Sportradar Group AG (SRAD)

Executive Summary / Key Takeaways

• Sportradar reached a decisive inflection point in 2024 where 26% revenue growth translated into 33% adjusted EBITDA growth and 100+ basis points of margin expansion, demonstrating that two decades of technology investment are finally converting into operating leverage and cash generation.

• The company's AI-driven automation moat—powered by computer vision covering 50% of matches, a generative foundation model for basketball, and Alpha Odds delivering 100 basis points of margin uplift—creates a virtuous cycle: deeper data fuels better products, which drives higher client margins and retention, making the platform increasingly indispensable.

• The IMG Arena acquisition, which closed in November 2025, represents a milestone that supercharges this flywheel by adding premium content like Wimbledon and the PGA Tour while uniquely providing Sportradar with €225 million in financial consideration, immediately accretive margins, and a distribution advantage (800+ clients vs. IMG's 90-100) that competitors cannot replicate.

• U.S. market expansion presents a material earnings driver as in-play betting converts from 50% to 70% of handle; each 1% conversion equates to €6 million in incremental EBITDA, while the segment grows 30%+ annually and now represents 28% of total revenue.

• Strong free cash flow conversion—improving from 53% in 2024 to 72% in the first nine months of 2025—combined with a net cash position of €360 million and an active €300 million share repurchase program, demonstrates capital discipline that supports the thesis while the stock trades at 12.7x EV/EBITDA, a reasonable premium for a business delivering 20%+ EBITDA margins and 15%+ revenue growth.

Setting the Scene: The Data Backbone of Global Sports Betting

Sportradar Group AG, founded in 2001 and headquartered in Sankt Gallen, Switzerland, operates as the critical infrastructure layer connecting sports leagues, betting operators, and media platforms. The company generates revenue through two primary segments: Betting Technology & Solutions, which provides data, odds, streaming, and managed trading services to sportsbooks; and Sports Content, Technology & Services, which delivers marketing, media, and integrity solutions. This dual structure creates a powerful feedback loop—betting data enhances media products, while media engagement drives more betting volume, each reinforcing the other.

The global sports betting market provides a powerful tailwind, expanding at an 11% CAGR through 2027, with the U.S. market exploding from $300 million in gross gaming revenue in 2018 to nearly $14 billion in 2024. Sportradar sits at the center of this ecosystem, not as a consumer-facing brand but as the indispensable B2B provider that makes modern sports betting possible. The company's competitive positioning stems from its integrated platform approach—offering end-to-end solutions from data collection through risk management—versus competitors like Genius Sports (GENI) and Stats Perform that typically provide modular components. This integration creates switching costs that manifest in customer net retention rates consistently above 114%, with existing clients expanding their spend as they deepen their reliance on Sportradar's platform.

The industry structure rewards scale and data depth. As betting operators face increasing pressure to manage risk across more events and markets, they outsource complex trading functions to specialists. Sportradar's Managed Trading Services (MTS) now handles approximately €48 billion in annual turnover across 250 books and 500 brands, making it one of the world's largest bookmakers by volume. This scale creates a mathematical advantage—managing millions of tickets across thousands of events yields predictive insights that individual operators cannot replicate, allowing Sportradar to deliver 11%+ margins for clients while improving its own profitability.

Technology, Products, and Strategic Differentiation: The AI Moat

Sportradar's technological advantage begins with automation. By 2024, computer vision technology collected live data from approximately 50% of matches, capturing up to 100,000 data points per match—nearly 100 times the volume of traditional manual methods. This isn't merely a cost-saving measure; it fundamentally transforms the depth and speed of data available for odds-making and in-play betting. More data points enable more accurate pricing, which reduces risk and increases betting turnover. Deeper data allows Sportradar to offer more markets with tighter margins, making its platform more attractive to operators while improving its own risk management.

The generative foundation model for basketball represents a breakthrough that extends beyond betting into coaching and performance analytics. Trained on billions of 3D body post data points from thousands of NBA games, the model understands player movement, decision-making, and game flow at an unprecedented level of detail. It powers real-time predictive insights—expected points in current possession, ball handler scoring probability, player actions' effect on points per possession—that enhance both 4Sight Streaming and Alpha Odds. The technology itself is defensible due to data scale and training investment, while the applications (predictive betting insights, enhanced streaming graphics) generate measurable client value that competitors cannot match without similar infrastructure.

