Sportradar Group AG (SRAD) Q3 2022 Earnings Report, Transcript and Summary

Good day and welcome to the Sportradar Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this call maybe recorded. I would now like to turn the call over to Christin Armacost, Manager, Investor Relations. You may begin.

Thank you. Good morning, everyone and thank you for joining us for Sportradar’s earnings call for the third quarter of 2022. 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. These slides will be posted on our website at the conclusion of this call. A replay of today’s call will be available on our website. After our prepared remarks, we will open up the call to questions from investors. In the interest of time, please limit yourself to one question plus one follow-up. 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 involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. 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. Also during today’s call, we will present both IFRS and non-IFRS financial measures. Additional disclosures regarding these non-IFRS measures, including a 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. Joining me on the call today are Carsten Koerl, Chief Executive Officer and Ulrich Harmuth, Interim Chief Financial Officer And now, I would like to turn the call over to Carsten Koerl.

Thank you, Christin and thank you all for joining us today and welcome to Sportradar’s Q3 earnings call. We are pleased to report a very strong quarter with strong revenue growth as well as an expansion of profitability and cash conversion, showcasing our sustainability scale and operating leverage of our business model. Now, I am touching on the operational goals. We are proud of these results. And we remain focused on our core operational objectives, expanding our high margin rest of the book business based on our up-sell and cross-sell strategy to move customers up the value chain; second, leveraging our significant investment into people, technology and weak relationships in the U.S. market, that is to say we expect to grow our revenue base and underlying market growth, which is further accelerating by the growth share in in-play betting; number three, drive efficiency across the organization by leveraging our global footprint, streamlining processes and optimizing our resources; and last one, continue to make investments into strengthening our market position and expanding our addressable markets. The execution against these objectives has resulted in solid operational performance and financial results through the first 9 months of this year’s was exceeded our expectations. For our third quarter, we delivered strong year-over-year revenue growth of 31%. We delivered an adjusted EBITDA margin of 20% this quarter compared to 15% in the third quarter last year and 16% in the second quarter 2022, 400 basis percentage points uplift. Let me remind you that these strong results have been achieved beside significant adverse market conditions in some of the regions that we serve as well as the potential of global recessions. We further managed to generate strong operational cash flow with a conversion rate of 93%. Why this cash conversion has been favorable impacted by foreign exchange rates this quarter, we continue to generate cash to invest into organic and inorganic growth opportunities. This remains one of our business priorities and has enabled us to prepay $200 million of our bank debts this quarter. Our revenue growth was predominantly driven by rest of the world betting business where we continue to expand our business with existing customers. This is reflective in our 117% net retention rate this quarter compared to the same period last year, strongly driven by our ability to move customers up the value chain. Managed betting service is our highest value service in the data value chain grew 84% compared to last year attributed to cross-selling new products into existing customer base. Our advertising business, which is relatively new product in our portfolio, grew by 62% versus last year. During the quarter, our managed trading service generated an annualized betting turnover of €19 billion run-rate. To put this into perspective, this compares to approximately £11 billion in stakes that FanDuel accepted in the first 6 months of 2022, the second strong growth contributor in our U.S. business, which reached profitability in the third quarter 2022 for the first time ever. Our CFO will go into more details, but I am very excited to report the first positive adjusted EBITDA margin of 11% for our U.S. business segment in this quarter, the first time since we became a public company. Based on the continuous growth in the U.S. betting, the number of states will have regulated betting as well as the good adoption of in-play betting, we see that our early investment into people, product, technology and sport rights are paying off. The positive adjusted EBITDA results further demonstrate that Sportradar business model of generating profits in growing markets because of operational leverage and increasing share of in-play betting also works very well for the U.S. marketplace. Revenue in the whole U.S. segment grew by 61% compared to last year’s quarter. This remains largely a result of the growth of the underlying betting volume as we are participating in the NGR of our customers. However, when we look at the rest of the world business, we see the biggest growth driver for Sportradar’s revenue is in-play betting. More than 90% of our rest of the world revenues are driven by in-play, we believe we can see similar success in the U.S. with this segment. The U.S. market is still in a very early inning of the in-play betting and the real time shares of GGR between 