Q3 2023 Sportradar Group AG Earnings Call

Yeah.

Good day and thank you for standing by welcome Sport radar third quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

You will then hear an automated message advising you of heinous race to withdraw your question. Please press star one again, please be advantage for today's conference is being recorded I would now like to hand, the conference over to your speaker today Christian on Mccloskey manager of Investor Relations. Please go ahead.

Thank you operator, Hello, everyone and thank you for joining us for smart radars earnings call for the third quarter of 2023.

Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at investors, that's what radar dot com and will be posted on our website at the conclusion of this call.

A replay of today's call walk will be available on our website.

After our prepared remarks, we will open the call to questions from investors.

Interest of time, please limit yourself to one question plus one follow up.

Please note that some of the information you will hear during this discussion today will 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 to.

To differ materially from our forecast.

For more information please refer to the risk factors discussed on our annual report on form 20-F filed with the FCC in March and form 6K furnished with the SEC today, 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, both I F RF and non I F. R S financial measure.

Additional disclosures regarding these non I F. R S measure.

A reconciliation of Ifr at nine I F. R S measure.

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 for today's call are Carsten call, our Chief Executive Officer, and Dr. Griffin, Chief Financial Officer, and now let me turn the discussion over to Carsten.

Thank you Christine and good morning, and good afternoon to everyone.

Have a lot to share with you today on our performance for 'twenty to 'twenty three strategic actions, we are taking to improve profitability as well as our growth expectations for 2024 and beyond.

In a dynamic time of our organization I'm impressed by the focus and execution exhibited across our teams in particular, our ability to unlock unlock greater profitability from our growing revenue base.

This collective effort is laying a durable foundation for our continued growth and success in 2024 and beyond.

While we remain on track to deliver strong year over year growth in 2023, we are updating our outlook to reflect the financial performance to date and address some recent market headwinds.

While we expect to deliver adjusted EBITDA at high end of our previous guidance and stronger adjusted EBITDA margin, we are reducing our revenue outlook to reflect some of these short term challenges.

Now, we expect to deliver revenue in the range of $870 million to 880 million euros.

Representing year over year growth between 19 and 21%.

Adjusted EBITDA in the range of 162 million to $167 million representing year over year growth between 29, and 33 and improved EBITDA margin in the range of 18.4 and $19 two per.

We have lowered our full year's revenue outlook, mainly to reflect two factors.

First the Euro has further strengthened creating pressure on our U S dollar denominated revenue relative to our initial expectations.

Second and more recently in Q3 betting operators, especially those outside of the U S has experienced margin pressure primarily to live betting and soccer due to winning streak of batteries with more favor explaining and gold rich cadence during the start of the European football.

Fall season.

This contributed to softness in our Q3 MTS results and our outlook for the rest of the year very participate in all of sports betting clients revenues.

Our strong outlook for adjusted EBITDA, and adjusted EBITDA margin reflects improving operating leverage through both cost management and ongoing strategic initiatives to streamline our business operations, which we will walk you through shortly.

Turning to the third quarter.

We delivered revenues of 201 million.

Up 12% year over year, this was lower than our expectations, primarily due to the note itself in MTS revenues outs.

Outside of this our portfolio results were broadly in line with our expectations.

We delivered record quarter profitability with adjusted EBITDA of $50 million up 38% year over year and adjusted EBITDA margin of 25, an improvement of 471 base.

<unk> points year over year.

We also generated net cash from operating activities of 76 million euros up 19% year over year, and we ended the quarter with.

290 million cash and cash equivalents up $26 million or 10% quarter on quarter.

As a leader in our industry.

Work to ensure that we consistently deliver value to our clients and shareholders.

This week, we initiated a reduction in our.

Global workforce.

This action is part of a broader set of strategic initiatives to better position the company for growth.

Which we aim to simplify and streamline the companys operating structure, improving product IRI and portfolio optimization.

Completed this reduction in workforce should result in an approximate 10% reduction of the company's 2023 labor cost run rate.

<unk> contributes positively to future operating leverage.

It will also enable us to be more agile.

Intently focused on our strategic priorities and to capture the market opportunities ahead of us.

Now I'd like to update you on a few new and expanded deals that will help drive our growth and profitability into 2024.

First our teams are well underway with realizing the value of our strategic partnerships with the NBA with our latest lifetime revenue and profitability estimates ahead of our original expectations. When we announced this deal in 2021.

With the knowledge of the current trading and newly closed long term client agreements. We can confirm that this investment remains on track to be a strong revenue contributor and highly accretive to our EBITDA margin goals over the lifetime of the deal to remind you of the MBA.

<unk> was trying to 'twenty three 'twenty 'twenty four season and run through 'twenty 31.

With last week's tip off of the season, we have now signed up our U S client base to the premium content for the next eight years, including draft Kings bet, MGM that 365, Fabulous and Caesars.

We are also incredibly pleased with the positive engagement for this premium content offering across our international client base that accounts for approximately 40% of the total NPA deal value.

We are just at the beginning of our journey with this great franchise that will be an important innovation in growth catalyst for the company I look forward to unlock additional value, which we will deliver to our clients and our company over the term of the deal.

In addition, I'm thrilled about the partnership with the Taiwan Sports Lottery.

We selected as their official technology and service solution provider through 'twenty 33.

This is our 14th government approved lottery.

We'll be providing the tab on sports lottery with the platform combining multitude of services like MTS pre match lifeboats heads to add transports poker player account management solution.

This rollout which commenced in quarter three.

<unk> extends to over 2600 retail outlets in Taiwan.

Last our value continues to be recognized in the industry winning several awards.

<unk> sports betting provider after year marketing service provider of the year and top leaders in AI 100.

Before I turn it over to Gerry I would like to reflect a little more.

On where we are in our journey.

I am excited about the market prospects ahead of us.

Driving sustained profitability growth on scale by using the power of our worldwide network together with the growing data opportunity is more than ever fascinating and motivating.

We are the industry leader and trusted partner, because we have developed enduring and valued relationships with our clients and partners that only deepen with our innovative capabilities our.

Our best in class content portfolio is the fuels, which powers, our existing products and robust recurring revenues.

It's also the catalyst for further core revenue growth product innovation deeper monetization and value creation.

<unk> portfolio today is a critical is that the critical mass and.

Stable level to drive our revenue growth and profitability ambitions for the years ahead.

Put it in another ways, while we can acquire more rights if the ROI makes sense.

We do not need more rights to deliver on our growth targets.

Last we are operating at scale with an HR organization to drive strong profitability growth in the years ahead.

We also have the financial capabilities to enhance our position further should the right opportunities arise.

To put this into context, let me walk you through how this translate into revenue growth and higher margin for the company.

Using the U S. As a sample we offer the broadest sports coverage delivering official analytics and intelligence to 95% of the core U S professional sports or over 5000 games annually based on our partnerships with NBA MLB NHL.

Yes.

We leverage this foundation of assets across our media leak in spot partners to move up the value chain with our products and capture a higher share of U S gross gaming revenues or <unk>.

In play adaptation is the key driver for that in the U S.

S, whereas in more advanced European markets in play adaptation accounts for approximately 80% of the betting revenues in the U S. It accounts for approximately 35% after U S GTR.

Coding to our estimates closing the in play Cup, but result in a 25% to 35% increase in our current U S revenue base with a strong margin profile.

Last is the strength of our product roadmap throughout 2024.

Highlighting our partnership with the NBA, we intent to drive deeper value within the life bearing markets and to bring life and immersive fan experience next generation Telecom thing and AI, driven <unk> analytics for coaching solution.

You will see us introducing products like micro batting virtual stadium mixed reality augmented Avi and real time states and insights.

In summary, we are well positioned to capture significant growth opportunities.

By expanding monetization with our existing clients acquiring new clients leveraging the power of data and drive insights and innovation and broadening and deepening our partner ecosystem.

With that.

Turn over the call to Jeff to discuss the financial results and outlook in more detail.

Thank you Carsten.

Turning to the third quarter.

We delivered revenues of $201 million up $22 million or 12% year over year.

While most of our revenue lines were broadly in line with our expectations, we had a lower than expected revenue from our MTS platform.

Due to the weaker client revenues in which we participate via revenue share.

In Q3 betting operators internationally experienced margin pressures, primarily in their life betting and Theyre soccer segments due to a winning streak for sports betters with more favorites, winning and call rich games during the start of the European football season.

This adversely affected our Q3 MTS results.

From a portfolio perspective rest of world betting was up $11 million or 11% year over year with solid performances across the main product lines in particular life thoughts and data were up 18% year over year.

Despite the softness in MTS was up 7% year over year.

Rest of World A&P was up $5 million or 15% year over year supported by the addition of the new Combi, Paul Reitz, and an uplift in services to existing and new clients.

The United States segment was up $3 million or 11% year over year as we continued to see growth in this developing market.

In U S dollars the U S grew.

18% in the quarter.

All other revenues were up $2 million or 19% year over year, primarily driven by growth in our ads business.

Net profit for the quarter was $5 million, including $15 5 million and impairment charges, resulting from the streamlining of our business operations and product portfolio.

This compares to 13 million net profit in the prior year, which benefited from stronger foreign currency gains.

Looking at our adjusted EBITDA, we delivered a strong result.

Adjusted EBITDA was $50 million up $14 million of 38% year over year.

Adjusted EBITDA margins improved almost 471 basis points to 25, 1%.

This improvement was driven by a more profitable revenue mix and operating leverage across all major expense lines in.

