Q1 2025 Sportradar Group AG Earnings Call
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Speaker Change: Good day, and thank you for standing by and welcome to the sports radar first quarter 2025 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message.
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Speaker Change: Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Jim Duffy.
Speaker Change: S P P and head of Investor Relations. Please go ahead.
Speaker Change: Thank you operator, Hello, everyone and thank you for joining us for support radar earnings call for the first quarter of 2025.
Speaker Change: Please note that the slides we will reference during this presentation can be accessed via the webcast or on our website at investors that sport radar dot com and will be posted on our website with 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 will prepared remarks, we will open up 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'll 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 risks and uncertainties that may cause actual results or trends to differ materially from our forecast.
Speaker Change: For more information please refer to the risk factors discussed in our annual report on form 20-F, and form 6K filed with the SEC along with the associated earnings release.
Speaker Change: We assume no obligation to update any forward looking statements or information, which speak as of their respective dates.
Speaker Change: Also during today's call, we will present, IRS and non <unk> financial measures and operating metrics.
Additional disclosures regarding these measures and metrics, including a reconciliation of ire for us to non <unk> measures are included in the earnings release supplemental slides and our filings with the SEC each of which is posted to our Investor Relations website.
Speaker Change: Joining me today are Carsten <unk>, our CEO and Greg <unk>, our CFO and now I'll turn the call over to Carsten.
Carsten: Good morning, and thank you for joining us today.
Carsten: It was great to see many of you in person at our Investor Day last months.
Carsten: I want to start by underscoring what we discuss.
Carsten: And what sets <unk> apart.
Carsten: We are a mission critical with either embedded.
Carsten: Fast growing industry.
Carsten: Shifting towards more personalized.
Carsten: If experiences.
Carsten: With the deepest broadest sports content, a diverse product suite global reach and powerful technology and AI, we are helping our clients and partners to revolutionize the fan experience enhance their business, while enabling us to deliver strong financial and operating momentum for ourselves.
Carsten: This was evident in our first quarter results, we had a strong start to the year.
Carsten: Building our momentum throughout 2024, as we delivered our highest ever quarterly revenue of $311 million was up 17% year over year, we saw broad based growth across our leading product portfolio and across geographies demonstrating.
Carsten: Diversity and your ability of this growth.
Carsten: That performance also flowed through to our bottom line with adjusted EBITDA, increasing by 25% as we continue to deliver increasing operating leverage.
Carsten: I discussed at our Investor Day outgrowth strategy is driven by four key pillars, the rapid growth of our global market.
Carsten: <unk> to expunge rates, including capturing more in play, but I think.
Carsten: Unlock adjacent market opportunities and driving innovation, and even removing growth barriers through our technology and AI.
Carsten: <unk> walk you through how we capitalize on these pillars that drive durable growth first expanding global sports betting market continues to provide a strong tablet with an expected CAGR of 11% through 2027.
Carsten: Markets like Europe continued to grow strongly.
Carsten: As you know is growing even faster and given that we cover three after four.
Carsten: Fourthly, the NBA, NHL, and MLB, which represent approximately 70% of the betting GTR off the top for leaks.
Carsten: We are uniquely positioned to capitalize on this growth and continue expanding our leading position.
Carsten: This quarter reflects that opportunity with our U S revenue growing 31% now representing 28% of our total company revenues.
Carsten: This market grows is enhancing as new Geo Please open up.
Carsten: For example in Latin our early foothold in Brazil is driving strong momentum with 50 clients on boarded recently was done for our managed trading services or MTS.
Carsten: Our I gaming marketing solutions, offering, which I will walk you through shortly.
Carsten: In addition, we continue to keep a close eye on the APAC, including Japan, and India, where we see a significant opportunity.
Carsten: When they legal bills.
Carsten: We also have begun exploring Thailand, and <unk>, where we see longer term opportunities.
Carsten: Second I'll take rate continues to grow as we move clients deeper into our product and content value chain, including driving more in playback.
Carsten: We have been accelerating innovation and bringing next generation products to market.
Carsten: Fueling fan engagement, some of which I will talk about in a moment.
Carsten: With only 40% of our clients.
Carsten: Or more product there is significant opportunity to continue to scale product adoption and grow our take rate.
Carsten: The foundation for us, having the broadest and deepest portfolio of the most better fund sports.
Carsten: And we have a leading position across soccer basketball and tenants.
Carsten: Some of the biggest sports clubs and federations globally.
Carsten: In soccer via Bundesliga UEFA AFC of Continental in basketball, we have NBA, WNBA and CPA and antennas, we have ATP and future with our pending acquisition of IMT arenas sport rights portfolio. This will further broaden our position across these key sports.
Carsten: Turning to soccer spot greatest breadth and coverage for painting is unparalleled encompassing more than 150000 metros each year NPL for up to 190 pre matched bedding markets and 250 in play betting market in a given match.
Carsten: We are bringing our premium products to software for the $2025 20 to 2006 season, including four sides screening Alpha <unk> as well as Virtualized life, <unk>, which provides real time animated virtualization of the play on the field.
Carsten: Moving to other key sports, we entered juicing edition of player and smartphone markets for the NBA this quarter.
Carsten: Now offer approximately one eight and the player in micro markets betting opportunities per MBA.
Carsten: We also plan to introduce mark to markets for the MLP early season, as part of our expanded and extended partnerships.
