Q2 2024 Sportradar Group AG Earnings Call

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David Karnovsky: David Karnovsky, David Karnovsky, David Karnovsky [inaudible] Good day and thank you for standing by. Welcome to the Sportradar second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

[inaudible]

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: Good day and thank you for standing by. Welcome to the Sport Radar's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the 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.

Operator: To withdraw your question, please press star 1 one again. Please be advised that today's conference is being held. I would now like to hand the conference over to Jim Bombassei, Senior Vice President, Investor Relations. Please go ahead.

Speaker Change: Please be advised that today's conference is being recorded.

Jim Bombassei: I would now like to hand the conference over to Jim Bombassei, Senior Vice President, Investor Relations. Please go ahead.

Jim Bombassei: Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the second quarter of 2024. Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at investors.sportradar.com and will be posted on our website at the conclusion of this call. A replay of today's call will also be available on our website. After our prepared remarks, we'll open the call to questions from analysts and investors.

Jim Bombassei: Thank you, Operator. Hello, everyone, and thank you for joining us for Sport Radar's earnings call for the second quarter of 2024.

Speaker Change: Please note that the slides we will reference during this presentation will 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.

Speaker Change: A replay of today's call will also be available on our website.

Speaker Change: After our prepared remarks, we'll open the call to questions from analysts and investors.

Jim Bombassei: In the interest of time, please limit yourself to one question and one follow-up. Please note that some of the information you will hear during our discussion today 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. 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 SEC along with the associated earnings release. We assume no obligation to update any forward-looking statements or information.

Speaker Change: In the interest of time, please limit yourself to one question and one follow-up.

Speaker Change: 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.

Speaker Change: These statements involve risk and uncertainties that may cause actual results or trends to different material from our forecasts.

Speaker Change: 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 SEC along with the associated earnings release.

Jim Bombassei: We speak as of the respective date. 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 findings with the SEC, each of which is posted to our investor relations website. Joining me today are Carsten Koerl, our CEO, and Craig Sellenstein, our CFO. And now I'll turn the call over to Carsten. Hello, everyone.

Speaker Change: We assume no obligation to update any forward-looking statements or information. We speak as of their respective dates.

Speaker Change: Also, during today's call, we will present both IFRS and non-IFRS financial measures.

Speaker Change: 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 findings with the SEC, each of which is posted to our investor relations website.

Speaker Change: Joining me today are Carsten Koerl, our CEO, and Craig Selenstein, our CFO. And now, I'll turn the call over to Carsten.

Carsten Koerl: And thank you for being here today. We are thrilled to share the incredible momentum we are experiencing across our business. We feel an energy and excitement in our growth and success, and I look forward to discussing the remarkable progress we've made. I'm very excited and pleased with our third consecutive quarter of record revenue. Our revenue increased 29% year-on-year, driven by an uptick of 59% in the U.S. and 22% across Europe, APEC, and Latin America.

Carsten Koerl: Hello everyone and thank you for being here today. We are thrilled to share the incredible momentum we are experiencing across our businesses.

Carsten Koerl: We feel an energy and an excitement in our growth and success, and I look forward to discussing the remarkable progress we've made.

Craig Selenstein: I'm very excited, pleased with our third consecutive quarter of record revenue.

Craig Selenstein: Our revenue increased 29% year-on-year, driven by an uptick of 59% in the U.S. and 22% across Europe, APEC, and Latin America.

Carsten Koerl: This dynamic year in sports, marked by several major international competitions, propelled fan engagement to unprecedented levels, further demonstrating the value of our products. I'm proud that we continue to reinforce our leading position as an essential partner to the sports industry. It's particularly encouraging to see that we achieved this top-line revenue while strengthening our business through operational efficiencies and a focus on enhancing cash generation. Our focus on maximizing efficiency led to excellent cash flow this quarter.

Craig Selenstein: This dynamic year in sports, marked by several major international competitions, propelled fan engagement to unprecedented levels, further demonstrating the value of our products.

Craig Selenstein: I am proud that we continue to reinforce our leading position as an essential partner to the sports industry.

Craig Selenstein: It's particularly encouraging to see that we achieved this top-line revenue while strengthening our business throughout operational efficiencies and a focus on enhancing cash generation.

Craig Selenstein: Our focus on maximizing efficiency led to excellent cash flow this quarter.

Carsten Koerl: We will maintain this focus to drive further improvement in this key matter. Our new CFO, Greg Salenstein, will be a key partner in our efforts to continue optimizing our performance. I'm pleased to welcome him to his first earnings call today. He joined us at the beginning of June and has hit the ground running.

Craig Selenstein: We will maintain this focus to drive further employment in this key metric.

Greg Salenstein: Our new CFO, Greg Salenstein, will be a key partner in our efforts to continue optimizing our performance.

Speaker Change: I'm pleased to welcome him to his first earnings call today. He joined us in the beginning of June and has hit the ground running. Greg will provide more color on our financial highlights from this quarter in his remarks.

Carsten Koerl: Greg will provide more color on our financial highlights from this quarter in his remarks. We also welcome Besha Peshadi from Google, who will lead the advancement of our technology. Hiring a top international AI leader is a clear statement of our ambition in this important area. Under Bazinet's guidance, we will enhance our AI capabilities to drive efficiency and cost savings and develop products that transform the way sports are consumed on our sports platform.

Speaker Change: We also welcome Tejat Beshadi from Google, who will lead the advancement in our technology. Hiring a top international AI leader is a clear statement of our ambition in this important area.

Bayes: Under Bayes' guidance, we will enhance our AI capabilities to drive efficiency and cost savings and

Bayes: develop products that transform the way sports are consumed in our sports platform.

Carsten Koerl: Our technology and history of innovation is one of our core competitive advantages, together with our market-leading content portfolio and distinctive client-centric approach. We will go deeper into these three areas during today's call, but first, I'd like to highlight two key milestones of which I'm particularly proud. First, we expanded and expanded our exclusive multi-year partnership with UEFA, the governing body of European football. Starting with the 2024-2025 season, we are the only provider eligible to distribute official data for batting purposes.

Speaker Change: Our technology and history of innovation is one of our core competitive advantages together with our market-leading content portfolio and distinctive client-centric approach.

Speaker Change: We will drive deeper into these three areas during today's call, but first, I'd like to highlight two key milestones of which I'm particularly proud of.

Speaker Change: First, we expanded and expanded our exclusive multi-year partnership with UEFA, the governing body of European football. Starting with the 2024-2025 season, we are the only provider eligible to distribute official data for padding purposes.

Carsten Koerl: This deal strengthens our competitive global soccer rights portfolio. We view this as a strategic asset, given that soccer accounts for over 50% of global betting turnover and is surging in popularity in the U.S. ahead of the 2026 World Cup. The agreement, which features a 33% increase in soccer match coverage to 900 annually, includes a first-of-its-kind agreement to distribute data for non-betting media, opening up new revenue streams for us. We will also, for the first time, have the ability to leverage advanced player tracking data to refine and enhance our leading AI-enabling betting and streaming products and services. With this deal, we have the exclusive right to use tracking data for the Champions League and the Europa League competitions in our products and services.

Speaker Change: This deal strengthens our competitive global soccer rights portfolio. We view this as a strategic asset, given that soccer accounts for over 50% of global batting turnover and is surging in popularity in the U.S. ahead of the 2026 World Cup.

Speaker Change: The agreement, which features a 33% increase in soccer match coverage to 900 annually, includes a first-of-its-kind agreement to distribute data for non-betting media, opening up new revenue streams for us.

Speaker Change: We will also, for the first time, have the ability to leverage advanced player tracking data to refine and enhance our leading AI-enabling betting and streaming products and services.

Speaker Change: With this deal, we have the exclusive right to use tracking data for the Champions League and the Europa League competitions for our products and services.

Carsten Koerl: I'm increasingly pleased with the continued outperformance of our managed trading services, or MTS, a core solution designed to help operators manage and optimize their betting offering. So far this year, we have signed up 46 additional sportsbooks across some of the fastest growing betting markets globally, including Brazil and Africa. Our success with MTS not only underscores its vital role in optimizing an operator's performance but also reflects what we see as our three core strengths, which I highlighted earlier. I'd now like to spend some time talking about these in more detail.

Speaker Change: Seconds.

Speaker Change: I'm increasingly pleased with the continued outperformance of our managed trading services for MTS business.

Speaker Change: a core solution designed to help operators manage and optimize their betting offering. So far this year, we have signed up 46 additional sportsbooks across some of the fastest-growing betting markets globally, including Brazil and Africa.

Speaker Change: Our success with MTS not only underscores its vital role in optimizing an operator's performance, but also reflects what we see as our three core strengths, which I highlighted earlier.

Speaker Change: I'd now like to spend some time talking about these in more detail.

Carsten Koerl: Sportradar stands unmatched in both the depth and scale of our coverage and client network. We bring together over 800 batting operators, 400 sports, and 900 media companies, who cover close to one million matches annually. This means we have access to the richest data sets in the market. The breadth and the depth of our content, combined with advanced technology, enables us to provide clients with unique insights into nearly all sports, as well as better recommendations throughout the year.

Speaker Change: Spot Radar stands unmatched in both the depth and scale of our coverage and client network.

Speaker Change: We bring together over 800 batting operators, 400 sport leagues, and 900 media companies who cover close to 1 million matches annually.

Speaker Change: This means we have access to the richest data sets in the market.

Speaker Change: The breadth and the depth of our content, combined with advanced technology, enables us to provide clients unique insights into nearly all sports, as well as better preferences throughout the year.

Carsten Koerl: It creates a virtual circle of innovation that constantly sets new industry standards. Our growth is driven not only by our ability to deepen relationships with existing clients through effective upselling and cross-selling but also by our success in attracting new clients. New market entrants turn to us because of our deep understanding and our ability to address the involving and sophisticated. Our relationship with clients goes beyond the transaction. It's a collaborative partnership where we work to help clients enhance their value proposition and Diversify Their Revenue.

Speaker Change: It creates a virtual circle of innovation that constantly sets new industry standards.

Speaker Change: Our growth is driven not only by our ability to deepen relationships with existing clients through

Speaker Change: effective upsetting and cross-setting, but also by our success in attracting new clients. New market entrants turn to us because of our deep understanding and our ability to address the evolving and sophisticated needs.

Speaker Change: Our relationship with clients goes beyond the transactional.

Speaker Change: It's a collaborative partnership where we work to help clients enhance their value proposition.

Carsten Koerl: Our unwavering focus on meeting our clients' needs is the reason we continue to strengthen existing relationships and forge new ones. In fact, our net retention rate stood at 117% for the quarter, demonstrating that our clients choose and stay with us and do more with us year after year. We work with all the major U.S. market leaders, including FanDuel and DraftKings. Our client-centric approach has helped drive many of our U.S. clients' rapid growth and innovation since launching in the U.S. Our partnerships often started with supplying live data to power their fantasy sports offerings. When the U.S. sports betting market legalized in 2018, Sportradar supported building up their online betting product.

Speaker Change: and diversify their volunteer strengths.

Speaker Change: Our unwavering focus on meeting our client's needs is the reason we continue to strengthen existing relationships and frog new ones.

Speaker Change: In fact, our net retention rates stood at 170% for the quarter, demonstrating that our client shoes been saved with us and to move with us year after year.

Speaker Change: We work with all the major U.S. market leaders, including FanDuel and DraftKings.

Speaker Change: Our client-centric approach has helped drive many of our U.S. clients' rapid growth and innovation since launching in the U.S. market. Our partnerships often started with supplying live data to power their fantasy sports offerings.

Speaker Change: When the U.S. sports betting market legalized in 2018, Sportradar supported building up their online betting products.

Carsten Koerl: As their business expanded, we continually adapted to meet our customers' evolving needs, covering additional sports and developing tailored product features, including in audiovisual streaming services and their consumer acquisition efforts through our ads products. This client-centric focus on innovation and product development highlights why we are a strategic partner to many of the leading entrepreneurs in the world. For example, our partnership with FanDuel is a core long-term partnership. We have supplied data to FanDuel for multiple sports since 2015 when it was a fantasy sports business, and data and streaming since its launch of sports betting in 2018, as well as other services since then.

Speaker Change: As their business expanded, we continually adapted to meet our customers' involving needs, covering additional supports.

Speaker Change: and developing tailored product features, including in audiovisual streaming services and their consumer acquisition efforts through our ads products.

Speaker Change: This client-centric focus on innovation and product development highlights why we are strategic partners to many of the leading operators.

Speaker Change: For example, our partnership with FANBUILD is a core long-term partnership.

Speaker Change: We have supplied data to FanDuel for multiple sports since 2015, when it was a fantasy sports business, and data and streaming since its launch of sports betting in 2018.

Carsten Koerl: We recently extended our relationship with them through 2031. Innovation is central to our culture. We continue to lead the charge in the industry and through our application of AI across the product. For over a decade, we have been at the forefront of integrating AI into sports, such as tennis, table tennis, and basketball, through machine learning and computer vision.

Speaker Change: as well as other services since then. We recently extended our relationship with them through 2031.

Speaker Change: Innovation is central to our culture. We continue to lead charge in the industry and through our application of AI across the product.

Speaker Change: For over a decade, we have been at the forefront of integrating AI into sports, such as tennis, table tennis, basketball, through machine learning and computer vision.

Carsten Koerl: As I mentioned, Asia's leadership at CTO and CAIO will help to propel our efforts even further to enhance our product portfolio and to drive innovation. Our mission is clear: harness the full potential of AI to transform the sports economy. Our data advantage is crucial, but it's not just the data. It is also what we do with it on our sports platform that makes a difference. Our extensive and historical content portfolio combined with advanced AI positions us uniquely to tackle this challenge and seize new opportunities.

