Q4 2023 Sportradar Group AG Earnings Call

Operator: Good day, and welcome to Sportradar's 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Good day and welcome to sports.

Fourth quarter earnings conference call at this time, all participants are suddenly mode.

Operator: After the speaker's remarks, we will conduct a question and answer session. To ask a question at that time, please press star 1-1 on your touchtone telephone. We ask that you please limit yourself to one question in the follow-up. As a reminder, this call is being recorded. I would like to turn the call over to Jim Bombasse, Head of Investment Relations and Corporate Finance. You may begin. Thank you, operator. Hello, everyone.

After the Speakers' remarks, we will conduct a question and answer session to ask a question at that time. Please press star one one or you touched on the telephone we ask that you. Please limit yourself to one question and a follow up as a reminder, this call is being recorded.

I'd like to turn the call over to Jim by biopsy head of Investor Relations and corporate Finance you may begin.

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

Jim Bombassei: And thank you for joining us for Sportradar's earnings call for the fourth 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 will be posted on our website at the conclusion of this call. A replay of today's call will also be available on our website.

Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at investors that sport radar dot com.

And will be posted on our website at the conclusion of this call.

Replay of today's call will also be available on our website.

Jim Bombassei: After our prepared remarks, we will open up 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 our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue and future business outlook. Such statements involve risk and uncertainties and may cause actual results or trends to differ materially from our forecast.

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

In the interest of time, please limit yourself to one question plus one follow up.

Okay.

Please note that some of the information you'll hear during our 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 or trends to differ materially from our forecast.

Jim Bombassei: For more information, please refer to the risk factors discussed in our annual report on Form 20-F and Form 6-K filed today with the FEC, along with the associated earnings release. We assume no obligation to update any forward-looking statements or information we 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 and non-IFRS measures, are included in the earnings release, supplemental slides, and our filings with the SEC, each of which is posted to our investor relations website. Joining me today are Carsten Koerl, our Chief Executive Officer, and Gerard Griffin, our Chief Financial Officer. Now, let me turn the discussion over to Carsten. Thanks, Jim. Good morning, everyone.

For more information please refer to the risk factors discussed in our annual report on form 20-F.

6K filed today with the SEC along with the associated earnings release.

We assume no obligation to update any forward looking statements or information, which speak as of their respective dates.

Also during today's call, we will present, both <unk> and non <unk> financial measures.

Additional disclosures regarding these non <unk> measures, including a reconciliation of <unk>.

Non aircrafts measures are included in the earnings release supplemental slides and our filings with the SEC each of which is posted to our Investor Relations website.

Joining me today are Carsten Carroll, our Chief Executive Officer, and Joe Griffin, Chief Financial Officer.

And now let me turn the discussion over to Carsten.

Thanks, Jim Good morning, everyone. We are excited to speak with you today to provide an overview of our performance in 2023, and our strategic outlook in 2024.

Carsten Koerl: We are excited to speak with you today to provide an overview of our performance in 2023 and our strategic outlook in 2024. As a global leader in sports technology, we continue to consistently deliver above market growth. This reflects the depth of our content and the high value proposition of our product offering supported by the breadth of our client and partnership. In 2023, we continue to scale and refine our business. I'm delivering strong growth and. Profitability and We also drove stronger operating leverage while continuing to invest in our content and technology.

As the global leader in sports Technology, we continue to consistently deliver above market growth at scale.

Reflects the depth of our content and our high value preposition.

Our product offering supported by the breadth of our client and partnership relationships.

In 2023, we continue to scale and refine our business strategically.

Delivering strong growth in revenues profitability and cash flow.

We also drove stronger operating leverage while continuing to invest in our content and technology capabilities.

Carsten Koerl: We plan to maintain this growth momentum in 2024 with a more agile and focused organization. In 2023, we delivered revenues and adjusted EVTA at the high end of our guidance, with revenues up 20%, and Adjusted EVTA increasing 33%. This marks the third consecutive year we delivered at least 20% revenue growth. We also improved our adjusted EBTA margins by 1.8 percentage points and grew net cash flow from operating activity. Highlighting the Operational Leverage in our, Now I will touch upon several operating highlights in 2023 illustrating our exceptional, First, we are thrilled to be selected as the successful bidder for the Global ATP Data Betting and Streaming Rights for the NEC. We are truly excited about what this will bring to tennis fans around the world.

<unk> maintained its growth momentum in 2024 with a more a job and focused organization.

In 2023, we delivered revenues and adjusted EBITDA at a high end of our guidance range with revenues up 20%.

And adjusted EBITDA, increasing 33%.

This marks the third consecutive year, we delivered at least 20% revenue growth.

We also improved our adjusted EBITDA margins by one eight percentage points and grew net cash flow from operating activities by 54% highlighting the operational leverage in our model.

Now I will touch upon several operating highlights in 2023 illustrating our exceptional performance.

First we are thrilled to be selected as the successful bidder for the global ATP data batting in streaming rights for the next six years.

We are truly excited about that this will bring the tennis fans around the world both spot rate on ATP have great ambitions to plan and to revolutionize sports betting in tennis, bringing to market innovative products and services some of which I will discuss shortly.

Carsten Koerl: Both Sportradar and ATP have great ambitions to plan and revolutionize sports betting in tennis, bringing innovative products and services to market, some of which I will discuss. In addition to ATP, we've strengthened our content portfolio with other long-term partnerships, including with NASCAR, Commonwealth, the South American Football Confederation, and Bundesliga, the premier German soccer league. Collectively, these partnerships fuel our ambitious product roadmap, transform the sports betting experience, foster more in-play betting while driving more value to our clients and Sport. With our MBA partnership, we expanded several of our commercial deals, including CESA Sportsbook and MGM for official MBA games. With these, we now have agreements with all the major operators in North America, which represents nearly 100% of the U.S. market, signing on for the official NBA. We were also selected to power Taiwan's Sports Lottery, the sixth largest sports lottery globally. We have fully integrated Sportradar's Sportsbook solution across more than 2,600 retail outlets, as well as web and mobile.

In addition to ATP, we strengthened our content portfolio, but other long term partnerships, including with NASCAR Com Nepal to South American football consideration and Congress Liga to Premier German Soccer Federation.

Collectively these partnerships fueled our ambitious product roadmaps to transform the sports betting experience foster more employee pairing while drive more value to our clients and spot radar.

With our NBA partnership we expanded several of our commercial deals, including Caesars Sports book and Pat MGM for official NBA data with these we now have agreements with all the major operators in North America, which represents nearly 100%.

<unk> of the U S market signing on for official NBA data.

We were also selected to power, Taiwan Sports lottery.

<unk> largest sports lottery globally.

We have fully integrated spot rate is sports books solution across more than 2600 retail outlets as well as web and mobile channels.

Carsten Koerl: This is another great win, and we now work with nearly 50 lotteries around the globe and intend to sign additional parts in the new year. These achievements and the results this past year speak to the tremendous program we are making to cement our position as the partner of choice in the. Given the strength of our business, fundamentals, and the confidence in the positive outlook for the future, our Board of Directors has approved a $200 million U.S. dollar share buyback, underscoring our confidence in long-term value. I also want to take a moment to update you on our CFO. We have been conducting our search progress and have some strong candidates on the. We are confident that we will.

This is another great win and we now work with nearly 50 lotteries around to globe and intend to sign additional partnerships in the near future.

These achievements and our results this past year speak to the tremendous progress we are making to cement our position as the partner of choice in the industry.

Given the strength of our business fundamentals and the confidence in the positive outlook for the future our board of directors have approved a.

200 million U S dollar share buyback underscoring our confidence in the long term value preposition.

I also want to take a moment to update you on our CFO search.

We have been conducting our search progress and have some strong candidates under consideration.

We are confident we will select a strong individual to take on this role.

Carsten Koerl: [inaudible] I'm excited about the strong foundation we established and the momentum we have against opportunities that await us in 2020. Core to this, the depth and breadth of our real-time, data, and technology, which are the key competitive advantages. We cover approximately 1 million events annually across approximately 70 sports and partners with approximately 400. We are the leading solution provider of unparalleled insights into sport. The continued enhancement and scaling of the real-time content and data fuels our innovative product development, helping to drive future growth and leverage in our business. In 2023, we will further strengthen this, most notably through our partnership with MBA and ATP. These global partnerships bring incredible reach and value to our overall content portfolio and product. As I have mentioned on previous calls, tennis has a global fan base of 1.6 billion, making it the second most watched sport, underscoring its enormous reach.

