Sportradar Group AG (SRAD) Q2 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Sportradar Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jim Bombassei, SVP and Head of Investor Relations. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the second quarter of 2025. Please note that the slides we will reference during this presentation can be accessed via the webcast on our website investors.sportradar.com and will be posted on our website at the conclusion of this call. A replay of today's call will also be available on our website. After our prepared remarks, we will open the call to questions from analysts and investors. In the interest of time, please limit yourself to one question and 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 Form 6-K filed today with the SEC, 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 IFRS and non-IFRS financial measures and operating metrics. Additional disclosures regarding these measures and metrics, 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 today are Carsten Koerl, our CEO; and Craig Felenstein, our CFO. Now I'll turn the call over to Carsten.

Good morning, everyone, and thank you for joining us today. We are excited to report another quarter of strong execution and performance. We delivered all-time record quarterly revenues, up 14% year-over-year, once again demonstrating the strength and durability of our business. Our performance underscores our position as a mission-critical partner deeply embedded in the global sports ecosystem. Despite ongoing volatility in the broader economy, our model continues to deliver consistent growth on both top and bottom lines. Revenue growth this quarter was broad-based across both products and regions. At the same time, our focus on efficiencies and driving increased operating leverage translates to expanding margins and robust cash flow generation. Looking ahead, we see continued strong operating momentum for the remainder of the year. And given this confidence, we are raising our full year outlook. The durability of our results is driven by our long-term growth strategy anchored on the core pillars we outlined at our Investor Day. First, we are uniquely positioned to capitalize on the rapid expansion of the global sports betting market, given our scale, including the depth and breadth of our sports content, premium products and deep client relationships. Second, we are driving higher take rates by growing our product and content penetration across our client base as we continue to accelerate innovation and bring next-generation products to the market that enhance our clients' business. Third, we are looking at new revenue streams by expanding into adjacent markets where we can leverage our existing capabilities and expertise. Finally, we continue to invest in innovation and remove growth areas, applying our cutting-edge technology and AI capabilities to help us further scale our growth of our business efficiently. Turning to market growth. We continue to benefit from the underlying expansion of the global sports betting market, both in the U.S. and internationally. This quarter, we saw a growth of 30% in the U.S. and 9% in the rest of the world, reflecting strong market fundamentals in all regions. Since the legislation of the U.S. sports betting in 2018, the market has grown from approximately $300 million in GGR to nearly $14 billion last year. This is providing a strong tailwind and reinforces the significant opportunity has. Global market growth has also benefited from the number of sport matches available to bet on. Our growth is also being driven by deepening relationships with our clients as we move them up our content and product value chain. Today, 40% of our clients take 4 or more Sportradar products. This gives us significant opportunity to further embed ourselves in their operations and increase our take rate. Our content portfolio with over 1 million matches annually across more than 85 sports gives us the scale and flexibility to help clients optimize performance and unlock incremental value. Our clients are increasingly adopting higher value, highly immersive engaging products, which are helping to foster more in-play betting. In our core betting business, our Managed Trading Service, or MTS, continues to see strong momentum with turnover growth of 23% year-to-date. This growth in turnover has been driven by increased adaptation of MTS by our clients as well as growth in the sports we manage on the platform. In 2024, we signed over 50 new sports books on MTS. And going forward, we have a robust pipeline of additional sports books that will join the platform. In terms of our sports coverage on MTS, since 2018, we added 70 sports, growing from approximately 355,000 annual events to nearly 900,000 events in 2024, a 150% increase. Our 4Sight Streaming product is also gaining traction, especially in fast-based sports like tennis and table tennis. A recent case study with LottoMattica's GoldBet brand demonstrated a 30% uplift in turnover for 4Sight covered events. In 2025, we have increased tennis coverage for 4Sight, adding the ATP 500 and ATP 250 events to our existing coverage of ATP Masters, Finals and NextGen events. In total, we offered 4Sight up to 1,750 ATP matches this year. And since April, we have provided 4Sight coverage across our full portfolio of UTR Pro Tennis Tour matches. By end of 2025, we will have offered 4Sight across at least 14,000 UTR matches. Micro markets are another exciting opportunities for better and for Sportradar. We expanded our micro market offering from the NBA and ATP to now Major League Big Baseball and the WNBA where adaptation by betters has been rapid. During the NBA playoffs, we launched 8 additional micro markets compared to the regular '24, '25 season, resulting in a significant increase in micro market betting tickets and turnover again during the playoffs on our MTS platform. We're also continuing to involve commercial models to closely align with our client needs, which is further enhancing our sport and product penetration. In today's competitive market, operators need to be increasingly agile in order to grow their business. We are addressing this challenge by providing them with the flexibility to dynamically adjust their sports and product mix through the life of the contract, helping to maximize their business and our revenues. I'm also excited to highlight the strengthened partnership with the German Bundesliga soccer league where we are rolling out a new wave of in-play product and enhanced viewing experience solution to entertain the league's more than 1 billion global fans. Bundesliga is now benefiting from our cutting-edge innovations with the addition of live player market, which is expected to unlock 240 new betting opportunities per match, while products like 4Sight Streaming and our live match tracker would significantly enhance the live betting experience. This enhancement strengthens our software offering and reinforces our position as leading supplier of soccer betting content for our clients. Our leading position and ability to service our clients with being further bolstered by our pending acquisition of IMGA's portfolio of sport rights. We continue to anticipate this acquisition will close in the fourth quarter of this year, which will further boost our content offering in the most bet of sports, including soccer, tennis and basketball. Our planning efforts are well underway, and are focused on ensuring a seamless transition post closure with the cross-functional teams preparing detailed plans that will support long-term value creation for both our clients and the partners. It's important to note that our leadership extends well beyond core betting. In today's fragmented media environment, we are seeing a clear trend. Our clients increasingly turn to Sportradar to enhance fan engagement across mobile streaming and connected TV platforms. Betting is no longer a stand-alone experience. It is an integral part of how fans engage with sports. As fan behavior becomes more interactive in real time and sports viewership continues to transition from linear to digital and mobile streaming, our media and technology clients and our league partners are increasingly relying on Sportradar to drive deeper engagement and greater value across multiple channels. We are in active discussions with several leading technology and media platforms to integrate our data API, streaming products and advanced analytics to drive greater engagement and viewership on their platforms. This interest is a clear demonstration of our build on sell to many business models. Importantly, we are also committed to remove growth barriers and scaling efficiently through innovation by leveraging our technology and AI. Our engineering teams have adopted advanced API tools that are transforming how we build and deploy products. Early data shows up to a 40% increase in developer productivity, empowering faster product life cycles and accelerating time to market. We also launched an AI program system for our customer support teams, delivering faster, more accurate resolutions and enhancing service quality. These capabilities are part of a broader long-term initiative to streamline our infrastructure, reduce development friction and grow revenue efficiently, all while maintaining discipline on headcount. In closing, we remain confident in our long-term strategy and the significant opportunity that lies ahead. our competitive advantage as well as our laser focus on execution and efficiencies is driving durable revenue growth and expanding margins and cash flow. We believe this positions us well to deliver strong and sustainable value for our clients, our partners and our shareholders in the months and years to come. Thank you. I will now turn it over to Craig, who will discuss our financial results in greater detail.