Carsten: And the MBA, our nexgen products, such as <unk> streaming and Beth and all Virtualized <unk> continued to gain momentum.
Carsten: Our Virtualized life <unk> generated 50 million viewing sessions in the first quarter, which is incremental to a pure ship of our MBA audiovisual streams in a sports program. Additionally, and Mbas leap plus or <unk> product generated a click through rates tore.
Carsten: Sports book operators of approximately three 5%.
Carsten: This far exceeds the industry average of traditional affiliate models of less than 1% demonstrating strong interest by Merck.
Carsten: Immersive experience and then came back when.
Carsten: <unk> is with us.
Carsten: Hence we are continuing to build on this success with plan to launch a two point the old version of fore sight in the second half of this year.
Carsten: And <unk> is enhanced version with pizza, new dynamic capabilities, such as shorts and serve quality momentum analyzers and player movements in positions on the court, helping to drive more immersive experiences.
Carsten: Turning to the expansion into the adjacent markets one of the key areas we are focused.
Carsten: Which is a natural extension of our business.
Carsten: Our existing book of clients already rely on marketing services to drive customer acquisition.
Carsten: We are leveraging this relationships and experience a strong test in the market of Brazil underway for Ikea.
Carsten: Our gaming strategy in Brazil is to offer a fully integrated 360 degree solution that drives growth across the entire play a lifestyle.
Carsten: So at we deliver personalized real time advertising across multiple channels to acquire as quickly and cost efficiently once acquired we'd leverage our proprietary AI technology to seamlessly transition phase between sports betting and gaming, creating a dynamic always.
Carsten: On experience.
Carsten: Locally we now have 84 iconic brands already using our marketing services to acquire and retain customers.
Carsten: We are well positioned to scale this initiative.
With a 2 billion global digital gaming marketing Sam opportunity is significant.
Carsten: We are really excited about the momentum we are seeing in our business as we drive durable growth across the key pillars. We are equally excited about the recently announced agreement to acquire <unk> venous portfolio of spotlights.
Carsten: The proposed acquisition will further enhance our growth strategy.
Carsten: Strength in our premium content, offering and basketball soccer and tenants.
Carsten: We will acquire this right through a unique structure.
Carsten: What's required to pay any financial condos to duration and as that we will receive $125 million of cash payments from in depth.
Carsten: Additionally, endeavor will make up to $100 million in cash prepayments to certain up to spotlight orders pending regulatory approval, we expect the transaction to close in quarter four of this year and to be immediately accretive to our adjusted EBITDA and cash margins.
Carsten: Tend to seamlessly integrate this content into our product offering.
Carsten: On day, one we can quickly monetize again east rights. Following the same playbook, we used where we acquired <unk> from ISG.
Carsten: Lastly, as Im sure you saw a couple of weeks ago, we completed a secondary offering which we anticipate will help increase the trading liquidity and speeds float in our stock given the strength of our balance sheet and attractive value. We've seen our shares we participated in the offer.
Carsten: Purchase savings 60 plasma universe of shares.
Carsten: Our existing 200 million share repurchase program.
Carsten: This brings our total reproach to $86 million since we've put in place the program about a year ago.
Carsten: Close to half of the total program authorization.
Carsten: With another quarter of record revenues.
Carsten: Off to a strong start to the year.
Carsten: Our unparalleled scale and unique competitive advantages underpinning our strong execution and financial performance. We continue to see strong <unk> growth ahead. This.
Carsten: This confidence is also grounded in our historical performance.
Carsten: We have shown that we are built to weather uncertainties.
Carsten: Over the years, our company has successfully navigated market share global disruptions and industry changes.
Carsten: More broadly global online sports betting GTR has proven resilient.
Carsten: Growing steadily across various economic cycles.
And as a digital first company, we are largely insulated from the impact of tariffs.
Carsten: This durability and growth is underscored by the approximately 2 billion of contractual revenues commitments, we have locked in over the next two years that we highlighted at our Investor day.
Carsten: Find puts a strong visibility on our key costs, including locked in sports rights.
Carsten: We're at an inflection point for multi year margin expansion increased cash generation.
Carsten: Thank you and now I will turn it over to Craig for a more in depth review of our financials this quarter.
Craig: Thanks, Karsten and thank you everyone for joining us. This morning, I really enjoyed meeting many of you in person at our Investor day last months and providing further clarity regarding whatsapp sport radar apart as well as our value creation framework moving forward.
Craig: We remain absolutely focused on delivering durable and consistent revenue growth.
Craig: Bridging our stable and predictable cost base. So we can deliver significant multi year margin expansion, what ultimately matters, most free cash flow generation.
Craig: Throughout 2024, we generated significant progress on all these fronts and as our first quarter results demonstrate that momentum has certainly continued into 2025.
Craig: We are further leveraging our best in class product suite across our leading global distribution network to deliver increasing value to our lead media and sports book partners.
Craig: This past quarter support radar delivered a record total company revenue of $311 million, an increase of $45 million or 17% compared with the first quarter a year ago.
Craig: This growth was driven by higher uptake across our meeting product and solutions have demonstrated by customer net retention rate of 122%.
Craig: Reflecting our ability to deepen client relationships and expand service offerings.
Craig: Our consistent ability to deliver returns significantly ahead of market growth is a testament to our high demand content and products resonate with our customers.
Craig: Looking at the individual product groupings, we delivered broad based growth across both betting technology and solutions as well as sports content technology and services.