I am excited about the strong foundation, we've established and the momentum we have against opportunities that await us in 'twenty to 'twenty four core to this is the depth and breadth of our real time sports content data and technology, which are the key competitive advantages.

And serve as a foundation to our growth engine.

We cover approximately $1 million events annually across approximately 70 sports and partners with approximately 400 sports leagues and federations we are there.

Leading solution provider.

Paralleled insights into sports.

The continued enhancing and scaling of the real time content and data pure salary innovative product development, helping to drive the future growth and leverage in our business.

In 2023, we further strengthened this assets, most notably through our partnership with NBA and ATP.

This global partnerships bring incredible reach and value to our overall content portfolio product offering.

As I have mentioned on previous calls tenants, both global fan base of one 6 billion eyeballs.

Making it the second most pattern sport.

Underscoring its enormous reach and appeal.

Carsten Koerl: Similarly, basketball is a huge fallout global sport. 2.2 Billion Fans Worldwide, ranked as the third most hated on. Our approach to our portfolio of rights is both Strategic and Deliberate, focusing on the rights that deliver the highest ROI and allow us to continue to invest, innovate, and deliver the best value for our clients, partners, and shareholders. We believe we have the right mix and scale of content, while we have the ability to acquire more wine if the ROI makes sense. We do not need additional rights in order to deliver on our growth.

Similarly basketball is a huge followed global sports with 2.2 billion fans worldwide ranked as the third most Pat on sport.

Our approach to our portfolio of rights is both strategic and deliberate focusing on the rides that deliver the highest our lives and allow us to continue to invest innovate and deliver the best value for our clients partners and shareholders.

We believe we have the right makes sense scale of content.

While we have an ability to acquire more rights if the OE makes sense, we do not need additional rights in order to deliver on our growth targets.

Carsten Koerl: Now turning to our product. It is backed with exciting innovations, leveraging our proprietary tech to deliver further value to our clients, from expanding live odds markets to enhance streaming betting products to creating next-level betting. We continue to define.

Now turning to our product roadmap.

It is packed with exciting innovations leveraging our proprietary tech and deliver further value to our clients.

From expanding <unk> markets to enhance streaming providing products to creating next level batting engagement tools, we continue to define the sports betting experience.

Carsten Koerl: Sportsbettingexperience.com, As I mentioned, at the core of our strategy lies productization and deep data and how it enables us to launch new and value-added products to the market that create a more immersive experience. Our partnerships with MBA and DATP are great examples. We are creating deeper insights from games and matches, driving innovation, enriching the fan experience, and simulating in-play. Let's talk about some of these innovations and new products.

As I mentioned at the core of our strategy lies the product to recession and deep data and how it enables us to launch new and value add products to the market that create a more immersive betting experience.

Our partnerships with MBA empty ATP are great examples of this.

We are creating deeper insights from games that matches driving innovation enriching the fan experience and simulating in play betting.

Let's talk about some of this innovations and new products.

Carsten Koerl: I'm excited to discuss our new Sportradar 4-side streaming, which we launched initially with the ATP and went live earlier this month at Indian Wells. ProSight enhances our core audiovisual offering by seamlessly integrating animated overlays such as live broadcast graphics, statistics, and visualization directly into the video stream of Games for Sports. This leads to an enhanced viewing experience and excites bettors about new in-play betting markets as we gear up to introduce micro-betting later this year, where we will provide sports fans with the opportunity to bet on key moments. We are also very pleased to roll out our MBAPT product to the MBA's League Pass OTT platform. mBet, another industry-first product, integrates live betting content in real-time into an OTT platform, offering AMBAT creates the ultimate integrated bat and watch experience during the live stream broadcast of a game and reduces friction when OTT viewers want to play. It is great to see that AMBATZ has already had significant uptake with unique users growing tenfold since it launched at the beginning of this year only.

First I'm excited to discuss our newest spot rate of fore sight streaming technology, which we launched initially with the ATP and went live earlier this month in Indian wells.

Our site enhances our core audio visual offering by seamlessly integrating animated overlays such as last broadcast graphics statistics visualizations directly into the video stream of games for sports books.

This leads to an enhanced viewing experience and excites matters about newer in play betting markets as we gear up to introduce micro padding later this month.

Provide sport fans with the opportunity to Pat on key moments in the match.

We are also very pleased to rollout our embedded product to the NBA League pass OTT platform.

Haven't yet another industry first product integrates live betting content in real time into an OTT platform offering a wide range of real time data, including point spread over Andre insights and player props.

And that creates ultimate integrated back and watch experience during last stream broadcast offer game entered juices friction when OTT fuse want to place bets.

Carsten Koerl: As we add additional batting functionality over the coming months, we anticipate usage to continue. We are also very excited about our game changing our thoughts, which builds on our market-leading core odds solution by generating odds tailored for individual sportsbooks based on their real-time liquidity. We are very excited about how this has already proven itself in the market, generating an approximately 10% higher margin for sportsbooks on their. These are just a few examples of products that have either launched or will launch. 2024.

It is great to see that <unk> has already been significant uptake with unique users growing can fault since it launched at the beginning of this year on the pass.

As we add additional batting functionality over the coming months as we anticipate usage to continue to climb.

We are also very excited about our game changing our thoughts offering.

Carsten Koerl: I feel great about our robust product roadmap and the opportunities it will bring... Moving to our 2024 financial, we see a clear path to delivering robust results. We expect another year of at least 20% revenue and adjusted EBTA. Execution of our game plan in 2024 should position us for continued growth and meaningful operational leverage over the coming years, as well as strong free cash flow. Our growth in 2024 will be underpinned by our recurring business, which will benefit from underlying market growth and contractual increases, in addition to unlocking further value leveraging, our best in. Furthermore, we will see a meaningful step-up driver from our newly acquired MBA and MFA programs. In conclusion,

Which builds on our market leading core solution.

Generating <unk> tailored for individuals, but sports books based on their real time liquidity.

We are very excited how this has already proven itself in the marketplace generating an approximately 10% higher margin for sports books on their patent tickets.

These are a few examples of products that have either launched or will launch in 2024.

I feel great about our robust product roadmap and the opportunities.

Mark.

Moving to our 2024 financial goals.

We see a clear path to delivering robust growth.

Carsten Koerl: We are an indispensable trusted partner. Supports Industry Delivering Solutions at Scale. Our exceptional leadership is laser-focused on driving efficiency, excellence, and quality across the board. Underpinning this is our unwavering focus on client and shareholder value as we execute against our strategic priorities and 2024. Now, I will turn it over to Gerard to review the financials. Thank you, Carsten.

We expect another year of at least 20% revenue and adjusted EBITDA growth.

Execution of our game plan in 2024 should position us for continued growth and meaningful operational leverage over the coming years as well as strong free cash flow generation.

Our growth in 2024 will be underpinned by our recurring business, which will benefit from underlying market growth and contractual increases. In addition to unlock further value leveraging our best in class product and content portfolio.

Gerard Griffin: We delivered strong revenue and EBITDA growth in 2023, closing out the year with our financial results at the high end of our guidance range. Our business fundamentals are strong, and we are well positioned for continued growth and success in 2024 and beyond. Our fiscal 2023 financial results reinforce the durability and scalability of our growth profile, as well as our focus on profitability. Revenues were $878 million, up $147 million, or 20% year over year. Profit for the year from continuing operations was $35 million, up $24 million, or 230% year-over-year. Adjusted EBITDA was $167 million, up $41 million, or 33% year-over-year. Adjusted EBITDA margins were 19%, an improvement of 1.8 percentage points year-over-year. Net cash flow from operating activities was $259 million, up $91 million, or 54% year-over-year.

Furthermore, we will see a meaningful step up driver.

Newly acquired MBA at ADP rights.

In conclusion.

We are indispensable trusted partner of the sports industry delivering solutions at scale.

Our exceptional leadership is laser focused on driving efficiency.

<unk> and quality across the board.

Underpinning this is our unwavering focus on client and shareholder value as we execute against our strategic priorities and 2024 growth plan.

Now I will turn it over to Jerry to review the financial highlights. Thank you.

Thank you Carsten.

We delivered strong revenue and EBITDA growth through 2023 closing out the year, what our financial results at the high end of our guidance range.

Our business fundamentals are strong and we are well positioned for continued growth and success in 2024 and beyond.

Our fiscal 2023 financial results reinforce the durability and scalability of our growth profile as well as our focus on profitability.

Revenues were $878 million up $147 million or 20% year over year.

