Sportradar Group AG (SRAD) Q3 2026 Earnings Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the SPORT RADAR Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to James Bombassei, Senior Vice President, Investor Relations and Corporate Finance. Please go ahead.

James Bombassei: Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the third 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.supportradar.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 up the call to questions from analysts and investors. In the interest of time, please limit yourself to 1 question and 1 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 on file with the SEC along with the associated earnings release. We assume no obligation to update any forward looking statements or information. We 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, 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 I. Felenstein, our CFO. And now I will turn the call over to Carsten.

Carsten Koerl: Good morning, everyone, and thank you for joining us. Before I get into the results, I want to touch on how our industry is evolving, and what it means for SportRadar. Sport has never been more valuable nor fragmented in terms of how fans engage, and consume it. A fan today might watch a game on a broadcast network or streaming platform, checks stats with an AI assistant, plays a bet with a sports book, or trade a contract with the prediction market. Every 1 of those experiences depends on a critical element. Official, real time, and reliable data and the technology that turns it into the insights that engage sports fans. As the sports ecosystem expands into new channels and ways to consume sport, competitive intensity is increasing, driving greater demand for what SportRadar provides. We have seen this dynamic in sports betting for years, and we are now seeing it play out in prediction markets. At the same time, our media and technology clients are increasingly looking to us to help them engage fans in new and innovative ways. Sport Raider will realize outsized benefits from these trends given our unmatched position which is the result of 3 things that are very hard to replicate. Our scale in official data rights, breadth of our product suite, and our industry leading technology and AI capabilities. This quarter, is a clear example of that position at work. With that, I want to highlight a number of key takeaways for the quarter. First, we delivered strong growth on revenue, adjusted EBITDA and free cash flow fueled by momentum across our business. IMG ARENA, continues to meaningfully contribute to our betting gaming business, And 1 year in, we have successfully integrated and monetized the largest sports rights portfolio acquisition in our space. Second, this is the first quarter we saw the benefits of the extension of our flywheel in prediction markets with exchanges. While it took some time to strike deals with the lead prediction market players, we have now established SportRadar as the leading sports data and technology solution partner for the sports prediction market ecosystem. We continue to expand our exchange relationships and have signed up market makers and brokers And the NBA recently authorized prediction markets requiring the use of official data. These partnerships are already starting to contribute to our results, and we expect that contribution to grow as trading volumes increase and as we add more partners. Third, demand for our official data visualization and AI enabled technology is growing beyond betting. With an expanding media technology and iGaming client base. And Fourth, we are sharpening our focus on the business that will drive our growth. Last month, we announced the sale of Atrium Sports for $170 million, which represents a premium multiple and the proceeds will further strengthen our balance sheet and support our capital allocation priorities. Let's cover each of these in more detail. Our third quarter results demonstrates strength across the business. Total company revenues increased 24% year over year as we benefit from strong performance in betting and gaming content, as well as our marketing and media services. Delivered an adjusted EBITDA margin of 28% and generated significant free cash flow. Results are benefited from continued strong execution of our monetization of IMG arena rights as well as from our prediction markets. It has now been 1 year since we acquired IMG ARENA, the largest acquisition in our industry, and our teams have done an excellent job integrating these rights into our-- As a result, the portfolio is performing ahead of our original revenue synergy target expectation. Of 25%. The integration has expanded our product portfolio. We added IMG ARENA's premium golf and MMA products and made them available across our entire client base. These products combine extensive alt streaming and advanced virtualizations into a single offering. We have also used IMG content to expand our next gen offerings, rolling out play and micro markets for side streaming, and virtual live match records across the tennis grand slams. We have secured key renewals, including EuroLeague Basketball this quarter, and these rights Are Creating New Opportunities Beyond Betting, including in iGaming. In Terms Of Underlying Market Dynamics In The US, market growth improved in the third quarter, while the rest of the world, we have generally seen continued strong growth. Touching on developments in Brazil for a moment. We have been a long term partner to some of the leading Brazilian federations and operators and that commitment has not changed. The provisional measure signed in September remains in effect while congress considers it and the Supreme Court is reviewing the industry requests for an injunction with a public hearing set for today. We are following both processes closely and staying in close contact with our partners, clients, and stakeholders in the market. Our experience across regulated markets globally is that a well regulated framework is the best way to protect fans, bettors, and sport. Turning to prediction markets. We see prediction markets as a meaningful expansion of the global sports tab. They are bringing in new participants, new formats and new demand for sports content and they are doing it alongside regulated sports betting not in replacing it. Just as we did in online sports betting, we are powering every layer of this market, exchanges, market makers, and brokers. Polymarket now uses our full suite of prediction market services across their 20 leagues, including the NBA ATP Tour, MLB, NHL, and the Bundesliga. In a matter of months, relationship has grown from a single sport into an end to end partnership. Kochi is using our solutions across official data, integrity services, fan engagement, and customer acquisition. NOVIC, has become our third leading exchange partner, and we recently signed our first broker agreement with Robinhood. We have also signed agreements with a number of market makers who are looking for our real time data to optimize their performance and trade sports event contracts with greater speed. The opportunity in prediction market goes beyond data. The rapid expansion of prediction markets is increasing competitive intensity, our clients are investing heavily to acquire new users and that is driving growth in our marketing and media services businesses. Entering the prediction markets require minimal incremental investment. We are using the same rights, the same technology, and the same teams that already power our betting business. Our agreements are structured so that we participate as volumes grow. We are still in the early innings, and we have an active pipeline across the exchanges, brokers, and market makers globally. We expect prediction markets to become an increasing meaningful contributor to our growth going forward. Moving to our media business. We see demand for sports data and our AI enabled technology solutions continuing to grow beyond betting. Driven by an expanding base of media and technology customers seeking to leverage our capabilities. 1 of the drivers is AI. As fans increasingly turn to AI assistants, and large language models for sports information for live scores to player stats and game recaps. These platforms need accurate real time official data to deliver reliable answers. SportWader has long standing relationships with many of the world's largest technology companies and our data powers sports experiences across a number of the leading AI platforms today. Turning to our PlayRaider iGaming business. We continue to make great progress, leveraging our unparalleled video streaming portfolio our unique live betting capabilities, we are creating immersive data and video experiences where these players can watch and engage with live sports 24/7 through live betting casino style games, and community jackpots. This engagement will help extend the player journey for a sportsbook. As we get set to launch for our 24/7 destination early next year we continue to build momentum including having secured additional iGaming regulatory certifications and additional tier 1 clients. We also took steps this past quarter to streamline our operations as we focus on our core betting, gaming, and media business. Last month, we announced the sale of Atrium Sports, the coaching and scouting business of Synergy Sports, to Teamworks Innovations for $170 million. This represents accretive double digit EBITDA multiple relative to SportRadar's market valuation. The divestiture of these noncore assets streamlines our business as we focus on our key growth priorities. We are retaining key technology assets and capabilities that are already integrated into our business. Automated sports production cameras, automated graphic solutions, certain computer vision capabilities, and competition management products. Will continue to support growth and innovation going forward. So proceeds from this sales will further strengthen our balance sheet and support our capital allocation priorities as we continue to repurchase shares to take advantage of the volatility in the market as well as the value we see in our shares. In closing, this quarter's outstanding performance was underscored by our position as the critical technology partner powering sports betting, media, and now prediction markets. Our scale in official sports data rights, the breadth of our product suites, and our industry leading technology capabilities make us mission critical in betting, and we are now able to leverage this position in prediction markets. Entering the space requires minimal investment and produces high incremental margins. We see continued opportunity ahead as we provide increasing value to our sports book, media, and marketing clients, capitalize on prediction markets, and invest in iGaming. This will enable us to deliver robust growth in the months and years ahead. Thank you. I will now hand the call over to Craig who will discuss our financial results in greater detail.

