Sportradar Group AG Q1 FY2026 Earnings Call

Hello, everyone. Thank you for joining the Sportradar Q1 2026 Earnings Call. I will now hand the conference over to Jim Bombassei, Head of Investor Relations and Corporate Finance.

Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the first 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 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, 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, 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 today are Carsten Koerl, our CEO; and Craig Felenstein, our CFO. And now I'll turn the call over to Carsten.

Good morning, everyone, and thanks for joining us. Today, I will discuss our Q1 results and operations, which reflect our premier position as a scaled leader in the expanding global sports data ecosystem. I will also highlight the accelerating business momentum we anticipate over the course of this year: the appointment of Sameer Deen as COO, the enhanced open market repurchase program, and reaffirming of our 2026 full-year financial outlook. This reflects the great confidence we have in our business model, the integrity of our people and operations, and our company's very bright prospects for profitable growth and outsized value creation. Before we get into the results, I want to address directly the recent self-interested reports published by known short sellers with the intent of driving down our company's stock price. For more than four years as a public company and over the past 2.5 decades before that, we have built Sportradar to give bookmakers and fans the tools they need to engage with and wager safely on their favorite sports markets. To be clear, Sportradar and I reject the unfounded and misinformed allegations contained in the reports. As the global leader in sports technology, trusted by leagues, operators and regulators around the world, we place integrity, transparency, and professionalism at the heart of everything we do. For 25 years, Sportradar has maintained regulatory licenses in jurisdictions around the world. In order to maintain the respect and trust of our stakeholders and ensure the long-term vitality of our industry, we continue to conduct our business in a manner consistent with the highest standards. Unfortunately, these actors thrive on misinformation and repackaging historical allegations to drive down company stock prices at the expense of long-term focused investors. The company takes very seriously our obligation to our stakeholders. To be clear, the company maintains a robust compliance framework with oversight from the Board of Directors that is designed to assist the company and its officers in navigating the complex business and regulatory landscape. This morning, we filed a Form 6-K that speaks to our strong compliance and KYC framework, and we encourage investors to read it for additional details. Given our strong conviction in the long-term value of our business, during quarter one we repurchased approximately $90 million worth of shares, bringing our total repurchases since inception of the program through last week to approximately $228 million. Also this morning, we announced that we have entered into a $250 million enhanced open market repurchase program to be executed under our previously authorized $1 billion share repurchase program. I believe the company's current valuation does not reflect the strength of our business and our long-term prospects, and I'm confident in the path we are on. Accordingly, I intend to personally purchase $10 million worth of shares in Sportradar when our trading window opens. Before turning to our results, I want to take a moment to welcome Sameer Deen, who will be joining Sportradar as Chief Operating Officer on May 18. Sameer brings extensive experience across sports betting, gaming and digital media, including most recently from his time at Entain, where he served as Chief Commercial Officer. The executive leadership team and I look forward to partnering with Sameer, who will be instrumental in driving our commercial efforts and optimizing our operations. Now turning to our first quarter results. Sportradar delivered Q1 revenues of EUR 347 million, an 11% increase year-over-year. This was driven by strong performance in betting and gaming content, including continued strong progress monetizing IMG ARENA rights. We generated adjusted EBITDA of EUR 66 million, which translated to a margin of 19%. From a bottom-line perspective, we continue to drive strong free cash flow as we expanded cash conversion to 67% in the quarter. In terms of our competitive position, we are the sports technology leader, covering over one million matches annually. The unique breadth of our offering powers more data and content generation, enables us to stream more video than our peers, and helps grow our MTS trading liquidity. It is this scale and expertise, as well as the depth of our global client base, that is enabling us to make great progress integrating the IMG rights portfolio and capitalizing on revenue synergies. Demand across our global client base has been strong with more than 75% of our core betting clients now consuming IMG content, including all Tier 1 operators. Of our clients who were previously not customers of IMG, nearly 60% are now purchasing IMG content from us. Our partnership expansion with Hard Rock Bet to include official content from the PGA TOUR and UFC is a clear example of this. We are excited to continue unlocking incremental value through cross-selling, giving us tremendous operating leverage as we capitalize on our existing infrastructure and capabilities. From a product perspective, we have integrated IMG content into our core product suite and are now integrating it into our next-generation offerings for both golf and the tennis Grand Slams. The continued strong progress and rapid integration underscore our ability to monetize sport rights across our larger global client base and product suite to deliver significant accretive revenue growth. Our increased sports coverage, combined with our product innovation and the deeper engagement this fosters, is helping to boost our streaming activities. Last year, we streamed over 525,000 matches globally. In 2026, we anticipate streaming over 700,000 across our global footprint. Switching to our Managed Trading Services, we continue to scale the business with turnover up 24% in the quarter. While turnover was strong, our revenues in the quarter were impacted by player-friendly outcomes. Trading margins should normalize over time, given the diversity of our clients and sports coverage on the platform, and we expect the business will continue to be a core growth driver for us going forward. Turning to iGaming. We recently launched Playradar, our dedicated iGaming brand, which will serve as a natural extension for our core business. Playradar capitalizes on our unique position as well as our sports data expertise to offer hybrid products that blend the sports betting and iGaming experiences. We are doing this organically and cost-effectively using existing resources. We are already live across Latin America, including Brazil, and over the remainder of the year anticipate launching in a number of European markets, including the U.K., Greece, Sweden and Denmark, as well as several U.S. states and Canada. Now touching on prediction markets: in light of the evolving environment and moderating U.S. market growth, we see prediction markets as a significant opportunity where Sportradar is uniquely positioned to lead given our premium content, global scale and unmatched product portfolio. Prediction markets expand the U.S. TAM by opening up new states, attracting new demographics and increasing engagement with sports. Similar to our position in online sports betting, we will power key players in the prediction market ecosystem. Sportradar's prediction service will provide our exclusive data products and services to exchanges, market makers and brokers. For Sportradar, this opportunity diversifies our customer base, expands our SAM and promotes a shift to live engagement, all of which should drive higher revenue over time. We are in active commercial discussions with a number of prediction market players for the use of official data and products related to MLB, NHL, MLS and UFC among other global leagues and competitions. While we expect to announce agreements soon, we are being deliberate in our discussions to ensure we maximize economics given the value we will bring to this ecosystem. Now turning to the remainder of the year. We see a number of drivers for our business. The FIFA World Cup in June is expected to generate significant betting turnover, which should contribute to our MTS business. With our new visualization and with operators expecting to take advantage of the event to launch marketing campaigns, this should also contribute to our performance. Additionally, as we progress through the year, we believe we will increasingly benefit from prediction markets as we enter into agreements with exchanges, market makers and brokers. All of this contributes to confidence in our full-year guidance and increasing momentum in our business over the course of the year. In closing, Sportradar is well positioned to take advantage of an evolving sports market and has momentum heading into the rest of the year. We are uniquely positioned to benefit from both online sports betting and prediction markets by leveraging our long-term rights agreements and unmatched product portfolio. We will continue to drive innovation across our business, uphold the highest levels of integrity and transparency while delivering increasing value to our clients, our partners and our shareholders. The underlying fundamentals of the business remain strong, and we are confident in our growth strategy and the opportunities ahead. Thank you. I will now hand over the call to Craig, who will discuss our financial results in greater detail.

