Sports data and analytics giant Sportradar’s (Nasdaq: SRAD) revenue jumped 30% in the third quarter as business in the emerging U.S. sports betting market surged 119%. Overall, the company posted sales of $155 million (€136.8 million) in the three months ending Sept. 30, beating the consensus estimates of equity analysts.
“We outperformed the quarter, clearly,” CEO Carsten Koerl said on a video call. “We solidly worked on what we said: growth, getting raw material and expanding our services. Now we just have to simply follow through and execute on what we promised. We are very focused on generating value and profits for our shareholders.”
Outside of the U.S. Sportradar posted double-digit growth in its two major business lines, with betting up 24% as client demand for pricier offerings like managed betting and live odds grew. Sportradar’s audio-visual demand outside the U.S. was up 13%, however, hampered by the negative effect of a glut of games played in the third quarter 2020 due to the pandemic. Adjusting for schedule shift, sales were up about 30% compared to a normal quarter, the company said.
Business in the U.S. was driven by the expansion of sports wagering, as more jurisdictions for legalized betting and more demand from companies in the betting space pushed sales up to the equivalent of $22 million. Market concerns that Sportradar sales would suffer due to some large betting operators caught out by unprofitable wagers weren’t realized. Koerl told Wall Street analysts on a call this morning that U.S. business actually improved among betting clients and little impact was seen from client losses globally. Revenue was also helped by the acquisition of Synergy Sports, a data and video analytics business with deals with the NBA, MLB and top-tier college basketball.
In the quarter, Sportradar had a net loss equivalent to $10.2 million, narrowing from nearly $17 million in 2020. Sportradar’s preferred metric, adjusted earnings before interest, taxes, depreciation and amortization (ebitda), grew 21% in the period to $23.6 million (€20.9 million), a margin of 15%. Fast growing technology-focused businesses like Sportradar are frequently judged by ebitda as a harbinger of eventual profitability. Sportradar says its adjusted metric better represents the continuing business by setting one-time costs aside. Sportradar’s adjusted ebitda adds depreciation back in, removes amortization for all assets but sports rights, and also adds back in various charges such as share-based compensation and financing costs that normally are deducted in standardized accounting.
For the full year, the company said 2021 revenue should come in around €554 million ($626 million), which would be a 37% increase from 2020 and a slight rise from what analysts have been expecting.
The combination of the positive results and news of Sportradar securing worldwide exclusive data rights to the NBA boosted shares. Sportradar shares rallied in trading on the Nasdaq today as much as 13% to $24.54 before easing slightly midday and closing at $21.83.
Koerl remained optimistic about the company’s long-term prospects amid the relatively flat intra-day action. “It’s a marathon, not a sprint. And we consistently need to hit our numbers to get the trust of the investment community,” he said in a follow-up interview. “Then I’m not worried about the stock development.”
(This story has updated Sportradar’s closing stock price in the penultimate paragraph and added a quote from Koerl in the last paragraph.)