Craig I. Felenstein: Thanks, Carsten. And thank you everyone for joining us this morning. Sport Radar's strong third quarter results further demonstrate the growing demand for our best in class product suite diversified content portfolio, and cutting edge technology and services solutions. This is true for existing customers across our unmatched global distribution network, who are taking more and more of our products and services and also true for new entrants recognize the value of what we have built and the appeal it will have for their clients and partners. The sports, media, and betting industries are rapidly evolving. Giving fans more ways than ever to engage with, and experience the sports they love. Sport Radar is ideally positioned to take advantage of these compelling new growth by leveraging the robust platform and content portfolio we have already built. And through new products and offerings, we can quickly develop given our deep experience, and advanced technological capabilities. Turning to our third quarter results, Sport Radar generated revenues of 363 million an increase of 70 million or 24% compared with the third quarter of 2025. Growth was driven by strong demand across our product portfolio, including continued strong uptake of IMG content and diverse new prediction market opportunities. The rapid evolution of prediction markets has further expanded our addressable market, and once again reinforces the value of Sportradar's premium data content, and technology offerings. Turning to our individual product groupings, Growth was driven by our betting technology and solutions products with revenue of 297 million. Increasing 27% versus the third quarter of a year ago. This growth was due to a 37% increase in betting and gaming content revenues, reflecting strong demand for our streaming and betting engagement products as well as odds and live data products. Most notably from additional contributions related to our IMG acquisition and growing demand for prediction markets. We are very much in the early innings of monetizing prediction markets, and see significant additional growth opportunities as these markets continue to expand. As we deepen the partnerships we have already established and as we broaden our reach across all facets of the ecosystem. Managed betting services revenues declined 3% versus the same quarter of a year ago. As strong turnover growth at managed trading services was more than offset primarily by lower trading margins due to unfavorable UEFA and European soccer outcomes in late August and early September. Moving to our other product grouping, sports content, technology, and services delivered revenues of 66 million an increase of 11% year on year. Driven by growth in marketing and media services, as we benefited from increased spend from media and technology customers as well as increased affiliate marketing spending as prediction market exchanges and sportsbook customers ramped up their customer acquisition campaigns. Geographically, our revenue growth in the quarter was broad based. US revenue up 47% and Rest of world revenue up 17% year-on-year. US revenues expanded to 27% of our revenue mix as we capitalized on the growing demand for our breadth of content and innovative product solutions. Including new opportunities across The US prediction market ecosystem. The strong revenue growth across our product portfolio translated into significant adjusted EBITDA growth in the third quarter, with adjusted EBITDA of 102 million, up 21% year on year. We also delivered strong adjusted EBITDA margins of 28.2% during the quarter. As we continue to be diligent across our cost infrastructure as revenues expand. As we anticipated on our last call, Q3 margins did decline slightly compared with a year ago, Due in large part to the seasonality of IMG content. But as we lap our IMG acquisition in November, and further capitalize on the prediction market opportunity, We anticipate adjusted EBITDA margin expansion in the fourth quarter and for the full year. 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 54% year-on-year to 112 million, due primarily to the addition of IMG content. Which, from a seasonality perspective, has a higher volume of matches in the second and third quarters given the tennis, golf, and soccer calendar. To a lesser extent, the quarter also included rights costs related to certain prediction market opportunities, that are tied directly to revenue generation. With our major rights deals locked in long term, and predominantly being amortized on a straight line basis, and with prediction market rights aligned with revenue generation. We remain confident in our ability to drive operating leverage from our high demand sports portfolio and the premium products we have developed for our expanding global customer base. Adjusted personnel expenses were $68 million in the quarter, down 5% year on year despite the inclusion of IMG headcount. As we continue to realize the benefits of the cost efficiency initiatives, that we implemented earlier this year. And from a reduced bonus accrual versus a year ago. Our streamlined operating structure has better aligned resources with our strategic priorities, And going forward, we will continue to capitalize on efficiencies while focusing resources on the most