Thanks, Carsten, and thank you, everyone, for joining us this morning. We are a week earlier than originally anticipated as we wanted to discuss our financial and operating results as soon as possible so we can better capitalize on the opportunity provided by the company's current share price. Importantly, our focus remains the same: delivering durable and consistent revenue growth while leveraging a stable and predictable cost base so we can deliver significant multiyear margin expansion and what ultimately matters most, free cash flow generation. The value we are creating for our sports, media, technology and betting partners continues to translate into significant top-line growth. And while there were some headwinds during the quarter, which I will discuss in a moment, full-year expectations remain unchanged as our expanded best-in-class content and product suite is further resonating across our existing leading global distribution network and new platform opportunities. Looking at the first quarter, Sportradar generated revenues of $347 million, an increase of $35 million or 11% compared with the first quarter of 2025, driven by the strong uptake of IMG content and the continued cross-sell and upsell of our products and solutions to existing clients as demonstrated by our customer net retention rate of 108%. It is important to note the NRR growth excludes the utilization of IMG content by existing customers, but does include the impact of foreign currency headwinds, particularly from the U.S. dollar relative to the euro. Overall, our revenue growth in the first quarter would have been 16% on a constant currency basis, excluding the impact of FX movements. Turning to our individual product groupings. Growth was driven by our betting technology and solutions products with revenue of $288 million, increasing 15% versus the first quarter a year ago. This growth was led by a 20% increase in betting and gaming content revenues, driven by strong demand for IMG content across our client base and continued growth in both our streaming and betting engagement products as well as odds and live data products despite slower growth from U.S. sportsbooks. We continue to capitalize on the revenue synergies related to IMG by leveraging this content across our global scale and integrating it further into our extensive product suite, and we fully anticipate exceeding the 25% synergy target we discussed last quarter. Managed Betting Services was down slightly in the quarter as increased turnover at Managed Trading Services was offset by unfavorable sporting outcomes, most notably during February on European soccer, which we expect to normalize over the course of the year. Moving to our other product group, sports content, technology and services products delivered revenues of $59 million, a decrease of 4% year-on-year, predominantly driven by reduced spending on marketing campaigns during the quarter and foreign currency headwinds, partially offset by media upsells to technology companies and increased contributions from integrity services as we expand our league partnerships. The growth in the quarter was once again geographically broad-based with Rest of World revenue increasing 14%, while U.S. revenue was up 4% on a reported basis. Headwinds from foreign currency movements and to a lesser extent, the timing of marketing campaigns significantly impacted U.S. reported revenue, which would have increased approximately 17% on a constant currency basis. Turning to adjusted EBITDA. Our continued focus on cost efficiencies, along with our stable sports rights portfolio, delivered slight margin expansion in the quarter with adjusted EBITDA of $66 million, up 12% year-on-year. As anticipated, the IMG acquisition continues to be margin accretive as we scale the business and realize cost synergies in areas such as engineering, scouting, audiovisual production and personnel. 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 amounts. This past quarter, sports rights expense increased 18% year-on-year to $122 million due primarily to the addition of IMG. As we have said previously, all of our major rights deals are locked in long term. So we have significant visibility on sports rights costs moving forward, giving us high confidence in our ability to drive operating leverage as we capitalize on the value of our high-demand sports portfolio and the premium products we have developed for our global customer base. Adjusted personnel expenses were $84 million in the quarter, up 5% year-on-year, predominantly driven by the inclusion of IMG headcount with slower growth across our existing workforce even as we drive new growth opportunities. Importantly, personnel expenses continued to decline as a percentage of revenue, down 144 basis points versus last year as we further capitalize on efficiencies provided by technology advancements and focus resources on the most profitable growth