Sportradar Group AG Price & Performance (SRAD)

Thank you, operator. Hello, everyone. And thank you for joining us for Sportradar's earnings call for the fourth quarter and full year 2024. 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 also be available on our website. After our prepared remarks, we will open the call to questions from 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 our discussion today 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 20 F and Form six ks filed 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 IFRS and non IFRS financial measures and operating metrics.

Additional disclosures regarding these measures and metrics including a reconciliation of IFRS to non IFRS measures are included in the earnings release supplemental slides and our filings with the SEC. Each of which is posted to our Investor Relations website. Joining me today are Kostan Kearl, our CEO and Craig Fellenstein, our CFO. And now I'll turn the call over to Karsten. Good morning, We are pleased to be speaking with you today. This has been a tremendous year for us both financially and strategically. Our strong performance was fueled by the continued execution of our growth strategy and underpinned by our core competitive advantages. This includes the depth and breadth of our sports coverage, best in class product portfolio, unmatched global distribution network, and cutting edge technology. As you may have already seen this morning, we announced that we are further expanding our leading global content portfolio as we enter into an agreement with Endeavor and WME ING to acquire IMG Arena and its global sports betting rights portfolio. I'm incredibly excited about this acquisition which enhances our footprint in some of the most better born sports including tennis, soccer and basketball, and will deliver significant value to our clients partners, and shareholders.

The deal once closed is expected to be immediately accretive to our business and margins. I will talk more about this deal and the benefits momentarily, but first, I'd like to discuss some of the highlights from this past year. We delivered on our promises and ended 2024 with a great quarter across the board. Capping another consecutive year of above the market growth and ahead of our already raised expectations. Importantly, this strong performance flowed through to our bottom line as we reached an inflection point in our operating leverage, earlier than anticipated.

Going forward, we are well set for multiyear margin expansion and significant cash flow generation. Turning to our strategic highlights. There were a number of key achievements this past year that reinforced our competitive position and strong growth profile. Let me start by discussing how our deep and robust content portfolio is powering growth. We have the broadest coverage of the most battleground sports in our industry. Which provide us with market leading data ports. And we have now secured all our major sports content on the long term including basketball, soccer, hockey, tennis, and baseball. This gives us significant visibility on a key part of our cost structure as well as a long runway to innovate, expand, grow our new product offering and drive our content ROI. I'm very pleased with our recently announced expanded partnership with Major League Baseball. The deal runs through 02/1932, and is expected to be immediately accretive to our business and margin. We are now the exclusive provider of MLB official data for betting media, as well as audiovisual content across our client network around the world. The global baseball market is continuing to expand at the same time as we see increasing sports betting legalization in markets such as Mexico, Korea, Taiwan, and anticipated future markets like Japan, and India.

Given our global reach, we believe we are the only sports technology company that can help the league engage fans and betters all over the world and help unlock new revenue opportunities. As part of the agreement, MLB has also taken an equity stake in Sportradar further solidifying our long term partnership. The disciplined approach we have taken with our existing sport rights and the strong returns we are generating is what gave us confidence and the opportunity to acquire the portfolio of rights from the IMG Arena maximizing the value of high demand content for our clients as we partners is what we do best and this portfolio comprised of relationships with over 70 rights holders and covering approximately 39,000 official data events and 30,000 streaming events across 14 global sports on six continents provides a variety of growth avenues Importantly, approximately 70% of these rights are spread across the top three sports for global betting turnover.

Basketball, soccer, and tennis greatly enhancing our status as the number one content provider in core betting sports while also expanding our content offerings in emerging live betting sports. Prominent global properties include Wimbledon U. S. Open Rolling Corners in three of the four Grand Slams, as well as the Major League Soccer Germany FA Cup, Euroleague Basketball, and PGA Tour, among other T bone properties. Content is the fuel of our engine, We are uniquely positioned to integrate and monetize these rights seamlessly based on our highly scalable technology platform and broad client network. This portfolio will accelerate Sportradar's robust revenue adjusted EBITDA, and free cash flow growth and will be margin accretive upon close. From a transaction structure standpoint, we are not making any payments to Endeavor. Instead, Endeavor will be providing financial consideration of $225,000,000 including cash compensation of $125,000,000 to support RADAR and up to $100,000,000 to certain sport right holders which will reduce our future obligations. There will be regulatory review in certain international territories and we anticipate that the deal will close in fourth quarter of this year. We expect to replicate with this ride the success we had with our new NDA and ATP deal in 2024.

Both the MVA and ATP have significantly enhanced distribution of our core data, arts and audiovisual or AV products. This content helped us to provide most comprehensive video offerings for sportsbooks and their customers powering 450,000 live AV streams annually as well as live vetting uptake and Foresight and other visualization solutions that capture the play on the field. Access to deeper, richer data from our content partnerships combined with our advanced proprietary technology is fueling our next generation of hyper personalized products. Changing the way that fans interact with sports. We are automating our data collection for faster collection on a much greater scale. We have made great inroads and are now collecting live data from approximately 50% of our matches through automated means by harnessing computer vision technology. To put this into a context, we can now collect to 100,000 data points in a single match. Which is nearly 100 times the amount of data collected through traditional collection methods. We demonstrated this in January at our standardized the biggest betting and gaming trade show with live three on three basketball games, played to highlight how our company's technology is used to power product at every stage of the sports betting value chain.

