Sportradar AG has celebrated the performance of its US operations, which turned profitable for the first time since its IPO during Q3 after securing a long-term extension to its deal with FanDuel.
Reporting its third quarter results, Sportradar declared total revenues of $185.6m, up 31% year-over-year, driven by US and Rest of World Betting division gains.
Sportradar US division soars
It was the US operations that stole the headlines, though, with revenues hiking 61% up to $32.8m, largely attributed to a strong increase in its US betting services and the cross-selling of non-data products to operators whilst benefiting from wider US market trends.
Notably, the firm turned profitable in the US for the first time since its IPO, with adjusted EBITDA of $3.58m compared to a loss of 6.6m in Q321. Its adjusted EBITDA figure in the US was 11% from (34%) one year ago.
The improvement in performance was attributed to the ‘enhanced operating leverage as a result of the growing scale of our business’ in the wake of heavy US investment.
A key US deal sacred during Q3 was the long-term extension to its deal with FanDuel for the official NBA data until the 2030/31 season.
Continuing its collaboration, Sportradar and FanDuel will aim to enhance the sports betting experience with player tracking data to develop props and same game parlays.
Carsten Koerl, Chief Executive Officer of Sportradar, said: “Our strong performance in the third quarter exceeded our expectations across all key financial metrics. We consistently managed to grow revenue, profitability and cash flows despite adverse market conditions during the first three quarters of 2022.
“We are proud of the continuous success of our US operations. We managed to generate a US profit for the first time in the third quarter, displaying solid operational leverage in the business model. Underpinning this success is the extension of our long-term partnership with FanDuel.
“This partnership is a testimony to our strategy, to expand our relationships and become an embedded technology provider for our customers, based on strategic long-term deals with our league partners.”
Further operational improvements have been made to the business during Q3, including the evolution of Sportradar’s structure, appointing global leaders for content creation, product development and commercial excellence. Sportradar maintained that its US segment will retain a ‘go-to-market’ approach.
This approach has been taken to ‘become faster in decision-making and execution, and will be more effective and efficient in serving global customers’.
Whilst revenue has risen, Sportradar’s cost base has also risen; purchased services and licenses costs increased by 18.1m compared to Q321 due to the increased investment in coverage, whilst personnel expenses increased by 16.9m, or 33%, owing to inorganic growth from acquisitions in the AI space.
Despite increasing costs, the group’s adjusted EBITDA increased by 75% YoY up to $37.9m as Sportradar continues to focus on profitability.
This was achieved at a margin of 20% compared to 15% in Q321.
Q3 also saw Sportradar clear debt with a $207.6m prepayment on its outstanding liabilities. By the quarter’s end, Sportradar owed $245.9m.
Following the strong results, in which the group outperformed expectations, Sportradar has raised its full-year guidance. Its revenue expectation range now stands at $703.6m-$708.5m, representing 28-29% growth YoY, whilst its adjusted EBITDA expectation has narrowed to $121.5-$124.5m) at a margin of 17-18%.
Ulrich Harmuth, Interim Chief Financial Officer, added: “The financial results in the third quarter demonstrated that Sportradar consistently has managed to grow almost three times faster than the underlying betting market and our growing scale has led to margin expansion – as indicated by the US segment turning profitable in the third quarter.
“As a result of this strong momentum and based on what we can see today, our 2023 preliminary expectations are for revenue to grow in the mid-20s percent while expanding Adjusted EBITDA margin above 2022 levels.”