Carsten Koerl, CEO of Sportradar SRAD, was recently a guest on Benzinga's All-Access.
Sportradar SRAD wants to revolutionize the sports fan and betting experience through its comprehensive technology solutions. The platform connects sports federations, media companies and betting operators with cutting-edge data analytics, visualization tools and integrity services. Organizations worldwide rely on Sportradar’s solutions to enhance engagement, provide real-time insights and maintain sporting integrity across major leagues and competitions.
Sportradar SRAD wants to revolutionize the sports fan and betting experience through its comprehensive technology solutions. The platform connects sports federations, media companies and betting operators with cutting-edge data analytics, visualization tools and integrity services. Organizations worldwide rely on Sportradar’s solutions to enhance engagement, provide real-time insights and maintain sporting integrity across major leagues and competitions.
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NewsTranscript
00:00And it is my pleasure to welcome in the CEO of Sportradar, Carsten Kroll.
00:08It's fantastic to be with you today, Carsten.
00:10Thanks for having me, Dan.
00:12Great to see you.
00:13The honor and pleasure is all mine.
00:14And listen, Carsten, I'm a longtime sports broadcaster, so I couldn't be more excited
00:17to bring you in and what the incredible things you guys are doing at Sportradar.
00:21Let's open up here and just let people know what you guys are all about at Sportradar.
00:26Well, we are sitting on that junction between the media business and the sports betting
00:30business.
00:31It's all about sports.
00:32We aggregate that data, we put it into products, and we're monetizing this, obviously.
00:37In the U.S., we have three big leagues, the NHL, the NBA, and now the MLB.
00:42So we announced it in this quarter that we extend for an eight-year contract.
00:46We are missing the NFL, but you can't have all of them.
00:49Now, potential-wise, when we close our deal and you saw that we did an acquisition, we
00:55add something like PGA on top of it and a couple of other properties.
00:59So that gives us the content to fuel the solutions, and we are helping here sports betting companies
01:06to create value.
01:07We help the media business to do this.
01:09And looking into the future, of course, we are facilitating AI technology to get more
01:14and more insights.
01:15And the dream is to tell a different story for every sports fan about his favorite sport
01:21based on deep data.
01:23And that's the beautiful thing, Carson, about sports.
01:25It's a different story every day.
01:26And obviously, with the betting angle, the sky's the limit.
01:29I know that Sport Radar just reported record-breaking full-year revenue of $1.1 billion,
01:34obviously exceeding guidance and analytics expectations.
01:37To you, what were the key drivers behind this growth?
01:40And how do you plan to sustain this momentum in 2025?
01:44For 2024, and just off from the quarter this call in, sometimes it is always tough to see
01:52that when you are ending a year, which was very good, like you said, you're focusing
01:57only on 2025.
01:58I only got questions about 2020, but you're right, 24 was a great year for us.
02:03It was a tough one because we onboarded two big new rides.
02:07One is an extension with the NBA, significant, and another one is ATP tennis.
02:13With this, we had an uplift in our ride costs of 65%, and we mitigated this completely,
02:20and we showed margin leverage.
02:22And I think that's the reason why the market begins.
02:25We have a very robust, scalable engine.
02:28We are, by far, from a revenue perspective, the biggest in the market, and that pays off.
02:32So in 2024, it was all about execution, trying to run a tight ship from a cost side and really
02:40leverage on the new rides, but invest into technology to monetize in the future.
02:45Sure, we'll get into that tennis stuff in a little bit.
02:47I'm a huge tennis fan, so I'm excited about that.
02:50I want to talk about your betting and technology solution segment.
02:54It saw a 29% year-over-year revenue increase to $907 million.
02:59What innovations or strategic moves do you believe contributed most to this growth, and
03:04where do you see the biggest opportunities going forward for expansion?
03:08We are especially proud for the risk management and trading services.