From automated data collection to data visualization and in play betting. We are already working on a number of additional ways to leverage this deeper data to further personalize the sports and experience with tailored content, boosting engagement and stimulates more vetting opportunities. A case in point is foresight. Which harnesses this deeper data to enhance brand engagement and support the growth of in play betting. With the average time spent on foresight stream clocking in at 24% longer as compared to a standard stream it is delivering on that promise. More time spent watching the games means more opportunities for fans to dive deeper into the action growing engagement with the sport, and creating new betting opportunities. We have already rolled out Foresight across tennis, basketball and table tennis, and later this year we will roll it out to soccer, Additionally this year, we will launch an enhanced foresight offering that will create even more immersive and engaging fan experience. We are also advancing the in play betting experience, introducing innovative micro markets, [indiscernible] the game industry hasn't seen before. We have recently launched micro markets for ATP tennis matches and NBA games, creating an additional 2,500 new betting opportunities per tennis match and 1,200 new batting opportunities at a basketball game.

We are planning to launch a number of other sports including football, baseball, and ice hockey this year to open up potential new revenue and value for our clients with AI driven products based on our exclusive content. Another highlight of 2024 was the performance of our managed trading services where we managed to trade risk of our sport book customers. MPS is a key value proposition for our clients consistently delivering high turnover and margin. In 2024, NPS turnover reached €35,000,000,000 which makes us a top bookmaker globally, and we achieved a 10.7% margin [indiscernible] An improvement compared to 9.8 in 2023. This performance is a clear testament for our AI driven market leadership in technology. Our proven trading and risk management capabilities combined with the diverse of sports MTS offers enables us to achieve such strong results and mitigate the impact from any single sport. This performance underpins the increasing demand for this core product, as most sportsbooks look to outsource their trading and risk management capabilities to us. In fact, we have added a number of useful folks' clients in the past year and now provide NPS service to over two fifty books and encompasses over 500 sports books brands.

NPS has value outside the pure trading and risk management. Providing us with unique insights into betters across hundreds of books. By managing the backs of 80,000,000 unique letters, steer alone, we are able to gain a deeper understanding of their preferences and dynamics. This insight informs our ad business and our ability to target, acquire, and engage SpotBook customers at a lower acquisition cost than other peers. We enhanced this business in 2024 with the launch of the new channel including paid search and audio, and the additional affiliate marketing capabilities through Excel Media which was acquired at the end of twenty twenty four. Global expansion is a part of our growth story. Particularly in emerging markets like Brazil. Where we opened an office last year. With 18 licensed granted to date and as well as over 100 of folks expected to enter the market for sales, competitive market, presents opportunities to sell our best in class products, and services to customers with diverse needs. We made a strong start into leveraging our existing partnerships with global operators entering the market while expanding ties with local operators seeking additional capabilities. In fact, we have already seen 35 news report for clients [indiscernible] And we continue to see this growth.

Additionally, we are also using this region to pilot our marketing services for iGaming. IGaming is a natural adjacency to sports betting with the majority of our customers in Brazil offering both sportsbooks betting and iGames. As sport bettors often also engage in iGaming, we can leverage our marketing and cross selling capabilities to attract engage, and retain these sponsors for our customers. The iGaming space is a natural expansion given our established customer base who have operating license for both [indiscernible] and iGaming. We have already proven out this capability in iGaming in some European countries, and Brazil now looks like the right market to scale this initiative with a three sixty degree solution. It starts with helping SportDOCs acquire customers through our ad business then providing them data ops and platform services enhance their performance. We can further engage and retain those customers by converting them to iGaming customers. Through AI driven campaign management. This covers all aspects of acquisition, stimulation, retention, and operation for a modern sportsbook, and our gaming operator. Wrapping up, this past year we have executed strongly, both operationally and financially against our growth strategy. Our strong content portfolio which will be further enhanced with our announcement this morning, our global footprint and our investment in development of the next generation products are providing us with the opportunity to generate continuous [indiscernible] growth ahead.

With increased cost visibility from our long term deal and our financial discipline, we are at an inflection point for significant value creation. As we look at our 2025 goals, we expect to continue to deliver robust growth we are leveraging our investments in technology and AI to ultimate automate, commercialize and increase accessibility to sports data for a broader ecosystem and we expect to continue to deliver margin expansion. I couldn't be more excited about our future and look forward to speaking to you more about this at our upcoming Investor Day on April 1. Now, I will turn it over to Craig. Thanks, Carsten, and thank you everyone for joining us this morning. As Carsten highlighted, 2024 was a year of strong execution as we generated continued operating and financial momentum by leveraging our best in class content and robust product portfolio. Across our broad global customer base. The significant value we are delivering to our league media, and sportsbook partners translating into record financial results. And we have clearly reached an inflection point with strong top line growth translating into margin expansion and cash flow generation. I will focus the majority of my comments on our fourth quarter performance.

