI, and on the growth and the innovation which is driven there. We have significant more clarity and significantly more focus to execute on this. So that comes from inside the organization. It needs some time to restructure now all teams and scale this down, but we feel very strong about this and we see very positive results already.

Thanks, and maybe as another follow-up on that, I think this is the first earnings call since Jer announced your departure. It's not often we have this kind of change in the midst of a reorg, so I'd love to hear what you think are key focus areas for any incoming CFO and things you'd want to impart. Thank you.

Let me take this one. I think Jer did a fantastic job. It's not only JIR in the financial department. JIR installed a chief accounting officer. We have here Jim sitting with us for the IR and the preparation and several other leaders which have been installed in the last year. So we feel very, very strong from a people perspective, from an organization perspective. And yes, it's sad that JIR took a personal decision to depart, but this is a team exercise. We have a very strong team in place. And as I said, we are very confident to find a replacement for Juror who is on the level of Juror and who can help us to push the company further forward.

Yeah, I would just build on that. I haven't left the building yet, but as I think about the leadership team, there's the seven of us in the leadership team. That group is very much, as Carson said earlier, very much focused on the priorities and the opportunities we have ahead of us and you know, one of those things as we grow our top line is operating leverage, as I said, in some of the other questions. While that may sound like a finance thing, it's not. It's a visceral focus by the leadership on making sure we're investing in the right areas and we're managing our run rates in a way that we are unlocking that value. That's not going to change. And whoever comes into the CFO seat, as Carson said, we have a very strong finance organization. But more importantly, they're coming into a management team that's dialed in on the opportunity. And what they need to do is continue to focus us on the right ROIs, the right level of operating leverage, and let the rest take care of itself. So I think from that point of view, just to build on Carson's point, we have a very strong team in this organization. My personal decision aside, this company is well dialed in to continue to grow profitably.

That's great. Thanks.

Operator, we'll take our last question.

Thank you. Our last question comes from Sean Kelly with Bank of America. Your line is open.

Hi, good morning. Hi, good morning, everyone. Can you hear me? Yes. Great. Thank you for squeezing me in here. So I just wanted to go back to the sort of MTS and MBS growth that you saw. And just I'm thinking more about 2024 and just trying to get a sense of it. It goes back a little bit to, I think, David's question at a high level. Are there any sort of new geographic markets that are sort of meaningfully outgrowing the core? And I guess, Carson, the reason I ask is obviously we see some maturity and some regulatory headwinds in the more mature European markets, particularly the UK and the Netherlands. So just trying to think about where you're seeing globally that meaningful outsized growth. And specifically, is there anything in for Brazil or is that entirely upside if that market comes online in the second half?

Hi, Sean. So we see Brazil, as I just told. So the opportunity here is probably a 5 billion GGR per year for the next three years. That's a 15, comparing it with the U.S. with a 10 billion. That shows the size and scale, of course. That is the optimistic case here that the regulation goes fully in place in a way that the sports folks are empowered to really invest decently in that market opportunity. So we are very bullish and optimistic on this. There are a couple of other small states in Latin America where we think that's interesting. It's interesting to look into. Africa continues to grow besides all the local issues which we see in Nigeria and South Africa. We see overall a strong growth here. In Europe, you are right, there are countries where we see it is a bit more difficult. The UK is probably the most prominent of this. But there are other opportunities, for example, in Italy or in Croatia where we see the opposite. So I would say that's a balanced view for Europe. Looking into Asia, we have continued to monitor India very closely. We are looking to the Philippines here. And we believe there is an opportunity, not in this year, but maybe in two or three years in Japan, not so much in China. So overall, if I'm looking around the globe from a growth opportunity, we see significantly more opportunities than threats. That's the overall picture. Looking to MTS and MBS, we see enormous scale. We see that we established here a system which is really solving a problem for the operator. It's delivering a higher return for them in the risk management with a lower cost. And we see that this product is really sensational performing. That is something which we can relatively quickly implement with the operators, the risk management. The managed betting service and the platform is a slower development. It takes longer, longer lead times. to convert operators on the platform. But we showed that we can do this on scale with the Taiwanese lottery. And we are building up here a very strong pipeline for looking into the managed betting services in the future. It will take a bit longer than the MTS integration. And to finally give you the percentages, 75% of it is MTS, 25% of it is the managed betting sportsbook services, what we predict in the next years.

Great, thank you so much. And then maybe it's just a follow-up, same idea, but, you know, obviously the year experienced a little bit of pressure in the rest of world betting segment margins. Is that just, I mean, amortization of sports rights across the broader global portfolio, or is there anything else that's driving that? Do you expect that to start to level out again as you gain operating leverage? Anything specifically to call out on the segment margin side?

