Sportradar (SRAD) Q1 2026 Earnings Transcript

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DATE

Wednesday, May 6, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Carsten Koerl
• Chief Financial Officer — Craig Felenstein
• Head of Investor Relations — James Bombassei

TAKEAWAYS

• Revenue -- $347 million, representing 11% reported growth year over year and 16% growth on a constant currency basis, primarily driven by uptake of IMG content and effective cross-sell strategies.
• Adjusted EBITDA -- $66 million, reflecting a 19% margin and 12% increase versus the previous year, with margin expansion attributed to the IMG acquisition and realization of cost synergies.
• Free Cash Flow -- $44 million, marking a 38% increase year over year, with free cash flow conversion of 67% compared to 54% the prior year.
• Share Repurchases -- $90 million completed during the quarter, totaling $228 million repurchased since inception, alongside announcement of a new $250 million enhanced open market repurchase program under the $1 billion authorization.
• Net Loss -- $6 million compared to a $24 million profit last year, mainly due to $9 million in unrecognized foreign currency losses versus a $28 million gain in the same period 2025.
• Betting Technology and Solutions Revenue -- $288 million, up 15%, led by a 20% increase in betting and gaming content revenues and growth in streaming, odds, and live data products.
• Managed Trading Services Turnover -- Increased 24%, but revenues reduced due to "player-friendly outcomes," particularly affecting February European soccer trading margins.
• Sports Content, Technology, and Services Revenue -- $59 million, down 4%, with declines attributed to reduced marketing spend and FX headwinds, partially offset by media upsells and Integrity services.
• Geographic Revenue -- Rest of World revenues up 14%; U.S. revenue up 4% reported, or 17% on a constant currency basis.
• Constant Currency FY 2026 Outlook -- Revenue growth expected at 23%-25% ($1.56 billion-$1.58 billion reported), with adjusted EBITDA forecasted at $390 million-$400 million (34%-37% growth), and margin expansion of approximately 200-225 basis points.
• Cost Structure -- Sports rights expenses reached $122 million (up 18%), adjusted personnel expenses were $84 million (up 5%), purchase services were $46 million (up 5%), and other operating expenses were $28 million (up 16%), all affected by the inclusion of IMG and cloud spend.
• Core Betting Clients Consuming IMG Content -- Over 75%, including all Tier 1 operators; ~60% of clients previously not using IMG content now do so, highlighting broad-based monetization from the IMG rights acquisition.
• Playradar iGaming Launch -- Rolled out across Latin America, including Brazil, with plans to expand to the U.K., Greece, Sweden, Denmark, multiple U.S. states, and Canada before year-end.
• Customer Net Retention Rate -- 108%, excluding IMG content utilization by current customers and factoring in FX headwinds.
• Restructuring Charges -- Planned cost-efficiency measures expected to produce between $13 million and $18 million in restructuring charges for the remainder of the year, aimed at driving additional operating leverage.
• Exposure to Gray Markets -- Management estimates revenues exposed to gray markets at "low to mid-single-digit" levels; "could be as high as 12%," though review and compliance processes designed to restrict business to licensed operators only.
• Prediction Markets -- Management described imminent commercial announcements with exchanges, market makers, and brokers, stating, "We are very confident that we will see very soon some bigger news and announcements around this."
• CEO Share Purchase -- CEO Koerl intends to purchase $10 million of company shares when the trading window opens, as a signal of management’s confidence in intrinsic value.

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RISKS

• Craig Felenstein noted, "U.S. market growth is definitely slower than it was when we were speaking after our fourth quarter results," and marketing services revenue declined 9% in the quarter, citing operator uncertainty and deferred spend as contributing factors.
• Net loss of $6 million, as operating growth year-on-year was offset predominantly by unrecognized foreign currency losses of $9 million, primarily associated with our U.S. dollar-denominated sports rights
• Sports content, technology, and services segment saw a 4% revenue decline, with reduced marketing campaign spend and foreign currency headwinds identified as primary causes.
• Management expects restructuring charges of $13 million-$18 million for the remainder of the year to achieve further cost efficiencies.

SUMMARY

Sportradar Group AG (NASDAQ:SRAD) reported double-digit year-over-year revenue growth, margin expansion, and robust free cash flow, driven by strong IMG content monetization and share repurchases. The company addressed short-seller allegations directly on the call, reiterating its robust compliance controls and highlighting estimated gray market exposure at no more than 12% of total revenue. Management confirmed the launch of the Playradar iGaming brand in Latin America and forthcoming entry into key European and North American markets as part of a cost-effective, organic growth strategy. Executives emphasized imminent, potentially material commercial activity in prediction markets, with management stating that near-term announcements may already be factored into annual guidance, while later deals could be additive. The full-year outlook for revenue and adjusted EBITDA was reaffirmed despite headwinds from U.S. sports betting market softness, marketing services variability, and considerable FX impact.

• Sportradar’s adjusted personnel and purchase services costs fell as a percentage of revenues, improving operational efficiency and reflecting technology-driven process changes.
• New COO Sameer Deen will join to support commercial expansion and operational optimization, bringing experience from Entain, which management positions as critical for the company’s growth priorities.
• Forthcoming restructuring is expected to optimize organizational structure, enhancing operating leverage in the back half of the year.
• Management maintains that the exposure to unregulated markets is monitored via a very rigid KYC process, with immediate contract termination for violations, and notes that the majority of content piracy relates to non-betting informational tools.
• AI and GenAI technologies were said to deliver a 20% lead time reduction in engineering and are expanding across both operational and legal functions to further cost containment and speed-to-market.