In particular personnel expenses, driven by lower run rates as we actively manage our expense base.

Personnel expenses were $75 million up $7 million or 10% year over year.

Personnel expenses, excluding stock based compensation was $64 million up $3 million or 5% year over year.

Sports rights for 36 million up 1 million or 3% year over year.

Turning to liquidity.

We ended the quarter with liquidity of 510 million euros. This.

This was comprised of $290 million in cash and cash equivalents up $29 million or 10% quarter on quarter, and a $220 million revolving credit facility with no amounts outstanding.

Given our solid liquidity position and our focus on delivering long term value to our shareholders. We are reviewing several options to enhance our capital allocation.

Today, and thank you for standing by.

Unknown Attendee: Welcome to Sportradar's third quarter, 2023 earnings conference called. At this time, all participants are in a listen-only mode. After the speech's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised so today's conference is being recorded.

Before I turn to our revised 2023 outlook and initial views for growth in 2024.

I would like to take a moment to expand on Carson's remarks related to the actions we are taking to better position the company for top line growth and operating leverage in the future.

As we've noted in the past we are continuing to see challenging all aspects of our business to ensure we are focusing our talents and resources on the most profitable growth opportunities.

Unknown Attendee: I would now like to hand the conference over to you. Thank you for joining us for Sportradar's earnings call for the third quarter of 2023. 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 we'll be posted on our website at the conclusion of this call. If we play up today's call, we'll be able to answer your questions. We'll also be available on our website.

Due to this focus this week, we initiated a reduction in our global workforce.

This action is part of a broader set of initiatives of strategic initiatives to better position. The company for growth, which are aimed at simplifying and streamlining the companys operating structure, improving product rois and portfolio optimization.

When completed this action should result in an approximate 10% reduction in the company's 2023 labor cost run rates and contribute positively to future operating leverage.

Unknown Attendee: After our prepared remarks, we will open the call to questions from investors. In the interest of time, please limit yourself to one question plus one follow-up. Please note that some of the information you will hear during this discussion today will 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 resolve for trends to differ materially from our forecast.

We expect this action to be materially complete by the first quarter of fiscal 2024.

Unknown Attendee: For more information, please refer to the risk factors discussed on our annual report on Form 20 asks filed with the FCC in March and Form 6K furnished with the FCC today 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 both IFRS and non IFRS financial measures. Additional disclosures regarding these non IFRS measures, including a reconciliation of IFRS to non IFRS measures, are included in the earnings release, supplemental slides, and are filed with the FCC, each of which is posted to our investor relations website.

In 2024, we expect the operating leverage our strategic initiatives will unlock and personnel cost of sales and other operating costs will be offset by the pressure in operating leverage resulting from the onetime step up in our sports rights costs expected from the first full year of our NBA and ATP.

Partnership deals.

As we look beyond 2024.

There is the potential for all major expense line items to contribute to improved operating leverage.

As we continue to actively manage our operating cost run rates and a more stable sports rights portfolio your cost base.

Turning to our revised 2023 outlook.

While we remain on track to deliver strong year over year growth in 2023, we are updating our outlook to reflect our financial performance to date and address some market headwinds.

Our updated outlook for fiscal 'twenty three is as follows.

Revenue in the range of $870 million to $880 million, representing year over year growth between 19 and 21%.

Kristen: Joining me for today's call are Carson Carl, our Chief Executive Officer, and Jair Griffin, Chief Financial Officer. And now, let me turn the discussion over to Carson.

Adjusted EBITDA in the range of $162 million to a $167 million representing year over year growth between 29 and 33%.

Carson Carl: Thank you, Kristen, and good morning and good afternoon to everyone. We have a lot to share with you today on our performance for 2023 strategic actions we are taking to improve profitability, as well as our growth expectations for 2024 and beyond. In a dynamic time of our organization, I'm impressed by the focus and execution exhibited across our teams, in particular our ability to unlock greater profitability from our growing revenue base.

Adjusted EBITDA margins in the range of 18, 4% to 19, 2%.

Carson Carl: This collective effort is laying a durable foundation for our continued growth and success in 2024 and beyond. Grant. While we remain on track to deliver a strong year-over-year growth in 2023, we are updating our outlook to reflect the financial performance today and address some recent market headwinds. While we expect to deliver adjusted EBTA at high end of our previous guidance and stronger adjusted EBTA margin, we are reducing our revenue outlook to reflect some of these short-term challenges.

Our revised full year revenue outlook, primarily reflects greater FX pressure on our U S revenues than previously indicated given the strength of the euro versus the U S dollar.

Lower MTS revenues for the year, given the softness experienced in Q3 and a more cautious estimate for Q4.

Our stronger adjusted EBITDA outlook, primarily reflects improving operating leverage through the continued active cost management and initial benefits from the ongoing strategic actions to streamline our business operations.

Product portfolio.

Turning to 2024.

As we look forward into 2024, we expect to deliver at least 20% revenue growth from our enhanced content portfolio, which will include the NBA and ATP rights and improved monetization across the product portfolio.

We also expect to deliver at least 20% adjusted EBITDA growth with the improvements in operating leverage and personnel cost of sales and other operating costs offsetting the one time impact from the step up in sports rights costs for the new NBA and ATP partnerships.

Carson Carl: Now we expect to deliver revenue in a range of 870 million to 880 million euros, representing year-over-year growth between 19 and 21%. Adjusted EBTA in the range of 1.62 million euros to 167 million, representing year-over-year growth between 29 and 33 and improved EBTA margin in the range of 18.4 and 19.2%.

In summary.

We remain on track to deliver robust growth in 2023.

And are well positioned for continued profitable growth in 2024 and beyond.

With that we'd like to open up the call for your questions.

Operator would you open up the line for questions.

Thank you.

A reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press star one again, please wait for your name to be announced again, we ask that you. Please limit yourself to one question and one follow up until all have had a chance to ask a question after which we will answer any additional questions from you as time permits.

Carson Carl: We have lowered our full year's revenue outlook mainly to reflect two factors. First, the euro has further strength in creating pressure on our US dollar denominated revenue relative to our initial expectations. Second, and more recently in Q3, betting operators, especially those outside of the US, have experienced margin pressure primary to live betting and socket due to winning streak of bettors with more favorites winning and gold-rich gains during the start of the European football season. This contributed to softness and our Q3MTS results and our outlook for the rest of the year really participate in our sports betting clients revenues.

Please standby, while we compile the Q&A roster one moment for your first question. Please.

Yeah.

Our first question comes from the line of Ryan <unk> with Craig Hallum Capital Group. Your line is now open.

Good day Carson Jerry Thanks for taking my questions.

Good day Ryan.

Curious on the U S. So deceleration in growth I know a little bit of an FX headwind, but even considering constant currency deceleration in growth there and even relative to the rest of the business. I guess, you COVID-19% growth in bedding in AAV implies there was weak.

Weaker somewhere else offset that to get to 11% overall, so what what specifically isn't going as well there.

Carson Carl: Our strong outlook for adjusted EBTA and adjusted EBTA margin reflects improving operating leverage through both cost management and ongoing strategic initiatives to streamline our business operations, which we will walk you through shortly. Turning to the third quarter, we deliver revenues of 211 million euros up to 12% year-over-year. This was lower than our expectations primarily due to the noted softness in MTS revenues. Outside of this, our portfolio results were broadly in line with our expectations.

Sure do you want to take this question has the CFO.

Yes in terms of in terms of the U S.

If you take off the <unk>.

FX impact we feel that we actually had a strong growth in the quarter I would remind you. It's this is our quietest quarter. If when you look at.

In terms of the fiscal year.

Outside of our explanation there was nothing else material to call out in terms of the API side of the business.

And then just on guidance for the year are.

Carson Carl: We delivered record quarter profitability, which adjusted EBTA of 50 million euros, up 38% year-over-year and adjusted EBTA margin of 25 and improvement of 471 basis points year-over-year. We also generated cash from operating activities of 76 million euros, up 19% year-over-year, and we ended the quarter with 290 million cash and cash equivalent, up 26 million or 10% quarter on quarter.

Lowering in part smaller part due to the euro strengthening.

As I look at it the euro was trading at the lowest USD conversion this year and it has actually depreciated versus U S. Dollar since you last gave guidance so.

Am I missing something there.

Most of the impact was what we flagged back in the last quarter, where you saw that we flagged that versus our original guidance. We felt it was pressure of around $10 million. All were saying is that that pressure, which is now reflected in this revised guidance range.

Did increase the actual blended rate in Q3 did contribute to more.

Pressure I think as you look into Q4, it shouldnt it shouldn't be an impact.

Carson Carl: As a leader in our industry, we worked to ensure that we consistently deliver value to our clients, and shareholders.

Thank you one moment for our next question. Please.

Carson Carl: This week, we initiated a reduction in our global workforce. This action is part of a broader set of strategic initiatives to better position the company for growth, which we aim to simplify and streamline the company's operating structure, improving product ROI, and put for your optimization. When completed, this reduction in workforce should result in an approximate 10% reduction of the company's 2023 labor costs run rate and contributes positively to future operating leverage. It will also enable us to be more agile, intently focused on our strategic priorities and to capture the market opportunities ahead of us.

Our next question comes from the line of Robin Farley with UBS. Your line is now open.

Great. Thanks, two questions.

So if you've covered this we have had some trouble getting onto this call but.

Sure.

For easy business for rest of World I don't know if you addressed the margin being down a couple hundred basis points, there even with the 15% revenue increase so I don't know if theres any color to add on the rest of world AZ. I know you just mentioned something about the U S business, but on the rest of World and then the other.