Thanks, Carsten, and thank you, everyone, for joining us this morning. Sportradar's unique position at the intersection of the sports, media and betting industries continues to drive strong performance as we increasingly leverage our diverse best-in-class product portfolio, leading technology solutions and high-demand content across our broad and deep global customer footprint. Sportradar's strong second quarter results, including another quarter of record revenue, meaningful margin expansion and significant free cash flow generation further demonstrates the strength and durability of our position in the sports ecosystem as well as the opportunity in front of us as the market continues to expand, and we further innovate in collaboration with our league, media and sportsbook partners. This past quarter, Sportradar delivered revenues of $318 million, an increase of $39 million or 14% as compared with the second quarter a year ago, driven by higher product uptake from existing clients, incremental spend from new clients, continued U.S. market growth and strong trading results from our Managed Trading Services business. We continue to outperform market growth by deepening our client relationships through cross-selling and upselling our diverse portfolio of offerings as demonstrated by our customer net retention rate of 117%. Looking at the individual product groupings. We delivered broad-based growth across both our betting technology and solutions products as well as our sports content, technology and services. Betting Technology & Solutions revenue of $259 million grew 12% versus the second quarter a year ago, primarily driven by a 10% increase in betting and gaming content, including 12% growth in our streaming and betting engagement products due to strong growth in audiovisual revenues from both existing and new customers. Odds and live data also continued to perform well, up 9% year-over-year, led by U.S. market expansion, additional uptake of our products and new customer additions. Additionally, Managed Betting Services continued to grow strongly, up 21% year-on-year, led by the sustained momentum at Managed Trading Services, driven by increased turnover from higher volumes across our existing customer base, trading activity from new clients as well as higher overall trading margins. Turning to our other product group. Sports content, technology and services also delivered strong results this past quarter with revenues of $59 million, increasing 22% year-on-year. Growth was broad-based, led by marketing and media services, which was up 16% year-on-year, primarily from increased uptake from technology and media companies and from contributions related to our expanded affiliate marketing capabilities. We also nearly doubled the contributions from Integrity Services due to the uptake of products and services from our league partners and delivered 24% growth versus a year ago from sports performance due primarily to price increases. Geographically, our growth continues to be broad-based U.S. revenue up 30% and Rest of World revenue up 9% in the second quarter. U.S. revenues expanded to 28% of our revenue mix as we continue to capitalize on the continued rapid market growth and the growing demand for our breadth of content and innovative product solutions. The strong revenue growth across our product portfolio translated into significant adjusted EBITDA growth in the second quarter, with adjusted EBITDA of $64 million, increasing 31% year-on-year. Our continued focus on cost efficiencies, combined with our predictable and stable sports rights costs enabled us to deliver significant operating leverage with our adjusted EBITDA margin expanding approximately 250 basis points year-on-year to 20.1% as we continue to be diligent across our cost infrastructure. Looking at the individual cost buckets this past quarter, I will be speaking to adjusted expenses to provide a breakdown of the expenses that impact adjusted EBITDA. We have detailed in the earnings release and the financial section of the earnings presentation, the bridge from IFRS amounts. This past quarter, sports rights expense increased 11% year-on-year to $106 million due primarily to the continued success of our ATP content as well as our renewed Major League Baseball partnership. Sports rights expense was down 103 basis points as a percentage of revenue as we further capitalize on the value of our high-demand sports portfolio and the premium products we have developed. We will remain disciplined and strategic with regards to the rights to be acquired. And with all of our major rights deals locked in long term, we have significant visibility moving forward. This visibility gives us confidence in our ability to drive further operating leverage across our sports portfolio as we deliver additional value to our global customer base. Turning to people. Adjusted personnel expenses were $80 million in the quarter, up 12% year-on-year, driven primarily by increased headcount to support growth opportunities. Importantly, our personnel expenses continued to