Alpha Odds exemplifies how AI translates into margin expansion. The product contributed to a 100 basis point margin uplift for clients, directly improving their profitability and making Sportradar's services stickier. When clients achieve 11%+ margins through MTS versus 9.8% they managed themselves, they have no incentive to build competing infrastructure. This creates pricing power—Sportradar can capture a portion of the value it creates through higher fees while still leaving clients better off than they would be independently. The result is a win-win dynamic that shows up in the financials as expanding EBITDA margins and 114%+ customer net retention.

4Sight Streaming demonstrates the commercial application of deeper data. Average time spent on a 4Sight stream is 24% longer than standard streams, and a case study with LottoMattica's GoldBet brand showed a 30% uplift in turnover for 4Sight-covered events. Enhanced data visualization drives incremental betting activity, not just passive engagement. For media partners like NBC/Peacock's "Performance View," DAZN, Google (GOOGL), and Yahoo!, this translates into higher viewer retention and monetization. For Sportradar, it creates a new revenue stream that leverages the same underlying data infrastructure, improving asset utilization and margins.

Micro markets represent another layer of product innovation. With 1,500+ new betting opportunities per ATP tennis match and 1,200+ per NBA game, Sportradar is expanding the addressable market for in-play betting. The rapid adoption—expanding from NBA and ATP to MLB and WNBA within quarters—shows that operators and bettors value granular, real-time markets. This drives incremental turnover on the MTS platform, where Sportradar captures a percentage of handle. Each new micro market is essentially zero marginal cost revenue once the data infrastructure exists, directly flowing to the bottom line and expanding EBITDA margins.

Financial Performance: Evidence of the Flywheel Working

The 2024 results validate the inflection thesis. Revenue grew 26% to €1.1 billion while adjusted EBITDA increased 33% to €220 million, expanding margins by over 100 basis points to 20%. This acceleration—where EBITDA grows faster than revenue—signals that fixed costs are being absorbed by scale and variable costs are declining through automation. The composition of growth underscores the strength: U.S. revenue surged 58% and increased to 24% of the mix, up 500 basis points year-over-year, while customer net retention hit 127% in Q4. These metrics demonstrate that Sportradar is growing both by acquiring new clients and by extracting more value from existing ones, the hallmark of a platform with network effects.

Q3 2025 results show the momentum continuing. Revenue reached €292 million, up 14% (17% constant currency), while adjusted EBITDA grew 29% to a record 29% margin. The 260 basis point improvement in personnel expenses as a percentage of revenue—up only 4% year-over-year while revenue grew 14%—proves that automation and efficiency gains are real. This isn't temporary cost cutting; it's structural leverage from AI and process improvements. The 72% free cash flow conversion through nine months, up from 62% in the prior year, shows that margin expansion is converting into cash, not just accounting profits.

The U.S. segment's performance underscores the growth opportunity. Despite Q3 being seasonally weak due to NBA and NHL off-seasons, U.S. revenue still grew 21% and represented 23% of the mix. In Q1 and Q2, growth exceeded 30% with the segment reaching 28% of revenue. The U.S. market is still early in its in-play adoption curve—currently at 50% of handle versus 70-80% in mature markets like the UK. Each 1% conversion represents €6 million in incremental EBITDA, meaning a full 20 percentage point shift would add €120 million annually, a transformative figure for a company that delivered €290 million in adjusted EBITDA guidance for 2025.

Managed Betting Services (MBS) growth, led by MTS, shows the platform's gravitational pull. In Q3 2025, MBS grew 19% year-over-year, with MTS turnover up 25%. On a trailing twelve-month basis, Sportradar managed approximately €48 billion in turnover, achieving over 11% margins for clients. This scale creates a self-reinforcing cycle: more turnover generates more data, which improves predictive models, which enhances margin performance, which attracts more clients. The 42 new clients in the integration pipeline as of Q2 2025, plus 35 new sportsbook clients signed in Brazil, indicate this cycle has room to run.

Sports Content, Technology & Services grew 31% in Q3 2025, led by 33% growth in Marketing and Media Services. This segment's acceleration diversifies revenue beyond core betting and leverages the same data infrastructure. Integrity services more than doubled, demonstrating that leagues increasingly rely on Sportradar's technology to protect their sports. Integrity is a strong enabler rather than a profit driver, but it creates strategic lock-in—leagues that depend on Sportradar for integrity monitoring are more likely to grant exclusive data rights, strengthening the content moat.

The IMG Arena Acquisition: A Milestone Deal Structure

The IMG Arena acquisition, closed on November 3, 2025, represents more than content consolidation—it demonstrates masterful capital allocation. Unlike typical acquisitions where the buyer pays cash, Sportradar receives approximately €225 million in financial consideration: €125 million in cash compensation and up to €100 million in prepayments to certain sports rights holders that reduce future obligations. This structure is immediately accretive to revenue, adjusted EBITDA margins, and free cash flow, while adding premium content including Wimbledon, the U.S. Open, Roland-Garros, Major League Soccer, EuroLeague basketball, and the PGA Tour.