No, I think it's partially due to the point you made, sports rights. Obviously, we're continuing to invest in our global platform with the majority of that cost would be hitting the rest of the world, which is the largest part of our scale. As you think about moving forward, the rest of the world is sort of, you can look at the total company view and the rest of the world is very similar. We do expect to see operating leverage over the coming years out of the rest of the world. We actually expect I know you made some comments about some of the more developed markets. We still expect our rest of world business to grow very strongly over the coming years. And for all of the reasons we've said in the various questions and the prepared remarks. So, yes, rest of world is expected to follow a similar flow for the total company, which means operating leverage coming out of 24 into 25 and 26. Thank you so much.

Thank you, everyone, for joining us for our earnings call. We'll turn it back to the operator.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day. you Thank you. Thank you. Thank you. Thank you. Good day and welcome to Sport Radar's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question at that time, please press star 1-1 on your touchtone telephone. We ask that you please limit yourself to one question and a follow-up. As a reminder, this call is being recorded. I would like to turn the call over to Jim Bombassi, Head of Investment Relations and Corporate Finance. You may begin.

Thank you, Operator. Hello everyone and thank you for joining us for Sport Radar's earnings call for the fourth 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 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 will 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 Form 6-K filed today with the FTC, 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 and non-IFRS measures, are included in the earnings release supplemental slides in our filings with the SEC, each of which is posted to our investor relations website. Joining me today are Carsten Kuehrl, our chief executive officer, and Gerald Griffin, chief financial officer. And now let me turn the discussion over to Carsten.

Thanks, Jim. Good morning, everyone. We are excited to speak with you today to provide an overview of our performance in 2023 and our strategic outlook in 2024. As a global leader in sports technology, we continue to consistently deliver above market growth at scale. This reflects the depth of our content and the high value proposition of our product offering, supported by the breadth of our client and partnership relationships. In 2023, we continue to scale and refine our business strategically, delivering strong growth and revenues, profitability, and cash flow. We also drove stronger operating leverage while continuing to invest in our content and technology capabilities. We plan to maintain this growth momentum in 2024 with a more agile and focused organization. In 2023, we delivered revenues and adjusted EVTA at a high end of our guidance range with revenues up 20% and adjusted EBTA increasing 33%. This marks the third consecutive year we delivered at least 20% revenue growth. We also improved our adjusted EBTA margins by 1.8 percentage points and grew net cash flow from operating activities by 54%. highlighting the operational leverage in our model. Now I will touch upon several operating highlights in 2023, illustrating our exceptional performance. First, we are thrilled to be selected as the successful bidder for the global ATP data betting and streaming rights for the next six years. We are truly excited about that this will bring the tennis fans around the world. Both Sportradar and ATP have great ambitions to plan and revolutionize sports betting and tennis, bringing to market innovative products and services, some of which I will discuss shortly. In addition to ATP, we strengthened our content portfolio with other long-term partnerships, including with NASCAR, Comniball, the South American Football Confederation, and Bundesliga, the premier German soccer federation. Collectively, these partnerships fuel our ambitious product roadmaps to transform the sports betting experience, foster more in-play betting, while drive more value to our clients and sport radar. With our MBA partnership, we expanded several of our commercial deals, including Caesar Sportsbook and BetMGM for official MBA data. With these, we now have agreements with all the major operators in North America, which represents nearly 100% of the US market, signing on for official NBA data. We were also selected to power Taiwan's sports lottery, the sixth largest sports lottery globally. We have fully integrated sport radars sportsbook solution across more than 2,600 retail outlets as well as web and mobile channels. This is another great win and we now work with nearly 50 lotteries around the globe and intend to sign additional partnerships in the near future. These achievements and the results this past year speak to the tremendous progress we are making to cement our position as the partner of choice in the industry. Given the strength of our business fundamentals and the confidence in the positive outlook for the future, our board of directors have approved a 200 million US dollar share buyback, underscoring our confidence in the long-term value proposition. I also want to take a moment to update you on our CFO search. We have been conducting our search progress and have some strong candidates under consideration. We