decline as a percentage of revenue as we closely manage headcount to ensure we are focusing our talent and resources on the most profitable growth opportunities while unlocking additional operating leverage. Adjusted purchased services were $44 million in the quarter, up 14% year-on-year, primarily driven by increased cloud costs to support growth initiatives as well as higher traffic and affiliate costs related to the expansion of our marketing services business. Adjusted other operating expenses of $24 million in the quarter, were up 2% year-on-year, declining as a percentage of revenue. With a strong first half of the year behind us, we continue to see meaningful opportunity to deliver sustained operating margin expansion over the long term, given the inherent scale we have in our business and our long-term cost visibility. As we drive further revenue opportunities, continue to closely manage our cost structure and realize the benefit of sports rights being amortized on a straight-line basis over the life of these contracts, we expect to deliver more of every dollar of revenue to our bottom line. Looking at the full P&L. We generated a profit for the quarter of $49 million versus a loss of $1.5 million in the same period a year ago, driven by the strong operating results, along with an unrealized foreign currency gain of $54 million, primarily associated with our U.S. dollar-denominated sports rights compared to an unrealized currency loss of $8 million in the same period a year ago. Turning to the balance sheet. We continue to be in a strong liquidity position, closing the quarter with $312 million in cash and cash equivalents and no debt outstanding. During the first half of the year, we generated $84 million of free cash flow or a free cash flow conversion rate of 68% compared to free cash flow of $59 million or a 62% conversion rate in the first half of 2024. The increase in free cash flow was driven by strong operating cash flow, partially offset by higher sports rights payments. Cash and cash equivalents decreased $36 million since the end of 2024 as the strong free cash flow generation was more than offset primarily by the repurchase of 3 million shares or $65.5 million as part of the secondary offering during the second quarter. Looking forward, we continue to anticipate strong free cash flow growth for the full year and a conversion rate above last year's level. Please note that given the timing of sports rights payments, we do anticipate a step-down in the third quarter before stepping back up in Q4. Turning to capital allocation. We have now repurchased approximately $86 million of stock at an average price of $17.96 and are nearly halfway through our $200 million share repurchase program. We continue to see value in our shares, given our strong and durable growth and expectations for significant operating margin and cash flow expansion moving forward. It is important to note that our capital allocation priority remains investing in expanding the long-term growth potential of the company. And we will weigh returning capital to shareholders versus additional organic and M&A investment opportunities in both the short and long term. Moving to our full year expectations for 2025. Given the strong second quarter results and the sustained operating momentum across our business, we are raising our full year guidance despite headwinds from the further weakening of the U.S. dollar versus the euro. We now anticipate revenues of at least EUR 1.278 billion, representing year-over-year growth of at least 16%. And we now anticipate adjusted EBITDA of at least EUR 284 million, representing growth of at least 28% versus 2024. This strong EBITDA growth translates to at least 210 basis points of adjusted EBITDA margin expansion in 2025. We also continue to expect a free cash flow conversion rate above 2024's conversion rate of 53%. Note that this guidance does not take into account any impact from the pending IMG ARENA acquisition, given the uncertainty around the timing of closing. And we will incorporate the upside from this acquisition into our guidance once the deal closes. However, it is important to note that we do anticipate IMG's sports rights portfolio will not only accelerate our revenue, adjusted EBITDA and free cash flow generation, that will be accretive to our overall adjusted EBITDA and cash margins. Overall, the continued strong results during the second quarter reinforced Sportradar's significant growth opportunity in 2025 and beyond. We are confident in our ability to capitalize on an expanding addressable market, both in the U.S. and across the world, while delivering additional value to our clients, given our robust content and product suite and leading technology capabilities. The durable and meaningful revenue growth we are generating will help drive long-term shareholder value as we deliver consistent operating leverage and strong cash flow in the months and years ahead. Thank you for your time this morning. And now Carsten and I will be happy to answer any questions you may have.