Question is.

Amit MTA deal can you give us a sense of.

Kind of the profitability between your arrangements.

With them on the.

Carson Carl: Now, I'd like to update you on a few new and expanded deals that will help drive our growth and profitability into 2024. First, our teams are well underway with realizing the value of our strategic partnerships with the NBA, with our latest lifetime revenue and profitability estimates ahead of our original expectations, when we announced this deal in 2021. With the knowledge of the current trading and newly closed long-term client agreements, we can confirm that this investment remains on track to be a strong revenue contributor and highly accretive to our EVTA margin goals over the lifetime of the deal.

<unk> dot aside versus.

Tracking technology. It seems like there are a lot of companies that have some piece of the deal with the MBA.

And different tracking and so I wonder if you could just help us understand the profitability of the different pieces of your.

Range, but with the MBA you know in general terms.

Hi, Robin this is carsten.

Looking toward the AAV revenue, that's the seasonal effects.

<unk>.

Quarter, three is not a high traffic quarter from <unk> perspective, you know that we have a portfolio, which we bring to the market. So they always premium rights and behind this we lined up a couple of cheaper rights for example table tennis.

And that is the effect, which you see here the growth comes Mike stated from Continental and the MLP there so nothing special to state.

Carson Carl: To remind you, the NBA deal begins with 2023-2024 season and runs through 2021. With last week's pivot of the season, we have now signed up our U.S, client base to the premium content for the next eight years, including draft kings, bad NGM, bad 365, fan yields and seasons. We are also incredibly pleased with the positive engagement for this premium content offering across our international client base that accounts for approximately 40% of the total NBA deal value.

C a readjustment in quarter four here.

Which goes from a profitability most likely a bit in the other direction, but that seasonal effects.

And very small.

Looking to the NBA deal and I'm glad that you asked I would like to remind everybody.

Those deals are accounted from an accounting perspective treated in the way there was a lump sum and in this case it split it.

In equal proportions over eight years.

We all think can follow debts during the term of the deal it gets more profitable for us is to distribute it because we can line up more products and more clients behind it. So this deal gets only more margin accretive for us.

Carson Carl: We are just at the beginning of our journey with this great franchise that will be an important innovation and growth catalyst for the company. I look forward to unlock the additional value which we will deliver to our clients and our company over the term of the deal.

During the term of the second half of such deals are significantly more profitable combining this with our strong outlook, which we gave for 2024.

Carson Carl: In addition, I'm thrilled about the partnership with the Taiwan Sports Lottery. We selected as their official technology and service solution provider through 2030-33. This is our 14th government approved lottery. We will be providing the Taiwan Sports Lottery with a platform combining multitude of services like MTS, pre-match lifelots and the end-to-end sportsbook and player account management solution. This rollout, which commenced in quarter three, will ultimately expand to over 2600 retail outlets in Taiwan. Last, our value continues to be recognized in the industry, winning several awards, including sports betting provider of the year, marketing service provider of the year, and top leaders in the Taiwan Sports Lottery. 100.

How could we leverage our business and how could we leverage our worldwide operation into client base looking specifically to the data piece.

In the United States, which we mentioned comps for 60%.

It's on the data it's not AEP worldwide. There is in the EV component in there and there was a plan that mix between the data.

<unk> on a worldwide basis worldwide, we are very satisfied with how we are tracking from the U S. We signed every operator for the next eight years on the extended deal which includes deep data and innovative solutions, where we highlighted a few of them are not.

<unk> tracking providers for the MBA there is one tracking provider on the fresh food tracking provider nothing else there is.

Carson Carl: Before I turn over to Jair, I would like to reflect a little more on where we are in our journey. I'm excited about the market prospect ahead of us. Driving sustained profitability grows on scale by using the power of a worldwide network together with the growing data opportunity is more than ever fascinating and motivating. We are the industry leader and trusted partners because we have developed enduring and valued relationships with our clients and partners that only deepen with our innovative capabilities.

<unk> side deal in place with some teams, which for fear to get also a solution from another tracking provider that's on discrete off the NBA deal teams. It doesn't make to extent to the woman MBA and that is the team by team based team we have at the yields with the leak with Dnb on this and we are providing.

Those solutions, which we highlighted I hope that answers the question Robyn.

Great. Thank you very much thanks.

Thank you one moment for our next question. Please.

Carson Carl: Our best-in-clouds content portfolio is the fuel which powers our existing products and robust recurring revenues. It's also the catalyst for further core revenue growth, product innovation, deeper monetization, and value creation. Our content portfolio today is at a critical mass and stable level to drive our revenue growth and profitability ambitions for the years ahead. But, put it in another way, while we can acquire more rights if our right makes sense, we do not need more rights to deliver on our growth targets. Last, we are operating at scale with an agile organization to drive strong profitability growth in the years ahead. We also have the financial capabilities to enhance our position further should the right opportunities arise.

Okay.

Our next question comes from the line of David Kornacki with Jpmorgan. Your line is now open.

Alright. Thank you Jarrod, maybe just following up on the 2020 for 'twenty.

20% revenue growth and I think you had said EBITDA as well.

While we have you on the call I wanted to see if you could break that down a bit in terms of where you think that growth will come from by segment and then Carson you noted the importance of in play betting for future growth just curious with the start of the NFL NBA and NHL seasons, how the uptake looks there relative to to early last year.

Carsten do you want me to start.

Yes, please start.

Okay.

So David in terms of the actual growth next year, we believe that the growth is going to be broad based in the sense that.

Carson Carl: To put this into a context, let me walk you through how this translates into revenue growth and higher margin for the company. Using the US as a sample, we offer the broadest sports coverage delivering official analytics and intelligence to 95% of the core US professional sports or over 5,000 games annually based on our partnerships with MBA, MLB, and NHL. We leverage this foundation of assets across our media, league, and sport partners to move up the value chain with our products and capture a higher share of US growth gaming revenues or PGR.

We obviously will see the contributions from our enhanced content portfolio. So.

Both directly and indirectly true, obviously cross selling and packaging.

It's going to obviously help our U S growth, but others.

As you saw on our notes here, 40% of the MBA businesses outside of the United States. So we expect it to be a major contributor internationally summary.

Similarly, with the ATP.

Beyond that we.

Been investing as you know and enhancing the overall potential of our portfolio. So we do believe that there's opportunities to introduce new products next year, but also enhance our existing portfolio to enable us to upsell and continue to drive on what is already a very strong and recurring revenue base.

Carson Carl: In-play adaptation is the key driver for that in the US, whereas in more advanced European markets, in-play adaptation accounts for approximately 80% of the betting revenues, in the US it accounts for approximately 35% of the US GGR. According to our estimates, closing the in-play gap would result in a 25% to 35% increase in our current US revenue base with a strong margin profile.

So.

Hardly speaking, it's going to come across the board in terms of the existing portfolio, but obviously, the addition of new products and new content is going to help amplify our growth in 2024.

And for the second part was the in play we see a pickup 10, sometimes 15% on the operate the pace of shift into live betting from US 30, an average $235 for a little bit more because our numbers, which we get from the operators I think.

Carson Carl: Last is the strength of our product growth map throughout 2024. Highlighting our partnership with the MBA, we intend to drive deeper value within the live betting markets and to bring life and immersive fan experience next generation telecasting and AI-driven and 3D analytics for coaching solutions. You will see us introducing products like micro betting, virtual stadium, mixed reality, augmented AV, and real-time states and Insights. In summary, we are well positioned to capture the significant growth opportunities ahead by expanding monetization with our existing clients, acquiring new clients, leveraging the power of data and drive insights and innovation and broadening and deepening our partner ecosystem.

More important is that we are supporting this trend with our products. The EV products are stimulating we have that for baseball and four NHL now and what is also stimulating is all the visualizations based on deep data, which you saw in the slides, which we do and where we launched a couple of new products for the MBA.

But we wanted to here is we want to create that experience for the batteries to follow the Mets in running and of course stimulate them for place some bets.

A testament that we are right on track is.

The interview, which Amy <unk> from fans and draft Kings as to Ceos did <unk> stated, there and we moderated that panel that debt.

<unk> is high on their agenda and the products around this are products, which they are looking into it. So I think all of this together. So as you build working very solidly that we move into the live betting and.

Jair Griffin: With that, I turn over the call to Jair to discuss the financial results and outlook in more detail. Thank you, Carsten. Turning to the third quarter, we delivered revenues of $201 million, up 22 million, our 12% year-of-year. While most of our revenue lines were broadly in line with our expectations, we had a lower than expected revenue from our MTS platform, due to the weaker client revenues in which we participate via revenue share.

The last piece maybe is the leaks. They are supporting there is a lot they see the opportunities with that life experience. So we think the trends will continue we have nothing to think against it if it reaches the 80%, which we see in Europe. That's that's still open but we.

Jair Griffin: In Q3, betting operators internationally experienced margin pressures, primarily in their life betting in their soccer segments, due to a winning streak for sports bettors with more favorites winning and goal-rich games during the start of the European football season. This adversely affected our Q3 MTS results. From a portfolio perspective, rest of our betting was up 11 million, our 11% year-of-year, with solid performances across the main product lines. In particular, live odds in data were up 18% year-of-year, MBS despite the softness in MTS was up 7% year-of-year.

See a solid trend from pre matched into life bedding.

Thank you.

Thank you one moment.

Next question.

Okay.

One moment for our next question.

Our next question comes from the line of Michael Graham with Canaccord Genuity. Your line is now open.

