Sports data and analytics giant Sportradar (NASDAQ: SRAD) reported first-quarter revenue of $186.4 million, which is up 31% compared to the same period last year, beating analyst projections.
Sportradar stock was flat after the market opened Wednesday morning before dropping 5.6% at the closing bell. The afternoon downturn isn’t completely surprising, as the Dow Jones Industrial Average tumbled almost 1,200 points in its worst day since the COVID-19 pandemic started in March of 2020.
The global sports technology company saw a strong performance, as its U.S. business reached $28.5 million in revenue; that number is up 124% compared to the first quarter of 2021, which was impacted by the ongoing COVID-19 pandemic. The sports data firm—backed by Charlotte Hornets owner Michael Jordan and Monumental Sports and Entertainment CEO Ted Leonsis—had a solid recovery since then and experienced an 8.1% increase in revenue from the fourth quarter in 2021 ($172 million).
The strong jump in first quarter year-over-year revenue can largely be attributed to more activation in U.S. sports betting, now legal in some form across 30 states. The data company is banking on more live betting during games, which is more lucrative, opposed to pregame wagering, which is more common in the States than in most European nations.
“It will be like a rocket for us—propelling us forward as live betting in the U.S. increases,” Sportradar chief financial officer Alex Gersh said in a video call. “And it will continue to increase, I can promise you that.”
Sportradar, which collects and distributes data to bookmakers and media companies, projects double-digit revenue growth and expects to reel in somewhere between $738-$777 million this fiscal year, even though shares have been down more than 20% in recent weeks. During the first quarter, the Swiss-based company saw its adjusted EBITDA decrease 5% ($29.6 million) from the same time last year as it accounted for the reversal of cost-saving tactics related to the ongoing pandemic. The slight decrease is also due to associated costs of going public last September after raising $513 million through an IPO.
Adjusted free cash flow went up 100% to $13.5 million, compared to the same period last year, while cash and equivalents totaled $751 million, with total liquidity available reaching $867 million (includes undrawn facilities).
Sportradar looks to improve its long-term profitability by creating more value through optimization and more product offerings. The 21-year-old company expects to upsell both new and old customers beyond data services via platform management and audio/visual services. That also means investing, which is one of the reasons behind the bump in personnel operating expenses, which increased $14.3 million from the first quarter of 2021 up to $54.9 million.
Sportradar is wrapping up the first season of its 10-year deal with the NHL, and continues to push its scope beyond data distribution. Its other business units extend to sports betting integrity services and tech solutions, and it acquired analytics firm Synergy Sports last year.
The U.S. sports betting market continues to grow quickly, and is now legal in some form across 30 states. With most of the major professional sports leagues already tied up in long-term data-related deals, the NCAA’s loosening of sports betting rules for member schools and conferences may provide opportunities for Sportradar as it will be the official partner for Bowl Season (non-CFP bowl games).
The company could be a solid fit with schools and conferences (many of whom already have existing relationships with Synergy Sports) looking to increase fan engagement while maintaining the integrity of the landscape.
“At the end of the day, we’re going to have to commercial negotiations with the conferences and see whether we can agree or not agree,” Gersh said. “We only do deals that make sense for us.”
(This article has been updated with stock-price information in the second paragraph, as well as quotes throughout from Alex Gersh.)