[Operator Instructions] And our first question comes from the line of Ryan Sigdahl of Craig-Hallum Capital Group.

Great to see the continued momentum in the business and from a number standpoint. I want to start with the Club World Cup. So first year, expanded teams, Sportradar had the rights. So curious, I guess, what you saw from a betting standpoint across your customers? And specifically, if there was an outsized benefit or what you saw within the MTS business?

Ryan, nice to hear you. So the World Cup was very good for MTS, and it was the right decision that we jumped on this deal on a very short notice. What is very interesting is that we saw there is a big interest from the media company to drive traffic from betting into the media space. So we fully achieved this, and we strengthened the partnership here. And from an MTS perspective, it was, of course, very good because there was not much soccer content at this time, and we saw a pickup here.

Great. For my second question, just your competitor just announced the rights for European leagues. It was previously held by IMG ARENA. You guys are in the process of that pending acquisition. If I look at Slide 16, both past decks as well as the current one, it doesn't appear like the European League Soccer were ever included in that pending acquisition. But I guess curious if that's true and then your considerations of those rates specifically? And then second to that, I guess, any change in expectation for IMG? It doesn't sound like from a financial standpoint, but anything from, I guess, that's jumped out in the past couple of months?

It was a loss-making deal, the European leagues for IMG. So we asked IMG before we closed the deal to wind this up and find a settlement, which they did. So it's not in the numbers, you're right, not in the prediction from IMG. Second, there is no audiovisual inventory in those rights, so it's data rights for these leagues. And we have many of the audiovisual rights for the individual leagues. So we feel in a pretty strong position here.

And our next question comes from the line of Jason Tilchen of Canaccord Genuity.

I'm wondering on Managed Betting Services, you saw a particularly strong revenue growth there. I'm wondering if you could share a little bit more about how much the large cohort of new MTS customers that you brought in, in the first half of last year has sort of been impacting that business? And just more broadly, how uptake of that product has trended over the past few months and as you -- your ability to move more customers into that sort of higher-value product in the back half of the year?

Yes, like I told in the script, so it's 50 clients, which we onboarded in 2024. The pipeline which we see at the moment is precisely 42 new clients, which are in the integration period. So we see a very, very strong pickup on the Managed Trading Services, 23% is reflecting this. We are now trading close to 45 billion in turnover on this. So there is -- we have a very nice tailwind here with the trading services. And I think one remark here is we hear from many clients, they focus more and more on marketing and branding and saying for the trading, "We leave this with you guys. You deliver us the better results purely given by the volume of trading that we have, the number of tickets, which we see the mechanic and the mathematics of the big numbers works your perfectly."

Great. Very helpful. And one quick follow-up would be, you mentioned in your prepared remarks, some of the conversations you're having with media companies on some fan engagement solutions. Wondering if you could share a little bit more about is this sort of new solutions you're developing with them? If it's existing products you've already developed for Sportsbook customers that you're sort of selling into that and how meaningful that opportunity is on a go-forward basis?

We think it's pretty meaningful. So we see the 3 markets connected with each other, and that is increasing the media companies, sports betting and sports by itself. This is driven by the information of the sports fan. There is a need, what we saw now in the World Cup that the media companies are recruiting from the sports betting space. And we are the perfect partner for this because on our platform, we have the information about the sport. We have the information about the sports fan, and we know the need from the sports by themselves. So this is connected. We don't see too many media companies stepping into the sports betting space. But we see that it's connected with sports betting with client acquisition. And then here, we start the flywheel with all the tools which we have, the ad service, which is playing in there and the conversion.