But it is important to recognize the meaningful shareholder value that was created over the course of the past year. Total company revenue for the full year of 1,100,000,000.0 increased $229,000,000 or 26% compared with 2023, driven in large part by higher spending from our clients. Including significant incremental contributions related to our new ATP and NBA deals. Our growth was broad based with strength across our product portfolio. Including betting and gaming content, managed trading services, and our ads business. We also generated strong gains both in The US and globally. With The U. S. Up 58% year on year and the rest of world up 19%. Our U. S. Revenues have increased to 24% of our total revenue, up 500 basis points versus a year ago. As we capitalize on the continued rapid domestic market growth and the growing demand for our innovative products and depth of content. Most importantly, the steps we have taken to align our cost base with the revenue opportunities is enabling us to deliver significant operating leverage with a 26% revenue growth this past year translating into 33% adjusted EBITDA growth. Adjusted EBITDA of $222,000,000 for the year increased $56,000,000 compared with a year ago, and the company increased full year adjusted EBITDA margins by over 100 basis points to 20% despite the initial year increases associated with the new long term ATP and NBA deals.

Turning to the fourth quarter in more detail, record revenues of $3.00 $7,000,000 increased $54,000,000 or 22% compared with the fourth quarter a year ago, as we continue to have success growing our client relationships.

Increasing the uptake of our leading products and solutions, as demonstrated by our customer net retention rate a 27%. Looking at the individual product groupings, growth was diversified with broad based increases across both bedding technology and solutions as well as our sports content technology and services group. Betting technology and solutions revenue of $247,000,000 delivered 21% growth versus the fourth quarter 30% year on year increase in betting and gaming content including 30% growth at our streaming and betting engagement products. Most notably due to strong growth in audiovisual revenues. Odds and LiveData also continue to perform well. Up 30% year over year. Benefiting from the strong US market growth as well as from additional customer uptake of our products. Along with premium pricing for new content such as ATP. Additionally, managed trading services continued to grow strongly year on year. Due to higher trading margins and more betting activity from existing and new clients of our sports book partners. As expected, and as we highlighted on our last call, overall managed betting services was down slightly as the success at MTS was offset by comparisons to last year's initial setup revenue. Related to hardware deliveries for the Taiwan lottery deal.

Moving to our other product group, sports content, technology, and services also delivered strong results this past quarter. With revenues of $60,000,000 increasing 11,000,000 or 23% year on year. By marketing and media services growth of 22% due primarily to the continued growth of our ads business as we saw a variety of sports books investing in marketing campaigns during the fourth quarter. Similar to the full year, had broad based growth geographically during Q4. With The U. S. Business increasing 41% and the rest of the world increasing 16% as we continue to outpace the sustained market growth across the globe. The revenue growth across our product portfolio translated to significant adjusted EBITDA growth with adjusted EBITDA of $61,000,000 in Q4, increasing $21,000,000 or 53% year on year. As expected, now that we've begun to lap the first year of our new major sports rights, we are starting to deliver significant total company operating leverage. With adjusted EBITDA margins in the fourth quarter expanding over 400 basis points to 20%. 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 impact adjusted EBITDA.

Have detailed the earnings release and the financial section of the earnings presentation the bridge from IFRS amounts. This past quarter sports rights expenses increased to 37 percent $103,000,000 in the quarter, due primarily to the new ATP rights. Which are driving significant revenue growth as we upsell solutions to existing clients, well as add new clients given the premium nature of this content. We continue to be disciplined and strategic in building up our premium rights portfolio. With the recent extension of our long term partnership with Major League Baseball, we have significant visibility moving forward. Having secured all of our largest rights under long term deals. Given this visibility, we have full confidence in our ability to drive operating leverage across our sports portfolio and see significant opportunity to drive incremental value as we develop and scale our premium products and solutions for our global customer base. Turning to people, adjusted personnel expenses were 73,000,000 in the quarter. Up 9% year on year. Driven primarily by increased headcount to support growth opportunities and by higher incentive compensation given the financial performance this year. Importantly, adjusted personnel expenses were down approximately two seventy basis points as a percentage of our revenue, and we will continue to closely manage headcount ensure we are focusing our talent and resources on the most profitable growth opportunities.

While unlocking additional operating leverage. In addition to the leverage we delivered across our personnel costs, adjusted purchase services expense of 44,000,000 decreased 4% versus last year. As increased cloud and IT Costs To Primarily Support Growth Initiatives, As Well As Higher Traffic Costs Related To The Growth Of Our Ad Business, Was More Than Offset By The Initial Setup Costs Associated With The Taiwan lottery in the fourth quarter a year ago. Overall adjusted purchase services declined approximately three seventy basis points as a percentage of revenue. And moving forward, we will continue to further leverage our existing infrastructure, investing in our products portfolio. Lastly, adjusted other operating expenses of 27,000,000 increased 5% versus last year, and declined approximately 140 basis points as a percentage of revenue. Overall, there is inherent scale and operating leverage in our business. And we expect to meaningfully expand total company margins beginning in 2025. As we drive further revenue opportunities closely manage our cost infrastructure and start to fully realize the benefits of sports rights being amortized on a straight line basis over the life of each contract. We generated net loss of $1,000,000 in the fourth versus the net profit of $23,000,000 reported in the fourth quarter a year ago.

