Sportradar Group AG

Ladies and gentlemen, thank you for standing by. Welcome to the Sport Radar Third Quarter 2024 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 would 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 like now to turn the conference over to Jim Bombese, Head of Investor, Corporate Finance. 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 2024. Please note that the slides we will reference during this presentation could be accessed through the webcast or on our website at .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 the analysts and investors. In the interest of time, please limit yourself to one question and 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 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 6K filed today with the SEC, 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 findings with the SEC, each of which is posted to our investor relations website. Joining me today are Karsten Kurl, our CEO, and Craig Felinstein, our CFO. Now I'll turn the call over to Karsten.

Thank you for joining our third quarter earnings call. I'm very pleased to share these excellent results with you. Our business delivered on the key metrics that drive value with revenue growth of 27%, adjusted EVTA of 30%, and strong free cash flow up 140% -to-date. We grow margins in the quarter and are once again raising our full-year guidance. And now expect margin expansion for the full year. This performance was fueled by the continued execution of our strategy and underpinned of our core competitive advantages, including the depth and breadth of our sports coverage, broad product portfolio, and unmatched global distribution network. Our unparalleled scale and expertise make us indispensable to the sports ecosystem. We bring together 800 operators, 400 sport leagues, and 900 media companies to cover close to a million matches annually. We have the richest and deepest data sets in the industry, which we efficiently monetize to consistently outperform the market. Importantly, we are now on an inflection point to drive multi-year operating margin expansion, generating significant cash flow, and deliver meaningful shareholder value. We believe that free cash flow is the key driver of value, and we are laser-focused to drive more and more every dollar to the bottom line. Our ability to generate substantial profitability and cash flow is the result of the scale of the business we have established and this between which we are operating. Let me elaborate on some of the reasons that are driving this inflection point. We have built strong foundations for our business with a diverse portfolio of products and broad client distribution funnel, which are leveraging to monetize our global sports content. We have nearly all our major sports content secured for long-term, including basketball, soccer, hockey, and tennis. This provides us with significant visibility on a key part of our cost structure, as well as a long runway to innovate, expand and grow our product offering, and drive our ROI. Access to deep, rich data combined with advanced proprietary technology is fueled our next generation of hyper-personalized products. We see an exciting opportunity to tap into the growth demand from fans and operators for deep engagement with the action on the field. By building products that are quickly scalable and launching them in one sport, we are able to leverage them across our sports portfolio, resulting in a shorter time to market. Harnessing our live sports content, we are creating innovative solutions ranging from cutting-edge visualization to enhanced ops through in-game betting markets. We are redefining the standard of fan engagement, opening new revenue streams for our clients, and increasing our share of the wallet. A great example of how we are doing this is through our partnership with the NBA. We announced a couple of weeks ago, ahead of the new season, we are quickly scaling the number of cutting-edge products, including four-site streaming, enhanced embed offering, and our thoughts. Let me pause on the award-winning four-site streaming product for a moment. Four-site streaming enhances our core audiovisual offering by seamlessly integrating animated overlays, such as live broadcast graphics, statistics, and visualization, directly into the video screen of the games or sportsbooks. Because our products are developed with flexibility and scalability in mind, we have been able to seamlessly adapt four-site from tennis since we launched this ATP earlier this year, through our complexities of the multiplayer teams for like basketball. This leads to an enhanced viewing experience, deeper