And our next question comes from the line of David Katz of Jefferies.

Craig, I think you talked about this a little bit, but for the team, I wanted to just look at the ROW business and its organic growth rate. My sense is that there's some FX in there and the growth rate, at least on the surface, looks a bit lower than it's been for the past several quarters. What's in there and what's really going on and what's kind of the organic growth rate of that business, thinking about it the rest of this year and next?

Sure. Thanks for the question, David. So when you think about the rest of the world, there really is not much currency impact in the rest of the world business. The majority of our currency impacts come from the U.S. dollar-denominated results that ultimately flow back into our euro. But what you're seeing with regards to the rest of the world in the quarter is predominantly just timing around media campaigns that we've seen from an advertising perspective, right? When you look at the first quarter, you had really strong growth on the advertising side of the house due to some additional campaigns that took place in the first quarter. There was less of that in the second quarter. But when you look at the 6 months and what's happened ultimately with that -- our advertising business over the first 6 months of the year, it's up strongly versus where it was in 2024, but there's going to be some choppiness to that line given the realities of the ad campaigns and when they ultimately come to fruition.

And our next question comes from the line of Chad Beynon of Macquarie.

I wanted to start with in-play in Q2, I guess, more focused on the U.S. penetration and how we continue to see that evolve. Can you talk about what that looked like either from a year-over-year standpoint or a sequential standpoint? Is that still moving in the right direction and still gives you confidence in some of the things that you talked about at the Investor Day?

Chad, Carsten here. So we see what we reported on the Investor Day. We see a strong conversion from in-play in the U.S. So at the moment, the numbers which we have, and that's based on averages from the clients and what we see on our MTS platform, shows that we are around about 50% in-play to the pre-match betting. And we see that this trend goes into the direction of more than 70%. And our MTS trading platform, we are significantly higher than 70% for the U.S. matches from the rest of the world, and we see a strong conversion going into this. It means for us from a financial perspective, given the run rate and the growth in the U.S. on the projection on 2029, that means 1% conversion is accounting to EUR 6 million EBITDA for us, and that is more or less a direct flow-through. There are a little bit platform costs involved in there, but it's more or less pure cash. So from 1%, it's a EUR 6 million on the current run rate, and we see 50% proportion in average, and we believe it is growing higher than 70%.

Great. And then, Craig, for the Q2 sports betting margin, was there any major differential versus kind of what you guys had forecasted? And if so, are you willing to quantify that?

Yes. We don't quantify, obviously, how everything changed versus our expectations. But what I will say is the results pretty much came in as expected. We have such diversity with regards to the sports content that we have globally that an individual outcome of a singular event has a very rare ability to move the needle for us in terms of performance. So the margin that we achieved with regards to pretty much all of our business lines came in a little bit better than we expected in the quarter because we were able to take some costs out of the overall infrastructure of the company. But in terms of the performance with regards to the results that happened throughout the world, there was no change versus expectations.

And our next question comes from the line of Barry Jonas of Truist.

As you look at the recent bidding processes for sports right deals, I'm curious how you would characterize just how rational the pricing environment is today?

Well, we saw now the European leagues in this area, I guess, that's where you are referring to. For the European leagues, I gave you my answer. So that was a loss-making deal for IMG. And this is the data deal without the audiovisual rights. So we looked on it, and we find that from a commercial perspective, not fitting to our ROIs. The same for this area. So we said to the market that we stay very disciplined on rights acquisitions. We have high hurdles, and we have a clear definition what is the return, what we expect from those rights. If the right is not fitting to it, we can't take it and that was the process here. So we didn't see that for this price, there was a fit in our portfolio. And one last thing is you know that we have all our key rights to achieve the aims, which we highlighted in the Investor Day for the next 3 years. So we are pretty clear in the execution when it comes to onboarding new rights. And we see already a lot of new rights coming to us from IMG.

Great. That's really helpful. And then clearly, a lot of talk around prediction markets out there. I'm just curious what you think would have to happen for you to become more constructive on prediction.