profitable growth opportunities. Adjusted purchased services were 51 million up 24% year on year. Primarily due to the inclusion of IMG. As well as higher cloud and traffic costs. Adjusted other operating expenses of 29 million in the quarter were up 34% year on year. With the increase predominantly driven by costs related to our Brazil operations, and expenses due in part to supporting adjacent market growth opportunities. Overall, we continue to see margin expansion opportunity 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, we will continue to closely manage our cost structure, delivering more of every dollar of revenue to our bottom line. Looking at the full p and L, profit for the quarter increased $5 million to $27 million as our operating growth was partially offset by unrealized foreign currency losses of 6 million. Primarily associated with our US dollar denominated sports rights, and restructuring costs of 4 million related to ongoing efficiency initiatives we outlined on our second quarter call. Turning to the balance sheet. Sport Radar remains in a very strong liquidity position. Closing the quarter with a 190 million in cash and cash equivalents, and undrawn 250 million revolving credit facility and no debt outstanding. In the first 9 months of the year, the company generated free cash flow of 177 million, an increase of 18% from the same period a year ago. And we continue to convert more of each dollar of EBITDA into free cash flow, as demonstrated by a free cash flow conversion rate of 72%. Fourth quarter cash conversion will likely be negative due primarily to the timing of rights payments and prediction market cash flows. But we continue to anticipate strong free cash flow growth for the full year with free cash flow conversion above last year's rate of 56%. Excluding non routine legal payments. Cash and cash equivalents declined 175 million since year-end 2025, as the strong free cash flow generation more than offset by accelerated share repurchases. During the quarter, we completed the previously announced $250 million enhanced open market repurchase program and continued to be active repurchasing shares under the broader $1 billion share repurchase authorization. Reflecting our conviction in our business our durable growth trajectory, and the value creation opportunities we see ahead. Year to date, we have already repurchased 28 million shares for approximately 408 million which is 24% of our free float at the beginning of the year. In the fourth quarter, 2 additional cash inflows will further strengthen our strong balance sheet. The first is a $50 million payment from IMG in relation to the acquisition that was completed a year ago. A second $50 million IMG payment will be received in November 2020. Additionally, later this quarter, we anticipate a payment of 170 million upon closing our divestiture of Atrium Sports, following regulatory approval. As Carsten mentioned, this was the business that was not core to our future growth plans and we will use the proceeds to support our operational, strategic, and capital allocation priorities. In terms of sizing, Atrium made up nearly all of the sports performance revenue line in our P&L, and you can assume it was operating with EBITDA margins slightly above 30% on a standalone basis. Turning to our expectations for the remainder of the year, the second half opportunities we outlined last quarter are playing out as expected. Including the continued realization of IMG synergies, the expansion of our addressable market through prediction market ecosystem, and several successful global customer renewals. As such, we continue to anticipate constant currency revenue growth of 19% to 21%, which at current FX rates is expected to be between 1.518 and 1.538 billion reported. We expect to drive operating leverage on this revenue growth with adjusted EBITDA growth of 24% to 27% on a constant currency basis. which at current FX rates is expected to be $360 million to $368 million reported. While this guidance remains unchanged, it is important to note that the 2026 outlook does not yet include any impact from the divestiture of Atrium Sports. Given the uncertainty around the timing of closing. Looking ahead, we will provide 2027 guidance on our fourth quarter earnings call. But given the current uncertainty regarding Brazil, for modeling purposes, estimate that Brazil related revenues are a little over 60 million annually. Overall, the investments we have made in content, technology, and product to leverage the global scale we have developed continue to deliver strong financial results. Our position and portfolio are unmatched and underpins our ability to deliver sustainable revenue growth. IMG content is now fully integrated and delivering value across our global customer base, and prediction markets have become a meaningful new revenue stream. Demonstrating our ability to monetize our core capabilities in adjacent markets. Combined with a leaner cost structure, we are well positioned to deliver significant margin expansion and further expand free cash flow, driving additional shareholder value 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: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question comes from Ryan Sigdahl with Craig Hallum Capital Group. Please go ahead.

