Ladies and gentlemen, thank you for joining us, and welcome to Sportradar Group's Third Quarter Earnings Call. [Operator Instructions] I will now hand the conference over to Jim Bombassei, Senior Vice President, Investor Relations and Corporate Finance. Jim, please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the third quarter of 2025. 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 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 today with the SEC, along with the associated earnings release. We assume no obligation to update any forward-looking statements or information, which 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 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 for today's call are Carsten Koerl, our CEO; and Craig Felenstein, our CFO. And now I'll turn the call over to Carsten.

Good morning, everyone, and thank you for joining us today. I'm pleased to announce another quarter of strong execution and performance. Our results further underscore our scale and position as a mission-critical partner deeply embedded in the global sports ecosystem. We achieved record quarter 3 revenues of EUR 292 million and strong flow-through with 29% growth in adjusted EBITDA and a record adjusted EBITDA margin of 29%. So far, this year, we have generated EUR 149 million of free cash flow, representing very strong conversion of 72%. In addition, we are raising our full year '25 guidance with the closing of our IMG Arena acquisition and providing our initial thoughts for '26. underscoring our accelerating growth and value creation. Given the strong momentum we see going forward and the opportunity to create significant shareholder value, our Board of Directors authorized increasing our share repurchase program by EUR 100 million, raising the total program to a size of EUR 300 million. As we discussed at our Investor Day, we are uniquely positioned to capitalize on the rapid expansion of the global sports betting market, given our scale and the depth and breadth of our content, we are driving higher take rates by growing our products and content, penetrating across our loyal client base as we continue to accelerate innovation and bring next-generation products to the market. IMG Arena fits squarely into this growth strategy. First, we would like to welcome our new colleagues and partners from around the world. IMG Arena is a highly strategic acquisition, which aligns with our core business and will fuel our next leg of growth. It further strengthens the competitive position as the scaled leader at the intersection of sports, media and betting, bringing a wealth of premium content and complements and enhances our already robust…

Thanks, Carsten, and thank you, everyone, for joining us this morning. Sportradar's strong third quarter results once again demonstrate the value of the unique position we have built at the intersection of the sports, media and betting industries. The relationships we have developed and nurtured with clients and partners over more than 2 decades is driving durable and consistent revenue growth. And when combined with our stable and predictable cost base, we are generating record adjusted EBITDA margins and significant free cash flow. Sportradar is leveraging our best-in-class product suite across our leading global distribution network to deliver increasing value to our league, media and sportsbook partners. And as Carsten mentioned, the closing of the IMG Arena acquisition further strengthens our competitive position as the mission-critical partner to the sports industry. I will provide more color on the expected contribution from IMG later in my remarks as it accelerates our growth while being accretive to our margin and cash flow profile. Turning to the quarter. Sportradar delivered revenues of EUR 292 million, an increase of EUR 37 million or 14% as compared with the third quarter a year ago. This growth was driven by higher uptake from our existing partners, continued strong U.S. market growth and strong trading results from our managed trading services business. We continue to outperform market growth by deepening our client relationships through cross-selling and upselling our diverse portfolio of offerings as demonstrated by our customer net retention rate of 114%. As we have discussed previously, foreign currency movements, most notably due to the U.S. dollar relative to the EUR o, continue to be a headwind and revenue growth in the third quarter would have been 17% on a constant currency basis. Looking at the individual product groupings, we delivered broad-based growth across both our betting…

[Operator Instructions] Your first question comes from the line of Robin Farley with UBS.

I wanted to just clarify on your full year '25 EBITDA raise. The release says that you're including IMG Arena, but is it fair to say that the -- just given that it's only 2 months, I don't know if there's anything to break out how much of the increase was IMG Arena versus your organic business? Just wanted to clarify.

Sure. Thanks, Robin. We appreciate the question. So, when you think about the raise in guidance for 2025, from a revenue perspective, the majority of that increase relates to the inclusion of IMG into the 2025 full year forecast, offset by a little bit of foreign currency impact on the overall base business versus our original expectations. When you think about it from an EBITDA perspective, given the strong margin expansion that we delivered in the third quarter, we are continuing to raise our expectations for the full year, including IMG. When you think about IMG overall, what we indicated when we announced the deal earlier this year was that we expect it to be margin accretive to our overall margins. The majority of that will take place, obviously, over the course of the next 12 months, but we do expect upon close that it will definitely be margin accretive at least in the first 3 months following acquisition. So, there is some contribution from an EBITDA perspective with regards to IMG in Q4.