I think we are very constructive. That's on one hand. It is a regulatory question, which is mainly a tax issue. So as long as we have not a clarity on this, how the predictive markets are taxed. I think it is very, very difficult for us and for the market to see that we can really invest here. We are very open for this, but I think that's a question which must be solved. And the second thing about the size of the prediction market, I think we get a very good feeling if you look to the U.K. and if you look to Betfair, they're existing since more than 20 years. They have a very good business, but the dominant business is sports betting. And the beauty of sports betting is that you can really price everything because the bookmaker is the one who is holding then the risk. On these predictive markets, you're going to need to match it always with an individual. So that gives you less flexibility to accept many different betting types. That's how we see it. But in principle, we welcome this. In principle, we think that's a good additional business for us because they need content.

And our next question comes from the line of Jordan Bender of Citizens.

Carsten, in your prepared remarks, you said something along the lines of looking at new revenue streams. Is this a comment related to ongoing initiatives? Or are there adjacent verticals out there you'd be interested in entering? And if so, can you provide any color there?

We try to stay razor-sharp focused on the strategy, which we highlighted. So additional revenue streams for sure from iGaming platform business, which we highlighted. There are some nice place with AI content distribution to media partners. So these are the things. There is nothing new to what we said on the Investor Day here. But we see this is beginning to pick up. I can't speak at the moment about the media companies, which are in the integration of AI content generation, but we do this. And we have 2 test clients here where we see how we are going. We also have a car manufacturer who is looking into this automatized sport content production with AI. So we see some nice revenue opportunities.

Great. And on the follow-up, you called out last quarter, free cash flow conversion should decline in the second quarter, yet it improved significantly. However, the full year conversion number didn't really change. Was there anything shifting into the second quarter that helped conversion or are you just being constructive on the full year outlook?

Yes. The one challenge -- thank you for the question, Jordan. The one challenge when you're trying to predict what's going to happen in a quarter from a free cash flow perspective comes down to the timing of when your actual payments go out the door for some of these sports rights. So the shifting between quarters sometimes could ultimately drive things higher or lower on a quarterly basis. But obviously, over the course of the year, it plays itself out the right way. What I will say is when you look at the conversion that we had in the first 6 months of the year of 68%, it is ahead of where we were last year at around 62%. We are continuing to grow our cash flow conversion, and we do expect to continue to do that for the full year, like we said originally in our guidance, but you will see some quarterly fluctuations based off of the timing of sports payments.

And our next question comes from the line of Clark Lampen of BTIG.

I have 2 quick ones. First, Craig, I wanted to see if you could follow up on the comments you made earlier around Rest of World performance and the pause in marketing spend. Is there anything, I guess, as you think back on what happened in 2Q that you would attribute that to? Or any reason why we should think about it as potentially transient? And then the second question is on the MTS business. Nice momentum that you're seeing there. Carsten, last quarter, you called out strength in Brazil. It seems like maybe we're seeing some of that in the pipeline right now. Anything that you could tell us or I guess, color you could give us on distribution of new customers? Are you seeing more from international markets, U.S. markets? Is there a SKU there?

Sure. Thanks, Clark. I'll start with the first question, and then Carsten can answer the second. There was really no change to the business momentum or the business trends with regards to the advertising campaigns that we saw. Again, you will see some choppiness to this business just given it requires the sportsbooks to ultimately want to spend on advertising opportunities. Sometimes we see more of that in the quarter, sometimes we see less. Just like I said with free cash flow and the quality of the free cash flow that we're generating -- when you look at the advertising business over a multi-quarter period, we do expect there to be some continued nice momentum in that business. And you see that year-to-date with regards to the advertising business. We do expect to see some really nice momentum in the media and ad business in the back half of the year and based off of everything that we've seen with regards to our conversations with our customers. So I think when you look at the full year results, they'll be very much in line with the expectations that we have for the year.

Well, and to the MTS business, we are 23% up in this year on MTS, which is a pretty strong performance. Looking to the cohort, the 50% from 2024, pretty diversified. So it's not a fixed location here. Yes, Brazil is contributing, but we see it all over the place. More important is the pipeline. We have nearly the same size pipeline now in the integration. So we expect continued strong growth in this segment. Looking from overall turnover, which we enjoy here, it's EUR 45 billion, which is very, very strong from an uplift perspective. And the bigger this is growing and the higher the number of the tickets, the better the algorithms are working. We deployed alpha in most of the products here. So we see a strong uptick and a better performance for our clients, which is the reason why we can onboard and recruit more clients.

And our next question comes from the line of Michael Hickey of the Benchmark Company.

Carsten, Craig, Jim, great quarter, guys. Just a quick update if possible, Carsten, on Brazil. And what you're doing with your iGaming platform there in terms of the marketing services? And I guess as a platform and the scalability you think of that moving forward into other markets and potentially the U.S.? And I have a follow-up.