Craig: We're generating sustained growth from products and solutions, we have been offering for decades, such as live data.
Craig: We are seeing strong demand from newer products, such as managed services and marketing services, demonstrating our ability to create new opportunities and additional value for our customers.
Craig: I think technology and solutions revenue of 250 million delivered 14% growth versus the first quarter, a year ago, primarily driven by a 13% increase in betting and gaming content, including 15% growth in our streaming embedding engagement products.
Craig: Loan growth in audio visual revenues.
Craig: <unk> also continued to perform well up 11% year over year benefiting from strong U S market growth and from additional uptake of our products.
Craig: Additionally, managed spending services continued to grow strongly up 16% year on year.
Craig: Led by the performance of management services, driven by increased turnover and higher trading margins.
Craig: Turning to our other product group sports content technology and services also delivered strong results. This past quarter with revenues of 61 million, increasing 33% year over year led by 36% growth in marketing and media services due primarily to continued growth of our AD business several sports books incur.
Craig: Spending on marketing campaigns during the first quarter.
Craig: And from additional contributions related to our expanded affiliate marketing capabilities.
Craig: Geographically our growth continues to be broad based with U S revenue growth of 31% and rest of world growth of 12% versus the first quarter a year ago.
Craig: Our U S revenues expanded to 28% of our total revenues as we capitalize on the continued rapid domestic market growth and the growing demand for our breadth of content and innovative product solutions.
Craig: The strong revenue growth across our product portfolio translated into significant adjusted EBITDA growth this past quarter with adjusted EBITDA, increasing 25% year over year to $59 million.
Craig: The steps, we have taken to align our cost base with the revenue opportunities. We are generating is enabling us to deliver significant operating leverage with adjusted EBITDA margins, expanding 120 basis points to 19% for the first quarter.
Craig: Looking at the individual cost buckets I will be speaking to adjusted operating expenses to provide a breakdown of the expenses that impact adjusted EBITDA.
Craig: We have detailed in the earnings release and the financial section of the earnings presentation. The bridge from Ifr's announce.
Craig: This past quarter sports rights expense increased 14% year on year to $104 million.
Craig: Primarily driven by the continued success of our ATP contract.
Craig: Now there'll be it lapsed, our new NBA and ATP deals from a year ago, we are starting to deliver margin expansion across our sports portfolio.
Craig: We continue to be disciplined and strategic with regards to the Reits, we acquire and with all of our major rights deals locked in long term, we have significant visibility going forward.
Craig: This visibility gives us confidence in our ability to drive further operating leverage across our sports portfolio as we develop and scale, our premium products and solutions for our global customer base.
Craig: Turning to people adjusted personnel expenses were $8 million in the quarter up 16% year on year, driven primarily by increased headcount to support growth opportunities.
Craig: Importantly, adjusted personnel expenses continue to decline as a percentage of revenue and we will continue to focus our talent and resources on the most profitable growth opportunities.
Craig: Unlocking additional operating leverage.
Craig: Adjusted purchased services were $44 million in the quarter up 24% year on year, primarily driven by higher traffic and affiliate costs related to the expansion of our marketing services business, along with increased cloud and it costs primarily to support growth initiatives.
Craig: And adjusted other operating expenses of 24 million in the quarter were up 5% year on year declining as a percentage of revenue.
Overall, we continue to see meaningful opportunity to deliver sustained operating margin expansion over the long term given the inherent scale, we have in our business and our long term cost visibility.
Craig: As we drive further revenue opportunities continue to closely manage our cost structure and realize the benefits of sports rights being amortized on a straight line basis over the life of these contracts, we expect to deliver more of every dollar of revenue to our bottom line.
Craig: Looking at the full P&L, we generated $24 million of profit in the quarter, an increase of $25 million versus the first quarter a year ago, driven by the strong operating results along with a foreign currency gain of $28 million, mostly associated with the U S. Dollar denominated sports rights compared to a $14 million currency loss in the same period a year ago.
Craig: Partially offset by higher share based compensation year on year.
Craig: Turning to the balance sheet, we continue to be in a strong liquidity position closing the quarter with $358 million in cash and cash equivalents, an increase of $10 million from the previous quarter with no debt outstanding.
Craig: We generated $32 million of free cash flow during the quarter as compared with breakeven cash flow with the same period a year ago.
Craig: The increase was driven by the strong operating cash flow as well as the timing of certain payments, which moved to Q2 of the current year.
Craig: We continue to focus on converting more of each dollar into free cash flow as evidenced by the free cash flow conversion rate of 54% in the quarter.
Craig: Given the strength of our balance sheet, our expectations around significant additional free cash flow generation moving forward and the cash we will receive in the <unk> transaction, we are well positioned to be able to invest in expanding the long term growth potential of the company, whether organically or through M&A, while also returning capital to shareholders.
Craig: To that end as Carsten mentioned following the quarter, we opportunistically participated in a secondary offering repurchasing $65 million or 3 million shares at an average price of $21 83 per share.
Craig: When combined with the previous share repurchases in total we have repurchased approximately $86 million of stock at an average price of $17 96.
Craig: And are nearly halfway through our $200 million share repurchase program.
Craig: We continue to see value in our shares given the durable growth and expectations for significant operating margin and cash flow expansion going forward.
Craig: Turning to our guidance for 2025, given the strong first quarter results and the operating momentum across our business.