So, some contribution, but it sounds like IMG might be the majority of the revenue increase, but the majority of EBITDA increase is from the rest of your business. Is that the right way to interpret that?

That's correct.

Your next question comes from the line of Jason Tilchen with Canaccord.

A little bit of a follow-up on IMG. I'm just wondering now that the deal is closed, if you could share a little bit more about how conversations with some of your existing clients have gone regarding potentially including some of the additional rights in the products that they're taking and when you expect that to sort of more meaningfully show up in terms of the financial results in fiscal '26?

Jason, Carsten here. So, as you know, the deal has closed on Monday. And before from an antitrust perspective, we couldn't interact with the right holders and also with IMG directly. So, it's very early days. But of course, it's interesting and both of the big leagues here in the U.S. have reached out. PGA have reached out, Major League Soccer have reached out, and we start now discussions. It's an interesting space from a product perspective. It's still very early days, but we are more than optimistic that we can build here some innovations, which will even materialize in '26. So, the spirit is very good. Integration is good for tennis. That is more business as usual. We have now 3 slams. And here, the work is more to look on the ones which are early renewal. So, the U.S. Open, they are in 5 years. So that is more business as usual for us. We focus here more on Wimbledon and Roland-Garros, but we have already a perfect product portfolio, and we can ingest this data. We focus really on the 3 top sports, soccer, basketball and tennis. And this integration is relatively simple for us because that data goes into a machine, which we already have built it. The difference to IMG is we learned now they have 90 to 100 clients. We have around about 800. So, this content is flowing in our global distribution engine. And some of the content is already getting into the ready products for some of the sports like Golf, for example, we see very interesting and exciting opportunities.

And maybe just a follow-up for Craig. In the context of Carsten's response there, talking about sort of the magnitude of 7 to 8x increase in the number of clients you can sell these products into. Is it fair to say that the guidance that you've given for fiscal '26 in terms of the acceleration of growth related to IMG is primarily with regards to their core existing client base and not related to sort of some of the upselling leveraging your global distribution network?

No, I would answer that a little bit differently from a financial perspective. I would say that's true for 2025. When you look at the increase that we're looking at for the current year related to IMG, that's predominantly related to their existing business. But when you look over the course of the next 12 months, including what I indicated for 2026, we would expect there to be some significant uptake from our existing clients. So, you'll see that throughout the year, and it should build throughout the year. So, when we talk about our expectations for 2026, we are expecting some significant revenue synergies across our existing business given the relationships that we have and the new content that we've just obtained.

Your next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

I want to start with integrity services, up triple digits this quarter. Obviously, a lot of news headlines, MBA, allegations, et cetera. But curious kind of if you're seeing an increased uptake. And given you have a market-leading product there, is this helping kind of from a feature in your negotiations with leagues within the many value-added things you're providing to them. But curious if this is moving up that stream.

Ryan, Carsten here. We are very proud of our integrity service and what we can do for both regulators and law enforcement agencies and the leagues. So, integrity and protection of the game is the highest interest for all the stakeholders. From our perspective, that's something which is enabling us to do the business in the betting markets, which we are doing and to expand our footprint here. Integrity is not really a service which is driving strong profits for us. The commitment here is it is a very strong enabler for going on our betting services. But we are using more and more technology. It's more and more GenAI where we are getting more and more precise on seeing inconsistencies, which is helpful for our partners. You mentioned NBA with the current things, what happens there, but it happens also in baseball and many other sports. So, we are getting more and more accurate on this, which helps sport in a very general way. So that's the commitment from an integrity perspective.

And just as a follow-up, curious from a customer-friendly soccer results that we've heard from many of your customers in September. Did you guys see that impacting your MPS business? And if you did, if you're able to quantify it?

Yes, we see some impact when you have only favorites winning in soccer. And as a reminder, more than 70% of our revenues are outside of the U.S. and soccer is the main betting sport. So, in start of the season, when we see favorites winning, that is from a risk management perspective, more difficult to manage. We see a very limited impact on this in our NPS, and you see the strong growth numbers. But it's, of course, not really supportive from a bookmaker perspective. It's only the favorites are winning. As a small reminder, yesterday was a different day, and we saw a couple of surprises. So, this is leveling out very, very quickly. But the first quarter was a bit weaker because of this from a trading result.