The strategic logic extends beyond the balance sheet impact. IMG Arena's portfolio includes relationships with over 70 rights holders covering approximately 39,000 official data events and 30,000 streaming events across 14 sports on six continents. Approximately 70% of these rights concentrate in soccer, tennis, and basketball—core betting sports that complement Sportradar's existing offerings. This eliminates a competitor and consolidates premium content under Sportradar's platform, reducing the risk of bidding wars for key rights. The combination will yield revenue synergies beyond IMG's standalone performance.

The distribution advantage is perhaps the most underappreciated aspect. IMG Arena served 90-100 clients, while Sportradar serves approximately 800. This 8:1 client ratio means Sportradar can monetize IMG's content across a far broader network, extracting more value from each rights agreement. The company intends to "seamlessly integrate and monetize these rights across its highly scalable technology platform," which should drive significant uptake from existing clients throughout 2026. Management expects this to accelerate revenue growth to 23-25% on a constant currency basis while expanding margins by an additional 250 basis points.

The deal also strengthens Sportradar's hand in future rights negotiations. By acquiring IMG's portfolio, Sportradar removes a bidder from the market and gains scale advantages in renewing key agreements. Sports rights costs are rising, and scale determines profitability. The company's disciplined approach—passing on European league rights that IMG previously held because they were "loss-making" and "not fitting to our ROIs"—shows management's strategic focus on profitable, accretive deals rather than growth for growth's sake.

Outlook, Guidance, and Execution Risk

Management's guidance tells a story of accelerating confidence. For full-year 2025, they raised expectations to at least €1.29 billion in revenue (17% growth) and €290 million in adjusted EBITDA (30% growth), implying nearly 240 basis points of margin expansion. This guidance includes IMG's contribution but also reflects strong underlying performance, as evidenced by the Q3 beat and margin expansion. The fact that they maintained guidance despite €10 million in foreign currency headwinds and €3-4 million in EBITDA impact demonstrates the underlying business momentum.

The 2026 outlook is even more ambitious. Management anticipates 23-25% revenue growth on a constant currency basis, with an additional 250 basis points of EBITDA margin expansion. These targets assume successful IMG integration and significant revenue synergies from existing clients adopting the new content. The key execution variable will be cross-selling—leveraging relationships with 800+ clients to upsell IMG's premium content. Historical precedent with ATP rights suggests Sportradar can execute this, but the scale is larger and the timeline is aggressive.

The cadence of margin expansion reveals management's understanding of their cost structure. They expect adjusted EBITDA margins in the high teens in the first half of 2025, accelerating in the second half with the highest margins in Q3, due to the phasing of sports rights costs. This pattern shows margins aren't random but driven by predictable cost timing, giving investors visibility into quarterly performance. Free cash flow conversion is expected to exceed 2024's 53% rate, with Q2 typically lower than Q1 before ramping in the second half.

Key assumptions underpinning the guidance include continued U.S. market growth, successful AI adoption, and stable regulatory environments. The U.S. opportunity is particularly important—converting in-play betting from 50% to 70% of handle would generate €120 million in incremental EBITDA, nearly 40% of the 2025 EBITDA guidance. Management's observation that "we have zero indication that the U.S. will not adapt to the international market" suggests confidence, but execution depends on operator marketing and consumer adoption.

Risks and Asymmetries: What Could Break the Thesis

Prediction markets represent a regulatory and competitive risk that could challenge Sportradar's core model. While management acknowledges potential opportunities, they correctly note that historical precedent shows prediction markets like Betfair captured only single-digit GGR share over 25 years due to structural limitations. The mechanics are "significantly more complicated than sports betting" because they require market makers and matching offers, limiting flexibility for parlays and live betting. If U.S. regulators favor prediction markets over traditional sports betting, it could slow Sportradar's growth trajectory in its most important market.

Customer concentration remains a persistent risk. While the company serves over 250 books and 500 brands, the top clients likely represent a meaningful portion of revenue. The loss of a major operator could impact growth and margins, particularly if that operator develops in-house capabilities. Sportradar's moat mitigates this—MTS margins of 11%+ for clients create strong incentives to stay—but concentration risk never disappears entirely.