Gerard Griffin: Our revenue growth was well ahead of our market growth rates, enabled by focused execution and the scale of our business. This was driven by strong growth from our recurring client base, including strong expansion in fast-developing markets like the US and new global client wins, such as the Taiwan Lottery. We made significant progress in driving profitability, improving operating leverage by 1.8 percentage points due primarily to leverage in our sports rights and personnel expenses as well as a stronger revenue mix. We closed the year with liquidity of $497 million, comprised of $277 million of cash-in-cash equivalent and a $220 million revolving credit facility with no amounts outstanding. Today, we are pleased to announce that our Board of Directors has approved a U.S. dollar 200 million share buyback program, justified by our strong business fundamentals and our confidence in the long-term profitability and cash flow outlook for the company. Now turning to the fourth quarter.

Profit for the year from continuing operations was $35 million up $24 million or 230% year over year.

Adjusted EBITDA was $167 million up $41 million or 33% year over year.

Adjusted EBITDA margins were 19% an improvement of one eight percentage points year over year.

Net cash flow from operating activities were $259 million up $91 million or 54% year over year.

Our revenue growth was well ahead of our market growth rates enabled by focused execution and the scale of our business.

This was driven by strong growth from our recurring client base, including strong expansion in fast developing markets like the U S and new global client wins, such as the Taiwan lottery.

We made significant progress in driving profitability.

Improving operating leverage by one eight percentage points due primarily from leverage in our sports rights and personnel expenses as well as a stronger revenue mix.

We'll continue.

To maintain a strong balance sheet.

During the year with liquidity of $497 million comprised of $277 million of cash and cash equivalents.

Gerard Griffin: We delivered revenues of 253 million euros, up 46 million, or 22% year over year. We are very happy with the market performance of all major product lines, with each generating at least 20% growth. Rest of world betting was up 26 million, or 25% year over year, with strong performances across all the main product lines. In particular, LiveOps data was up 15% year-over-year, MBS was up 48% year-over-year, driven by the initial set of revenues for the Taiwan lottery and a rebound in our MTS business in the latter part of the quarter. Rest of World AP was up 8 million, or 20% year-over-year, supported by the addition of our new Combi Bowl and MBA rights and an uplift in services to existing and new clients. The United States was up 12 million, or 28% year over year, driven by strong market performance, including the initial contributions from our MBA deal and an uplift from selling additional services to existing and new clients. In U.S. dollar terms, our U.S. business grew 37% year over year. All other revenues were broadly flat.

$220 million revolving credit facility with no amounts outstanding.

Today, we are pleased to announce that our board of directors has approved a U S dollar 200 million share buyback program.

Justified by our strong business fundamentals and our confidence in the long term profitability and cash flow outlook for the company.

Now turning to the fourth quarter.

We delivered revenues of 253 million euros up $46 million or 22% year over year.

We are very happy with the market performance of all major product lines with each generating at least 20% growth.

Rest of World betting was up $26 million or 25% year over year with strong performances across all the main product lines in particular, Lightbox and data was up 15% year over year MBS was up 48% year over year driven by the initial set of revenues for the Taiwan lottery and a rebound in our MTS business in the latter part.

For the quarter.

Rest of World AP was up $8 million or 20% year over year.

Supported by the addition of our new combo, and MBA right and an uplift in services to existing and new clients.

The United States was up $12 million or 28% year over year, driven by strong market performance, including the initial contributions from our NBA deal and an uplift from selling additional services to existing and new clients.

Gerard Griffin: The offer for the quarter from continuing operations was $23 million, compared to a loss of $33 million in the prior year quarter. This improvement was driven primarily by a 40 million positive year-over-year impact from foreign currency and a stronger revenue contribution in the current year. Looking at our adjusted epithelium.

In U S dollar terms, our U S business grew 37% year over year.

All other revenues were broadly flat year over year.

Gerard Griffin: Justin Ibiza was $40 million, up $4 million or 13% year over year. Adjusted EBITDA margins were 15.7%, down 1.3 percentage points, and de-leveraged from higher sports rights, partially offset by operating leverage primarily in personnel expense. Personnel expenses were $89 million, an increase of 8 million or 10% year over year.

Profit for the quarter from continuing operations was $23 million compared to a loss of $33 million in the prior year quarter.

This improvement was driven primarily by a $40 million positive year over year impact from foreign currency and a stronger revenue contribution in the current year.

Looking at our adjusted EBITDA.

Gerard Griffin: Sports rights for 75 million of 25 million are 51% year-over-year, driven by the new rights, in particular the kickoff of our NBA partnership in the current quarter. In summary, we delivered a strong Q4 financial performance to cap off a strong growth year in 2023, where we delivered at the high end of our guidance ranges. With these strong business fundamentals, we are well positioned for continued growth and success in 2024. With that in mind, let's turn to our 2024 outlook. For fiscal 2024, we expect to continue to scale our business globally, delivering at least 20% growth in revenue and epithel, which will equate to a base case of revenues of $1.050 billion, adjusted Epitaph of $200 million, and adjusted EBITDA margins of 19%. In fact, just to consider when assessing our outlook for 2024, our outlook assumes a euro to US dollar exchange rate of 1.07.

Adjusted EBITDA was $40 million up $4 million or 13% year over year.

Adjusted EBITDA margins were 15, 7% down one three percentage points and deleverage from higher sports rights, partially offset by operating leverage primarily in personnel expenses.

Personnel expenses were 89 billion up $8 million or 10% year over year.

Sports rights were $75 million up $25 million or 51% year over year.

Driven by the new rights in particular, the kickoff of our NBA partnership in the current quarter.

In summary, we delivered a strong Q4 financial performance to cap off a strong broke here in 2023.

We have delivered at the high end of our guidance ranges.

But these strong business fundamentals, we are well positioned for continued growth and success in 2024.

With that let's turn to our 2020 for outlook.

For fiscal 2024, we expect to continue to scale, our business globally, delivering at least 20% growth in revenue and EBITDA.

Which will equate to a base case up.

Revenues of $1 <unk> 5 billion.

Adjusted EBITDA of $200 million.

And adjusted EBITDA margins of 19%.

Some factors to consider when assessing our outlook for 2024 include.

Gerard Griffin: Revenue growth will be driven primarily from our strong recurring client revenue streams, leveraging our best-in-class content and product portfolio, amplified this year by the addition of our ATP and MBA partnerships. As we've noted in the past, We will continue to challenge all aspects of our business to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage. We expect the strategic actions we have taken today, as well as our continued focus on sustainable profitability in 2024, will unlock approximately five percentage points of operating leverage, collectively in personnel, cost of sales, and other operating expenses. This should offset the impact on operating leverage resulting from the one-time step-up in sports rights costs, primarily from the first full year of our NBA and ATP partnership deal.

Our outlook assumes a euro to U S dollar exchange rate of one point or seven.

Revenue growth will be driven primarily from our strong recurring client revenue streams, leveraging our best in class content and product portfolio amplified. This year by the addition of our ATP NBA partnerships.

As we've noted in the past.

We will continue to challenge all aspects of our business to ensure we are focusing our talents and resources on the most profitable growth opportunities and unlocking operating leverage.

We expect the strategic actions, we have taken to date as well as our continued focus on sustainable profitability in 2024 will unlock approximately five percentage points of operating leverage collectively and personnel cost of sales and other operating expenses.

This should offset the impact on operating leverage resulting from the onetime step up in sports rights costs, primarily from the first full year of our NBA and ATP partnership deals.

Gerard Griffin: Accordingly, for the full year, we expect our adjusted EBITDA margins to be similar to 2023, progressing from the mid-teens in the first half of the year into the low 20s in the second half of the year. This seasonality is primarily a function of the face of sports rights costs and the realization of the full year run rate benefits from our cost section.

Accordingly for the full year, we expect our adjusted EBITDA margins to be similar to 2023.

Progressing from the mid teens in the first half of the year into the low <unk> in the second half of the year.

This seasonality is primarily a function of the facing of sports rights costs and the realization of the full year run rate benefits from our cost action.

Gerard Griffin: We are very much focused on enhancing margins and precasting for generation, and as we look out beyond 2024. We expect to unlock operating leverage from all major expense line items as we continue to scale our business, actively manage our operating cost run rates, and benefit from a more stable sports rights portfolio call space. As we reflect on our performance in 2023 and our outlook for 2024, we are well on track to deliver on the long-term financial targets we outlined at the time of our IPO, namely revenue growth of at least 20% and adjusted EBITDA margins in the 25 Before we open the call for questions...

We are very much focused on enhancing margins and free cash flow generation.

As we look out beyond 2024.

We expect to unlock operating leverage from all major expense line items as we continue to scale our business.