As the $21,000,000 improvement in adjusted EBITDA and $21,000,000 tax benefit due primarily to the recognition of deferred tax assets, more than offset [indiscernible] by the 65,000,000 change in unrealized currency losses mostly associated with the US dollars and amid sports rights. Turning to the balance sheet, continue to be in a strong liquidity position. Closing the quarter with $348,000,000 in cash and cash equivalents and no debt outstanding. As anticipated, our cash balance declined $20,000,000 from the end of the third quarter primarily due to the acquisition of the affiliate marketing assets of Xcel Media, as well as from the timing of sports rights payments. For the full year, we generated free cash flow of a hundred and $18,000,000 versus $50,000,000 in 2023. Led by strong cash from operations, primarily as we leverage our expanded sports content portfolio and implement additional cost and working capital management measures. We continue to make meaningful strides with regards to increasing free cash flow conversion and delivered 53% conversion in 2024. Versus 30% in 2023. Our balance sheet will be further enhanced given the structure of the IFG transaction announced this morning. In conjunction with this transaction, aside from the additional free cash flow we anticipate generating, we will receive approximately 125,000,000 over a two year period following the close.

Given the strength of our balance sheet, our expectations around significant additional free cash flow generation going forward, and the cash we will receive in the transaction we are well positioned to be able to invest in expanding the long term growth potential of the company. Whether organically, or through M and A. While also returning capital to shareholders. Today, we repurchased approximately 20,000,000 worth of our stock at an average price of $11.44 under our $200,000,000 share repurchase program. Including $6,000,000 in the fourth quarter. Given the IMG transaction, we have been restricted from buying back shares, but 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. We anticipate significantly accelerating repurchases under our buyback program, when our trading window opens. Turning to our expectations for the year ahead, the strong operating and financial momentum we generated throughout 2024 poised to continue in 2025. Given the uncertainty around timing of closing, our 2025 guidance does not include any impact from the acquisition of ING Arena. And we will incorporate the upsides of the acquisition into our guidance once the deal closes.

However, it is important to note that the acquisition of the content portfolio from IMG will not only accelerate our revenue, adjusted EBITDA and free cash flow generation, but it is attractive from an ROI perspective. And will be accretive to our overall adjusted EBITDA margins. For the full year 2025, anticipate total company revenue of at least 1,273,000,000 representing year over year growth of at least 15%. As we outperformed the sustained global market expansion and further capitalized on our high demand content portfolio innovative product suite. At the same time, anticipate adjusted EBITDA of $281,000,000 or 26% year over year growth with at least 200 basis of adjusted EBITDA margin expansion in 2025 despite the increased cost associated with our expanded Major League Baseball partnership. As we look at the cadence for 2025, we anticipate margins will be in the high teens in the first half of the year, and will accelerate in the second half of the year with the highest margins in the third quarter. Given the phasing of sports rights costs within the year. Additionally, in the year ahead, we will continue to focus on converting more of every dollar to cash flow, and anticipate growing our free cash flow conversion rate the 53% conversion we delivered in 2024.

Overall, strategic and operational steps we have taken over the last several years generated another year of strong results in 2024. Has us poised to build additional shareholder value in the years ahead we deliver sustained long term revenue growth while converting more and more of each dollar into EBITDA and free cash flow. With the market continuing to expand, with Sportradar's proven track record of delivering additional value to our partners, across the global sports ecosystem through product innovation and development, and with a cost structure that has high visibility moving forward, we are very much at an inflection point of revolution. And look forward to discussing the opportunities that lie ahead in further detail at our Investor Day next month. Thank you for your time this morning. And now Carsten and I will be happy to answer any questions you may have.

As a reminder, in the consideration of time, we ask you please limit yourself to one question and one follow-up. One moment for our first question.

Now, first question coming from the line of Brian Sickdahl with Craig Hallum Capital Group. Your line is now open.

Hey, Carson, Craig. First, kudos on the structure of the IMG deal. Curious if anything what you're taking from a balance sheet or liability standpoint besides the rights contracts at fair market value? And then on the cost per perspective, people just what's all included in here, what's not. And then on the revenue synergy potential, we've seen you guys cross sell, upsell, broader distribution, etcetera, on ATP in the right you've organically won in the past. But curious if you expect kind of a similar quicker uplift from these rights? Hi, Ryan. Karsten here.

Take the first part and leave them the liability and the people to crack. So first, if we if we, for a moment, think into the future, if we are sitting here in one year time, I think we will realize how great of a deal that was. It's a milestone for Sportradar into development. I'm very proud of the team that we managed this. It is a very good day for Sportradar. Having said this, let's split the deal into two aspects. One is the strategic one. The second one is the commercial one. Looking to the strategic, we scale and we are the premium provider for the B2B spots. So that makes us even stronger. Looking to the coverage, we expand the coverage, we do this [indiscernible] that's basketball, that's soccer. That's very complimentary. Looking to our ability, and to touch on this, we saw what has happened with ATP, which we took from IMG beginning of twenty twenty four. We managed this property significantly better And that is given the scale which we have. We have 800 bookmakers We have 900 media companies connected to this machine. And this is a well oiled machine. We are global from a footprint we simply have to leverage on this.

