Sportradar Gr Q3 2026 Earnings Call Transcript

Sportradar Gr (NASDAQ:SRAD) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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View the webcast at https://events.q4inc.com/attendee/454909318

Summary

Sportradar Gr reported a revenue increase of 24% year over year, driven by strong performance in betting and gaming content as well as media services.

The company successfully integrated IMG Arena, surpassing their 25% revenue synergy target, and expanded its product portfolio with offerings like premium golf and MMA content.

Sportradar Gr is experiencing growth in prediction markets, establishing itself as a leading solution partner with exchanges, market makers, and brokers, and seeing contributions from partnerships with entities like the NBA.

The sale of Atrium Sports for $170 million will strengthen the company’s balance sheet, focusing on core growth areas like betting, gaming, and media.

Despite regulatory uncertainties in Brazil, the company remains committed to the market, emphasizing the importance of a well-regulated framework.

The company maintains its guidance for 2026, expecting constant-currency revenue growth of 19-21% and adjusted EBITDA growth of 24-27%, despite regulatory uncertainties.

Sportradar Gr is actively repurchasing shares, reflecting confidence in its business and growth trajectory.

The company is launching Playradar iGaming in Q1 2027, leveraging sports content for immersive gaming experiences, but expects gradual growth in this new venture.

Full Transcript

OPERATOR

After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jim Bombasi, Senior Vice President, Investor Relations and Corporate Finance. Please go ahead.

Jim Bombasi (Senior Vice President, Investor Relations and Corporate Finance)

Thank you, operator. Hello everyone, and thank you for joining us for Sportradar Gr’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.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 up the call to questions from analysts and investors.

In the interest of time, please limit yourself to one question and one follow-up. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in our annual report on Form 20-F and Form 6-K filed 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 the 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 (Chief Executive Officer)

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 Gr. 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, check stats with an AI assistant, place a bet with a sportsbook, or trade a contract with a prediction market. Every one 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 sport fans.

As the sports ecosystem expands into new channels and ways to consume sport, competitive intensity is increasing, driving greater demand for what Sportradar Gr 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. Sportradar Gr will realize outsized benefits from these trends.

Given our unmatched position, which is the result of three things that are very hard to replicate — our scale in official data rights, the 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, one year in, we have successfully integrated and monetized the largest sport 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 leading prediction market players, we have now established Sportradar Gr 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, visualizations and AI-enabled technology is growing beyond betting. With an expanding media, technology and iGaming client base, and force, 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 this in more detail. Our third quarter results demonstrate 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. We delivered an adjusted EBITDA margin of 28% and generated significant free cash flow. Results benefited from continued strong execution and monetization of IMG Arena rights as well as from our prediction markets.

It has now been one year since we acquired IMG Arena, the largest content acquisition in our industry, and our teams have done an excellent job integrating these rights into our flywheel. 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 live streaming and advanced visualizations into a single offering. We have also used IMG content to expand our next-gen offerings, rolling out play and micro markets for live 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 U.S., market growth improved in the third quarter, while the rest of the world generally saw continued strong growth. Touching on developments in Brazil for a moment, we’ve been a long-term partner to some of the leading Brazilian federations and operators, and that commitment hasn’t 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 ecosystem. They are bringing in new participants, new formats and new demand for sports content, and they are doing it alongside regulated sports betting, not 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 20 leagues, including the NBA, ATP Tour, MLB, NHL and the Bundesliga.

In a matter of months, that relationship has grown from a single sport into an end-to-end partnership. Kalshi is using our solutions across official data, ops, integrity services, fan engagement and customer acquisition. Novig 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 sport event contracts with greater speed.

The opportunity in prediction markets goes beyond data. The rapid expansion of prediction markets is increasing competitive intensity, and our clients are investing heavily to acquire niche 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 exchanges, brokers and market makers globally. We expect prediction markets to become an increasingly 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. One of the drivers is AI. As fans increasingly turn to AI assistants and large language models for sports information — from live scores to player stats and game recaps — these platforms need accurate, real-time official data to deliver reliable answers.