Actively manage our operating cost run rate and benefit from a more stable sports rights portfolio cost base.

As we reflect on our performance in 2023 and our outlook for 2024, we are well on track to deliver on the long term financial targets, we outlined at the time of our IPO, namely revenue growth of at least 20% and adjusted EBITDA margins in the 25% to 30% range.

Before we open the call for questions I want to note that we expect to enhance and simplify our financial reporting in 2020 for better align with the changes we've made to our business organization.

Operator: I want to note that we expect to enhance and simplify our financial reporting in 2024, better aligned with the changes we've made to our business organization. We will have more to communicate on this in advance of our Q1 earnings call. With that, we would like to open the call for questions. Operator, will you open the line for questions? Thank you. As a reminder, if you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

We will have more communicate on this in advance of our Q1 earnings call.

With that wed like to open the call for questions.

Operator will you open the line for questions.

Thank you as a reminder, if you'd like to ask a question. Please press star one one.

Your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Michael Patrick Graham: Our first question comes from Michael Graham with Canaccord. Your line is open. Hey, good morning.

Our first question comes from Michael Graham with Canaccord. Your line is open.

Carsten Koerl: Thank you. And thanks for all the detail. I wanted to ask about two things. One, in the press release, you talked about some nice initial contributions from the new NBA deal. And I just wanted to dig into that a bit and maybe see if there was anything incremental you could share about, you know, some of the customer conversations and what they were really excited about. And then, more broadly, could you just make a comment on your product roadmap for the year? You know, should we expect this to be a relatively innovative year relative to 2023? Thank you. Chairperson, thanks for the question.

Hey, good morning, Thank you and thanks for all the detail I wanted to ask about two things one on the press release, you talked about some nice initial contributions from the new NBA deal and I just wanted to dig into that a bit and maybe see if there was anything incremental you could share about.

Some of the customer conversations and what are they really excited about and then I just wanted to ask more broadly can you just make a comment on your product roadmap for the year should we expect this to be.

A relatively innovative year relative to two.

2020, thank you.

Hi, This is Sarah thanks for the question.

Carsten Koerl: In terms of the MBA, as we said in our prior earnings call, this is a premium partnership we have that's generated over a billion in revenue for us over the lifetime of the agreement. It's also a very strong start. We've locked in all of the major operators here in the States, and we've got really strong engagement internationally as well, given it is a global deal. So it's performing, as we said, ahead of our original expectations, and it's obviously implied in our guidance. Well, and on the product roadmap, as you saw, we have launched four sites now. We launched Alpha and MBET. We all have the idea, how can we convert it quicker into life?

In terms of the MBA.

As we said in our prior earnings call. This is this is a premium partnership rehab.

Worked off our $1 billion and revenue to us over the lifetime, it's off to a very strong start.

We've locked in all of the major operators here in the states and we've got really strong engagement internationally as well given that it's a global deal.

So it's.

It's performing as we said are ahead of our original expectations and it's obviously implied in our guidance.

Okay.

On the product road map as you saw we launched now for sites. We launched also and Embeds. All has the year, how can we convert quicker into life and how can we collect more data and yes, youre right. We can expect more of those products.

Carsten Koerl: And how can we collect more data? And yes, you're right. You can expect more of those products. We have a fully ramped-up engine here, and we are focusing laser sharply on those two topics, life conversion and collecting more data to put it into innovative. Okay, thank you very much.

We have a full ramped up engine here and we are focusing laser sharp on.

On those two topics lab conversion and collecting more data to put it into innovative products.

Okay. Thank you very much.

Michael Patrick Graham: Thank you. Our next question comes from Ryan Sigdahl with Craig Hallam Capital Group. Your line is open. Hey, good morning, Carsten, Gerard.

Thank you. Our next question comes from Ryan <unk> with Craig Hallum Capital Group. Your line is open.

Hey, good morning Carson here.

Ryan Ronald Sigdahl: I want to start with sports rights. So looking at slide 22, very helpful; I appreciate that. But based on the existing contracts, do you have any more specifics you can give on kind of sports rights leverage in 2025, and then the next several years as you season and get out of year two, three of the NBA and ATP, but also considering you have a renewal with Major League Baseball and others coming? So, Hi, Ryan, Carsten here.

To start with sports rights. So looking at slide 22 very helpful. Appreciate that.

Based on existing contracts do you have any more specifics you can give on kind of sports rights leverage in 2025, and then the next several years as you season and get out of your into your two or three of the NBA and ATP, but also considering you have a renewal with major league baseball and others coming so.

Hi, Ryan cost in here so for the sport drives like we said we are focusing on return of investment looking into that.

Carsten Koerl: So, for the sport rides, like we said, we are focusing on return on investment by looking into that. We are sitting on a strong cash position. We are perfectly placed from our scale and the distribution power which we have, but we carefully evaluate for every ride, what is the return on investment? If that fits into our long-term strategy, of course, we are ready to acquire new rides.

We are sitting on a strong cash position, we are perfectly placed from our scale and the distribution call, which behalf, but we carefully evaluate forever right.

What is the return of investment because that fits into our long term preposition of course, we are ready to acquire new rights for the moment, the numbers, which 3% our numbers, which we can cross sell.

Gerard Griffin: For the moment, the numbers which we present are numbers which we can fulfill and deliver with the vehicles which we have. So, we feel pretty strong and confident about where we are sitting, but we are monitoring the market actively. And Ryan, just to build on Carsten's comment, you know, when you think about 25 and 26, as we stated in our prepared remarks, we have the ability to deliver operating leverage across all line items, including sports rights. And you know, this year, it's a meaningful step up because we're adding two very important premium rights in ATP and MBA. But as you know, the amortization of those rights is fixed over the lifetime. So as we go into the outer years, that's definitive.

Deliver with the rights, which we have so we feel pretty strong and.

But where we are setting, but we are monitoring the market activity.

And Ryan just to build on <unk> comment when you think about 25% and 26 as we stated in.

Our prepared remarks, we have the ability to deliver operating leverage across all line items, including sports rights and this year, it's a meaningful step up because we're adding two very important premium rights in ATP and NBA, but as you know the amortization of those rights as fixed over the lifetime. So as we go into outer years.

Gerard Griffin: We know over the life of these deals what that sports rights number is. We also know that as these deals evolve, we see an evolution of revenue, which means the contribution from these deals is more beneficial to the company in the latter half of these deals than it would be in the early years. So that, in itself, will enable us to have more confidence in operating leverage as we look out beyond 24. Then just for my follow-up question; curious about anything you have to say about Brazil.

That's a definitive we know over over the life of these deals what that sports rights number is we also know that as these deals evolves, we see an evolution of the revenue which means the contribution from these deals is more beneficial to the company in the latter half of these deals is it would be at the early Saturday years. So.

That in itself will enable us to have more confidence in operating leverage as we look out beyond 'twenty four.

Good.

For my follow up question, Chris about anything you have seen on Brazil, I think you guys do some business currently with your large customers like about 365, there, but I guess, how does regulating that market change those deals and any potential opportunities. There. Thanks. Good luck guys.

Carsten Koerl: I think you guys do some business currently with your large customers like Bet365 there, but I guess how does regulating that market change those deals and any potential opportunities there? Thanks. Good luck, guys. Thank you, Ryan.

Thank you Ryan so I'm flying to Brazil.

Carsten Koerl: There is a big conference there. It is a very exciting market. It is a priority for us and for me. The market, as we see it at the moment, is still in the gray zone. So we still see adaptations. There is a piece of law which was introduced in December last year. But still, there are no licenses given.

Four weeks time.

There was a big conference there it is a very exciting market. It is a priority for us and for me.

The market, how we see it at the moment is still in the Gray zone. So we still see adaptations that was the piece of floor, which was introduced in December last year still as there are no licenses given how we expect that this will happen quarter tool beginning of quarter three so the market is ramping.

Carsten Koerl: We expect that this will happen in quarter two, beginning of quarter three. So the market is ramping up here. From a size perspective, the online gray market with the big players, which you mentioned, is maybe a two billion GGR. We expect with regulation that market is growing at a five billion GGR per year. To put that into a comparison, the US is around about 10 billion.

Up here from a size perspective to online gray market with the big players that you mentioned is maybe 2 billion GTR.

We expect with regulation that market is growing on a 5 billion CAGR per year, how to put that into a comparison. The U S is around about a $10 billion. So that shows you, it's a very scalable and sizable opportunity and it's an opportunity which is driven on soccer.

Carsten Koerl: So that shows you it's a very scalable and sizable opportunity. And it's an opportunity driven by soccer. Our common goal here is very supportive. We are looking into strengthening this portfolio to attack Brazil's foothills. But it's a focus area for us. Thanks Carsten, good luck guys.