Looking now to the commercials, the deal is accretive to the revenues obviously. It is accretive to the margin. And it's accretive to cash flow. So the ROI which we deliver with this deal is sensational. And that is the reason why we are so excited about it. It took quite a while to get it done. There are a lot of details, as you might imagine. And it's now when I got the first messages from our clients, they are going on sports which I also find very exciting. So we get some messages around snooker, We get something around cough. And me as a golfer, of course, I have a passion for those things. But there is a good opportunity to even increase our client network here.

And now I hand over to Greg for the people and for the liabilities.

Sure. Thanks, Brian, for the question. So we are acquiring the asset and liabilities of the IMG Arena business, and we will provide more color on what that entails once we get closer to closing. Obviously, that will change a little bit between now and closing. That said, the vast majority of what we're acquiring is the sports rights themselves. So for the most part, that is the asset that we're acquiring as part of this transaction. When it comes to other aspects of the IMG arena business, one of the reasons that we're so confident that we'll be able to achieve some nice accretive margins for our own business that there's significant operational synergies between the two businesses. Obviously, from a technology perspective, from a scouting perspective, from an overhead perspective, So we do see an opportunity to, as we move forward, to reduce the cost structures of the combined entity as we head into the next phase of our evolution here. So there will be some nice opportunities to expand margins moving forward.

Excellent.

For my follow-up question, looking at slide 11 on Brazil, I know it's early, but want to focus on MTS. So you guys have signed up almost half of the sports books on MTS. Curious what's driving that outsized success and demand for MTS specifically in that market? And then within that mix, is it mostly full kind of everything MTS capabilities? Or know, are some of these just taking specific sports for for the MTS side?

Thanks. So one thing is, of course, the team, Ryan. We have a super strong team in Brazil. We created the office in Sao Paulo So they are doing an excellent job. Yesterday, we also signed an integrity partnership with the SOCO configuration there. So you see the pieces are going together the same way like we did it in The US. So it's a very good team performance, 35, MTS bookmakers, is a strong testament for this. And it's simply, we are providing the economy of scale for them. They are doing the They are doing the branding. And we keep the house clean, and we do a good operation. But a very exciting piece in Brazil is iGaming.

As you know, the bookmakers are making roundabout four times more money with an iGaming client than with sports betting. But sports betting is the acquisition channel. And this market is our first market for the three sixty degree scheme, which I said in the script. We start with the acquisition. We use our apps product, It's problematic advertising. We convert this better than anybody else. So then we offer the data, we offer the ops, the platform or the MTS, whatever the client wants to have. And with Lights where we do the channel optimization and the campaign management based on AI. We can switch that over into the churn management and get it into iGaming campaigning, and all those things then And in between, we have the acquisition tools where we do the entertainment, the scores, detailed match analysis. And that makes a three sixty degree system here. I'm very proud that we could now already sign up with two companies for iGaming. It's very early innings, and I'm telling you now is happening in the last two weeks. But we see a strong pickup. So Brazil is a market where it's very vibrant, lots of opportunities, and we have a very strong team on the ground.

That is the reason why the results are so good. Thank you.

And our next question coming from the line of Michael Graham with Canaccord. Your line is now open.

Thank you. And and, again, congrats on a really a really great, you know, quarter and momentum. I wanted to ask about MTS.

A little bit deeper, and there are really two questions. One is, can you comment on how how big of an impact the sale of the Taiwan Lottery hardware sales last year had on know, organic growth? Like, should we talk about the organic growth in MTS? And then just going deeper into your 100 basis points of margin expansion, you mentioned AI, but maybe a little more detail on what drove that expansion and how are you thinking about what that does, in the coming year? As you kinda get that product more fully ramped up?

Sure. Do you wanna go on Yeah, I'll handle the first part of the question. Carson, you can handle the second. So Michael, thanks for the question. When you think about the impact of the Taiwan lottery a year ago, the overall MBS segment was down slightly in the fourth quarter. If the Taiwan lottery one time set of fees had not been received a year ago, the growth in the MBS business in the fourth quarter would have the high 20% range, so similar to what it was for the rest of the year. With regards to the MBS segment.

Far as NCS specifically, the NCS segment in the fourth quarter, we don't talk about specifically, but it obviously makes up the majority of that piece of our business.

You can assume that the growth in the fourth quarter was somewhere very much in the mid to high 20% range.