Alright. Thank you I wanted to ask two the first one is on them.

The sort of cadence of the negative sports outcomes that you mentioned I know.

Jair Griffin: Rest of WorldAV was up 5 million, our 15% year-of-year supported by the addition of the new economy ball rights and an uplift in services to existing and new clients. The United States segment was up 3 million, our 11% year-of-year as we continued to see growth in this developing market. In US dollars, the US grew 18% in the quarter. All other revenues were up 2 million, our 19% year-of-year, primarily driven by growth in our ads business.

You reaffirmed guidance at the end of August and just wondering if maybe some of that stuff.

Pretty late in the quarter or just maybe talk about.

Specifically the month of September and then.

Just wanted to ask if you had any updated thoughts on the long term.

<unk> ability roadmap in the U S. You saw it would be profitable.

Wondering if you have any updated thinking around how long it takes the U S to get closer to your.

Corporate average.

Okay. Good so I'll take the first part and then I'll leave the U S piece to Gerry if you.

Jair Griffin: Net profit for the quarter was 5 million, including 15.5 million in impairment charges, resulting from the streamlining of our business operations and product portfolio. This compares the 13 million that profit in the prior year, which benefited from stronger foreign currency gains. Looking at our adjusted EBITDA, we delivered the strong result. Adjusted EBITDA was 50 million, up 14 million, of 38% year-of-year. Adjusted EBITDA margins improved almost 471 basis points to 25.1%. This improvement was driven by more profitable revenue mix and operating leverage across all major expense lines.

Looking now into the correction to MTS to mechanism here is that we have a revenue share from the gross gaming revenues. After your operator, so when the operator has more profitability because we managed to risk better for them, we have a higher proportion on this ship them now.

It is from a risk management perspective.

We're looking to the biggest towards from a liquidity perspective. So we set this has happened in Europe or the rest of the world not in the U S. Because we are speaking about favorable soccer results February Lusaka results means favorites are winning so we had that effect and we are not deal in there.

Jair Griffin: In particular, personal expenses driven by lower run rates as we actively manage our expense base. Personal expenses were 75 million, up 7 million, or 10% year-of-year. Personal expenses, excluding stock-based compensation, were 64 million, up 3 million, or 5% year-of-year. Sports rights were 36 million euros, up 1 million, or 3% year-of-year, of the year. Turning to liquidity, we enter the quarter with liquidity of 510 million euros. This was comprised of 290 million cash and cash equivalents, up 29 million or 10% quarter on quarter, and a 220 million revolving credit facility with no amounts outstanding.

One all the companies reporting public had the same effect think of it as if you were giving a loan to the better so the better we'll windows, but sooner or later, the operator will bring it back if they offer consistently to risk management, which we provide to them.

And yes favorites, winning is something nobody kind of what it happens it happens quite frequently in this business.

It's nothing to be worried about it's simply a winning streak, which we are facing and it comes together with gold.

And the last minutes, which is not good from a risk management perspective, and the number of heico's readjusted. Our agribusiness. We think we have taken care of this effect, but as I said, it's a revenue share base. So that has an effect on our MTS results.

Jair Griffin: Given our solid liquidity position and our focus on delivering long-term value to our shareholders, we are reviewing several options to enhance our capital allocation. Before I turn to our revised 2023 Outlook and initial views for growth in 2024, I would like to take a moment to expand on Carsten's remarks related to the actions we are taking, the better position the company for top-line growth and operating leverage in the future. As we have noted in the past, we are continuously challenging all aspects of our business to ensure we are focusing our talent and resources on the most profitable growth opportunities.

We faced this with the beginning of the soccer season, which is in quarter three and may be the very last piece of this is if you compare this quarter soccer to the quarter in the last year, you will see that in the last year, we had the World Cup a lot of matches have been shifted so proportionately we had significantly more.

<unk> soccer matches in quarter, three last year than we have in this year. So that year by year comparison is also affected partly because of this.

Jair Griffin: Due to this focus, this week we initiated a reduction in our global workforce. This action is part of a broader set of initiatives to better position the company for growth, which are aimed at simplifying and streamlining the company's operating structure, improving product ROI, and portfolio optimization. When completed, this action should result in an approximate 10% reduction in the company's 2023 labor cost run rates and contribute positively to future operating leverage. We expect this action to be materially complete by the first quarter of fiscal 2024.

Hand over to <unk> for the second part.

Yes, when you think about the U S and some of what I'm going to say actually applies to our broader business.

If you think about some of the major.

Content deals we have in place like Carson.

<unk> talked about the NPA in his prepared remarks.

USF deal evolves over its lifetime.

Yes, the back half of that deal is significantly more accretive from an EBITDA point of view than the earlier.

Earlier years, when we're dealing with.

Straight lining the amortization costs, but obviously a growing revenue base. So when you think about the U S. Given the size of the U S.

Jair Griffin: In 2024, we expect the operating leverage our strategic initiatives will unlock in personnel, cost of sales, and other operating costs will be offset by the pressure and operating leverage resulting from the one-time step-up in our sports rights costs expected from the first full year of our NBA and ATP partnership deals. As we look beyond 2024, there is the potential for all major expense line items to contribute to improve operating leverage. As we continue to actively manage our operating costs, run rates, and a more stable sports rights portfolio cost base.

We will have a meaningful impact on on that business.

Over the coming years, as we think about more long term.

The other the other aspects of the business, we have the content portfolio today to serve that business and grow that business.

We talked about that in our.

In our prepared remarks, but as more states open up and as lifelike betting evolves.

It's obviously going to deliver a stronger revenue contribution off what is essentially a fixed base of business from a cost point of view, so theres going to be operating leverage that will be triggered so from a U S perspective.

Jair Griffin: Turning to our revised 2023 outlook, while we remain on track to deliver strong Eurovere growth in 2023, we are updating our outlook to reflect our financial performance today and address some market headwinds. Our updated outlook for fiscal 23 is as follows. Revenue in the range of 870 million to 880 million representing Eurovere growth between 19 and 21%. Adjusted EBITDA on the range of 162 million to 167 million representing Eurovere growth between 29 and 33%.

We feel confident that the growth opportunities, there, but structurally and what we're doing to enhance our product portfolio and that will lead to an expanded margin profile and we'll definitely bring the U S up over over the coming years and more broadly. It's the same concept. If you think about rest of world, whether it's D. J.

T P deal or whether it's the NBA deal.

The structure of these deals.

Are such that they are going to be.

Very nice contributors to margin expansion as we think through the lifetime of the deal a little bit of a wait at the start but they are.

Jair Griffin: Adjusted EBITDA margins in the range of 18.4% to 19.2%. A revised full year revenue outlook primarily reflects greater effects pressure on our US revenues than previously indicated given the strength of the Euro versus the US dollar. Lower MTS revenues for the year, given the softness experienced in Q3 and a more cautious estimate for Q4. Our stronger adjusted EBITDA outlook primarily reflects improving operating leverage through the continued active cost management and initial benefits from the ongoing strategic actions to streamline our business operations on product portfolio.

They're obviously going to enable us to drive better margins outside of what we've said already which is keeping a close eye on our operating structure and making sure. We're driving the right kind of product innovation to deliver more value add to our client base.

Okay. That's helpful. Thank you so much.

Thank you one moment for our next question. Please.

Yeah.

For the cargo after you.

Our next question comes from the line of Jason Bazinet with Citi. Your line is now open.

I just had a quick question on that.

Faster than 20% Rev growth greater than 20% EBITDA growth next year.

I think that means consensus estimates have to move up.

Jair Griffin: Turning to 2024, as we look forward into 2024, we expect to deliver at least 20% revenue growth from our enhanced content portfolio, which will include the NBA and ATP rights and improved monetization across the product portfolio. We also expect to deliver at least 20% adjusted EBITDA growth with the improvement in operating leverage in personnel, cost of sales and other operating costs of setting the one time impact from the step up in sports rights costs for the new NBA and ATP partnerships.

And so I was just wondering if you could maybe highlight what are the two or three.

Most notable risks to achieving those sort of growth rates.

Joe would you take up that question from Jayson.

Yes, obviously ill start with profitability.

And I'm going to give you an Irish answer so apology, but if we decide to.

Not focus on managing our operating costs and we see you know.

Gradual creep back in our in our employee base in terms of our labor cost.

Jair Griffin: In summary, we remain on track to deliver robust growth in 2023, and our well-positioned for continued profitable growth in 2024 and beyond. With that, we would like to open up the call for your questions. Operator, will you open up the line for questions? Thank you. As a reminder to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced.

That would obviously impact the level of operating leverage that we believe we can deliver in 2024 and beyond.

The actions, we're taking this week while difficult.

Due to position us for strong operating leverage of over the coming years.

From a revenue perspective.

Again, the content portfolios in place and the product offerings in place. So it would have to be.

More of a macro factor is just the U S open up.

Jair Griffin: Again, we ask that you please limit yourself to one question and one follow-up until all have had a chance to ask a question, after which we will answer any additional questions from US time permits. Please stand by, where we compiled a T&A roster. One moment for our first question, please.

At a slower pace is there is there any is there anything else structurally wrong, which we don't believe in any of our markets I don't I don't see any.

Material issues.

Obviously if.

If the world changes and.

Ryan Sigdal: Our first question comes from the line of Ryan Sigdal with Craig Hallum, Capital Group. Your line is now open. Good day, Carsten Jair. Thanks for taking our questions. Good day, Ryan. Here's on the US. So, deceleration in growth. I know a little bit of an FX headwind, but even considering constant currency, deceleration in growth fair and even relative to the rest of the business. I guess you commented 19% growth in betting an AV implies there was weaker somewhere else to offset that peak to 11% overall.