Our continental deal here was very supportive we are looking into strengthening this portfolio to a tech Brazil 40 years.

Focus area for us.

Thanks, Curtis and good luck guys.

Ryan Ronald Sigdahl: Thank you. Operator, we'll take our next question. Operator. It looks like Robin may have left the queue.

Thank you.

Yeah.

Operator, we'll take our next question.

Yeah.

Operator.

And it looks like Robin may have left the queue.

Operator: Our next question comes from Bernie McTernan with Needham & Company. Your line is open. Great, thanks for taking the questions. To start, the 20% plus revenue growth expected this year, we'd love just to get a sense in terms of how much of that is driven by rate versus volume, and try and get a sense in terms of, you know, the new rights deals, how much that's contributing to the top line. And then as a follow-up, just if you could talk about the visibility into future revenue of the business, the 20% plus revenue growth, how sustainable is that into future years? And I guess given the context of the $200 million buyback authorization as well.

Our next question comes from Bernie Mcternan with Needham <unk> Company. Your line is open.

Great. Thanks for taking the questions to start.

The 20% plus revenue growth expected this year, we'd love just to get a sense in terms of how much of that is driven by rate versus volume try and get a sense in terms of the new rights deals how much that's contributing to the top line and then as a follow up just if you could talk about the visibility into future revenue of the business the 20% plus.

Revenue growth.

Sustainable is that into future years, and I guess, given the context of the $200 million buyback authorization as well too.

Bernard Jerome McTernan: Yeah, in terms of looking at the 20% growth, and you know, the largest element of that growth is coming from what we call business as usual. In other words, it's contractual increases year on year in market growth, our focus on client centricity, and, you know, adding new clients into our core business. So you could, you could sort of estimate that broadly at, you know, roughly 60%.

Yes in terms of in terms of looking at the 20% growth.

Yes.

The largest element of that growth is coming from what we call business as usual in other words, its contractual increases year on year market growth.

Focus on client Centricity, and adding new clients into our core business.

So you could you could sort of estimate that broadly yet.

Gerard Griffin: The balance, to your point, is sort of the step up from ATP and MBA, from a revenue perspective, obviously, from a sports rights perspective, we talked about that. That's, that's the, the leverage factor that you see in 24. So, you know, that's the basic shape of 24, and as we look out into 25 and 26, you obviously are going to see a continual evolution of the revenues, as I said in the last question about our ATP and MBA deal. In addition, we have consistently grown organically over 20% in terms of our core business. And so, as we think about the next years, you know, we do expect to continue to grow. We're not giving long-range guidance on this call, but, you know, if you look at our historical performance and the investments we're making into new technology and new products, we have confidence that we've got the leverage to continue to grow our top line.

Roughly 60% the balance to your point is sort of the step up from ATP and MBA.

From a revenue perspective, obviously from a from a sports rights perspective, we talked about that that's that's the deleverage factor that you see in 'twenty four so.

The basic shape of 'twenty four as we look out into 'twenty five 'twenty six you obviously are going to see a continual evolution of the revenues as I said in the last question from our ATP and MBA deal in addition to.

We have consistently grown organically over 20% in terms of our core business and so as we think about the out years, we do expect to continue to grow.

We're not giving long range guidance on this call, but if you look at our history historical performance and the investments, we're making into new technology and new products. We have confidence that we've got the levers to continue to grow our top line and more importantly.

Gerard Griffin: And more importantly, you know, operating leverage as we think about, you know, twenty five, twenty six and beyond, the buyback. Obviously, when we look at our stock price and we look at the value, we believe that there's obviously significantly more value in the fundamentals and the future of this company than we're currently getting credit for. So we thought it was appropriate to put a buyback in place so that we can obviously enter the market and address the issue of purchasing back stock at lower levels.

Operating leverage as we think about $25 26 and beyond.

The buyback.

Obviously from a.

Yes, when we look at our our stock price when we look at the value. We believe that there is obviously significant more value than the fundamentals and the future of this company than we're currently getting credit for.

We thought it was appropriate to put a buyback in place. So that we can obviously entered the market and address that.

The.

Purchasing back stock at lower levels and.

Gerard Griffin: And it's a nice lever to have within our capital allocation strategy as we move forward. If you think more broadly about capital allocation, obviously, we believe in the future of our business. So we will continue to invest in areas where we feel we can scale our capabilities and the opportunities further. So the buyback is just one aspect of our capital allocation strategy.

It's just it's a nice lever to have within our capital allocation strategy as we move forward.

If you think more broadly about capital allocation, obviously, we believe and the future of our business. So we will continue to invest in areas, where we feel we can scale our.

Our capabilities and the opportunity further.

So the buyback is just one aspect of our capital allocation strategy.

Got it thanks, Sir.

Robin Margaret Farley: Thank you. Our next question comes from Robin Farley with UBS. Your line is open.

Thank you. Our next question comes from Robin Farley with UBS. Your line is open.

Gerard Griffin: Great, thank you. I wonder if you could give us some color on how U.S. EBITDA fits into your guidance for 2024 in terms of the overall EBITDA target. Yeah, no, the US is profitable in 2024. And, you know, it's continuing to evolve.

Great. Thank you I Wonder if you could give us some color on how.

U S EBITDA fits into your guidance for 2024.

Turning to the overall EBIT target.

Yes.

As profitable in 2024.

Carsten Koerl: It's growing, obviously, its top line, and we are seeing operating leverage in the US. So from that perspective, it's expected to be profitable. Obviously, it came in in Q4 with, you know, compressed because of the MBA deal, but with the benefits of the revenues from the MBA, plus, you know, growth in the rest of the portfolio, plus our focus on managing profitability and run rates, you know, the US will be a profitable contributor to our business in 2024.

It's continuing to evolve its growing obviously topline and we are seeing operating leverage in the U S.

So from that perspective, it's it's expected to be profitable obviously it came in in Q4 with.

Compressed because of the NBA deal, but with the benefits of the revenues from the MBA plus growth in the rest of the portfolio plus our focus on managing profitability and run rates.

<unk> will be a profitable contributor to our business in 2024.

Robin Margaret Farley: Maybe I can add, we will, Robin, maybe I can add, we expect to outperform market growth in the US, according to the statistics we all have. So we think we have leverage here; we will grow stronger than the market in the US. And so to repeat, yes, we expect to be profitable in the US, more profitable than we have been. Okay, thank you.

And we will know Robert maybe I can add we expect to outperform the market growth in the U S. According to the statistics, which we all have so we think we have a leverage here, we will grow stronger than the market in the U S and so to repeat.

Yes, we expect to be profitable in the U S more profitable than we have been this year.

Gerard Griffin: And maybe just as a follow-up, you know, just as you were sort of talking about how your sports rights costs are fairly fixed now, and there'll be this operating leverage, and with, you know, the growth in new markets coming on, is there a thought that you guys might, at some point, not on the call today, but that you might give three-year targets at some point, given that, you know, maybe some of these expenses you have I'm just curious if that's something you think you might do in the next, in the next few quarters, or any thoughts on that? No, there are thoughts on that in terms of giving more long-range outlook and a deeper look into the company, but there'll be more to come on that in future calls. Okay, thank you.

Okay. Thank you and maybe just as a follow up.

Just as you're sort of talking about how your sports rights costs are fairly fixed now there'll be this operating leverage.

With the growth.

In new markets coming on.

Is there a thought that.

You guys might at some point not on the call today, but that you might give.

Three year targets at some point given that maybe some of these expenses.

Pretty good visibility on and there is also pretty good visibility on.

Some of the revenue growth in the U S. I'm just curious if you if that something you think you might do in the next in the next few quarters or any thoughts on that.

There is thoughts on that in terms of giving more long range outlook.

Or look into the company, but there'll be more to come on that in future calls.

Okay. Thank you.

David Brian Katz: Thank you. Our next question comes from David Katz with Jeffries. Your line is open. Good morning.

Yes.

Thank you. Our next question comes from David Katz with Jefferies. Your line is open.

Gerard Griffin: Thanks for taking my question. I appreciate it. And I think this is in a similar vein to the prior question. But with respect to the NBA, sort of cost weight and its impact on, you know, margins, can you just talk a bit about what the trajectory of that is, as we move out, you know, into the little longer term, just so we can start to imagine how the profitability there works. Yeah, the, you know, the actual sports rights cost is fixed, you know, we all have all those projections done. So we know exactly how much we're amortizing every quarter because it's on the balance sheet, and it's amortized over the life of the deal.