opportunities. Adjusted purchase services were $46 million, up 5% year-on-year, primarily due to the inclusion of IMG as well as higher cloud spending. Overall, adjusted purchase services declined by 84 basis points as a percentage of revenue as we further leverage our existing infrastructure. Adjusted other operating expenses of $28 million in the quarter were up 16% year-on-year, with the increase predominantly driven by costs related to IMG. Overall, we continue to anticipate meaningful margin expansion over the long term, given the inherent scale we have in our business and our long-term cost visibility, including the benefits of sports rights being amortized on a straight-line basis. At the same time, we have recently initiated steps to further streamline our business and drive additional cost efficiencies. We anticipate these steps, which are expected to result in restructuring charges of between $13 million and $18 million during the remainder of the year, will drive additional operating leverage and optimize our organizational structure for sustained value creation. Looking at the full P&L, we generated a net loss for the quarter of $6 million versus a profit of $24 million in the first quarter a year ago as our operating growth year-on-year was offset predominantly by unrecognized foreign currency losses of $9 million, primarily associated with our U.S. dollar-denominated sports rights versus a gain of $28 million in the same period a year ago. Turning to the balance sheet. Sportradar remains in a very strong liquidity position, closing the quarter with $322 million in cash and cash equivalents and no debt outstanding. In the first quarter, the company generated free cash flow of $44 million, an increase of 38% from the first quarter a year ago, and we continue to convert more of each dollar of EBITDA into free cash flow as demonstrated by free cash flow conversion rate of 67% versus 54% a year ago. Looking forward, we continue to anticipate strong free cash flow growth for the full year and a conversion rate above last year's rate of 56%. Cash and cash equivalents declined $44 million from the end of 2025 as the strong free cash flow generation was offset primarily by share repurchases of $90 million during the quarter. Our priority with regards to capital allocation remains investing in the long-term growth of the company. However, given the significant discount between the current share price and the fundamental strength of our business, we believe there is currently no better use of capital than investing in Sportradar shares. Last quarter, the Board approved a significant increase in our share repurchase program, raising the total plan by an additional $700 million to bring the total authorization to $1 billion. This quarter, under this expanded authorization, the Board has approved a $250 million enhanced open market repurchase program with purchases to commence when our trading window opens and with the expected completion within approximately three months, subject to trading volumes. This reflects our conviction in the durable growth trajectory of our business and the multitude of value creation opportunities ahead. Turning to our expectations for the year. We are reaffirming our full-year 2026 outlook. While there have been some short-term headwinds, there are also a variety of opportunities for the remainder of the year that we expect to capitalize on such as further IMG synergies, the prediction market ecosystem and global customer renewals. As such, we still anticipate constant currency revenue growth of 23% to 25%, which at current FX rates is expected to be between $1.56 billion and $1.58 billion reported. We expect to drive significant operating leverage on this revenue growth with adjusted EBITDA growth of 34% to 37% on a constant currency basis, which at current FX rates is expected to be $390 million to $400 million reported with approximately 200 to 225 basis points of margin expansion in 2026. As a reminder, we expect the strongest revenue growth to occur in the second and third quarters given the timing of sporting events and the inclusion of IMG content. Additionally, given the weakening of the U.S. dollar throughout 2025 at current currency rates, the FX headwinds will still be significant in Q2. Overall, we are very excited about the opportunities Sportradar has moving forward. The investments we have made in content, technology and products, along with an unmatched global customer base has us well positioned to deliver durable revenue growth as the market expands and additional opportunities arise. At the same time, we are becoming even more efficient with our cost structure and with strong visibility regarding sports rights, we fully expect to deliver significant margin expansion and further ramp free cash flow, delivering additional value for our shareholders 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.