engagement, and more in-play opportunities. The four-site product targets the fast-growing in-play gaming sector and optimizes acquisition, engagement, and retention by leveraging our cutting-edge technology. Approximately 25% of our audiovisual clients have signed on the four-site today already. We have exciting plans to launch four-site streaming in other of our sports content early next year. Turning into in-game betting, our premium sports portfolio is ideally suited for this format, with start-stop action, extended season, and high game volume spread throughout the week, maximizing engagement opportunities for better. One of our recent offerings, MicroMarket Betting, tap into this potential, allowing fans to wager on a -by-minute outcome during the game. The real-time rapid bet cycles amplify the excitement of live sports and enhance the fan experience. MicroMarket is a great example. Our sport radar is leveraging AI and computer vision to turn in-depth sports content into new value for our clients. This year, we introduced MicroMarket Betting in ATP, building on its success, launched in Socrates. Currently, we offer eight MicroMarkets, providing up to 1,500 new betting opportunities for a tennis match. We are rapidly scaling and expanding, with plans to bring MicroMarkets to additional sports, including basketball, football, baseball, and ice hockey by early 2025. Building on our continued success, we are also excited about our managed trading service or MTS, a core solution designed to help operators manage and optimize their trading performance. MTS continues to experience strong growth. For the trailing 12-month, ended September 30th, we managed turnover of approximately 35 billion euros and achieve a margin of approximately 10% for our sportsbook clients. This translated in GGR rules, approximately 37%. Additionally, over the course of this year, we have signed up a number of new sportsbooks for our managed trading service, demonstrating the growth, trust, and reliance on MTS by our clients. AlphaObs, our AI-driven real-time betting odds tailored for sportsbook, using their real-time liquidity in our access to extensive sports data, is also seeking uptake from our clients as they gain the benefit of higher margins in their trading performance. It is worth noting that with tennis, soccer, and basketball, AlphaObs now covers 80% of MTS turnover with cricket following in early 2025. Now turning into our marketing services or ads business. We are excited about the opportunities that have as we have added additional capabilities. We built the business on the back of our MTS platform, which provides us with unique insights into battles across hundreds of sportsbooks. Gaining fan insights from billions of data points, our ads business delivered more than 50 billion ad impressions last year alone. This performance based on business has demonstrated ability to acquire customers for sportsbook at up to 40% lower cost. Again, similar campaign running by other platforms or agencies. We are expanding our offering to provide a 360 degree value proposition for clients. In addition to our current programmatic paid social and page search offerings, we are adding the capability to acquire users through the affiliate chat. And we see clear opportunities to expand beyond the betting industry, given the highly attractive, high intent both fan and demographic. Our product innovation and ability to quickly scale solutions to meet our client needs will enable us to continue to outperform the market. Equally important is being disciplined, proposal and strategic in spending every dollar we granted to ensure that we maximize shareholder value. We are intensively focused on managing our major cost buckets driving efficiencies across the board and maximizing cash flow, which our TFO will discuss shortly. With the long term cost visibility of our major sports, right? And the steps we are taking to manage personnel and other operating costs. We are at an inflection point for expanding operating margin and increasing ash flow generation. This process exceptional performance highlights the strength of our business and the continued execution of our strategy. Our achievements are a testament to the value we are creating for our clients, partners and shareholders alike. We have singularly focused on delivering what drives value and we are excited about our mission plan and continue innovating and lead the industry. We look forward to sharing with you more about our plan and opportunities ahead at our investor day on March 25th next year in New York City. More details will follow. Thank you. I will now turn it over to Frank.