Our first uptick in Brazil. So we see at the moment, 70, 7-0, licensed operators with more than 140 brands. We integrated now with 50 of them. So we are the biggest player in this market. So we are the one who is running fastest in this early stage. It's a good testament for our investment there and for the work of the team. Looking to iGaming, it's our test market. And I'd like to remind everybody what we understand with iGaming, we believe that from a sports betting perspective, iGaming and sports betting should not be treated separately by the operator. It belongs to each other, and there is a connection. At the moment, it is separated. So we believe that the 360-degree flywheel here is acquisition with sports betting. We have all the tools with this with programmatic advertising. We classified as we have our own DSP and SSP here that we can convert. That goes into the full sports betting funnel up to the full platform management or trading services. Then we switch it over with campaign management, with bonus systems into the iGaming space, and there is a connection with retention. So if you see a live match in the streams, you get all the side markets, the micro markets. But for example, in a tennis match, if there is a 20-second break because they're changing the balls, we can show if we know that user is also interested in basketball, for example, we can show a spin with a basketball branded slot. And that goes within 20 seconds. This is the kind of connection which we see. This is the 360 service. And this is what we test at the moment in the market and Brazil is our test market. We have 34 integrations already from the 50 clients there. So there is a strong uptick. But from a result perspective, of course, we expect in the future significant more contribution than we see at the moment.

Sounds good. The second question from us, obviously, you have an incredible and global perspective on the growth of sports betting in as much as you can. Obviously, you're not an operator, they're your partners. When you look at the U.S. gaming market in Q2, just wondering your sort of view, I guess, on the health of the market, when you look at handle GGR and old? Is it sort of tracking or beating your expectations and sort of early Q3 trends of the momentum that's in fact continuing or not?

So giving predictions in the future for the Q3, I'm very careful with these things. But it's something where we see a very strong U.S. We see very strong growth. We see nice opportunities. That was 10 days ago in California, trying to understand better what goes on here, where do we see these trigger points for potential market openings. So it's interesting. It's not something which will happen in the next quarter, no worries. But we see that there is a very strong adaptation in the U.S., and we see that's a continued trend. But looking into Q3, lots of matches are starting. Usually, you see some surprises in the early days. So we think tendency-wise, if you ask me now privately, I will see some stronger hold numbers. We are not depending on this, as you know, from our business model, but that's what we currently see in the U.S.

And our next question comes from the line of Bernie McTernan of Needham & Company.

Just to start, Carsten, in the prepared remarks, you mentioned 40% of clients taking 4 more products. Is there any color that you can provide on the take rate of these clients that are taking 4 more products versus 60% who are taking 4 or less? And any context for how that 40% penetration has changed over time?

Well, like highlighted on the Investor Day, it's important for us to see that 40% are taking those 4 products from our clients. So we have a 60% where we still have a lot of abilities. And for this 40%, we see trends in upselling. And as a sample from an MTS perspective, where we indicated the 50 customers and now the 42 in the pipeline. That is a strong testament to how we can make the take rate higher and do this upselling. So this is the flywheel which we execute here. Of course, with the client relations which we have and with the binding tools which are in there, that's significantly easier for us. The same works, by the way, for the ad service. So that's how we try to do it. I can't classify you now the numbers from the upselling. Maybe Craig can do this, but we are not disclosing those numbers normally.

Okay. Understood. And I believe you mentioned higher trading margins at MTS in the quarter. Can you just talk about what's driving this? And is this a onetime benefit? Or is it more of just sustainably being able to trade at a higher margin?

While there are always results-driven margin improvement, difficult to figure out how much is now from a resulting perspective, how much is from the algorithms. But tendency-wise, one thing is for certain with Alpha and more information, we see better trading results. And that is a trend, which we'll see continuing. That's simply a trend of the mass and the big numbers, and we are very satisfied to see those impacts.

And our next question comes from the line of Sam Nielsen of JPMorgan.

Carsten, when we think about the international TAM, obviously, under the current footprint, it continues to grow quite nicely. But wondering if there's any potential new markets we should be keeping an eye out for pre-legalization over the next 6 to 12 months? And then you kind of talked about Brazil a little bit earlier in the Q&A. Is there any way to quantify kind of the impact that it may have had on this year's expectations?

Well, first, Brazil is continuing to grow. We believe it's at the moment on a 2 billion all over and it goes probably to 5 billion, maybe EUR 6 billion in the next 4 years. So that's a strong growth profile, and we are the biggest player in this market and then early adopters. So we see continuous growth and that gave you a bit of size of the numbers from a TAM. What we see in APAC is very interesting. We continue to be a strong promoter for Japan. We are very happy with Major League Baseball and the rights there. We believe that this might be a key element for any upcoming regulation. We see some nice developments in India. We see some nice developments in Thailand. Thailand probably most progressive in this perspective, but we see growth opportunities in those markets. Of course, we see growth opportunities around the globe. Looking to Europe, we are ramping up now for the World Cup in the next year. Usually, that's a good period. You see more clients coming in, you see more activities.