15% and 35% depending on the sport compared to an in-play share of 80% in the European markets. With the development of live betting products for U.S. sports and the growing customer acceptance, we strongly believe that the in-play betting will become the biggest future growth driver for the U.S. betting market and Sportradar’s revenues in the United States. Continuing with the U.S., I want to highlight a few of our successes and recent developments. Last month, we signed a landmark deal with our partners at FanDuel, an early extension of our existing relationships as the preferred data and supplier throughout the 2030-2031 NBA season. The early extension of this is a testimony of how long-term league deals provide us with the ability to expand the relationship with our customers and move them from a pure content distributor to an embedded technology provider. Under the new contract, we will work closely together with FanDuel to develop products leveraging the NBA state-of-the-art player tracking technology to create new opportunities for same game parlays and in-play betting highlighting Sportradar’s strength in live betting. We will also provide our live channel trading and content distribution platform providing video streaming 8 seconds faster than a TV broadcast. This broadening our relationship with FanDuel fully aligns with our U.S. strategy to leverage our long-term league relationships to support our key U.S. customers with their product development and creating exciting user experiences. Another innovative relationship we announced is tennis data innovations. We expand the distribution of ATP Tour official data to betting operators. The partnership is creating new secondary feed directly from the umpire chair to provide the fastest, most reliable and most accurate data in in-play betting markets and enhanced fan experience. We also announced our largest rest of the world paid social advertising deal with Kindred, our large international online gaming operator. Kindred will use Sportradar’s AI and machine learning technology to engage more efficiently with sport fans and betters across the major platforms of Facebook and Instagram. Last, we are pleased to mention that we have won the American Gambling award for Data Supplier of the Year. This award is presented by Gambling.com and recognizes excellence in data service delivery, a true statement to the service we provide to our customers and the successful year we had so far in 2022. The American Gambling Awards are highly competitive and we are excited to receive our exclusive Golden Eagle trophy. On the previous earning call, we mentioned the reorganization of our management team. From January 2023 onwards, Sportradar will globally organize content creation and acquisition, product development and commercial execution while retaining a dedicated go-to-market approach for the United States. This new structure will lead to a streamlined organization allowing a more efficient process, faster decision-making and the ability to serve our global customers even more efficiently. Finally, after having spent the better part of October meeting with investors and analysts, I want to address a key concern many of you, the possibility – have told us the possibility of a recession and the impact on Sportradar. To address that, I would like to spend a few minutes on Sportradar’s growth model, which is based on four levers. Number one, Sportradar serves a global betting market that is expected to grow 11% annually throughout 2027. Historically, the global betting markets have grown throughout all crisises with the only exception being in 2020, when due to the pandemic, a large number of sports competition were suspended. Second, Sportradar consistently managed to grow almost 3x faster than the underlying market due to our ability to up and cross-sell customers, moving them higher up the value chain and expanding into new regulated markets, our model enabling us to grow 6% in 2020, despite the underlying betting market contracting by around about 11%. Number three, based on the growing revenues, we can expand our margin by leveraging significant scale in our business model with a streamlined organization for global content acquisition, global product development and global technology and infrastructure. And lastly, our profitability generates significant growing cash flow that we invest into our future, expanding our product portfolio, geographical reach and increasing our addressable markets. We have built this model over the last 20 years and while the question about impacting of a potential recession looms in investor minds, it is also on top of the mind of Sportradar’s management team. I want to leave you with some of the history as you think about our Q4 and beyond despite various economic recessions in the past, including the pandemic events. Since inspection, this company, Sportradar has always had a positive growth year-over-year further despite the turbulent market under economic conditions we exceed our expectations for the first three quarters of this year. Because of this foundation and our continued innovation as a market leader, we believe there are many reasons to be optimistic about our future for continued profitable growth. With that, I would like to turn the call over to Ulrich Harmuth, our Interim CFO. Ulri, has been working very closely with me at Sportradar over the last 10 years. Ulri was previously responsible for corporate development and M&A and was instrumental in driving all aspects of our IPO last September. Ulri has a deep understanding of the company and its financials and I have no doubt that he will lead the financial organization to achieve greater success in the months to come. Over to you, Ulri.