Craig: Our underlying financial expectations for the year continued to expand.
Craig: Underlying revenue and EBITDA growth are anticipated to be above our original expectations. However, due to adverse foreign currency movements, primarily related to the U S dollar versus the euro for now we are meeting our expectations for the reported results for the year unchanged.
Craig: On a reported basis, we continue to anticipate revenues of at least $1 273 billion representing year over year growth of at least 15% and adjusted EBITDA of at least 281 million growth of at least 26%.
Craig: We continue to expect at least 200 basis points of adjusted EBITDA margin expansion in 2025.
Craig: Free cash flow conversion rate above 2020 forced conversion rate up 53%.
Craig: Note that this guidance does not take into account any impact from the IMG Arena acquisition, given the uncertainty around the timing of closing and we will incorporate the upside from this acquisition into our guidance once the deal closes.
Craig: However, it is important to note that we anticipate IMG sportswise portfolio will not only accelerate our revenue adjusted EBITDA and free cash flow generation, but it will be accretive to our overall adjusted EBITDA margins and cash margins.
Craig: With regards to the cadence for the remainder of 2025, we continue to anticipate that adjusted EBITDA margins will be in the high teens in the second quarter, and we will accelerate in the back half of the year with the highest margins in the third quarter.
Craig: In terms of free cash flow conversion, given the timing of sports rights payments, we anticipate the second quarter conversion rate will be below the first quarter level and will then ramp up in the back half of the year.
Craig: As a reminder, during our Investor day, you laid out three year targets, including 15% revenue CAGR through 2027, which when combined with our stable cost base will drive margins to 27% by 2027 and over 30% longer term.
Craig: We also anticipate expanding free cash flow conversion to 60% over the next few years.
Craig: The strong operating results. We are delivering today is a great foundation to achieve these long term targets as we drive sustained revenue growth, while converting more and more of the solid EBITDA and free cash flow, we are well positioned to create additional shareholder value in the months and years ahead.
Craig: Thank you for your time this morning.
Craig: And I will be happy to answer any questions you may have.
Thank you and as a reminder to ask a question at this time. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change: Ask that you please limit yourself to one question one follow up one moment for first question.
Speaker Change: First question is going to come from the line of Ryan <unk> with Craig Hallum Capital Group. Your line is open. Please go ahead.
Ryan: Hey, Kirsten Craig.
Ryan: One is that with handle growth in the industry, especially in the U S. It's been kind of a hot topic across.
Ryan: Sport radar U S growth, 31% in Q1 kind of really nice outperformance I guess, you mentioned a lot of things from a product business momentum et cetera standpoint, but curious if theres anything to specifically call out in Q1, driving that outperformance versus the others and then also if youre seeing any softness from an industry sampling.
Ryan: Your player demographic standpoint.
Ryan: Hi, Ryan.
Ryan: Yes.
Ryan: Well, we simply to execute on our strategy, which we promote at Enbridge.
Ryan: <unk> expense hopefully quite details on the Investor day, we have the biggest portfolio is 70% of the GTR from the Big four sports are in our hands and we see this as monetizing pretty well we have the right products for the market.
Ryan: That is now accumulating to the 31% gross please don't forget that the U S is now 28% of our overall revenue.
Ryan: If we look into the U S segment, roughly 50% of that is betting related strongly growing and the other part is for just both media segment, but we saw a significant uptake on the media services was 36% not only U S. Based so thats strong signal.
Ryan: Execution.
Ryan: And just for my follow up question.
Ryan: On Friday, drafting specifically called out some really positive remarks on in game betting product enhancements, we have made driving accelerating growth offer implant in Q1 and that accelerating into April and early Q2, I guess are you seeing similar acceleration in the U S or is that.
Ryan: <unk> kind of specific operator specific commentary.
Ryan: We see the general trends and the general trend is going more into the worldwide markets. The UK for example is almost 70% proportions.
Ryan: <unk> brand is now confirmed with the U S. Some books adopt quicker. Some books are adopting store. It's a question of the marketing and we are into your direct people and how do you promote it and the sample of which you mentioned shows that there is a big potential, but we see it over it to complete base of Boulder bookmakers that there.
Ryan: But other patients going into the end running market.
Speaker Change: Thanks, Carsten nice job guys. Good luck. Thank you.
Speaker Change: Thank you one moment for our next question and.
Speaker Change: And our next question is going to come from the line of Robin Farley with UBS. Your line is open. Please go ahead.
Robin Farley: Great. Thanks, I wanted to ask if your expectations for AMG I know theyre not in your official guidance and won't be.
Robin Farley: The deal closed but are they still similar to I think you had talked about maybe $30 million to $35 million.
Robin Farley: EBITDA is that still what you're thinking or has that changed as you've had a little more time to look at that.
Robin Farley: Hi, Robin So first we see it in the same way like we mentioned on the Investor Day and also during the secondary we are well on track with.
Robin Farley: With getting through the antitrust procedures. So there was no change to execution is there no change in the plans and we expect this to close in end of quarter three beginning of quarter four.
So no change from that side no signs.
Robin Farley: We have to change our guidance here like we said if we would have done this acquisition in the first of January and have it in our books.
Robin Farley: It would come out with the revenue off of in the high Twenty's to close to 30%. So that is the impact there.
Robin Farley: Deal is margin accretive from the first moment that theatres cash liquidity are cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash liquidity of cash liquidity of cash accretive cash liquidity of cash liquidity of cash liquidity of cash accretive cash liquidity of cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash equate.