[Operator Instructions] Your next question comes from the line of David Katz with Jefferies.

In a different direction, Carsten, I've heard some conversation from you in meetings with investors, et cetera, around iGaming. If you could give us some updated thoughts on how you see the opportunity set for you globally for Sportradar in iGaming and how we can start to think about that maybe hitting the model over time?

Well, like stated in the last quarter, that's for us at the moment, test period. So, we are doing this in Brazil, and we see it holistic. So, 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 data feeds 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 product, measure the stimulation and the churn and have retention tools in between with the visualization. So that's a 360 holistic approach, which we test 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 U.S. is such a sample. 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. From an iGaming perspective, we think there is -- it's a natural element for us because our clients usually have both licenses if they can operate in territories which license iGaming and sports betting. We have the connection to the clients. We have the technology and the platform and the approach. So, we feel very strong about iGaming to integrate this in our portfolio.

And just as a follow-up, thinking about whether at some point that could be -- require some capital to ramp? Or is that sort of minimal or not something we should think about?

David, we are looking in both. So, we are looking into organic investments, and we do this into our teams to build the right games. And we are looking into the market. Is there something which is attractive for us to follow on this strategy. But it follows our general guidance in saying what we do in M&A must be accretive to our margin, which is a tough hurdle to go, but we are looking actively to expand this service, and both are an option, the organic and the M&A expansion.

Your next question comes from the line of Shaun Kelley.

I wanted to go back to the topic of prediction markets, if we could. Carsten or Craig, can we just talk about -- there's obviously a big announcement between some of these prediction markets and the NHL, which is a major partner of yours. So, can you talk about, first of all, the participation of Sportradar in that deal, if there was any? And then, I mean, second, much bigger picture, just what's the primary use case for the customers as it would relate to sort of the prediction market side of this, whereas with traditional house back books, obviously, I think we know how you participate with those customers. But here, the interface seems a little different. And what would be the sort of primary value prop or selling proposition to a very different landscape as you kind of think about these markets? And maybe, Carsten, if you could just draw on your experience from Betfair and sort of how that landscape work, that might be useful.

Shaun, I was expecting that question from a prediction market perspective. So, give me a bit more time because it's an interesting topic, I think, for all of us. In principle, we see here 3 stakeholders, and we are in a unique position because we are connected to all of them. First stakeholder is, of course, sport leagues and the teams. I had in the last 48 hours meetings with 3 commissioners about this to get their view on the situation. And the view is differentiated from some of them, they are saying the most important for us is -- and that's unique -- that's uniting all of them is the responsible gaming and the integrity of the game. So, they want to guarantee this. That's the main interest from sport. And of course, you might guess it. There is also a financial interest from sport to say if we organize these measures, we want to have a participation. And now we are coming to what is the official data used. And is there an official data used to settle what happens on the prediction market. And here, we see different views from NHL, MLB and MBA. I don't want to go here too much into the details, but you mentioned that there was a press statement from NHL. So, you see yourself that there is a different interpretation of this. But what is uniting all of them is responsible gaming integrity is on top of mind. It needs a clear rule set, and this rule set currently is not there. Second, states and regulators, their interest is player protection, and their interests are clear rules on this and license operators have to follow and comply to these rules in the territory of those states. And there is a tax…

That's perfect. And just a very quick follow-up. Have you been approached? And is there a use case for market makers? And have you been approached by those as potential customers of Sportradar?

Yes, we have been approached, and we are discussing this. That's the reason why I said we are ready to go here once the framework is the right framework that we can start to act. But the market maker is playing a main role here. The market maker needs high-quality data, and the market maker needs more or less 0 latency. Very important for them. We have all these services, and we can provide it to them.

Your next question comes from the line of Barry Jonas with Truist.

Can you just give us an update on what percent of OSB handle came from in-play in the quarter and how you see that ramping going forward?

Yes. Barry, as you know, we are not reporting constantly on this handled, but the number is roughly the same like in the last quarter. Comparing it to what we see on our MTS global business, which is roughly 70% handled from online sportsbooks for live, we see here in the U.S. roughly 50%, but the trend is picking up that we get a higher conversion on live betting.

And then just as a follow-up, I believe you have a big sports right contract with UEFA up in early '27. When should we expect renewal discussions to commence? And are there opportunities to expand that contract any further?