Speaker Change: As I mentioned, Asia's leadership at CTO and CAIO will help to propel our efforts even further to enhance our product portfolio and to drive innovation. Our mission is clear.

Speaker Change: harness the full potential of AI to transform the sports economy.

Speaker Change: Our data advantage is crucial, but it's not just the data.

Speaker Change: It is also what we do with it on our sports platform that makes a difference.

Speaker Change: Our extensive and historical content portfolio, combined with advanced AI, positions us uniquely to tackle this challenge and seize new opportunities.

Carsten Koerl: And we are doing just that. We are transforming how fans interact with their favorite sports through products such as four-side streaming, our AI-enriched streaming technology, and embed, which integrates batting directly into OTT platforms. We expect to use Gen AI to build new experiences that can answer all types of questions about ongoing and historic games and new multi-modal experiences for sport consumption that are hyper-personalized to fit. We see this as the next phase in the evolution of sports. We are also using AI to reduce friction in client workflows, for example, by building AI-powered chatbots that can handle a significant amount of the hundreds of thousands of support requests we receive annually.

Speaker Change: And we are doing just that. We are transforming how fans interact with their favorite sports through products such as Foresight Streaming, our AI-enriched streaming technology, and MBED, which integrates batting directly into OTT platforms.

Speaker Change: We expect to use Gen AI to build new experiences.

Speaker Change: which can answer all types of questions about ongoing and historic games to new multi-modal experiences for sport consumption that are hyper-personalized to fans. We see this as the next phase in the evolution of sports consumption.

Speaker Change: We are also using AI to reduce friction in client workflows. For example, by building AI power chatbots that can handle a significant amount of the hundreds of thousands of support requests we receive annually.

Carsten Koerl: We will reduce manual processing, speed up processing time, and increase customer satisfaction. This means we will be able to address more queries and do it fast. These innovations are setting new standards for client engagement and creating new opportunities and revenue streams for our company. We believe we have significant growth potential and see an opportunity to become an even more essential and integrated partner for our clients and partners as technology opens up new ways to engage the next generation of sports bettors and fans.

Speaker Change: We will reduce manual processing, speed up processing time, and increasing customer satisfaction. This means we will be able to address more queries and do it faster.

Speaker Change: These innovations are setting new standards for our client engagement and creating new opportunities and revenue streams for our company.

Speaker Change: We believe we have significant growth potential and see an opportunity to become an even more essential and integrated partner for our clients and partners.

Speaker Change: as technology opens up new ways to engage the next generation of sport bettors and fans.

Carsten Koerl: I look forward to sharing our exciting plans for the future, including our long-term growth story or exciting roadmap for driving innovation and our opportunity to drive operating leverage and tremendous shareholder value at our upcoming investor day, which we are planning in New York City in early 2025. With that, I will turn it over to Greg. Thanks, Carsten. And thank you, everyone, for joining us this morning.

Speaker Change: I look forward to sharing our exciting plans in the future, including our long-term growth story or exciting roadmap for driving innovation and our opportunity to drive operating leverage and tremendous shareholder value at our upcoming investor day.

Speaker Change: which we are planning in New York City in early 2025. With that...

Greg Salenstein: I have spent much of my career interacting with the investment community and look forward to connecting with each of you over the next few months to further discuss our business and its multifaceted process. I am extremely excited to have joined Sportradar and to have the opportunity to work with Carsten, our board, and the entire Sportradar team to capitalize on the variety of growth avenues ahead in both the short and long term.

Speaker Change: I will turn it over to Greg.

Greg Salenstein: Thanks Carsten, and thank you everyone for joining us this morning. I have spent much of my career interacting with the investment community and look forward to connecting with each of you over the next few months to further discuss our business and its multi-faceted prospects.

Joe: I am extremely excited to have joined Sportradar and to have the opportunity to work with Carsten, our board, and the entire Sportradar team to capitalize on the variety of growth avenues ahead in both the short and long term.

Greg Salenstein: In my brief time here, I have had the chance to meet with many of our passionate and knowledgeable employees worldwide, as well as some of our lead partners and customers, and it has reinforced how integral we are to the overall market. Sportradar's unique position at the intersection of the sports, media, and betting industries will allow the company to drive significant value creation for its shareholders as we generate sustained double-digit top-line growth while expanding margins and delivering high levels of free cash flow.

Speaker Change: In my brief time here, I have had the chance to meet with many of our passionate and knowledgeable employees worldwide, as well as some of our lead partners and customers.

Speaker Change: and it has reinforced how integral we are to the overall marketplace.

Speaker Change: Sportradar's unique position at the intersection of the sports, media, and betting industries will allow the company to drive significant value creation for our shareholders as we generate sustained, double-digit, top-line growth while expanding margins and delivering high levels of free cash flow.

Greg Salenstein: The strength and durability of Sportradar's position are evidenced by the operating momentum and financial results the company generated during the second quarter, with another quarter of record revenue combined with strong growth in adjusted EBITDA and cash flow.

Speaker Change: The strength and durability of Sport Radar's position is evidenced by the operating momentum and financial results the company generated during the second quarter, with another quarter of record revenue combined with strong growth in adjusted EBITDA and cash flow.

Greg Salenstein: Revenues of $278 million increased $62 million, or 29%, as compared with the second quarter of 2023, led by higher spending from customers, including incremental contributions related to our new ATP and NBA partnership deal. We continue to have success growing our client relationships by increasing the uptake of our leading products and solutions, which are helping to drive their business performance. Looking at the individual product groupings, we delivered broad-based growth across both our betting, technology, and solutions products, as well as our sports content, technology, and services. Betting, technology, and solutions revenues of $229 million delivered 30% growth versus the second quarter a year ago.

Speaker Change: Revenues of $278 million increased $62 million, or 29%, as compared with the second quarter of 2023, led by higher spending from customers, including incremental contributions related to our new ATP and NBA partnership deals.

Speaker Change: We continue to have success growing our client relationships by increasing uptake of our leading products and solutions, which are helping to drive their business performance.

Speaker Change: Looking at the individual product groupings, we delivered broad-based growth across both our betting, technology, and solutions products, as well as our sports content, technology, and services.

Speaker Change: Betting, technology, and solutions revenues of $229 million delivered 30% growth versus the second quarter a year ago.

Greg Salenstein: The increase was driven primarily by 33% growth in our betting and gaming content, including 41% growth in our streaming and betting engagement product, most notably due to a strong growth in audiovisual revenue. Odds and live data also performed well, up 27% year-over-year. Both AV and odds and live data benefited from existing and new customer uptakes of our products, premium pricing, and strong U.S. market growth. Additionally, our managed betting services grew 21%, led by continued strong managed trading services performance due to higher trading margins and more betting activity from existing and new customers of our sports book client.

Speaker Change: The increase was driven primarily by 33% growth at our betting and gaming content, including 41% growth at our streaming and betting engagement products, most notably due to a strong growth in audiovisual revenues.

Speaker Change: Odds and live data also performed well, up 27% year-over-year.

Speaker Change: Both AV and odds and live data benefited from existing and new customer uptakes of our products, premium pricing, and strong U.S. market growth.

Speaker Change: Additionally, our managed betting services grew 21%, led by continued strong managed trading services performance due to higher trading margins and more betting activity from existing and new customers of our sport book clients.

Greg Salenstein: Sports content, technology, and services also delivered strong results this past quarter with revenues of 49 million, increasing 22% year on year, led by marketing and media services growth of 28% due to strong growth in our ads business as we saw several sports books launch marketing campaigns in 2Q.

Speaker Change: Sports content, technology and services, product, also deliver strong results this past quarter, with revenues of $49 million, increasing 22% year on year.

Speaker Change: led by marketing and media services growth of 28% due to strong growth in our ads business as we saw several sportsbooks launch marketing campaigns in 2Q.

Greg Salenstein: The growth across all product groups was significant worldwide, especially in the U.S., as we continue to outpace the market, growing 59% year on year and representing 22% of our revenues in the quarter. The revenue growth across our product portfolio translated to significant adjusted EBITDA growth, with adjusted EBITDA of $49 million, increasing $9 million, or 22% year-on-year. The sports rights impact in the quarter was mostly offset by the operating leverage we delivered across the rest of our costs.

Speaker Change: The growth across all product groups was significant worldwide, especially in the U.S., as we continued to outpace the market, growing 59% year-on-year and representing 22% of our revenues in the quarter.

Speaker Change: The revenue growth across our product portfolio translated to significant adjusted EBITDA growth, with adjusted EBITDA of $49 million, increasing $9 million, or 22% year-on-year.

Speaker Change: The sports rights impact in the quarter was mostly offset by the operating leverage we delivered across the rest of our cost base.

Greg Salenstein: We have been disciplined and strategic in building up our premium rights portfolio and have significant visibility moving forward, having secured many of our most significant rights under long-term deals. There is inherent scale and operating leverage in our business, and we expect to meaningfully expand total company margins as we drive further revenue opportunities, closely manage our cost infrastructure, and realize the benefit of sports rights being amortized on a straight-line basis over the life of each content.

Speaker Change: We have been disciplined and strategic in building up our premium rights portfolio and have significant visibility moving forward, having secured many of our most significant rights under long-term deals.

Speaker Change: There is inherent scale and operating leverage in our business.

Speaker Change: and we expect to meaningfully expand total company margins as we drive further revenue opportunities, closely manage our cost infrastructure, and realize the benefit of sports rights being amortized on a straight-line basis over the life of each contract.

Greg Salenstein: Looking at the individual cost buckets this past quarter, sports rights increased 83% to $96 million in the quarter, due primarily to the new ATP and NBA rights. Each of these properties is driving significant revenue growth as we leverage the power of these two franchises to upsell solutions to existing customers, as well as add new customers, given the premium nature of this content, and we see continued opportunity going forward to drive incremental value through these rights. Personnel expenses were $89 million in the quarter, up only 6% year-on-year and down approximately 700 basis points as a percentage of our revenue.

Speaker Change: Looking at the individual cost buckets this past quarter, sports rights increased 83% to $96 million in the quarter, due primarily to the new ATP and NBA rights.

Speaker Change: Each of these properties is driving significant revenue growth as we leverage the power of these two franchises to upsell solutions to existing customers, as well as add new customers, given the premium nature of this content, and we see continued opportunity going forward to drive incremental value through these rights.

Speaker Change: Personnel expenses were $89 million in the quarter, up only 6% year-on-year, and down approximately 700 basis points as a percentage of our revenue.

Greg Salenstein: We will continue to closely manage headcount to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage. In addition to the leverage we delivered across our personnel costs, other operating expenses of $23 million increased 8% versus last year, a decline of approximately 160 basis points as a percentage of revenue as we further leverage our existing infrastructure. We generated a loss for the quarter of $1.5 million versus approximately breakeven last year as the $9 million improvement in adjusted EBITDA was more than offset by higher sports finance costs and foreign exchange losses resulting from unrealized currency losses due primarily to U.S. dollar-denominated sports, Turning to the balance sheet, we continue to be in a strong liquidity position, closing the quarter with $322 million in cash and cash equivalents, an increase of $48 million from the first quarter with no debt outstanding.

Speaker Change: We will continue to closely manage Headcount to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage.

Speaker Change: In addition to the leverage we delivered across our personnel costs, other operating expenses of $23 million increased 8% versus last year, a decline of approximately 160 basis points as a percentage of revenue as we further leverage our existing infrastructure.

Speaker Change: We generated a loss for the quarter of 1.5 million versus approximately break-even last year.

Speaker Change: as the $9 million improvement in adjusted EBITDA was more than offset by higher sports finance costs.

Speaker Change: and foreign exchange losses resulting from unrealized currency losses due primarily to U.S. dollar-denominated sports rights.

Speaker Change: Turning to the balance sheet, we continue to be in a strong liquidity position, closing the quarter with $322 million in cash and cash equivalents, an increase of $48 million from the first quarter, with no debt outstanding.

Greg Salenstein: During the quarter, we delivered strong cash flow from operations. While there will be some quarterly fluctuations related to the timing of sports rights payments, specifically in the third quarter, we anticipate strong free cash flow growth and conversion for the full year. During the quarter, we also began to buy shares under our $200 million share repurchase program. As of August 9th, we have repurchased $8 million worth of our stock at an average price of $10.67.

Speaker Change: During the quarter, we delivered strong cash flow from operating activities.

Speaker Change: While there will be some quarterly fluctuations related to the timing of sports rights payments, specifically in the third quarter, we anticipate strong free cash flow growth and conversion for the full year.

Speaker Change: During the quarter, we also began to buy shares under our $200 million share repurchase program.

Speaker Change: As of August 9th, we have repurchased $8 million worth of our stock at an average price of $10.67.

Greg Salenstein: We continue to believe that our shares are undervalued given the strong growth we are delivering and the expectations for significant further margin expansion and cash flow conversion in the future. It is important to note that our capital allocation priority is investing in expanding the long-term growth potential of the company, and we will weigh returning capital to shareholders versus additional organic and M&A investment opportunities in both the short and long term.

Speaker Change: We continue to believe that our shares are undervalued given the strong growth we are delivering and the expectations for significant further margin expansion and cash flow conversion in the future.

Speaker Change: It is important to note that our capital allocation priority is investing and expanding the long-term growth potential of the company, and we will weigh returning capital to shareholders versus additional organic and M&A investment opportunities in both the short and long term.

Greg Salenstein: Turning to our full expectations for 2024, given the continued operating momentum and strong results during the quarter, we are again raising our full-year estimates. We now anticipate revenues of at least $1.07 billion and adjusted EBITDA of at least $204 million, or growth of at least 22% versus 2023 on both the top and bottom lines. The strong adjusted EBITDA growth will result in full-year adjusted EBITDA margins of approximately 19% despite the one-time significant ramp-up in sports costs this year.