INDUSTRY GLOSSARY

• IMG ARENA: A sports data and media rights platform integrated into Sportradar’s product suite, driving notable revenue and margin synergies.
• MTS (Managed Trading Services): Sportradar’s offering providing odds, risk management, and trading for sports betting operators.
• Playradar: The new dedicated iGaming brand from Sportradar, aiming to fuse sports data and gaming offerings.
• KYC (Know Your Customer): Compliance procedures used to verify client legitimacy and licensing, referenced with respect to gray/black market operator exposure.
• Prediction Markets: Exchanges or platforms where participants forecast sporting event outcomes, cited by management as a significant emerging opportunity.
• SAM (Serviceable Addressable Market): The segment of the broader market that a company can realistically serve, cited in the context of prediction market expansion.

Full Conference Call Transcript

James Bombassei: Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the first quarter of 2026. Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at 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, to the risk factors discussed in our annual report on Form 20-F and Form 6-K filed 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. We may also discuss certain forward-looking non-IFRS financial measures that cannot be reconciled to the most directly comparable IFRS financial measure without unreasonable efforts. Joining me today are Carsten Koerl, our CEO; and Craig Felenstein, our CFO. And now I'll turn the call over to Carsten.

Carsten Koerl: Good morning, everyone, and thanks for joining us. Today, I will discuss our Q1 results and operations, which reflect our premier position as a scaled leader in the expanding global sports data ecosystem. I will also highlight the accelerating business momentum we anticipate over the course of this year. The appointment of Sameer Deen as COO, the enhanced open market repurchase program and reaffirming of our '26 full year financial outlook. This reflects the great confidence we have in our business model, the integrity of our people and operations and our company's very bright prospectus for profitable growth and outsized value creation.

Before we get into the results, I want to address directly the recent self-interested reports published by known short sellers with the intent of driving down our company's stock price. For more than 4 years as a public company and over the past 2.5 decades before that, we have built Sportradar to give bookmakers and fans the tools they need to engage with and wager safely on their favorite sports markets. To be clear, Sportradar and I reject the unfounded and misinformed allegations contained in the reports. As the global leader in sports technology, trusted by leagues, operators and regulators around the world, we place integrity, transparency, professionalism at the heart of everything we do.

For 25 years, Sportradar has maintained regulatory licenses in jurisdictions around the world. In order to maintain the respect and trust of our stakeholders and ensure the long-term vitality of our industry, we continue to conduct our business in a manner consistent with the highest standards. Unfortunately, these actors strive on misinformation and repackaging historical allegations to drive down company stock prices at the expense of long-term focused investors. The company takes very seriously our obligation to our stakeholders. To be clear, the company maintains a robust compliance framework with oversight from the Board of Directors that is designed to assist the company and its officers to navigating the complex business and regulatory landscape.

This morning, we filed a 6-K that speaks to our strong compliance and KYC framework, and we encourage investors to read it for additional details. Given our strong conviction in the long-term value of our business, during quarter 1, we repurchased approximately $90 million worth of shares, bringing our total repurchases since inception of the program through last week to approximately $228 million. Also this morning, we announced that we have entered into a $250 million enhanced open market repurchase program to be executed under our previously authorized $1 billion share repurchase program. I believe the company's current valuation does not reflect the strength of our business and our long-term prospects, and I'm confident in the path we are on.

Accordingly, I intend to personally purchase $10 million worth of shares in Sportradar when our trading window opens. Before turning to our results, I want to take a moment to welcome Sameer Deen, who will be joining Sportradar as Chief Operating Officer on May 18. Sameer brings extensive experience across sports betting, gaming and digital media, including most recently from his time at Entain, where he served as Chief Commercial Officer. The executive leadership team and I look forward to partnering with Sameer, who will be instrumental in driving our commercial efforts and optimizing our operations. Now turning to our first quarter results. Sportradar delivered Q1 revenues of EUR 347 million, an 11% increase year-over-year.

This was driven by strong performance in betting and gaming content, including continued strong progress monetizing IMG ARENA rights. We generated adjusted EBITDA of EUR 66 million, which translated to a margin of 19%. From a bottom line perspective, we continue to drive strong free cash flow as we expanded cash conversion to 67% in the quarter. In terms of our competitive position, we are the sports technology leader, covering over 1 million matches annually. The unique breadth of our offering powers more data and os generation enables us to stream more videos than our peers and helps grow our MTS trading liquidity.

It is this scale and expertise as well as the depth of our global client base that is enabling us to make great progress integrating the IMG rights portfolio and capitalizing on revenue synergies. Demand across our global client base has been strong with more than 75% of our core betting clients now consuming IMG content, including all Tier 1 operators. Of our clients who were previously not customers of IMG, nearly 60% are now purchasing IMG content from us. Our partnership expansion with Hard Rock Bet to include official content from the PGA TOUR and UFC is a clear example for this.

We are excited to continue unlocking incremental value through cross-selling, giving our tremendous operating leverage as we capitalize on our existing infrastructure and capabilities. From a product perspective, we have integrated IMG content into our core product suite and are now integrating it into our next-gen offerings for both Golf and Tennis Grand Slams. The continued strong progress and rapid integration underscore our ability to monetize sport rights across our larger global client base and product suite to deliver significant accretive revenue growth. Our increased sports coverage, combined with our product innovation and the deeper engagement this foster is helping to boost our streaming activities. Last year, we streamed over 525,000 matches globally.

And in '26, we anticipate to stream over 700,000 across our global footprint. Switching to our managed trading services. We continue to scale the business with turnover up 24% in the quarter. While turnover was strong, our revenues in the quarter were impacted by player-friendly outcomes. Trading margins should normalize over the time, given the diversity of our clients and sports coverage on the platform. And we expect the business will continue to be a core growth driver for us going forward. Turning into iGaming. We recently launched Playradar, our dedicated iGaming brand, which will serve us as a natural extension for our core business.

Playradar capitalizes on our unique position as well as our sports data expertise to offer hybrid products that blend the sports betting and iGaming experiences. We are doing this organically and cost effectively using existing resources. We are already live across Latin America, including Brazil, and over the remainder of the year, anticipate launching in a number of European markets, including the U.K., Greece, Sweden and Denmark, as well as several U.S. states and Canada. Now touching on the prediction markets in light of the evolving environment and moderating U.S. market growth, we see prediction markets as a significant opportunity where Sportradar is uniquely positioned to lead given our premium content, global scale and unmatched product portfolio.