We are in active discussions like we are with all our league partners. UEFA is a special case. They are sitting in Switzerland. We are based in Switzerland. I'm in frequent contact with UEFA. Looking now to the opportunities you heard in the call before that we launched yesterday with NBC, the performance view, which was on air. That is something which we do now also for soccer. This is a thing which is very interesting for UEFA because what we can do is we predict the next pixel. And then going forward, we can simulate what might happen in the next 4, 5 in the NBA case, 7 seconds. And these are products where UEFA sees a big use case if it comes to their global distribution and broadcast partners. So, these are things which we're actively discussing, and it involves, of course, the tracking data and the deeper data. So, these are developments which UEFA is more than interested in. And of course, we are more than interested to get deeper embedded in the value creation of this league.

Your next question comes from the line of Clark Lampen with BTIG.

I've got 2 questions. The first is going to be on IMG. You provided a framework for 2026 inclusive of the business and contributions. But I wanted to see if you could give us maybe a little bit more detail qualitatively around sort of what's assumed next year from an integration standpoint and a revenue synergy capture standpoint. Does it take a while, I guess, to have the sort of client-by-client discussions and negotiations that result in those synergies unlocks, i.e., should we imagine that, that is a bigger opportunity for 2027 rather than 2026 because that's -- there's a time component there that you can't really compress. And then as we think about the overall SRAD customer base, right now, you guys have close to 2,000 customers around 200 strategic and enterprise. Are the majority of those customers, I guess, sort of even beyond the first 200 addressable, I guess, from an incremental revenue standpoint? Or how should we think about how far and wide, I guess, the distribution of this could go?

Sure. Thanks, Clark. So, when you think about the revenue synergies, they will take some time to ramp over the course of 2026. But as I mentioned, we are now out there starting to talk to those clients immediately. Once the deal closed, we were out there having those discussions already on Monday. And we understand that when you look at the kind of content that we're acquiring, specifically soccer, tennis and basketball. These are some of the most highly demanded sports from a gaming perspective. So, a lot of the clients that we have globally will be looking for these almost instantaneously. When you think about some of the other, what I would call, synergy opportunities, certainly, we've identified items on the cost side that we're looking at that will take some time to ultimately come to fruition over the course of 2026, but the vast majority of this will be on the revenue side. The one thing I will note is that the majority of their customers, the customers that IMG had are customers of ours. So, for those clients, those clients already have a lot of these products and services, where we have the ability to upsell and cross-sell is the other 700 to 800 or so clients that we have globally on the gaming side of the house. And we have already started those discussions, and you'll see that, like I said, ramp up throughout 2026.

Maybe just as a very quick follow-up, the 8% betting and gaming content growth that we saw this quarter, you guys called out a 250 basis points FX drag. Was that -- if we were to think about ex-FX growth for betting and gaming content, should we think about a similar FX drag on that portion of your business? Or was it more elevated or sort of less elevated or less significant for any reason?

Yes. We obviously don't guide by individual line item or talk to too much specifics with regards to the makeup of individual line items. But what I will say is your thesis is correct. When you look at the FX impact, the impact on that line item is very consistent with what it would be across the entire company in totality from a percentage perspective. So, when you're looking at growth in that segment or that product grouping, it certainly would be into the double digits without foreign currency. And when you look at that versus how it was trending in Q1 and Q2, it's very consistent performance throughout the course of the year. So, we're seeing nice, sustained momentum in our, what I would say is core businesses.

Your next question comes from the line of Michael Hickey with Benchmark.

Carsten, Craig, Jim, congrats guys on a great quarter, great guide as well. Carsten, you kind of nailed the predictions market piece. We appreciate that. Your experience certainly shows through. You did say you're in active discussions with all the key stakeholders here. Just in terms of timing from those discussions, should we start to see some flow-through here in '25? Or do you think the divide and the debate is deep enough that '26 is more likely? And then data integrity, obviously, is focal here. But also, curious what you're doing on the advertising side. Obviously, the market is going to heat up. Some of your operator partners are coming in, Polymarket is coming in. And so, it seems like on the media side, you might have some incremental opportunities as well.

We do. And Michael, the media side is not problematic. And we have some business already with [ Kulti ] in this perspective, it comes to client acquisition and to advertising services. So, this is something which is a nice opportunity. There's relatively high spend from those participants because it's a new market entry, and that is a less problematic service. And we are in very active discussions here to develop then also the tailor-fit product for these client groups, but we have already some services there.