The better is continually.

On a stronger winning streak, which has not historically been the case.

That could could impact some of our revenue shares but.

As I stand here today looking at our assumptions for 2024.

We feel good about delivering at least 20% given given the strength of our content and what we're doing to enhance the monetization of the product portfolio.

That's great and if I could just ask one follow up you guys mentioned that you don't need any more rights you made by more Reits, but you don't need them would you say that that's a new chapter in the evolution of your company or could you have said that a year ago or three years ago.

Jair Griffin: So, what specifically isn't going as well there?

Jair Griffin: Jair, do you want to take this question as the CEO vote? Yeah, no, in terms of the US, we actually, if you take off the FX impact, we actually had a strong growth in the quarter. I would remind you, this is our quietest quarter when you look at the fiscal year. Outside of our explanation, there was nothing else material to call out in terms of the AV side of the business. Then just on guidance for the year, lowering in part, smaller part due to the euro strengthening.

Sorry go.

Go ahead, Sir no. No go ahead. So I think you can do it perfectly.

What we've said.

At least during my tenure and I know, it's been said in the past we take a very.

Strong ROI approach to sports rights and it's one of the reasons that we walked away from from certain rights that.

And in a world, where youre not worried of our profitability you'd probably say oh, let's add them to the portfolio.

Well, what we see right now with the addition of the NPA and ATP is that we have the portfolio that is basically the foundation for our long our long range planning right now.

Jair Griffin: As I look at it, the euro is trading at the lowest USD conversion this year. And it's actually depreciated versus US dollars since you last gave guidance. So, am I missing something there? No, most of the impact was what we flagged back in the last quarter, where you saw that we flagged that versus our original guidance, we felt it was pressure of around 10 million. All we're saying is that that pressure, which is now reflected in this revised guidance range, did increase the actual blended rate in Q3, did contribute to more pressure. I think as you look into Q4, it shouldn't, it shouldn't be in him.

Unknown Attendee: Thank you.

Unknown Attendee: One moment for our next question, please.

It's not to say that if we found.

Another REIT that would actually amplify our revenue growth at the right profitability, we wouldnt execute against it but I think there's been a perception in the past that it's always up until the right. We have to keep buying more rights to drive revenue growth. The answer is it's not that case at least not from our perspective.

If you look at the breadth and depth of our portfolio. It can Morton serves the needs of our client base.

In the U S and our client base internationally. So from our point of view, it's not necessarily a change, but it's something I think we have to say very clearly because I think there is a concern which if you want to take the bare case that sports rights are always going to go up our sports rights right now when you look at the large.

Robin Farley: Our next question comes from the line of Robin Farley with UBS. Your line is now open. Great. Thanks, Ed. Two questions. And I probably don't know if you've covered this. We have had some trouble getting onto this call.

<unk> writes their long term rights are locked in.

Robin Farley: But on the A.V, business for the rest of the world, I don't know if you addressed the margin being down a couple of hundred basis points there, even with the 15% revenue increase. So I don't know if there's any color to add on the rest of the world A.V. I know you just mentioned something about the U.S, business, but on the rest of the world A.V.

As we said as it relates to the MBA.

It's also a commitment from our client base to engage in that deal so from our point of view.

The structure of sports rights.

The only way that Youre sports rights will materially grow from where I stand here. Today is if you do add another major right or you have a major adjustment to a REIT, but right now.

Robin Farley: And then the other question is. On the MBA deal, can you give us a sense of kind of the profitability between your arrangements with them on the sports data side versus tracking technology. It seems like there are a lot of companies that have some piece of a deal with the MBA in different tracking. And so I wonder if you could just help us understand the profitability of the different pieces of your arrangement with the MBA if there's, you know, in general terms. Thanks.

We feel good about the portfolio rights and.

That portfolio. We believe can can can sustain us so from our point of view, we have stability in sports rights.

And that's an important factor because it will allow us to focus on the rest of our P&L from the point of view of managing you obviously, our run rate in terms of our personnel costs in our other.

Our other external costs.

That's great. Thank you.

Carson Carl: Hi, Robin. This is Karsten. So I'm looking to the A.V, revenue. That's a seasonal effect. So it's a it's a quarter three is not a high traffic quarter from A.V, perspective. You know that we have a portfolio which we bring to the market. So they always premium rights and behind this we line up a couple of cheaper rights, for example, table tennis. And that is the effect which you see here. The growth comes like you're stated from Comable and MLB there. So nothing special to state.

Thank you one moment for our next question. Please.

Our next question comes from the line of Stephen Grambling with Morgan Stanley. Your line is now open.

Alright, Thanks, and this is maybe a clarification on some comments at the beginning but it's not that often that you see a company talking about 20% plus top line growth that's above consensus, but then also announcing a global workforce reduction.

A reduction.

Of this size.

I mean, basically <unk> got some temporary top line hits, but still talking about strong strength in the future. So maybe you can just clarify again, what the impetus for the workforce reduction was and also just any other details you can give on what the new org structure might look like thank you.

Carson Carl: You will see a readjustment in quarter four here which goes from a profitability most likely a bit in the other direction, but that's seasonal effects and very small. Looking to the MBA deal and I'm glad that you ask. I like to remind everybody that those deals are accounted from an accounting perspective treated in the way there is the lump sum. And in this case, it's split it in equal proportions over eight years.

Steven.

Yes, I'll take that one quickly.

I can't give you an update about new work structures. We are constantly reviewing the process that we are more efficiently that we have more client centric and and.

Carson Carl: We all I think can follow that during the term of a deal it gets more profitable for us to distribute it because we can line up more products and more clients behind it. So this deal gets only more margin created for us during the term the second half of such deals. How significantly more profitable combining this with our strong outlook which we gave for 2024. It shows you how good we leverage our business and how good we leverage our worldwide operation in the client base looking specifically to the data piece in the United States which we mentioned counts for 60%.

And that is that is a constant process, which I think every company needs to do looking to why we did the reduction in the workforce, which is which is which is a tough step which we did in the last days.

We believe that it's the right thing to do to prepare our business to be fit for the future.

Future growth.

And it's a plan, which be executing now since a couple of months. So those things have to be Val plant. We know what we announced is that we have two major big deals with the NBA and with the ATP with amazing opportunities for us, but we kind of needs to handle also the cost <unk>.

Carson Carl: It's only data. It's not AV worldwide. There is an AV component in there and there is a blended mix between the data and the AV deal on a worldwide basis worldwide. We are very satisfied with how we are tracking from the U.S. We signed every operator for the next eight years on the extended deal which includes deep data and innovative solutions where we have highlighted a few of them. There are not two tracking providers for the MBA.

For this.

And Thats, what we are doing so we are focusing on client centricity. We are streamlining the processes. We're looking that we allocate our resources on the right product. We took a couple of products out and we took a couple of our products.

<unk> maintained and small to focus on dose which are driving our growth.

And.

And as the last sentence.

The team follows this amazingly even if these are more difficult decisions, we all understand it's necessary for the future exploration of oil growth. That's the reason why we did it.

Carson Carl: There is one tracking provider, one official tracking provider, and everything else. There is a small side deal in place with some teams which prefer to get also a solution from another tracking provider. That's on discretion of the MBA teams. It doesn't extend to the woman MBA and that is a team-by-team-based deal. We have a deal with the league with the MBA on this and we are providing those solutions which we highlighted. I hope that answers the question, Robin. Great. Thank you very much. Thank you.

Unknown Attendee: One moment for our next question, please.

We want to deliver this return to our shareholders and to all the stakeholders in the company.

Thank you.

Thank you one moment for our next question. Please.

Yeah.

Our next question comes from the line of Jordan Bender from JMP Securities. Your line is now open.

Great. Thanks for taking my question two for me.

Operators called out in the UK, just some of the friction relating to the regulatory environment. During the quarter I was wondering if that had any impact on our results during the third quarter and could that be a potential risk into the fourth quarter with just some of those changes ongoing and then second.

David Karnovsky: Our next question comes from the line of David Karnovsky with David Morgan. Your line is now open. Thank you. Jared, maybe just following up on the 2024, the 20% revenue growth and I think you had said to EBITDA as well. Just while we have you on the call, I want to see if you could break that down a bit in terms of where you think that growth will come from by segment.

Flow through for next year, plus or minus 20% as well.

<unk> talked about right sizing the cost structure. So how should we think about that flow through past 'twenty for what I guess, what's the what's the right way to think about <unk>.

David Karnovsky: And then Carson, you noted the importance of in-play betting for future growth. Just curious with the start of the NFL and the A&HL seasons, how the uptake looks there relative to early last year. Carson, do you want me to start? Yes, please start, Joe. David, in terms of the actual growth next year, we believe that the growth is going to be broad-based in the sense that we obviously will see the contributions from your enhanced content portfolio.

On a mature business. Thank you.

Hi, Jordan, So I'll take the first question and then I leave the outlook into 2025, plus two juror.

UK regulators yesterday tightened the regime, which we welcome a lot because it's it's the aspect of player protection.

It's responsible gaming and we believe that's the only way to really grow and to be accountable with this so.