Thanks, Carsten for the kind words. I am very excited to lead the finance team and partner with our management team to continue to deliver strong results. I look forward to talking to our investors and discussing the strong investment thesis for Sportradar. Let me now provide you further details on the strong results for this quarter. Revenues in the third quarter increased 31% to €179 million versus the third quarter of 2021. Growth was strong across all of our segments. Once again, the majority of growth came from our rest of world betting business, which contributed €22 million of our growth. The U.S. grew 61% compared to last year. We reported an adjusted EBITDA of €37 million for the third quarter, up 69% year-over-year, resulting in an adjusted EBITDA margin of 20% compared to 15% in Q3 of last year. The third quarter is typically Sportradar’s strongest quarter with regards to profitability. As the major U.S. leagues on season break and sports rights costs are only amortized over the months the leagues play. Our levered cash conversion was 93% and the unlevered cash conversion was 104% both positively impacted by foreign exchange rates. Even after the prepayment of €200 million of our bank debt, we still have more than €0.5 billion of cash and cash equivalents on our balance sheet. Now looking at our segment revenues, our rest of the world betting revenue grew 28% in the quarter to €101 million, representing 56% of our total revenue. Growth was primarily driven by an uptick in our higher value-add offerings, including managed betting services or MBS, and live odds services. More specifically, MBS revenue grew 84% year-over-year to €38 million. Our live odds business grew 12% due to up-selling content to existing clients. Rest of the world betting adjusted EBITDA increased 8% to €48 million. The associated adjusted EBITDA margin declined to 48% versus 57% in the prior period as a result of inorganic investments into artificial intelligence capabilities as well as temporary savings and sports rights and scouting costs in the prior year due to the COVID-19 pandemic. The Rest of the world AV segment grew 14% year-over-year to €33 million. This growth was largely driven by cross-selling or the visual content to existing data customers and expanding the AV portfolio with existing AV customers. Rest of the world AV adjusted EBITDA increased 32% to €13 million. The segment adjusted EBITDA margin increased to €38 million from €33 million mainly due to as a result of revenue growth. Now turning over to the United States. The U.S. segment continues to be our highest growth segment and reached a major milestone by turning profitable on a quarterly basis this quarter, the first time since the IPO. Revenue grew 61% year-over-year to €32 million with strength across the board. Betting and gaming revenues grew 144% year-over-year due to growth of the underlying betting markets and good signs of adaption of in-play by U.S. customers as revenues doubled year-over-year albeit from a small base. We also saw strong growth in our audiovisual product and in our media solutions. As highlighted before, the U.S. business generated a profit this quarter, underscoring the scalability of our business model and the ability to convert our U.S. contracts into profitable business. Third quarter U.S. adjusted EBITDA was a positive €3 million compared to a loss of almost €7 million last year. The U.S. adjusted EBITDA margin was 11% versus a negative margin of 34% last year. At this stage, I would like to also comment on Sportradar’s foreign exchange exposure, which mainly results from converting our U.S. dollar denominated U.S. segment into euros, our reporting currency. In the third quarter, Sportradar Group generated U.S. dollar denominated revenues of $39 million against U.S. dollar denominated costs of $44 million, resulting into an almost perfect natural hedge. Now, turning to costs. Personnel costs for the quarter increased by €17 million to €68 million in line with our expectations. We are normalizing the growth in personnel costs for acquisitions into capabilities for our managed betting services, in particular bikes and [indiscernible]. The organic growth rate of personnel cost has been 27% year-over-year. Purchase services and licenses in the third quarter of 2022 increased by €18 million to €48 million compared with the third quarter of 2021 as a result of increased cost of content creation and processing as well as content costs for our advertising business. Other operating costs decreased by 19% or €5 million compared to last year’s quarter due to high costs related to Sportradar’s IPO in September of last year. Lastly, sports rights costs increased by €6 million to €35 million in the third quarter of 2022. Growth was driven by new deals with the ATP, the UEFA and the International Cricket Council, as well as the 10 years extension of the NHL contract. Sports rights costs as a percentage of revenue decreased to 19% versus 21% last year. In the third quarter, Sportradar generated the strong adjusted free cash flow of €34 million, up from €33 million last year. Our unlevered cash flow conversion was 104% down from 161% last year and our adjusted cash flow conversion has been 93% in the quarter compared to 158% in the same period last year. Cash flow in Q3 2021 was extraordinarily high due to high expenses related to the IPO in September of last year that were only paid in Q4 last year. Cash flow in the third quarter was positively affected by favorable FX gains, as the euro continued to weaken during the quarter. Cash flow has increasingly become the focus for our company and they started several internal projects to increase the cash conversion, in particular, by managing our working capital more proactively by reducing the days sales outstanding for our customers. Furthermore, we have also reacted to rising interest rate levels. After having repaid half of our term loan in the third quarter, as Carsten mentioned, we plan to prepay the remaining portion of the term loan in the fourth quarter. As a result of our strong cash conversion, we retain a strong liquidity. In the third quarter, we have increased the revolving credit facility by further €110 million to now €220 million. Together with our current cash position of €512 million, this leaves us with a total liquidity of €732 million. Even after the planned prepayment of the remaining €220 million of term loan, we will still be in a strong position to support our operational business with organic investments and pursue acquisitions to further accelerate our profitable growth and expand our addressable markets. Finally, let me give you an update on our guidance for the full year 2022. Based on the strong performance in the third quarter partially influenced by the mentioned seasonality effects on sports rights costs, we are raising our expected revenue outlook to a range of €718 million to €723 million or a 27% to 29% growth rate coming from a prior range of €695 million to €750 million. Further, we are raising the bottom end of our adjusted EBITDA guidance and also narrow the overall range to a new range of €124 million to €127 million, representing a year-over-year increase of between 22% and 25% from a prior range of €123 million to €133 million. With that, I will turn the call back to Carsten for some closing remarks.

