Sportradar Group’s Earnings Call: Prediction Market Revenue Timing and U.S. Market Weakness Claims Clash

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Date of Call: Aug 3, 2026

Financials Results

• Revenue: $378 million, up 19% year-over-year (21% on a constant currency basis)
• Operating Margin: Adjusted EBITDA margin of 20%, up year-over-year

Guidance:

• Constant currency revenue growth for full year 2026 expected to be 19% to 21% ($1.518B to $1.533B reported at current FX rates).
• Constant currency adjusted EBITDA growth for full year 2026 expected to be 24% to 27% ($360M to $368M reported at current FX rates).
• Strongest revenue growth expected in Q3, with acceleration of adjusted EBITDA margin growth, though margins will be down year-on-year in Q3 due to IMG content seasonality.

Business Commentary:

Revenue Growth and Strategic Monetization:

• Sportradar reported revenues of $378 million for Q2 2026, a 19% increase year-over-year.
• The growth was driven by strong performance in betting and gaming content, particularly from the continued monetization of IMG Arena rights.

Prediction Markets and New Opportunities:

• The company is actively capitalizing on the prediction markets opportunity, with new agreements such as the multi-year global deal with Culture, expected to contribute to revenue growth.
• The expansion into prediction markets is seen as a natural adjacency that broadens the addressable market, similar to the growth seen in online sports betting.

Impact of Foreign Exchange and Market Dynamics:

• On a constant currency basis, Sportradar's revenue growth would have been 21%.
• The reported revenue growth was negatively impacted by foreign currency headwinds, particularly the strength of the U.S. dollar against the euro.

Operational Efficiency and Cost Management:

• Adjusted EBITDA increased to $76 million, up 19% year-on-year, supported by a focus on cost efficiencies and synergies from the IMG integration.
• The company is leveraging AI to automate workflows and enhance cost efficiencies, contributing to margin expansion.

U.S. Market Trends and Regulatory Environment:

• The U.S. market growth has moderated due to the absence of significant state openings and increased tax regulations.
• Despite these challenges, Sportradar remains confident in its long-term growth ability by executing on strategic initiatives like prediction markets and live gaming expansion.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges short-term headwinds, updating guidance lower due to U.S. market softness, prediction market deal timing delays, and tax/regulatory impacts. However, they express confidence in long-term fundamentals, stating 'the fundamentals of our business remain strong' and expect outperformance in 2027.

Q&A:

• Question from Eric Handler (Roth Capital): Could you dissect the guidance revision, the puts and takes, and your view for the back half and catalysts for 2027?
  Response: The revision reflects delayed prediction market deal timing and continued U.S. market softness, though advertising recovered. Fundamentals for 2027 remain unchanged, with continued outperformance expected.

• Question from Chad Beanan (Macquarie Capital): Were U.S. trends decelerating through Q2, and what was the World Cup benefit?
  Response: U.S. market growth was flat QoQ. The World Cup drove strong Q2 turnover and ticket sales, but the final (in Q3) was the most profitable match.

• Question from Chad Beanan (Macquarie Capital): Any change in expectations for PlayRadar uptake in the back half?
  Response: PlayRadar is in early stages; a major launch is planned for September. It combines live sports content with iGaming to create a crossover experience.

• Question from Ryan Sigdahl (Craig Hallam Capital Group): Does slowing regulated sports betting growth change your strategy to shorten league rights deals?
  Response: No change in strategy; rights deals are margin-positive and enable expansion into prediction markets, which are accretive.

• Question from Ryan Sigdahl (Craig Hallam Capital Group): Any update on short report allegations?
  Response: The audit committee determined the short seller reports presented a misleading narrative. The company has rigorous compliance frameworks and has received regulatory approvals and rights renewals.

• Question from Joe (VTIG): What is the deal structure with Kalshi, and is it a good template for others?
  Response: Deals include fixed and variable fee components to capture upside. Each deal is tailored, but all must be accretive and leverage the company's strengths across content and services.

• Question from Zach (Wells Fargo): Does the delayed prediction market benefit imply a bigger 2027/2028 benefit, and how to layer it into guidance?
  Response: Yes, 2027/2028 will see a ramp-up as deals are executed. The upside for 2026 is in the tens of millions, with significantly higher potential for 2027.

• Question from Zach (Wells Fargo): Given moderating U.S. growth, what is the fixed vs. variable contract mix and expectations?
  Response: About two-thirds of contracts are fixed, one-third variable. Fixed renewals should see historical increases; variable will fluctuate with the market, but overall is expected to expand.

• Question from Jordan Bender (Citizens): How should we think about outperforming U.S. market estimates next year?
  Response: Outperformance is driven by product strength, content, and client relationships globally, not just U.S. It's a result of consistently delivering value.

• Question from Jordan Bender (Citizens): How should we account for incremental prediction market deals in guidance?
  Response: Current guidance includes the Kalshi deal (pending NBA agreement). There is significant upside from potential deals with other exchanges, market makers, and brokers.

• Question from Barry Jonas (Truist Securities): How much cannibalization is OSB seeing from prediction markets?
  Response: Clients report very limited cannibalization currently.

• Question from Barry Jonas (Truist Securities): How are you thinking about M&A, specifically affiliate marketing?
  Response: M&A is not focused on affiliate marketing. The priority is share repurchases given the stock price disconnect from fundamentals.