Prediction markets expands the U.S. TAM by opening up new states, attracting new demographies and increasing engagement with sports. Similar to our position in online sports betting, we will power key players in the prediction market ecosystem. Sportradar prediction service will provide our exclusive data products and services to exchanges, market makers and brokers. For Sportradar, this opportunity diversifies our customer base, expands our SAM and promotes a shift to live engagement, all of which should drive higher revenue over time. We are in an active commercial discussion with a number of prediction market players for the use of official data and products related to MLB, NHL, MLS and UFC amongst other global leagues and competitions.

While we expect to announce agreements soon, we are being deliberate in our discussions to ensure we maximize economics given the value we will bring to this ecosystem. Now turning to the remainder of the year. We see a number of drivers for our business. The FIFA World Cup in June is expected to generate significant betting turnover, which should contribute to our MTS business. With our new visualization and with operators expecting to take advantage of the event to launch marketing campaigns, this should also contribute to our performance. Additionally, as we progress through the year, we believe we will increasingly benefit from prediction markets as we enter into agreements with exchanges, market makers and brokers.

All of this contributes to confidence in our full year's guidance and increasing momentum in our business over the course of the year. In closing, Sportradar is well positioned to take advantage of an evolving sports market and has momentum heading into the rest of the year. We are uniquely positioned to benefit from both online sports betting and prediction markets by leveraging our long-term rights agreements and unmatched product portfolio. We will continue to drive innovation across our business, uphold the highest levels of integrity and transparency while delivering increasing value to our clients, our partners and our shareholders. The underlying fundamentals of the business remains strong, and we are confident in our growth strategy and the opportunities ahead.

Thank you. I will now hand over the call to Craig, who will discuss our financial results in greater detail.

Craig Felenstein: Thanks, Carsten, and thank you, everyone, for joining us this morning. We are a week earlier than originally anticipated as we wanted to discuss our financial and operating results as soon as possible so we can better capitalize on the opportunity provided by the company's current share price. Importantly, our focus remains the same, delivering durable and consistent revenue growth while leveraging a stable and predictable cost base so we can deliver significant multiyear margin expansion and what ultimately matters most, free cash flow generation. The value we are creating for our sports, media, technology and betting partners continues to translate into significant top line growth.

And while there were some headwinds during the quarter, which I will discuss in a moment, full year expectations remain unchanged as our expanded best-in-class content and product suite is further resonating across our existing leading global distribution network and new platform opportunities. Looking at the first quarter, Sportradar generated revenues of $347 million, an increase of $35 million or 11% compared with the first quarter of 2025, driven by the strong uptake of IMG content and the continued cross-sell and upsell of our products and solutions to existing clients as demonstrated by our customer net retention rate of 108%.

It is important to note the NRR growth excludes the utilization of IMG content by existing customers, but does include the impact of foreign currency headwinds, particularly from the U.S. dollar relative to the euro. Overall, our revenue growth in the first quarter would have been 16% on a constant currency basis, excluding the impact of FX movements. Turning to our individual product groupings. Growth was driven by our betting technology and solutions products with revenue of $288 million, increasing 15% versus the first quarter a year ago.

This growth was led by a 20% increase in betting and gaming content revenues, driven by strong demand for IMG content across our client base and continued growth in both our streaming and betting engagement products as well as odds and live data products despite slower growth from U.S. sportsbooks. We continue to capitalize on the revenue synergies related to IMG by leveraging this content across our global scale and integrating it further into our extensive product suite, and we fully anticipate exceeding the 25% synergy target we discussed last quarter.

Managed Betting Services was down slightly in the quarter as increased turnover at Managed Trading Services was offset by unfavorable sporting outcomes, most notably during February on European soccer, which we expect to normalize over the course of the year. Moving to our other product group, sports content, technology and services products delivered revenues of $59 million, a decrease of 4% year-on-year, predominantly driven by reduced spending on marketing campaigns during the quarter and foreign currency headwinds, partially offset by media upsells to technology companies and increased contributions from Integrity services as we expand our league partnerships.

The growth in the quarter was once again geographically broad-based with Rest of World revenue increasing 14%, while U.S. revenue was up 4% on a reported basis. Headwinds from foreign currency movements and to a lesser extent, the timing of marketing campaigns significantly impacted U.S. reported revenue, which would have increased approximately 17% on a constant currency basis. Turning to adjusted EBITDA. Our continued focus on cost efficiencies, along with our stable sports rights portfolio, delivered slight margin expansion in the quarter with adjusted EBITDA of $66 million, up 12% year-on-year. As anticipated, the IMG acquisition continues to be margin accretive as we scale the business and realize cost synergies in areas such as engineering, scouting, audiovisual production and personnel.

Looking at the individual cost buckets, 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 18% year-on-year to $122 million due primarily to the addition of IMG. As we have said previously, all of our major rights deals are locked in long term.

So we have significant visibility on sports rights costs moving forward, giving us high confidence in our ability to drive operating leverage as we capitalize on the value of our high-demand sports portfolio and the premium products we have developed for our global customer base. Adjusted personnel expenses were $84 million in the quarter, up 5% year-on-year, predominantly driven by the inclusion of IMG headcount with slower growth across our existing workforce even as we drive new growth opportunities. Importantly, personnel expenses continued to decline as a percentage of revenue, down 144 basis points versus last year as we further capitalize on efficiencies provided by technology advancements and focus resources on the most profitable growth opportunities.

Adjusted purchase services were $46 million, up 5% year-on-year, primarily due to the inclusion of IMG as well as higher cloud spending. Overall, adjusted purchase services declined by 84 basis points as a percentage of revenue as we further leverage our existing infrastructure. Adjusted other operating expenses of $28 million in the quarter were up 16% year-on-year, with the increase predominantly driven by costs related to IMG. Overall, we continue to anticipate meaningful margin expansion over the long term, given the inherent scale we have in our business and our long-term cost visibility, including the benefits of sports rights being amortized on a straight-line basis.

