Sportradar Group AG (SRAD) Q4 2021 Earnings Report, Transcript and Summary

00:06 Good morning and thank you for standing by. Welcome to the Sportradar Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. 00:29 I would now like to hand the conference over to your speaker today Rima Hyder, Senior Vice President of Investor Relations. Please go ahead.

00:37 Thank you, Catherine and good morning, everyone, and thank you for joining us for Sportradar’s earnings call for the fourth quarter and full-year of 2021. Before we begin, I would like to point out that the slides we will reference during this presentation can be accessed via the webcast on our website at investors.sportradar.com. 01:01 The slides will be posted on our website at the conclusion of this call. A replay of today’s call will be available via phone and on our website. After our prepared remarks, we will open the call to questions from investors. To be fair to everyone, please limit yourself to one question, plus one follow-up. 01:21 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 involves risks and uncertainties that may cause actual results or trends to defer materially from our forecast. 01:42 For more information, please refer to the risk factors discussed in our annual report on Form 20-F and the Form 6-K furnished with the SEC today along with the associated earnings release. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates. 02:04 Also during today’s call, we will present both IFRS and non-IFRS financial measures. Additional disclosures regarding these non-IFRS measures, including the reconciliation of IFRS to non-IFRS 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. 02:31 Joining me today are Carsten Koerl, Chief Executive Officer; and Alex Gersh, Chief Financial Officer. And now, I’d like to turn the discussion over to Carsten.