Thanks, Ulri. In closing, I want to remind everyone of our key priorities. We continue to focus on growing our core betting products and further expanding our market position in the U.S., while improving our profitability and cash generation due to the operating leverage in our business model. We remain prudent stewards of managing your capital, balancing risks and opportunities, all in the name of long-term shareholder value creation. With that, I turn over to the operator for Q&A.

[Operator Instructions] Our first question comes from Ryan Sigdahl with Craig-Hallum. Your line is open.

Hey, Carsten. Congrats, Ulri and really nice job on the quarter guys. Two for us here one on strategy and maybe one more specifically on guidance or current operations. So first, U.S. positive EBITDA, really nice see to that inflection a lot quicker than we were anticipating here. But is that sustainable going forward or how much of that differently is the result of kind of a sports calendar within Q3 on your official rights costs?

Well, I might take this question, Ryan. Nice to hear you. No, we see going forward profitability in the U.S. segment and it’s mainly driven with what we can convert from pre-match into live, which is the interesting piece here. So we have between depending on sport, it is 15% to 35% at the moment proportion of live betting at the NFL, the weakest the NHL, as you know the strongest, this numbers which we get from our clients. And every margin points, which we can do it now here is for Sportradar at the moment of €1.2 million roundabout and this is revenues, which comes practically without any additional costs. So this trend is giving us great confidence that we are continuing to go down the road, which you see now and you saw that now quarter by quarter in the last four quarters, we continued to reduce the losses. Now, we reached first time ever profitability. So because of that trend, we are very optimistic. Of course, we are also optimistic by seeing our media business which was growing strongly in the U.S. So that gives us confidence in this outlook.

That’s really great to hear. Second follow-up question here, just given the recent litigation settlement with Genius and UK Football really defending reinforcing official rights. Does that change your operational focus on leagues where Sportradar has official rights and by far the largest portfolio of those versus open-sourcing data for non-partner leagues?