are confident we will select a strong individual to take on this role. I'm excited about the strong foundation we established and the momentum we have against opportunities that await us in 2024. Core to this is the depth and breadth of our real-time sports content, data and technology, which are the key competitive advantages and serve as a foundation to our growth engine. We cover approximately 1 million events annually across approximately 70 sports and partners with approximately 400 sports leagues and federations. We are the leading solution provider of unparalleled insights into sports. The continued enhancing and scaling of the real-time content and data fuels our innovative product development, helping to drive the future growth and leverage in our business. In 2023, we further strengthened these assets, most notably through our partnership with MBA and ATP. These global partnerships bring incredible reach and value to our overall content portfolio and product offering. As I have mentioned on previous calls, tennis boosts a global fan base of 1.6 billion eyeballs, making it the second most bet on sport, underscoring its enormous reach and appeal. Similarly, basketball is a huge fallout global sport with 2.2 billion fans worldwide. ranked as the third most bet on sport. Our approach to our portfolio of rides is both strategic and deliberate, focusing on the rides that deliver the highest ROI and allow us to continue to invest, innovate, and deliver the best value for our clients, partners, and shareholders. We believe we have the right mix and scale of content. While we have an ability to acquire more rides, If the ROI makes sense, we do not need additional rights in order to deliver on our growth targets. Now turning to our product roadmap. It is backed with exciting innovations, leveraging our proprietary tech and deliver further value to our clients. From expanding live odds markets to enhanced streaming betting products to creating next level betting engagement tools. we continue to define the sports betting experience. As I mentioned, at the core of our strategy lies the productization and deep data and how it enables us to launch new and value-add products to the market that create a more immersive betting experience. Our partnerships with MBA and DATP are great examples of this. We are creating deeper insights from games and matches, driving innovation, enriching the fan experience, and simulating in-play betting. Let's talk about some of these innovations and new products. First, I'm excited to discuss our new Sport Raider Foresight streaming technology, which we launched initially with the ATP and went live earlier this month in Indian Wells. ProSight enhances our core audiovisual offering by seamlessly integrating animated overlays such as live broadcast graphics, statistics, and visualizations directly into the video stream of games for sportsbooks. This leads to an enhanced viewing experience and excites bettors about new in-play betting markets as we gear up to introduce micro-betting later this month. where we will provide sports fans with the opportunity to bet on key moments in the match. We are also very pleased to roll out our mBet product to the NBA's League Pass OTT platform. mBet, another industry-first product, integrates live betting content in real time into an OTT platform, offering a wide range of real-time data including point spread over on their insides and player props. MBAT creates the ultimate integrated bat and watch experience during live stream broadcast of a game and reduces friction when OTT viewers want to place bats. It is great to see that MBAT has already been significant uptake with unique users growing tenfold since it launched at the beginning of this year on League Pass. As we add additional betting functionality over the coming months, we anticipate usage to continue to climb. We are also very excited about our game-changing Alpha Odds offering, which builds on our market-leading core odds solution by generating odds tailored for individual sportsbooks based on their real-time liquidity. We are very excited how this has already proven itself in the marketplace, generating an approximately 10% higher margin for sportsbooks on their betting tickets. These are a few examples of products that have either launched or will launch in 2024. I feel great about our robust product roadmap and the opportunities it will unlock. Moving to our 2024 financial goals, we see a clear path to delivering robust growth. We expect another year of at least 20% revenue and adjusted EBITDA growth. Execution of our game plan in 2024 should position us for continued growth and meaningful operational leverage over the coming years, as well as strong free cash flow generation. Our growth in 2024 will be underpinned by our recurring business, which will benefit from underlying market growth and contractual increases in addition to unlock further value leveraging our best-in-class product and content portfolio. Furthermore, we will see a meaningful step-up driver by our newly acquired MBA and ATP rights. In conclusion, We are indispensable trusted partner of the sports industry delivering solutions at scale. Our exceptional leadership is laser focused on driving efficiency, excellence, and quality across the board. Underpinning this is our unwavering focus on client and shareholder value as we execute against our strategic priorities and 2024 growth plan. I will turn over to Gerald to review the financial highlights. Thank you.