At the same time, we have recently initiated steps to further streamline our business and drive additional cost efficiencies. We anticipate these steps, which are expected to result in restructuring charges of between $13 million and $18 million during the remainder of the year, will drive additional operating leverage and optimize our organizational structure for sustained value creation.

Looking at the full P&L, we generated a net loss for the quarter of $6 million versus a profit of $24 million in the first quarter a year ago as our operating growth year-on-year was offset predominantly by unrecognized foreign currency losses of $9 million, primarily associated with our U.S. dollar-denominated sports rights versus a gain of $28 million in the same period a year ago. Turning to the balance sheet. Sportradar remains in a very strong liquidity position, closing the quarter with $322 million in cash and cash equivalents and no debt outstanding.

In the first quarter, the company generated free cash flow of $44 million, an increase of 38% from the first quarter a year ago, and we continue to convert more of each dollar of EBITDA into free cash flow as demonstrated by free cash flow conversion rate of 67% versus 54% a year ago. Looking forward, we continue to anticipate strong free cash flow growth for the full year and a conversion rate above last year's rate of 56%. Cash and cash equivalents declined $44 million from the end of 2025 as the strong free cash flow generation was offset primarily by share repurchases of $90 million during the quarter.

Our priority with regards to capital allocation remains investing in the long-term growth of the company. However, given the significant discount between the current share price and the fundamental strength of our business, we believe there is currently no better use of capital than investing in Sportradar shares. Last quarter, the Board approved a significant increase in our share repurchase program, raising the total plan by an additional $700 million to bring the total authorization to $1 billion. This quarter, under this expanded authorization, the Board has approved a $250 million enhanced open market repurchase program with purchases to commence when our trading window opens and with the expected completion within approximately 3 months, subject to trading volumes.

This reflects our conviction in the durable growth trajectory of our business and the multitude of value creation opportunities ahead. Turning to our expectations for the year. We are reaffirming our full year 2026 outlook. While there have been some short-term headwinds, there are also a variety of opportunities for the remainder of the year that we expect to capitalize on such as further IMG synergies, the prediction market ecosystem and global customer renewals. As such, we still anticipate constant currency revenue growth of 23% to 25%, which at current FX rates is expected to be between $1.56 billion and $1.58 billion reported.

We expect to drive significant operating leverage on this revenue growth with adjusted EBITDA growth of 34% to 37% on a constant currency basis, which at current FX rates is expected to be $390 million to $400 million reported with approximately 200 to 225 basis points of margin expansion in 2026. As a reminder, we expect the strongest revenue growth to occur in the second and third quarters given the timing of sporting events and the inclusion of IMG content. Additionally, given the weakening of the U.S. dollar throughout 2025 at current currency rates, the FX headwinds will still be significant in Q2. Overall, we are very excited about the opportunities Sportradar has moving forward.

The investments we have made in content, technology and products, along with an unmatched global customer base has us well positioned to deliver durable revenue growth as the market expands and additional opportunities arise. At the same time, we are becoming even more efficient with our cost structure and with strong visibility regarding sports rights, we fully expect to deliver significant margin expansion and further ramp free cash flow, delivering additional value for our shareholders 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: [Operator Instructions] Your first question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

Ryan Sigdahl: Good to see positive business momentum despite some of those transitory impacts in the quarter. I want to start with marketing services just to dig in there because that was where most of the miss was versus ours and I think generally street expectations. But had been a good growth business. It was down 9% in the quarter. Can you talk about what specifically happened in the quarter? And if there's been a structural change in spend from your operator customers or if it was really a timing of spend? And then kind of along that lines, reiterating the guidance, but given that softer start to the year, what gives you confidence to reiterate that?

Craig Felenstein: Sure. Thanks, Ryan. I appreciate the question. When you look at marketing services, listen, it's always been a very choppy revenue line item, right? It really depends on what operators want to do in any given quarter, and they can shift their spending, I would say, up to the last minute with regards to when they want to spend. Sometimes they keep it in the current quarter, sometimes they push it out and sometimes they don't spend at all. What I think happened in the first quarter is you did have some people pull back given some of the uncertainty in the space.

And I think you also had some people who were saving some of their spend heading into the World Cup, which you could see come back in the second and third quarter. When we look at the marketing spend line for the full year, we still expect it to deliver really nice growth. Our ads business is in really healthy shape, and we know the value that we bring to our sportsbook partners and our iGaming partners, and we see a significant opportunity to grow this line moving forward.

When you think about the guidance for the full year and what we expect, we do expect marketing services to grow definitely more in line with what it's done historically, excluding any onetime items. Some of the other things that we look at with regards to guidance for the full year that we are -- gives us confidence that we'll ultimately get to where we guided to at the start of the year, one would be the marketing that we just talked about. Two would be the continued success that we're seeing with IMG and how it's resonating with our customers.

And the third and probably the biggest is we have really good sight lines right now, we think, with regards to some prediction market revenue opportunity that's going to happen in the predominant in the back half of the year. So those 3 things give us confidence that we're going to hit our guidance for 2026.

Ryan Sigdahl: Helpful. Then for my follow-up, just given the recent news flow kind of over the past handful of days here. From our standpoint, there's a big difference between licensed gray market operators and black market illegal operators. Curious if you're willing to quantify and say with confidence what your revenue mix is for operators in black illegal markets. And then if there would be ways for those operators to get radar data without having a direct relationship with the company? And then kind of lastly, with that, how you think about licensed gray market operators?

Carsten Koerl: Ryan, this is Carsten. The first point is the black market and the gray market, we do not work with black market operators. For the gray market, we have a solid compliance structure in place, and we only work with licensed operators. And the measurements which we apply here is a risk assessment and irrespective of licensing and jurisdictions, we support only business which has a license. The team is constructed out of legal experts, compliance and risk personnel together with external advisers. We take this very, very serious, and we are running a very rigid KYC process, which I think I explain later on.