David Karnovsky: So both directly and indirectly through obviously cross-selling and packaging, that's going to obviously help our US growth. But if you, as you saw in our notes, you have 40% the MBA businesses outside of the United States. So we expect it to be a major contributor internationally, similarly with the ATP. Beyond that, we've been investing, as you know, in enhancing the overall potential of our portfolio. So we do believe that there's opportunities to introduce new products next year, but also enhance our existing portfolio to enable us to upsell and continue to drive on what is already a very strong and recurring revenue base.

That's a measurement, which some of the operators.

Might suffer some of them, but not it's very much depending on how you're integrating this and how you're using it also as an opportunity from our base we have.

We have the recurring revenue model with all the UK operators. So there is little component and with the revenue share, but usually we are running a SaaS business. There we don't see any weakness here.

Thanks to our worldwide distribution base, we have not a significant risk in the U K that we have too many client accounts, there we have spread it and rather distribute it around the world.

David Karnovsky: So broadly speaking, it's going to come across the board in terms of the existing portfolio, but obviously the addition of new products and new content is going to help amplify our growth in 2024. And for the second part, with the in-play, we see a pickup 10, sometimes 15% on the operator base, a shift into live betting from a 30 in average to a 35 or a little bit more. These are numbers which we get from the operators.

Now to the second piece outlook 2025, Joe Please yes.

I'm going to talk more broadly than 25, I think it's $25 26 27.

Yes.

Jordan the way to think about it is if you look at.

20% growth at least 20% growth in 2000 for top and bottom.

Implies that we're.

David Karnovsky: I think more important is that we are supporting this trend with our products, the AV products are stimulating, we have that for baseball and for NHL now. And what is also stimulating is all the visualizations based on the data which you saw in the slides, which we do and where we launch a couple of new products for the MBA. What we want to do here is we want to create that experience for the batters to follow the match in running and of course stimulate them for play some bets.

We're holding EBITDA margins broadly flat and the reason for that is we believe that we're going to deliver meaningful.

We will unlock meaningful operating leverage from personnel cost of sales and all other operating costs and <unk>.

That is true of a variety of initiatives around our product portfolio. The actions, we've announced today and continually challenging every aspect of the business, but in 24, it's covering a step up a onetime step up in sports rights.

David Karnovsky: A testament that we are right on track is the interview which Amy and Jason from Van Dure and Draft Kings as the CEOs did on G2E and they stated there and we moderated that panel, that life betting is high on their agenda and the products around this are products which they are looking into. So I think all this together shows you we are all working very solidly that we move into the life betting and the last piece maybe is the leaks, they are supporting this a lot, they see the opportunities with that life experience so we think the trend will continue, we have nothing to think against it. If it reaches the 80% which we see in Europe that's still open but we see a solid trend from pre-match into life betting. Thank you. One moment for our next question.

When you look out into into 25, and 26%, 27% on the assumption of continued strong revenue growth.

All of those line items in a stable environment should be growing at a lesser pace than than your revenue and that is absolutely. The objective. We have mined. So you will see you will see margin expansion and stronger operating leverage across.

Most likely all of those line items.

As we evolve to 'twenty five 'twenty six 'twenty seven.

From our point of view the business is structurally set up and a way that if we can continue to do what we've been doing for the last years in other words continuing to drive value for our client base drive revenue growth.

Youre going to see a change in dynamic where whether it's your personnel costs, whether it's improved.

Premium flow through from our revenue base or from a stable sports rights portfolio.

Youre going to see operating leverage.

And.

That's essentially what we've been saying up until now we just tried to make it a little bit Christopher unclear at this time.

Because essentially 24 is a transition year when you bring into material premium rights like ATP and MBA, but given the actions. We're taking you will clearly see in the P&L.

Carson Carl: Our next question comes from the line of microgram with can accord genuity, your line is now open. I think you wanted to ask to the first one is on the sort of cadence of the negative sports outcomes that you mentioned, I know you reaffirmed guidance at the end of August and just wondering if maybe some of that stuff happened pretty late in the quarter or just maybe talk about specifically the month of September and then I just wanted to ask if you had any updated thoughts on long term profitability road map in the US, you re solidly profitable, just wondering if you have any updated thinking around how long it takes the US to get closer to your corporate average.

A different profile from an operating expense point of view that is setup for unlocking further operating leverage as we grow the company over the coming years.

Thank you very much.

Thank you.

Our next question comes from the line of Stefan as Chris with Needham <unk> Company. Your line is now open.

Hey, Thanks for taking our question Steph calling in for Bernie.

Just wanted to ask on the NBA.

Any extra products or capabilities that you bring to the MBA and the new season and then.

Have you been able to sign up any other sports books to reflect the new NBA deal. In addition to that MGM last week.

We signed up all of them. So it's.

Carson Carl: Thanks. Good. So I take the first part and then I leave the US piece to jury if you allow. Looking now into the correction and the MTS. The mechanism here is that we have a revenue share from the cross-gaming revenues of the operator. So when the operator has more profitability because we manage the risk better for them, we have a higher proportion on the share. Now it is from a risk management perspective, you are looking to the biggest pools from a liquidity perspective.

I'll count at the moment 40 operators in the U S that might be one or the other tribe.

Which we do not count here, but all of them signed up for the additional content package.

And for the new team for the next eight years, so that's the whole United States and all operators there.

The interesting piece here is we are moving up with this deal.

Data provider into a solution partner with the NBA and with our clients and that amdocs in the future much more potential around this immersive gaming experience live betting experience the things, which we have highlighted there but the deal is consistently deployed over all opera.

Carson Carl: So we said this has happened in Europe or the rest of the world, not in the US because we are speaking about favorable soccer results. Favorable soccer results means favorites are winning. So we had that effect and we are not the only one or the company's reporting public had the same effect. Think of it as if you are giving a loan to the better. So the better will win this, but sooner or later the operator will win it back if they offer consistently the risk management which we provide to them.

That's in the U S.

Thank you.

Thank you one moment for our next question. Please.

The next question comes from the line of Shaun Kelley with Bank of America. Your line is now open.

Carson Carl: And yeah, favorites winning is something nobody can avoid. It happens quite frequently in this business. It is nothing to be worried about. It is simply a winning strike which we have. Facing. And it comes together with the goals in the last minutes, which is not good from a risk management perspective, and the number of high goals. We adjusted our algorithms. We think we have taken well care of this effect, but as I said, it's a revenue share base.

Hi, everyone. Thank you for taking my questions.

So two for me first would be on just as we look out to the fourth quarter and we kind of move past some of these.

As a whole or sports outcome related issues.

Just trying to kind of think through the guidance as laid out still implies.

Revenue to Reaccelerate. So if we didn't have the sporting outcome related issues would that be enough to hit sort of what your the roughly 20% growth rate that your <unk> outlook implies or are you also expecting to see some seasonality and some uplift from the start of the NBA season, I know seasonally.

Carson Carl: So that has an effect on our MTS results. And we face this with the beginning of the soccer season, which is in court three. And maybe the very last piece of this is if you're comparing this quarter soccer to the quarter in the last year, you will see that in the last year we had to look up a lot of matches have been shifted. So proportionally, we had significantly more soccer matches in quarters three last year than we have in this year. So the year by year comparison is also affected partly because of this.

Some of these contracts kick in so is that part of why revenue should reaccelerate in the fourth quarter. So that's my first question.

So the guide go ahead go ahead sorry.

Kristin.

Jair Griffin: I hand over to you, Joe, for the second part. Yeah, when you think about the US and some of what I'm going to say actually applies to our broader business. If you think about some of the major content deals we have in place like Carsten talked about the NBA in his prepared remarks. You have that deal evolves over its lifetime. The back half of that deal is significantly more accretive from an EBITDA point of view than the earlier years when we're dealing with your straight line of the amortization costs, but obviously a growing revenue base.

Jair Griffin: So when you think about the US, given the size of the US, that will have a meaningful impact on that business over the coming years as we think about more long term. The other aspects of the business, we have the content portfolio today to serve that business and grow that business. We talked about that in our prepared remarks. But as more states open up and as life betting evolves, that's obviously going to deliver a stronger revenue contribution of what is essentially a fixed base of business from a cost point of view.

We have leverage farm profitability perspective with that please your second question Sean.

Thanks, Yeah. My second question is really just on free cash flow conversion I know this is an area even working on a little bit with payment terms and some other things with vendors, but can you just remind us maybe medium or long term, what's the right kind of way to think about.

Jair Griffin: So there's going to be operating leverage that will be triggered. So from a US perspective, we feel confident that the growth opportunities there both structurally and what we're doing to enhance our product portfolio. And that will lead to an expanded margin profile and will definitely bring the US up over the coming years. And more broadly, it's the same concept if you think about rest of the world, whether it's the ATP deal or whether it's the NBA deal.

You're EBITDA at at free cash flow conversion for the business broadly.

Sure. Please yes, we're resetting the password targeting to drive to at least a 50% conversion and.

While we don't disclose that metric you you you have the.

Have the details to help you.

Figure it out for.

Year to date, which it's around 43 per cent in actually for Q for Q3 was above 50 per cent because there was a very good cash quarter.

Jair Griffin: The structure of these deals are such that they are going to be very nice contributors to margin expansion as we think through the lifetime of the deal. A little bit of a way at the start, but they're obviously going to enable us to drive better margins outside of what we've said already, which is keeping a close eye on our operating structure and making sure we're driving the right kind of product innovation to deliver more value add to our client base. Okay, that's helpful. Thank you so much. Thank you. One moment for our next question, please. Did the call go off?

Q for we expect to be a bit more compressed, but overall, we're we're progressing through the year two a stronger cash conversion.

Thank you one moment for our next question. Please.