Thank you, Carsten. We delivered strong revenue and EBITDA growth in 2023, closing out the year with our financial results at the high end of our guidance range. Our business fundamentals are strong, and we are well-positioned for continued growth and success in 2024 and beyond. Our fiscal 2023 financial results reinforce the durability and scalability of our growth profile as well as our focus on profitability. Revenues were $878 million up $147 million or 20% year-over-year. Profit for the year from continuing operations was $35 million up $24 million or 230% year-over-year. Adjusted EBITDA was $167 million up $41 million or 33% year-over-year. Adjusted EBITDA margins were 19% an improvement of 1.8 percentage points year over year. Net cash flow from operating activities were $259 million, up $91 million, or 54% year over year. Our revenue growth was well ahead of our market growth rates, enabled by focused execution and the scale of our business. This was driven by strong growth from our recurring client base, including strong expansion in fast-developing markets like the U.S., and new global client wins, such as the Taiwan Lottery. We made significant progress in driving profitability, improving operating leverage by 1.8 percentage points, due primarily from leverage in our sports rights and personnel expenses, as well as a stronger revenue mix. We continue to maintain a strong balance sheet, closing the year with liquidity of $497 million, comprised of $277 million of cash and cash equivalent and a 220 million revolving credit facility with no amounts outstanding. Today, we are pleased to announce that our board of directors has approved a US dollar 200 million share buyback program, justified by our strong business fundamentals and our confidence in the long-term profitability and cash flow outlook for the company. Now turning to the fourth quarter, we delivered revenues of 253 million euros up 46 million or 22% year-over-year. We are very happy with the market performance of all major product lines, with each generating at least 20% growth. Reservoir bedding was up 26 million or 25% year-over-year, with strong performances across all the main product lines. In particular, live odds and data was up 15% year-over-year. MBS was up 48% year-over-year, driven by the initial set of revenues for the Taiwan Lottery and a rebound in our MPS business in the latter part of the quarter. Rest of World AV was up 8 million or 20% year over year, supported by the addition of our new Commie Bowl and MBA rights and an uplift in services to existing and new clients. The United States was up 12 million or 28% year over year, driven by strong market performance, including the initial contributions from our MBA deal and an uplift from selling additional services to existing and new clients. In US dollar terms, our US business grew 37% year over year. All other revenues were broadly flat year over year. Offer for the quarter from continuing operations was 23 million compared to a loss of 33 million in the prior year quarter. This improvement was driven primarily by a 40 million positive year over year impact from foreign currency and a stronger revenue contribution in the current year. Looking at our adjusted EBITDA. Adjusted EBITDA was 40 million, up 4 million or 13% year over year. Adjusted EBITDA margins were 15.7% down 1.3 percentage points on the leverage from higher sports rights partially offset by operating leverage primarily in personnel expenses. Personnel expenses were 89 million, up 8 million or 10% year over year. Sports rights were 75 million, up 25 million or 51% year over year, driven by the new rights, in particular, the kickoff of our MBA partnership in the current quarter. In summary, we delivered a strong Q4 financial performance to cap off a strong growth year in 2023, where we have delivered at the high end of our guidance ranges. With these strong business fundamentals, we are well positioned for continued growth and success in 2024. With that, let's turn to our 2024 outlook. For fiscal 2024, we expect to continue to scale our business globally, delivering at least 20% growth in revenue and EBITDA, which will equate to a base case of revenues of $1.05 billion, adjusted EBITDA of $200 million, and adjusted EBITDA margins of 19%. Some factors to consider when assessing our outlook for 2024 include Our outlook assumes a Euro to US dollar exchange rate of 1.07. Revenue growth will be driven primarily from our strong recurring client revenue streams, leveraging our best-in-class content and product portfolio, amplified this year by the addition of our ATP and MBA partnerships. As we've noted in the past, we will continue to challenge all aspects of our business to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage. We expect the strategic actions we have taken today, as well as our continued focus on sustainable profitability in 2024, will unlock approximately five percentage points of operating leverage, collectively in personnel, cost of sales, and other operating expenses. This should offset the impact on operating leverage resulting from the one-time step-up in sports rights costs primarily from the first full year of our NBA and ATP partnership deals. Accordingly, for the full year, we expect our adjusted EBITDA margins to be similar to 2023, progressing from the mid-teens in the first half of the year into the low 20s in the second half of the year. This seasonality is primarily a function of the facing of sports rights costs and the realization of the full year run rate benefits from our cost action. We are very much focused on enhancing margins and free cash flow generation. And as we look out beyond 2024, we expect to unlock operating leverage from all major expense line items as we continue to scale our business, actively manage our operating cost run rates, and benefit from a more stable sports rights portfolio cost base. As we reflect on our performance in 2023 and our outlook for 2024, We are well on track to deliver on the long-term financial targets we outlined at the time of our IPO, namely revenue growth of at least 20% and adjusted EBITDA margins in the 25 to 30% range. Before we open the call for questions, I want to note that we expect to enhance and simplify our financial reporting in 2024, better aligned with the changes we've made to our business organization. We will have more to communicate on this in advance of our Q1 earnings call. With that, we would like to open the call for questions. Operator, will you open the line for questions?