But maybe we jump now to the second part of your question to define what is the pocket sitting in this gray market. Overall, it is between low single digit to a mid-double -- sorry, it's a low to mid-single-digit number, so 5% to 12%, 13%. That's the range which we have, and we are drilling this down from our operational business. For this, I hand over to Craig that he can give you these numbers.

Craig Felenstein: Sure. Thanks, Carsten. When you think, Ryan, about ultimately our revenues, obviously, we looked at -- come up with those numbers at a bottoms-up approach on a client-by-client basis. But let me talk to you a little bit about what is out there from an information that you guys can see, which can frame ultimately what this exposure could be. First, you have to look at our overall revenue. When you think about our overall revenue, there's really 2 big buckets. You have the betting technology and solutions part of our business and then the sports content technology and services part of our business.

The sports content, technology and services part of our business makes up a little over 20% of our revenues, and that is certainly non-betting related. When you break down the other 78% of our business in the betting technology and solutions products, betting and gaming content and managed betting services are what make up that kind of product group. Within the betting and gaming content side of that, the primary exposure is from our data and odds business. The other products in this group are our fan engagement tools, which is predominantly made up of AV streaming, which is not related. Within the managed betting services part of our business, the primary exposure from that is from our MTS business.

And when you think about kind of the pieces I just laid out that are exposed to potential gray markets, you're really talking about the data and odds business and the MTS business. And when you add those pieces together, you're talking about somewhere in the mid-40% of our overall revenues. Out of that mid-40%, you need to exclude the U.S. revenues, which are generated. And when you do that, the potential exposure gets reduced to somewhere in the mid-30% range. Then on top of that, there's obviously some large global providers that are in there.

When you remove those out of the equation and you apply what I would say our public estimates with regards to what gray markets are, you can see that the math takes you back down to that low to mid-single-digit exposure with regards to gray markets overall.

Operator: Your next question comes from Chad Beynon with Macquarie.

Chad Beynon: Slide 8 was really helpful in terms of outlining the prediction market ecosystem. And Craig, you talked about the guidance includes some of that ramp in the back half. And Carsten, you said that there's really good conversations. Is there any other touch points that you can help us with just in terms of thinking about the ramp or which one of those constituents, FCM, DCM or market makers is the most important and where we could see some activity in the back half?

Carsten Koerl: Chad, this is Carsten. So as you know, we got the green light from NHL, UFC, MLS and MLD that we can start the marketing here and we created services for this. So there are different needs, exchanges and market makers, they have a fundamental different need when it comes to the ultra-low latency data and video feeds. Market makers are interested in prediction models based on deep data, how can we forecast the next couple of seconds. This is really very important for them. Very different to online sports betting operators where you have a big importance on the result. It must be 100% right because it triggers a payout. For market makers, it stimulates liquidity in those directions.

So we develop products meanwhile for serving this. So that was good for us that we have some time. If we're looking now to the exchanges, you know that we already have fan engagement tools and customer acquisition here, and we are speaking with all the players in the market. As Craig said, we are very confident that we will see very soon some bigger news and announcements around this. We think that the NBA is also thinking about prediction markets and how to enter. We are in close partnership with the NBA, as you know, and in enhanced conversations.

So looking to the brokers, it's the segment where we have the customer acquisition, some visualization tools and of course, for both exchanges, we have the integrity services. If you look to the business model, what we are running here is pretty similar to online sports betting. So we have a fixed fee and a revenue share with a minimum guarantee, and that's at the moment in intensive negotiations.

Chad Beynon: That's great. And then with respect to AI at the Investor Day last year, you guys outlined some of the opportunities on the product development side of things. Can you talk about additional AI implementations either on the revenue driving side or on the cost containment side given the restructuring?

Carsten Koerl: We are on both sides. And as told in the last call, the engineering is a prime part of our business. We are one of the very first companies to set KPIs for the engineers, how they use the prompt and how they're working with it. It was leading already to a lead time reduction of 20%, and we are accelerating on this. We see excellent results from an engineering perspective. Operational-wise, more and more sports will be automatized. That's simply a trend. And we are doubling and tripling down to deploy AI and GenAI. Looking now into finance and legal, the opportunities are really big.

So there are really things where we can accelerate client contracting processes for the different regions, and we are actively deploying this. We are training our people on AI, GenAI. We want them to use agentic agents. I think that's a job every company has to do. We said we want to be the front runner on this. Within this process, of course, we will see efficiency gains. We change structures and we change processes in the company to the benefit of being more efficient and delivering faster and better quality.

Looking to the products, micro markets, Foresight, the foundation model and the Bettor Sense out product, which we developed, speaking very clearly on the deployment of GenAI and how we use this already with products. This is continuing, and we double and triple down on this.

Operator: Your next call comes from Barry Jonas with Truist.

Barry Jonas: Just curious since the reports came out if you've had any discussions with league partners or gaming regulators. Curious what the interactions there have been.

Carsten Koerl: Barry, Carsten here. The feedback so far is overwhelming to me. I get a lot of support from all sites, our partners, our clients, the industry, some commissioners. And from a regulator perspective, we are in contact with some regulators on a very frequent base. Some of them contacted our teams, explaining them the situation, and that's an ongoing process. Overall, the response was for me overwhelming that I got so much support and feedback on the allegations.

Barry Jonas: That's great. And then just a follow-up question on prediction markets. Given some of the ongoing U.S. state-by-state legal nuances, let's say, do you expect to have any limitations on the offerings for prediction market operators?

Carsten Koerl: Asking me about this is really a tricky territory. There are so many cases ongoing. At the moment, we don't see limitations. That is something which we leave to the regulators figuring out the way here. What we can do is we are working hands-on and very quick on the best possible product to serve our partners on the prediction market. And our partners, as you know, can be also online sports betting operators, which are switching into this segment. So we are fully focusing on this, and we try to deliver here the best quality product.