03:12So what we do here is we get the betting tickets from our clients, we are aggregating this,
03:17and we estimate risk profiles.
03:19Literally, we run the complete shop for them.
03:23This segment is so exciting because we have a revenue share.
03:26The better we do, the better we end up.
03:28What we did here is we traded 35 billion euros, roughly $40 billion, and the margin has improved
03:37from 9.8 to 10.7, so 100 basis points.
03:42That is pure cash.
03:44This service is something which is very unique to Sportrader.
03:47Beside the data that we sell and the probability models, that was a very great result in 2024,
03:53if you look to the betting services.
03:55And of course, if you look now, where do we have opportunities?
03:59This is in running, so it's the in-game betting activities, it's the micro markets.
04:04It's the thing which is in the US only 35% to 40% in a mix, if you look to sportsbooks.
04:11DraftKings is a bit higher, others are a bit lower, but what we clearly see is we came
04:17from a zero, we are now in this corridor of 35 to 40, and we see in the UK, for example,
04:23a 70% proportion of live betting.
04:25And every percentage point pre-match shifts into live, we are running around about $2
04:31million more.
04:33And that is more or less a complete flow through from a profitability value.
04:37There is a little bit cloud services in there, we process more things, but you can say that's
04:41pure profit.
04:43So these are the main drivers in the betting segment.
04:46And what we do now is we try to stimulate this.
04:49We try to put the AV feed, the video feed with data overlays, we give different angles,
04:56we give different things.
04:57During the flight of a basketball, you can swipe, is it in or is it out?
05:02Is it three point?
05:02Is it two point?
05:04Those kinds of interactive things they should stimulate.
05:06And we see this is beginning to work in a great way.
05:09For this, you need the data, you need the real-time data, and that's the developments.
05:14No, that was beautifully explained.
05:15I remember 15, 20 years ago, Karsten, the live betting options, maybe at the end of
05:19a quarter, end of a half, three games, now it's everywhere.
05:23So the possibilities are endless.
05:25And that's so key that you guys are on top of that.
05:27And another thing, I know the acquisition of IMG Arena significantly strengthens your
05:32portfolio at Sport Radar, particularly in high-demand sports like tennis, basketball,
05:37and soccer.
05:38Can you walk us through the strategic rationale behind that deal and how it fits into your
05:42long-term vision?
05:44So when we are looking into rights, we're always looking to the return of investment
05:50for those rights.
05:50So it's always the same scheme.
05:53And for IMG, we are talking about 70 sports.
05:56I have 70 rights which are in there.
05:59It's 14 sports.
06:00So we did the same exercise like we do when we do a rights acquisition with IMG.
06:06Of course, it's a company, and it's, at the end, then a shared deal.
06:10But the main focus was really on the rights.
06:13And then we are looking, can we put that in our engine and get more out of it?
06:18I'll give you a sample for tennis.
06:21We have now, with IMG, the top properties.
06:24That's Rodonga Ross, that's Wimbledon, and that's the US Open.
06:29So that's on the high end of the scale.
06:32That's the Grand Slams.
06:33We are only missing Australia.
06:34In between, we already have ATP.
06:37And we did great with ATP.
06:39And as a low end, we have the college sport, the college tennis,
06:44with more than 20,000 matches from UFC, basically, in the US.
06:48The US is a great territory for tennis, and it is the best sport for live betting
06:54because it has so many stop signals in there, so much action.
06:57And with every point, you have more or less a 50-50 chance.
07:01So you can win your stake quickly back, and it has a very high frequency.
07:06So if that fits, and it was the case for tennis, it was the case for basketball,
07:11and it was the case for soccer, which are the biggest betting sports for us,
07:15there's a strong strategic fit.
07:17We have the biggest footprint.
07:18So it fits wonderfully in our portfolio.
07:22That's the reason for this transaction.
07:24And it is accretive.
07:26So it's margin accretive.
07:27It's cash accretive.
07:29And it boosts, of course, our top line revenues.
