Despite a decline in profits during Q3, Sportradar AG remains confident in its commercial outlook as it eyes expansions into iGaming, increased use of Artificial Intelligence (AI), and a bigger international profile following the takeover of IMG Arena.

Q3 trading saw Sportradrar’s revenue rise 14% year-over-year to €292m (Q3 2024: €255.2m) while year-to-date revenue stands at €921.1m, 13% higher than last year.

However, accounts saw Q3 profits drop from €37m to €22m, attributed by leadership to lower foreign currency gains related to FX fluctuations associated with US$ denominated sports rights – although the picture around EBITDA was more positive, up 29% to €85m (€66m).

In an investors call later in the day, leadership also commented on the impact of customer-friendly football betting results across its B2C partners impacting Managed Betting Services returns.

A dip in profit has not deterred Sportradar from enhancing its investment objectives. The company continues to invest in AI, and has reiterated its objective of expanding into “IGaming at some point in the future”, though its product mix remains sports-focused for now.

Carsten Koerl, Sportradar CEO, said: “We delivered another quarter of strong topline growth and increasing flow through, including record EBITDA margins and substantial cash flow generation. The results reflect our sustained operating performance and the durability of our growth strategy.

“Our continued momentum is driven by our premium content and product portfolio, and leading technology and AI, which is enabling us to consistently drive above market growth and deliver increasing value for our clients and partners.”

Testing iGaming waters

Sportradar’s ambitions to launch in iGaming have been no secret, having been first mapped out during the company’s H1 earrings call earlier this year. The group explained at the time that it was using the still developing and now 10 months old regulated Brazilian betting market as its testing ground.

Speaking to investors earlier today, Koerl explained how Sportradar has begun testing its iGaming product in Brazil, how this links in with its historic focus on sports betting, and perhaps most significantly, where it intends to go next.

“Well, like stated in the last quarter, that’s for us at the moment a test period. So we are doing this in Brazil, and we see it as holistic. We are starting with the client acquisition, we have the ad service for this sport is a perfect instrument here.

“Once the client acquisition is done, it falls into the sports betting universe. Here we have all the products, from pure databases up to risk management or the full platform. We can channel switch that client based on AI, and get them into the iGaming space, provide them the right products, measure the stimulation and the churn, and have retention tools in between with the visualisation.

“That’s a 360 holistic approach, which we tested successfully in Brazil. There is a clear focus that once we are feeling strong enough with this product, we are looking into very scalable markets. The US is such an example. It’s a very scalable market where we believe we have to work on the portfolio, that we are competitive, and we do this as we speak.”

Prediction movements

It’s not a huge surprise that further expansion into the US is on Sportradar’s agenda. Though the majority of its revenue still comes from non-US markets, its US income rose 21% during Q3 to €66.6m (€54.9m), with Rest of World revenue also up 13% to €222.4m (€200.3m).

The contemporary US gaming space is an increasingly complex one, however, with the rise of prediction market platforms, an area analysts were particularly keen to hear Sportradar leadership’s perspective on.

Sportradar clearly sees a lot of growth potential in prediction markets, but is also cautious about how best both it and the wider industry should proceed. Koerl noted that there are various viewpoints across the US betting space around prediction markets, some of which are in favour and some of which are very opposed.

“I think it would be good for all of us to lean back and see if we can unite this interest from the different stakeholder groups into something which creates a framework of operation, which is a fair and balance and which is satisfying the needs of the player protection and the responsible gaming and the integrity of the sports.

“I’m totally certain that we will see this. There is a lot of movement in this space, but there are a lot of arguments uniting all those parties, so that is the ecosystem. We are actively connecting, we are actively involved in this debate. I think it needs top management to be in here, but from our perspective it is an opportunity.”

Post-IMG takeover vision

Ambitions for predictions and iGaming aside, the biggest development for Sportradar during H2 so far has been the acquisition of IMG Arena from Endeavor Group Holdings, the parent company of the UFC and WWE via its ownership of TKO Group.

The takeover came up against some regulatory hurdles in the UK when the Competition and Markets Authority (CMA) initiated an investigation into the acquisition. However, the takeover has now been greenlit by British authorities as the CMA assessed there was no risk to competition.

This acquisition will see Sportrear significantly expand its already extensive portfolio of media and data rights deals, which already includes the likes of the NBA and UEFA. Newcomers will include WImbledon, the WTA Tour and PGA Tour, among others.

Reflecting the post-Q3 closure of the IMG acquisition in mind, Sportradar has updated its guidance for 2025. The firm anticipates revenue growth of at least 17% to $1.29bn and adjusted EBITDA growth of at least 30% to €290m.

Concluding his company’s Q3 report, Koerl said: “We are very pleased to augment that growth with the completion of the acquisition of IMG ARENA, further bolstering our competitive position, including our unmatched rights offering, industry leading product suite and the depth and breadth of our global relationships.

“The acquisition of IMG provides additional growth avenues and we are excited by the opportunity to drive meaningful additional value for our shareholders going forward.”