Ryan Sigdahl: Hey. Good day, Carsten, Craig. Craig, I want to start with where you ended just on Brazil. Appreciate the $60 million annual revenue. that is helpful context. What is assumed in the 2026 guidance for Q4 from both cost and a revenue standpoint? And then maybe, Carsten, you on Brazil, just, how you think about strategy in the country and what you guys are looking forward to make potentially kind of a bigger decision to invest more or the reverse, I guess?

Craig I. Felenstein: Sure. I will start, Carsten, and I will turn it over to you. So, Ryan, thanks for the question. When you think about Brazil for us, the 60 million that we talked about as a current kind of run-rate annually for the business on the top line side, There will be some significant savings on the EBITDA side over time as we take out some additional costs if that ultimately does not come to fruition or ultimately the business does not come back to fruition. But we should have some savings both on the office side. We should have some savings on the personnel side, and we should have savings certainly on the sports right side. You do not see much of that yet in the fourth quarter just given that has ultimately come through with the current situation, and we do not know ultimately how it is going to play itself out. So the cost out has not yet started. When you look at it for a full year 2027, you would have some cost-- significant cost out as well. When you think about the phasing for 2026, you would assume that it is pretty much straight line throughout the 4 quarters. So assuming 60 million for the year, you can assume about 25% of that in the fourth quarter.

Carsten Koerl: Hi, Ryan. Carsten here. So, taking on Brazil from a strategic perspective. Fact is on September 25th, president Lula gave the provisional measure to put sports betting on hold and write it down. That takes now 60 days, to our knowledge, which a presidential, provisional measure takes. Then to congress, need to decide on this, need to either accept this and make a law for it, or refuse it. And in between, we understand today there is a hearing from the Supreme Court on the request of operators to get an immediate injunction on this. So it is very much in the flow. We expect by end of the week that we have more clarity on this. We have a lot of lead partners there. We have, of course, plenty of operators as our partners there. And they are serving the sports fans. So the first thing where we want to focus on is we deeply believe that a regulated market and a regulation is necessary in a country that is doing sports betting. So we believe that this would serve the sports fans. It would serve the market, of course. And it will serve the sport. Sport is lobbying heavily into a direction of keeping the regulation, So these things will be monitored and not least, we have roughly around 50 of our employees in the country. And they deserve that we are dealing responsibly with this matter. So we are looking now what the supreme court is deciding and then we take step-by-step, together with our partners the next measures But as I said, our belief is regulated market is the only alternative to protect the sports fans, the bettors, and the interest of the leagues.

Ryan Sigdahl: We are certainly hopeful logic prevails there, but I applaud the dynamic nature of kind of how you guys can react either way. In the spirit of getting expectations, you know, fully level set with all the moving mix dynamics in the industry, Second question would just be on MLB. Given there is an all but certain lockout that is coming, not expecting you guys to have a crystal ball to know precisely what will happen or how long it will happen, etcetera. but can you help us talk through the puts and takes? Think about the mark-- That market specifically with the league? How material it is or is not for SportRadar. My hunch is it is not nearly as large or impactful to overall numbers as many fear. But any way you can help us frame that would be helpful.

Carsten Koerl: Yeah. Ryan, I think Robin Manfred has the bigger crystal ball to look in the future than I have. But we would applaud if this lockout does not happen because it is for the sports fans and for the interested batters. Of course, a much better situation if there is a regular season. If there is not a regular season, it can be going in a lot of directions, a limited number of matches or no matches. We have contractual protections for this scenario in our existing contract framework. In quarter 4, we will, of course, know more and report more about this But we have a very strong tier sport portfolio, which can replace an MLB partly locked out or complete locked out. So the first thing is ATP with all the matches in this time PGA, because of IMG, we have plenty of new golf content. it is the WNBA, which is fully in play at this time, and many majors in the. of tennis work. So we think we have a good tier 1 replacement. We believe that the bettors will place bets on alternative sports. If there is no major league baseball content available, Having said this, we hope that the lockout will not happen, and that we will see a regular season.

Ryan Sigdahl: Helpful. Thanks, guys. Good luck.

Craig I. Felenstein: Thanks, Ryan.

Operator: Your next question comes from Shaun Kelley with Bank of America. Please go ahead.