Speaker Change: Turning to our full expectations for 2024, given the continued operating momentum and strong results during the quarter, we are again raising our full-year guidance.

Speaker Change: We now anticipate revenues of at least $1.07 billion and adjusted EBITDA of at least $204 million, or growth of at least 22% versus 2023 on both the top and bottom line.

Speaker Change: The strong adjusted EBITDA growth will result in full-year adjusted EBITDA margins of approximately 19%, despite the one-time significant ramp in sports costs this year.

Greg Salenstein: Please note that while we continue to focus on margin expansion, we do anticipate that Q3 margins will be below the prior year due to sports rights and product development costs. Conversely, we anticipate that Q4 will deliver significant margin expansion as we experience the initial impact of our new NBA deal and continue to focus on driving operating efficiency. Overall, continued strong results during the second quarter reinforced Sportradar's significant growth opportunity in 2024 and beyond.

Speaker Change: Please note that while we continue to focus on margin expansion, we do anticipate that Q3 margins will be below prior year due to sports rights and product development costs.

Speaker Change: Conversely, we anticipate that Q4 will deliver significant margin expansion as we lap the initial impact of our new NBA deal and continue to focus on driving operating efficiencies.

Speaker Change: Overall.

Speaker Change: the continued strong results during the second quarter reinforced Sport Radar's significant growth opportunity in 2024 and beyond.

Greg Salenstein: As we further drive revenues from additional innovation and product development, increased pricing, and the expansion of our addressable market both in the U.S. and across the world, we expect to drive long-term shareholder value by delivering real operating leverage and strong cash flow in the months and years ahead. Thank you for your time this morning.

Speaker Change: As we further drive revenues from additional innovation and product development, increased pricing, and the expansion of our addressable market both in the U.S. and across the world, we expect to drive long-term shareholder value by delivering real operating leverage and strong cash flow in the months and years ahead.

Operator: And now Carsten and I will be happy to answer any questions you may have. As a reminder, to ask a question, please press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Thank you for your time this morning, and now Carsten and I will be happy to answer any questions you may have.

Unknown Attendee: Good day, and thank you for standing by.

Unknown Attendee: Welcome to the Sportradar's second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Unknown Attendee: After the speaker's presentation, there will be a question and answer session. To ask a question during the 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.

Operator: Please stand by while we compile the Q&A. Our first question will come from the line of Ryan Sigdahl with Craig House. Good day, Carsten, Craig, Jim.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: Our first question will come from the line of Ryan Sigdahl with Craig Hallam.

Unknown Attendee: Please be advised that today's conference is being recorded.

Ryan Sigdahl: Nice job, solid performance here. First question, I want to start with operating leverage cost control. Everything looked really nice in the quarter, kind of the first half, and then looking at the assumptions you have on slide 17 for the remainder of the year. But there are two parts to my first question here, but I guess how do you feel about the current cost structure to build on that operating and margin momentum into 2025? And then secondly, to that, I guess on guidance. I might be nitpicking a little bit, good to see it increased, but a little lower incremental flow through on the EBITDA relative to the kind of underlying performance of the business seems to support. So any comment there? Hello guys? Am I still living?

Jim Bombassei: I would now like to hand the conference over to Jim Bombassei, Senior Vice President, Investor Relations. Please go ahead. Thank you operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the second quarter of 2024. Please note that the slides will reference during this presentation of the access. Be the webcast on our website at investors.sportradar.com and will be posted on our website at the conclusion of this call.

Ryan Sigdahl: Good day, Carsten, Craig, Jim. Nice job, solid performance here.

Carsten Koerl: Thank you.

Ryan Sigdahl: First question, I want to start on operating leverage, cost control, everything looked really nice in the quarter, kind of first half.

Jim Bombassei: A replay of today's call will also be available on our website. After our prepared remarks, we will open the call to questions from analysts and investors. In the interest of time, please limit yourself to one question and one follow up. Please note that some of the information you will hear during our discussion today will consist of four looking statements, including without limitations, those regarding revenue and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to different material from our forecast.

Ryan Sigdahl: And then looking at the assumptions you have on slide 17 for the remainder of the year. But two parts to my first question here, but I guess, how do you feel about the current cost structure to build on that operating and margin momentum into 2025? And then

Speaker Change: Secondly, to that, I guess on guidance, I might be nitpicking a little bit, good to see it increased, but a little lower incremental flow through on the EBITDA relative to kind of the underlying performance of the business seems to support. So any comment there?

Speaker Change: [inaudible]

Jim Bombassei: For more information, please refer to the risk factors discussed in our annual report on form 20F and form 6K file today, the BSEC 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 funds with the FEC, each of which is posted to our investor relations website.

Speaker Change: [inaudible]

Speaker Change: Hello guys, am I still live?

Jim Bombassei: Joining me today are Carson Curle, our CEO, and Craig Felonstein, our CFO.

Speaker Change: One moment.

Carsten Koerl: And now I'll turn the call over to Carson. Hello, everyone, and thank you for being here today. We are thrilled to share the incredible momentum we are experiencing across our businesses. We feel an energy and an excitement in our growth and success, and I look forward to discussing the remarkable progress we've made. I'm very excited, pleased with our third consecutive quarter of record revenue. Our revenue increased 29% year-on-year driven by an uptake of 59% in the U.S., and 22% across Europe, APEC, and Latin America.

Speaker Change: David Karnovsky, David Karnovsky

Speaker Change: [inaudible]

Operator: Operator, did you hear us? Yes, we can hear you now. Okay, can we, is Ryan still on the line? Ryan is on the line. Hey, sorry about that, Ryan.

Speaker Change: Operator, can you hear us?

Speaker Change: Yes, we can hear you now.

Speaker Change: Ryan is still on the line.

Operator: Hey, yeah, Ryan, can you... I can hear you guys, did you hear my question? No, we didn't. Could you repeat it? We just cut it off when we got the question. Sorry.

Speaker Change: Sorry about that, Ryan. Hey, yeah, Ryan, can you scratch?

Ryan Sigdahl: I can hear you guys, did you hear my question?

Ryan Sigdahl: No, we didn't. Could you repeat it? You just cut it off when we got the question. Sorry.

Ryan Sigdahl: All right. I'll do my best to ask it in the same way. Asking on operating leverage and cost control, a really nice job in the first half of the year, Q2, especially given the well-known step up in rates, but everything else. So two parts to my question, but one: how do you feel about the current cost structure to build on that margin momentum into 2025? And then kind of the second part to that, I guess, great to see the guidance increase and maybe nitpicking a little bit, but the incremental flow through to EBITDA implied in guidance is a little lower than what I think the underlying performance of the business seems to support. So any comment on the incremental margins and the updated guidance? Good. So let me take the first part and the second part; I'll leave them to Greg.

Ryan Sigdahl: Thank you.

Carsten Koerl: This dynamic year in sports, marked by several major international competitions, propelled fan engagement to unprecedented levels, further demonstrating the value of our product. I'm proud that we continue to reinforce our leading position as an essential partner to the sports industry. It's particularly encouraging to see that we achieved this top-line revenue while strengthening our business throughout operational efficiencies and a focus on enhancing cash generation.

Speaker Change: All good. I'll do my best to ask it in the same way. Asking on operating leverage and cost control, a really nice job in the first half of the year Q2, especially given the well-known step up in rights, but everything else. So two parts to my question, but one, how do you feel about the current cost structure to build on that margin momentum into 2025? And then kind of second part to that, I guess, great to see the guidance increase.

Speaker Change: and maybe nitpicking a little bit, but the incremental flow through to EBITDA implied in guidance is a little lower than what I think the underlying performance of the business seems to support. So any comment kind of on the incremental margins and the update to guidance?

Carsten Koerl: Foundation. Our focus on maximizing efficiency led to excellent cash flow this quarter. We will maintain this focus to drive further enforcement in this key metric. Our new CFO, Craig Felenstein, will be a key partner in our effort to continue optimizing our performance. I'm pleased to welcome him to his first earnings call today. He joined us in the beginning of June and has hit the ground running. Greg will provide more color on our financial highlights from this quarter in his remarks.

Carsten Koerl: So looking to the operating leverage, yes, that will continue. We see a margin, a target margin, mid to long term, of 25 to 30 percent. You will see now, year over year, that there is some leverage in there. So, as you said, we are very happy with the acceleration on the revenue side. We don't see major costs in the next years from rights. There are some rights which we will add to the portfolio. That is not a major problem.

Speaker Change: Good. So let me take the first part and the second part I leave them to Greg. So looking to the operating leverage, yes, that will continue.

Greg Salenstein: We see a margin, a target margin, mid to long term of 25 to 30 percent.

Greg Salenstein: you will see now year over year.

Greg Salenstein: that there is some leverage in there. So, as you said, we are

Speaker Change: We are very happy with the acceleration on the revenue side. We don't see major costs in the next years from rides. There are some rides which we will add to the portfolio. That is not major. We have a very solid portfolio. We will manage our personnel costs.

Carsten Koerl: We also welcome Beja Fischadi from Google who will lead the advancement in our technology. Hiring a top international AI leader is a clear statement of our ambition in this important area. On the Beja's guidance, we will enhance our AI capabilities to drive efficiency and cost savings and develop products that transform the way sports are consumed in our sports platform.

Carsten Koerl: We have a very solid portfolio. We will manage our personal costs in the way we demonstrated that, and you will see a flow through on EBITDA 14. Thanks, Carsten. And Ryan, thanks for the question.

Speaker Change: in the way like we demonstrated, and you will see a flow-through on the EBITDA for this.

Greg Salenstein: So certainly, we look at long-term margins, we expect there to be high incremental margins in business, and the margins for the company, as Carsten said, will increase pretty significantly in the coming years. We look currently at the current year, the revenue obviously is growing strongly, not only for the first half, but it'll be mixed growth in the second half as well. When we think about the full year flow through, As of now, we decided to keep margins pretty much the same where they were in the prior year, about 19%.

Speaker Change: Brian, thanks for the question. So, certainly, we look at long-term margins. We expect there to be high incremental margins in the business. And the margins for the company, as Carson said, will increase pretty significantly here in the out-years. We look currently at the current year.

Carsten Koerl: Our technology and history of innovation is one of our core competitive advantages together with our market leading content portfolio and distinctive client centric approach. We will drive deeper into these three areas during today's call, but first I like to highlight two key milestones of which I'm particularly proud of. First, we expanded and expanded our exclusive multi-year partnership this year for the governing body of European football. Starting with the 2024-2025 season, we are the only provider eligible to distribute official data for adding purposes.

Speaker Change: The revenue obviously is growing strongly, not only for the first half, but it will be mixed growth in the second half as well. When we think about the full year flow-through,

Greg Salenstein: But when we look at the back half of the year, the margins will accelerate versus where they were in the first half of the year. There certainly is some additional upside with regard to the margins in the back half of the year, and we'll revisit that on our third quarter call. But for now, we're comfortable leaving the margins where they are for the full year. Very good. For my second question follow up, just curious about MTS and specifically the Euro 2024 soccer tournament, which seems like really favorable betting volume results. But can you comment kind of how that played into your results?

Speaker Change: As of now, we decided to keep margins pretty much the same where they were on

Speaker Change: on prior year, about 19%. But when we look at the back half of the year, the margins will accelerate versus where they were in the first half of the year. There certainly is some additional upside with regards to the margins in the back half of the year, and we'll revisit that on our third quarter call. But for now, we're comfortable leaving the margins where they are for the full year.

Speaker Change: Very good. For my second question, follow-up, just curious on MTS and specifically Euro 2024 soccer tournament.

Speaker Change: seem like really favorable betting volume results.

Carsten Koerl: This year's ranks in our competitive global soccer rights portfolio. We feel this as a strategic asset given that soccer accounts for over 60% of global batting turnover and discerching in popularity in the US ahead of the 2022 World Cup. The agreement which features a 33% increase in soccer match coverage to 900 annually includes the first of its kind agreement to distribute data for non batting media opening up new revenue streams for us.

Carsten Koerl: And then if there's any incremental upside vis-a-vis traditional MTS customers and then ones using Alpha odds? Well, we saw a significant uptick with clients using our thoughts for the euro. That was roughly around about 15% better from a trading result than the clients without it. And as you know, the Euro was a very, very good event for bookmaker sports betting, not comparable at all with the Olympics, so the volume was significantly higher there, and the profit margin was significantly higher there, comparing it to the last euro. So we had a lot of favorites which struggled there, which is naturally very good.

Speaker Change: but can you comment kind of how that played into your results?

Speaker Change: and then if there's any incremental upside vis-a-vis traditional MTS customers and then ones using LFODs.

Speaker Change: Well, we saw a significant uptick with the clients using Alfa Ops for the euro. That was roughly around about 15% better from a trading result than the clients without it.

Speaker Change: And as you know, the Euro was a very, very good event for bookmaker sports betting. Not comparable at all with the Olympics, so the volume is significantly higher there.

Carsten Koerl: We will also, for the first time, have the ability to leverage a once player tracking data to refine and enhance our leading AI, enabling batting and streaming products and services. With this deal, we have the exclusive right to use tracking data for the Champions League and the Europa League competition for our product and services. Second, I'm increasingly pleased with the continued up performance of our managed trading services for MTS business. A course solution designed to help operators manage and optimize their batting offering.

Speaker Change: profit margin over average, comparing it to the last euros. So we had a lot of favorites which struggled there, which is naturally very good, but what made us really happy is the 15% uptick from Alphaltz, which demonstrates that this is the future of trading.

Carsten Koerl: But what made us really happy was the 15% uptick from our thoughts, which demonstrates that this is the future of trading. Great job, guys. Good luck.

Speaker Change: Great job, guys. Good luck. Thanks.