02:42 Thank you. Thank you, Rima. Thank you all for joining the call today. Before I talk about the results, let me begin by sharing our thoughts, remind those who are impacted by the heart breaking events in Ukraine. From Day 1, this conflict is our top priority and we have helped to ensure safety of our employees and the families in the region. 03:05 We have created an emergency relief fund to allow the company to provide financial assistance to colleagues and their families which are facing a hard time because of the conflict. We have donated 1 million in total. Half of that from the company, half of that from me, going to the Red Cross UNICEF and our emergency relief fund. 03:28 We are complying with all sanctions and we have decided to suspend any new investments in Russia, including signing new customers. We are and will continue to monitor the ongoing situation. Having said this, let me look into the year 2021. 03:48 Turning into this financials and looking on the slides, I have to say the past year was historic for us. It is an understatement to say historic, it was truly a landmark year in which we achieved many, many milestones. Our full-year revenues and adjusted EBITDA exceeded our guidance for the year and we saw robust growth across all our business segments. 04:15 We surpassed first time the €500 million mark for the annual revenues, first time in the company’s history. As we continue to close multi-year deals with some of the world’s largest leagues and federations. There are many, many other achievements that we celebrated this past year. 04:35 First, we acquired InteractSport and Synergy Sports, which enabled Sportradar to meet its customer support technology needs. In less than nine months, both acquisitions have been fully integrated enabling and creating a new vertical. This is called Sports Solutions and it leverages the power of automation through cutting edge use of computer vision and camera technologies to help sport organizations performing better on the field and increasing profitability off the field. 05:08 With Synergy and InteractSport, Sportradar now has a strong presence in the world of coaching and analytics, terminating both the professional and the [college fears] [ph] in basketball, baseball, ice hockey, as well as cricket. Second, we signed major deals with sport leagues and federations globally. 05:30 With standard deals with the NBA, NHL, and ITF we signed a new deal with UEFA and ICC, which is The International Cricket Council. This is continuing to undermine our strong position in basketball, soccer, tennis, and cricket, which owe their large batting handles. 05:51 Soccer is the most [indiscernible] in the world with a handle of €850 billion each year. For those who might be not familiar with this terminology, handle is defined as the amount of money in wages accepted. 06:07 Third, we announced a multi-year extension of the ITF, The International Tennis Federation to serve as the official data provider partner. Second only to soccer, Tennis is the second most [veteran] [ph] sport in the world with a handle of €140 billion. We are proud that we are continuing our 10 years close partnership with the ITF. 06:31 These are just a few samples how we are disrupting the market and implying our data driven approach to the global sports universe. In the U.S., we announced a 10-years deal extension with NHL and 8 years extension with the NBA, which is basically also a 10-years deal, since we have 2 years left on the present agreement. 06:53 Both [leagues] [ph] turn to us not only as their exclusive data provider, but also as their partner to develop technologies that will help them engage [sports sense one-at-one] [ph] in the future. Transforming and personalizing the experience of the legions of fans in the U.S. and globally. Both leagues have enormous fanbases. 07:16 We partner with NBA and NHL on existing future solutions and three business verticals. It's betting, it's the sport entertainment, and the Sports Solutions. This deal extensions and expansions are significant validators of the quality of our partnership and their confidence in Sportradar. 07:38 Fourth, we made our UFDS match fixing monitor service free to leagues across the world. In 2021, our UFDS detected more than 900 suspicious matches across the globe. We are running integrity as a breakeven business and providing UFDS for free because of our strong conviction that the fair playing field is essential foundation for the sport ecosystem and for sports betting. This shows our strong commitment to sports integrity as we believe that sports betting needs clear rules and monitoring and our integrity service with UFDS is providing this. 08:21 Before I go further, we may have some new listeners on the call. So, I wanted to take a moment to give you a brief overview who we are and our value proposition in the sport ecosystem. Sportradar offers one of the most robust and fully integrated sports data and technology platforms. We serve as a critical data infrastructure and content layer to sports betting and media industries. 08:48 We have well-established profitable business in Europe and other parts of the world. For over 20 years, we have demonstrated operational and execution excellence in creating one of the largest sports technology businesses in the world. As we expand our business in the U. S., a critical growth opportunity for us, we provide sports data in many cases as a sole provider to 70% of the total in-play market in the United States, who in turn manages nearly every legal sports bet placed in the U.S. by sport betters. 09:25 Our data and technology is used by betting operators, media companies and leagues and teams. We have four main pillars of our business. First, we fuel the sports betting industry, providing data insights enabling operators to do everything from the [indiscernible] to attracting customers and manage the platform. 09:45 Worldwide our betting customers number more than 900 and we cover close to 900,000 live events in more than 90 sports. Second, our data feeds are the source for live scores and statistics to all the top traditional and digital media leaders. Third, we serve teams and leagues with real time analytics and video breakdowns to help improving coaching and performance. 10:11 And finally, we monitor the data to detect critical patterns to show everything from potential match fixing to problem gambling. 10:22 Let us have a look on the U.S. and to close. We believe we have massive secular tailwinds propelling our growth, particularly in the U.S. where the spot betting market is expected to grow significantly as media, sports, and betting converge. Betting operators and sport teams are becoming media companies who are becoming betting operators. 10:46 We also expect to see a shift in the U.S. market from a pre-match betting to a more in-game betting, allowing us to upsell and cross-sell more of our live data products. A shift we have already experienced in established markets and a win for us in the European markets. 11:07 We believe we can achieve profitable and faster growth in the U.S. as more state legalize sports betting and launch mobile platforms. Our ability to achieve this growth is rooted in our deep relationship and understanding of this market and also because the U.S. market has some very interesting differences and benefits to our product strength. 11:30 For example, the market here is clear focused, driven by the legacy of fantasy sports and fans are very sophisticated and want data as much as possible. We predict that sports betting will increasingly be part of entertainment activities and placing bet will be as much as a part of the social fabric as watching came by itself. Our vast amount of data and the ability to provide real term position us very well in that field. 