Hi, Good morning, Thanks for taking my question I appreciate it.

And I think this is a similar vein to the prior question, but with respect to the MBA sort of cost weight and its impact on.

Margins can you just talk a bit about what the trajectory of that is as we move out.

So the little longer term.

Just so we can start to envision.

Profitability there works.

Yes.

Yes, the actual sports rights cost is fixed we all all of those projections are done. So we know we know exactly how much. We're we're amortizing every quarter because its on the balance sheet and it's amortized over the life of the deal. The variable part is obviously the evolution of the revenues, which are projected to grow ortho <unk>.

Gerard Griffin: The variable part is obviously the evolution of revenues, which are projected to grow over the lifetime of the project. So as you think about that, it's, you know, you're starting in the teens in terms of the flow through from an EBITDA point of view, growing into the 20s. And by the end of the contract, you're north of the 30s, just because of the nature of the lifetime. lifetime on that deal.

Time, so as you think about that.

Youre starting in.

You're starting in the teens in terms of the flow through from an EBITDA point of view growing into the twenty's them, but by the end of the contract you are north of the <unk>.

Just because of the nature of the lifetime lifetime on that deal.

Gerard Griffin: And similar for the ATP deal, you're looking at lifetime margins that are in the realm of our long-term goals of 25 to 30%. So again, it's math. And, you know, as you think about a fixed line for the sports rights and a curve, a growth curve for the revenue, with no real meaningful incremental OPEX considerations, you're looking at a higher return on these deals in the latter years than you are in the early years. And maybe if I can add one element to it, that's the live conversion.

And similar for the ATP deals Youre looking at margins lifetime that are in the realm of our our long term goals of 25% to 30% So again.

It's Matt.

And as you think about a fixed line for the sports rights.

Curve a growth curve for the revenue with no real meaningful incremental opex considerations youre looking at a higher return on these deals and in the latter years than you are in the early years.

And it's maybe in bi.

Longbow swung one element on it that's the life conversion.

Carsten Koerl: That's a benefit for us. When we manage to convert more pre-match bets into live betting, that means from every percentage point which we can convert, it's a 1.2 million flow through on our revenues without costs. We are sitting on this profit. Perfect.

That's a benefit for us when we manage to convert more pre match into live betting that means from every percentage point, which became convert it's a 1.2 million flow through on our revenues without costs, we have sitting on this property.

Gerard Griffin: And if I can just follow up a little bigger picture question, which I suppose also seconds the appetite for some long-term targets, but we think about the next three years, can you just talk a bit about how much of the path to profitability and revenue growth is within your control through, you know, new product introductions on the roadmap versus growth and just the underlying market? I think, you know, I'll start in terms of, if I look at it from an operating spend point of view, sports rights are completely within our control. It's our decision if we want to add, you know, incremental sports rights to the portfolio, and we will only do that where we see the kind of return that will contribute to our profitability and our growth. When you look at our expenses outside of people's costs, they've grown in the single digit range.

Perfect.

If I can just follow up a little bigger picture question, which I suppose also seconds.

The appetite for some long term targets, but when we think about the next three years.

Can you just talk a bit about how how much.

The path to profitability and revenue growth is within your control through new product introductions on the roadmap and versus.

Growth in just the underlying markets.

Okay. Thank you.

Yeah I'll start in terms of if I look at it from an operating spend point of view.

<unk> Reits are completely within our control, it's our decision if we want to add.

Incremental sports rights into the portfolio and we will only do that.

Where we see the kind of return that will contribute to our our profitability and our growth.

When you look at our expenses outside of people cross they've grown in single digit range. So we expect to continue to manage that line very tightly.

Gerard Griffin: So, and we expect to continue to manage that line very tightly. Similarly, when you look at what we did last year and our focus on run rates and profitability for people costs, that's also within our control. It's our decision where we're investing in our talent and where we're deploying them. And so, at the end of the day, there is variability in the future, but we've got a very much visceral focus on run rates, and how we're deploying capital and investments going forward. On the revenue side, year in, year out, the depth and scale of our portfolio, both our content and product portfolio, enables us to deliver significant value to our client base. And we've got over 900 plus sports betting clients globally.

Similarly, when you look at what we've done last year, and our focus on run rates and profitability for people costs.

That's also within our control Thats, our decision, where we're investing our talent and where we're deploying them. So.

In the end of the day, there is variability in the future, but we've got a very much a visceral focus on.

Run rates, how we're deploying capital and investments going forward on the revenue side.

Year end year out the depth and scale of our portfolio of both our content the product portfolio enables us to deliver significant value and value to our client base and we've got over 900 plus sport.

Gerard Griffin: So, from that point of view, we feel good about addressing a growth rate that's in line with the market. And then, incrementally, to that, given the investment we have in new products and the innovation within the company and our pricing capabilities, that's how we can index above market growth rates. And again, if you look at the history of the company, we've delivered on that, and we continue to deliver on that based on the guidance we're giving this year. Again, the future is not defined, but when I look at the capabilities we have within this company, more than any other, I think, company in our space, we have the ability to scale and grow. Thank you very much.

Sports betting clients globally.

So from that point of view, we feel good about us.

Addressing a growth rate that's in line with the market and then incrementally to that given the investment we have a new products and innovation within the company and our pricing case.

Our capabilities, that's how we can index above market growth rates and we again, if you look at the history of the company we've delivered on that and we continue to deliver on that based on the guidance, we're giving this year.

Again, the future is not defined but when I looked at the capabilities we have within this company.

More than any other I think a company in our space, we have the ability to scale and grow.

Gerard Griffin: Thank you. Our next question comes from Jordan Bender with Citizens J&P. Your line is open. Good morning, everyone.

Thank you very much.

Thank you. Our next question comes from Jordan Bender with citizens JMP. Your line is open.

Jordan Maxwell Bender: Jer, I want to follow up on the share repo comments you made earlier. Is there a way to think about, you know, cadence, whether it's a dollar amount or just the number of shares once that trading window opens here in a couple months? Yeah, Jordan, as you know, with these 10B51 plans, we will obviously be working with an investment bank in terms of the execution. And under the plan, we'll be managing the level of spend based on the trading volume of the stock and where the stock price is landing. We obviously will be only doing a percentage of the trading volume because we have low liquidity in the market.

Good morning, everyone I wanted to follow up on the on the share repo comments you made earlier is there a way to think about cadence whether it's dollar MAU.

Or just number of shares once that trading window opens here in a couple of months.

Yes, Jordan as you know with these <unk> one plans.

We will we will obviously, we will be working on with an investment bank in terms of the execution and under the plan will be managing the level of spend based on the trading volume of the stock and where the stock price is landing, we obviously will be the only doing a percentage of the trading volume we have a low liquidity in the market.

Gerard Griffin: But as you know, with these kinds of plans, you generally look at 10 to 15% as a sort of governor on the kind of purchasing you would do just so you're not influencing the stock in an abnormal way. Outside of that, it'll be opportunistic. It'll depend on where the stock is and the trading volumes.

But as you know with these kinds of plans you generally youre looking at a 10% to 15%.

Governor on the kind of purchasing you would do just so youre not influencing the stock in an abnormal way.

Outside of that it will be opportunistic.

And on where the stock is.

And the trading volumes so it's.

Jordan Maxwell Bender: So it's, The plan is governed by its parameters, its standard parameters; there's nothing unusual in there. So we'll see how it evolves over the coming quarter. Okay. And then just on the net retention ratio, that seems to have fallen off in the back half of the year. Is there anything to kind of call out on that?

There is the plan is governed by its parameters. There are standard parameters. There is nothing unusual in there. So we'll see we'll see how it evolves over the coming quarters.

Understood and then just on the net retention ratio that seems to have fallen off in the back half of the year is there anything to kind of call out on that.

Gerard Griffin: No, I think it's scale. It's still very strong, and any ratio above 100 is really strong. What I would say is when you think about the additional ads to our portfolio, with the MVN ATP rights and some of the focus on client centricity, I'd say, you know, to put it in my old parlance, same source sales should be stronger in 24 than they were in 23. So that will obviously help the ratio going forward. That's a great quarter!

No I think it's scale, it's still a very strong or any any ratio above 100 is really strong.

I would say is when you think about the.

The additional adds to our portfolio with the NBA and ATP Reits and some of the focus on client Centricity I'd say put it in my old parallel same store sales should be stronger in 'twenty four and there werent in 'twenty three so that will obviously help the ratio going forward.

Jordan Maxwell Bender: Thank you. Thank you. Thank you. Our next question comes from David Karnovsky with J.P. Morgan. Your line is open.