Shaun Kelley: Hi. Good morning, everyone. Thanks for taking my question. If somebody could give us a little color on just sort of the pros and cons of prediction markets, obviously, 47% U.S. growth. In the quarter is really strong. So wanted to see or get a sense where if you are already seeing some of the prediction market contribution in that number? And then just what are you seeing in the early stages of the NBA contract Are we seeing an uplift? Because we did not see, I think, implied Q4 revenue guidance much above what we were expecting. Wondering how that plays in maybe relative to the Brazil-- any Brazil impact you factored in for Q4 as well? Thank you.

Carsten Koerl: Hi, Shaun. Carsten here. So our prediction markets in this quarter, you see the first time the impact I think we all agree that this has a very positive impact. It took us some quarters to negotiate complex framework with our lead partners together with the operators out there. So. But we will see. We saw now the first quarter with a very positive impact on this. For us, prediction market is split into 3 elements, 6 changes where we mentioned we are cooperating here now with 3 of them. We extended from, in the beginning, single sport coverage now to the full flywheel, including marketing and detective services. So that is a good signal. Looking to the brokers, we have now the first broker which we signed. Are more to follow. And the most interesting is with the market makers. So we have now roughly 10 contracts with market makers. This is a segment where we see much stronger growth opportunities. We developed a prediction market feed especially for the lowest possible latency, so we aggregate their deep data from our sports partners, for example, in tennis, we get the line codes near 0.2 seconds faster than anybody else, faster than the lights are flashing on the court. Because of the cooperation with the official feed provided here. This is embedded then in the prediction market feed, and that can help high speed trading algorithms with the lowest latency. there is a lot of things to be done with co location and all those kind of things to reduce the latency of the line. But this is an element of constant developments to serve the needs of the market. As I said, the market makers are for us a bigger opportunity and we are doubling and tripling down on our technology to make the lowest latency data These are the 3 segments, and we see that this is growing. The NBA has started in quarter 4, as you know. So a bit too early to say something, but the statement is very strong and very clear from the NBA commissioner. That there is a strict compliance framework for the exchanges involved in there. That was always very important for our partner, and we behave-- we fully support this. We are very happy that the NBA is promoting the official data as the only source to settle the markets there. So that can be only positive, but we said in the last quarter, that the numbers of being uplifted are already implied in our numbers which we see for the end of the year.

Craig I. Felenstein: Operator, we will take our next question.

Operator: Your next question comes from David Katz with Jefferies. Please go ahead.

David Katz: Good morning, everyone. Thanks for taking my question and for all the detail. Excluding the unknown, right, with Major League Baseball, If you could talk about just how you see with all the moving parts your business algo for, you know, 2027. Not asking for guidance, of course, but just help us with, you know, the building blocks or bridge or some sense of how you see the business, and then MLB will do what it does. Thanks.

Craig I. Felenstein: Sure. Thank you, David. So when you think about 2027, you know, the growth algorithm that we have laid out here for quite some time still is very much in place. And that is, you know, we at Sportradar will be able to take advantage of market expansion and be able to outperform that market expansion. And when you think about market expansion and what that means moving forward, it really now has 2 distinct parts. It has the expansion of the OSB market, but it also has the expansion of the prediction market ecosystem. And those 2 things expanding our overall addressable market. So when we think about our 2027 growth, once again, we will take our cue from the market overall growth We will outperform that market growth by delivering high quality products high quality solutions to our customers. We have done for quite some time. And then we will also start to look for adjacent market opportunities like iGaming and other areas that can take that growth even higher. So from a revenue perspective, I say the story is very much intact. At the same time, we have some nice opportunity to continue to expand margins. A significant portion of our revenue growth will follow our bottom line. We expect to deliver significant margin expansion in 2027, and that comes with additional free cash flow generation as well. So you layer in what we kind of laid out at our Investor Day a little over a year ago, which is, you know, steady, predictable revenue growth, margin expansion consistently, free cash flow generation, that should continue very much into 2027. Perfect.

David Katz: Thanks very much.

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

Robin Farley: Great. Thank you. I wonder if you could kind of help us think about prediction market contribution on annualized basis, it sounds like, from a lot of the agreements you highlighted that things have just been ramping up. And just so we can think about what that contribution looks like today if you annualize it, knowing that there could be other agreements or other things that grow that, but just kind of where that is now. And then also, by the way, just a clarification you reiterated your guidance today. You talked about how Brazil is going to-- you are going to lose revenue but still have the expense. So is reiterating your guidance including that Brazil loss? In other words, is it actually sort of a raise if it were not for Brazil? Just how to think about that in your reiteration. Thanks.