Well, I think on the litigation piece, you saw the announcement and I do not need to dive deeper into this and yet the nature of your question, no, it doesn’t change. This was a settlement which we reached with Football DataCo and this is extremely important for us. We have now sub-licensed. We can access the data and we will incorporate this data into the suite of our products. And financially, it means that we pay a license fee, but we are able to sell the Football DataCo content to our customers and generate additional revenues with a positive EBITDA contribution. This was not possible before because we have no access to this data.

Helpful. Thanks, guys.

Our next question comes from David Karnovsky with JPMorgan. Your line is open.

Hi, thank you. Maybe one for Carsten and for Ulri. Carsten, I think last quarter, you had spoke to a value-based pricing model with some of your bigger operators, I am wondering if now maybe you could provide some details around this with anything here tied into FanDuel. And then for Ulri, you did release a preliminary outlook for 2023 just wanted to see if you could walk through some of the drivers at a high level and then is there anything you could say on free cash flow conversion outlook? Thanks.

Good. So, the value-based pricing is of course in connection with our reorganization in the management as reported. We have now started that transformation process that we look from a sales perspective on a global basis. We cluster our clients in a different way like we did it before. We pay more attention to our big clients. And we are trying to do more for the smaller clients to uplift them. And the value-based pricing is one of the modules for this. There are many more things which we are considering here. And we are already seeing the fruits of this transformation process in the quarterly numbers. With this, I will hand over to Ulrich.

Yes. Thanks Carsten and David. Good to hear from you. So, in the 2023 guidance, on the revenue side, we see continued strong momentum in our two key growth segments, which together account for almost 75% of our growth. The first one being the rest of the world, I think business where we grow primarily as a result of moving customers up the data value chain, as we have seen also in this quarter, moving customers to our match betting services. And the second one is the growth in the U.S. betting business, driven by three factors. First of all, our growth based on our customers’ growth since we are participating in their revenues. Secondly, the increased adoption of in-play betting, where we simply as Sportradar have a bigger revenue opportunity compared to pre-match. And thirdly, as a result of the expansion of our customer relationships, that what we have just seen with FanDuel. Therefore, we are very confident about our revenue growth. And with regards to the margin expansion, we have basically seen in the third quarter, the operational leverage in our business. We have grown our revenues by 31%, sports rights costs only grew by 20%, personnel costs only grew by 27%. We are normalizing for M&A effects. And our operational expenses even declined. And taking all these factors into consideration and despite adverse market conditions, we feel very strongly and very positive about the business prospects for the next year. And are confident to be able to continue our path to grow revenues, while expanding our profitability and our cash flow in parallel.

Thanks.

Our next question comes from David Katz with Jefferies. Your line is open.

Good morning everyone. This may be another version of some of what you discussed. But I am just eyeing the guidance and seeing what the revenue amount of growth is as compared to the EBITDA growth. Can you just discuss a little further what the impact to flow through is on that guidance? And why there isn’t just a bit more of the revenue reaching the bottom line? Thank you.

Ulrich, that is a question for the CFO?

Yes. No, happy to answer that. I think we discussed this already on previous calls. So, we have some adverse market conditions that we have to face. And as a result, we also had to change somehow our product mix. And some of the high margin revenue that we were expecting coming from some of the markets that we can’t serve at the moment, are simply not hitting our EBITDA line. And we grow faster than we projected in our advertising business. And that is a lower margin business. And that’s the reason why we increased our revenue guidance. And despite the adverse market conditions, only increased the lower margin of our EBITDA guidance.

Perfect. Thank you.

Our next question comes from Michael Graham with Canaccord. Your line is open.

Thank you and congrats on the U.S. profitability. Just could you maybe at a high level talk about now that you expect the U.S. to be profitable, just the pace of margin expansion that we should expect to see there at a high level? And then I thought it was interesting you mentioned acquisitions in your prepared remarks, if you just maybe talk broadly about what types of assets you think the business might need?