Robin Farley: Cash liquidity of cash liquidity of cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash liquidity are cash accretive cash liquidity of cash liquidity of cash liquidity of cash accretive cash accretive cash accretive cash accretive cash accretive cash accretive cash liquidity of cash liquidity are cash accretive cash flow.
Michelle: Hello, Michelle.
Michelle: Yes, Sir yes, Sir.
Robin Farley: Okay.
Robin Farley: You hear is accretive cash liquidity are cash accretive cash liquidity of cash accretive cash accretive cash liquidity of cash liquidity of cash.
Speaker Change: Ladies and gentlemen, please standby will be back with your conference momentarily.
Speaker Change: Hello, operator.
Speaker Change: Hello, Sir I can hear you.
Speaker Change: Very good so it looks like the speaker went offline I am sorry, if I this social group now.
Speaker Change: Alright, so robin I'm not sure if I answered your questions would you like to restate your question again.
Speaker Change: I definitely got the impression it was going to be cash accretive.
Speaker Change: I Wonder if you.
Speaker Change: It might have cut off.
Speaker Change: If you were addressing whether it was.
Speaker Change: I think the expectation for timeline was unchanged and I just I didn't hear if you had said something about whether that sort of 30 to 35 million in EBITDA accretion if that expectation has changed and then I'm just going to ask my follow up question as well it just in case there is that.
Speaker Change: Just to get it out there.
Speaker Change: Just wanted to.
Speaker Change: I ask you about I think there was a comment that your guidance for 2025 is left unchanged, but it would've gone up if it weren't for FX and so I wonder if you could just quantify sort of what the constant currency expectation for EBITDA was just so that we can see that more clearly okay. Thank you.
Speaker Change: Alright, good Craig can you take on the guidance with Athene side.
Speaker Change: Sure Thanks, Robin and thanks, everybody for standing by our technical.
Speaker Change: Okay.
Speaker Change: So when you think about the way the year kind of play itself out and we had a very strong third quarter. As you saw it was ahead of our original expectation the underlying strength of the business as I mentioned in my comments does continue moving forward and we have seen that in the second quarter and there's no signs of that pulling down in terms of the underlying trends of the business.
Speaker Change: However, when you look at the FX rates FX rates have moved against US since we gave our guidance back.
Speaker Change: Is.
Speaker Change: Mark.
Speaker Change: This year alone.
Speaker Change: What the current FX rates are today that would create about a 10 million euro headwind.
Speaker Change: For the full year 2025 versus our original expectation.
Speaker Change: And that will flow through down to EBITDA and that kind of $3 million to $4 million headwind or so overall, so when you think about that headwind, leaving our guidance unchanged tw correct the underlying strength of the business.
Speaker Change: Great. Thank you and then I don't know if you had said that the your expectation for the EBITDA for IMTT Arena is still in that 30% to 35.
Speaker Change: Lean range on kind of an annualized basis.
Speaker Change: I went not on the numbers Robyn thought I had told you that.
Speaker Change: EBITA margin perspective.
Speaker Change: From a cash perspective to tier remains accretive to our margin targets, which we have and I mentioned that if we would allocated for this year from a revenue perspective, we would end up from a revenue grows in the high 20 is close to 70%.
Speaker Change: So all that much.
Speaker Change: Okay. Thank you thank.
Speaker Change: Thank you.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: Our next question comes from the line of Jason until Chen with <unk>. Your line is open. Please go ahead.
Speaker Change: Great. Good morning, and thanks for taking my question I'm wondering at the Investor Day, you talked a little bit about how computer vision is now being used to capture data and I think about 50% of total covered event. So I'm wondering if you can share a bit more about what the roadmap looks like for further expansion there or if theres any sort of structural issues that would prevent you from getting to closer to 100% over.
Speaker Change: Time.
Speaker Change: And in terms of those additional data points that are being collected beyond sort of informing your life pricing models. What are some other examples of the ways. We're using this time to monetize via new product development.
Speaker Change: Hi, Jason So looking to how we see the sports in the market. We believe that we can cover the full 100% ultimate highs. This computer vision and it makes not too much sense to do this imagine a sport like water polo, which our CTO mentioned as always.
Speaker Change: Not too much sense to ultimate prices, but we believe we will end up roughly at around about 90%.
Speaker Change: And thats the great assets because once we get here is depending on the sports column to 10000 more data points and this is driving player markets micro markets, it's driving Russo realizations, it's driving stimulation to entertainment.
Speaker Change: So this gives us a peak value if we have more data points, because we can create more sophisticated products and of course, we couldn't get it into our households, maybe annualize the player behavior risk tracking matches with the models to come to a better predictions that to a better outcome for our clients. So that's how we see the usage here this year.
Chip the chip the chip the chip the chip the chip to chip this year.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: Our next question is going to come from the line of David Katz with Jefferies. Your line is open. Please go ahead.
David Katz: Hi, good morning, everybody.
Speaker Change: Thanks for taking my question.
Speaker Change: So I wanted to follow up on.
Speaker Change: The discussion with Ryan earlier about in play.
Speaker Change: Carsten got your comments about it but what I wanted was just a little more clarity on two things one.
Speaker Change: <unk>.
Speaker Change: As is the gating factor.