Our next question comes from the line of David Cats with Jeffrey Your line is now open.

Hi, Good morning, everyone. Thanks for squeezing me and.

This has been asked a few different ways because it is unique or it's not it's not all that common that we would get you know a high growth outlook coupled with.

You know a.

A kind of a cost cutting or or you know.

Jason Bazinet: Our next question comes from the line of Jason Bazinet.

Call It <unk>.

Cost cutting a restructuring or however, you want to characterize it.

Jason Bazinet: The city online is now open. I just had a quick question on that faster than 20% rev growth, greater than 20% of the dog growth next year. I think that means consensus estimates have to move up. And so I was just wondering if you could maybe highlight what are the two or three most notable risks to achieving those sort of growth rates?

The the way that these two should we look at those two and a discreet fashion or does the restructuring.

Enable for better growth or does it you know in some way dial back the growth opportunities or or are these just completely separate issues in the.

Jair Griffin: Gerard, would you take up that question from Jason? Yeah, obviously I'll start with profitability.

The cost side is just symptomatic of how the business was a ball.

David <unk>. This is always connected with each other the revenue and the costs.

Jair Griffin: And I'm going to give you an Irish answer, so apology. But if we decide to not focus on managing our operating costs and we see, you know, a gradual creep back in our in our employee base in terms of our labor costs, you know, that that would obviously impact the level of operating leverage that we believe we can deliver. We're in 2024 and beyond. You know, the actions we're taking this week, while difficult to do positionals for strong operating leverage over the coming years, from a revenue perspective, you know, again, the content portfolio is in place and the product offerings in place.

Restructuring is not the restructuring so a company like Microsoft is taking all 10% of the vote for every year and that can give you. Many more samples of this I think what we are doing here is we are getting a more mature business. We are focusing on delivering returns for Oh steak.

<unk>, we are focusing to prepare us for the next level of growth, we are strengthening or cash abilities, which we have so we are growing this vehicle them put in cash and for for me that belongs to how you operate and run the business in a responsible way I wouldn't call it restructuring, but we.

Jair Griffin: So it would have to be, you know, more macro factors does the US open up at a slower pace? Is there is there any is there anything else structurally wrong, which we don't believe in any of our markets? I don't I don't see any material issues. Obviously, if the world changes and it's, you know, the better is continually on a stronger winning streak, which is not historically been the case.

Reviewing all products and all processes and organization structure and we came to the conclusion that we can deliver what we just announced with this book for US and then I think it is responsible from us for the brute force, but also for all stakeholders to install this measure.

Minutes. So that's how we see it I think a 10% is not something totally out of the line if I'm looking to many other businesses and the tax base.

Carson Carl: That could impact some of our revenue shares, but as I stand here today, looking at our assumptions for 2024, we feel good about delivering at least 20% given given the strength of our content and what we're doing to enhance the monetization of the product portfolio. That's great. And if I could just ask one follow-up, you guys mentioned that you don't need anymore rights. You made by more rights, but you don't need them.

I I apologize for the word choices refinement will probably a better choice for my follow up what I wanted to ask about is you know all of US just industry water. So focused on product because you know at least at the operator level product is what's <unk>.

If you could just share some insights in terms of how you might be you know positioning yourselves to enable operators for that next big thing right. The past year, it's been.

Carson Carl: Would you say that that's a new chapter in the evolution of your company or could you have said that a year ago or three years ago? No, no, no, go ahead. So I think you can do this perfectly. What we've said, at least during my tenure, and I know it's been said in the past, we take a very strong ROI approach to sports rights, and it's one of the reasons that we walked away from certain rights that, you know, in a world where you're not worried about profitability.

So much same game parlays N and the like.

Talk about what's next to the degree that your cat and and how you position there.

If you look now to.

Our Cashcall, which I think we all agreed that's that's the global bedding business, that's 112 million revenues and uhm.

Carson Carl: You'd probably say, let's add them to the portfolio. What we see right now with the addition of the MBA and ATP is that we have the portfolio that is basically the foundation for our long range planning right now. It's not to say that if we found another right that would actually amplify our revenue growth at the right profitability, we wouldn't execute against it. But I think there's been a perception in the past that it's always up until the right.

It delivers a 50% profitability in this quota.

That's done by Upselling and cross selling lifting declines up the value chain, so, meaning we're going from a data into a product stage with a lie thoughts or the trading services or finally down the platform services, which you see now is the top of the lottery deal Uhm and Uhm, yes, partly also.

A little bit with some over bookings on data content, but that's not the bigger proportion.

Carson Carl: We have to keep buying more rights to drive revenue growth. The answer is it's not that case, at least not from our perspective. If you look at the breadth and depth of our portfolio, it can more than serve the needs of our client base in the US and our client base internationally. So from our point of view, it's not necessarily a change, but it's something I think we have to say very clearly because I think there's a concern which, if you want to take the bear case that sports rights are always going to go up.

Where is that going it's going very clearly into the products that it's going very clearly into the platform direction. So directionally uhm, you'll see now after the risk management that it goes more into the platform. We acquire the company called likes a year ago, which is <unk>.

Working with to use as in trying to apps and optimize the use of journey trying to optimize the true enough to use is trying to understand what can you push on a platform to use it to motivate him to grasso this into different genus, but also to optimize the growth in the sports betting performance and that gives.

Carson Carl: Our sports rights right now, when you look at the larger rights, their long term rights are locked in. As we said as it relates to the MBA, it's also a commitment from our client base to engage in that deal. You, the structure of sports rights, the only way that your sports rights will materially grow from where I stand here today is if you do add another major right or you have a major adjustment to a right but right now we feel good about the portfolio rights and that that portfolio we believe can can can sustain us so from our point of view we have stability in sports rights and that's an important factor because it allows us to focus on the rest of our P&L from the point of view of managing your obviously our run rate in terms of our personal costs and our other external costs.

Unknown Attendee: That's great. Thank you.

A variety of options and the platforms look through the U S tribes in the future what kind of solutions. My date wants to have is it more a solution, which is managed uhm by a provider with the platform and with all the elements, which is in there or is it more a big platform business, what they wanted to knowing that it's <unk>.

Unknown Attendee: One moment for our next question please.

Hundred 50 trap. So I think it is more at the thing, which I mentioned first so that's a good opportunity they're all good opportunities with major broadcast businesses around the world going into this direction. So it's consistently what we it's heading from the beginning we start with the content, but we putting it into products and that's.

The clear journey, and that's a clear mission information, but we have.

Thank you.

And our final question comes from the line of Ryan sit down with Craig Hallum capital.

Stephen Grambling: Our next question comes from the line of Stephen Grambling with Morgan Stanley. Your line is now open. Hi, thanks. And this is maybe a clarification from Thomas at the beginning, but it's not that often that you see a company talking about 20% plus top line growth. It's above consensus, but then also announcing a global workforce reduction of this size. I mean, basically you've got some temporary top line hits, but still talking about shrink in the future.

Now open.

Hey, guys. Just one quick follow up that I think might help us some kind of next year and ears forward, but can you quantify how much right costs will be up your over your next year with those two new deals that you know the cost to an all there'll be accounted for and then kind of what assuming the similar offset from the operational efficiencies.

Yeah, Ryan I'll I'll characterize it an operating leverage you know.

We we look at we we believe that we're gonna unlocks somewhere between four and five points of operating leverage in in.

Carson Carl: So maybe you can just clarify again, you know, what the impetus for the workforce reduction was. And also just any other details you can give up what the new or structure might look like. Thank you. Even yeah, I take that one quickly. I can't give you an update about new org structures. We are constantly refueling the process that we are more efficiently that we are more client centric and that is that is a constant process, which I think every company needs to do.

And 2024 and that will be all setting the the the the growth in the sports right. So if you you can work into the back you know if you if you work into reverse into that.

You're talking about somewhere between 37, and 42 per cent growth in sports right.

Excellent. Thank you.

Thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

Carson Carl: Looking to why we did the reduction in the workforce, which is, which is a tough step, which we did in the last days, we believe that it's the right thing to do to prepare our business to be fit for the future growth. And it's a plan which we're executing now since a couple of months. So those things have to be well planned. We know and we announced this that we have two major big deals with the NBA and with the ATP with amazing opportunities for us, but we're going to need to handle also the cost aspect for this.

Mmm.

[music].

Carson Carl: And that's what we are doing. So we are focusing on client centricity. We are streamlining the processes. We are looking that we allocate our resources on the right products. We took a couple of products out and we took a couple of our products into a maintenance mode to focus on those which are driving our growth. And there's a last sentence. The team follows this amazingly, even if these are more difficult decisions, we all understand it's necessary for the future acceleration of our growth. That's the reason why we did it. And we want to deliver this return to our shareholders and to all the stakeholders in the company. Thank you.

Unknown Attendee: One moment for our next question, please.

Jordan Bender: And the next question comes from the line of Jordan Bender from JMP Securities. The line is now open. Great, thanks for taking my question. Two for me, several operators called out in the UK just some of the friction relating to the regulatory environment. During the quarter, I was wondering if that had any impact on the results during the third quarter, and could that be a potential risk into the fourth quarter with just some of those changes ongoing.

Jordan Bender: And then second, you know, flow through for next year plus or minus 20% as well. You kind of talked about right sizing, the cost structure. So, you know, how should we think about that flow through, you know, past 24? I guess what's the right way to think about that on a mature business. Thank you.