Yes, Michael happy to take on this question. So, looking now to the U.S., like I highlighted the main thing is really for us focusing on whatever is real-time. Real-time is generating the highest value for Sportradar in all the business lines. Real-time in this specific case means live betting. So, whatever we can do here to create innovative services, where we stimulate live betting is what we do. And we do this very consistent with our league partners. We are doing workshops with our clients and with the league partners to figure out what kind of product can help best to stimulate this. It’s simply, there is a big trend there. And yes, like I mentioned several times, we see that the U.S. is following the past what we learned in all other markets in the world. So, that is giving us your confidence. Now, looking to those investments, it’s things like how can we improve with a new algorithm, new pricing models that we trade a little bit better, and that makes for us a big, big difference. So, if we are hiring, the profitability of our managed trading services only was the half a percentage point. That means for us bottom line 10x more cash, which we get with this considering that is 5% to 6% profitability on a single bet which you have there. So, these are exciting things. Of course, there is a lot of things ongoing in visualization, which is also leading into this trend, how can you visualize the match better to get more fan engagement. More fan engagement is leading into live betting. And the third one, which we see there is, of course, the state-by-state opening. We have not expected that California is opening up. Our models are saying 2024. So, there was still a good chance that our models are right with California also opening up for sports betting. But we see that the strategies state-by-state opening is going very, very well hand-in-hand with our predictions. And of course, that’s beneficial for us.

Okay. Thank you.

Our next question comes from Sean Kelly with Bank of America. Your line is open.

Hi, everyone. Thank you for taking my question. I just wanted to ask about the sort of cadence for the rest of world margins. So, I think you have kind of called out some of the adverse market conditions that I think – and some of the drivers for the margins this quarter. Can you just help us think going forward, as we start to let I think probably particularly issues in the Ukraine should in ‘23, should rest of world growth rates and margins start to look a little at – start to look a little bit more in line with revenue growth, as we kind of move past some of the headwinds, kind of these one-time headwinds that you are probably experiencing right now. Is that the right way to think about it?

Ulrich, can you go on this? It’s a number question on the projections to see the perfect place for…?

Happy to do that, Sean, and very nice meeting you. So, the current numbers for 2022, obviously, completely reflect all adverse market conditions. And therefore going forward, we do not expect that there is anything additional hitting our margin. And therefore, I would agree that going forward, you will see revenues grow in line with our – adjusted EBITDA grow in line with our revenue growth. Even, we should actually be able to see also some operational leverage in our rest of world betting business.

Okay. Great. Thank you. Understood. And then maybe just, can we just talk maybe big picture about sort of the longer term margin outlook in the U.S.? And then Carsten, you have been very clear on adoption of in-play being particularly important to that. But is there any kind of reason or change in your thinking around sort of the progress of U.S. margins eventually approaching sort of your international levels? What are some of the puts and takes there, particularly thinking about kind of NBA contract coming on in ‘23 and beyond and what that could mean for rights costs over here as well?

That’s more mid to long-term projects, and it’s always a bit tricky to give from. But look, you see the strong growth 144% in the betting core business in the U.S. at 110%, audio-visual 87%. There is still a lot of runway. If we get more audio-visual content, of course, that will boost our products. And we are actively speaking here with sports and leagues about this. Looking now from a growth perspective, we have 10 years deals with two of the big four was the NBA, and the NHL. And the challenge here is how can we create value for our clients, but not blindly up-selling data. How can we embed ourselves into the value chain, into the products that we generate this revenue for our clients. We are super confident that we can deliver this and the FanDuel deal is showing you in which direction this is going. So, I think we did clever decisions by having long-term deals with two of the big four properties. And we are working very closely with MLB on the same direction. So, it’s about how can you create a product, which is generating profitability for the clients, and not only blindly up-selling the data which they have to integrate by themselves. So, it’s a kind of combined action between us, the leagues, and the betting operators to and the ambition always is to create this value. Yes, there was a price uplift with the NBA contract. I recall how much critics I got when I announced this in September, last year that this is a landmark deal for us. And now we demonstrate that we get the biggest operator in the United States on a 10 years commitment for this deal, which comes with all this creation of new services. So, we are pretty confident that this will scale and follow the blueprint, which we have in the rest of the world business. We see no reason why that should not be the case.

