Sports technology firm Sportradar has posted a buoyant set of Q1 results for 2023, delivering growth in US revenue and adjusted EBITDA during a trading period that saw further big investments in AI and CV. Total Q1 profit, however, was lower at $7.4m compared with $9m year-on-year.
The firm’s latest results align neatly with the fifth anniversary of the repeal of PASPA, a fact not lost on CEO Carsten Koerl who said: “We see now an acceleration (in the market). In 2022 we doubled from three years ago from a volume perspective. We are still at the start, with big states to come in – California, Texas, Florida – they will significantly change the picture if that happens.
“There is a bright future from the number of people who have access to legal sports betting in the US. We saw an acceleration last year and we are seeing it also this year. We see a trend in the US that will go into more live betting, and we always said this.”
Turning to the key metrics, Sportradar’s Q1 report showed revenue ahead by 24% to $226.2m year-on-year, while adjusted EBITDA was up 37% to $40m. Growth in the latter, said the firm, demonstrated operational leverage from higher revenue “despite increased investment into Artificial Intelligence (AI) for liquidity trading, and Computer Vision technology”.
In Sportradar’s US segment, revenue rose by 55% to $43.3m year-on-year, with positive adjusted EBITDA for a third consecutive quarter. The upwardly mobile results were driven, said the firm, by higher sales of betting products as well as its digital advertising (ad:s) product.
US segment adjusted EBITDA for Q1 was $7.4m compared with a loss of $7m year-on-year. This, said Sportradar, marked the third consecutive quarter with positive adjusted EBITDA indicating “the strong operational leverage in the US business model despite continuous investments”. Segment adjusted EBITDA margin also improved to 17% from (25%) compared with the first quarter of 2022.
Koerl, updating investors, commented: “We started fiscal 2023 on solid footing, as we continued to deliver strong top-line growth, predominately by growing our value add products such as MBS and Live Odds in the Rest of World business, and strong, profitable growth in our US segment.
“We are also demonstrating operational leverage as we continue to focus on cost discipline across the organization and invest prudently to grow our top line. We are confident that our ongoing product innovation in AI and computer vision will enable us to remain a market leader and increase shareholder value for our investors.”
While Sportradar has demonstrated growth in Q1 2023, there have been significant costs and expenses. Purchased services and licenses in the first quarter of 2023 increased by $12.7m to $53m year-on-year, reflecting “continuous investments in content creation, greater event coverage and higher scouting costs”. Of the total purchased services and licenses, approximately $15.3m were expensed sports rights.
Personnel expenses in Q1 increased by $27.6m to $84.9m, primarily as a result of increased investment for growth which was driven by higher headcount associated with investments in AI and Computer Vision, increased share based compensation, and inflationary adjustments for labor costs.
The firm also saw further hikes in operating expenses by $1.9m to $23.2m as a result of higher software license costs, higher audit fees and implementation costs for a new financial management system. Total Q1 sports rights costs decreased by $3.1m to $56.1m year-on-year, primarily due to savings from the expected completion of the Tennis Australia contract.
Turning to the annual financial outlook, Sportradar told investors that it expects revenue for fiscal 2023 to be in the range of $987.6m to $1.1bn, representing growth of 24% to 26% over fiscal 2022.
Adjusted EBITDA meanwhile, is expected to be in a range of $171.9m to $182.8m, representing 25% to 33% growth versus last year. Adjusted EBITDA margin is forecast to be in the range of 17% to 18%.
Sportradar has made a number of other key announcements in recent weeks, notably hiring Gerard Griffin as its new Chief Financial Officer to lead the group’s accounting, financial and investor relations departments.