Understood great quarter. Thank you.

Thank you.

Thank you. Our next question comes from David Karnofsky with Jpmorgan. Your line is open.

David Karnovsky: Hi, thanks for the question. Carsten, with AV streaming, it's a fairly developed market internationally, more nascent in the U.S., but we have started to see products come through from some of the leagues like MLB and NHL or NFL with your competitor. Curious, first, what you're seeing in terms of engagement with these live streams, and then maybe with the NBA specifically, given they're going to negotiate overall media rights soon, do you see an opportunity coming out of that process for more dedicated betting streams that you could power?

Thanks for the question personally the avian streaming it's a fairly developed market internationally more nascent in the U S. But we have started to see products come through from some of the leaks like MLB in NHL, our NFL with your competitor curious first.

Seeing in terms of engagement with these live streams and then maybe with the NBA, specifically just given they're going to negotiate overall media rights. Soon do you see an opportunity coming out of that process for more dedicated pet extremes that you could power.

Carsten Koerl: Yeah, that's a good question because it looks into the future. And I think where this is going is hyper-personalization. So you're going to need to know the sports fan, you're going to need to know which team, which player, and then you need to give them a customized experience.

Okay.

Yeah.

That's a good question because it looks into the future.

Think where this is going to is hyper personalization, so youre going to need to know the sports and youre going to need to know, which team which player and then you need to give him a customized experience. That's where this is going for side is touching on this first we are using already deep data too.

Carsten Koerl: That's where this is going. Foresight is touching on this first. We are already using deep data to show some information about the match, which you can't see.

So some information about the match, which you can't see so you visualize the performance you anticipate what is suppose faith and Youre, giving this experience to the user. The next step is to really customize them for the user and then to stimulate the user for whatever you wanted to with monetization. It can go into sports.

Carsten Koerl: So you visualize the performance, you anticipate what the ball speed is, and you're giving this experience to the user. The next step is to really customize this for the user, and then to stimulate the user for whatever you want to do with monetarization. It can go into sports betting, but it's not limited. It's merchandising, it's ticketing, it's sponsoring.

But it's not limited its merchandising its ticketing is sponsoring now speaking to our partners on the NBA side, that's exactly what they're looking for so the future of this is hyper personalization.

Carsten Koerl: Now, speaking to our partners on the NBA side, that's exactly what they are looking for. So the future of this is hyper-personalization, trying to embed all the data points and all this information and giving a very enriched digital product to the sports fan. The competition here is global for Tier 1 sports, and the NBA prides itself on being the most innovative sport.

Turning to embed all the data points in order to inflammation, and giving a very enriched our product towards the sports at the competition here is.

His globally for the tier one sports and the MBA prior to stem cells to be the most innovative sports. So for US that was one of the big decision points why we chose NBA as our premium partners for this to be innovative, but thats, where the market is growing and I think for the tier one rights holders that's a very.

Carsten Koerl: So for us, that was one of the big decision points why we chose NBA as our premium partner because this to be innovative, but that's where the market is going. And I think for the Tier 1 rights holders, that's a very important aspect to use technology to distribute their product further. Yes, there is a good side aspect for us in sports betting. Given the size of the global media market, you see where this is trending to, and Sportradar is embedding itself as the technology partner and the premium partner for the NBA. Thank you. The next question comes from Stephen Grambling with Morgan Stanley. Your line is open. Our next question comes from Stephen Grambling with Morgan Stanley. Your line is open.

Important aspect to use technology to distribute that product further yes. There is a good side effect for us in sports betting given the size of the global media market, you'll see where this is trending to and spot radar is embedding itself as the technology partner premium partner for the NDA.

Okay. Thank you.

Thank you. Our next question comes from Stephen Grambling with Morgan Stanley. Your line is open.

Our next question comes from Stephen Grambling with Morgan Stanley. Your line is open hi.

Operator: Hi there. Thanks. Can you hear me?

Sure. Thanks can you hear me.

Stephen White Grambling: Yeah. So I guess a couple of follow-ups on the RE-ORG. One, I guess, where are we in terms of the labor savings? Are we achieving those? Where have they generally come from so far?

Yes.

So I guess a couple of follow ups on the re org.

I guess, where are we in terms of the labor savings exceeding those warehouse.

Generally come from so far.

Gerard Griffin: And is the business right now being operated the way that the segment results are currently disclosed, or is it much more centralized? Yeah, we're, the majority of the actions that we announced that, you know, the latter half of last year are complete, and you'll see the benefit of those, you know, flow through in 24 more in the second half of the year than in the first half of the year. And as we indicated in our prepared remarks, you know, as you're thinking about your models, you're thinking about EBITDA margins, think about sort of mid- It's just a function of sports rights and obviously getting the benefits from the actions we took in 20, in 23, but also our continued focus and profitability in 24. So, from that point of view, that's how you should think about it.

And as the business right now being operated the way that the segment results are currently disclosed or is it much more centralized.

Okay.

Yes.

The majority of the actions that we announced it.

The latter half of last year are complete you will see the benefit of those.

Flow through in 'twenty four more in the second half of the year than the first half of the year and as we indicated in our in our prepared remarks as Youre thinking about your models and you're thinking about EBITDA margins think about sort of mid teens for the first half of the year and then growing into the <unk> in the second half of the year. It's just a.

A function of the sports rights and.

Getting the benefits from the actions we took in 2020 three but also our continued focus on profitability and 24.

So from that point of view.

How you should you should think about it.

Carsten Koerl: Maybe if I can add more on the CEO's personal note here, the teams are feeling extremely empowered with the reorganization. We focus razor sharply on the product, on the ROI, and on the growth and the innovation which is driven there. We have significantly more clarity and significantly more focus to execute on this, so that comes from inside the organization. It needs some time to restructure all teams and scale this down, but we feel very strong about this, and we see very positive results already. Thanks, and maybe as another follow-up on that, I think this is the first earnings call since Jair announced your departure. It's not often we have this kind of change, you know, in the midst of a reorg, so I'd love to hear what you think are the key focus areas for any incoming CFO and things you'd want to impart. Thank you. Let me take this one.

Maybe if I can add more on the <unk>.

Your personal notes here. So teams are feeling extremely empowered with the reorganization, we focused razor sharply on the product under our ROI and on the gross NPA innovation, which has driven that we have significant more clarity and significantly more focus to execute updates so of that comes from <unk>.

<unk> the organization.

It needs some time to restructure now all team since cadence down, but we feel very strong about this can be seen very positive results already.

Thanks, and then maybe as a.

Another follow up on that I think this is the first earnings call since <unk> announced your departure, it's not often we have this kind of change.

<unk> I'd love to hear what you think are key focus areas for any incoming CFO and things you'd want to impart. Thank you.

Okay.

Let me take this one.

Carsten Koerl: I think JIR did a fantastic job. So it's not only JIR in the financial department. JIR installed a chief accounting officer.

I think sure data fantastic job. So it's not the only tour in the financial Department juror in stored Chief Accounting Officer, we have here, Jim setting with us for the IR and the preparation and several other leaders which have been installed in the last year. So we feel very very strong from a pizza.

Gerard Griffin: We have Jim sitting with us for the IR and the preparation and several other leaders who have been installed in the last year. So we feel very, very strong from a people perspective, from an organizational perspective. And yes, it's sad that JIR took a personal decision to depart, but this is a team exercise. We have a very strong team in place. And as I said, we are very confident that we can find a replacement for JIR who is on the level of JIR and who can help us to push the company further forward. Yeah, I would just build on that. Yeah, I haven't left the building yet.

Perspective from an organization perspective.

And yes, it set that took a personal decision to depart but this is a team exercise we have a very strong team in place and as I've said, we are very confident to find a replacement for sure with on the level of churn and who can help us to push the company further sublets yes.

Yes, I would just build on that.

Gerard Griffin: But and, you know, as I think about the leadership team, there are, you know, the seven of us in the leadership team, that group is very much, as Carsten said earlier, very much focused on the priorities and the opportunities we have ahead of us. And, you know, one of those things is that as we grow our top line, it is operating leverage, as I said, in some of the other other questions. While that may sound like a finance thing, it's not. It's a visceral focus by the leadership on making sure we're investing in the right areas and we're managing our run rates in a way that we are unlocking that value. That's not going to change.

Having left the building, yet, but and so I think about the leadership team.

There's seven of us in the leadership team.

That group is very much as Carsten said earlier very much focused on.

The priorities and the opportunities we have ahead of us.