Thank you very much.

Our next question comes from Bernie McTernan with Needham & Company. Your line is open.

Great. Thank you for taking the questions. Maybe to start, Carsten, you just mentioned that the FanDuel deal, would just love more color on the deal. Especially there was some mention of supplementary betting services that are included. I was wondering if that include maybe a minimum commitment on the ads product. And then also I think you mentioned that there were U.S. AV rights for the NBA as well. So, just wondering if there is any color in terms of what games you would have access to if that’s true?

Good. Can you repeat the second question, please, I had…

Yes. If there is – I believe you said on this call that there was AV rights or streaming rights associated with the NBA deal. So, interested in just what games you would have access to?

Okay. No AV and streaming rights are associated for the U.S. piece of the deal. Internationally, we have the NBA streaming and AV rights and we are selling this to clients not only to FanDuel. So, it’s nothing specific. For FanDuel, there are four, I think remarkable points. First, it’s the largest customer and we managed to get the largest U.S. sports book into a 10 years relationship on this property. Second, we are uplifting them on the value chain of our products. So, we are not only the preferred data supplier, we are integrating into the products of FanDuel with various ways that will give you the details on this. Third, big piece is tracking and the live channels. So, first time ever, we can use tracking data to create attractive play proposition bets, hoping and helping the clients that they can have more [indiscernible] and running, which is consistent with our strategy that we are convert pre-match into live. And number four, it’s a signal for the whole market that this is the direction you need to take. And we see already a lot of pickup on this one. That may answer the side question on which you asked about ads. We at Sportradar are not in favor to force our clients into a direction that there must be a minimum guarantee for a channel, which is complimentary, but not core sports betting. So, we are performing. And we are gaining market shares, which you will see into the ads performance of 110% uplift quarter-by-quarter. But we are not forcing the clients with a minimum guarantee that they have to go with ad services with us. So, we want to demonstrate this product strength to bookings and prove this all the time, instead of having a huge obligation for the client.

That’s great. And maybe just to follow-up on that last point on the significant growth you are seeing in the ads product. Is that that adding more customers, is that more spend per customer, we would just love to get some more insight in terms of what’s driving the growth?

The main thing what is driving growth is of course, the programmatic advertising and a more sensitivity from the customers on spend in channels like broadcast. That’s by the way something which we see also in the rest of the world here the gross is at 46%. And yes, we reported a big new client which is now joining us, that’s Kindred. That’s one of the big worldwide operators, multinational operators. And they are going now on our paid social, and which we have with Facebook and Instagram. And that’s an extension of the ad services. So, we see growth with existing clients. And the numbers I gave you, and we see new clients coming in.

Great. Thanks for taking the questions, Carsten.

No problem.

Our next question comes from Jason Bazinet with Citi. Your line is open.

I was just going back looking at my notes when – before you guys went public, and I don’t think the U.S. was supposed to turn profitable for. I don’t think you ever gave it time, but it was certainly sort of beyond ‘23. And it seems like the [Technical Difficulty]

There are no further questions. I would like to turn the call back over to Carsten Koerl for closing remarks.

Yes. Thanks everyone for joining the call today. In closing, I want to reiterate our ability to meet and exceed our revenues and profit expectations despite the ongoing economic challenges we face. We will continue to expand our top line with a focus on growing our betting rest of the world business as well as the U.S. business. In parallel, we relentlessly drive leverage into our business model to grow our bottom line and our cash flow. The first quarter with a positive EBITDA contribution from the U.S. is a clear indication that our business model also growth in the United States market and I wanted to personally thank our Sportradar team for their persistent commitment, day-in, day-out to serve our customers and league partners by continuing to build our business. I couldn’t be more proud of what we have achieved so far, and remain incredibly confident in our prospects for the future. Thank you for joining the call.

Ladies and gentlemen, this concludes the program. You may now disconnect. Everyone have a great day.