Thanks Karsten and thank you everyone for joining us this morning. Sport Radar's unique position at the intersection of the sports, media and betting industries continues to drive strong financial and operating momentum as we leverage our diverse products portfolio and high demand content across our deep global customer footprint. Before I dive into our strong quarterly results and raised full year expectations, a brief housekeeping note. In an effort to further increase transparency, beginning this quarter we have included some additional breakdowns in our earnings release and earnings presentation such as further detail on revenues and expenses including total sports rate expense. Additionally, we are now providing detail on free cash flow. Turning to the third quarter, Sport Radar built on the momentum generated during the first half of the year as the company delivered another quarter of strong revenue, adjusted EBITDA and cash flow growth. Record third quarter revenues of 255 million increased 54 million or 27% as compared with the third quarter of 2023 led by higher spending from clients including incremental contributions related to our new ATP partnership deal. We continue to have success growing our client relationships by increasing uptake of our leading products and solutions as demonstrated by our three Q net retention rate of 126%. Looking at the individual product groupings, we delivered broad based growth across both our betting technology and solutions products as well as our sports content, technology and services. Betting technology and solutions revenue of 210 million delivered 32% growth versus the third quarter a year ago. The increase was driven primarily by 37% growth at our betting and gaming content including 56% growth at our streaming and betting engagement products, most notably due to strong growth in audio visual revenues. Odds and live data also performed well of 24% year over year. Both AV and odds in live data benefited from existing and new customer uptake of our products and premium pricing including from the addition of ATP content as well as strong US market growth. Additionally, managed betting services grew 18% led by continued strong managed trading services performance due to higher trading margins and more betting activity from existing and new clients of our sports book partners. In managed betting services, this performance was partially offset by comparisons to last year's initial setup revenues related to hardware deliveries for the Taiwan lottery deal which benefited both the third and fourth quarters of 2023. Sports content, technology and services products also delivered strong results this past quarter with revenues of 45 million increasing 8% year on year led by marketing and media services growth of 10% due to the continued growth of our ad business as we saw several sports books investing in marketing campaigns in 3Q. The growth across all product groups was significant worldwide, especially in the US as we continue to outpace the market growing 46% year on year and representing 20% of our revenues in the quarter. The revenue growth across our product portfolio translated to significant adjusted EBITDA growth with adjusted EBITDA of 66 million increasing 15 million or 30% year on year. We also delivered total company operating leverage with adjusted EBITDA margin expanding to .8% despite the increased sports rights costs as we continue to be diligent across our cost infrastructure. Looking at the individual cost buckets, I will be speaking to adjusted expenses to provide a breakdown of the expenses that impacted adjusted EBITDA. We have detailed in the earnings release and the financial section of the earnings presentation, the bridge from IFRS amounts. This past quarter sports rights increased 77% to 63 million in the quarter due primarily to the new ATP rates which are driving significant revenue growth as we upsell solutions to existing clients as well as add new clients given the premium nature of this content. We see significant opportunity going forward to drive incremental value across our existing sports rights portfolio as we developed and scale our premium products and solutions for our global customer base. As Carson mentioned, we continue to be disciplined and strategic in building up our premium rights portfolio and have significant visibility moving forward having secured most of our largest rights under long-term deals. Net adjusted personnel expenses were 69 million in the quarter of 21% year on year and down approximately 140 basis points as a percentage of our revenue. Please note that the prior year third quarter did have a one-time benefit related to the reversal of the bonus accrual. In the absence of this item, personnel expenses would have increased mid single digits versus last year. We will continue to closely manage headcount to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage. In addition to the leverage we delivered across our personnel costs, net purchase services expense of 36 million increased only 5% versus last year as we further leverage our existing infrastructure while at the same time invest in our product portfolio. Importantly, this represented a decline of approximately 290 basis points as a percentage of revenue. Adjusted other operating expenses of 21 million decreased 10% versus last year, a decline of approximately 330 basis points as a percentage of revenue as we continue to be vigilant in managing our cost structure. There is inherent scale and operating leverage in our business and we expect to meaningfully expand total company margins as we drive further revenue opportunities, closely manage our cost infrastructure and realize the benefit of sports rights being amortized on a straight line basis over the life of each contract. We generated a profit for the quarter of 37 million, an increase of 33 million versus the 4 million reported in the third quarter a year ago, led by the 15 million improvement in adjusted EBITDA and 21 million higher foreign currency gains primarily resulting from unrealized currency fluctuations associated with the US dollar denominated sports rights. The prior year included one-time losses related to impairment on goodwill and intangible assets. The -on-year increase in profit was partially offset by higher sports financing costs, primarily related to our new ATP and NBA deals. Turning to the balance sheet, we continue to be in a strong liquidity position, closing the quarter with 368 million in cash and cash equivalents, an increase of 46 million from the second quarter with no debt outstanding. -to-date, we have generated free cash flow of 122 million versus 51 million in the same period a year ago, led by strong cash flow operations, primarily as we leverage our expanded sports content portfolio. Since the second quarter, we have ramped up the repurchase of shares under our $200 million share repurchase program. As of November 1st, we have repurchased approximately 20 million worth of stock at an average price of $11.42, including 8 million in the third quarter. We continue to believe that our shares are undervalued given the strong growth we are delivering and the expectations for significant further margin expansion and cash flow conversion in the future. It is important to note that our capital allocation priority is investing in expanding the long-term growth potential of the company, and we will weigh returning capital to shareholders versus additional organic and M&A investment opportunities in both the short and long term. Turning to our full year expectations for 2024, given the continued operating momentum and strong results during the third quarter, we are again raising our full year guidance. We now anticipate revenues of at least 1.09 billion, an increase of 20 million versus our prior guidance, and up 24% versus 2023. And we now anticipate adjusted EBITDA of at least 216 million up 12 million versus our prior guidance and growth of at least 29% versus 2023. The strong adjusted EBITDA growth is expected to result in full year adjusted EBITDA margin expansion in the current year, despite the significant ramp in sports costs. Please note that these expectations reflect the lapping of our NBA deal, which began in the fourth quarter a year ago, and the benefit from the initial setup fees related to the Taiwan lottery deal in last year's fourth quarter. From an operating leverage standpoint, we continue to expect significant margin expansion in the fourth quarter. Turning to cashflow, while we anticipate strong free cashflow growth and conversion for the full year, note that our fourth quarter cashflow results will be impacted by the timing of sports rights payments. Overall, the continued strong results during the third quarter demonstrates sport radars, significant growth opportunities in 2024 and beyond. We will continue to drive revenues and shareholder values through product innovation and development, higher pricing across our content portfolio, and the expansion of our addressable market, both in the US and across the world, while converting more and more of each dollar into EBITDA and free cashflow in the months and years ahead. Thank you for your time this morning, and now Carson and I will be happy to answer any questions you may have.

Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced and to withdraw your question, please press star 1-1 again. And also as a reminder, please limit to one question and one follow-up. And our first question is gonna come from Ryan Sigdahl with Craig Hallam Capital Group. Your line is now open.

Morning, Carson, Craig. Nice job, guys. Wanna start with the increment or the guidance raise. So incremental margins implied at 60% on the upside from revenue EBITDA. I guess, are there any big investment plans or stair-step functions on the cost side that we should anticipate in 25, 26? Or as I look at slide 18 of kind of that margin improvement, 17% to 19 to 20 over the last three years, that that should accelerate in 25, 26 as you get better leverage on those straight-lined sports rights.

Sure, thanks, Brian, and thanks for the kind words. So when we think about 25, and we'll provide obviously guidance for 25 on our fourth quarter call, but when you think about the margin expansion opportunity, which you'll start to see, frankly, in the fourth quarter here as we lap our NBA deal, so you'll see nice margin expansion in Q4 of this year, and that margin expansion will continue significantly in 2025. The drivers behind that margin expansion are gonna be really a couple of things. One, really strong continued revenue growth, which we do anticipate for 2025, so that'll be the biggest driver. And then you're gonna leverage that revenue growth across, I would say, all cost categories. Certainly on the sports side of the house, your sports rights cost increase will be significantly less next year than it was in 2024. So you'll be able to leverage your sports rights next year, and then you're gonna get leverage across all your other cost categories, certainly personnel costs, but as well as some of your back office technology costs, your marketing costs. So there'll be a variety of ways to achieve leverage growth here in 2025 as we move forward.

Thanks, Craig. For my follow-up question, looking at slide eight, the four-site streaming, it seems really cool, but I guess for the 25% of clients that have used it, are you seeing a better uptick of in-play betting using this four-site streaming versus the traditional digital AV feeds given? I would presume this is less latency behind it.

Hi, Ryan, Kirsten here. You're right, yes, there is less latency behind it. That's the reason why we started with tennis. Now we go on the other properties, basketball is the next. We wanna stimulate here, and what we see in the numbers is an uptick already. We see the market then roughly 35 to 40% from a live proportion perspective, and as you know, every percentage point flows more or less through on our balance sheet, which gives us at the moment, this leverage 1.6 million. There are little costs in cloud computing and those things, but it basically flows through. So what we wanna do with the product is stimulate for live betting.

Thanks guys, good luck. Thank you.

Thank you. And the next question comes from Michael Graham with Canaccord, your line is now open.

Thank you, and it's great to see the margin flow through here despite the higher sports rights cost, very encouraging. I wanted to just ask for my first question, if you might give us an update on the MLB deal, and if you can't say much about it, would you be willing to reiterate that you still expect to see leverage on your sports rights costs after that deal is incorporated into the model?

Hi, Michael Carsten here. The MLB season is now finished, and we are very, very happy about the partnership with the MLB. We are in excellent discussions, I would say. I can't announce anything today, but we are very optimistic that we will prolong this partnership, and this partnership will be margin-increase for us, so you can calculate that whatever we do here has a positive impact on our margin and earning profile.

All right, that sounds great. And then just as a quick follow-up, we've been having a lot of conversations about Brazil and the potential for that market. Can you just talk about your plans here and give us any updates that you have on Brazil?