Your first question comes from Ryan Sigdahl with Craig-Hallum Capital Group. We expect to deliver durable revenue growth as the market expands and additional opportunities arise. At the same time, we are becoming more efficient with our cost structure and, with strong visibility regarding sports rights, we fully expect to achieve significant margin expansion and further ramp free cash flow, creating additional value for our shareholders in the months and years ahead. Thank you for your time this morning. Carsten and I are happy to answer any questions you may have.

Good to see positive business momentum despite some of those transitory impacts in the quarter. I want to start with marketing services just to dig in there because that was where most of the miss was versus ours and I think generally Street expectations. Marketing services had been a good growth business but was down 9% in the quarter. Can you talk about what specifically happened in the quarter? And if there's been a structural change in spend from your operator customers or if it was really a timing of spend? And then kind of along those lines, reiterating the guidance, but given that softer start to the year, what gives you confidence to reiterate that?

Sure. Thanks, Ryan. I appreciate the question. When you look at marketing services, it's always been a very choppy revenue line item, right? It really depends on what operators want to do in any given quarter, and they can shift their spending, I would say, up to the last minute with regards to when they want to spend. Sometimes they keep it in the current quarter, sometimes they push it out and sometimes they don't spend at all. What I think happened in the first quarter is you did have some people pull back given some of the uncertainty in the space. And I think you also had some people who were saving some of their spend heading into the World Cup, which you could see come back in the second and third quarter. When we look at the marketing spend line for the full year, we still expect it to deliver really nice growth. Our ads business is in really healthy shape, and we know the value that we bring to our sportsbook partners and our iGaming partners, and we see a significant opportunity to grow this line moving forward. When you think about the guidance for the full year and what we expect, we do expect marketing services to grow more in line with what it's done historically, excluding any one-time items. Some of the other things that give us confidence that we'll ultimately get to where we guided at the start of the year are: one, the marketing that we just talked about; two, the continued success that we're seeing with IMG and how it's resonating with our customers; and three, and probably the biggest, we have really good sight lines right now, we think, with regards to some prediction market revenue opportunity that's going to happen predominantly in the back half of the year. So those three things give us confidence that we're going to hit our guidance for 2026.