Maybe I add, so Taiwan was 2,000 shops, which got to terminals for accepting sports betting. And also the lottery tickets. So that is a hardware investment. It was a one off And as Greg rightly said, without this, we are solidly in the 20s and above. Looking to the 100 basis points margin expansion, that's fairly simple. So we are sitting on two big pools from a cost perspective. We're sitting on salaries and employee costs, We managed to run a very tight ship here, and we will continue to do this. With a growth in roundabout 10% to 11% going forward. Looking now into the right, we expanded mass in 2024 with ATP and, of course, also with the MBA. So that was an uplift of 65%. And we could mitigate this. If you look now to our right going forward for the next six years, this is pretty much fixed now with the latest this Major League Baseball, have the security and stability in our rights portfolio. We have no cliffs. And it's predictable costs, which we see here. So there is not any kind of uncertainty on the sport wise Having those two elements, that gives us a lot of comfort to show margin leverage in the years going forward.

Okay.

Thanks very much, Carsten and Craig.

Thank you.

Thank you. And our next question coming from the line of Renee McTernan with Needham and Company. Your line is now open.

Great. Thank you for taking the questions. I want to start on IMG. And sorry if I missed it, but just how big are they currently from a revenue and EBITDA perspective? And do any of the comments on margin and free cash flow accretion contemplate synergies?

Craig, do you wanna go on this? Yeah.

Sure.

Bernie, thanks for the question.

So obviously, I'm not gonna talk to what they are today for themselves, but I can talk to what we think it would have been for us if we had owned this asset for the full year. Think about our revenue guidance of about 15% for the current year, if we had IMG as part of our overall portfolio starting January 1, our estimation is that our revenue growth would be somewhere in the high 20% range. So meaningful opportunity for us as a company as we ultimately move forward and leverage this across our portfolio. As Carsten indicated, like we did with ATP already. So, you see unique opportunities for us to leverage these assets across a variety of our relationships globally. In terms of the the margin expansion opportunity we do believe that these assets when put into our I would call, ecosystem and into our engine, we'll have higher margins than our existing margins moving forward. So it'll absolutely margin accretive for us, because we'll be able to leverage this content across a wide global distribution base. Okay. I have four for one piece of this content example. So TENS is something where we developed four sites.

We developed a live bot Now we are getting three of the four grand slabs additionally on top of what we have. Putting this into the existing product gives us a natural leverage there. And if you look now from a tennis standpoint, having the top tier tennis and having ATP in between there, and UTR at a low level, that makes a package which has some high demand from our clients. So that gives us additional leverage.

Understood. Thank you. And just as a the slide number eight that you guys put together on sports rights was really helpful. Is there any way to think about the average term remaining for the major contracts or IMG?

Yes.

So the major contracts from IMG are roughly around about three hips.

Got it.

Okay. Thanks, Carson. Thanks, Greg. Appreciate it.

Thank you.

Thank you. Our next question Our next question coming from the line of Robin Farley from UBS. Your line is now open. Great. Thank you. Going back to the ING deal, can you give us a sense of how much of the delta in EBITDA performance clearly, it's was losing money for IMG last year. So the delta between that and you believing that it will be higher margins for you if you owned it for full year twenty five. How much of that delta is the $225,000,000 And is that all spread over two years? I know at least part of that was spread over two years. How much of the delta comes from that sort of that guaranteed piece of it versus how much of the delta has to come from Sportradar you know, putting putting it in your system and your scale and all of that, just to get a sense of much of the delta is sort of locked up versus based on your performance.

Maybe I give it a first try and then Greg weighs in. So we can't speak for IMG and Endeavor. But what we did here is a very careful of the portfolio. We look to each and every right. We look to the revenues what they generate, and we look to our upselling abilities and the cross selling abilities. Abilities. We looked into can we use this content if we put it in our engine to get more revenue channels than they have, And then we're coming to a picture and saying, well, we believe with this content, can generate those revenues. And that was the first criteria. Second was, is this accretive to our EBITDA? That is a very, very clear point of decision in saying, we are doing something which is not accretive, we are not interested. And that's the reason why we did the deal. So it's accretive to our and it's accretive to the cash.

We needed some money. To repair some deals only a few, which are probably not in the current market from a pricing perspective. And that's what you see in the segments we said around about 100,000,000 has has been used in prepayments to the leagues to get those deals more in line with market conditions that we can monetize on them.

Let me add a couple of things just in terms of how it works with regards to our financial statements. Karsten already talked to how we're going to monetize these assets moving forward. But there's really two pieces to the cash components that were paid. So the one is that there are some prepayments that are made to the league. That will actually help us from a free cash flow perspective moving forward just to be free cash flow margin accretive for us because we have less of an obligation from a cash perspective to these rights. The other piece of the cash, the right to our balance sheet, will allow us to invest cash in future growth initiatives. The last part of this that's important to know is that when we take these assets into our portfolio, we write them down to the fair market value that they have for us as a company. And because we do that, it also allows us to have a lower cost base on these assets than initial rights were themselves. I would imagine for IMG. So that's how you should figure the three different components of the compensation.

Okay. And and and based on your commentary about where your revenue growth would have been, it sounds like the revenue you're saying if you had had it for the full year in 2025 would have been maybe $150,000,000 in revenue. Is that should we think about that as being what you're acquiring or is that where you would have gotten that if you upsell and cross sell everything that you're getting from ING? Is that $150,000,000 kind including what you think you would have added from upselling and cross selling?

Thanks.