Thank you. As a reminder, if you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Michael Graham with Canaccord. Your line is open.

Hey, good morning. Thank you, and thanks for all the detail. I wanted to ask about two things. One, in the press release, you talked about some nice initial contributions from the new NBA deal, and I just wanted to dig into that a bit and maybe see if there was anything incremental you could share about some of the customer conversations and what were they really excited about. And then I just wanted to ask more broadly, can you just make a comment on your product roadmap for the year? Should we expect this to be a relatively innovative year relative to 2023? Thank you.

Chair, thanks for the question. In terms of the MBA, as we said in our prior earnings call, this is a premium partnership we have that's worth over a billion in revenue to us over the lifetime. It's also a very strong start. We've locked in all of the major operators here in the States, and we've got really strong engagement internationally as well, given it is a global deal. So it's performing, as we said, ahead of our original expectations. And it's obviously implied in our guidance.

Well, and on the product roadmap, as you saw, we launched now Foresight. We launched Alpha and Embed. All has the idea, how can we convert quicker into life? And how can we collect more data? And yes, you're right. You can expect more of those products. We have a full run-up engine here, and we are focusing laser-sharply on those two topics, live conversion and collecting more data to put it into innovative products.

Okay, thank you very much.

Thank you. Our next question comes from Ryan Sigdahl with Craig Hallam Capital Group. Your line is open.

Hey, good morning, Karsinger. I want to start with sports rights. So looking at slide 22, very helpful. Appreciate that. But based on the existing contracts you have, any more specifics you can give on kind of sports rights leverage in 2025 and then the next several years as you season and get out into year two, three of the NBA and ATP, but also considering you have a renewal with Major League Baseball and others coming. Okay.

Hi, Ryan. Carsten here. So for the sport rides, like we said, we are focusing on return of investment by looking into them. We are sitting on a strong cash position. We are perfectly placed from our scale and the distribution power which we have. But we carefully evaluate for every ride what is the return of investment. If that fits into our long-term preposition, of course, we are ready to acquire new rights. For the moment, the numbers which we present are numbers which we can fulfill and deliver with the rights which we have. So we feel pretty strong and confident about where we are sitting, but we are monitoring the market actively.

And Ryan, just to build on Carson's comment, you know, when you think about 25 and 26, you know, as we stated in our prepared remarks, We have the ability to deliver operating leverage across all items, including sports rights. And this year, it's a meaningful step up because we're adding two very important premium rights in ATP and NBA. But as you know, the amortization of those rights is fixed over the lifetime. So as we go into outer years, that's a definitive. We know over the life of these deals what that sports rights number is. We also know that as these deals evolve, we see an evolution of the revenue, which means the contribution from these deals is more beneficial to the company in the latter half of these deals as it would be at the early years. So that in itself will enable us to have more confidence in operating leverage as we look out beyond 24.

Good. Then just for my follow-up question, Chris, about anything you have to say on Brazil, I think you guys do some business currently with your large customers like Bet365 there, but I guess how does regulating that market change those deals and any potential opportunities there? Thanks. Good luck, guys.

Thank you, Ryan. So I'm flying to Brazil in four weeks' time. There is a big conference there. It is a very exciting market. It is a priority for us and for me. The market, how we see it at the moment is it's still in the gray zone. So we still see adaptations. There is a piece of law which was introduced in December last year. Still, there are no licenses given. We expect that this will happen quarter two, beginning of quarter three. So the market is ramping up here. From a size perspective, the online gray market with the big players which you mentioned is maybe 2 billion GGR. We expect with regulation that market is growing on a 5 billion GGR per year. To put that into a comparison, the U.S. is around about a 10 billion. So that shows you it's a very scalable and sizable opportunity. And it's an opportunity which is driven on soccer. Our common ball deal here is very supportive. We are looking into strengthening this portfolio to attack Brazil fully as

but it's a focus area for us.

Thanks, Carson. Good luck, guys. Thank you.

Our next question comes from Bernie McTernan with Needham & Company. Your line is open.

Great. Thanks for taking the questions. To start, the 20% plus revenue growth expected this year, we'd love just to get a sense in terms of how much of that is driven by rate versus volume, trying to get a sense in terms of you know, the new rights deals, how much that's contributing to the top line. And then as a follow-up, just if you could talk about the visibility into future revenue of the business, the 20% plus revenue growth, how sustainable is that into future years? And I guess given the context of the $200 million buyback authorization as well, too.

Yeah, in terms of looking at the 20% growth and, you know, the The largest element of that growth is coming from what we call business as usual. In other words, it's contractual increases year on year, market growth, our focus on client centricity and adding new clients into our core business. So you could sort of estimate that broadly at roughly 60%. The balance, to your point, is sort of the step up from ATP and MBA from a revenue perspective. Obviously, from a sports rights perspective, we talked about that. That's That's the leverage factor that you see in 24. So, you know, that's the basic shape of 24. As we look out into 25 and 26, you obviously are going to see a continual evolution of the revenues, as I said in the last question from our ATP and MBA deal. In addition to, you know, we have consistently grown organically over 20% in terms of our core business. And so as we think about the out years, you know, we do expect to continue to grow. We're not given long range guidance on this call, but, you know, if you look at our historical performance and the investments we're making into new technology and new products, we have confidence that we've got the leverage to continue to grow our top line. And more importantly, unlock, you know, operating leverage as we think about, you know, 25, 26 and beyond. The buyback, obviously from a, When we look at our stock price and we look at the value, we believe that there's obviously significant more value in the fundamentals and the future of this company than we're currently getting credit for. So we thought it was appropriate to put a buyback in place so that we can obviously enter the market and address the purchasing back stock at lower levels. And it's just a nice lever to have within our capital allocation strategy as we move forward. If you think more broadly about capital allocation, obviously we believe in the future of our business, so we will continue to invest in areas where we feel we can scale our capabilities and the opportunity further. So, you know, the buyback is just one aspect of our capital allocation strategy.