Helpful. Then for my follow-up, just given the recent news flow over the past handful of days here: from our standpoint, there's a big difference between licensed gray-market operators and black-market illegal operators. Curious if you're willing to quantify and say with confidence what your revenue mix is for operators in black illegal markets. And then if there would be ways for those operators to get Sportradar data without having a direct relationship with the company? And then lastly, how you think about licensed gray-market operators?

Ryan, this is Carsten. The first point is we do not work with black-market operators. For the gray market, we have a solid compliance structure in place, and we only work with licensed operators. The framework we apply includes a comprehensive risk assessment and, irrespective of licensing jurisdiction, we support only businesses that hold a license. The team is constructed of legal experts, compliance and risk personnel together with external advisers. We take this very, very seriously, and we run a very rigid KYC process, which I described earlier. To quantify the portion in this gray area: overall, it is in the low- to mid-single-digit range. That's the range we have, and we are drilling this down from our operational business. For additional detail, I will hand over to Craig to provide the numbers.

Sure. Thanks, Carsten. When you think about our overall revenues, you have two big buckets: the betting technology and solutions part of our business and the sports content, technology and services part of our business. The sports content, technology and services part makes up a little over 20% of our revenues and is predominantly non-betting related. When you break down the other roughly 78% of our business—the betting technology and solutions products—betting and gaming content and managed betting services are the primary contributors. Within the betting and gaming content side, the primary exposure is from our data and odds business. The other products in this group are our fan engagement tools, which are predominantly AV streaming and are not tied to the kind of gray-market exposure you're discussing. Within managed betting services, the primary exposure is our Managed Trading Services business. When you add together the pieces exposed to potential gray markets, you're really talking about the data and odds business and MTS. Combined, that's roughly the mid-40% of our overall revenues. From that mid-40% you need to exclude U.S. revenues, which reduce potential exposure to somewhere in the mid-30% range. Then, removing large global providers and applying public estimates of gray-market prevalence, the math takes you back down to that low- to mid-single-digit exposure overall. So our best estimate, after client-by-client review, is low- to mid-single-digit percentage of total revenue.

Your next question comes from Chad Beynon with Macquarie.

Slide 8 was really helpful in terms of outlining the prediction market ecosystem. Craig, you talked about the guidance including some of that ramp in the back half. Carsten, you said that there's really good conversations. Is there any other touch points that you can help us with just in terms of thinking about the ramp or which one of those constituents—exchanges, market makers, or brokers—is the most important and where we could see some activity in the back half?

Chad, this is Carsten. As you know, we have received approvals from the NHL, UFC, MLS and MLB to begin marketing and creating services for prediction markets, and we have created tailored services for this. Different participants have different needs: exchanges and market makers require ultra-low-latency data and video feeds. Market makers are particularly interested in prediction models based on deep data—how can we forecast the next couple of seconds—which is very important for stimulating liquidity. This is different from online sports betting operators where accuracy of the final result is essential because it triggers payouts. For market makers, the objective is stimulating liquidity. We have developed products to serve both needs. We've already started discussions with exchanges; we have fan engagement tools and customer acquisition capabilities that are relevant. We are speaking with all players in the market. As Craig said, we are confident we will see announcements around this soon. We believe the NBA is also considering prediction markets and how to enter; we are in close partnership with the NBA and in enhanced conversations. Regarding brokers, that segment benefits from customer acquisition, visualization tools, and for exchanges we provide integrity services. From a business model perspective, it's similar to online sports betting: we typically plan a mix of fixed fees and revenue share with minimum guarantees, and those terms are the subject of intensive negotiations at the moment.

That's great. And then with respect to AI—at the Investor Day last year you outlined some of the opportunities on product development. Can you talk about additional AI implementations either on the revenue-driving side or on the cost containment side given the restructuring?