12:03 Now, I'm going to the growth drivers and the products. Our success in 2021 has been a result of strong growth in our core and new businesses. It has enabled us to beat our expectations in 2021 and we are excited about the good momentum going forward in 2022. We saw very strong growth in our international markets coming from our MTS products, that's the managed trading services, which grew almost 80% for the fiscal of 2021 versus 2020 of course. And we saw a record turnover growth of 81% in this comparison. 12:48 Our MTS offering is sophisticated, turnkey trading, risk management, Live Odds, and liability management solutions that helps betting operators posting the margins and profits while increasing their efficiency in the risk management. 13:05 Our Live Odds product also had a great year. We increased the number of matches covered by 22%, resulting in a year-over-year growth by almost 30%. We are very pleased to see the growth in momentum in our audio visual and ads business. AV is the visual content, we product to interests sport fans, [indiscernible] sporting event and give them a betting opportunity. 13:34 As is our technology that helps betting operators find people who want to bet, both of those technologies are critical in helping betting operators, finding fans more efficiently. As you can see on this slide, both AV and ads saw tremendous growth in their respective key metrics. In the U. S. we are incredibly pleased by the strong uptake of AV and ads. 14:02 Our U.S. AV business nearly doubled in 2021 over prior year, and the ads business grew tremendously year-over-year from just a few hundred thousand to over $6 million, and we see very significant potential in momentum ahead. Given the high acquisition costs facing the betting operators in the U.S., it’s safe to say that these products will continue to be on high demand and further leveraging them is a priority for us in this year. 14:36 Looking now to the exciting technology and the data collection of the future. Fully leveraging the power of the integrated sports solutions vertical is another massive priority for us. We want to serve our largest partners like NBA, NHL, and MLB holistically, which means continuing to involve our coaching an analytic platform for players and team performance through our synergy suite of products. 15:04 We plan to continue growing our team and computer vision experts both organically and through M&A likely through the additional synergy of the computer vision experts they have. With over 20 years’ experience in sport, we know that our market – we know what our market needs and we are covering that where we need to provide superfast and superdeep data and contextual data. This is the key ingredients to unlock future commercial benefit whether that be from [partner] [ph] looking for competitive advantage, the media companies wanting to show in-depth analysis as to the reason a team won, and for the sports fan himself, who want to understand both to what they have seen, but more important why? 15:58 We believe computer vision is the enabling technology for this future benefits. And our vision is to use technology to understand sport on a much more detailed player related level. Computer vision enabled multiple data sets to be ingested at the same time. This allows for the data to be contextualized whether it be sharing with a team pressure index for generation set fans, prompting them to come back and watch the match to drive the future of that engagement and involvement with the creation of the metaverse. 16:35 Bringing together the offline and online world’s to create a virtual reality space in which fans can interact with each other. To unlock the future of fan engagement, we have identified strategic sports partnering with top leagues. It is there for us, eight sports such as soccer, tennis, basketball, and others, driving the highest return for us, and we can use our already scalable solution, which we created for 90 plus sports, which we cover globally to create an even more fan focused solution. 17:12 We already have a strong in-house team as many are outstanding AI experts and data scientists, and we will be looking to grow the number through focused recruitment, as well as M&A. 17:25 Compute vision will be complemented by new innovative ways of automating data collection. With the acquisition of Synergy Sports and Interact, we have the best-in-class camera technology that we have used throughout basketball and cricket globally. 17:41 Going forward, we look to expand these capabilities both organically and inorganically. With computer vision, we can harvest more data points versus with a live human being. And in any business the more data you have, the better you can understand your market, continuing to gather more data, harness the insights and apply them throughout all our businesses is the foundation pillar of our 2022 strategy. 18:12 Closing remarks before I handing over to my colleague Alex our CFO. We provided annual guidance for today's call, which reflects the momentum of the growth in our high value products and our expected results from the first quarter of 2022. We are also evaluating any potential impact from the Russian Ukraine conflict. 18:39 Today in 2022, we have not had a meaningful impact on our financials from this conflict. It is important for you to understand that any potential financial impact is limited to the affected regions at this time. We do not believe it will have a downstream impact on other parts of our business. We have a resilient business model and years of experience in continuing to innovate and pivot our products and services when faced with an adverse situation. 19:15 In fact, even in this current Russia and Ukraine conflict, we were able to move our content collection from the Ukraine to other countries, ensuring that we have as little disruption as possible in our operation. 19:32 Our 2022 revenue guidance range from €665 million to €700 million. It's based on our global scale and growth and we believe we can absorb potential revenue losses from our business in Russia and Ukraine within that range. 19:52 On the adjusted EBITDA guidance, we have provided a guidance range from 123 million to 133 million. Based on what we know as of today, including our current mitigation plans, we believe in the very worst case, the adjusted EBITDA for 2022 could be 110 million. 20:18 As I said, earlier, we continue to monitor the conflict and its related impact to our business and we extend as good as we can and we will take necessary actions to preserve the growth in margins. 20:34 Before I turn to Alex, I want to remind investors that our investment thesis is fully intact. We are the leading B2B provider of technology solutions to sports betting and to sports betting market. We have a proven record of consistent long-term growth and strong cash generation, as well as a very strong customer retention. 20:58 We are poised to continue to take market share in a global growing market. We have the data and proprietary technology to provide our clients with best-in-class AI and machine learning powered by our solutions. And finally, we have ample liquidity on our balance sheet. We are disciplined in how we deploy our capital and we are using it for maximizing our growth potential. 21:26 With that, I'll turn over to Alex to discuss the numbers. Alex, the stage is yours.