Speaker Change: Technology or marketing how much of those and then secondarily do you think that the U S market is equivalent to Europe in that 70% number you gave that's been about for a while do you think it could be bigger than what are the puts and takes there. Thank you.
Speaker Change: Okay.
So technology and be delivered to the global market NBC here penetration rate of 70% to 80%. So it's definitely not technology. The technology is there in place and it's increasing as we speak.
Speaker Change: It is of course, the marketing and changing the mindset of the people and please don't forget the U S is a fairly new market and comes from the Las Vegas Times, where you have a different behavior.
Speaker Change: Sports betting so that is an education period, it's the stimulation and the products, which we have for this slide four site or embed our working perfectly into this direction. It will take a while we have zero indication that the U S will not subs to the international markets. So we see it growing we see.
Speaker Change: Momentum it depends at the moment on the education of the players in the marketing and activation from the bookmakers and of course and of course and of course and of course and of course and of course.
Speaker Change: Ladies and gentlemen, please standby your conference will resume momentarily.
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Speaker Change: Thanks.
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Speaker Change: Yes.
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Speaker Change: Ladies and gentlemen, thank you for standing by one moment and we will proceed with our Q&A portion.
And David Katz with Jefferies. Your line is open again, Sir. Please proceed with your questions.
David Katz: Okay. Thank you very much if you if you wouldn't mind just that second part of that question about technology being a gating factor in weather.
David Katz: I think <unk> got through most of the answer being U S, 70% to 80% it will take some time.
David Katz: And I think that's where we left off.
David Katz: Okay.
David Katz: Sorry for the technical issues here, David not at all.
David Katz: I hope the backup line small much better.
David Katz: The gating factor is not technology, it's reading market adaptation of the players it depends on the cooperation with the bookmakers their education of the players know dubbed it the trends, which we see are reflecting the international trends.
David Katz: U S market is fairly new Kevin International experience, which behalf. So it will take a while but there is no doubt for us that NBC and adaptation coding to the rates, which we see globally, which is between 70 and 80% in running.
Speaker Change: Thank you very much.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: Our next question comes from the line of Jordan Bender with citizens. Your line is open. Please go ahead.
Speaker Change: Hi, everyone. Good morning, it seems like a real focus to drive deeper into I gaming content that part of the industry really benefits from scale. So curious if M&A makes sense to quickly get that business scaled up.
Speaker Change: Yes.
Speaker Change: Yes, we are very excited about.
Speaker Change: Hi gaming like stated many time, Brazil is our test market here and we see a good adaptation, we see indeed in Brazil, now quarterly pick up about 31%, we usually don't report those numbers.
Speaker Change: But that is also driven by a pickup on the gaming services, which we have there we learn as we speak here in Nashville, as you understand our model here is that beyond uniting to acquisition the retention to sports betting service anti gaming in a 360 degree solution. So it's still very early.
Speaker Change: Early days, but we see a good pickup and you will see that be increasing our portfolio upbeat learning from this so we are doing.
Speaker Change: <unk>, perhaps getting the feedback and adopting this and getting this in our unique 360 degree approach in Brazil. Once we have learned enough you will see that be scaled this in other markets.
Speaker Change: And Jordan just to chime in here as we mentioned before when we look at M&A, whether it be in gaming or any other facet of M&A. It has to be ultimately accretive to what we're doing here is a part of our core business. We have such high growth rates in terms of both revenue EBITDA margin here moving forward that any M&A, we do moving forward has to fit within that.
Speaker Change: Parameters.
Speaker Change: Awesome. Thank you and then just on the follow up in your slides you mentioned opportunity to unlock operating leverage in 'twenty and beyond you've kind of mentioned a few times today as well so going back to the Investor Day, you gave in incremental margin guide of 40% through 2007.
Speaker Change: It steps up to 50% and beyond Youre curious to kind of what are the levers to help you see that step up in future years is that a function of just toss normalizing revenue going up or anything to kind of call out there. Thank you.
Speaker Change: Sure. The primary drivers certainly are the continued revenue growth that we've seen across the company right. Both from a market perspective, but also from an ability to cross sell and upsell and create new adjacent markets for ourselves so as the revenue.
The ramp here nicely over a multiyear period the cost basis of the company is very much manageable in terms of its level of escalation, we know exactly what our sports costs are going to escalate that given the long term nature of our sports rights here. They are mostly locked in for an average of about six years. We know what we can do from a managing a personnel and in other overhead perspective.
Youre moving forward.
Speaker Change: Given the visibility that we have on all of our costs and given the expectations from a revenue perspective, we see no reason why incremental margins can continue to expand at a nice clip here moving forward.
Speaker Change: Thank you very much.
Speaker Change: Thank you thank.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Michael Hickey with Benchmark Company. Your line is open. Please go ahead.
Michael Hickey: Hey, Carsten Craig Jim Congrats guys on strong <unk> here.
Michael Hickey: I guess stepping back into your analyst day, and you repeated it here Craig guiding 15% CAGR.
Speaker Change: Through 2007, just curious if you could sort of highlight for us Carson and Craig two or three biggest bare.
Michael Hickey: Variable that could push you above that range.
Speaker Change: Great.
Speaker Change: Yeah got it thanks, Carsten and feel free to add color when I'm done and thanks for the question Mike. So when you think about the biggest things that can ultimately take us higher than that 15% revenue CAGR. There are a number of things first and foremost we're not assuming any significant change in the market expansion here moving forward as the market expands faster because it's more uptake from existing markets.