Sports rights cost inflation could pressure margins if revenue growth slows. The company has secured long-term deals with MLB through 2032 and the Spanish Super Cup through 2032, providing cost visibility, but future renewals will likely be more expensive. Management's disciplined approach to rights acquisitions—walking away from unprofitable deals—helps, but the industry trend is toward higher costs. If competitors like Genius Sports bid aggressively for exclusive rights, Sportradar may face a choice between margin compression or losing key content.

Competitive threats from AI-native startups and operator in-housing could erode the technology moat. While Sportradar's generative foundation model and computer vision capabilities are currently leading, the barrier to entry for AI-driven analytics is lower than for exclusive data rights. If operators develop proprietary trading algorithms or if new entrants offer similar capabilities at lower cost, Sportradar's pricing power could weaken. The company's scale advantage—processing €48 billion in turnover—creates data network effects that are hard to replicate, but technology gaps can close faster than content advantages.

Regulatory fragmentation in the U.S. remains a wildcard. The emerging prediction market activity in Texas and California, representing 30% of U.S. GDP, could accelerate legalization pressure or create a parallel market that bypasses traditional sportsbooks. Management's four-level process to prevent data leakage to unregulated markets shows they take compliance seriously, but regulatory shifts could change the competitive landscape overnight.

Valuation Context: Premium for a Reason

At $22.46 per share, Sportradar trades at an enterprise value of $6.30 billion, representing 4.41x trailing twelve-month revenue and 12.7x adjusted EBITDA. These multiples are not cheap in absolute terms, but they appear reasonable when compared to the quality of the business. The company delivers 20%+ EBITDA margins, 15%+ revenue growth, and 70%+ free cash flow conversion—metrics that justify a premium to slower-growing or less profitable peers.

Genius Sports, the most direct competitor, trades at 4.28x sales but operates at negative 8% operating margins and negative 19.7% profit margins. While Genius is growing revenue at 20% year-over-year, it remains unprofitable and generates minimal free cash flow, with a price-to-operating-cash-flow ratio of 30.75x versus Sportradar's 14.38x. This comparison shows that Sportradar's integrated platform approach delivers superior profitability and cash generation, supporting a higher valuation multiple.

Sportradar's balance sheet strength further supports the valuation. With €360 million in cash and no debt, the company has zero financial risk and substantial dry powder for acquisitions or share repurchases. The €300 million share repurchase program, with €86 million already executed at an average price of $17.96, signals management's belief that the stock is undervalued. The 53% free cash flow conversion in 2024, improving to 72% in the first nine months of 2025, demonstrates that earnings quality is high and capital intensity is low.

Key valuation drivers include the IMG acquisition's accretion, U.S. market expansion, and margin expansion from AI automation. If management delivers on 2026 targets of 23-25% revenue growth and 250 basis points of margin expansion, the current valuation will appear conservative. Conversely, any slowdown in U.S. growth, margin compression from rights inflation, or execution missteps on IMG integration would make the multiples look stretched. The market is pricing in successful execution, but not perfection.

Conclusion: The Tipping Point of Data Value

Sportradar has reached a tipping point where its two-decade investment in data infrastructure, AI automation, and content rights is converting into accelerating margin expansion and cash generation. The 2024 inflection—where 26% revenue growth drove 33% EBITDA growth—was not a one-time event but the beginning of a sustained flywheel. Each additional data point captured through computer vision, each new micro market launched, each percentage point of in-play betting conversion, and each client migrated to MTS adds incremental margin with minimal incremental cost.

The IMG Arena acquisition supercharges this dynamic by adding premium content to an already dominant distribution platform. The unique deal structure, which puts €225 million in Sportradar's pocket rather than on its balance sheet as goodwill, reflects management's capital allocation discipline. More importantly, it creates a nearly insurmountable competitive advantage: 800 clients monetizing content that previously served only 90-100, yielding revenue synergies that will become visible throughout 2026.

The U.S. market opportunity provides the largest earnings lever. Converting in-play betting from 50% to 70% of handle represents €120 million in incremental EBITDA, while the segment continues growing at 30%+ annually. Sportradar's position as the exclusive MLB data provider through 2032, combined with its AI-driven product suite, makes it the default partner for operators seeking to capture this shift.

The investment thesis hinges on two variables: successful integration of IMG's content and continued U.S. in-play adoption. Execution risk exists—prediction markets could disrupt the regulatory landscape, sports rights costs could inflate, and competitors could narrow the technology gap. However, Sportradar's scale advantages, proven margin expansion, and fortress balance sheet provide multiple ways to win. For investors, the question is not whether the sports betting market will grow, but whether Sportradar can maintain its position as the indispensable infrastructure layer. The evidence from 2024 and 2025 suggests it can, and the valuation premium reflects that reality.