21:34 Thanks, Carsten. And good morning, everyone. Good to speak to you for the second time since Sportradar became a public company. As Carsten already stated, we had a very strong fourth quarter and full-year of 2021. I'm very pleased with the results and with what the team has been able to achieve. 21:55 For the full-year, we reported a 39% increase in revenue to €561 million, and a 33% increase in adjusted EBITDA to 102 million. Both metrics exceeded the top-end of our guidance ranges that we provided to you last quarter. We saw growth across all our segments, and we believe we are positioned well in 2022 to continue this growth. 22:21 Just as important, we saw adjusted EBITDA improvement in all our major segments. In addition, our dollar based net revenue retention rate of 125% has improved from 113% last year as we continue to cross sell to our customers across the globe. 22:39 Let me now take you through our quarterly results in detail and then I'll provide you with a full-year guidance some of which Carsten has already given you. Revenue in the fourth quarter 2021 increased 41% to €152 million versus the fourth quarter of [2022] [ph]. This was driven by strong growth across all business segments with the highest growth coming from the U.S. 23:07 Now, looking at the segment revenue in detail. Our rest of the world betting revenue, our largest segment grew 30% in the quarter to €82 million. This growth was primarily driven by an uptick in our higher value add offerings, including managed betting services, which includes managed trading services that Carsten already talked about and Live Odds Services. 23:30 In managed betting services, we saw record turnover largely with our existing betting operator customers, resulting in growth of 74% for the quarter revenue growth. Within Live Odds higher volume of matches covered resulted in a growth of 26% from a revenue perspective. Rest of the world audio visual segment grew 52% to 36 million versus prior quarter. 23:55 As COVID dissipated, we saw increased volume of streaming content of across all major sports, which helped the segment grow. In particular, we saw increase in volume from the NHL and NBA and additional content we had introduced during the COVID pandemic. 24:12 Turning to the United States, our highest growth segment, we grew 92% in the quarter to 23.2 million. This was driven by growth in our betting service as underlying markets continue to grow evidenced by gambling becoming legalized in more states, as well as the growth in turnover. 24:31 We also experienced strong adoption of our ads products, growth in sales of two U.S. media companies and a positive impact from the acquisition of Synergy Sports, which has strengthened our audio visual streaming capabilities. 24:47 Turning to costs. As you probably read in our earnings release this morning, personnel costs for the quarter increased 13 million to 47 million, in-line with our expectation. The major driver for this increase is approximately 600 new employees, mainly in product and technology that we have added from acquisition and organic hiring as we continue to invest in growing our business. 25:12 Our other operating expenses were 27 million, an increase of 13 million over prior year. This increase was primarily driven by reversal of temporary 2020 [COVID-related savings] [ph]. For example, marketing and travel, which we didn't spend in 2020, we’re back to normal. Cost of implementation of new accounting system and additional legal and M&A costs. 25:35 Total sports rights costs increased by 9 million to 39 million in the fourth quarter of 2021. Our sporting events returned to normal schedule with COVID restriction easing. A few words on EBITDA, adjusted EBITDA. Moving down the income statement to adjusted EBITDA, we reported adjusted EBITDA of 21 million for the fourth quarter. This is a 14% increase over the fourth quarter of 2020, primarily driven by higher revenue. 26:03 Adjusted EBITDA margin decreased to 14% versus 17%. However, for the full-year adjusted EBITDA margin, excluding IPO costs was 20%. Two key factors to consider here is that one, we are comparing a private company in 2020 with a publicly listed company in 2021; and two, that we have a reversal of temporary 2020 COVID-related cost savings in 2021. 26:33 For our segment adjusted EBITDA, rest of the world betting adjusted EBITDA increased 58% to 46 million. Rest of the world betting adjusted EBITDA margin improved to 56% versus 46% in the prior year, driven by growth in our higher margin products such as Managed Betting Services and Live Odds. 26:54 For the full-year, EBITDA margin improved from 51% to 57%. Rest of the world audio visual adjusted EBITDA increased 77% to 10 million and its adjusted EBITDA margin improved to 28% versus 24% in prior year. For the full-year EBITDA margin improved from 25% to 28%. The U.S. adjusted EBITDA decreased to a negative 8 million. United States adjusted EBITDA margin also decreased to negative 33% in the fourth quarter of 2021. 27:31 The degradation in the margin in the quarter is primarily due to our investment in content and technology and particularly within leagues and teams solution focused business. However, for the full-year, EBITDA margin has improved from negative 48% to negative 32%. It is important to note that for the full-year, all three major segments showed improvement in the adjusted EBITDA margin. 27:59 In addition, if you look our unallocated corporate overhead increased significantly during the year. However, that increase includes significant IPO costs, costs associated with being a public company, a reversal of temporary COVID savings implemented in 2020, as well as acquisition costs. 28:24 We believe that going forward, these unallocated corporate overhead should not increase and in fact should be reducing in 2022 and beyond. This will allow us to achieve greater operating leverage and strong cash flow generation going forward. 28:43 A few words on our liquidity. As Carsten said, our liquidity remained incredibly strong at the end of December 31, 2021. Cash and cash equivalents plus our undrawn credit facility was €853 million. During the fourth quarter of 2021, adjusted free cash flow decreased to negative 22 million. This was primarily due to additional interest from our senior secured term loan facility that we obtained in November of 2020, prepayment of certain sports league, as well as catch up and delayed sports league payments from 2020, payments of one-off IPO cost, which, by the way accounted for about €10 million, as well as higher costs associated with being a public company, which I talked about before. 29:35 A few words on – finally a few words on the guidance and again, Carsten already mentioned, talked about it a little bit, just expand a little bit on it. For the full-year 2022, we currently expect revenue to be in the range of, as Carsten said, €665 million to €700 million, reflecting annual growth rate of between 18% to 25%. 29:58 For adjusted EBITDA, we are guiding to a range of 123 million to 133 million, representing a year-on-year increase of between 21% to 30%. The adjusted EBITDA margin for 2022 is expected to be between 18.5% and 19%. As Carsten already mentioned, we believe our revenue guidance range can withstand the impact of potential revenue versus as a result of Russia and Ukraine conflict, as we do not rely on any one region for our annual growth. 30:30 On the adjusted EBITDA guidance, even our worst case scenario implies an 8% growth over prior year. I wanted to reiterate what Carsten already said. To date, we have not had a meaningful adverse impact on our business. However, we continue to monitor and evaluate any impact we could have in the rest of the year. 30:54 I also want to note that we are almost at the end of our first quarter of 2022, which is coming in line with our expectation. And the expected results of this first quarter are already reflected in our 2022 guidance. 31:08 Thank you, and I'll turn it back to Rima.