Sportradar Gr 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 Playradar iGaming business, we continue to make great progress leveraging our unparalleled video streaming portfolio and our unique live betting capabilities. We are creating immersive data and video experiences 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 our player journey for sportsbook. As we get set to launch 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 businesses. Last month we announced the sale of Atrium Sports, the coaching and scouting business of Synergy Sports, to Teamworks Innovations for US$170 million. This represents an accretive double-digit EBITDA multiple relative to Sportradar Gr’s market valuation. The divestiture of this non-core asset 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, including automated sports production cameras, automated graphics solutions, certain computer vision capabilities and competition management products. These will continue to support growth and innovation going forward. The proceeds from this sale will further strengthen our balance sheet and support our capital allocation priorities, as we continue to repurchase shares and 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 suite 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 sportsbook, 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 Greg who will discuss our financial results in greater detail.

Craig Felenstein (Chief Financial Officer)

Thanks, Carsten, and thank you everyone for joining us this morning. Sportradar Gr’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 who 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. Sportradar Gr is ideally positioned to take advantage of these compelling new growth opportunities 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, Sportradar Gr 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 Gr’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 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 from 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 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 group, 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 with 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 amount 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 purchase 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&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, Sportradar Gr remains in a very strong liquidity position, closing the quarter with 190 million in cash and cash equivalents, an undrawn 250 million revolving credit facility, and no debt outstanding. In the first nine 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 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 was more than offset by accelerated share repurchases. During the quarter we completed the previously announced 250 million dollar enhanced open market repurchase program and continue to be active repurchasing shares under the broader 1 billion dollar 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, two additional cash inflows will further strengthen our strong balance sheet. The first is a 50 million dollar payment from IMG in relation to the acquisition that was completed a year ago. A second 50 million dollar IMG payment will be received in November 2027. Additionally, later this quarter we anticipate payment of 170 million upon closing our divestiture of Atrium Sports following regulatory approval.

As Carsten mentioned, this was a 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 the 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 1.533 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 we 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 underpin 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 one question and one follow-up. If you would like to ask a question, please press star-one to raise your hand. To withdraw your question, press star-one. 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&A roster. Your first question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

Please go ahead.

Ryan Sigdahl (Analyst)

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

Craig Felenstein (Chief Financial Officer)

Sure, I’ll start, Carsten, then I’ll 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 doesn’t 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 some savings, certainly on the sports rights side.

You don’t see much of that yet in the fourth quarter, just given that has ultimately come through with the current situation and we don’t know ultimately how it’s going to play itself out. So the cost-out hasn’t yet started. But when you look at it for a full year 2027, you’d have some significant cost-out as well. When you think about the phasing for 2026, you would assume that it’s pretty much straight line throughout the four quarters. So if you’re assuming 60 million for the year, you can assume about 25% of that in the fourth quarter.

Carsten Koerl (Chief Executive Officer)

Hi, Ryan, Carsten here. So, taking on Brazil from a strategic perspective, fact is on 25th of September, President Lula gave the provisional measure to put sports betting on hold and wind it down. That takes now 60 days, to our knowledge, which a presidential provisional measure takes. Then the Congress needs to decide on this, needs 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 the operators to get an immediate injunction on this.

So this 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 league partners there. We have, of course, plenty of operators as our partners there and they are serving the sport 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 which is doing sports betting. So we believe that this would serve the sport 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 at least we have roughly around about 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 the regulated market is the only alternative to protect the sport fans, the bettors, and the interest of the leagues.

Ryan Sigdahl (Analyst)

We are certainly hopeful logic prevails there, but appreciate the dynamic nature of how you guys can react either way. In the spirit of getting expectations fully level set with all the moving, mixed dynamics in the industry, second question would just be on MLB, given there’s an all-but-certain lockout that’s coming. Not expecting you guys to have a crystal ball to know precisely what will happen or how long it’ll happen, et cetera. But can you help us talk through the puts and takes, think about the market specifically with the league, how material it is or is not for Sportradar Gr.

My hunch is it’s 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 (Chief Executive Officer)

Yeah, Ryan, I think Rob Manfred has the bigger crystal ball to look in the future than I have. But we would applaud if this lockout doesn’t happen, because it’s for the sport fans and for the interested bettors, 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 four, we will, of course, know more and report more about this, but we have a very strong tier-one sport portfolio which can replace an MLB partly lockout or complete lockout. 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’s the WNBA which is fully in play at this time, and many majors in the golf and tennis world. So we think we have a good tier-one 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 (Analyst)

Helpful. Thanks, guys. Good luck.