07:32As I mentioned, I'm a big tennis guy.
07:34Having three of the four Grand Slams, pretty freaking awesome, Carson.
07:37That's for sure.
07:38And I know that you guys at Sportradar operate at the intersection of sports, media, and betting.
07:43With your expanded content portfolio, how do you see technology such as AI,
07:48as we've kind of touched on, data analytics or streaming,
07:51playing a bigger role in shaping the future of fan and better engagement,
07:54which, as you know, we all well know, is a huge, huge sector right now?
07:59It's a huge sector.
08:00Look, I was at the All-Stars two weeks ago, three weeks ago.
08:04And all the big tech guys have been there on the panel
08:07and had the pleasure to speak with some of them at the end.
08:09They got a question saying,
08:11how do you see the market in three years for you?
08:15Netflix, Apple, you name them.
08:17And they all said, hyper-personalization, a product for Generation Alpha.
08:23This is what we see.
08:25So those two things I'm telling since, I think, three or four years,
08:29that this is really the sport consumption of the future.
08:33You're going to need to enrich the video feed.
08:35You need to personalize it.
08:37And Sportradar sits on that information.
08:39We are sitting on the fan data.
08:40We're sitting on the liquidity from the betting companies.
08:43And we are sitting on the sport data level one to five.
08:46And we have more than 70 sports with the biggest footprint.
08:49Using and facilitating these data points, making them accessible, that's what we do.
08:56And looking to the opportunities in the future in the media segment,
08:59I think it will be probably the most innovative segment by using AI
09:06and really creating a different story, how you broadcast this
09:10and how you are doing a tailor-made product for the user.
09:13It's post-betting.
09:14I think we are already further advanced.
09:16We do this already.
09:18And our clients are facilitating our data points.
09:20Yeah, it's very exciting times for Sportradar, for sure.
09:24And just taking a look forward with, you know,
09:26adjusted EBITDA growing 33% year-over-year
09:29and your free cash flow more than doubling.
09:31How does that IMG arena acquisition impact your financial outlook for 2025?
09:35And beyond, should investors expect that continued margin expansion
09:39and revenue acceleration?
09:41Well, look, the difficulty here is I don't know when this transaction is closing
09:46because we have antitrust in between.
09:48If you tell me how I can influence them that they give me a definite time
09:52when they are giving us the permit, that would be great.
09:55But I guess you can't do that.
09:57So we need to wait for basically the CMA in UK when they give us the go for this.
10:02At the moment, we anticipate that this is the case in the last quarter of this year.
10:06So we anticipate it's the six months.
10:09Then we only have the top line revenue for one quarter on our balance sheet 2025.
10:15If you look now, if you would say the transaction closes now,
10:19and if you look to our forecast, we would forecast
10:23mid 20s to a high 20s from a top line revenue growth.
10:29But at the moment, we're guiding into a 15 lowest and we expect hopefully a bit more.
10:34So that's how you see the impact from a top line revenue.
10:38From a profitability, that's very easy.
10:40So this will be margin accretive from the first moment
10:44and it will be cash accretive from the first moment.
10:46Why can we do this and IMG can't do it?
10:49It's not that they are not understanding the sector,
10:52but we are running simply a much bigger ship and we have 800 bookmakers.
10:57We have 900 media companies.
10:59We are truly global business and we have a broader product portfolio
11:03where we can put this raw material in.
11:06See the raw material and the data a little bit like a rocket fuel.
11:09So we put that into our spaceship and we are already on a good way.
11:15So see it in this way.
11:16I hope that comparison is not too offensive.
11:18But that's something how it works.
11:20It's a brilliant liftoff.
11:23It's great to be driving that bigger ship, Karsten.
11:25That's for sure.
11:26Listen, very exciting times ahead for you guys at Sport Radar.
11:29It was an absolute pleasure talking with you today, Karsten.
11:32Thank you so much for your time.