Got it. Thanks, sir.

Thank you. Our next question comes from Robin Farley with UBS. Your line is open.

Great. Thank you. I wonder if you could give us some color on how U.S. EBITDA fits into your guidance for 2024 in terms of the overall EBITDA target.

Yeah, the U.S. is profitable in 2024, and it's continuing to evolve. It's growing, obviously, top line, and we are seeing operating leverage in the U.S., So from that perspective, it's expected to be profitable. Obviously, it came in in Q4 compressed because of the MBA deal, but with the benefits of the revenues from the MBA, plus growth in the rest of the portfolio, plus our focus on managing profitability and run rates, the U.S. will be a profitable contributor to our business in 2024.

Maybe I can add. Robin, maybe I can add. We expect to outperform the market growth in the U.S. according to the statistics which we all have. So we think we have a leverage here. We will grow stronger than the market in the U.S. And so to repeat, yes, we expect to be profitable in the U.S., more profitable than we have been this year.

Okay, thank you. And maybe just as a follow-up, just as you were sort of talking about how your sports rights costs are fairly fixed now, and there'll be this operating leverage, and with the growth in new markets coming on, is there a thought that you guys might at some point, not on the call today, but that you might give three-year targets at some point, given that maybe some of these expenses you have pretty good visibility on, and there's also pretty good visibility on some of the revenue growth in the U.S.? I'm just curious if that's something you think you might do in the next few quarters, or any thoughts on that?

No, there is thoughts on that in terms of giving more long-range outlook and a deeper look into the company, but there'll be more to come on that in future calls.

Okay, thank you.

Thank you. Our next question comes from David Katz with Jefferies. Your line is open.

Hi, morning. Thanks for taking my question. I appreciate it. And I think this is a similar vein to the prior question. But with respect to the NBA sort of cost weight and its impact on, you know, margins, can you just talk a bit about what the trajectory of that is as we move out, you know, into the little longer term, just so we can start to envision how the profitability there works?

Yeah. You know, the actual sports rights cost is fixed. You know, all those projections are done. So we know exactly how much we're amortizing every quarter because it's on the balance sheet and it's amortized over the life of the deal. The variable part is obviously the evolution of the revenues, which are projected to grow over the lifetime. So as you think about that, you're starting in the – you know, you're starting in the teens in terms of the flow through from an EBITDA point of view, growing into the 20s, and by the end of the contract, you're north of the 30s, just because of the nature of the lifetime. Lifetime on that deal, and similar for the ATP deal, you're looking at margins lifetime that are in the realm of our long-term goals of 25 to 30%. So, again, It's math, and as you think about a fixed line for the sports rights and a growth curve for the revenue with no real meaningful incremental OPEX considerations, you're looking at a higher return on these deals in the latter years than you are in the early years.

Maybe I can add one element on it. That's the life conversion. That's a benefit for us. When we manage to convert more pre-match into live betting, that means from every percentage point which we can convert, it's a 1.2 million flow through on our revenues without costs. We are sitting on this property.

Perfect. And if I can just follow up a little bigger picture question, which I suppose also seconds the appetite for some long-term targets, but we think about the next three years. Can you just talk a bit about how much of the path to profitability and revenue growth is within your control through new product introductions on the roadmap versus growth in just the underlying markets?

I think Yeah, I'll start in terms of, if I look at it from an operating spend point of view, sports rights are completely within our control. It's our decision if we want to add incremental sports rights into the portfolio, and we will only do that where we see the kind of return that will contribute to our profitability and our growth. When you look at our expenses outside of people costs, they've grown in single-digit range, and we expect to continue to manage that line very tightly. Similarly, when you look at what we've done last year and our focus on run rates and profitability for people costs, that's also within our control. It's our decision where we're investing our talent and where we're deploying them. In the end of the day, there is variability in the future, but we've got very much a visceral focus on run rates, how we're deploying capital and investments going forward. On the revenue side, year in, year out, the depth and scale of our portfolio, both our content and product portfolio, enables us to deliver significant value to our client base. We've got over 900 plus sports betting clients globally. So from that point of view, we feel good about us addressing a growth rate that's in line with the market. And then incrementally to that, given the investment we have in new products and the innovation within the company and our pricing capabilities, that's how we can index above market growth rates. And again, if you look at the history of the company, we've delivered on that and we continue to deliver on that based on the guidance we're giving this year. Again, the future is not defined, but when I look at the capabilities we have within this company, more than any other, I think, company in our space, we have the ability to scale and grow.

Thank you very much.

Thank you. Our next question comes from Jordan Bender with Citizens JMP. Your line is open.