31:15 Catherine, we can open the line for Q&A now. Thank you.

31:20 Thank you. [Operator Instructions] Our first question comes from Robin Farley with UBS. Your line is open.

31:33 Great. Just a couple of questions related to the guidance. One is, just if you could give us some color around, does the guidance rely on anything in terms of acquisitions or completely without making any additional acquisitions? And then also if I might have misheard a comment, it sounded like during, there was a comment about €110 million as kind of a worst case scenario. And I just didn't catch what that was in relation to obviously the bottom-end of the EBITDA guidance range. Is the 123 million in terms of – what was the 110? Thanks.

32:13 Carsten here, nice to hear you again, Robin. No, it doesn't include any acquisitions or potential acquisitions so the numbers and the guidance which we give is without this. On the 110 or the 8%, which Alex said, Alex said, it's an 8% increase in a worse scenario, and I said it's 110 million EBITDA in a worst case scenario. 32:40 We don't see that we are in a worst case scenario like we stated. We see that we have no material impact as of now. And we are satisfied with our first quarter is coming in with our expectations. But we should assume what might be a worst case scenario, might be that sanctions are applying for many businesses including our business. We are going to have to stop it immediately, and that might be such a worst case impact. 33:11 Hope, that explains the situation. We are confident with the range of revenues, which we gave. We think we can absorb any region with a global business, which we have, probably we will not be able to absorb to U.S. as our strongest growing region. But for the rest, we can absorb this and therefore, we stick with the revenue range, which we have and they are including a negative impact for Russia and Ukraine. 33:41 Does that explain your question?

33:43 So, just to make really clear, is this €13 million difference between the bottom end of your range, the 123 and what you're saying is a worst case of 110, is that 13 million what your kind of annual EBITDA from the Russia and Ukraine region is and you're saying if that went from 13 million to zero or just trying to understand what the [Multiple Speakers]

33:43 Okay. No, it's not. No, it's not The Russian impact is in two buckets. One is to content. And by the way, that's also Ukrainian impact. And the second one is business, mainly with book makers. Let us have a look to the content. In the Ukraine, we produce table tennis matches on scale and we produced e-sport matches on scale. 34:30 We mitigated this meanwhile already because unfortunately, the country is not able to deliver this content anymore. And the mitigation was done into countries like the Czech Republic or Brazil or Hungaria. I can go closer on this if you are interested, but that is mitigated from a content impact. 34:50 Of course, we had a couple of weeks where we lost some revenues where we need to organize in meanwhile alternative content scenarios. 35:00 Looking now to the book makers, there are book makers in both countries, Ukraine and Russia. The book makers in Ukraine have stopped their business and the book makers in Russia are reducing the scope. So, all this together leads us into and hope, I’m now crystal clear that our revenues our 665 million to 700 million even in a worst impact if Russia stops to work for us. 35:30 Looking now to the EBITDA, we think that we can mitigate this, but in a maximum exposure scenario that might cost us a 13 million. Like you know, we are depending in our business model on leveraging the data and the services, which we have, so we cannot fully absorb it and keep the range like we have it. But we are absolutely sure with the current knowledge and that the current situation, which we see that is the 110 million in the worst case scenario with a full impact which we don't see at the moment. Does that answer the question?

36:08 Thank you.

36:11 Thank you. Well our next question comes from Bernie McTernan with Needham & Company. Your line is open.

36:18 Great. Thanks for taking the questions. Managed Betting Services had record turnover in 4Q. I was just wondering how much of that growth or a record turnover was driven by industry growth or signing up new clients for services, any changes in services that clients are taking?

36:38 Yes. The good thing with our Managed Betting Services is that we invented this services. So, we are the only company, which is providing this on scale. And so what you see here as a growth is the pure growth from, I think a good idea which we have six years ago which we scale now.

37:00 Got it. And then the dollar base net retention revenue increased to 125% for the year that was up year-over-year. Is the driver of that – does he go along with this higher MBS or is it more data and just trying to get a sense of what's implied within the 2022 guidance?

37:22 Alex, can you take that one?

37:25 Yeah. It's all of that. It's really just moving up the value services whether it's – and obviously Managed Betting Services is a big growth, Live Odds is big growth, audio visual is big grow, ads is big growth. All of these things are part of that 125% improvement.

37:48 Understood. Thanks for taking the questions.

37:53 Thank you. Our next question comes from David Karnovsky with JP Morgan. Your line is open.

37:59 Hi, thank you. Carsten you highlighted strong uptake for your ads product. I was hoping you could expand a bit on this, how much is coming from new customers versus greater spend allocations with existing ones? And then, we did recently see some U.S. operators discuss a need for more rational spend in customer acquisition, just wanted to get your thoughts on how a shift like that potentially impacts long-term demand for your ads business?

38:27 Yes, my reply for all operators will be, we should look that we have less spending and that this goes more in line with what we see international for our customer acquisition. And I think that is something which is at the moment discussed heavily amongst U.S. book makers for a good reason. So, we will see that you are looking for achieving more efficiency. 38:26 Our ads product is perfect for this. So, programmatic advertising is really targeting. It is reducing the costs. Therefore, we are super bullish on the expansion here because there is a strong driver and the companies need to look for more efficiency in the acquisition. 39:08 That's one side of the story. The other side for us is, we have one big client for this and the sports betting space. And that should give us significantly more leverage that we are posting our midsize and small clients and getting deeper into their ads business and helping them to be more efficient to gain new clients. So, we see a good run rate for us because there is a lot of space left with operators where we can upsell the ad service.

39:43 I think if I can just add Carsten. It's quite interesting because of course, Carsten had mentioned that we are now in the U.S. We reached almost over €6 million in revenue, but in the rest of the world, our ads business is growing at 70% as well for the full-year, right? So, you see that the adoption is broad, there are some very large customers, but it's broad, and it's going on in the U.S. and it's going on in the rest of the world as well.

40:16 Okay. And Carsten, I just want to follow-up on some of your U.S. comments about operators adding more media and then media companies moving further into betting, how do you see this playing out over the next few years? Do you think you could see real M&A in this space and the creation of vertical integrated offerings or do you see this is more, kind of incremental change and just executed through continued partnerships? Thanks.

