The most recent Q3 results from Sportradar marked the first time that the company was profitable for the US market since its IPO, an achievement which the sports technology company has taken great pride in. And rightly so.
The post-PASPA market has arguably been one of the biggest growth areas for Sportradar in recent years, and hitting profitability nearly two years ahead of schedule is no small feat.
So it comes as no surprise that when chatting with SBC, interim Chief Financial Officer Ulrich Harmuth pinpointed its US growth as a major milestone for the three months ended 30 September 2022.
“One of the biggest successes for us was that we achieved profitability in the US,” he began. “We said for quite a long time that the US market is going to work for us in a similar way as our Rest of World markets. We have made meaningful and accretive investments into our products, our content and our infrastructure. Then, with the increase in revenues, we will see operational leverage and turn profitable over time.”
New markets, new opportunities
As you might have guessed by now, the US is a huge growth market for Sportradar. And with over 30 states now open for sports betting, it’s safe to say that any new regulated market only presents further opportunities for the technology company.
But unlike a B2C sportsbook, Harmuth told SBC that there is less barrier to bringing in additional revenue in a newly regulated market like the U.S. for Sportradar – with minimal associated cost.
“Most of our customer contracts, if not all, are revenue share contracts. In simple terms, if the market is growing, our revenues are growing as well. .
“For us, a new state really brings new sources of revenue at almost no additional cost. We have the products, we have the sports rights, we have the teams in place to serve those customers. To a large extent, we’re often working with the same customers in new states as we are in more mature ones. When a new state opens up, that’s an incremental revenue opportunity for us.”
In-play betting: a catalyst for continued growth
According to Harmuth, he sees the Company’s revenue share contracts with operators, its continued broadening of customer relationships, and the pick up of in-play betting as the three core drivers in continuing to fuel its U.S. growth.
“The quicker adoption of in-play, in particular, helped to accelerate our route to profitability which generated a higher revenue opportunity for Sportradar. We are also excited about this as it makes betting a much more exciting experience for fans.”
“In our revenue share deals, we participate at a higher rate in in-play revenues compared to pre-match revenues. In Europe, we made more than 90% of our betting data revenues through our in-play products. That’s really a testament for our strength in in-play – and we see no reason why the in-play share in the U.S. should differ from the one that we have seen in the European markets.”
To fully elevate that in-play experience, Sportradar has been working alongside its league partners to create products that cater to the fans.
This, Harmuth explained, is done by working with its network of partners – in particular sportsbooks and leagues – and discussing what key areas can Sportradar contribute to the development of exciting new betting products and services.
“That is how we have made ourselves indispensable to the entire value chain.”
Moving up the value chain
Among the company’s recent major milestones was the October announcement that Sportradar and FanDuel signed a long-term agreement for official NBA data through the 2030-31 season.
As part of this deal, Sportradar and FanDuel will work together to create innovative products such as the use of player tracking data to enhance the betting experience. While FanDuel is the first US operator to use Sportradar’s official NBA data, Harmuth anticipates this is just the start and that more operators will sign up.
“With this deal with FanDuel, we moved from preferred data provider, which was already a great achievement, to an embedded technology provider. That’s really what we want to do. We want to move up the value chain with our customers. We expect that we can evolve other customer partnerships in a similar fashion.”
Whilst the US was a key focus for the CFO, the company’s Rest of World operations also deserve the limelight in their own right. Primarily focused upon the more mature markets in Europe, Sportradar has continued to see solid growth across this sector of the business.
Harmuth continued: “We are still seeing growth in our Rest of World business. We have achieved that by upselling more data and video content to our customers and cross-selling our product portfolio to more of our partners.
“You have seen in our results that our Managed Betting Services is the area that is growing the fastest for us. That’s the highest value-added product in our data value chain where we serve the customers not only data, but also odds, our trading as well as our platform.
It is often quite tricky to make an accurate prediction of what comes next for a company. But whilst not giving up any of Sportradar’s secrets for the next quarter, there was one thing that Harmuth was confident about – that was the company’s solid plans for continuous growth in the months to come.
“We were pleased with our most recent results. We will not deviate from our course and will continue to embed ourselves in this industry working alongside our valued customers and partners to create the most innovative products for bettors and fans to enjoy.”