OPERATOR

Thank you, Ryan. Your next question comes from Sean Kelly with Bank of America. Please go ahead.

Sean Kelly (Analyst)

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: are you 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 didn’t see, I think, implied Q4 revenue guidance much above what we were expecting.

So wondering how that plays in, maybe relative to any Brazil impact you factored in for 4Q as well. Thank you.

Carsten Koerl (Chief Executive Officer)

Hi, Sean, Carsten here. So, prediction markets in this quarter you see the first time the impact. I think we all agree that this is a very positive impact. It took us some quarters to negotiate a complex framework with our league partners together with the operators out there. But we saw now the first quarter with a very positive impact on this for us. Prediction market is split into three elements. Six exchanges, which we mentioned: we are cooperating here now with three of them. We extended from, in the beginning, single-sport coverage now to the full flywheel including marketing and integrity services. So that is a good signal. Looking to the brokers, we have now the first broker which we signed; there are more to follow. And the most interesting is 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 the prediction market feed especially for the lowest possible latency. So we aggregate there the deep data from our sport partners. For example, in tennis we get the line calls 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 a prediction market feed and that can help high-speed trading algorithms with the lowest latency.

There’s 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. But as I said, the market makers are for us a bigger opportunity, and we are doubling and tripling down on the technology to make the lowest latency data available. These are the three segments and we see that this is growing. The NBA has started in quarter four, as you know. So it’s 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 NBA. We fully support this and 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 the NBA uplift are already implied in our numbers which we see for the end of the year.

Jim Bombasi (Senior Vice President, Investor Relations and Corporate Finance)

Operator, we’ll take our next question.

OPERATOR

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

David Katz (Analyst)

Morning everyone. Thanks for taking my question. For all the detail, excluding the unknown with Major League Baseball, if you could talk about just how you see, with all the moving parts, your business algo for 2027. Not asking for guidance, of course, but just help us with the building blocks or bridge or some sense of how you see the business, and then MLB will do what it does. Thanks.

Craig Felenstein (Chief Financial Officer)

Sure. Thank you, David. So when you think about 2027, the growth algorithm that we’ve laid out here for quite some time is still in place, and that is we at Sportradar Gr 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 two distinct parts. It has the expansion of the OSB market, but it also has the expansion of the prediction market ecosystem.

And those two things are 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 the market growth by delivering high-quality products, high-quality solutions to our customers like we’ve done for quite some time. And then we’ll 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’d 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 when you layer in what we kind of laid out at our investor day a little over a year ago, which is steady, predictable revenue growth, margin expansion consistently, and free cash flow generation, that should continue very much into 2027.

David Katz (Analyst)

Perfect. Thanks very much.

OPERATOR

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

Robin Farley (Analyst)

Great. Thank you. I wonder if you could kind of help us think about prediction market contribution on an 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’re 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 weren’t for Brazil? Just how to think about that in your reiteration. Thanks.

Craig Felenstein (Chief Financial Officer)

Sure. So let’s start with the prediction market opportunity annually. And we’re not going to 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’ve struck thus far have a very mixed component to it. There’s some fixed-fee components to it when you think about some of the products and services that we’re offering. And there’s 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’ll 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’s 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’s a reason why we give a range with guidance because there’s a lot of ins and outs and a lot of moving parts that come with it. So when you have upside on certain items, you have downside on others.

And right now we’re certainly seeing some nice momentum across our business, across our betting and gaming business, across our marketing and media services business, we’re seeing some nice upside for prediction markets. But then you have this flip side, which is the Brazil reality, which is the uncertainty around Brazil. So when we give our guidance, we’re factoring in some of the positives and some of the negatives related to that. And that’s why we give a range ultimately over time.

OPERATOR

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

Barry Jonas (Analyst)

Hey guys, can you talk a little bit more about the PlayRadar launch next year? You know, how should we be thinking about the ramp and ultimately the materiality this could bring?