40:39 If I'm looking into the future, it's all about fan engagement. That's one driver. So, deep understanding of player related data. And how do you get it into a audio visual experience, which then creates a betting experience. So, those kind of things they are they are getting together in the future for very sure. And that enables new players in the market. So, I think that's what we will see. 41:06 The second one, the big driver is life. So, we see already a strong pickup on live matches and that is for us as a company, of course, perfect because 80% of our revenues are around life and life products. Probabilities to mention here, managed trading services. So, on this other things, where we see the two key drivers, but to answer your question, yes, I think we will see a new format of interactive betting on player related data and combining this with audio visual experience?

41:41 Thank you.

41:44 Thank you. Our next question comes from Ryan Sigdahl with Craig-Hallum. Your line is open.

41:51 Good morning, guys. Thanks for taking our questions. Curious, to hold aka win rates for your sports book customers, was it normally low in Q4, been talked a lot about, can you remind us how impactful that is to results both in the quarter and then going forward?

42:10 We are running a global business. So, looking from a global perspective, there is no impact on this. There are [good and bad months] [ph] for operators, which are focused on soccer. Soccer is around about 50% from the global market share. Tennis might make the next 20% and then be coming toward the ones like Basketball, Ice Hockey or American Football. 42:34 We are the global business. We enjoy that leverage that we have clients in many different regions of the world. That's on many different sports. So, we're not depending on, is there a specific sport, which has at the moment unfavorable results for book makers, it’s leveraging out more or less over the season.

42:58 That’s helpful.

42:58 So, there is no seasonality from the profitability of the bookmakers.

43:03 Yes. Good. One of the big bear thesis points is and I’m thinking correct, especially relative to what you've reported past and present, but is that sports data providers aren't scalable, it's profitless prosperity, just curious if you want to comment on that as your results today guidance again clearly disprove that point, but have your views on operating leverage and profitability changed since you came public late last year, especially given some of the accelerated spend from namely one of your competitors?

43:36 I'm very glad Ryan that you asked this question. I think, we proved that the business can grow on scale and can be very profitable. And we intend to prove this in the next couple of years, and we will prove this. So, it's, we understand it's up to us to show to the market that Sportradar understands how to operate in this business and how to hit or over exceed the predictions and my bold statement is, we beat 2021 on any numbers in quarter four. So, we show that we understand how to operate on scale and how to be profitable, and we will continue to do this. 44:19 That's the easy statement on this. If we are looking going forward. We have to add always new markets and new regions. That will come with an investment. You see how we are doing this in the U.S. and now yes, we have overhead costs there and we have license costs there, but Alex explained you, that we reduced already and that we are coming closer to the state of profitability. 44:46 We might see this in India, we might see this in Brazil, but in a very general way we can control our business and we have stable profit margins and the long-term prediction is, like we gave that guidance six months before, we will move up with the margin. At the moment, we are under 19% and we will move to slowly up with the leverage of the business globally.

45:12 Thanks. Nice job, guys and good luck.

45:16 Thank you.

45:18 Thank you. Our next question comes from Shaun Kelley with Bank of America. Your line is open.

45:25 Hi. Good morning or afternoon, everyone. I was wondering if you could comment a little bit more on just the, sort of outlook for potential UK regulations, as well as maybe Canada legalization. I know there's sort of slightly separate topics, but just on the UK, what would be possible impacts from some of the proposed legislation there? I know, it's been moving around, but what have you seen maybe other regulated market or if you could remind us of that as a starting point?

45:54 Let me go first on Canada because it’s pretty fresh. We got now the permission to operate in Ontario. I had an interview last week with them. And we are pretty excited about the Canadian market opportunity. It's a great place for Hockey as we all know the nation is driven by Hockey. And we are pretty bullish on the Canadian market. Any market which is opening up for legalized sports betting with clear condition and rules is beneficial for our business model. 46:30 Looking to the UK, yes, there have been many movements. And the government is trying to protect the players. We are strongly in favor of this. Strongly in favor of protecting the sport and the players. Yes, it will have an impact on the UK bookmakers, if there are strict limitations about the betting stakes and how you can do advertising. 46:57 We have at the moment no significant ads business in the UK. So, it will not impact us too much with the legislation, which I have in mind, but for our clients, it will be an impact. They will lose some of the revenues and we might see that we have to renegotiate some deals, which are based on revenue share. We think at the moment, it's a marginal impact looking to our UK client base and what we see from the legalization impact what might come there. 47:29 Around the globe, we see exciting markets. We think that Brazil is such a market. We are very actively looking into this market with the regulators to understand how can we contribute and how will this develop? There are two of the states in Brazil now going into a regulatory framework, which will allow them to accept sports betting in the next couple of weeks. 47:58 We see the same things happening in India. In India, we prepared our company already by being the best-in-class cricket provider and by moving up with our understanding of other sports. For example, Kabaddi, which is very important in that region. So, on the global scale, we see tenancy wise markets opening up and that's a good thing for us.