Oh, Michael, I have... I think we can spend two hours with updates on Brazil. So it's a market which is... There is a lot of progress in there. What we did now is we established an office that was not quite easy in Brazil to get all these setups done. The teams are working now full steam on it. We have early success, so we converted 13 clients for our MTS product, where we do the complete trading. And now we're beginning to get traction in the market. What we see from a legal perspective, we see a lot of politicians in the Senate lobbying for a ban of advertising. I even saw lately that some politicians are suggesting to stop the law which they put in place a couple of months ago. So that's usual for such early stages in the market, but what has happened is definitely the government is increasing the speed and increasing the demand on the operators to be now licensed. So the plan is beginning of January, you only can operate as a licensed operator. We have no doubts that this will happen. And we see a good trajectory in the market for our products. We see a good early pickup. Now it's up to us that we complement the product line. Lots of opportunities in bad engagement tools, lots of opportunities with advertising. And of course, we are pretty strong with the common goal and the soccer content which we have. So we are ramped up in a market which is demanding and challenging. You're gonna need to be really every second on your toes and that's what we are doing here.

Thank you, Karsten.

And our next question comes from David Katz Jeffries, your line is open.

Hi, good morning everybody. Thanks for taking my question and congrats on the beat and the raise. Appreciate it. First things first, with cash conversion levels today, can you help us think about where an aspirational cash conversion from EBITDA might be? And obviously the embedded part of that question is the allocation. I mean, the 20 million is a nice start. How do you see that allocation rolling forward and whether any acquisitions could get in the way? And I know there's a few in there, sorry about that.

Sure, so I'm not sure I understand the second part of the question, but let me answer the first part of the question about cash conversion. So obviously the company has made, what I would say is pretty strong strides with regards to cash conversion. Look at what cash conversion was a year ago in 2023, it was closer to 30%. This year it'll be north of over 50%. So really nice effort, not just in terms of free cash flow generation, but free cash flow conversion. We would expect that free cash flow conversion to continue to grow. We're not gonna put a target out there longterm at this point. We'll talk more about that on our investor day next year. But when you think about the cash properties of this business, there's a significant amount of cash that flows in ahead of performance, which will help your working capital over time. And we expect that to help us drive our free cash flow conversion rates higher than where they are today. So that's kind of our plan here moving forward as we focus on all aspects of the cash flow of the company.

Understood, and then as my- Can you repeat the second part of your question,

please?

Well, yeah, sorry, and I hope it's not spending my follow-up. I wanna follow the rules. But the question was whether there could be any tuck-ins or any kind of acquisitions probable or likely that would get in the way of capital returns.

Well, like stated multiple times, so the first thing is when we are looking now into expansion and investments, our own product, we are growing pretty strong, so that's our key focus there. We see, of course, potential consolidation opportunities. We monitor the market very careful. We look to things which are complementary. So that was Excel Media, where this was the missing piece in the 360-degree proposition which we had there, so we did an acquisition there. And we have so far 20 million buyback in our buyback program. And nothing has changed in these priorities,

David. Yeah, the one thing that I'll add to that commentary is when we do look at M&A opportunities, we do look at them in the context of our margin expansion opportunity across our entire portfolio. And the Excel Media deal that we completed or will complete here shortly will be margin-accretive for us moving forward. So that's the kind of deal that we're looking for as we look at M&A opportunities in addition to the organic rules that we have here today at the company.

Understood, I'll leave it there and come back around and yield the floor. Thanks very much. Thank

you. And the next question comes from Bernie McTernan with Needham & Company. Your line is open.

Great, thanks for taking the questions. Just wanted to follow up on the MLB. Carson, you said you expect it to be margin-accretive. Is that a day one comment or over the life of the contract? And the reason why I ask is because a big question we get on data providers in general is if they're gonna get, or if you guys are gonna get squeezed by the leagues over time. So can you talk to me maybe why you think you're able to get the MLB rights at a favorable price and how product and tech played into this?

Well, Bernie, you might understand that I cannot give you the details of what we currently discussing. But giving you a heads up, because we know the partners since a long time, I think we found a model which is working very good for the partner and for us. That we from the start see this deal already in the range of being margin-accretive and then getting of course better with the duration. Over the term, this deal is contributing and you know that our target margin is 25 to 30%. I can't give you more details on this, otherwise I would disclose things which I'm not allowed to disclose. But I hope it answers your question and you do not need to calculate with a big hit in your modeling here.