Ryan Sigdahl: Thanks. Thank you. Our next question will come from the line of Michael Graham with Canucos. Hi, thanks for taking my question and congratulations on the strong results. I wanted to just ask about sports rights, and maybe just comment on, you know, how you're seeing that situation developing more broadly. And I know you've made some moves to get more visibility with some longer-term deals. So we'd just love to hear a little bit about how you were able to make that happen and just touch on how you're managing sports rights costs going forward. Well, we don't expect to see major upticks from the sport rides in the next couple of years.

Speaker Change: Thank you all.

Speaker Change: Our next question will come from the line of Michael Graham with Canaccord.

Michael Graham: Hi, thanks for taking my question and congrats on the strong results. I wanted to just ask about sports rights.

Carsten Koerl: So far this year we have signed up all of his six additional sportsbooks across some of the fastest growing betting markets globally, including Brazil and Africa. Our success with MTS, not only on the scores, its vital role in optimizing and operating performance, but also reflects what we see as our three core strengths, which I highlighted earlier.

Michael Graham: Maybe just comment on, you know, how you're seeing that situation developing more broadly, and I know you've made some moves to get more visibility with some longer-term deals, so we'd just love to hear a little bit about how you were able to make that happen and just touch on how you're managing sports rights costs going forward.

Speaker Change: Well, we don't see major upticks from the sport rides in the next couple of years. We will add some rides, we will lose and replace some rides. We have the main pillars of our portfolio. This year, MBA and ATP was a major step up for us.

Michael Graham: We will add some rides; we will lose and replace some rides. We have the main pillars of our portfolio. This year, MBA and ATP were a major step up for us. I think we demonstrated that we handled this with excellence, and you see that in the revenue growth and also in the cut or the slow growth of our personal costs. That will simply continue.

Carsten Koerl: I'd now like to spend some time talking about these in more detail. Sportradar stands unmatched in both the depth and scale of our coverage and client network. We bring together over 800 betting operators, 400 four digs, and 900 media companies to cover close to 1 million matches annually. This means we have access to the richest data sets in the market. The breadth and the depth of our content combined with the bond technology enables us to provide clients unique insight into nearly all sports, as well as better preferences.

Speaker Change: I think we demonstrated that we handled this with excellence and you see that in the revenue growth and also in the cut or the slow growth of our personal costs.

Carsten Koerl: We don't see anything in the next years which is material in relation to this, and what we will try to do is we will manage our portfolio like we did in the past, but we don't see here major step-ups. So, the things are, you can calculate very well where that leads to. It will be a leverage extension on the EBITDA margin, and that's what I predicted before. We think we end up in a ballpark of 25 to 30 percent in the mid to long term. Okay, fantastic. Thank you, Carsten. Thank you. Our next question will come from the line of Bernie McTernan.

Speaker Change: That will simply continue.

Speaker Change: We don't see something in the next years which is material on this. And what we will try to do is we will manage our portfolio like we did it in the past.

Speaker Change: But we don't see here major step-ups, so you can calculate very well where that leads to. It will be a leverage extension on the EBITDA margin, and that's what I predicted before. We think we end up in a ballpark 25 to 30 percent.

Carsten Koerl: Throughout the year, it creates a virtual circle of innovation that constantly sets new industry standards. Our growth is driven not only by our ability to deepen relationships with existing clients through effective upsetting and cross-studding, but also by our success in attracting new clients. New market entrants turn to us because our deep understanding and our ability to address the evolving and sophisticated needs. Our relationship with clients called beyond the transaction. It's a collaborative partnership where we work to help clients and fund their value proposition and diversify their brand new strengths.

Speaker Change: on the mid- to long-term.

Speaker Change: Okay, fantastic. Thank you, Carsten.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Bernie McTernan.

Bernard McTernan: Great. Thanks for taking the question. I wanted to ask about revenue. The guidance implies a deceleration in revenue growth in the second half of the year. I'm assuming that's the MBA, just comparing the MBA. But really, the question is how to think about 25, if that, maybe the second half rate, and then maybe take off a couple of points for the ATP.

Bernie Mcternan: Great. Thanks for taking the question. I wanted to ask on revenue. The guidance implies a deceleration in revenue growth in the second half of the year. I'm assuming that's...

Bernie Mcternan: the MBA, just comping the MBA, but really the question is how to think about 25 if that...

Speaker Change: maybe the second half array, and then...

Craig Sellenstein: Craig, you mentioned you were expecting strong or sustained double-digit top-line growth here. Is there any kind of early color on whether that's the right way to think about 25 for revenue growth? Sure. Thanks, Bernie.

Speaker Change: Maybe take off a couple of points for the ATP. Craig, you mentioned, you know, expecting strong or sustained double digit top line growth here. So just if there's any kind of early color, if that's the right way to think about 25 for revenue growth.

Carsten Koerl: Our unravering focus on meeting our clients needs is the reason we continue to strengthen existing relationships and frog new ones. In fact, our net retention rates go at 117% for the quarter, demonstrating that our clients choose and stay with us and do more with us year after year. We work with all the major U.S, market leaders, including fans and draftings. Our client-centric approach has helped drive many of our U.S, clients' rapid growth and innovation since launching in the U.S, market.

Bernard McTernan: Thanks for the question. You know, obviously, we'll guide our revenue target to 25 as we get towards the end of the year and get closer to 25. That said, we certainly expect strong double-digit growth on the revenue side moving forward. For the rest of this year, you'll have obviously stronger growth in the third quarter on the revenue side before you start lapping the NBA in the fourth quarter, when the growth will slow a little bit.

Craig Selenstein: Sure. Thanks, Bernie. Thanks for the question. You know, obviously, we'll guide our 25 revenue as we get towards the end of the year and get closer to 25.

Craig Selenstein: That said, we certainly expect strong double-digit growth on the revenue side moving forward. The rest of this year, what you'll have is obviously stronger growth in the third quarter on the revenue side before you start lapping the MBA in the fourth quarter when the growth will slow a little bit.

Craig Sellenstein: That said, growth in 2025 will not just be driven by sports rights, but it'll also be driven by broader take-up of our existing products, by attracting new customers, and by higher prices. So, we fully expect there to be some strong growth in 2025. The specifics behind that, we'll get more color on as we get towards the end of the year. Okay. Thanks, Craig.

Craig Selenstein: That said, the growth in 2025 will not just be driven by sports rights, but it will also be driven by...

Craig Selenstein: broader take up of our existing products by attracting new customers, by higher pricing. So we fully expect there to be some strong growth in 2025. The specifics behind that we'll get more color on as we get towards the end of the year.

Carsten Koerl: Our partnerships often started with applying live data to power their fantasy sports offerings. When the U.S, sports betting market legalized in 2018, sports greater supported building up their online betting product. As their business expanded, we continually adapted to meet our customers, involving the covering additional sports and developing tailored product features, including in audio visual and streaming services and their consumer acquisition efforts through our ads product. This client-centric focus and innovation in product development highlights why we are a strategic partner to many of the leading operators.

Bernard McTernan: And then just one follow-up, thinking about the potential cadence of share buybacks. Nice to see the program getting started. Any restrictions that we should be aware of?

Craig Selenstein: Understood. Thanks, Craig. And then just one follow-up. Thinking about the potential cadence of share buybacks, you know, nice to see the program getting started. Any restrictions that we should be aware of? Just trying to think about if there's anything preventing you from being more aggressive on the buyback.

Carsten Koerl: Just trying to think about if there's anything preventing you from being more aggressive on the buyback. That's a question of capital allocation. And like we said in the script, first, we are looking for organic growth and supporting our product with organic growth. We are investing here. Second, we are looking into opportunities which are emerging in the market. You might have followed some of the statements.

Speaker Change: That's a question of capital allocation. And like we said it in the script, first we are looking to organic growth and supporting our product with organic growth. We are investing here.

Speaker Change: Second, we are looking into opportunities which are arising in the market, you might have followed.

Carsten Koerl: There is a consolidation ongoing, and some properties are coming to the market. We are looking into all opportunities here. And third, we want to support our growth units with investments, probably for ads where we see a strong pickup and strong growth. And then we revisit our buyback all the time. There's a pricing grid behind it. And it's a 10B5 trading plan, which has the usual restrictions, nothing special. Understand. Thank you both.

Speaker Change: Some of the statements, there is a consultation ongoing.

Speaker Change: and some properties are coming to the market. We are looking into all opportunities here. And third, we want to support our growth units with investments, probably for ads, where we see a strong pickup and strong growth. And then we revisit.

Carsten Koerl: For example, our partnership with Fandual is a core long-term partnership. We have supplied data to Fandual for multiple sports since 2015. When it was a fantasy sports business, and data and streaming since its launch of sports betting in 2018, as well as other services and STEM. We recently extended our relationship with STEM through 2031.

Speaker Change: All the time I'll buy back, there's a pricing grid behind it, and it's a 10B5 trading plan, which has the usual restrictions, nothing special.

Bernard McTernan: Our next question comes from the line of Robin Farley with UBS. Great, thank you. MLB, sort of the timing of that.

Speaker Change: Understood. Thank you both.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Robin Farley with UBS.

Carsten Koerl: Innovation is central to our culture. We continue to lead, charge in the industry, and through our application of AI across the product streets. For over a decade, we have been at the forefront of integrating AI into sports, such as STEM. And in the table tennis basketball, through machine learning and computer vision. As I mentioned, there is a leadership at CTO and CIO will help to propel our effort even further to enhance our product portfolio and to thrive innovation.

Robin Farley: And you mentioned in general terms that you don't expect anything significant in terms of an increase in sports rights, but were you including MLB in that, or would that be something that would change in terms of the rate of increase? Thanks. Hi Robin.

Robin Farley: Great, thank you. We can talk a little bit about.

Speaker Change: in Erie, Iraq.

Robin Farley: MLB, sort of the timing of that and you you mentioned in general terms that you don't expect anything significant in terms of an increase in sports rights but were you including MLB in that or would that be something that would change in terms of the rate of increase? Thanks.

Carsten Koerl: Significance is always a definition of numbers at this stage, so I can't give you detailed numbers. When I'm speaking about significance, looking forward, it will not have a major influence on our cost position in the sports rights when we are closing with MLB. So far today, we have nothing to announce here. We are very happy about our partnership with MLB. We have very constructive meetings. That's the same message I gave it to you in the last quarter.

Speaker Change: Hi, Robin. Significance is always a definition of numbers. At this stage, I can't give you...

Speaker Change: detailed numbers. When I'm speaking about significance, looking forward,

Carsten Koerl: Our mission is clear. Harness the full potential of AI to transform the sport economy. Our data advantage is crucial, but it's not just the data. It is also what we do with it on our sports platform that makes a difference. Our extensive and historical content portfolio combines with once AI positions us uniquely to tackle this challenge and see new opportunities. And we are doing just that we are transforming how fans interact with the favorite sports through products such as foresight streaming, our AI enriched streaming technology and embed which integrates batting directly into OTT platforms.

Speaker Change: It will have not a major influence on our cost position in the sport rights when we are closing with MLB so far today.

Speaker Change: We have nothing to announce here. We are very happy about our partnership with MLB. We have very constructive calls. That's the same message like I gave it to you in the last quarter.

Carsten Koerl: And Robin, on top of that, if you look at 2025, regardless of the impact of a new Major League Baseball deal, we do expect there to be a margin expansion in 2025 once that deal is, hopefully, closed. Great. Very helpful. Thank you. Just for a follow-up question.

Speaker Change: And Robin, what I'll add on top of that, if you look at 2025, regardless of the impact of a new Major League Baseball deal, we do expect there to be a margin expansion in 2025 once that deal is hopefully completed.

Robin Farley: You mentioned that you recently signed a contract with one of your major sportsbook clients going through 2031. Is it fair to assume that you have, you know, price increases built into that over, you know, as part of that contract that you've contracted price increases? Thanks.

Carsten Koerl: We expect to use Gen AI to build new experiences which can answer all types of questions about ongoing and historic games to new multi-model experiences for sports consumption that are hyper personalized to fans. We see this as the next phase in the evolution of sports consumption. We are also using AI to reduce friction in client workflows. For example, by building AI power chat box that can handle a significant amount of the hundreds of thousands of support requests we receive annually.

Robin Farley: Great. Very helpful. Thank you. Just for a follow-up question.

Speaker Change: You mentioned that you recently signed a contract with one of your major sports book clients going through 2031. Is it fair to assume that you have price increases built into that as part of that contract, that you have contracted price increases? Thanks.

Carsten Koerl: Robin, the majority of our betting contracts here in the U.S. are revenue share, so we are growing with our customers. And this is the major mechanism here for the sportsbook and the operators. But what we do, and hopefully demonstrate it, is, for example, with FanDuel, how we lift them up on the value chain, how we can hook up additional products behind the existing offering. And that is a continuous effort, which you will see over time. And, of course, we expect it to increase. Great, thank you. Our next question will come from the line of David Katz with Jeff. Hi morning, everyone.

Speaker Change: Robin, the majority of our embedding contracts here in the U.S. is revenue share, so we are growing with our customers.

Speaker Change: And this is the major mechanism here for the sportsbook and the operators.

Speaker Change: But what we do, and hopefully demonstrate it, is, for example, with FanDuel, how we lift them up on the value chain, how we can hook up additional products behind the existing offering, and that is a continuous effort which you will see over time, and of course, we expect increases here.

Carsten Koerl: We will reduce manual processing speed up processing time and increasing customer satisfaction. This means we will be able to address more queries and do it faster. These innovations are setting new standards for our client engagement and creating new opportunities and run new streams for our company. We believe we have significant growth potential and see an opportunity to become an even more essential and integrated partner for our clients and partners as technology opens up new ways to engage the next generation of sport battles and fans.

Speaker Change: Great, thank you.

Speaker Change: Our next question will come from the line of David Katz with Jeffries.