48:23 Great. And then, maybe just as my follow-up, just to go back to Russia, and just as more of a clarification, but Carsten I think the last thing you said, you mentioned something about the application of sanctions. Just could you be crystal clear on this? Do sanction supply to your offerings in Russia at this point? And what is your understanding or interpretation of those rules or what would need to change for sanctions [indiscernible]?

48:49 Well sanctions in generally apply for us from the EU, from the U.S., and from the UK. We are in all these regions. So, we are monitoring every sanction in this region, which means who is operating the business? Are there people which are on the sanction list in one of the businesses where we interact with. So, that's a constant process. And when I'm saying we are complying, that's what we are doing. We are looking to this. 49:17 What I said before, it might be that there was a sanction of saying any company in the U.S. or UK cannot cooperate with Russian businesses. If that will happen, of course, it applies to us and it will be a worst case scenario. I hope that is explaining the sentence is the sanctions.

49:34 Thank you very much.

49:41 Thank you. Our next question comes from Michael Graham with Canaccord. Your line is open.

49:47 Thanks a lot. Just wondering if you can update us on any trends you're seeing in rights cost and also wanted to see if we could get any updated thoughts on how your customers are engaging with your NFL product as the market has evolved there?

50:07 There was no change from – on the NFL comparing it to what we’ve said in the last quarter. We have a couple of small clients. That is a small [steak] [ph] on the total NFL betting market. The rest is with the official data provider. So, we don't see any significant change here. The same statement applies for the media business, which continued in a very normal way without any significant losses comparing it to the quarter before. 50:30 That's the NFL side. The rights cost in a general way are depending on what is the strategy and our strategy is eight key sports. Soccer is very important. Tennis is very important. Basketball, Ice Hockey, Baseball, and here we see a couple of opportunities in the next months, where we think we can increase our footprint, and the key idea around, this Michael is, we are focusing on Tier 1 sports, which are driving a lot of [indiscernible] because the strategy which we have was the sports solution vertical is that we are deeply engaging that we are getting more layer related data, more match data. And we are doing this for the reason that we want to interact with the sports fan. 51:27 Part of the sports fan, and a piece of this is sports betters and we understand very well what to do, but we also want to understand the sports fan much better for the future digital solutions around this. So, that's our key focus, and we are very excited about the upcoming opportunities in this eight sports with the main leagues in there.

51:49 Okay. Thank you, Carsten.

51:51 Thank you.

51:54 Thank you. Our next question comes from David Katz with Jefferies. Your line is open.

52:00 Hi. Good morning, everyone, and thanks for taking my question. You covered a lot of ground already. What I'd love to hear Carsten is, you and your team have kind of a unique perspective given that you've been global, been around for a long time, and what, I’d love your thoughts on as, how the U.S. market is evolving so far compared with what you have seen say in Europe, which is much more mature? And I think one of the issues we all are digesting is profitability, growth, engagement. How do you see those given the experiences that you all have?

52:47 Well, we are on the first inning here. So, we are pretty much on the start. And what we see already is, we are getting operational leverage. So, we are decreasing our losses and we see that this market is doubling on the revenue perspective on a yearly basis not at 92%, not doubling have to be correct here. But that's great. And that's not comparable to any market, which I know in Europe and that's the unique situation in the U.S. with the regulatory framework opening up with a big bang. 53:27 [Indiscernible] is not a big bang, is not all states in one-time, it’s state-by-state, and that's delaying it a little bit, but we are really super excited. So, we see a market, which is doubling in revenues every year. We have some overhead costs in this market, but we see for the rest, we are getting into a scalability and using the leverage. So, it's only a question of time that we are reaching here profitability. 53:54 So, for me, is it makes me very happy to see that the investment which we did in 2014 when we had been the front runner here and the only one in the marketplace and seeing this opportunity is now beginning to pay off is that leverage. So, that's how I see this. Looking now more specifically into it, where are the real things which matters for Sportradar, those are two things. 54:20 One is, player related data, usage of technology, and then telling us a story about a specific sport, about specific players, I see a huge opportunity. Metaverse is playing into this visualizations, all those kind of things. You're enriching this with data and then this experience of consuming to sport into deep data and the betting comes together. 54:44 So that will be something which I see in the U.S. as a main driver in the future. And difficult to predict how many players are going in, but I'm very sure it's data driven, its visualizations and it's an interaction between consumer to support with this data and having betting opportunities. 55:02 Second, live betting. Live betting is on the very, very, very beginning. So, in Europe and established markets, we see 80% of the bets are live and only 20% of the bets are pre-matched. In the U.S, it's a bit difference sport by sport. We can say, 70% is pre-matched and only 30% is live. And that's a significant difference. It's upside down to what we see internationally. 55:29 Without any doubt, we will see that the U.S. market is going on the international trend because live betting is so much more exciting, you see the match you consume it. For a company like Sportradar, it's so much better because we are going away from selling the pure data into selling the solution. And the solution is the probability on the data which we call Live Odds or is the trading and the risk management, which we call managed trading services and our handle on this is so significantly higher than on the pure data distribution. Therefore, those two trends are very important for us.