• Question from Jeff Stanchel (Stifel): Does back-half guidance assume market-wide improvement, and any shift in renewal economics?
  Response: Guidance assumes a slightly better U.S. market but is not dependent on significant changes. Contract economics remain largely unchanged as most are long-term and variable upside is positive long-term.

• Question from Jeff Stanchel (Stifel): What is the all-in take rate expectation for prediction market deals vs. traditional OSB?
  Response: Each deal is tailored, but prediction market deals must be at least as accretive as traditional OSB deals.

• Question from Mike Hickey (StoneX): Could Sportradar participate directly in market making for prediction markets?
  Response: Yes, by providing low-latency feeds and deep data modeling, which are highly valuable for market makers.

• Question from Mike Hickey (StoneX): What is the tax/regulatory impact, especially in the UK and for 2027?
  Response: Tax increases in the UK and Brazil this year were unfavorable for clients. No major tax obstacles are anticipated for 2027; iGaming is in a startup phase with unique value.

• Question from Bernie McTernan (Needham): Was U.S. weakness due to MLB crowding out from the World Cup?
  Response: No, it was broad-based market weakness; MLB volumes remain strong.

• Question from Bernie McTernan (Needham): What is the exit rate expectation for prediction markets?
  Response: Expectations are higher than three months ago due to increased ecosystem interest. Growth in 2027 will be stronger due to timing.

• Question from Jason Basnet (Citi): Could state-level legal challenges impact prediction market revenues in the U.S.?
  Response: Sportradar operates where allowed; it will continue to serve clients in jurisdictions where they are permitted.

Contradiction Point 1

Timeline and Impact of Prediction Market Revenue

Contradiction on when revenue contributions are expected and their materiality to guidance.

Jordan Bender (Citizens) - Jordan Bender (Citizens)

2026Q2: The guidance is conservative as there is \"significant much upside\" from potential additional deals... The CalSheet deal is largely locked in and embedded in guidance. - [Greg](CFO)

How should we interpret your comment on U.S. market outperformance next year—is that your estimate or the industry's—and how are new prediction market deals incorporated into your 2026 guidance? - Shaun Kelley (BofA Securities)

2026Q1: More prediction market revenue is now included (adding \"tens of millions\" annually, with some in 2026). - [Craig Felenstein](CFO)

Contradiction Point 2

Nature of U.S. Market Weakness

Contradiction on whether the market softness is broad-based or tied to specific factors like MLB.

Bernie McTernan (Needham) - Bernie McTernan (Needham)

2026Q2: It is a broad market comment, not specific to MLB, which continues to have \"strong volumes\" for Sportradar. - [Greg](CFO)

Was the noted U.S. weakness specific to MLB (e.g., World Cup crowding out) or broad-based, and what is the expected exit rate for prediction markets? - Ryan Sigdahl (Craig-Hallum Capital Group LLC)

2026Q1: U.S. market growth was flat/unchanged from Q1... The Knicks' performance in Q2 also impacted results. - [Greg](CFO)

Contradiction Point 3

Strategy Regarding Fixed-Term Rights Deals

Contradiction on the company's stance regarding the length and structure of its rights agreements.

Ryan Sigdahl (Craig Hallam Capital Group) - Ryan Sigdahl (Craig Hallam Capital Group)

2026Q2: The company remains \"margin positive\" on all major rights. ... The deal negotiation process with leagues took time, but the strategy is disciplined... No change in strategy. - [Greg](CFO) and [Karsten Kurl](CEO)

Given the high decremental leverage and slowing industry growth, does Sportradar's strategy to shorten fixed-term rights deals with leagues change, and is there any update on short seller allegations? - Barry Jonas (Truist Securities, Inc.)

2026Q1: It's a tricky, ongoing legal landscape. Sportradar is not predicting limitations and is focused on delivering the best product to its partners, who may include online sports betting operators switching into prediction markets. - [Carsten Koerl](CEO)

Contradiction Point 4

Inclusion of Prediction Market Revenue in 2026 Guidance

Guidance inclusion of significant prediction market deals shifts from "not included" to "largely locked in."

Jordan Bender (Citizens) - Jordan Bender (Citizens)

2026Q2: The CalSheet deal is largely locked in and embedded in guidance, pending the NBA agreement (a Q4 driver). - [Greg](CFO)

How are new prediction market deals factored into 2026 guidance? - Robin Farley (UBS)

20260303-2025 Q4: The 2026 guidance includes minor contributions from prediction markets... Significant deals are not included. - [Craig Felenstein](CFO)

Contradiction Point 5

Timeline for Realizing IMG Revenue Synergies

Phasing of IMG revenue synergies shifts from being fully baked-in for 2026 to being more dependent on content retention into 2027.

Zach (Wells Fargo) - Zach (Wells Fargo)

2026Q2: The **growth driver has expanded** from just traditional OSB markets to include prediction markets. Sportradar's focus... will allow it to 'take share'... - [Greg](CFO)

Does the delayed prediction market benefit imply a larger upside for 2027/2028 and how should this be factored into the Investor Day growth targets? - Bernard McTernan (Needham)

20260303-2025 Q4: Revenue upside is possible based on customer content/product dialogue. Cost synergies are more identifiable... The goal is for IMG to be margin accretive in 2026 and beyond. - [Carsten Koerl](CEO) and [Craig Felenstein](CFO)

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