Carson Carl: Hi Jordan, so I take the first question and then I leave the outlook into 2025 plus to Joe. UK regulators, yes, they tighten the regime, which we welcome a lot because it's it's the aspect of player protection. It's responsible gaming and we believe that's the only way to really grow and to be accountable with this. So, that's a measurement which some of the operators might suffer. Some of them might not. It's very much depending on how you're interpreting this and how you're using it also as an opportunity.

Carson Carl: From our base, we have we have the recurring revenue model with all the UK operators. So, there is a little component in with the revenue share, but usually we're running a sourced business there. We don't see any weakness here. And thanks to our vote by distribution base, we have not a significant risk in the UK that we have too many client accounts there. We have outspread it and well distributed around the world.

Jair Griffin: Now, to the second piece, I'll look 2025, Joe, please. Yeah, I'm going to talk more broadly than 25. I think it's 25, 26, 27. You know, Jordan, the way to think about it is if you look at 20% growth, at least 20% growth in 24 top and bottom, that implies that, you know, we're holding EBITM margins broadly flat. And the reason for that is we believe that we're going to deliver meaningful, we will unlock meaningful operating leverage from personnel cost sales and all other operating costs.

Jair Griffin: And that's true, a variety of initiatives around our product portfolio, the actions we've announced today and continually challenging every aspect of the business. But in 24, it's covering a step up or one-time step up in sports rights. When you look out into 25 and 26 and 27 on the assumption that continued strong revenue growth, all of those line items in a stable environment should be growing at a lesser pace than your revenue.

Jair Griffin: And that is absolutely the objective we have in mind. So you will see margin expansion and stronger operating leverage across most likely all of those line items as we evolved 25, 26, 27. So from our point of view, the business is structurally set up in a way that if we can continue to do what we've been doing for the last years, in other words continuing to drive value for our client base, drive revenue growth.

Jair Griffin: You're going to see a change in dynamic where whether it's your personnel cost, whether it's improved premium flow through from our revenue base, or from a stable sports rights portfolio, you're going to see operating leverage. And that's essentially what we've been saying up until now. We just tried to make it a little bit crisper and clearer this time because essentially 24 is a transition year when you bring in two material premium rights like eight.

Jair Griffin: KTP and MBA, but given the actions we're taking, you will clearly see in the PNL a different profile from an operating expense point of view that is set up for unlocking further operating leverages we grow the company over the coming years.

Unknown Attendee: Thank you very much.

David Katz: Thank you.

Carson Carl: Our next question comes from Linus, Defanna's, Chris, with Need in my company. Your line is now open. Hey, thanks for taking our questions, Steph, calling in for Bernie. So I'm going to ask on the MBA and then extra products or capabilities that you bring to the MBA in the new season. And then have you been able to sign up any other sports books to reflect into MBA deal in addition to BMGM last week?

Carson Carl: We signed up all of them. So it's an account at the moment for the operators in the US. There might be one or the other tribe which we do not count here. But all of them are signed up for the additional content package and for the new deal for the next eight years. So that's the whole United States and all operators there.

Carson Carl: The interesting piece here is we are moving up with this deal from a data provider into a solution partner with the MBA and with our clients. And that unlocks in the future much more potential around this immersive gaming experience, live betting experience, the things which we are highlighted there. But the deal is consistently deployed over all operators in the US. Thank you.

Unknown Attendee: One moment for our next question please. The next question comes in the line of Sean Kelly with Bank of America. Their line is now open. Hi everyone. Thank you for taking my questions. So Q for me first would be on just as we look out to the fourth quarter and we kind of moved past some of these whole or sport outcome related issues. Just trying to kind of think through the guidance as laid out still implies revenue to re-accelerate.

Unknown Attendee: So if we didn't have the sporting outcome related issues, would that be enough to hit sort of what your roughly 20% growth rate that your 4Q outlook implies? Or are you also expecting to see some seasonality and some uplift from the start of the NBA season? I know seasonally some of these contracts kick in. So that part of why revenue should re-accelerate in the fourth quarter. So that's my first question. So the guide, go ahead, sir.

Unknown Attendee: Go ahead. We do expect seasonality will kick in in Q4 and also as Carson indicated in his remarks, we do have the roll out of the Taiwan lottery which will be more of a benefit in Q4 than it was in Q3. So while we still expect some pressure against the business as a real estate MTS and we've taken a more cautious view as we look at Q4, we do expect to see a re-acceleration of growth.

Unknown Attendee: So when you look at it from a year-over-year perspective, you're back in Q4, to the 20s. Great, so maybe I'll be at one thing, because I think it's very important. The guidance says, we are midpoint 20% top line growth for 2023 and we will deliver this. The guidance says we are midpoint on a 31% year over year for many BTA perspectives, and we will deliver this. So I think it's a strong growth business, and we managed and showed that we have leverage from a profitability perspective.

Unknown Attendee: But that's please your second question, Shaun. Thanks, and my second question is really just on free cash flow conversion. I know this scenario even working on a little bit with payment terms and some other things with vendors, but can you just remind us maybe medium or long term what's the right kind of way to think about, you know, you're eating out of free cash flow conversion, but the business broadly. Sure, please.

Unknown Attendee: Yeah, as we said in the past, we're targeting to drive to at least a 50% conversion. And while we don't disclose that metric, you have the details to help you figure it out for both year-to-date, which it's around 43% then actually for Q3, it was above 50% because it was a very good cash quarter. Q4, we expect to be a bit more compressed, but overall we're progressing through the year to a stronger cash conversion. Thank you. One moment for our next question, please.

David Katz: A next question comes from the line of David Katz with Jeffries, your line is now open. Hi, good morning, everyone. Thanks for squeezing me in.

David Katz: This has been asked a few different ways, because it is unique. It's not all that common that we would get, you know, a high growth outlook coupled with, you know, a kind of a cost cutting or, you know, we'd look at those two in a discrete fashion or those, the restructuring, you know, enable for better growth or, or does it, you know, in some way, you know, dial back the growth opportunities or, or these just completely separate issues and, you know, the cost side is just symptomatic of how the businesses evolve.

David Katz: David, this is always connected with each other, the revenue and the costs. Restructuring is not a restructuring, so a company like Microsoft is taking out 10% of the workforce every year and I can give you many more samples of this. I think what we are doing here is we are getting a more mature business. We are focusing on delivering returns for our stakeholders. We are focusing to prepare us for the next level of growth.

David Katz: We are strengthening our cash abilities, which we have, so we are growing this, we are converting cash. And for me, that belongs to how you operate and run the business in a responsible way. I will not call it restructuring, but we are refuting our products and our processes and organizations structure and we came to the conclusion that we can deliver what we just announced with this workforce. And then I think it is responsible for the workforce, but also for our stakeholders to install this measurements. So that is how we see it. I think a 10% is not something totally out of the line if I am looking to many other businesses, and Depakespace. I apologize for the word, George.

Carson Carl: It refinement is probably a better choice.

Carson Carl: From my follow-up, what I wanted to ask about is, you know, all of us, just industry-wide are so focused on product, because, you know, at least at the operator level, product is what's winning. If you could just share some insights in terms of how you might be, you know, positioning yourselves to enable operators for that next big thing, right? The past year, it's been, you know, so much of, you know, same-game parlays and the like.

Carson Carl: Talk about what's next to the degree that you can and how you're positioned there. If you look now to our cash cow, which I think we all agree that's that's the global batting business. That's 112 million revenues, and it delivers a 50% profitability in this quarter. That's done by upselling and cross-selling, lifting the clients up the value chain. So, meaning we are going from a data into a product stage with the lifehorts or the trading services, or finally then the platform services which you see now with the Taiwanese lottery deal.

Carson Carl: And yes, partly also a little bit with some overbookings on data content, but that's not the bigger proportion. Where is that going? It's going very clearly into the product. It's going very clearly into the platform direction. So, directionally, you will see now after the risk management, there goes more into the platform. We acquired a company called ViEx a year ago, which is working with the users and trying to optimize the user journey, trying to optimize the turn of the users, trying to understand what can you push on a platform to use it to motivate him to cross-sell this into different channels, but also to optimize the growth in the sports batting performance.

Carson Carl: And that gives a variety of options in the platforms. Look to the US tribes in the future. What kind of solutions might they want to have? Is it more a solution which is managed by a provider with the platform and with all the elements which is in there? Or is it more a big platform business? What they want to do? Knowing that it's 350 tribes, I think it is more the thing which I mentioned first.

Carson Carl: So, that's a good opportunity. There are good opportunities with major broadcast businesses around the world going into this direction. So, it's consistently what we're telling from the beginning. We start with the content, but we're putting it into products, and that's the clear journey, and that's the clear mission and vision what we have.

Carson Carl: Thank you.

Ryan Sigdal: And our final question comes from the line of Ryan Sigdo with Craig Hallum Capital Group. The line is now open. Hey guys, just one quick follow-up that I think might help us sum up kind of next year and the years forward, but can you quantify how much right costs will be up year-over-year next year with those two new deals that you know the cost to and how they'll be accounted for, and then kind of what assuming the similar offset from the operationally efficiencies.

Jair Griffin: Yeah, Ryan, I'll characterize it in operating leverage. We believe that we're going to unlock somewhere between four and five points of operating leverage in 2024, and that will be offsetting the growth in the sports rights. So if you can work into the back, if you work into reverse into that, you're talking about somewhere between 37% and 42% growth in sports rights. Excellent.

Unknown Attendee: Thank you.

Unknown Attendee: This concludes today's conference call. Thank you for your participation. You may now disconnect everyone.

Unknown Attendee: Have a wonderful day.