David Katz: Thanks for taking my question. I wanted to see if we couldn't, you know, take all the well-received detail on this, this morning's disclosure, and just talk about how you view the company's algorithm, particularly as it relates to the US, right? And if we were to put a growth rate on the US market, you know, market growth, call it 30%. How does that translate into, you know, Sportradar's US business, and, you know, sort of walk us through what that means for your revenue and earnings, etc. And I recognize that there's some time to this long-term EBITDA margin level, and we're not there yet. But, you know, any insight around that would just help us get organized. Thanks.

David Katz: Morning, everyone. Thanks for taking my question.

David Katz: I wanted to see if we couldn't, you know, take all the well-received, you know, detail on this morning's disclosure and just talk about how you view the company's algorithm, particularly as it relates to the U.S.

Speaker Change: right, and if we were to put a growth rate on the U.S.

Speaker Change: you know, market growing, you know, call at 30%.

Speaker Change: How does that translate into, you know, Sport Radar's U.S. business and, you know, sort of walk us through what that, you know, means for your revenue and earnings, etc.? And I recognize that there is some time to this long-term EBITDA margin level, and we're not there yet.

Carsten Koerl: I look forward to share our exciting plans in the future, including our long-term growth story or exciting roadmap for driving innovation and our opportunity to drive operating leverage and tremendous shareholder value at our upcoming investor day, which we are planning in New York City in early 2025. 5.

Speaker Change: But, you know, any insight around that would just help us get organized. Thanks.

Carsten Koerl: David, what we saw in the U.S. is we see now, more and more from our business perspectives, a strong growth in the betting sector. And we have a media sector here, and we have business technology in the league. What we see.

Craig Felenstein: With that, I will turn it over to Craig. Thanks, Carsten, and thank you everyone for joining us this morning. I have spent much of my career interacting with the investment community and look forward to connecting with each of you over the next few months to further discuss our business and its multi-faceted prospects. I am extremely excited to have joined Sportradar and to have the opportunity to work with Carsten, our board, and the entire Sportradar keen to capitalize on the variety of growth that have used ahead in both the short and long term.

Speaker Change: David, what we saw in the U.S. is we see now more and more from our business perspectives a strong growth in the betting sector and we have a media sector in here and we have the business with technology in the leagues. What we see

Carsten Koerl: I think it's fair to say that 50% of our revenues, roughly, are now in the betting space. It was a third last year, and that is growing strong with 59% compared to last year's quarter. We expect that the market will grow by roughly 25% in the next years, and we expect that we will outperform this market. That's what we demonstrated in the last years. We have the broadest offering. We have three of the top four leagues.

David Katz: I think it's fair to say that 50% of our revenues, roughly, are now in the betting space. It was a third last year, and that is growing strong with the 59% comparing it to the last year's quarter.

Speaker Change: We expect that the market is growing roughly 25% in the next years, and we expect that we outperform this market. That's what we demonstrated in the last years. We have the broadest offering, we have three of the top four leagues.

Craig Felenstein: In my brief time here, I have had the chance to meet with many of our passionate and knowledgeable employees worldwide, as well as some of our lead partners and customers, and it has reinforced how integral we are to the overall marketplace. Sportradar's unique position at the intersection of the sports, media, and betting industries will allow the company to drive significant value creation for our shareholders, as we generate sustained double-digit top-line growth while expanding margins and delivering high levels of free cash flow.

Carsten Koerl: We have deep partnership relations on product level with all the main players here, so we have a solid starting base to outperform the underlying market growth. Looking from a profitability perspective, of course, we see leverage here. Our costs, more or less, well, not flatly, but they're growing very slowly.

Speaker Change: We have deep partnership relations on product level with all the main players here.

Speaker Change: So, we have a solid starting base to outperform the underlying market growth.

Speaker Change: Looking from a profitability perspective, of course, we see leverage here. Our costs, more or less, well, not flatly, but they're growing very slow. We have the locked-in rights deals for multiple years, so we will see a strong growth in the betting space. There are

Carsten Koerl: We have the right to lock in the right fields for multiple years, so we will see a strong growth in the betting space. There are two major things which nobody can say at the moment about California and Texas. What will happen here?

Craig Felenstein: The strength and durability of Sportradar's position is evidenced by the operating momentum and financial results the company generated during the second quarter, with another quarter of record revenue combined with strong growth in adjusted EBITDA and cash flow. Revenues of 278 million increased 62 million, or 29 percent, as compared with the second quarter of 2023, led by higher spending from customers, including incremental contributions related to our new ATP and NBA partnership deals.

Speaker Change: Two major things which nobody can say at the moment, California and Texas, what will happen here. We know the size of this market is significant. So we can't calculate at the moment for the market opening here. We don't have it in our projections. That will play in our favor if that happens.

Carsten Koerl: We know the size of this market is significant, so we can't calculate it at the moment, but the market opening here, we don't have it in our projections. That will play in our favor if that happens. That's really helpful.

David Katz: And just just to follow up, right, what your commentary is around your positioning in the US market, right? That was the US market. That was the US market. You asked specifically, I hope, about the US. I absolutely did.

Speaker Change: That's really helpful. Just to follow up, your commentary is around your positioning in the U.S. market, right? That was the U.S. market. You asked specifically, I hope, about the U.S. pay.

Craig Felenstein: We continue to have success growing our client relationships by increasing uptake of our leading products and solutions, which are helping to drive their business performance. Looking at the individual product groupings, we delivered broad-based growth across both our betting, technology, and solutions products, as well as our sports content, technology, and services. Betting, technology, and solutions revenues of 229 million delivered 30 percent growth versus the second quarter a year ago. The increase was driven primarily by 33 percent growth at our betting and gaining content, including 41 percent growth at our streaming and betting engagement products, most notably due to a strong growth in audiovisual revenues.

Carsten Koerl: But as my follow-up, you know, just taking the larger rest of the world, which obviously isn't growing as fast. Could we ask the same question about how the rest of the world works if we were to make an assumption, a revenue growth or a market growth assumption for the rest? Yeah, thanks. Of course, you should ask, David.

Speaker Change: I absolutely did but as my follow-up you know just taking the larger rest of the world with which obviously isn't growing

Speaker Change: as fast. You know, could we ask the same question about how the rest of the world works if we were to make an assumption, a revenue growth or a market growth assumption for the rest? Yeah, thanks.

David Katz: So what we see here is we see growth between 10 and 12%. We also see more growth opportunities around the live product. Specifically, here, we see the market in Brazil, where we believe it's going from a 2 billion GGR to 5 billion in the next three to four years. That is a significant size. We see continuous, very strong growth in Africa. And there are a few joker cards in Asia, I would say.

Speaker Change: Of course, you should ask, David. So, what we see here is we see a growth between 10% and 12%. We see more growth opportunities around the live product. Specifically here, we see the market in Brazil, where we believe it's going from a 2 billion GGR to a 5 billion in the next three to four years. That is a significant size.

Craig Felenstein: Odd and live data also performed well of 27 percent year over year, both AV and odds and live data benefited from existing a new customer uptake of our products, premium pricing, and strong US market growth. Additionally, our managed betting services grew 21 percent, led by continued strong managed trading services performance, due to higher trading margins and more betting activity from existing and new customers of our sport book clients. Sports content, technology, and services product also deliver strong results this past quarter, with revenues of 49 million increasing 22 percent year on year, led by marketing and media services growth of 28 percent due to strong growth in our ad business as we saw several sports books launched marketing campaigns into Q.

Carsten Koerl: Looking now to India, that might be something where we see a market opening or a slow market opening. We have it not in that 10 to 12% overall market growth. Maybe it is something in Japan, on the horizon of three to five years, which gives us here even more acceleration. In Europe, I think we have a pretty solid picture that that is an average between 10 to 12 percent.

Speaker Change: We see continuous, very strong growth in Africa, and there are a few joker cards in Asia, I would say. Looking now to India, that might be something where

Speaker Change: We see a market opening or a slow market opening. We have it not in that 10 to 12% overall market growth. Might be something in Japan.

Speaker Change: on the horizon of three to five years.

Speaker Change: which gives us here even more acceleration in Europe. I think we have a pretty solid picture that that is an average between 10 to 12 percent. We see some markets performing better, some markets performing worse.

Carsten Koerl: We see some markets performing better, and some markets performing worse. That is the overall picture. For us, the main thing is that with this growth in TEM, we need to place our products so that we are replacing services which our clients are doing at the moment in-house with our service. MPS is a perfect example of this.

Speaker Change: That is the overall picture. For us, the main important thing is, with this growth in TEM,

Craig Felenstein: The growth across all product groups with significant worldwide, especially in the US as we continue to outpace the market, growing 59 percent year on year and representing 22 percent of our revenues in the quarter. The revenue growth across our product portfolio translated to significant adjusted EBITDA growth with adjusted EBITDA of $49 million, increasing $9 million, or 22% year-on-year. The sports rights impact in the quarter was mostly offset by the operating leverage we delivered across the rest of our cost base.

Speaker Change: We need to place our products that we are replacing services which our clients are doing at the moment in-house with our service. MPS is a perfect sample for this.

Carsten Koerl: We are growing our SAM in a growing TEM by 10 percent, meaning we put market leverage in here that we can achieve our growth rate. Let me remind you, historically, we had a CAGR of 25 percent from quarter 21 to quarter 221 to quarter 224. The average growth is 25 percent quarter by quarter. I think that demonstrates our ability to outperform the market. Thank you very much.

Speaker Change: So we are growing our salmon in a growing time of 10% to 10%.

Speaker Change: meaning we put a market leverage in here that we can achieve our growth rate. And let me remind you, historically, we have a CAGR of 25% from quarter

Speaker Change: 21 to quarter 2, 21 to the quarter 2, 24, the average growth is a 25% quarter by quarter and I think that demonstrates our ability to outperform the market growth.

Craig Felenstein: We have been difficult and strategic in building up our premium rights portfolio and have significant visibility moving forward, having secured many of our most significant rights under long-term deals. There is inherent scale and operating leverage in our business, and we expect to meaningfully expand total company margins as we drive further revenue opportunities, closely manage our cost infrastructure, and realize the benefit of sports rights being amortized on a straight line basis over the life of each contract.

David Katz: I appreciate it. Thank you. Our next question will come from the line of Jason Bazinet with Citi. I just had a quick question. You guys have such a long track record outside the United States. I'd just be curious.

Speaker Change: Well, thank you very much. Appreciate it.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Jason Bazinet with Citi.

Jason Bazinet: I just had a quick question. You guys have such a long track record outside the United States. I'd just be curious...

Jason Bazinet: If you could just name two or three things that have surprised you about how the US market has evolved relative to your history outside the United States, either in terms of the betting behavior of individuals or the way the OSBs are sort of responding to the products and services that you offer. Thanks. I think the U.S. market is still in the very early innings. What has surprised me is that we haven't seen more operators coming into the market and investing significantly.

Jason Bazinet: If you could just name two or three things that have surprised you about how the U.S. market has evolved relative to your history outside the United States, either in terms of

Craig Felenstein: Looking at the individual cost bulk of this past quarter, sports rights increase 83% to $96 million in the quarter due primarily to the new ATP and NBA rights. Each of these properties is driving significant revenue growth as we leverage the power of these two franchises to upsell solutions to existing customers, as well as add new customers, given the premium nature of this content, and we see continued opportunity going forward to drive incremental value through these rights.

Speaker Change: the betting behavior of the individuals or the way the OSBs are sort of responding to the products and services that you offer. Thanks.

Speaker Change: I think the U.S. market is still on the very early innings.

Speaker Change: What has surprised me is that we saw not more...

Speaker Change: operators coming into the market and investing significantly. I think we have a couple of big operators or I know we have a couple of big operators outside of the U.S.

Jason Bazinet: I think we have a couple of big operators, or I know we have a couple of big operators outside of the U.S. that are really looking very carefully when the right time to invest. We saw a couple of operators that went out of the market because of the very high customer acquisition costs. So there is a dynamic here, and size matters. I believe that we will see more operators coming into the market once the customer acquisition costs are more settled down. That is one of the surprises.

Craig Felenstein: Personal expenses were 89 million in the quarter, up only 6% year-on-year, and down approximately 700 basis points as a percentage of our revenue. We will continue to closely manage headcount to ensure we are focusing our talent and resources on the most profitable growth opportunities and unlocking operating leverage. In addition to the leverage we delivered across our personnel cost, other operating expenses of 23 million increased 8% versus last year, a decline of approximately 160 basis points as a percentage of revenue as we further leverage our existing infrastructure.

Speaker Change: which really looking very careful. When is the right time to invest? We saw a couple of operators which went out of the market

Speaker Change: because of the very high customer acquisition costs. So there is a dynamic here.

Speaker Change: and size matters. I believe that we will see more operators coming into the market once the customer acquisition costs are more settled down. That is one of the surprises. Another one is

Carsten Koerl: Another one is that, if I'm looking now at the big digitals here in the country, I think you can make significantly more out of sport and data and create a product which is very appealing for clients. I think we will see this, and we will see much more investment in rides, which is very supportive of our overall platform approach. So the adaptation of technology is going quicker than I had thought.

Speaker Change: That if I'm looking now to

Craig Felenstein: We generated a loss for the quarter of 1.5 million versus approximately breaking even last year, as the 9 million improvement adjusted to EBITDA was more than offset by higher sports finance costs and foreign exchange losses resulting from unrealized currency losses due primarily to US dollar denominated sports rights. Turning to the balance sheet we continue to be in a strong liquidity position, closing the quarter with 322 million in cash and cash equivalents, an increase of 48 million from the first quarter with no debt outstanding.