Good morning, everyone. Jared, I want to follow up on the share repo comments you made earlier. Is there a way to think about cadence, whether it's dollar amount or just number of shares once that trading window opens here in a couple months?

Yeah, Jordan, as you know, with these 10b51 plans, obviously, we will be working with an investment bank in terms of the execution And under the plan, you know, we'll be managing the level of spend based on, you know, the trading volume of the stock and where the stock price is landing. We obviously will be only doing a percentage of the trading volume. We have a low liquidity in the market. But as you know, with these kind of plans, you generally, you're looking at a 10 to 15% as sort of governor on the kind of purchasing you would do just so you're not influencing the stock in an abnormal way. Outside of that, it'll be opportunistic. It'll depend on where the stock is and the trading volumes. So the plan is governed by its parameters. Their standard parameters. There's nothing unusual in there. So we'll see how it evolves over the coming quarters.

Understood. And then just on the net retention ratio, that seems to have fallen off in the back half of the year. Is there anything to kind of call out on that?

No, I think it's scale. It's still a very strong, any ratio above 100 is really strong. What I would say is when you think about The additional adds to our portfolio with the MVN ATP rights and some of the focus on client centricity, I'd say, you know, to put it in my old parallel, same-store sales should be stronger in 24 than they were in 23, so that will obviously help the ratio going forward.

Understood. Great quarter. Thank you. Thank you.

Thank you. Our next question comes from David Karnofsky with J.P. Morgan. Your line is open.

Hi, thanks for the question. Carson, with AV streaming, it's a fairly developed market internationally, more nascent in the U.S., but we have started to see products come through from some of the leagues like MLB and NHL or NFL with your competitor. Curious first what you're seeing in terms of engagement with these live streams, and then maybe with the NBA specifically, just given they're going to negotiate overall media rights soon, do you see an opportunity coming out of that process for more dedicated betting streams that you could power for?

Yeah, that's a good question because it looks into the future. And I think where this is going to is hyper-personalization. So you're going to need to know the sports fan. You're going to need to know which team, which player, and then you need to give him a customized experience. That's where this is going. Foresight is touching on this first. We are using already deep data. to show some information about the match which you can't see. So you visualize the performance, you anticipate, what is the ball speed, and you're giving this experience to the user. The next step is to really customize this for the user and then to stimulate the user for whatever you want to do with monetization. It can go into sports betting, but it's not limited. It's merchandising, it's ticketing, it's sponsoring. Now, speaking to our partners on the NBA side, that's exactly what they are looking for. So the future of this is hyper-personalization, trying to embed all the data points and all this information and giving a very enriched digital product to the sports fan. The competition here is globally for the Tier 1 sports, and the NBA prides themselves to be the most innovative sport. So for us, that was one of the big decision points why we chose NBA as our premium partner for this to be innovative, but that's where the market is going. And I think for the Tier 1 rights holders, That's a very important aspect to use technology to distribute their product further. Yes, there is a good side aspect for us in sports betting. Given the size of the global media market, you see where this is trending to. And Sport Radar is embedding itself as a technology partner, premium partner for the NBA.

Thank you.

Thank you.

Our next question comes from Steven Grambling with Morgan Stanley. Your line is open. Our next question comes from Steven Grambling with Morgan Stanley. Your line is open.

Hi there. Thanks. Can you hear me? Yes. So I guess a couple follow-ups on the RE-ORG. One, I guess where are we in terms of the labor savings, achieving those, Where have they generally come from so far? And is the business right now being operated the way that the segment results are currently disclosed, or is it much more centralized? Thanks.

Yeah, the majority of the actions that we announced at the latter half of last year are complete. You'll see the benefit of those flow through in 2024 more in the second half of the year than the first half of the year. As we indicated in our prepared remarks, as you're thinking about your models and you're thinking about EBITDA margins, think about sort of mid-teens for the first half of the year and then growing into the 20s in the second half of the year. It's just a function of the sports rights and obviously getting the benefits from the actions we took in 23, but also our continued focus and profitability in 24. So from that point of view, that's how you should think about it.

Maybe if I can add more on the CEO personal note here. The teams are feeling extremely empowered with the reorganization. We focus razor sharply on the product, on the ROI, and on the growth and the innovation which is driven there. We have significant more clarity and significantly more focus to execute on this. So that comes from inside the organization. It needs some time to restructure now all teams and scale this down, but we feel very strong about this, and we see very positive results already.

Thanks. And maybe as another follow-up on that, I think this is the first earnings call since J.R. announced your departure. It's not often we have this kind of change in the midst of a reorg. So I'd love to hear what you think are key focus areas for any incoming CFO and things you'd want to impart. Thank you.