One of those things as we grow our top line is operating leverage as I said in some of the other other questions while that May sound like a finance thing it's not it's a visceral focus by the leadership on making sure we're investing in the right areas and we're managing our run rates.

In a way that we are unlocking that value of that thats not going to change and whoever comes into into the into the CFO seat as Carson said, we have a very strong finance organization, but more importantly, they're coming into a management team that's dialed in on the opportunity and what they need to do is continue to focus focus.

Gerard Griffin: And whoever comes into the CFO seat, as Carsten said, we have a very strong finance organization. But more importantly, they're coming into a management team that's dialed in on the opportunity. And what they need to do is continue to focus us on the right ROIs, the right level of operating leverage, and let the rest take care of itself. So I think from that point of view, just to build on Carsten's point, we have a very strong team in this organization. My personal decision aside, this company is well dialed in to continue to grow profitably. That's great, thanks.

On the right Rois, the right level of operating leverage and.

Let the rest take care of itself. So I think from that point of view just to build on Carson's point, we have a very strong team and this organization my personal decision to cite this company as well as well dialed into continue to grow profitably.

Stephen White Grambling: Best of luck. Operator, we'll take our last question. Thank you. Our last question comes from Shaun Kelley with Bank of America. Your line is open. Hi, good morning. Hi, good morning, everyone. Can you hear me?

That's great. Thanks best of luck.

Yeah.

Operator, we'll take our last question.

Thank you our last question comes from Shaun Kelly with Bank of America. Your line is open.

Yes.

Hi, good morning.

Operator: Yes. Great. Thank you for squeezing me in here. So, I just wanted to go back to the sort of MTS and MBS growth that you saw, and just, I'm thinking more about 2024, and just trying to get a sense of, and this goes back a little bit to, I think, David's question at a high level. Are there any sort of new geographic markets that are sort of meaningfully outgrowing the core? And I guess, Carsten, the reason I ask is, obviously, we see some maturity and some regulatory headwinds in the more mature European markets, particularly the UK and the Netherlands. So, just trying to think about where you're seeing, globally, that meaningful outsized growth, and specifically, is there anything in for Brazil, or is that entirely upside if that market comes online in the second half? Hi Shaun.

Everyone can you hear me.

Yes.

Great. Thank you for squeezing me in here so.

I just wanted to go back to the sort of MTS and Mds growth that you saw.

I'm thinking more about 2024.

Trying to get a sense of and it goes back a little bit to I think David's question at a high level.

Are there any sort of new geographic markets that are sort of meaningfully outgrowing the core I guess Carson and the reason I ask is obviously, we see sub.

Some maturity and some regulatory headwinds in the more mature European markets, particularly the U K and the Netherlands. So just trying to think about where youre seeing like globally that meaningful outsized growth and specifically is there anything in Brazil or is that entirely upside if that if that market comes online.

In the second half.

Carsten Koerl: So we see Brazil, as I just said. So the opportunity here is probably a five billion GGR per year for the next three years. That's a 15% comparing it with the U.S., which has 10 billion. That shows the size and scale.

Hi, Sean So we see Brazil as I just told so the opportunity here is probably a $5 billion CJR per year for the next three years. That's a 15 comparing it with the U S was a 10 billion that shows the size and scale of course that is the optimistic case here that the.

Carsten Koerl: Of course, that is the optimistic case here that the regulation goes fully in place in a way that the sports books are empowered to really invest decently in that market opportunity. So we are very bullish and optimistic about this. There are a couple of other small states in Latin America where we think that's interesting.

The regulation goes fully in place in a way that the sports books are empowered to really invest decently in that market opportunity. So we are very bullish and optimistic on this there were a couple of other small states in Latin America, where we think that's interesting it's interesting to look into.

Carsten Koerl: It's interesting to look into. Africa continues to grow. Besides all the local issues which we see in Nigeria and South Africa, we see overall strong growth here. In Europe, you are right, there are countries where we see it is a bit more difficult. The UK is probably the most prominent of these.

Africa continues to grow besides all the local issues, which can be seen in Nigeria, and South Africa, we see overall a strong growth here in Europe, you're right there are countries where.

We see it is a bit more difficult to U K is probably the most prominent of this but there are other opportunities for example, in Italy or in <unk>, So where we see the opposite so I would say that's a balanced fuel for Europe.

Carsten Koerl: But there are other opportunities, for example, in Italy or in Croatia, where we see the opposite. So I would say that's a balance too for Europe. Looking into Asia, we have continued to monitor India very closely. We are looking into the Philippines here.

Looking into Asia, we have continued to monitor or India very closely we are looking to the Philippines here and we believe there is an opportunity not in this year, but maybe in two or three years in Japan, not so much in China. So overall, if I'm looking around the globe from a growth opportunity.

Carsten Koerl: And we believe there is an opportunity, not this year, but maybe two or three years in Japan, not so much in China. So overall, if I'm looking around the globe, from a growth opportunity perspective, we see significantly more opportunities than threats. That's the overall picture. Looking at MTS and MDS, we see enormous scale. We see that we have established here a system which is really solving a problem for the operator.

We see significantly more opportunities than threats.

That's the overall picture looking to MTS in MBS.

We see enormous scale, we see that we establish tiara system, which is really solving a problem for the operator is delivering a higher return for them into risk management with a lower cost and we see that this product is really sensational performing.

Carsten Koerl: It's delivering a higher return for them in risk management with a lower cost. And we see that this product is really performing sensationally. That is something which we can relatively quickly implement with the operators, the risk management. The managed betting service and the platform are a slower development.

That is something which we can relatively quickly implement with the operators to risk management to manage betting service center platform is a slower development it takes longer and longer lead times to convert operators on the platform, but we showed that we can do based on scale with the Taiwanese lottery and we.

Carsten Koerl: It takes longer, longer lead times to convert operators on the platform, but we showed that we could do this at scale with the Taiwanese lottery. And we are building up here a very strong pipeline for looking into managed betting services in the future. It will take a bit longer than the MTS integration. And to finally give you the percentages, 75% of it is MTS, and 25% of it is the managed betting sportsbook services, which will be predicted in the next year. Great, thank you so much. And then, maybe, as just a follow up, the same, same idea.

Building up here, a very strong plan for looking into the managed betting services in the future it will take a bit longer than the MTS integrations and to finally give you the percentage of 75% of it is MTS, 25% of it is diminished betting sports book services scope, we predict in the next years.

Great. Thank you so much and then maybe just a follow up same same idea, but obviously the year experienced a little bit of pressure in the rest of world betting segment margins is.

Shaun Clisby Kelley: But, you know, obviously, the year experienced a little bit of pressure in the rest of the world betting segment margins. Is that just, I mean, amortization of sports rights across the broader global portfolio? Or is there anything else that's driving that?

Is that just I mean amortization of sports rights across the broader global portfolio or is there.

Gerard Griffin: Do you expect that to start to level out again, as you gain operating leverage? Anything specifically to call out on the segment margins? No, I think it's partially due to the point you make about sports rights.

Anything else is driving that do you expect that to start to level out again as you gain operating leverage anything specifically to call out on the segment margins.

No I think it's partially due to the point you made sports rights. We also obviously, we're continuing to invest in our global platform with the majority of that cost would be hitting the rest of world, which is the largest part of our scale as you think about moving forward.

Gerard Griffin: We're also, obviously, continuing to invest in our global platform, with the majority of that cost hitting the rest of the world, which is the largest part of our scale. As you think about moving forward, the rest of the world is sort of, you can look at the total company view, and the rest of the world is very similar. We do expect to see operating leverage over the coming years from the rest of the world. We actually expect, I know you made some comments about some of the more developed markets. We still expect our rest of the world business to grow very strongly over the coming years, and for all of the reasons we've said in the various questions and the prepared remarks. So yes, the rest of the world is expected to follow a similar flow for the total company, which means operating leverage coming out of 24 and 25 and 26.

The rest of world is sort of.

You can look at the total company view in rest of World is very similar we do expect to see operating leverage over the coming years out of rest of world. We actually expect I know you made some comments about some of the more developed markets. We still expect our rest of world business to grow very strongly over the coming years.

For all of the reasons, we said in the various questions in the prepared remarks, so yes rest of world.

As expected to follow a similar flow for the total company, which means operating leverage coming out of 24% to $25 26.

Shaun Clisby Kelley: Thank you so much. Thank you everyone for joining us for our earnings call. We'll turn it back to the operator. Thank you for your participation. This does conclude the program. You may now disconnect. Everyone have a great day. Thanks for watching!

Thank you so much.

Thank you everyone for joining us for our earnings call, we'll turn it back to the operator.

Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

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