Speaker Change: the big digitals here in the country, I think you can make significantly more

Speaker Change: out of sport and the data and create a product which is very appealing for clients. I think we will see this and we will see

Speaker Change: hear much more investment in rides, which is very supporting for our overall platform approach. So the adaptation of technology goes quicker than I have thought. The development of new padding product goes a bit quicker, which is a positive surprise. And it's all about

Carsten Koerl: The development of new betting products goes a bit quicker, which is a positive surprise. And it's all about player-related things. So the more information you have here, the better you can use technology to create an appealing betting product, but also an appealing sports information media product. These are the three things, if you ask me about it.

Speaker Change: the player-related things. So the more information you have here, the better you can use technology to create an appealing betting product, but also an appealing sports information media product. These are the three things, if you ask me about it.

Craig Felenstein: During the quarter we delivered strong cash flow from operating activities, while there will be some quarterly fluctuations related to the timing of sports rights payments, specifically in the third quarter, we anticipate strong free cash flow growth and conversion for the full year. During the quarter we also began to buy shares under our 200 million share repurchase program. As of August 9, we have repurchased 8 million worth of our stock at an average price of 1057.

Jason Bazinet: Great, thank you. Our next question will come from the line of Michael Hickey with the Benchmark Company. Hey Carsten, Craig, Jim, congrats on the quarter, guys, questions, just to say, Looks like in the quarter your net retention rate of 117 was down from 120 in previous years.

Speaker Change: That's great. Thank you.

Speaker Change: Our next question will come from the line of Michael Hickey with the Benchmark Company.

Michael Hickey: Hey Carsten, Craig, Jim, congrats on the quarter, guys, thanks for taking our questions. Just to, looks like in the quarter your net retention rate, 117, was down.

Craig Felenstein: We continue to believe that our shares are undervalued given the strong growth we are delivering and the expectations for significant further margin expansion and cash flow conversion in the future. It is important to note that our capital allocation priority is investing in expanding the long-term growth potential of the company and we will weigh returning capital to shareholders versus additional organic and M&A investment opportunities both the short and long-term.

Michael Hickey: It's just curious, any chance, customer churn there or how effective, Crossup. And then the second question on capital allocation, Carsten, you touched on it. Obviously, you've got your buyback, Cleared Your Debt Here, and you alluded to, & Associates, the process itself, the sports betting assets, open bet. Ryan P.O., sold or bought or any such.

Michael Hickey: 120 prior years. Just curious, any trends in customer churn there or how effective you've been?

Speaker Change: and Cross Selling.

Speaker Change: And then the second question on capital allocation, Karsten, you touched on it. Obviously, you've got your buyback.

Craig Felenstein: Turning to our full expectations for 2024, given the continued operating momentum and strong results during the quarter, we are again raising our full year guidance. We now anticipate revenues of at least 1.07 billion and adjusted EBITDA of at least 204 million or growth of at least 22% versus 2023 on both the top and bottom line. The strong adjusted EBITDA growth will result in full year adjusted EBITDA margins of approximately 19% despite the one-time significant ramp in sports costs this year.

Speaker Change: You've cleared your debt here, and you alluded to...

Speaker Change: Some assets coming on sale, obviously Endeavor.

Speaker Change: is in the process of selling his sports betting assets open bet.

Speaker Change: and IMG Arena. I think they sold that, or bought it, besides the games for $1.2 billion. So just curious if you could talk about the synergistic value you see of that asset in terms of tech and maybe data rights.

Michael Hickey: Just curious if you could talk about Page 1 of 12, Tech, and maybe Datterite, and maybe how you think about competitive scenarios. Yeah, Michael, I'll start with the NRR question. Obviously, if you look at the numbers quarter to quarter, we improved sequentially versus where we were in the first quarter on the NRR. If you compare it to where we were a year ago, the primary difference is just the timing of some ad campaigns on some of our larger clients. It has nothing to do with any slowdown of those clients. It's just the timing of the campaigns related to them.

Speaker Change: and then maybe how you think about competitive scenarios as a competitor was to pick it up. Thanks guys.

Craig Felenstein: Please note that while we continue to focus on margin expansion, we do anticipate that Q3 margins will be below prior year to the sports rights and product development costs. Conversely, we anticipate that Q4 will deliver significant margin expansion as we left the initial impact of our new NDA deal and continue to focus on driving operating efficiencies. Overall, the continued strong results during the second quarter reinforce sport radar significant growth opportunity in 2024 and beyond.

Speaker Change: Yeah, Michael, I'll start with the NRR question. Obviously, if you look at the numbers quarter-to-quarter, we improved sequentially versus where we were in the first quarter on NRR. If you compare to where we were a year ago, the primary difference is just the timing of some ad campaigns on some of our larger clients. It has nothing to do with any slowdown of those clients. It's just the timing of the campaigns related to them. When you look at the $117,000, obviously it implies that there was much broader take-up of products by our existing customers, and they were also willing to pay higher prices when the products were appropriate.

Greg Salenstein: And when you look at the 117, obviously, it implies that there was much broader take-up of products by our existing customers, and they were also willing to pay higher prices when the products were appropriate. So, we're seeing nice growth across our existing customers.

Craig Felenstein: As we further drive revenues from additional innovation and product development, increased pricing and the expansion of our addressable market both in the US and across the world, we expect to drive long-term shareholder value by delivering real operating leverage and strong cashflow in the months and years ahead.

Carsten Koerl: And the capital allocation, like I said before, maybe I can go a bit deeper on this. We have the client centricity approach, meaning we kind of need to listen to our clients, what makes their life easier, how can we leverage, and how can we sell more. The first thing that every client tells us is, make it easy for us to integrate you, make it easy for us to integrate all your services, make it not that complex that you have 20 different integration procedures, streamline this kind of thing.

Speaker Change: We're seeing nice growth across our existing customer base.

Speaker Change: And the capital allocation is, like I said it before, maybe I go a bit deeper on this. We have the client centricity approach.

Unknown Attendee: Thank you for your time this morning and now Carson and I will be happy to answer any questions you may have. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by when we compile the Q&A roster.

Speaker Change: meaning we kind of need to listen to our clients. What makes their life easier? How can we leverage and how can we sell more?

Speaker Change: The first thing that every client is telling us, make it easy for us to integrate you. Make it easy for us to integrate all your services. Make it not that complex, that you have 20 different integration procedures.

Carsten Koerl: That is what you do on a sports platform. We are investing in this, like you see in the purchase services and in the race here. So we believe that it is a very good investment for our future. So that's a piece of the capital allocation. You mentioned Endeavor; I didn't do that, and I can't speak about specific opportunities in that space, but I can tell you that we actively monitor the market, not only with the major consolidation; we are looking into the market and how we can support our growth products. Ads is an example here.

Speaker Change: streamline this kind of thing.

Speaker Change: That is what you do in a sports platform. We are investing into this, like you see in the purchase services and in the race here. So we believe that is a very good investment for our future. So that's a piece of the capital allocation.

Ryan Sigdahl: Our first question will come from the line of Ryan Siktol with Craig Hallum. Good day Carson Craig Jim, nice job solid performance here. First question, I want to start on operating leverage cost control. Everything looks really nice in the quarter kind of first half and then looking at the assumptions you have on slide 17 for the remainder of the year.

Speaker Change: You mentioned Endeavor. I didn't do that, and I can't speak about specific opportunities in that space. But I can tell you that we actively monitor also the market, not only with the major consolidation. We are looking into the market, how can we support our growth products. Ads is a sample here.

Carsten Koerl: Two parts to my first question here, but I guess how do you feel about the current cost structure to build on that operating and margin momentum into 2025? Secondly, to that, I guess on guidance, I might be nitpicking a little bit good to see it increased but a little lower incremental flow through on the EBITDA relative to the underlying performance of the business seems to support any comment there. Hello guys, nice to live.

Carsten Koerl: And that is a very interesting space, specifically in the U.S., where we see high growth. And then we are adjusting the pricing grip step by step. We are looking at this. We think that we are undervalued.

Speaker Change: And that is a very interesting space, specifically in the U.S., where we see the high growth.

Speaker Change: And then we are adjusting the pricing grid step-by-step. We are looking to this. We think that we are undervalued. That's the reason why we have to share buyback, and we visit this step-by-step and on a quarterly basis. That's the strategy here.

Michael Hickey: That's the reason why we have to do a share buyback. And we will do this step by step and on a quarterly basis. That's the strategy here. Thanks, guys. Good luck.

Michael Hickey: Thank you. Our next question will come from the line of Jordan Bender with Citizens James. Good morning, everyone.

Speaker Change: Thanks, guys. Good luck.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Jordan Bender with Citizens JMP.

Jordan Bender: I want to discuss a broader question, and maybe similar to a previous question. And that's around the regulatory and tax changes that we're starting to see bubble up here in the US. Carsten, you've been in the industry for quite some time, and you've seen these changes globally over the course of your career. So the question is, can you help us maybe frame what you've seen outside of the US to help us understand how your clients might ultimately react here in the US?

Jordan Bender: Good morning, everyone. I want to discuss a broader question. It may be similar to a previous question, and that's around the regulatory and tax changes that we're starting to see bubble up here in the U.S. You know, Karsten, you've been in the industry for quite some time, and you've seen these changes globally over the course of your career. So the question is, can you help us maybe frame what you've seen outside of the U.S. to help us understand how your clients might ultimately react?

Jordan Bender: And ultimately, what I'm trying to get at here is, how do you position your company to adapt to some of these changes? And do you ever see opportunities emerging as the environment starts to get tighter around you?

Jordan Bender: here in the U.S. and how, you know, ultimately what I'm trying to get at here is how do you position your company to adapt to some of these changes and do you ever see maybe opportunities emerge as the environment starts to get tighter around you? Thank you.

Carsten Koerl: Thank you. Yeah, we have been investing in that space for quite a while. As you all know, our integrity services are the gold standard worldwide. We feel obliged that we are providing that service to protect the sport. That's the most important thing. If the sport does not have the trust that it is played neutrally and that everybody has the same chance, there will be no sports betting.

Karsten: Yeah, we are investing in that space since quite a while. As you all know, our integrity services are the gold standard worldwide. We feel obliged that we are providing that service to protect the sport. That's the most important. If

Carsten Koerl: Moment. Operator, do you hear us? Yes, we can hear you now. Okay, can we, Ryan's right still on the line? Ryan is on the line. Sorry about that, Ryan. Yeah, Ryan, can you finish? I can hear you guys. Did you hear my question? No, we didn't. Could you repeat it? If you don't cut it off, then we've got the question. Sorry, Ryan. All good. I'll do my best to ask it in the same way.

Speaker Change: sport has not the trust that is played neutral and that everybody has the same chances, there will be no sports betting. And by the way, there will be not a progress in sport without it.

Carsten Koerl: And by the way, there will not be progress in sport without this. We think responsible gaming is absolutely important. So with the data and the information which we have now with the betting ticket in a nominalized way, we can build algorithms to show if there is a developing gaming addiction, what to do with it, how to measure it. We call that responsible gaming services. Of course, it is completed with geolocation.

Speaker Change: We think Responsible Gaming...

Speaker Change: is absolutely important. So with the data and the information which we have now with the betting ticket, in a nominized way,

Speaker Change: we can build algorithms to show if there are developing gaming addictions.

Speaker Change: what to do with it, how to measure it, we call that responsible gaming services.

Carsten Koerl: It's completed from a government perspective with how taxes are paid. At the moment, this is still a batch profiling process. As some of you might know, we believe that from a calculation perspective, you should do this in real time online when you're calculating taxes. I think that leaves much less space for mistakes and manipulations whatsoever. All in all, we summarize this in our responsible gaming services. So we think there is a very nice opportunity, and there is not one standard around the globe.

Speaker Change: Of course, it is completed with geolocation, it's completed from a government perspective with...

Carsten Koerl: Asking on operating leverage and cost control, a really nice job in the first half of the year. Here are Q2, especially given the well-known step-up and rights, but everything else. So two parts, two, my question. But one, how do you feel about the current cost structure to build on that margin momentum into 2025? And then kind of second part to that, I guess. Great to see the guidance increase and maybe nitpicking a little bit.

Speaker Change: how are taxes paid? At the moment, this is still a batch profiling. As some of you might know, we believe that from a calculation perspective, you should do this real time online, that you're calculating the taxes.

Speaker Change: I think that leaves much less space for mistakes, manipulations, whatsoever.

Carsten Koerl: But the incremental flow through to EBITDA, implied in guidance, is a little lower than what I think the underlying performance of the business seems to support. So any comment? Kind of on the incremental margins and the updated guidance.

Speaker Change: All in all, we summarized this.

Speaker Change: to our responsible gaming services.

Speaker Change: So, we think there is a very nice opportunity, and there is not one standard around the globe.

Carsten Koerl: We believe that the US can pave the way for this. We think it's by far the most attractive market at the moment from a growth potential and from a size perspective. We see Brazil at the same size.

Craig Felenstein: So let me take the first part and the second part, I leave them to Greg. So looking to the operating leverage, yes, that will continue. That is not major. We have a very solid portfolio. We will manage our customer costs in the way like we demonstrate that. And you will see a flow through on the EBITDA for this. Thanks. Thanks, Carson. Thanks for the question. So certainly we look at long term margins.

Speaker Change: We believe that the U.S. can pave the way for this. We think it's by far the most attractive market at the moment from a growth potential and from a size.

Carsten Koerl: So the regulator is looking for what is the best standard, but it always goes in the same way: how to protect the sport, how to protect the people, and then how to generate taxes for the state. So these are the three things. And we see the positioning of Sportradar as a global player with the listing and the transparency and excellent basis that we can scale here and establish alongside our market-leading integrity services.

Speaker Change: We see in Brazil all the same size, so the regulator is looking what is the best standard, but it always goes in the same way, how to protect.

Speaker Change: the board, how to protect the people, and then how to generate taxes for the state. So those are the three things. And we see

Speaker Change #100: It's the positioning of Sportradar as a global player with the listing and the transparency and excellent basis that we can scale here and establish beside our market-leading integrity services more.

