Data and analytics company Sportradar reported second-quarter sales rose 23% this morning as the company raised its expectations for full-year sales. Wall Street responded by buying up shares, sending the company up more than 21% by mid-morning on the Nasdaq.
Sportradar generated nearly $186 million (177.2 million euros) in revenue in the quarter that ended June 30, driven primarily by an increase in higher-value sports betting offerings, such as managed betting services and live odds services. Those reflect greater betting volumes and upselling of customers, respectively, according to the company’s earnings release.
“Live betting is key for us, the margin is significantly higher for whatever is related to live, and we are benefiting,” Sportradar founder and CEO Carsten Koerl said during a question-and-answer period with brokerage analysts this morning.
He noted to analysts that this year’s economic uncertainty hasn’t been affecting the business. “This industry is resilient to an economic downturn. In cases of a downturn, we even see more requests for sports betting in many of the markets,” Koerl said.
The sales gains came despite losing about $5.3 million in business due to a loss of revenue from Russian customers as the company complied with sanctions. Given the strength it is seeing in the market, Sportradar raised its revenue guidance for all of 2022 to the equivalent of $730-$751 million—about $30 million higher across the range than previously indicated. That would represent growth of about 25.5% for the year.
“We estimate we handled 8 billion euros of transactions in the first half of the year alone and remain on track to handle between 17 to 20 billion of transactions for 2022,” Koerl said in prepared remarks during the call. “That would make us one of the top five bookmakers in the world, including DraftKings and FanDuel.”
Sportradar also announced the resignation of chief financial officer Alex Gersh today. After two years in Switzerland with Sportradar, Gersh said his family wants to return to the U.S., and he has taken a new, undisclosed position with a different entity. Gersh, who participated in the earnings call, will leave Sportradar at the end of September.
Income-wise, Sportradar’s results showed a net profit of nearly $24 million, largely due to foreign currency gains, which reflects in part the conversion of business done in the strengthening U.S. dollar into the Euro, in which the company reports results. Net profit was also bolstered by other equity-related accounting provisions. The business prefers to focus on adjusted earnings before interest and taxes (EBIT), which in Sportradar’s definition adds back costs for share compensation, litigation expenses and finance costs, among other items, and deducts currency gains and other financing and accounting line items. By that measure, the company says it had an adjusted EBIT margin of 16% in the period, which was down from 22% in the year-ago period. For the full year, it says its adjusted EBIT should be around 18%.
Overall, the company says every aspect of its business is seeing strong growth, in particular sports betting and ad sales in the U.S. The company’s products support about 70% of in-play net gaming revenue in the country through servicing about 98% of bookmakers. “It’s the segment where we have the strongest focus on, it’s the highest profitability for us,” Koerl said during the question-and-answer period. “It comes from our first-mover advantage—we started here in 2014.”
Sportradar shares opened higher and rallied to be up as much as 21% Tuesday morning, at $14.56 a share, a five-month high, before closing at $13.39.
(This article has been corrected to indicate Sportradar trades on the Nasdaq, and updated with the share price at the close of trading.)