Operator: Your next question comes from Jeff Stantial with Stifel.

Jeffrey Stantial: Maybe just starting off on the marketing business, you talked about this a little bit, but just curious to get your latest thoughts on sort of the cadence of commercialization of more of the user acquisition services to predictions, specifically, how material was this of a growth driver in Q1 as we think about Q2 and into the back half, have you been able to start to deepen relationships with the exchanges now that you seem to be spending on user acquisition quite aggressively? Just any sort of thoughts there on that process and how you see that playing out through the remainder of the year would be great.

Craig Felenstein: Yes. Listen, I think as Carsten highlighted, and thanks for the question, we're still very early days, right? So we have done, I would say, some collaboration with the prediction markets as they ramp up, and we continue to do work with the traditional OSBs as they continue to potentially enter that space as well as grow their existing business. So I would say there's been some work in that space, but certainly not of scale compared to what is our traditional marketing business.

Jeffrey Stantial: That's great. And then shifting over to the reports from last week in the 6-K that you filed this morning. So you talked about 3 types of customers, right, direct license B2C, licensed B2B and then noncustomers, but bad actors that are pirating the data illegally. That second cohort, the licensed B2B distributors, I just want to be clear, [ Craig ], the low to mid-single digits revenue exposure you talked about for unregulated, would this include B2B resellers that are selling into unregulated markets? I assume you have really no idea which markets that do sell into. So I would think no.

And if the answer is no, can you just help us think about sort of how material those relationships are relative to your overall revenues?

Carsten Koerl: Let me take the overall revenues because that might be a bit confusing before. So the bridge, which Craig did is, I think, pretty clear that the exposure here after looking into the areas of our business is roughly 45% of our business might be subject to exposure. And then Craig said that the U.S. business, which is 1/3 of this, that comes from managed trading services and from data and ops. These are the 2 components which are exposed. That 1/3 goes away. So we are sitting on 30%. And from this 30%, we are looking into our client base.

The vast majority of our clients do not operate in unregulated markets, take a Flutter or take an Entain or take a FanDuel. We subtract this, and we are coming then down to a number which is low to mid-single digit. That's where we sit. In some cases, if you let now an AI system running through this, and of course, we did simulations with public market data, that might drop into the range of a maximum of 12%. We believe it's a low to mid-single-digit number of our total revenues, which are exposed. I hope that clarifies the situation.

Operator: Your next question comes from the line of Shaun Kelley with Bank of America.

Shaun Kelley: Maybe just high level, like looking at the quarter and the trends here. I don't know if you gave this, but could you give us a sense of -- turnover sounded like it was healthy, but obviously, there was an outcome-driven issue on the trading or betting side. Could you normalize for that at all and give us a sense of sort of what core might have looked at either on revenues or EBITDA had that not been the case?

Craig Felenstein: Sure. When you look at our MTS business, Shaun, obviously, it is somewhat outcome dependent. That said, given the diversity that we have in our MTS business, you tend not to see too many fluctuations in a given quarter. But when you look at the growth that we delivered last year from an MTS perspective and you look at the growth has been, I would say, relatively consistently with regard to our MTS business here over the last several years, you're going to look for that growth to continue here as we continue to add clients, as we continue to grow the overall handle and as we continue to do well from an efficiency perspective.

So I don't have any reason to believe that the historical growth rates will alleviate. At some point, you do start to face the law of larger numbers, but the trends in the business are very positive overall aside from the short-term outcomes.

Shaun Kelley: Okay. And then maybe just higher level, could we just talk about some of the puts and takes that are in the outlook as it relates to where we stood a quarter ago and specifically kind of referring to the cost reduction program you mentioned and then sort of any incremental uplift for prediction markets or any sort of shift in timing on U.S. growth just as we kind of think about where maybe some of that marketing spend might show up. So just what's kind of changed as it relates to the remainder of the back half, more specifically, is the cost reduction program factored into EBITDA? Is that incremental?

And then specifically on prediction markets, is there now a number baked in here that was either bigger or more material than what we had previously?

Craig Felenstein: Sure. So let's break it down a little bit. So originally, when we gave our guidance a few months ago, there was a few things that have changed since then. First and foremost, the U.S. market growth is definitely slower than it was when we were speaking after our fourth quarter results. At that point, we also did not include anything significant from prediction markets in our results and IMG was at a certain level. What's changed since then is certainly the U.S. market, we think it's going to grow a little bit slower than we originally anticipated. We are including more from prediction markets.

Carsten talked last quarter about the fact that we think on an annual basis, prediction markets can bring tens of millions of dollars to our ultimate results. We don't expect to generate all of that this year, but we certainly expect to generate some of that this year. And then IMG is continuing to perform better. We're seeing better cross-sell. We're seeing better upsell from IMG, and that will allow us to do better than our 25% revenue synergies than we originally thought. So when you layer all those things in together, you do get, I would say, revenue in the range that we expected. From a margin perspective, the cost-out initiatives that we're putting forth will have an impact.

Obviously, we're sitting here at the middle of the year. So it's going to have less of an impact in the first half of the year and will be more of an impact in the back half of the year. But there is some savings factored in from a guidance perspective and a margin perspective in the back half of the year. And that's how I would frame it.

Operator: Your next question comes from Mike Hickey with StoneX.

Michael Hickey: Just a quick follow-up on the allegations here. One piece of it was that your sales team was uploading prospects from legal markets, sort of the [indiscernible] for everyone. Can you just specifically address that allegation, Carsten? And then I got a follow-up on Playradar.

Carsten Koerl: Mike, can you please repeat the question? So there was a dropout in my line.

Michael Hickey: Yes. Sorry about that. The part -- one wrinkle of the allegation was they had interviewed or they're acting as prospects -- prospective operators to your sales team at ICE. And I think we were saying they're from illegal markets and that your team was receptive to that, yes.