Craig I. Felenstein: Sure. Sure. So let's start with the prediction market opportunity annually, and we are not gonna guide to a specific piece of our business and what that looks like in 2027. But what I will say is our prediction market deals that we have struck thus far have a very mixed component to it. there is some fixed fee components to it when you think about some of the products and services that we are offering. And there is some variable components to it that will grow as those markets grow. So the ultimate contribution from prediction markets will be determined by the number of new deals that we strike. It will be determined by the types of deals that we strike, and it will be determined by ultimately the volumes that grow in that space that we get to take advantage of. So we do expect there to be some significant growth from prediction markets next year. it is just really hard for us to quantify that specifically as an individual piece of our business. When you think about our guidance for this year, there is a reason why we give a range on guidance because there is a lot of ins and outs and a lot of moving parts that come with it. So when you have upside on certain items and have downside on others. And right now, we are certainly seeing some nice momentum across our business. Across our betting and gaming business, across our marketing and media services business. We are seeing some nice upside for prediction markets. Then you have this flip side, which is the Brazil reality, which is the uncertainty around Brazil. So we give our guidance, we are factoring in some of the positives and some of the negatives related to that. that is why we give a range ultimately over time.

Robin Farley: Okay. Thank you.

Operator: Your next question comes from Barry Jonas with Truist. Please go ahead.

Barry Jonas: Hey, guys. Can you talk a little bit more about the Playradar launch next year? How should we be thinking about the ramp? And ultimately, what materiality this could bring? Thank you.

Carsten Koerl: Hi, Barry. Carsten here. So we had-- we had a great show in this 1 together with Jason Robinson. Marco Jordan on stage promoting PlayRadar. And seeing how the audience likes the idea of connecting live sport content and iGaming. that is the core idea here. So we have the assets. We have the content, the video feeds, and the live data. And connecting this now with casino style chip games to make it very quick. And very quick transaction and adding some community features like jackpot, etcetera. that is the core idea. So we got great interest. We signed up a couple of tier 1 clients. We are ramping up on the territories from a regulatory perspective. And we expect in quarter 1 to launch a new 24/7 channel where you see the live content and you have the betting opportunity. This is still on the start up stage so it is not a mature business which we have here. That makes it very difficult to predict. What we see in the amount of interest is astonishing, and we are in possession of the content which is driving this eye gaming experience. This is going all into real time, so it is point by point match play in tennis It is the free throws in basketball, very speedy, very quick opportunities, which are relating then into the high gaming. Do not expect hundreds of millions next year from this. We want to grow this deliberately and on a long term perspective. Not on the short term and quick money making. But to ramp up, as I explained, was great. As a second element, we are using a lot of AI here to help our clients to get much, much quicker in creating slots and casino style games. This is a complete agentic developed studio which is doing the design, which is doing the mathematical models producing, for example, then the slot machines. Our belief here in the whole thing is that it goes all away from the traditional way how you can set up matches by yourself, choose the colors, and those things. Into a fully customized solution. So the solution will be provided on the fly with a complete validation and verification from the regulator side and from the design side. So this is the direction of travel. It will take a while but we see that this has a mega opportunity and we continue to slowly, step-by-step, develop the iGaming space.

Barry Jonas: Sounds great. Then just for a follow-up. I-- some states have successfully banned prediction markets, and I guess it is possible we could see a few more before there is a potential Supreme Court ruling. So just curious how we should think about potential implications to your prediction market revenues and contracts.

Carsten Koerl: First of all, Barry, we are very happy. That we have now prediction market flywheel. And that delivers very, very strong insights. In our contracts with the operators, we have clauses in that if it is not possible to offer them content in the market, they cannot use our content for serving that specific market. For the rest, at the moment, the markets that are excluded are not really the significant ones. So for the moment, we see that the growth is continuing and accelerating. But this is-- yeah, this is a regulatory perspective. We cannot influence it. And we keep monitoring the situation. But so far, we see the impact on prediction markets not as material from the states which are excluded.

Barry Jonas: Thank you.

Operator: Your next question comes from Peter Supino with Wolfe Research. Please go ahead.

Peter Supino: Hi. Good morning. I wondered as you look into 2027, how you are thinking about the growth relative to the 2027 targets that you outlined in April? Of 2025. I know elements of that have been touched on this call, but thought maybe that framing might invite a different answer. And I also wanna just pause and comment that having Jim and Craig on this call is making this media analyst feel like I dialed into the wrong conference call.

Craig I. Felenstein: Thanks, Peter. Appreciate that. So, you know, the 2027 targets that we laid out, you know, at our Investor Day at the start of 2025, Have not changed except for 1, I would say, specific factor, and that is the market growth. Right? The market growth that we laid out at investor day at that point, the market growth was growing well into the double digits. Today, the traditional OSB market is growing a lot less than that. Now what you have seen replace some of that, as we have talked a lot about on this call, is the prediction market opportunity. And we are just starting to scrape the bottom of that opportunity, with the deals that we have struck. So over time, we certainly expect to be able to deliver really strong growth when you factor in that the addressable market of our business has expanded between OSBs and prediction markets when you add those 2 things together. That is the biggest variable that I would say that has changed from where we were several years ago, which is the market growth is very different than it was then. What I would say on the cost side of the equation is the cost side is growing very much as we expect it, which is we do have very, very much significant leverage on the back of our sports rights as we leverage them across a variety of different ecosystems. That continues. We have been, I would say, somewhat aggressive with regards to the personnel side of the house, the operating expense side of the house. To make sure that we get that exact leverage from a EBITDA perspective. We delivered 290 basis points of margin expansion last year. Deliver close to 100 basis points of margin expansion this year. Expect to accelerate that next year. So a lot of the facets of what we said at the Investor Day are holding true. At the end of the day, the free cash flow generation that we talked about is, this year will be ahead of where we were last year at 56%. We are getting close to that 60% that we laid out at investor day. So I would say the targets that we laid out are very much in play versus where we are today versus where we were then.