That's helpful, but we'd love to just to get a sense in terms of what maybe products and technology that you offer that maybe excites the MLB or other league partners in general in terms of the conversations that you're having with them.

The really exciting piece for the MLB is not so much the US market, it's the expansion opportunities around the globe. Taiwan is there, Korea is there, Japan is a market where we are super, super interested in. They are super interested. It's leveraging technology, computer vision, tracking, getting things like force size, but in a more sophisticated way for those target markets. And we are perfectly suited for them because we are a global enterprise. We have long-term relations. We know how to get that to the market and to get that power of technology to the sport firms around the globe. And of course, also for the sake of increasing the betting revenues here. This is the main focus area.

Got it, thanks Carson, appreciate it.

And the next question comes from Robin Farley with UBS. Your line is open.

Great, thank you. So if you don't mind just one more on the MLB contract, just to be crystal clear, your, what you know to, I understand it's still a discussion, but basically you fully expect your 2025 EBITDA margins overall to be higher than your 2024 EBITDA margins, right? Inclusive of whatever costs come when you do announce the terms of MLB. Is that kind of what you're trying to communicate or am I putting words in your mouth?

Yes, yes,

very simple,

yes.

Yeah, and I'll add, don't forget, we're now looking for margin expansion now Robin in 2024, even with the sports rights that we've taken on this year. So when you think about next year with MLB, we'll already have lapped the NBA deal, we'll have lapped our ATP deal, and we're gonna get leverage across a variety of these contracts here moving forward. So we certainly expect 2025 to be much higher margins. And that's not just for 2025, we expect margin expansion, certainly as Karsten said, over a multi-year period to get up to that 25 to 30% range.

Okay, perfect, thank you. And then just as a follow-up, when you're talking about foresight, I think you said 25% of your audio visual customers are using that. Can you talk about, does that tend to be in the larger sportsbooks or a different group? In other words, where are you seeing the sort of early adoption? And then are others testing it or kind of, do you think that there'll only be a certain percent of sportsbooks using that? Just get your expectations there, thanks.

Well Robin, it's a broad mix geographically, also from a size tier one to tier three to tier three. So there is not a specific pattern in this region or for this size of the sportsbooks, it's picked up better or worse. It's picked up pretty good, as you see with the number. And what the product should do, and I think that's the most important one, the product should stimulate for live betting. So this is the main purpose of it. And we are super happy with the strong pick up there. From a monetization perspective, it's not so much the product, it's more what we get with MTS and what we get with our live thoughts and additional traffic. And the numbers here are very encouraging and we continue to expand it now and leverage it over many more sports as announced.

Okay, great, thank you.

Thank

you.

And our next question comes from Jordan Binder with Citizens. Your line is open.

Good morning, everyone. Carson, maybe just a follow up first on the XL Media acquisition, the thesis around you're gonna do an acquisition for margin expansion. Can you just help us or get more granular in terms of the benefits, in terms of revenue and cost energy that you might get out of XL Media?

Let me give you first the high level idea around it. And then for the detailed numbers, I hand over to Greg. XL Media has at the moment, 70 million unique sports fans per month in the US with various sites that's either in partnership or own websites. So that's an affiliate business, which is highly valuable for our 360 degrees value proposition. And that starts with the programmatic advertising, goes into the paid search, goes into affiliate, and then of course, also into customer retention. Two years ago, we did an acquisition with Wikes for customer retention. And now we fill that gap from affiliate perspective with XL Media. We fill it by purpose with the US business because from a cost perspective, this is the market where we see the best pickup for affiliate business. So that is the core idea of it. We think by embedding it now into our 360 degree solution, we get the best leverage for the property and XL Media obviously thinks it in the same way. So as a standalone property, it is profitable, but integrating it now is making it really strongly valuable. And like Greg said it before, of course we expect a margin uplift by integrating this into our 360 degree value proposition. Greg, do you wanna add something?

Yeah, the only thing I'll add is when you think about the impact for 2024, it will certainly be minimal just given the timing of where we are in the year when the deal is ultimately expected to close. So you won't see much uptick here in 2024. There will be some benefit obviously in 2025, but as Karsten mentioned, a lot of that will depend on how much we are able to integrate this with our current ad offerings and our current customer acquisition offerings for our clients. And we'll provide additional color on how everything is trending next year when we give our guidance for 2025.