Yeah. Let me be clear, Robin. Is what we would have had from this asset, we believe, in 2025 We had that asset as of January 1. That said, we can't predict exactly what the revenue will be upon close because depends on how long that close ultimately takes. Of these rights will obviously have shorter time frames. They may roll off, and it would be up to us whether we wanna renew them or not. But when when the time comes to close on the deal, we'll have a much better feel for what the next twelve months will look like, and we'll give you an update at that point.

Okay, so that does not include you guys upselling and cross selling? You're saying?

Does nothing to do with that. Right.

Okay. Thank you.

Thank you.

And our next question coming from the line of David Katz with Jefferies. Your line is now open.

Hi. Morning.

Everyone.

I'm just personally going back to the topic of the day, on the acquisition, Can you just color us in a little bit on how you thought about valuation on it? And you know, maybe educate us a bit on kind of what how you thought about market value today and and what the implication is, you know, for other rights that you you know, you sort of already own.

And already acquired. Thank you.

David, we are doing this in the same way like for every right. So we are looking to the ROI, from a ride's acquisition. We are looking to what we believe we can make with this right in the market our scale, the products which we have. Nothing different than with this acquisition. We looked to all the 70 rides in the 14 sports. And we did the same exercise. What we have to do here on top is we saw how IMG can monetize those rights. And we had to do the exercise what is in their for us with cross selling and upselling, And partly we have some products which IMG have. So we have MTS, We have the live, what's the set for PP. So that was coming then on top of this. For most of the rights, which are in this portfolio, we have been a participant in the center. So we are interested in those rights because they are in our suite spot. And the sweet spot specifically is soccer, is basketball, and is tennis. There are now some more opportunities which are not in our calculation, We're getting a stronger footprint in this sport.

And when we can scale with more innovative solutions. So there is more to come. But is a normal ROI which we do sport by sport. [indiscernible] order wise. And there is a target margin, which we wanna achieve and that has been done in the same way like we do it normally for rights. And as Craig said on the beginning, it's an asset acquisition. So we are interested in the sport rides. So that is the key focus here.

Understood. And in another direction is my follow-up. Craig, I think you may have mentioned and it was a bit choppy on my line about share repurchases and acceleration just wanna make sure I heard right. And if you could add some color there, that would help too. Thanks.

Sure. When you think about the cash position the company is in today, the free cash flow that we're generating as a company, which is obviously accelerating just as part of our core business and part of our base business. And then you layer on top of that the what I would call the [indiscernible] capital that we're gonna have as part of the I g transaction. And then you factor in that there is only so much money we can invest back into our business, and there's no obvious large m and a opportunity out there outside of what we're doing right now, then you see an opportunity to use that capital in a variety of ways. And one of those ways will be to return capital to shareholders at a at a more accelerated rate. Obviously have not been able to do that because we were privy to this information that this acquisition was ongoing. Now that that is behind us, once the window opens up again, we will look to return capital to shareholders. But I will say this, it is always one of three options that we have. We are always looking at ways to invest in our existing core assets.

Given the high margins we have in our existing business, we wanna continue to expand the margins in our existing business, and we're not going to jeopardize that by putting too much money back into the business. Same goes for any M and A opportunity. It has to be margin accretive for us to do it. So if we can't find either of those two things, then we will go ahead and return capital to shareholders. And because of the cash we have, do have the ability to do both.

Thank you. And our next question coming from the line of Michael Hickey with The Benchmark Company. Your line is now open.

Hey, Carsten, Craig, Jim.

Good morning, guys. Good afternoon. Congrats on twenty four and your deal. Very exciting. I think I guess, just the first question, Karsten, you've obviously built out a very strong foundation to your business here and when you think about rights that you have, the longevity of those rights and the cost associated. And of course, you said you're your business is inflecting, and and we saw that in q four. And '24, really. So just wondering, today, Karsten, longer term vision, how you see Sportradar evolving over the next three to five years and what are the biggest opportunities for expansion?

So thanks for congratulating us 2024 So it's the first time that we speak about these numbers today in the call. And I think we should celebrate it. So it's a 26% growth. Top line revenue, 33%. On the EBITDA, we showed margin expansion and leverage. It was not expected from the market. I think it was good year for us 2024. Now looking forward in the digital business, globally, to predict five years is really difficult. Ten years ago when one of our private equity partners asked me for three years, I said I can predict the wrong. I get with a two in a range that it is in the tolerance with the three, it's getting very difficult. So looking now forward, we have four business areas. Sports betting, I think we we showed that we understand what we are doing. We showed that we understand our two main cost blocks and how to manage this. Going forward, the right much more transparent on this. And that applies now also for IMG because we told you we are looking to the ROI in the same way that for normal ones. We can expand now into iGaming. Do the test in Brazil.