We are deploying AI on both sides. Engineering is a prime part of our business; we were one of the first companies to set KPIs for engineers on how they use prompts and how they're working with AI. This has already led to lead time reductions of roughly 20%, and we are accelerating. Operationally, more sport processes will be automated—this is a clear trend—and we are doubling and tripling down on AI and generative AI. The opportunities in finance and legal are also significant: we can accelerate client contracting processes across regions and are actively deploying AI tools for that. We are training our people on AI and generative AI and want them to use agentic agents; that's a task for every company. We aim to be a front-runner. Within this process we will see efficiency gains and change structures and processes to be more efficient and deliver faster and higher-quality outcomes. On the product side, micro-markets, Foresight, the foundation model, and our BettorSense product are clear examples where we are deploying generative AI today, and we will continue to scale these efforts.

Your next call comes from Barry Jonas with Truist.

Just curious since the reports came out if you've had any discussions with league partners or gaming regulators. Curious what the interactions there have been.

Barry, Carsten here. The feedback so far has been overwhelmingly supportive. I've received a lot of support from our partners, clients, the industry and some commissioners. From a regulator perspective, we are in contact with several regulators on a frequent basis. Some have proactively contacted our teams to discuss the situation, and that remains an ongoing process. Overall, the response has been overwhelmingly supportive in light of the allegations.

That's great. And then just a follow-up on prediction markets. Given some of the ongoing U.S. state-by-state legal nuances, do you expect to have any limitations on the offerings for prediction market operators?

Barry, that's a difficult legal area with many ongoing cases. At the moment, we do not see specific limitations; that is something regulators will need to determine. What we can do is work hands-on to deliver the best possible product to serve our partners in prediction markets. Our partners can include online sports betting operators who are entering this segment, so we are fully focused on delivering the highest-quality solutions and will follow regulatory developments closely.

Your next question comes from Jeff Stantial with Stifel.

Maybe just starting off on the marketing business, you talked about this a little bit, but just curious to get your latest thoughts on the cadence of commercialization of more of the user acquisition services to predictions specifically. How material was this as a growth driver in Q1 and as we think about Q2 and into the back half, have you been able to deepen relationships with exchanges now that you seem to be spending on user acquisition quite aggressively? Any thoughts on how you see that playing out through the remainder of the year would be great.

Yes. Listen, I think as Carsten highlighted, we're still very early days. We have done some collaboration with prediction market players as they ramp up, and we continue to do work with traditional online sportsbooks as they consider entering this space or growing their presence. So there's been some activity, but certainly not at the scale of our traditional marketing business yet.

That's great. And then shifting over to the reports from last week and the 6-K you filed this morning. You talked about three types of customers: direct licensed B2C, licensed B2B, and then noncustomers—bad actors pirating the data illegally. That second cohort, the licensed B2B distributors: would the low- to mid-single-digit revenue exposure you talked about for unregulated markets include B2B resellers that are selling into unregulated markets? I assume you may not always know where those resellers ultimately sell. If the answer is no, can you help us think about how material those relationships are relative to your overall revenues?

Let me explain the revenue bridge. Craig's breakdown is accurate: roughly 45% of our business might have some exposure in theory. When you remove U.S. revenue and large global providers, you get down to roughly 30%. From that 30%, we analyze our client base: the vast majority of our clients do not operate in unregulated markets—clients such as Flutter, Entain, FanDuel, etc. After subtracting those and running client-by-client assessments, we come to a low- to mid-single-digit exposure of total revenues. If you run additional analysis or simulations, the maximum could be up to around 12% in extreme cases, but we believe our best estimate is low- to mid-single-digit of total revenues exposed. I hope that clarifies the situation.

Your next question comes from Shaun Kelley with Bank of America.

Maybe just high level, looking at the quarter and trends here. Turnover sounded healthy, but obviously there was an outcome-driven issue on the trading or betting side. Could you normalize for that and give a sense of what core might have looked like either on revenues or EBITDA had that not been the case?

Sure. When you look at our MTS business, it is outcome dependent to a degree. Given the diversity in our MTS client base, you usually don't see huge quarter-to-quarter fluctuations, but there are exceptions. The growth we delivered last year from an MTS perspective has been relatively consistent over several years, and we expect that growth to continue as we add clients, grow overall handle, and drive efficiency. So while I can't provide a precise normalized EBITDA number here, the underlying trends are positive and we expect normalization over time.