OPERATOR

Thank you.

Carsten Koerl (Chief Executive Officer)

Hi, Barry, Carsten here. So we had a great SBC show this fall together with Jason Robinson, Michael Jordan on stage promoting PlayRadar and seeing how the audience likes the idea of connecting live sport content and iGaming. That’s 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 transactions, and adding some community features like jackpots, etc. That’s the core idea. So we got great interest. We signed up a couple of tier-one clients. We are ramping up on the territories from a regulatory perspective and we are expecting quarter one to launch a new 24/7 channel where you see the live content and you have the betting opportunities. This is still in the startup stage, so it is not a mature business which we have here that makes it very difficult to predict. But what we see in the amount of interest is astonishing.

And we are in possession of the content which is driving this iGaming experience. This is all going into real time. So it’s the 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 iGaming. Don’t 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 the 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, lambda slot machines. Our belief here in the whole thing is that it goes all away from the traditional way, how you can set up the 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 iGaming space.

Barry Jonas (Analyst)

That sounds great. And just for a follow-up, some states have successfully banned prediction markets. And I guess it’s possible we could see a few more before there’s a potential Supreme Court ruling. So just curious how we should think about potential implications to your prediction market revenues and contracts. Thank you.

Carsten Koerl (Chief Executive Officer)

First of all, Barry, we are very happy that we have now prediction market flywheel and that delivers very, very strong results in our contracts with the operators. We have clauses in that if it is not possible to offer them content in the market, they can’t use our content for serving that specific market. For the rest, at the moment, the markets which 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 regulated perspective. We can’t 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 included in this.

Barry Jonas (Analyst)

Thank you.

OPERATOR

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

Peter Supino (Analyst)

Hi, good morning. I wondered, as you look into 2027, how you’re thinking about the growth relative to the 2027 targets that you outlined in April of 25. I know elements of that have been touched on call, but thought maybe that framing might invite a different answer. And I also want to 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 Felenstein (Chief Financial Officer)

Thanks, Peter. Appreciate that. So you know, the 2027 targets that we laid out, you know, at our investor day last at the start of 2025 have not changed except for one, 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 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 two things together. But 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 going very much as we expected, 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’ve 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 exact leverage. From an EBITDA perspective, we delivered 290 basis points of margin expansion last year.

We’re going to deliver close to 100 basis points of margin expansion this year. We expect to accelerate that next year. So a lot of the facets of what we said at Investor Day are holding true. And 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’re 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 Jeff Stanchel with Stifel. Please go ahead.

Jeff Stanchel (Analyst at Stifel)

Hey, good morning everyone. Thanks for taking our question. Maybe just starting off on the IMG acquisition, which does seem fitting just given today is the one-year anniversary of closing that deal. Carsten, Craig, can you just give us a little bit deeper of a post-mortem update on that acquisition? Meaning where are you pacing currently in terms of that original 25% revenue synergy target? Where could that ultimately land? And then what are some of the key opportunities that are still being executed on as you look ahead for the remainder of the year and into 2027?

Craig Felenstein (Chief Financial Officer)

Sure. So thank you for the question, Jeff. When you look at IMG, you know, it gets lost a little bit because of all the other noise around the space and all the other noise ins and outs of the company. But it really was a significant success for Sportradar Gr. When you think about the fact 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’re going to collect this year with regards to IMG, we’ll collect another 50 million next year.

So we got paid to take on rights and the ecosystem that we’ve built here at Sportradar Gr allows us to take advantage of those rights significantly. And you’ve seen that on the revenue side. One of the biggest things for me that I look at when I look at this business is it’s now not IMG versus traditional Sportradar Gr. We’re selling this content together and ultimately driving more value for our customers. And that is ultimately what comes about.

So it’s 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’re seeing strong revenue synergies, you’re seeing strong margin expansion. And then one of the other things that we don’t talk about that much, but we’ve been able to do is we’ve 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’ll be able to build on this now, now that we have this content as we head into 2027.

So overall, a very, very positive transaction for us.

Carsten Koerl (Chief Executive Officer)

Maybe let me add one more thing. So, yes, it’s 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, it is not only the content, it’s the products which we created on top of the content. The visualizations, the live match trackers, the in-play match trackers, in-play match opportunities. So these are the things which IMG has not developed.