Great, and you'll probably talk about this at your investment, but my second question here is, the EBITDA margin target of 25 to 30%, that's not new, but as we think about how do we get to the lower end versus the upper end of that range, is the main driving factor here just gonna be some future renewal periods? Is there anything else into that equation we should be thinking about?

Yeah, I would say that there's a number of things which are gonna drive it higher into the range. Certainly, first and foremost, and something that we sometimes forget about when we're talking about margin expansion, is how good we are on the revenue side of the house. Our ability to drive new products and drive new customer offerings off of the rights that we already have and off of the content we've already developed and drive new customer value will drive revenues, and that revenue will flow through more and more to the bottom line. So revenue is a big piece of that. Secondly, we're going to get leverage across all of our cost categories. How much leverage we get is dependent on how much we have to invest to deliver on some of these revenue opportunities, but we feel that we have a pretty good sight line to significant margin expansion, both in the short term and the long term. But the variables are gonna be how strong is that revenue growth and our ability to continue to manage our overall cost base.

Thank you very much.

And our next question comes from Samuel Nielsen with JPMorgan. Your line is open.

Hey, morning everyone. Thank you for taking my questions. With the MBA season underway, what kind of pricing premium are you seeing amongst your customers at the start of year two of the contract? And then I know you talked about some of the premium products you're having strength in the ATP deal, but how much more premium do you see out there from an MBA pricing perspective? Just trying to get a sense of whether the 4Q revenue growth exit rate is a fair assumption in the trap like 2025 revenue growth, or if we should expect more or less growth in 2025 and then kind of your exiting 2024.

Well, let me go general on the MBA. And for the 2025 numbers I hand over to Greg. Looking now where we are, we are three weeks in the season, so there is not too much to say about it. We see the predicted adaptation. We see that the property is picking up very, very well. In a very general way, and you referred also to the ATP, we reached an inflection point. We show now that we have a stronger EBITDA margin growth. And I think that highlights how good we did with these two major properties, which we onboarded in this year, ATP and MBA. So we are very satisfied with the pickup here. We are very satisfied that we could extend all the client contracts. We have every client now on the new contract for MBA. And for ATP, we continue still to sign up new clients. So from this perspective, it is slightly better than predicted. We are happy about the property and now looking on the long-term and those deals are going 2030 and beyond. We have an enormous leverage here because the deals are fixed. We add revenue growth on top of it. So that gives us exactly the leverage. But now I'm going into, or Greg is going into the details of 2025.

Yeah, so from, we look at 2025, obviously there's a number of ins and outs that come through. So I wouldn't necessarily use 2024's fourth quarter as a guide, but we'll give further guidance on our call here in early part of 2025. What I will say, when you think about revenue growth for next year, you think about what the overall market is growing across the world. And if you assume that that market is growing somewhere in the low double digit range, and you think back to the fact that we've outperformed the market for a multi-year period, we should be able to do better than that in 2025. And a lot of that's gonna be driven by the power of the content that we have, the power of the products that we've developed and the innovation that we have moving forward. And that's a combination of some of the sports content that we have, some of the products that we've built that Karsten mentioned here earlier. So again, we'll give further color here early next year, but we feel really good about the strong revenue growth we're gonna deliver next year.

Thank you for that, that makes sense. And then I guess, can you talk about some of maybe the key technology or customer engagement pain points that some of your larger OSB operators are coming to you and asking you to solve maybe going into 2025? And maybe like, what products you're seeing the most uptick in?

Karsten here, Samuel. So as Greg said, we see here from a growth perspective, the four big categories underlying market growth. It's low double digit around the globe, some markets better, some markets worse. It's a share of the wallet with cross sell upsell. It's the US with in-play betting where we see a strong pickup and it's adjacent markets. Marketing services is one sample of this. These are growth categories. And focusing now from a client perspective, yes, we want to have an easy integration that we can accelerate those growth categories and that's exactly what we focus on. Every client is telling us how to get the product easy integrated, very stable, very safe, very secure. AI helps in this perspective enormously. We onboarded as you know, a new CTO and CAIO. We did enormous progress on that sector. Easy integration of all our products and the content is key to success to leverage on those four core drivers for the growth. That's what we are focusing on in 2025.

Thank you guys, great job on the quarter. Thank you. We want to thank everyone for joining us for our call. I'll turn it back to the operator now.

This concludes today's conference call. Thank you for.