Carsten Koerl: And then just on the follow-up, I don't think you mentioned it, but from the first quarter to today, your rates for the total year are projected to increase by about 8% or so. Can you just kind of help us bridge, you know, where you were a couple months ago to why that went up about $25 million for the year? Yeah, sure. So, Jordan.

Speaker Change #100: Awesome. And then just on the follow-up, I don't think you mentioned it, but...

Craig Felenstein: We expect there to be high incremental margins in the business and the margins for the company as far as we'll increase pretty significantly here in the out of years. We look currently at the time here. The revenue obviously is going strongly not only for the first half, but it will be mixed growth in the second half as well. We'll be thinking about the full year flow through. As of now, we decided to keep margins pretty much the same where they were on on prior year, about 19%.

Speaker Change #101: From the first quarter to today, your rates for the total year are projected to increase by about 8% or so. Can you just kind of help us bridge, you know, where you were a couple months ago to why that went up about $25 million for the year?

Greg Salenstein: So the bulk of the increase relates to the ATP deal and where the revenues are being generated. There are some nuances to the accounting related to the ATP deal. But for the most part, the deals are working pretty much as we anticipated. The margins on the deals from an EBITDA and cash perspective have been better than we anticipated. So even though the sports rights are a little bit higher, the return on those rights has actually been greater than we anticipated thus far. Thank you very much.

Speaker Change #102: Thanks, Jordan. So the bulk of the increase relates to the ATP deal and where the revenues are being generated.

Speaker Change #103: There are some nuances to the accounting related to the ATP deal, but for the most part, the deals are working pretty much as we anticipated. The margins on the deals from EBITDA and the cash perspective have been better than we anticipated. So even though the sports rights are a little bit higher, the return on those rights has actually been greater than we anticipated thus far in the year.

Craig Felenstein: But when we look at the back half of the year, the margins will accelerate versus where they were in the first half of the year. There certainly is some additional upside with regards to the margins in the back half of the year. And we'll revisit that on our third quarter at all. But for now, we're comfortable leaving the margins where they are for the full year.

Speaker Change #104: Thank you very much.

Operator: Our next question will come from the line of Samuel Nielsen with J.P. Morgan. Good morning, everyone. Thank you for taking my questions. Looking at the updated guidance, I guess when we go back a few quarters, I think you mentioned the initial 2024 revenue guidance was assuming roughly 60% of growth coming from business as usual and 40% of growth from a step up from a revenue perspective around the NBA and ADP partnerships. So I was just wondering where the incremental contributions have come from here since your initial guide.

Carsten Koerl: Very good. For my second question, follow up. Just curious on MTS and specifically year old 2024 soccer tournament. It seems like really favorable betting volume results. But can you comment kind of how that played into your results? And then if there's any incremental upside vis-a-vis traditional MTS customers and then ones using LFODs. Well, we saw a significant uptick with the clients using our thoughts for the Euro. That was roughly around about 15% better from a trading reserve than the clients without it.

Speaker Change #104: Our next question will come from the line of Samuel Nielsen with J.P. Morgan.

Samuel Nielsen: Thank you.

Samuel Nielsen: Morning, everyone, and thank you for taking my questions.

Samuel Nielsen: Looking at the updated guidance, I guess when we go back a few quarters, I think you mentioned the initial 2024 revenue guidance was assuming roughly 60% of growth coming from business as usual and 40% of growth from a step up from a revenue perspective around the NBA and ADP partnerships.

Operator: Is it more across the board, or are you seeing a more meaningful benefit from your contracts than the kind of that initial 40% split that you laid out? But from the expectations that I've seen, the increase has actually been across the board. That said, we are doing a nice job of leveraging the sports contract more than was anticipated. So it's not just the sports, but we are seeing a nice return on the sports. But sports also help in other areas.

Speaker Change #106: So just wondering where the incremental contributions have come from here since your initial guide. Is it more across the board or are you seeing a more meaningful benefit from your contracts than kind of that initial 40% split that that you laid out?

Carsten Koerl: And as you know, the Euro was a very, very good event for bookmaker sports betting, not comparable at all with the Olympics, so the volume significantly higher there. Profit margin over average comparing it to the last Euros. So we had a lot of favorites which struggled there, which is naturally very good. But what made us really happy is the 15% uptick from our thoughts, which demonstrates that this is the future of trading.

Speaker Change #106: Donald Trump, Donald Trump,

Speaker Change #107: Of course, I've only been here for two months, but from the expectations that I've seen, the increase has actually been across the board. That said, we are doing a nice job of leveraging.

Speaker Change #108: the sports contract more than was anticipated. So it's not just the sports, but we are seeing nice return on the sports. But the sports also help in other areas. It helps us to drive more products. It helps us to drive more price.

Samuel Nielsen: It helps us to drive more products. It helps us to drive higher prices. So all in all, there's the direct benefit from the sports, and then there's the indirect benefit. But if I was gonna look at the increase versus original expectations, it really is broad-based, and not just related to one item. That makes sense. Thank you.

Unknown Attendee: Great job, guys. Good luck. Thanks. Thank you.

Speaker Change #108: So all in all, there's the direct benefit from the sports, and then there's the indirect benefit. But if I was going to look at the increase versus original expectations, it really is broad-based and not just related to one item.

Michael Graham: Our next question will come from the line of Michael Graham with Canacord. Hi. Thanks for taking my question and congrats on the strong results. I wanted to just ask about sports rights. Maybe just comment on how you're seeing that situation developing more broadly.

Samuel Nielsen: And then I was wondering if you could touch on what you're kind of seeing in the advertising business a little bit into the back half of the year. We've heard many larger North American operators talking about leaning into customer acquisition given a favorable environment. Obviously, we had nice growth in the 2Q, but just wondering how your conversations and maybe commitments are going with operators for future periods, maybe how long the lead time is there, and how much upside is maybe not baked into the guidance for the back half of the year from the ad segment.

Carsten Koerl: And I know you've made some moves to get more visibility with some longer term deals, so we'd just love to hear a little bit about how you were able to make that happen and just touch on how you're managing sports rights costs going forward. Well, we don't see major upticks from the sport rights in the next couple of years. We will add some rights. We will lose and replace some rights. We have the main pillars of our portfolio.

Speaker Change #109: That that makes sense. Thank you. And then I was wondering if you could touch on what you're kind of seeing in the ads business a little bit into the back half of the year

Speaker Change #110: We've heard many larger North American operators talking about leaning into customer acquisition given a favorable environment.

Speaker Change #111: Obviously had nice growth in the 2Q, but just wondering how your conversations and maybe commitments are going with operators for future periods, maybe how long the lead time is there, and how much upside is maybe not baked into the guidance for the back half of the year from the ad segment.

Speaker Change #112: We see quite a...

Samuel Nielsen: We see quite an interesting pickup in quarter two here. We see a lot of demand, specifically in the US. Our ad service here looks like the product of choice for doing acquisition and reducing costs for our clients. The uptick with 28%, like you see in the script, is, I think, a clear statement about this. And I also mentioned that we are looking to expand in that space. It's all about how can we get the sports fan together with our partners in the sports betting space to convert them. And how can we stimulate this?

Carsten Koerl: This year, MBA and ADP was a major step up for us. I think we demonstrated that we handled this with excellence and you see that in the revenue growth and also in the cut for the slow growth of our personal costs. That will simply continue. We don't see something in the next years, which is material on this. And what we will try to do is we will manage our portfolio like we did it in the past, but we don't see here major step up.

Speaker Change #113: interesting pickup in quota 2 here. We see a lot of demand specifically in the U.S.

Speaker Change #114: Our ad service here looks like the product of choice for doing acquisition and reducing costs for our clients.

Speaker Change #115: uptick with 28% like you see in the script is, I think, a clear statement for this. And I also mentioned that we are looking to expand in that space.

Speaker Change #116: It's all about how can we get the sports fan together with our partners in the sports betting space to convert them and how can we stimulate this. And we have the market-leading product here. We are optimistic in the second half of the year that this will further expand.

Carsten Koerl: So the things are you can calculate very well where that leads to. It will be a leverage extension on the EBITDA margin. And that's what I predicted before. We think we end up in a boardpark 25 to 30 percent on the mid to long term. Okay, fantastic. Thank you, Carson.

Unknown Attendee: Thank you.

Carsten Koerl: And we have a market-leading product here. We are optimistic in the second half of the year that this will further expand. Operator, we have time for one more question. We have time for one more question, Operator.

Speaker Change #117: Operator, we have time for one more question. We have time for one more question operator.

Operator: Our last question will come from the line of Stephen Grambling with Morgan Stanley. I think one more follow-up on the US market. When you think about the 25% growth going forward, even with fewer states legalizing it, what do the recent data points or your experience in Europe tell you about, you know, how much of that's going to be from customer growth versus spend per customer? And, and how should we be thinking about who the incremental sports betting customer is and or how their betting behavior may evolve versus the existing base? It's a broad mix.

Bernard McTernan: Our next question is from the line of Bernie McTernan. Great. Thanks for taking the question. We wanted to ask on revenue. The guidance implies a deceleration revenue growth in the second half of the year. I'm assuming that's the MBA just comping the MBA, but really the question is how to think about 25 if that maybe the second half rate and then maybe take off a couple of points for the ATP. Craig, you mentioned expecting or sustained double digit top line growth here.

Speaker Change #118: Our last question will come from the line of Stephen Grambling with Morgan Stanley.

Stephen Grambling: One more follow-up on the U.S. market. When you think about the 25% growth going forward, even with fewer states legalizing, what do recent data points or your experience in Europe tell you about?

Stephen Grambling: you know, how much of that's going to be from customer growth versus spend per customer and and what you, how we should be thinking about who the incremental sports betting customer is and or how their betting behavior may evolve versus the existing base.

Stephen Grambling: So what we see is if there are different demographic groups, that's probably the most interesting play here in the US. So it goes away from this Las Vegas type of punter into something which is the younger generation, which needs another entertainment product. And specifically, to mention here is live betting.

Craig Felenstein: So there's any kind of early color if that's the right way to think about 25 for revenue growth. Sure. Thanks for the question. You know, obviously one guide are our 25 revenue as we get towards the end of the year and closer to 25. That said, we certainly expect strong double digit growth on the revenue side moving forward. The rest of this year, which you'll have is obviously stronger growth than third quarter on the revenue side before you start lapping the MBA in the fourth quarter when the growth will slow a little bit.

Speaker Change #120: It's a broad mix. So what we see is if there are different demographical groups, that's probably the most interesting play here in the US. So it goes away from this Las Vegas type of punter into something which is the younger generation, which needs another entertainment product.

Carsten Koerl: So we see an uptick. We are now on a 35 to 40% increase. As you know, every percentage point which goes into live renders for us roughly 1.6 million more in revenues. That comes more or less without costs. Yes, there are some minor cloud costs associated with this, but that's more or less pure profit. That's what we see all over the place. So it's a mix of product adaptation and education of the punters going into new customer groups, and that is progressing quite rapidly here in the US.

Speaker Change #121: specifically to mention here is

Speaker Change #122: live betting. So we see an uptick. We are now on a 35 to 40 percent. As you know, every percentage point which goes into live renders for us roughly 1.6 million more in revenues. That comes more or less without costs. Yes, there are some minor cloud costs associated to this.

Craig Felenstein: That said, the growth in 2025 will not just be driven by sports rights, but also be driven by broader take-up of our existing products, by attracting the customers, by higher pricing. So we fully expect there to be some strong growth in 25. The specifics behind that will give more tolerance to get towards the end, of the year. Understood. Thanks, Craig.

Speaker Change #122: but that's more or less pure profit. That's what we see all over the place. So it's a mix of product adaptation, application of the partners going into new customer groups and that goes quite rapidly here in the U.S.

Craig Felenstein: And then just one follow-up theme about the potential cadence of share buybacks. You know, nice to see the program getting started. Any restrictions that we should be aware of, just trying to think about if there's anything preventing you from being more aggressive on the buyback? That's a question of capital allocation. And like we said in the script, first we are looking to organic growth and supporting our product with organic growth. We are investing here.

Stephen Grambling: Great, thank you everyone. We want to thank everyone for joining us on our earnings call. Now, we'll turn it back over to the operator. This concludes today's conference call. Thank you for participating; you may now disconnect.

Speaker Change #123: Thank you very much for joining us today.

Speaker Change #124: Great, thank you everyone.

Speaker Change #125: We want to thank everyone for joining us for our earnings call and now we'll turn it back over to the operator.

Speaker Change #126: This concludes today's conference call. Thank you for participating. You may now disconnect.

Craig Felenstein: Second, we are looking into opportunities which are raising in the market. You might have followed some of the statements. There is a consolidation ongoing and some properties are coming to the market. We are looking into all opportunities here. And third, we want to support our growth units with investments probably for ads where we see a strong pickup and strong growth. And then we revisit all the time our buyback. There's a pricing grid behind it. And it's a 10v5 trading plan which has the usual restrictions. Nothing special. Understood.

Unknown Attendee: Thank you both.

Robin Farley: Our next question comes from a line of Robin Farley with UBS. Great. Thank you.

Carsten Koerl: Talk a little bit about your ex. MLB. Third, the timing of that. And you mentioned in general terms that you don't expect anything significant in terms of an increase in sports rights. But were you including MLB in that or would that be something that would change in terms of the rate of increase? Thanks. Hi Robin. Significant is always a definition of numbers at this stage. I can't give you detailed numbers. When I'm speaking about significance looking forward, it will have not a major influence on our cost position in the sports rights when we are closing with MLB.