Operator: Your next question comes from Jeffrey Stanchel with Stifel. Please go ahead.

Jeffrey Stantial: Good morning, everyone. Thanks for taking our question. Maybe just starting off on the IMG acquisition, which still seems fitting just given today is 1 year anniversary of closing that deal. Carsten, I think Craig, could you just give us a little bit deeper of a postmortem update on that acquisition, meaning where are you pacing currently in terms of that original 25% revenue synergy target? Where could that ultimately land? Then what are some of the key opportunities that are still being executed on as you look ahead for the remainder of the year? Into 2027?

Craig I. Felenstein: Sure. Sure. So thank you for the question, Jeffrey. When you look at IMG, it gets lost a little bit because of all the other noise around the space and all the other noise, the ins and outs of the company. But it really was a significant success for SportRadar. When you think about the fact that, first, when you even ignore the results of the business, but you look at the fact that we were able to secure these rights and get paid to do so. You see some of that upside, you know, from the 50 million that we are gonna collect this year with regards to IMG. We will collect another 50 million next year. So we got paid to take on rights and the ecosystem that we have built here at Sportradar allows us to take advantage of those rights significantly. And you have seen that on the revenue side. 1 of the biggest things for me that I look at when I look at this business is it is now not ING versus traditional sport radar. Selling this content together and ultimately driving more value for our customers. And that is ultimately what comes about. So it is been a really strong success on the revenue side. The revenue contribution is I would say, definitely above the 25% synergy that we laid out for you when we closed the deal. And the margin accretive nature of this content has been recognized in our results as well. So you are seeing strong revenue synergies. You are seeing strong margin expansion. And then 1 of the other things that we talk about that much, but what we have been able to do is we have been able to be much more efficient with regards to the cash generation and collection at that business. So all of these things together have been very, very positive for the company here in 2026. And we will be able to build on this now that we have this content as we head into 2027. So overall, a very, very positive transaction for us.

Carsten Koerl: Maybe if you let me add 1 more thing. So, yes, it is the integration of the content to our 800-plus clients. That was always the thesis that we have much more clients than IMG. We successfully managed this, but even more important is not only the content, it is products which we created on top of the content. The visualizations, the live match trackers, in-play match trackers, in-play match opportunities. So these are the things which ING has not developed. So we developed those things, and we deployed it to the clients. Those are high-margin products. And that is valid updates. That is in tennis. That is involved for Major League Soccer. it is for UFC fighting. That was a lot of work, but the team executed this sensationally.

Jeffrey Stantial: that is great. Thank you for all that color, Your next question comes from Jordan Bender from Citizens.

Operator: Please go ahead.

Jordan Bender: Hey, everyone. Thanks for the question, and good morning. Where are you guys in terms of signing up market makers and that pipeline? And as time has kind of moved on, are Market Makers asking for different types or quality of data? And then I have a follow-up.

Carsten Koerl: Absolutely, Joe. So we have now around 10 market makers, of course, in the first wave We focused on the big ones. The model is the same, so there is a minimum and then there is a revenue share component. Some of the deals are a bit different structure here, but these are the 2 components. There are well over 300 market makers, probably even a bit more depending on what exchanges we are looking to. And this ranges from big teams to very, very small 5 to 10 people teams around the globe. So they all have 1 thing in common. It is full-trial, low-latency feeds. With the technology which I said before, our prediction market feed is exactly targeting this. We are enriching it already with deep data from our official partnerships. To get even more reliable and faster information into those feeds. We are speaking here also about server collocation and the latency reductions in the lines. This is exactly what the market makers are really looking for. From an algorithm perspective, the next development is that, for example, our foundation model, which we did for the NBA, where we tried to predict on very complex math what is the next 5 seconds doing. We have that with CNBC and the peak of feed in there. This helps us predict now with a high accuracy next couple of seconds. So that is the next wave of innovation which goes then into this prediction market feed and product shift too. It should help the market makers to get a little bit of an edge Same like you know it from the financial markets. So this is 1 of the areas where we are in full support in place from a development perspective, that we will see very strong iterations here. And, yeah, as I said before, we see this as a real big market opportunity for us.

Jordan Bender: Great. Thank you. And on my follow-up, Craig, this might be a better question for offline, but I will try here anyways. If I take the midpoint of the EBITDA guidance, I assume free cash flow conversion being negative in the fourth quarter, add back a couple million of the litigation expenses. I have free cash flow conversion still down year over year in the updated guidance. You said you are expecting to grow that over 25. Can you just help us with the bridge or what I am missing in that calculation?

