Betting on football, basketball, cricket and tennis are driving the strong growth of Sportradar – the global leader in data and technology for sports betting operators.
The Switzerland-based company (ticker: SRAD) reported on Wednesday that its 2022 revenue rose 30% to $780 million, while cash earnings rose 23%. US betting revenue has doubled, but a drop in earnings is sending the stock down.
Sports betting revenue in the US is growing as more states allow wagering and as more bets are placed during live games rather than pre-game, Sportradar managing director Carsten Koerl told Barron’s. Online direct mail for weather is another successful service for the company, he says.
While cash earnings before interest, taxes, depreciation and amortization, or Ebtida, rose 23% to $135 million, Sportradar’s spending on technology and sports league rights reduced net income by 18% to $11 million, or 3 cents a share. In response, traders sent Sportradar shares up 9% to $10.76 in Wednesday morning trading.
That puts the stock at a multiple of 18 times the roughly $170 million in cash EBITDA that Sportradar expects from about $970 million in revenue this year.
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Sportradar began providing match results to bookmakers such as Flutter Entertainment’s FanDuel unit (FLTR. London). It has expanded its data services to include audiovisual feeds, odds and computer-programmed advertising. It dominates the global sports data market, where it competes with the likes of Genius Sports (GENI).
For the December quarter, the betting data company grew its revenue by 35% to $221 million. Ebitda rose 64% to $38 million for the quarter.
US revenue grew 77% to $44 million thanks to increased in-play betting. Outside the US, most bets are placed during matches, and such bets are more profitable for bookmakers. Every percentage point shift in betting, from pregame to in-play, is worth $1.2 million to Sportradar, Koerl said.
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Sportradar ended December with about $260 million in cash after raising about $440 million to fully pay off its bank debt. The company’s strong cash flows allow it to invest in new products such as managed trading services, where Sportradar manages betting operations for bookmakers who then focus on marketing and collections.
Computer vision and artificial intelligence are other technologies that Sportradar is developing. They were key to recently winning a data deal with the Association of Tennis Professionals. Capturing biometric and computer vision data from tennis players increases the statistical data available by 100x and should improve Sportradar’s ability to set odds for in-play bets.
“By learning the probabilities,” Koerl said, “we can better predict which player will win the next point based on the data.”
Write to Bill Alpert at [email protected]
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