Carsten Koerl: So you're speaking about the [ Sinch ] campaign, which was deployed at ICE on one of our salespersons. Now you need to know ICE is a gaming show with around about 60,000 spectators. The team is fully loaded with a lot of meetings. I think we had more than 4,000 meetings on this 2 days or 3 days of ICE. And this was deliberately done and the sales guy, a relatively young sales guy was [ teens ]. Of course, we did some interviews with him after this. And we know that he was picked for more than 2 hours. And those taking was, of course, not reflecting all his statements. That's the first point.

But the second and much more important one is this is never a contract. So when a sales guy is selling something, there is a kickoff of a very intensive KYC process. That has the identification, the verification, the license verification against the regulator, the verification of a corporate filing and the register, which is in there. Then finally, running this through sanction list from all the available markets where we are acting. And then it goes to a final review of our legal counsel before a contract is signed. So this is far off from signing a contract, and this was a [indiscernible] campaign on a relatively young sales employee at ICE.

No excuse on this, should not happen, but this was far off from signing a contract or teasing somebody into doing business in our legal markets.

James Bombassei: Mike, we can't hear you.

Operator: Yes, apologies. The last question dropped. The next question is from Trey Bowers with Wells Fargo.

Raymond Bowers: First question, I guess, would just be on the guidance. Well, 2 questions on the guidance. One, just given the timing of when you provided the full year guide coming out of the fourth quarter, any thoughts about giving a specific Q2 guide this late in the quarter? It seems like potentially things really fell off pretty rapidly in March, given the timing of your guide and then ultimately the kind of the EBITDA production. And then for the full year, in terms of prediction markets versus kind of traditional OSBs, are you guys seeing that these 2 things are related?

Do you feel like the prediction markets are kind of cannibalizing your OSB business and you're going to make up for it with the higher prediction market business? And I'll stop there.

Craig Felenstein: I'll answer the guidance question, and then I'll turn it over to Carsten, who could talk about the prediction markets versus traditional OSBs. So Trey, obviously, we don't guide from a quarterly basis. We didn't guide to the first quarter, and we're certainly not going to guide to the second quarter. But what I would say is when you look at what happened in the first quarter, the biggest change from when we guided to ultimately when we reported was the, I would say, softness on the marketing line as well as some of the continued softness on the U.S. market being greater than we anticipated. So those 2 things obviously now have already baked into our results.

And when you think about our guidance for the year, we're factoring those in. And certainly, we expect to deliver really nice growth during the second quarter from both a revenue perspective, but also from a bottom line perspective.

Carsten Koerl: Good. Taking the second part with the cannibalization. Well, first, we see that now more people have the opportunity to place their opinion, if I phrase it in this way, on a prediction market in California or in Texas or in Florida. So that is a big population, which can now get an opinion on a sport event and monetize on this. That is in principally an expansion of the TAM. We might also discuss there is a TAM expansion because the age is dropping to 18. That's at the moment what we see. So we see that this additional market access is by far outpacing whatever cannibalization effect is in there.

What I can tell you from talks with the CEOs of our clients is that the cannibalization is pretty small here. So looking to this, we see an outpacing TAM. We see an expansion opportunity for us, and this is something which excites us.

Raymond Bowers: And then if I can just follow up, there's -- included in these reports we saw last week is the idea that all of the profits of the company are generated from kind of Tier 3 and 4 leagues that are arguably more ripe with kind of integrity issues. Can you guys just speak to that? Are the primary leagues still major profit centers? And is that a founded accusation?

Carsten Koerl: Yes, of course, it's an unfounded acquisition. And looking into our partners and the leagues where we monetize 30% of our complete revenue streams is AV, predominantly AV is dedicated to the Tier 1 leagues. Our [indiscernible] investment, which we have there, the partnerships and the products which we develop. By the way, AV is in this allocation, I think, no way disputed. So we have a geo ring-fencing on this. Our partners are telling us where we can play out AV screens and how we can play out those AV screens. So it's in no way that the majority of our revenues and profits are tied to this. This is purely unfunded allocation.

Operator: Your next question comes from Robin Farley with UBS.

Robin Farley: Just on the prediction markets commentary, I wanted to clarify, you mentioned you expect some revenue now in the second half. But would the timing of an announcement be before then? Just it sounded like the discussions are a little more near term than that. And then just to understand whether or how much that could add to guidance. It sounds like maybe since the last quarter's call, even though your full year guidance is unchanged, that there maybe is some prediction market revenue now in that guidance.

I'm just trying to get a sense of when we see announcements, would certain leagues be additive to your current guidance levels, just kind of so we can think about what that could mean when we see that announcement.

Carsten Koerl: Well, without putting too much speculation out and Robin, so the talks which we have with all the players in the prediction markets are pretty intense. We are doing this now since a couple of weeks. We are very optimistic that we soon have something to announce, which is for us important that we have the right framework in place with the players. The same goes for the market makers, but one somehow needs the other. So that's the debate which we currently do with many, many parties in this space. And of course, we are also in discussions with our partners on the league side, which are deploying the [ errors ] of official data.

This goes on now for a couple of weeks, like I said, we think that the discussions are on a very mature stage. There is nothing to announce now, but we believe soon, we can announce something. And I went over maybe to the impact to you, Craig.

Craig Felenstein: Yes. Just -- and Robin, what I would add in terms of the magnitude of the impact really depends on what ultimately gets done. And Carsten referenced that we're talking to a variety of players from all facets of the prediction market ecosystem, whether it be the brokers, whether it be the exchanges, whether it be the market makers. If anything that happens in, what I would say, short term gets announced, you can pretty much assume that, that was included in our estimates for the year.

Anything that gets done a little bit later, you can assume is additive on top of that because we're only including in stuff that we feel pretty confident we will get done here in the short term.