So we developed those things and we deployed it to the clients. That’s high-margin products and that’s well adopted. That is in tennis, that is in volleyball, it’s for Major League Soccer, it’s for UFC fighting. So that was a lot of work, but the team executed this sensational.

Jeff Stanchel (Analyst at Stifel)

That’s great. Thank you for all that color.

OPERATOR

Your next question comes from Jordan Bender from Citizens. Please go ahead,

Jordan Bender (Analyst)

Everyone, thanks for the question and good morning. Where are you guys in terms of signing up market makers or 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 (Chief Executive Officer)

Absolutely, Jordan. So we have now around about 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 differently structured here, but these are the two 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 five- to 10-people teams around the globe. So they all have one thing in common: it is ultra-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 league partnerships to get even more reliable and faster information into those feeds.

We’re speaking here also about server colocation 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 the next five seconds are doing. We have that with CNBC and the Peacock feed in there. This helps us to predict now, with a high accuracy, the next couple of seconds. So that’s the next wave of innovation which goes then into this prediction market feed. And what it should do, it should help the market makers to get a little bit an edge, same like you know it from the financial market.

So this is one of the areas where AI is fully in place from a development perspective, where we will see very stormy iterations here. And yeah, as I said before, we see this as a real big market opportunity for us.

Jordan Bender (Analyst)

Great, thank you. And on my follow-up, Craig, this might be a better question for offline, but I’ll try here anyways. If I take the midpoint of the EBITDA guidance, I assume free cash flow conversion 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’re expecting to grow that over 25. Can you just help us with the bridge or what I’m missing in that calculation?

Craig Felenstein (Chief Financial Officer)

Yeah, we can get into the details after the call. My guess is you’re underestimating the potential legal expense, or the legal expense that we paid earlier in the year, really related to a settlement which obviously has cash implications but does not have EBITDA implications. But let’s—we’ll take that one offline to make sure. But when you factor that out, we do expect free cash flow conversion to be up year on year versus 2025. So we’ll walk you through it.

Jordan Bender (Analyst)

Perfect. Thank you.

OPERATOR

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

Michael Hickey (Analyst)

Hey, Carsten, Craig, Jim. Great quarter, guys, and congrats on getting the NBA deal done. That’s awesome. It was great news that day. Just two 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 Felenstein (Chief Financial Officer)

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’s 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 two and a half billion dollars of additional turnover. So really nice growth on the turnover side of the house. The reality: the sports outcomes just didn’t work in our favor and as a result, that’s why you see the down result in the quarter. If you had actually had the same trading margin a year ago—sorry, this 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’ll turn it over to Carsten for anything else he wants to add.

Carsten Koerl (Chief Executive Officer)

Well, we spoke a lot about prediction markets already. So it’s something where 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. We 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 one thing strategically, what is important to note is both the CFTC and the leagues very clearly said the official data must be the data for the raw material for the models, but also for the settlement and for integrity requirements. We have three of the top four leagues. All the three leagues which we have, they gave a clearance for prediction markets. So that gives us the confidence for 2027 that the growth which we see now is continuing.

Michael Hickey (Analyst)

Nice. On the second question, topic marketing and media, looks like you got some pretty good revenue growth in the quarter, about 15%. So strong double digit. What’s driving the stronger marketing demand and do you expect it to continue here and into 27? Thank you, guys.

Carsten Koerl (Chief Executive Officer)

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, from an acquisition perspective, to do the acquisition of the future bettor. That is very helpful for programmatic advertising. We built 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. So that’s definitely one of the business areas where we have hopes that we can do significantly more in 2027.

Michael Hickey (Analyst)

Thanks for the color. Good luck, guys.

Jim Bombasi (Senior Vice President, Investor Relations and Corporate Finance)

Operator, we have time for one more question.

OPERATOR

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

Chad Beynon (Analyst)

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 Felenstein (Chief Financial Officer)

Sure. Thanks, Chad, for the question. So when we think about capital allocation for our business, our thought process really hasn’t wavered even as the stock price has, which is the reality of our cash usage is ideally we want to 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 i