Speaker Change: Or additional markets that were unexpected ultimately become legalized and that certainly would add on the opportunity from.
Speaker Change: Faster revenue perspective, the second thing is certainly the addition of.
Speaker Change: Additional product opportunities when you think back to our business.
Speaker Change: Yes, it wasn't even a thing several years ago.
Speaker Change: A significant portion of our business as we add new products and services into the mix and as the uptake continues to be wider across the board that can certainly add some additional revenue opportunities and then you look at some of the adjacent markets that caution as mentioned in the past like gaming or things on the marketing services side of the house that has the ability to certainly added.
Speaker Change: Additional market additional revenue opportunities moving forward. So there's a variety of ways that revenue could exceed what our what I would say baseline expectations are.
Speaker Change: Thanks.
Speaker Change: Second question from Us.
Speaker Change: Im sorry, if you sort of if you feel like you've fully covered this but your marketing and media services growth Karsten and 36% in the quarter exceptionally strong just curious all the drivers there it looks like <unk> is incremental.
Speaker Change: Very exciting and then I guess most important how durable.
Speaker Change: Do you see growth.
Speaker Change: From this category.
Speaker Change: Is it sort of.
Speaker Change: Obviously online gaming I think is fairly defensive.
Speaker Change: How would you view that marketing piece in terms of the defensive nature relative macro conditions. Thanks, guys.
Speaker Change: We are we are very pleased about takeoff for 36%.
Speaker Change: As you well understand.
Speaker Change: It is broadly over the players so it's more sports book operators coming online with the marketing campaign stands to reason why as we simple deliver better returns thats measured in CPA. So you can follow this directly and to better debt service returns to our clients.
Speaker Change: We see an uptick so we are very pleased it's broad over the players if not the only U S space and it's mainly the marketing services, which we are speaking about.
Speaker Change: So that is something which is a good trend, let's see how this is stabilizing.
Speaker Change: The first quarter has been very encouraging for us.
Speaker Change: Yes, the one other thing I would add we do have the consolidation of our new affiliate capabilities in that marketing line for the current year, however, even with that number.
Speaker Change: Taken out the growth in the marketing services line would've been well over 20%. So we are seeing nice growth across the board in our marketing services line.
Speaker Change: Thanks, Thanks, guys. Good luck.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Bernie Mcternan with Needham <unk> Company. Your line is open. Please go ahead.
Bernie Mcternan: Great. Thanks for taking the question, maybe just to follow up on marketing services, just any thoughts in terms of any additional assets or capabilities that you need.
Speaker Change: In order to scale that business, even further or is it just.
Continuing to show that strong CPA in gist.
Speaker Change: Just continued execution.
Speaker Change: Continue the execution is the clear answer, but reducing the costs is the next one which we are looking to build its defense I'd product, which we launched <unk> with our partners on NBA and MLB side to drive raw material, meaning sports fans introduced system, which is optimizing them.
Speaker Change: Such forward. This service. So that's the next step, which we execute parallel that we need to focus to continue to provide the value so meaning lower acquisition costs for our clients.
Speaker Change: Understood and then just as a follow up call.
Speaker Change: And from the Investor day, it pretty clear that you have a close relationship with the NBA and silver.
Speaker Change: Both.
Speaker Change: Flutter and draft Kings were talking about being a tough year for the MBA batting wise just wanted to get.
Speaker Change: Your view on the season and maybe outlook for next year as well. Thank you.
Speaker Change: Yes, I heard the comments I think they have been made.
Speaker Change: For basketball in general so not too much.
Speaker Change: The MBA for us the MBA is doing very well, you'll see it in our numbers.
Speaker Change: We launched now at 1800, new markets, a clear market micro market.
Speaker Change: Launched the new fore sight product there and that is fully in the spring and active.
Speaker Change: If we look to our results with the MBA.
Speaker Change: Really good.
Speaker Change: Went to projections. So we are very pleased with this.
Speaker Change: Got it thanks Krishna.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Clark Lampkin with.
Speaker Change: Your line is open. Please go ahead.
Speaker Change: Thanks for taking the questions two from me.
Speaker Change: Carsten and the prepared remarks, you mentioned I think 50 million sessions in Lifevantage tracker. It sounded like Youre also picking up some momentum with foresight is it possible to give us a feel for repeat rates underlying user base or or maybe if you're feeling generous I guess sort of product evolution on what you guys are planning for it.
Speaker Change: In terms of.
Speaker Change: Expansion of our improvement of that product over the balance of the year and then Craig really quick housekeeping question repurchase and capital allocation you talked about that being deployed.
Craig: Around the secondary as sort of opportunistic as we think about it on a go forward basis any plan or sort of a roadmap that you guys have set around whether this is going to be deployed programmatically or <unk>.
Similar fashion more opportunistically. Thank you.
Speaker Change: I'll take the first part and then Greg just putting them on the second piece for the tier ones or something.
Craig: A small milestone.
Craig: It follows the same cloud we have deep data, we use AI to assemble this and provide innovative solutions to either stimulation or direct transaction alcohol to suss out before the direct transaction NAS losses, the premium product for the trading services and full size is division already.
<unk> commercial organization showed to the stimulation for the in running markets and here you will know the math behind this so the more we can convert one percentage perspective, the more earnings in 2029 six.
Craig: 6 million per percent, which we convert from 34% to 47, that's our prediction at the moment, which I think is conservative.