Robin Farley: Okay. Great. That's very helpful. And then just a follow-up question on the results, if you could just help us quantify, it sounds like the revenue is in line with expectations from a constant currency perspective. But typically, your EBITDA grows more than your revenue growth sizably more. So can you just quantify in any way how much was maybe sport outcomes how much was FX? And then if there's anything else you'd call out that for that difference in this quarter? And then including, I don't know if you said sports rights increase, excluding IMG.

Craig Felenstein: Yes. Listen, I think we broke it down a little bit earlier. What I would say is if you look at the revenue growth in the quarter, we delivered 11% revenue growth. We indicated that the FX impact to that would have been closer to 16% had it not been for FX. And I think that was the biggest, I would call, headwind during the quarter. And a lot of that does fall down to the bottom line. The EBITDA growth would have been certainly larger without the FX.

So other than that, the components that we talked about in the quarter, we delivered margin expansion in the quarter despite the revenue coming in a little lower than we traditionally have delivered. And I think that speaks to our ability to control costs and our ability to manage our business as revenues fluctuate up or down.

Operator: Our next question comes from the line of Sam Nielsen with JPMorgan.

Samuel Nielsen: Just following up on that last point of the 5-point FX headwind in the quarter. If I recall correctly from your last call, 1Q is expected to be the largest headwind for the year. So how should we kind of think about the cadence of these FX headwinds as we go through the balance of the year?

Craig Felenstein: Yes. So for the most part, it should shake itself out after the second quarter. So if you look at what happened with the FX rates in the 2025, the U.S. dollar weakened throughout the year, right? So certainly, in the third and fourth quarter, you're lapping an already weak U.S. dollar. In the first and second quarter, you are not. The impact in the second quarter should not be as great as it was in the first quarter, but it still should be material with regards to the growth rate overall.

Samuel Nielsen: Makes sense. And then following up on the prediction markets topic and maybe looking kind of broader picture. Obviously, it's early, but wondering if you kind of see a bigger revenue opportunity for Sportradar in the data and betting segment or within the advertising segment at maturity?

Carsten Koerl: The clear answer is we see it in both segments. So in the advertising segment, those guys are sitting quite on some funds that they want to grab market shares. That's a good thing for a provider like us. Same goes now on the downside pressure for online sports betting. So we expect for the World Cup a material uplift on marketing and investments in this. So that's a good opportunity for us. But there is a big opportunity on the data and especially on the ultra-low latency data, server colocation, et cetera [indiscernible] , which we are actively following up with the operators.

James Bombassei: Operator, we have time for one more question.

Operator: Your last question comes from the line of Clark Lampen with BTIG.

William Lampen: I've got 2 follow-ups, if I may. Maybe going back to, I guess, third question on some of the KYC detail that you put out this morning, which was very helpful. I think in one of the passages, you talked about enforcement and verification responsibility potentially being placed on the intermediary. Is it right to think that if something -- if there's a negative event that, I guess, impacts revenue for some portion of the sort of 3% to 12% that you dimensionalized before, is the recourse ultimately with the B2B partner and not really with radar? Is it right to sort of think about it in that context? And then Craig, just, I guess, another guidance question.

You talked about global customer renewals. Could you give us a sense for when you will start to begin the renegotiation or renewal process with some of your partners and whether there's anything baked into guidance for this year in terms of upticks?

Carsten Koerl: I will go on the first part. So let me use another company sample here. We all know Bloomberg. Bloomberg is working predominantly on the terminals with hedge funds and banks. That's the business model. So the data is delivered there, also some of the products. So that's a B2B business. Some of those partners are sublicensing the content. They apply a KYC, same like we apply it with highest market standards. So it can be always happening to Bloomberg, but also to us that some of this content is stolen, and I explain to you later on how this is done.

But it happens to everybody who is in this space, and you have to have methods and mitigation methods in place, how you figure this out. What is the fact is that the regulators are scrutinizing the operators in Bloomberg example, the banks. If there is a bank which is failing or a fund which is failing, it is not Bloomberg. It is the banks. Looking now to our split, the B2C is something where we apply the intensive KYC. That's what we also do with B2B operators. But the B2B operators, in our case, they have some syndications. And sometimes we are not aware of this. So some of them might also act without our agreement on this one.

And we have this. As soon as we see this, we shut it down. There was one case in 2023, where an operator was exposing in Iran some content. We got aware of this. We shut it down immediately. This is now used all allegations to put us in this credit and to somehow look into the direction that they have a financial profit. But that is the scheme which we have in place, and we indeed have piracy. So Sportradar is probably most of the most attacked company when it comes to sport data and piracy. Our data is scrapped, is redistributed without our knowledge, our ideas and the client ideas can be reengineered.

And yes, the very important fact here is we speak predominantly around about 90% of this content where there is a Java code on a web page about live match trackers. I don't know if everybody knows what it is, but this is a live score for a sport. That's it. So it's not a betting functionality. It's an information tool about the score, a league table, live score, which is in there or a halftime score or a full-time score. That is what the tracker is transporting. I hope I answered the first part of your question.

Craig Felenstein: Yes. And with regards to the second part of your question, listen, I think the global customer renewals is actually something that happens on a regular course of business for us. So when you think about our company, about 2/3 of our revenue are fixed fee, 1/3 are variable out of the 2/3 that are fixed. Traditionally, about 1/3 comes up every single year, and that's not obviously on January 1. It comes up throughout the course of the year.

And we have some renewals here that are coming up throughout the rest of the year that we think that there's some additional opportunities for, which can help us get additional revenue and capture additional share of wallet from some of our customers as we deliver them more value. So that is ultimately some of the upside that we see in the back half of the year as well.

James Bombassei: That ends our first quarter call. Thank you, everyone. Now I'll turn it back over to the operator.

Operator: This concludes today's call. Thank you for attending. I will now turn the call back to Jim for closing remarks.

James Bombassei: Operator, with that said no closing remarks, we'll end the call. Thank you.

Operator: Perfect. You may now disconnect. Thank you for attending.

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