And then, Carsten, I think what I heard you say is when you sort of examine and live through the Betfair situation in the U.K. and you reflect on that experience in the U.S., what I think I heard you say or translated was that in regulated markets, you wouldn't expect much share from the prediction markets versus the traditional operators. I just want to confirm that I heard you correctly on that. And then the second piece, I think the big unlock here besides the incremental business you can drive from the prediction side would be that the prediction markets continue to scale, and they motivate unregulated states like Texas, California, maybe altogether half the U.S. population to accelerate legalization of traditional sports betting. Obviously, that's where the majority of your core business is. I'm just sort of curious your confidence or not that, that could actually be a catalyst for legalization and the opportunity for you.

So, let's go first on the share and the prediction markets. The nature of the business here is that you have a market maker in between and you have various levels of prices, which you can buy, and which needs then a match. So usually see 5 levels, 6 levels of the market. And if you want to lay up, let's say, $10,000, you might need to wait until you have the matching with the different levels and you might need to make compromises. So, the way how this transaction is done is significantly more complicated than sports betting. The beauty of sports betting is you can price literally everything because the bookmaker on the other side is holding then the risk, which is enabling a beautiful business for us with the MTS services. But that's the beauty of sports betting. You can price everything. You can do this live. You can price parlays up to whatever, 20x. So that's something which is not possible from the model of exchanges and prediction markets. But prediction markets are super-efficient. If it comes to 1 or 2 or 5 matches, limited number of matches, where you have a lot of liquidity that this matching goes very quickly. For example, a Super Bowl or some NFL matches. If you talk about 3,000 matches from MLB or NBA or 4,000 from NHL, that is spread much thinner, and it gets much less interesting because you do not have that liquidity to match it. So, this is what we observed for 25 years with Betfair and what Betfair observed by themselves. So, there is a very good use case if you speak about a limited number of matches where there is a high interest and it's a very sharp pricing, usually attracting more high rollers,…

Operator, we have time for one more question.

Your next question comes from the line of Jordan Bender with Citizens Bank.

I want to address some of the noise around the business with your exposure to certain markets, whether they're gray or beyond that. Are you able to discuss your view on this exposure? And internally, how do you make sure your data isn't ending up in markets they shouldn't be ending up in?

Jordan, Carsten here. Can you please define what is gray market for you?

I guess, unregulated, untaxed, I guess some of us or you guys maybe have seen some of the reports out there that --

Thank you for the clarification. So, we have a 4-level process. So, we are only working with licensed operators. And we have contracts which are enabling those operators only to work in the territory where they are licensed in. That's the first one. Second, we have a global compliance team, which is making an intensive KYC with every operator, and we are insisting on this that we control it. Number 3, we have an internal audit, which is looking to IP infringements. We are trying to see it in our data feeds mistakes, which we can identify and then assemble where is our content popping up. And if there is a case, where our content is popping up in markets which are not licensed, which are not covered by the contracts. Of course, we are going on those operators. That happens for a handful of cases every year, and we are monitoring this very closely. Number 4, we have league partners, which are from us requesting a vetting process. NBA and NHL is such a samples. So, for every operator who gets this content, that is a separate vetting process with the league, which is coming on top of the levels 1 to 3, which we have there.

And Craig, it's the second quarter in a row that you've talked about adding headcount. The company restructured 2 years ago. So, can you maybe specifically kind of opine on where you're adding some of this talent and where you see the need for more talent?

Yes. Thanks, Jordan. So, I would say it's less about us adding talent, and it's more about using existing talent more efficiently. When you look at the personnel cost growth that we had in the third quarter, it was somewhere in the low to mid-single digits. It's obviously a step down from what you've seen historically. And that's just an example of us using our existing headcount in more efficient ways. So, we'll continue to look for ways to do that. When we put people to work or we end up adding any new headcount, we always look at what are they working on and what's the return on what they're working on. And if they're working on things that, frankly, have not taken a lot of hold, then we'll move them to projects, which have higher return parameters around them. And you're seeing that across the business. You'll continue to see that diligence in Q4, and we expect that to continue into 2026 as well. So, the days of us adding somewhere in the mid- to high teens people every single year because we're a technology company are behind us, and we're going to put our heads to work in the places that matter most.

We want to thank everyone for joining us for our third quarter earnings call. Now I'll turn it back to the operator.

Thank you. This is all the time we have today for questions. I will now turn the call back to Jim Bombassei for closing remarks.

Everyone will be around for your questions throughout the day. I appreciate you joining the call.

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