Assessing Sportradar's Q3 2025 Earnings: Is the Stock Undervalued Despite Strong Outcomes?

Sportradar Group AG (NASDAQ: SRAD) just delivered a mixed Q3 2025 earnings report, sparking a 3.79% pre-market decline in its stock price. While revenue and adjusted EBITDA growth outperformed expectations, the EPS miss and short-term volatility raise a critical question: Is this a buying opportunity for contrarian investors? Let's dissect the numbers, strategy, and valuation to determine whether the market is overreacting.

The Q3 Results: Strong Operational Momentum, Mixed Short-Term Metrics

Sportradar reported Q3 revenue of €292 million, a 14% year-over-year increase but slightly below the €295.11 million forecast, according to the earnings call transcript. Earnings per share (EPS) came in at €0.07, missing the €0.08 estimate. However, the company's operational performance was robust: adjusted EBITDA surged 29% to €85 million, with a record 29.0% margin, as highlighted in a Chartmill report. Free cash flow for the first nine months hit €149 million, a 72% conversion rate, and full-year guidance was raised to at least €1.29 billion in revenue and €290 million in adjusted EBITDA, per the earnings call transcript.

The Sports Content, Technology & Services segment grew 31% YoY, while Betting Technology & Solutions rose 11%, figures that the Chartmill report also emphasizes. These figures underscore Sportradar's ability to capitalize on the global sports tech boom, driven by demand for real-time data, AI-driven analytics, and regulated betting markets.

Valuation Metrics: A Contrarian Lens

Sportradar's current P/E ratio of 76.39 is reported in a Roth Capital note, which at first glance appears lofty. Context matters: the private equity market's Q3 2025 EV/EBITDA multiple averaged 14.61x, according to a Q3 PE trend update, suggesting that public market multiples for high-growth tech firms often outpace private equity benchmarks. For Sportradar, a company with 17% revenue growth and 30% EBITDA growth, a P/E of 76.39 may reflect optimism about its long-term trajectory rather than overvaluation.

Consider the EBITDA angle: At €85 million in Q3, annualized EBITDA would be €340 million. With a market cap of $8.24 billion (noted in the Roth Capital note), this implies a P/EBITDA ratio of roughly 24x (assuming a 2025 EBITDA of €340 million). Compare this to the private equity EV/EBITDA of 14.61x from the Q3 PE trend update, and Sportradar appears to trade at a premium. However, this premium is justified by its recurring revenue model, global expansion, and strategic acquisitions like IMG ARENA, which enhance its content portfolio and margin potential, as detailed in the earnings call transcript.

Strategic Catalysts: Margin Expansion and Shareholder Returns

Sportradar's recent $100 million share repurchase authorization increase (now $300 million total) signals confidence in its intrinsic value, a point the Chartmill report highlights. The company also plans to integrate IMG ARENA, a move expected to drive margin expansion and diversify its content offerings. These initiatives align with a broader trend in the sports tech sector: consolidation and vertical integration to capture more value from the data-to-betting ecosystem.

Moreover, the board's guidance for 2026 growth-driven by innovation and IMG ARENA integration-suggests the company is positioning itself for sustained outperformance. Analysts project FY2026 earnings of $0.51 per share and FY2027 at $0.80 per share, according to the Roth Capital note, implying a forward P/E of 16x by 2027 if the stock trades near current levels. This trajectory hints at a compelling risk/reward profile for long-term investors.

The Contrarian Case: Buying the Dip in a High-Growth Sector

The market's immediate reaction to the EPS miss-trading shares at $24.61 pre-market, as noted in the earnings call transcript-overlooks Sportradar's structural strengths. The company operates in a sector where demand for real-time data and AI-driven insights is accelerating, and its 31% growth in the Sports Content segment highlights its competitive edge.

While the P/E ratio of 76.39 (per the Roth Capital note) may seem steep, it's important to note that earnings are expected to grow rapidly. At a projected $0.51 EPS in 2026, the P/E would compress to 54x, still high but more in line with peers like DraftKings or FanDuel. For contrarian investors, the key is to differentiate between a short-term earnings blip and a long-term growth story.

Final Verdict: A Buy for the Patient Investor

Sportradar's Q3 results reinforce its position as a leader in the sports tech revolution. The EPS miss and stock dip present an opportunity to buy into a company with strong operational leverage, a resilient business model, and a clear path to margin expansion. While the P/E ratio is elevated, the company's growth trajectory and strategic initiatives justify a premium valuation. For investors with a 3–5 year horizon, this is a stock worth considering-especially as the sector continues to consolidate and innovate.