Craig: And the deep data here will help us enter impressions are going into the direction to use the bigger crowd, which is success in it to stimulate them to go into this direction that is the same for to have that product here. So this is why we do it and we see a good pickup.
Speaker Change: Second part.
Speaker Change: Thanks, Carsten so certainly when you look at the strength of our business and when you look at not just the strength of our balance sheet today, but the free cash flow that we're planning on generating here moving forward not to mention the cash that we're going to hopefully get here as part of the <unk>.
Speaker Change: Close of the RMT transaction, we certainly have a lot of deployable capital here going forward, our first priority with the deployable capital is to invest it back into our business to look for ways to build additional products to look for ways to build additional services to add more value to our existing customers and attract new customers. Let me look for M&A opportunities, which we kind of have seen us do here.
Speaker Change: Look forward, we've been very judicious with regards to M&A only looking for things that are accretive to our overall business model.
Speaker Change: The absence of those two things or even at the same time as we're doing those two things that we do see an opportunity to continue to return capital to shareholders.
Speaker Change: Certainly we expect a significant opportunity going forward with regards to our share price. We think we're undervalued, where we are today given the.
Speaker Change: Growth profile of the company.
Speaker Change: I would say this years question, specifically will look to do both the opportunistic as well as do some programmatic buying here.
The secondary was a great opportunity are a great example of us being opportunistic because there is an opportunity for us to buy shares below market prices and we went ahead and did that and then when we move forward, we're going to allocate a certain percentage of our capital to go back and buy back shares programmatically and we'll see how that progresses here as things move forward.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you. Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Samuel Nielsen with J P. Morgan. Your line is open. Please go ahead.
Samuel Nielsen: Good morning, everyone. Thanks for taking my question and congrats on the quarter following up a little bit on what Ryan and David asked earlier on in play one of your customers called out a very strong lift in live betting on MLB games recently, which obviously has a direct benefit to your business, but I was wondering if you could talk about what youre seeing from from kind of where you sit from an MLP perspective.
Speaker Change: Kind of products operators are utilizing the most maybe outside of your life data.
To drive this heightened engagement. Thank you.
Speaker Change: Yeah.
Speaker Change: Well the Ami will be specifically for example, like for the MBA. So you will see the usage of the deep data and the values visualization stimulation products driving the large markets. So we expect here a strong uptick like we see it also with the NHL and with the NBA.
Speaker Change: Looking now to our dependency on the results fairly limited so the revenue share, which we have there is a mix of <unk> and <unk>. So we are not really dependent on the results and the outcomes for this to deliver our topline revenue.
To answer the question.
Speaker Change: Yes, yes. Thank you.
Speaker Change: And then in the NBA are there any plans to bring kind of like a baton watch product.
Speaker Change: Kind of MBA rates portfolio at some point here moving forward.
Speaker Change: Yes, well be well on track so it's integrated.
Speaker Change: With the MBA.
Speaker Change: Is fully running there we are spending to ticket proposed and you will then draft Kings and of course, we intent to do this or more of our corporation.
Speaker Change: Thank you very much.
Speaker Change: Operator, we have time for one more question all right one moment.
Speaker Change: Our last question is going to come from the line of Steve <unk> with Deutsche Bank. Your line is open. Please go ahead.
Speaker Change: Hey, good morning, everyone. Just following up on the live betting one more time are you seeing any difference in the migration between sports in the U S for pre match July from our Betters perspective is soccer higher relative to the other sports in the U S and can you help us on how to think about the difference in hold.
Speaker Change: Rates between pre match in live betting.
Speaker Change: We see in general the fast moving sports have higher adaptation rates for us and for our clients, So basketball and hockey.
Speaker Change: Is something where we see this trend, but we see also that baseball as a mechanic, which looks quite volatile spending so it's a broad mix or.
Speaker Change: Football, we cant say too much because it's not the whole.
Speaker Change: Property, but the learning from the clients.
Speaker Change: It's also a good sport because after 30 seconds break which had been there from a live betting perspective.
Speaker Change: Looking now to the U S.
Speaker Change: Rose.
Speaker Change: We see that it meets in agitation com.
Speaker Change: That is a delay of 345 years to the international markets, but we see a strong pick up here and the strong momentum that remember we started six years ago on zero. So we are now on a 34, 35%. So we see a strong pickup there there is no indication that the U S.
Speaker Change: We will not follow the international markets. The opposite is the case, what we see in the U S is really something about the deep data and about the variety of two player markets into micro markets. There is a strong demand for this that is a difference to what we see internationally.
Speaker Change: Okay. Thank you and then can you just help us on how to think about the difference in hold rates you see between pre match in live betting.
Speaker Change: Well.
Speaker Change: Depending on the policies, which are deciding on this.
Speaker Change: If you have holidays in there of course, the profitability is significantly higher live betting in part as a challenge. Therefore, we developed a user interfaces to make this interactive and make it very quick user chop AI for the betting tickets.
Speaker Change: Very helpful for those things, but the profitability from a live betting perspective.
Speaker Change: Is lower than on the pre match when you are taking deposits into account, but there are various technologies and new products, which help to bridge that gap.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: Great. Thank you everyone. We want to thank you for joining us for our earnings call I apologize for the technical difficulties and thanks for your patience I'll turn it back over to the operator.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect everyone have a great guy.
Speaker Change: Yes.
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