56:07 That is super helpful. I appreciate it. If I may follow it up, can we just get a comment with respect to how the market overall here in terms of the profit opportunity compares with what you've seen in other global markets. And I know your preference is to speak specifically about yourselves, but for the industry in total, is the profit opportunity in the U.S., what you've expected and how does it compare with elsewhere?

56:44 Absolutely. It's like we have expected. We know that in the U.S. The profitability is a little bit lower than, for example, in the European markets. That has to do with the relatively high fees from the leagues. We have a unique consolation in the United States that we have four very powerful leagues. 57:05 They are using their power in the market in their favor, which is totally okay. And that is reducing a little bit of earning potential for the operators and for us because the leagues get a share from this, which is proportional wise bigger than this in European markets, but it's exactly what we expected and what we communicated in all our numbers and what we communicated in the IPO.

57:32 Helpful. Thank you very much.

57:36 Thank you. Our next question comes from Steve Pizzella with Deutsche Bank. Your line is open.

57:43 Hey, good morning guys. Thanks for taking the question. Somewhat following up on the previous line of questioning. Within the U.S. business, can you just talk about the current mix you're getting from betting compared to the other business lines and where do you see that mix evolving over time?

58:02 That's a perfect question for CFO with the mix and the numbers in the U.S. Alex can pass that on to you for the U.S. and the mix of the revenues?

58:13 Yeah, sure. Sure, Carsten. So, we don't – it’s difficult to speak about it. Simply because of COVID, there has been some changes in terms of year-on-year in terms of when the sports will be employed and so on it offers a very little bit of, kind of a little bit of a noise in the numbers, but betting is by far the biggest growth of our business. Obviously, percentage wise [ads] [ph] is much, much bigger. It went, as Carsten said, from 0 million to 6 million, right? So, that's a huge percentage, but in terms of overall numbers, the betting business is one of the fastest growing businesses and anywhere between 50% and 60% growth over there, and then audio visual is very, very close behind it as well. So, those are kind of the large big growth opportunities.

59:15 Okay. Thank you.

59:19 Thank you. And our last question comes from Mike Hickey with Benchmark. Your line is open.

59:27 Hey, Carsten, Alex. Good mornings guys. Good afternoon. Just curious on your first quarter, I think you said that it was, sort of baked into your guidance here obviously, for the year, can you give me a framework around first quarter on revenue and EBITDA? I think the [Street] [ph] is at 160 in revenue, 31 million in EBITDA. And second question for me, [April 4] [ph] here Ontario is looking to legalize sports betting in game, I know you talked about Canada from a licensing perspective, with your operator partners, you expect sort of a smooth transition from the grey to legal market or is there any potential [indiscernible]?

60:12 Right. So, let me take the Canada question and refer it to the Q1 to our CFO. As for Canada and Ontario and Canada in general, Ontario, we got now the permission for operating and interacting with the players there in the market. We are super proud of this that we could achieve this very, very quickly. And that's simply exciting. It's a new market. It's opening up. 60:39 What we see in Canada as a specific opportunity [Technical Difficulty] talk into too much details, but we see here platform opportunities. Meaning, we can provide our full platform, our betting platform powering this with data with the management and hoping bigger partners for doing sports betting in the country. 61:02 So, we see here significant opportunities, and we are very excited about this. That’s what I can say at the current stage in Canada. I’m handing over to Alex for the Q1.

61:16 Thanks. Well, I mean, Q1 is not finished. Obviously, we're still working through it. I'm not, I think revenue numbers are right where they should be. I think on the EBITDA, people need to remember that in the Q1 of last year, you still had a lot of benefit from – or some benefit from the savings that were one-off temporary COVID savings that we've experienced in previous year. 61:49 So there's has been some of those moving into the Q1 of last year. In the Q1 of this year, no there's no longer any of that all being reversed. And the second thing that, you know and I've made this point before, we are a public company and we have a course of a public company in the Q1 of last year, we did not have cost of a public company. So that's another thing that needs to be considered.

62:16 Maybe I’ll add quickly Mike. It's difficult to speak now about Q1 as you know, purely from a legal perspective, we have not closed it. Still in the Q1. You mentioned the 156, I think it's a bit higher, it's around 160. I told before that we are very encouraged by the start of the year and that is, of course also reflected in the revenue results, which we expect for Q1. Hopefully, that gives you a bit of feeling and the indication which you need to have.

62:48 Yeah. Thanks Carsten. Just a quick follow-up on Canada, with your existing sports book operators that you partnered with, in Ontario have all of them been licensed for legalization or are a few of those still waiting to be approved?

63:07 I'm telling you now a secret. The one who was approving me is former Police Officer and he needs to find his way into that job, how to do it. So, they have on the beginning, that's all the problems that's gross problems. And they need to build up that capacity that they really can do their diligence. I think they take this very, very serious, but it takes a little bit of time for them to ramp up on the scale what we see in the U.S. It's very professional in the U.S. And Canada is in the very early stage. 63:42 So, they need to build up that capacity to go quicker to get more operator’s license. And I think that's the biggest issue at the moment and therefore, we are super happy that we managed this very quickly. That's how the situation is at the moment.

63:58 Okay. Thanks guys.

64:02 Thank you. And that's all the questions we have for today. Thank you for participating in today's conference call. You may now disconnect. Everyone, have a great day.