Okay. And then maybe higher level, can we talk about the puts and takes in the outlook as it relates to where we stood a quarter ago—specifically referencing the cost reduction program you mentioned and any incremental uplift for prediction markets or any shift in timing on U.S. growth? Is the cost reduction program factored into EBITDA guidance? Is that incremental? And is there a prediction markets number baked into guidance this year?

Sure. A few things have changed since we provided guidance a few months ago. First, U.S. market growth is slower than we initially anticipated. Second, we are including more from prediction markets than we initially did—Carsten has previously discussed that prediction markets could bring tens of millions of dollars to annual results; we don't expect to realize all of that this year but expect some contribution. Third, IMG is performing better than expected with stronger cross-sell and upsell, and we now expect to exceed the 25% synergy target. From a margin perspective, the cost-out initiatives we've announced will have an impact mainly in the back half of the year; some savings are factored into our guidance, but the initiatives will be more fully realized later in the year. So in total, these items net out to retain the guidance we've reiterated today.

Your next question comes from Mike Hickey with StoneX.

Just a quick follow-up on the allegations here. One piece of it was that your sales team was engaging with prospects from illegal markets at ICE. Can you specifically address that allegation, Carsten? And a follow-up on Playradar as well.

Mike, can you please repeat the question? I had a dropout in my line.

Yes. Sorry about that. The allegation was that individuals posed as prospective operators from illegal markets to your sales team at ICE, and that the sales team was receptive and engaged with them.

You're referring to a staged campaign targeted at one of our salespeople at ICE. ICE is a large gaming show with around 60,000 attendees, and our team had thousands of meetings across the event. The staged campaign targeted a relatively junior salesperson. He was recorded for more than two hours in that context. Those recordings do not reflect the full context of his interactions. Importantly, initial sales engagement is far from a contract. Whenever there is potential business, we initiate an intensive KYC process: identification and verification, license verification against the regulator, verification of corporate filings and registries, sanctions screening across applicable lists, and final legal counsel review before any contract is signed. So while we regret any incidents of misrepresentation or targeted campaigns at events, this was far removed from any contract execution. This was a staged campaign aimed at a junior salesperson at ICE; it should not have happened, but it was not representative of our contracting or compliance processes.

Yes, apologies. The last question dropped. The next question is from Trey Bowers with Wells Fargo.

First question on the guidance: given the timing of when you provided the full-year guide coming out of Q4, any thoughts about giving a specific Q2 guide this late in the quarter? It seems like things fell off in March given the timing of your prior guide and the Q1 results. And for the full year, in terms of prediction markets versus traditional online sportsbooks, are these two things related? Do you feel like prediction markets are kind of cannibalizing OSB business, and you'll make up for it with prediction market revenue?

I'll answer the guidance question and then hand to Carsten on prediction markets. Trey, we don't provide quarterly guidance; we didn't guide to Q1 and we won't guide specifically to Q2. What changed between our prior guide and Q1 results were softness on the marketing line and greater-than-expected softness in the U.S. market. Those items are now baked into our results and our updated view for the year. We still expect to deliver strong growth in Q2 from both revenue and bottom-line perspectives.

On cannibalization: we see an expansion of the TAM. Prediction markets allow more people to express opinions and monetize those opinions—potentially younger demographics and new states—which expands the total addressable market. Anecdotally from CEO-level conversations with our clients, cannibalization has been small. We see an overall expansion opportunity that outpaces any small cannibalization effect.

And a follow-up: the reports suggested that profits come mainly from Tier 3 and 4 leagues that are argued to have greater integrity issues. Can you speak to whether the primary leagues are still major profit centers and whether that accusation is founded?

That allegation is unfounded. A significant portion of our revenues and profits is associated with AV and premium content tied to Tier 1 leagues. AV revenue, partnerships and products related to Tier 1 leagues constitute a meaningful part of our business. We have geo ring-fencing and contractual controls about where and how AV can be distributed. The claim that majority profits come from Tier 3 or 4 leagues is incorrect.

Your next question comes from Robin Farley with UBS.

On prediction markets, you mentioned you expect some revenue in the second half. Would the timing of an announcement be before then? It sounded like discussions are near term. Also, could you clarify whether prediction market revenue is included in the guidance and how additive potential announcements would be?