Got it. That's great. And then in terms of U.S. revenue, obviously, it maintained a strong growth from the first quarter there. Wondering if there's anything in the back half of '24 that we should be thinking about you guys lapping going into the second half of this year and kind of our modeling there?

Thanks for the question, Sam. I think when you look at the year-on-year from '25 versus '24, the results are pretty much apples-to- apples for the course of the year. We had the addition of our Major League Baseball deal, which started towards the tail end of the first quarter and is kind of rolling through the rest of the year, but we had Major League Baseball previously. So there's a little bit of higher cost from that perspective for this year, nothing significant, but something to point out. So overall, when you're looking at growth in Q3 and growth in Q4, it should be very much on an apples-to-apples basis.

And our next question comes from the line of Ben Miller of Goldman Sachs.

I'm curious if you can provide some updates on the path from here for the 4Sight product. Just any color on how you think about the mix of growth from increasing the penetration of sports books that have adopted or percent of matches that can be streamed via foresight over time would be helpful.

But 4Sight is a stimulation product. What it should do is it should drive traffic into the live betting. And we see with LottoMattica's GoldBet study that this is excellent. So it's working very, very well, strong conversion, strong drives into live betting. That is the purpose of the product. So user engagement. We rolled out the product now in basketball. We will roll it out for Major League Baseball very soon. We developed it for soccer like we highlighted. And of course, we rolled it out, we rolled our tennis properties. So these are the most important betting sports for us and 4Sight is now present there. We see strong client adaptation reflected also in our trading numbers. So that's what we can say to it. Connecting this now with the micro market and with other products like emBET is the clear strategy in this segment.

Great. And then just as a follow-up, you've talked a lot about the opportunity to drive take rates through attach rates of higher-margin products and services. I'm curious, though, how you think about the opportunity for like-for-like pricing power in products and services offered from here and just how you think about that algorithm between the 2?

Yes. I think when you look at the pricing algorithm that we have, Ben, you have to look at it really versus domestic -- or I should say, the U.S. versus international. In the international market, the majority of our contracts are fixed fee, aside from our MTS contracts. And with those contracts, we have natural escalators built into those contracts. And every time those contracts come up, which is an average of 3 years or so, we look to renegotiate it. And we do have some pricing power depending on the value that we've added to our clients, and we've seen them want to collaborate with us and continue to take more products, but also be willing to pay higher prices if we're delivering real value. And you do see the same thing here in the U.S. In the U.S., where the contracts are predominantly variable contracts, we obviously grow with our clients as they grow. But as we continue to deliver value through our products and we come up -- and those contracts come up, we have the ability to negotiate higher prices. The good thing for us is with some of our larger clients, those contracts actually run for a significant period of time here moving forward. And when we look to kind of elaborate and expand those contracts, we're talking about more products and services and more value that we can add to those customers. So it's been a good relationship, both domestically and internationally.

And our last question comes from the line of Jason Bazinet of Citi.

You guys obviously have a lot of vectors that are helping your top line, the GGR growth, upselling, meaning a deeper content portfolio, cross-selling and then moving up to the value chain like MTS. Just in simple terms, if you looked at what contributed to your growth over the last few years relative to what you think will unfold over the next few years, do you see a big shift in the underlying drivers of your growth in those 4 buckets, GGR growth, upsell, cross-sell and moving up the value chain?

No. We see that we have a strong growing global market in average, roughly around about 10% over the whole world. And we see us in a pretty strong position because we have the biggest distribution. We are connected to 900 players in the sports betting gaming space and to more than 2,000 media companies. So we don't see any change here. And our situation is that we believe with the breadth and depth of our content portfolio and the products, we can outperform the underlying market growth. We see nice opportunities looking now into a direction of connection with media and sports and sports betting, and we develop a platform for this. So we think that this is something which will generate some significant uplift opportunities. Connection with iGaming, we mentioned and discussed here and the take rate and the cross-selling and upselling is something which we demonstrated, for example, very successful with the trading services. And if you put our AI around it and every company in the world needs to care about is every technology business, then you have a winning proposition. So we feel pretty strong around those 4 gross pillars in the strategy.

Great. We want to thank everyone for joining us for our second quarter earnings call. I'll turn it back over to the operator.

This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.