Craig I. Felenstein: Yeah. We can get into the details after the call. My guess is you are underestimating the potential legal expense or the legal expense that we paid earlier in the year related to a settlement which obviously has cash implications but does not have EBITDA implications. But let's. We will take that 1 offline, to be sure. But when you factor that out, do I do expect free cash flow conversion to be up year on year versus 2025. So we will walk you through it.

Jordan Bender: Perfect. Thank you.

Operator: Your next question comes from Michael Hickey with Stonex. Please go ahead.

Michael Hickey: Hey, Carsten. Craig, Jim. Great quarter, guys, and congrats on getting the NBA deal done. that is awesome. It was great news that day. Just 2 questions from us. The first question on managed betting Services, a little pressure in the quarter. I guess just looking beyond unfavorable sports results that had an impact, how healthy overall do you see the demand for managed trading services? And then sort of your thinking on the opportunity on prediction market platforms for a similar service And then I have a second question.

Craig I. Felenstein: Sure. Let me talk a little bit about the impact of the sports outcomes. And then, Carsten, you can talk a little bit more about the MTS business from your perspective. Listen. I think that the reality of our MTS business is that it is operationally doing very, very well. When you look at it from a turnover perspective in the third quarter, you had significant double digit turnover growth as we continue to see more volume from existing customers. As we add new customers, we did get a nice pop from a turnover perspective with the World Cup, about $2.5 billion of additional turnover. So really nice growth on the turnover side of the house. The sports outcomes just did not work in our favor. And as a result, that is why you see the down results in the quarter. If you had actually had the same trading margin this year that you would have had a year ago, you year that you would have had a year ago, you would have seen double digit revenue growth at MTS this quarter. So very much an outcome driven result here for the quarter, but the momentum across the business remains very, very strong. So I will turn it over to Carsten for anything else he wants to add.

Carsten Koerl: Well, we spoke a lot about prediction markets already. it is something we are what we see at the moment is the first quarter where we see a positive impact. As I said, the exchanges We have now a working model with all of them. Are in the very early innings with market makers and the brokers. From a technology perspective, it goes all into the low latency and real time, and the biggest opportunity for sure is here with the market makers. I think 1 thing strategically, what is important to note is both the CFTC and the leagues that we could use. That the official data must be the data for the raw material for the models, but also for the settlement and for the integrity requirements. We have 3 of the top 4 leagues. All the 3 leagues that we have, they gave a clearing for prediction markets. So that gives us the confidence for 2027. that is the growth which we see now is continuing.

Michael Hickey: Nice. On the second question, topic, marketing and media, it looks like you got some pretty good revenue growth in the quarter. Up 15%, so strong double digit. what is driving the stronger marketing demand? And do you expect it continue here and into 2027? Thank you, guys.

Carsten Koerl: What we saw in the last quarter is a strong demand for the World Cup. Of course, this is also connected now to prediction markets. As we know, there is a furious fight out there for clients, So there was a lot of money in the market which is looking for. From an acquisition perspective, to the acquisition of the future better. That is very helpful for programmatic advertising. We built it here an engine by ourselves with all the elements there, and we show strong performance in this area. So we see this growing. As prediction markets are growing, we see more competition in there. that is definitely 1 of the business areas where we have focus that we can do significant more in front of cell.

Michael Hickey: Nice. Thanks for the color. Good luck, guys.

Carsten Koerl: Operator, we have time for 1 more question.

Operator: Your final question comes from Chad Beynon with Macquarie Capital. Please go ahead.

Chad Beynon: Hi. Good afternoon. Thanks for taking my question. Just in terms of the share repurchase, this is the second quarter in a row at these elevated levels, $300 million between Q2. And Q3. So as we think about the incoming cash from Atrium, the current liquidity that you have on the balance sheet, Craig, how are you guys thinking about repurchases in the near term and beyond? Thanks.

Craig I. Felenstein: Sure. Thanks, Chad, for the question. So when we think about capital allocation for our business, our thought process really has not wavered even as the stock price has, which is the reality of our cash usage is ideally we wanna put it to work in our business to create additional long term value opportunities for the company. So, investing in the core assets of the business, investing in new opportunities like PlayRadar. We also certainly will look at M&A opportunities to see what can create additional long term opportunities. The challenge of finding M and a opportunities that are better than your core business is it is hard to find those that are growing faster than the revenue growth we are delivering, and the margins that we are delivering. And the cash flow that we are delivering. So the strength of our balance sheet allows us to continue to be active with regards to the buyback program even as we do the other things, which is invest in our business and look at M&A. And given where the share price is today and given the long term value that we are creating as a company, we do believe that there are significant opportunities to repurchase shares. But we will always weigh those 3 things together. Looking at the best uses of our capital moving forward. We did complete the $250 million share enhanced share repurchase program in the start of September. And then we have continued to buy under our new plan, which is a new grid as we look to take advantage of the dislocation between the value we are creating and the share price, and we will continue to evaluate that as we move forward.

Carsten Koerl:

Chad Beynon: Appreciate it. Thank you.

James Bombassei: We wanna thank everyone for joining us for Q3 call. Now I will turn it back to the operator.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.