We did a test in some smaller European markets. That would be a sum for us from 1,400,000,000.0 So that's a growth opportunity in that sector. Going forward, we want to expand here. Looking now into the media business, that's an area where I was at the All Stars two weeks ago. And I saw all the big digitals on stage, and I had the pleasure to talk to some of them. It's about hyper personalization. It's about products for generation also. Are sitting on this. We are sitting on this data post. We are sitting on the technology. And we understand AI. So we are excited about growth opportunities in that media space. [indiscernible] we are we are very happy about what we have, and we are leveraging this and expanding here. So that is something which gives us the fuel for getting into those verticals. And then we have only felt the last thing left, which there is a business with government and regulators It's very early stage. We are there with integrity services. But looking for the functional gaming, looking into what we can do in this space, we have high hopes here to expand on the timeframe of two, three, four years, in that area.

I hope that answers a bit the outlook into the future. Where we see us and well the 2024.

Yeah, nice. Thanks, Carson. And just a follow-up, [indiscernible] I mean, I think you said you're a technology company, and we agree. So I guess under the topic of product innovation, how you're leveraging AI and machine learning to enhance your products. And if there's any upcoming innovations within your product suite that you're particularly excited about? Let me split it in three different categories. One is efficiency, As a sample, we more or less automatized our first level support. We have more than 400,000 support needs. Asking the first or hitting the first level. We automatize with AI around about 80% of this. So we are facilitating our data pools And because a level of quality in there that we could advertise it.

So that's a clear efficiency improvement. It happens in many many places of the company. Legal is one of the departments benefiting from it. So that's something which is the first one. Second one is how can we optimize the client value? AlphaOp is a clear sample for this. And today, we told you that we achieved an uplift of 1% so 100 basis points. On the margin. Most of this is coming from leveraging AI, leveraging our data pools, and optimizing this. And then the third one, we call that true innovation, not some buzzwords, We want to really do true innovation, and that's at the end, leveraging the data pool from the fans leveraging the sport data up to level five data, and leveraging the liquidity information which we get. That's something which we will show you on the Investor Day a bit more closely. Give you some samples for our case. But that's how we see AI.

Thanks. Thanks, Carson. Good luck, guys.

Thank you. Thank you.

Thank you. And our next question coming from the line of Jordan Bender with Citizens Bank. Your line is now open.

Morning, everyone. I want to circle back on the movement movement of cash related to the deal real quick. So $100,000,000 to the right holders will be used to restructure those deals. But do the broad assumptions that you provided if you did own the business this year does that assume that you'll need to exit any of the 70 rights portfolio that IMG owns to get to those levels Craig, do you wanna go on this? Yeah, no, it does not. We were assuming we're getting all of the rights It just requires some early payments to some of those rights of some of the future obligations.

Perfect. And then just on the follow-up on the guidance, fourth quarter growth really strong 22%. For '25, the implied growth around 15%. How should we reconcile basically the step down in growth between the exit rate 4Q and then 2025?

Sure, Jordan. So obviously, 2024 year included [indiscernible] step ups that we had associated with both the NBA and ATP. So they were a big part of the step up in that first year. Then we're gonna build off that again starting in 2025. And when you think about the 2025 growth, you're really coming at it from the standpoint of you see market growth somewhere globally around 10%, a little bit less than that. Rest of the world and certainly larger than that in The US. Then we're gonna grow faster than that. Like, we have for several several years here. By increasing the share of wallet that we get from each of our customers as we add additional value to them by giving them additional products or providing additional content. We do see some additional opportunity as we get additional in play versus where it was historically as the in play becomes a bigger piece of the pie, that certainly helps us from a revenue perspective. And then as Carsten mentioned, we're starting to invest in some of these adjacent markets, and that will also provide us an opportunity here moving forward. So those are really the drivers for us for 2025.

Appreciate it. Thank you very much.

Operator, we have time for one more question.

Sure. Last questioner coming from the line of Sam Nielsen with JPMorgan. Your line is now open.

Guys. Congrats on the great quarter guidance in IMG and I guess just following up on that last question for 2025 guidance. How should we kind of think about your sports rights from a leverage or percent of revenue perspective prior to the IMG? Acquisition completion. I think you've guided to like 200 basis points of margin expansion.

Is it fair to assume fifty-fifty split between sports rights and non sports rights costs? In terms of leverage next year?

Yeah. Thank you, Sam. I think you actually just answered your own question. That's exactly what expect for for 2025. We expect to get margin expansion across not only our sports rights, but across our continuing infrastructure as a company. And right now, if I was gonna have to lay out what that would be from a breakdown perspective, I'd have about fifty fifty for the year.

Okay. That's great. And then on the IMG announcement, could you kind of go over the process for regulatory approval? I would assume your peers were maybe looking into steel, especially with the favorability of the terms. What is your initial sense on how maybe antitrust is thinking about the deal?

Well, we expect the main antitrust is in The UK. And the CMA is doing this. In The US, we have no antitrust issues. So we are under the threshold for The US rights, and we don't need to file in The US. There are a couple of minor jurisdictions. We think we have a very solid argumentation and IMG said by itself in their last quarter, that they will discontinue this business. So we think we have a very solid argumentation here. That we can close and reach this closing in quarter four.

Great, thank you. Nice quarter. Thank you everyone for joining us for our call. Our turn it back over to the operator.

Ladies and gentlemen, this does conclude conclude today's conference call. Thank you all for your participation. You may now disconnect.