Without speculating excessively, we have been conducting intensive discussions for several weeks with many players in the prediction market ecosystem. Those discussions are at a mature stage and we're optimistic we'll be able to announce something soon. However, I won't put a specific timeline on it today. We are focused on ensuring the right commercial frameworks are in place prior to announcements.

To add: the magnitude of any impact depends on what gets done. Any items we expect to happen in the short term that we are confident about are included in our annual estimates. Anything that happens later would likely be additive to our current guidance. So if you see an announcement that we have signaled as near-term, assume it's included; anything later is upside.

Okay, great. And then a follow-up on the quarter: revenue was roughly in line on a constant currency basis, but typically EBITDA grows more than revenue. Can you quantify how much of the EBITDA difference was due to sporting outcomes versus FX or any other factors? Also, you mentioned sports rights increase—was that excluding IMG?

When you look at revenue growth in the quarter we reported 11% growth; without FX it would have been closer to 16%. The FX headwind was the largest single factor and it flows through to the bottom line. Sporting outcomes affected MTS in the quarter and were another headwind to revenue and EBITDA. Despite that, we delivered slight margin expansion, which highlights our ability to manage costs. The sports rights increase was driven primarily by the inclusion of IMG; our major rights deals remain locked in long-term.

Our next question comes from the line of Sam Nielsen with JPMorgan.

On the FX headwind: if I recall correctly from your last call, Q1 is expected to be the largest headwind for the year. How should we think about the cadence of FX headwinds through the balance of the year?

For the most part, the FX impact should normalize after Q2. The U.S. dollar weakened through 2025, so in the third and fourth quarters last year we were lapping a weaker dollar. The first and second quarter comparisons are more challenging. The Q2 impact should be less than Q1 but still material to the growth rate overall.

Makes sense. Then on prediction markets and the broader opportunity: do you see a bigger revenue opportunity at maturity in the data and betting segment or within the advertising segment?

The clear answer is both. Advertising sees opportunity as companies invest to capture market share in prediction markets and online betting, which should lift marketing spend. There's also a significant opportunity in data—especially ultra-low-latency data, colocation and related services—which we are actively pursuing with operators and market infrastructure providers. So both are meaningful opportunities for us.

Operator, we have time for one more question.

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

Two follow-ups. First, regarding the KYC detail in the 6-K: you mentioned enforcement and verification responsibility may be placed on the intermediary. If there is a negative event that impacts revenue for some portion of the 3% to 12% range you gave, is the recourse ultimately with the B2B partner rather than Sportradar? Is it right to think of it that way? Second, on global customer renewals: when will you begin renegotiations with partners and is there any upside from renewals baked into guidance for this year?

Let me address the first part. Think of it like other data or content providers: large B2B providers—similar to how Bloomberg delivers content to banks and hedge funds—provide data to customers who may sublicense content. We apply intensive KYC to B2C and B2B counterparties, but in some cases intermediaries may syndicate content without our agreement. When we detect unauthorized distribution, we shut it down immediately. This does happen in the industry—data scraping and piracy are real issues for any company in this space. Much of the common piracy we see is scraping of live match trackers—live scores, league tables, halftime or full-time scores—rather than betting functionality. Regulators scrutinize operators and counterparties; if an operator or partner acts improperly, the enforcement or regulatory action typically falls on the operator, not the data provider. We have mitigation and enforcement methods in place and we act promptly when we detect misuse.

On renewals: renewals are a routine part of our business—about two-thirds of our revenue is fixed fee and roughly a third of that fixed-fee base typically renews or comes up for contract annually. Renewals occur throughout the year rather than on a single date. We have several renewals coming up during the rest of the year and see opportunities to capture additional share-of-wallet as we deliver more value to customers. Some of that potential upside is reflected in our guidance, and other renewals could represent incremental upside as they are finalized.

That ends our first quarter call. Thank you, everyone. Now I'll turn it back over to the operator.

This concludes today's call. Thank you for attending. I will now turn the call back to Jim for closing remarks.

Operator, with that said no closing remarks, we'll end the call. Thank you.

Perfect. You may now disconnect. Thank you for attending.