Carsten Koerl: So far today, we have nothing to announce here. We are very happy about our partnership with MLB. We have very constructive calls. That's the same message that I can give to you in the last quarter. And Robin, what I'll add on top of that is you look at 2025 regardless of the impact of the new major league baseball. We do expect any more expansion in 2025 once that deals hopefully completed. Great. Very helpful. Thank you.

Carsten Koerl: Just for a follow-up question, you mentioned that you recently signed a contract with one of your major sports booklines going through 2031. Is it fair to assume that you have price increases built into that as part of that contract that you've contracted price increases? Thanks. How Robin the majority of our embedding contract here in the US is revenue share. So we are growing with our customers. And this is the major mechanism here for the sportsbook and to operators.

Carsten Koerl: But what we do and hopefully demonstrate it is, for example, with Spandual, how we lift them up on the value chain, how we can hook up additional products behind the existing offering. And that is a continuous effort which you will see over time. And of course, we expect increases. Joseph. Great. Thank you.

David Katz: Our next question will come from the line of David Katz with Jeffries. Hi, morning, everyone. Thanks for taking my question.

David Katz: I wanted to see if we couldn't, you know, take all the well-received, you know, detail on this morning's disclosure. And just talk about how you view the company's algorithm, particularly as it relates to the user. The US, right? And if we were to put a growth rate on the US, you know, market growing, you know, call it 30%. How does that translate into, you know, Sportradar's US business and, you know, sort of walk us through what that, you know, means for your revenue and earnings, et cetera.

David Katz: And I recognize that there is some time to this long-term EBITDA margin level that we're not there yet. But, you know, any insight around that would just help us could organize. Thanks. David, what we saw in the US is we see now more and more from all business defectives, a strong growth in the betting sector. And we have a media sector in here and we have the business is technology and the leaks.

David Katz: But we see, I think it's fair to say that 50% of our revenues roughly are now in the betting space. It was assert last year. And then that is going strong with the 59% comparing it to the last year's quarter. We expect that the market is throwing roughly 25% in the next years and we expect that we are performing this market. That's what we demonstrated in the last years. We have to broadest offering.

David Katz: We have three of the top four leagues. We have deep partnership relations on product level with all the main players here. So we have a solid starting base to outperform the underlying market growth. Looking from a profitability perspective, of course, we see leverage here. I'll cost more or less day. Well, not flatly, but they're growing very slow. We have to lock in right fields for multiple years. So we will see a strong growth in the betting space.

David Katz: There are two major things which nobody can say at the moment. California and Texas, what will happen here. We know the size of this market is significant. So we can't calculate at the moment, but the market opening here. We don't have it in our projections. That would play in our favor if that happens.

Carsten Koerl: That's really helpful and just just to follow up right with your your commentary is is around your positioning in the US market. Right. That's what the US market that was the US market. And you asked specifically, I hope about the US space. I absolutely did, but I just might follow up. You know, just taking the larger rest of the world with which obviously isn't growing as fast. You know, could we ask the same question about how the rest of the world works if we were to make an assumption.

Carsten Koerl: A revenue growth or a market growth assumption for the rest. Yeah. Thanks. Of course, you should ask David. So what we see here is we see a growth between 10 and 12%. We see more growth opportunities around the life product specifically here. We see the market in Brazil, very believe it's going from a two billion JGR to a five billion in the next three to four years. That is a significant size.

Carsten Koerl: We see continues very strong growth in Africa. And there are a few joke cards in Asia, I would say looking now to India that might be something where we see market opening or slow market opening. We have it not in that 10 to 12% overall market growth might be something in Japan on the horizon of three to five years, which gives us here even more acceleration in Europe. I think we have a pretty solid picture that that is an average between 10 to 12%.

Carsten Koerl: We see some markets performing better some markets performing worse. That is the overall picture for us. The main important thing is with this growth in 10, we need to place our products that we are replacing services which our clients are doing at the moment in house with our service. MPS is a perfect example for this. So we are growing our same in a growing time with top to 10%. Meaning we put a market leverage in here that we can achieve our growth rate and let me remind you historically we have a cater of 25% from quarter 21 to quarter 21 to the quarter to 24. The average growth is a 25% quarter by quarter. And I think that demonstrates our ability to outperform the market. Cross. Thank you very much. Appreciate it.

Unknown Attendee: Thank you.

Jason Bazinet: Our next question will come from the line of Jason Bazinet with city. I just had a quick question. You guys have such a long track record outside the United States. I'd just be curious. If you could just name two or three things that have surprised you about how the US market has evolved relative to your history outside the United States. The United States either in terms of the betting behavior, the individuals or the way the OSBs are sort of responding to the products and services that you offer. Thanks.

Carsten Koerl: I think the US market is still on the very early innings. What has surprised me is that we saw not more operators coming into the market and investing significantly. I think we have a couple of big operators or I know we have a couple of big operators outside of the US, which really looking very careful when is the right time to invest. We saw a couple of operators which went out of the market because of the very high customer acquisition cost.

Carsten Koerl: So there is a dynamic here and size matters. I believe that we will see more operators coming into the market once the customer acquisition costs are more settled down. That is one of the surprises. Another one is that if I'm looking now to the big digitals here in the country, I think you can make significantly more out of sport and the data and create a product which is very appealing for clients.

Carsten Koerl: I think we will see this and we will see here much more investment in rights, which is very supporting for our overall platform approach. So the other page of technology goes quicker than I have saw the development of new bedding product goes a bit quicker, which is a positive surprise and it's all about the player related things. So the more information you have here, the better you can use technology to create an appealing bedding product but also an appealing sports information media product.

Unknown Attendee: This are the three things if you ask me about it. That's great. Thank you.

Michael Hickey: Our next question will come from the line of Michael Hickey with the benchmark company.

Michael Hickey: Hey Carson Craig Jim, congrats on my quarter. Thanks for taking the questions. Just to look like in the quarter year net retention rate 117 was down 120 prior years, just curious any trends and customer turn there or how effective you've been and cross selling. And then the second question on capital allocation, Carson, you touched on it. How this you've got your buy bag. You cleared your debt here and you alluded to the mass sets coming on sale.

Michael Hickey: Obviously endeavor is in the processes of the sports betting assets open that an IMG arena. I think they sold that bottom sense to games 1.2 billion. They're just curious if you could talk about, at the center just in value. You see of that asset in terms of tech and maybe data rights. And then maybe how you think about competitive scenarios. So competitive levels to pick it up. Thanks, guys. Yeah, Michael, I'll start with the in our question.

Michael Hickey: Obviously, if you look at the numbers quarter to quarter, we we improve sequentially versus where we were in the first quarter on the NRR. If you compare it to where we were a year ago, the primary difference is just the timing of some ad camp. Campaigns are some of our larger clients. It has nothing to do with any slow down of those clients. It's just the timing of the campaigns related to them.

Michael Hickey: And when you look at the 117, obviously the implies that there was much broader take up of products by our existing customers. And they were also going to pay our prices when the dogs were appropriate. So we're seeing nice growth across our existing customer base.

Carsten Koerl: Good. And the capital allocation is like I said before, maybe I go a bit deeper on this. We have the client's intensity approach, meaning we kind of need to listen to our clients. What makes their lives easier? How can we leverage and how can we sell more? The first thing that every client is telling us make it easy for us to integrate you make it easy for us to integrate all your services, make it not that complex that you have 20 different integration procedures.

Carsten Koerl: Stream line is kind of things. That is what you do in a sports platform. We are investing into this. Like you see in the purchase services and in the race here. So we believe that is a very good investment for our future. So that's a piece of the capital allocation. You mentioned endeavor. I didn't do that and I can't speak about specific opportunities in that space. But I can tell you that the actively monitor also the market, not only with the major consolidation.

Carsten Koerl: We are looking into the market. How can we support our growth products? That's an example here. And that is a very interesting space specifically in the US where we see the high growth. And then we are adjusting the pricing grip step by step. We are looking to this. We think that we are on the value that's the reason why we have to share by back and be visited this step by step and in a quarterly basis.

Unknown Attendee: That's strategy here. Thanks, guys. Good luck. Thank you.

Jordan Bender: Our next question will come from the line of Jordan Bender with citizens JMP.

Carsten Koerl: Good morning, everyone. I want to discuss a broader question and maybe similar to a previous question. And that's around the regulatory and tax changes over starting to see bubble up here in the US. You've been in the industry for quite some time and you've seen these changes globally over the course of your career. So the question is, can you help us maybe frame what you've seen outside of the US to help us understand how your clients might ultimately react here in the US and how ultimately what I'm trying to get out here is how do you position your company to adapt to some of these changes and do you ever see maybe opportunities emerge as the environment starts to get tighter around you.

Carsten Koerl: Thank you. Yeah, we are investing in that space since quite a while. As you all know, our integrity services are the gold standard rules. We feel obliged that we are providing that service to protect the sport. That's the most important. If sport has not the trust that is played neutral and that everybody has the same chances, there will be no sports betting and by the way, there will be not a progress in sport without this.

Carsten Koerl: We think responsible gaming is absolutely important. So with the data and the information which we have now with the batting ticket in an unnominated way. We can build algorithms to show if there are developing gaming addiction, what to do with it, how to measure it, record that responsible gaming services. Of course, there is a, it is completed with geolocation. It's completed from a government perspective with how our taxes paid at the moment.

Carsten Koerl: This is still a batch profiling as some of you might know, we believe that from a calculation perspective, you should do this real time online that you're calculating the taxes. I think that leaves much less space for mistakes, manipulations whatsoever. All in all, we summarize this to our responsible gaming services. So we think there is a very nice opportunity and there is not one standard around the globe. We believe that the US can pave the way for this.

Carsten Koerl: We think it's by far the most attractive market at the moment from a gross potential and from a size. We see in Brazil the same size, so the regulator is looking what is the best standard, but it's always goes in the same way. How to protect the sport, how to protect the people, and then how to generate taxes for the state. So these are the three things and we see, with the positioning of Sportradar as a global player with the listing and the transparency and excellent basis that we can scale here and it's established beside our market leading integrity services more.

Craig Felenstein: Awesome, and then just on the fall of I don't think you mentioned it but from the first quarter to today your rights for the total year or projected to increase by about eight percent or so. Can you just kind of help us bridge, you know, where you were a couple of months ago to why that went up about 25 million for the year. Sure, so, thanks Jordan, so the bulk of the increase relates to the ATP deal and where the revenues are being generated, there are some nuances to the accounting related to the ATP deal, but for the most part the deals are working pretty much as we anticipated.

Craig Felenstein: The margins on the deals from either the and the cash perspective have been better than we anticipated, so even though the sports rides are a little bit higher, the return on those rights has actually been greater than we anticipated thus far in the year.

Unknown Attendee: Thank you very much.

Samuel Nielsen: Our next question will come from the line of Samuel Nielsen with JP Morgan. Morning everyone, thank you for taking my questions. Looking at the updated guidance, I guess when we go back a few quarters, I think you mentioned the initial 2024 revenue guidance was assuming roughly 60% of growth coming from business as usual and 40% of growth from a step up from a revenue perspective around the NBA and ADP partnerships. So just wondering where the incremental contributions have come from here since the initial guide.

Samuel Nielsen: Is it more across the board or are you seeing a more meaningful benefit from your contracts and kind of that initial 40% split that you laid out? So from the IG, of course, I've only been here for two months, but from the expectations that I've seen, the increase has actually been across the board that said we are doing a nice job of leveraging the sports contract more than was anticipated. So it's not just the sports, but we are seeing a nice return on the sports, but the sports also help another area helps us to drive more products. It helps us to drive more price. So all know there's the direct benefit from the sports and there's the indirect benefit.

Craig Felenstein: But if I was going to look at the increased versus original expectations, it really is broad based and not just related to one item. That that makes sense. Thank you.

Carsten Koerl: And then I was wondering if you could touch on what you're kind of seeing in the ads business a little bit into the back half of the year. We've heard many larger North American operators talking about leaning into customer acquisition given a favorable environment. Obviously had nice growth in the tube tube, but just wondering higher conversations and maybe commitments are going with the operators for future periods, maybe how long the lead time is there and how much upside is maybe not baked into the guidance for the back half of the year from the ad segment.

Carsten Koerl: We see quite a quite an interesting pick up in quarter to here. We see a lot of demands specifically in the US. Our at service here is looks like the product of choice for doing acquisition and reducing costs for our clients up thick with 28% like you will see in the script is I think a clear statement for this. And I also mentioned that we are looking to expand in that space.

Carsten Koerl: It's all about how can we get the sports and together with our partners in the sports betting space to convert them. And how can we stimulate this and we have the market leading product here we are optimistic in the second half of the year that this will further. Response Operator, we have a matter of one more question. We have time for one more question operator.

Unknown Attendee: Our last question will come from the line of Stephen Grambling with Morgan Stanley. I think one more follow up on the US market. When you think about the 25% growth going forward, even with fewer states legalizing, what are recent data points or your experience in Europe tell you about, you know, how much of that's going to be from customer growth? And what you have to be thinking about, who the incremental sports betting customer is and or how they're betting behavior may evolve versus the existing base.

Unknown Attendee: It's a broad mix. So what we see is if there are different demographic groups, that's probably the most interesting play here in the US. So it goes away from this Las Vegas type of punter into something which is the young. There's a generation which needs another entertainment product and specifically to mention here's live betting. So we see an uptick and we are now on a 35 to 40%. As you know, every percentage point which goes into life renders for us roughly 1.6 million more in revenues that comes more or less without costs.

Unknown Attendee: Yes, there are some minor cloud costs associated to this, but that's more or less pure profit. That's what we see all over the place. So it's a mix of product adaptation, education of the punters going into new customer groups and that goes quite rapidly here in the US.

Unknown Attendee: Great, thank you everyone. We want to thank everyone for joining us for our rings call. Now we'll turn it back over to the operator. This concludes today's conference call. Thank you for participating. You may now disconnect.