Let me take this one. I think JIR did a fantastic job. So it's not only JIR in the financial department. JIR installed a chief accounting officer. We have here Jim sitting with us for the IR and the preparation and several other leaders which have been installed in the last year. So we feel very, very strong from a people perspective, from an organization perspective. And yes, it's sad that JIR took a personal decision depart but this is a team exercise we have a very strong team in place and as i said we are very confident to find a replacement for juror who is on the level of juror and who can help us to push the company further forward yeah i would just build on that um i haven't left the building yet but um you know as i think about the leadership team uh there's you know the seven of us in the leadership team

that group is very much, as Carson said earlier, very much focused on the priorities and the opportunities we have ahead of us. And one of those things as we grow our top line is operating leverage, as I said in some of the other questions. While that may sound like a finance thing, it's not. It's a visceral focus by the leadership on making sure we're investing in the right areas and we're managing our run rates in a way that we are unlocking that value. That's not going to change. And whoever comes into the CFO seat, as Carson said, we have a very strong finance organization. But more importantly, they're coming into a management team that's dialed in on the opportunity. And what they need to do is continue to focus us on the right ROIs, the right level of operating leverage, and let the rest take care of itself. So I think from that point of view, just to build on Carson's point, we have a very strong team in this organization. My personal decision aside, this company is well dialed in to continue to grow profitably.

That's great. Thanks.

Operator, we'll take our last question.

Thank you. Our last question comes from Sean Kelly with Bank of America. Your line is open.

Hi. Good morning, everyone. Can you hear me?

Yes.

Great. Thank you for squeezing me in here. So I just wanted to go back to the sort of MTS and MBS growth that you saw. And just I'm thinking more about 2024 and just trying to get a sense of it. It goes back a little bit to I think David's question at a high level. Are there any sort of new geographic markets that are sort of meaningfully outgrowing the core? And I guess Carson, the reason I ask is obviously we see some maturity and some regulatory headwinds in the more mature European markets, particularly the UK and the Netherlands. So just trying to think about where you're seeing globally that meaningful outsized growth. And specifically, is there anything in for Brazil or is that entirely upside if that market comes online in the second half?

Yeah. Hi, Sean. So we see Brazil, as I just told. So the opportunity here is probably a 5 billion GGR per year for the next three years. That's a 15, comparing it with the U.S. with a 10 billion. That shows the size and scale, of course. That is the optimistic case here that the regulation goes fully in place in a way that the sports folks are empowered to really invest decently in that market opportunity. So we are very bullish and optimistic on this. There are a couple of other small states in Latin America where we think that's interesting. It's interesting to look into. Africa continues to grow besides all the local issues which we see in Nigeria and South Africa. We see overall a strong growth here. In Europe, you are right, there are countries where we see it is a bit more difficult. The UK is probably the most prominent of this. But there are other opportunities, for example, in Italy or in Croatia where we see the opposite. So I would say that's a balanced view for Europe. Looking into Asia, we have continued to monitor India very closely. We are looking to the Philippines here. And we believe there is an opportunity, not in this year, but maybe in two or three years in Japan, not so much in China. So overall, if I'm looking around the globe from a growth opportunity, we see significantly more opportunities than threat. That's the overall picture. Looking to MTS and MBS, we see enormous scale. We see that we established here a system which is really solving a problem for the operator. It's delivering a higher return for them in the risk management. with a lower cost. And we see that this product is really sensational performing. That is something which we can relatively quickly implement with the operators, the risk management. The managed betting service and the platform is a slower development. It takes longer, longer lead times to convert operators on the platform. But we showed that we can do this on scale with the Taiwanese lottery. And we are building up here a very strong pipeline for looking into the managed betting services in the future. It will take a bit longer than the MTS integration. And to finally give you the percentages, 75% of it is MTS, 25% of it is the managed betting sportsbook services, what we predict in the next years.

Great, thank you so much. And then maybe as just a follow-up, same idea, but, you know, obviously the year experienced a little bit of pressure in the rest of world betting segment margins. Is that just, I mean, amortization of sports rights across the broader global portfolio, or is there anything else that's driving that? Do you expect that to start to level out again as you gain operating leverage? Anything specifically to call out on the segment margin side?

No, I think it's partially due to the point you made, sports rights. Obviously, we're continuing to invest in our global platform with the majority of that cost would be hitting the rest of the world, which is the largest part of our scale. As you think about moving forward, the rest of world is sort of, you can look at the total company view and the rest of world is very similar. We do expect to see operating leverage over the coming years out of rest of world. We actually expect, I know you made some comments about some of the more developed markets. We still expect our rest of world business to grow very strongly over the coming years. And for all of the reasons we've said in the various questions and the prepared remarks, So, yes, the rest of the world is expected to follow a similar flow for the total company, which means operating leverage coming out of 24 into 25 and 26.

Thank you so much.

Thank you, everyone, for joining us for our earnings call. We'll turn it back to the operator.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.