Conference Transcript - SRAD 2026-03-24

Eric Handler, Analyst — ROTH Capital

All right. Good morning, everybody. I'm Eric Handler, Media and Entertainment Analyst here at Roth Capital. Very happy to have today with us Craig Fallenstein, Chief Financial Officer of Sport Radar. Craig, welcome. Thanks for having me. Appreciate it. Let's start big picture. Can you talk about your outlook for 2026, key drivers for the year, as well as strategic priorities and goals? Sure. And thank you, everybody, for joining us.

Craig Fallenstein, CFO

So we, about a year ago actually almost a year ago to the day we had our investor day uh and at that investor day we really laid out what i think is is the thesis for the company and the direction of the company not just for 2026 but also for the the next several years and really the focus right now is just acting on that i would say is strategy the first part of that strategy is just delivering what i would say is consistent durable revenue growth and the way we're going to do that is by capitalizing on what we see as an expanding market and we've done that for years we've outperformed the market on a regular basis so first is that opportunity second is selling more content and more products to a variety of our customers so capturing more share of their overall wallet and we do that by adding content like we did with img which we can talk about later on but also developing new and innovative products for our customers which we've been able to do for a consistent basis for long period of time then it's expanding really into adjacent markets and we'll talk a little bit about some of the announcements we made today around iGaming but even when you think about things like prediction markets or things like that those are opportunities for us moving forward so looking for ways to capitalize on that so when you layer all those things in we said we were going to deliver somewhere in the mid-teens revenue growth over a multi-year period we're ahead of that based off the results we delivered in 25 we've issued guidance for 2026 of constant currency revenue growth of 23 to 25 percent so the revenue i would say opportunity continues unabated when you think about what that means from uh from an eva dot perspective we delivered 290 basis points of margin expansion in 2025 and we're going to build on that in 2026 we've got to another 200 to 225 basis points of margin expansion and we're confident in that because the cost base of our company is relatively predictable we have these large sports rights which are locked in for a multi-year period no new sports right of scale up for about five years so we have really good visibility on the cost side of the house from a sports perspective and the overall rest of our cost infrastructure is very much manageable so we see an additional opportunity to go out and deliver additional what I would say is margin expansion and the most important part of all this is it's all flowing down to cash flow last year we delivered about 56 percent of our EBITDA to cash flow which ended up in our bank account this year we said we're going to expand upon that so all of these things together give us a unique opportunity to grow this year in 2026 and then certainly beyond so you know it's interesting you have a

Eric Handler, Analyst — ROTH Capital

very consistent predictable cut fully contracted revenue stream but you know a lot of times we see you act sort of in lockstep with you know DraftKings or flutter because you know there's a lot always a lot of noise around the monthly handle and hold how would you characterize you know the state of you know US online sports betting as well as the international markets and how does that really impact your business sure when you think about our revenue we truly are a geographically diverse company in actuality about 70 of our revenue was generated outside the u.s so when you think about the contracts that we have outside the u.s the vast majority of those contracts are

Craig Fallenstein, CFO

fixed fee contracts so they are are not open to the what i would say is market expansion on a direct basis we have escalators built into those contracts and our international business grows at a pretty consistent clip domestically we have about as I said about 30% of our revenue here in the United States and that's broken down amongst a variety of components but the contracts with the draft kings and the FanDuel are based off of their revenue and we get a percentage of their revenue share so how they do certainly has an impact on how we do and we are seeing consistent growth here in the US obviously it's been a little bit a little bit choppy here over the last several months and there may be some ups and downs but overall the US market will only continue to expand there are new opportunities as we just talked about a little

Eric Handler, Analyst — ROTH Capital

bit with prediction markets which i'm sure we'll get into further but there's a unique opportunity for us to expand our u.s business and when you look at the the international opportunity and the domestic opportunity and i combined we see no reason why we can't deliver on the expectations that we laid out a year ago okay so let's talk about predictive markets in your last earnings call uh predictive markets was described as a positive opportunity that could be worth in the tens of millions of dollars in 2026 and hopefully more uh as the years go by um we just saw a nice deal uh with polymarket and major league baseball uh last week so how how are you or how will you be monetizing um predictive market companies sure you know one of the things that's been noisy in

Craig Fallenstein, CFO

our space right now is that the prediction markets is creating a lot of uncertainty For us as an organization, we view it only as an opportunity. Certainly, there are way more players in the prediction markets than they are, for example, in the domestic OSB market, which creates a lot of opportunity just in terms of the number of clients. But each of those clients is very, very different. When you break down the ecosystem of the prediction market, first and foremost, you have the exchanges, and the exchanges are going to be looking for certain products and opportunities, whether it be data, whether it be fan acquisition opportunities, whether it be fan engagement opportunities. there's a unique opportunity for us to talk to the exchanges and ultimately provide products to them that'll help their entire ecosystem then you have the brokers who sit on top of that they are looking for a lot of the similar types products whether it be fan engagement opportunities whether it be acquiring customers and then you have the market makers who are looking for our real-time data when you think about the data that we provide we're providing live low latency data with our league partners to these market mayors which allows us to reduce the risk that they have so there's a vast i would say array of customers and clients that we can reach out to who we've already started having conversations with who have already asked us for a lot of these tools and data sets and we're going to work with them and find out what the right revenue model ultimately is here moving forward last week you did see uh an announcement with major league baseball and polymarket to effectively move forward with mlb data across the the poly market ecosystem and major league baseball included that we are their official data partner as part of that announcement and we will look to now move forward with major league baseball to ultimately monetize their data and that has really been the only thing that's been holding us back here with regards to the prediction markets over the last several months is we want to continue to work with our sports partners you know we have relationships with 400 league partners globally we only want to do for their data what they want us to do with their data and that means partnering with the right people so we're now working on that model moving forward and i believe most importantly as these leagues form a you know contract with the predictor mark companies they're actually requiring uh you know the predictor mark companies to work with you yeah so right now it's still very early days obviously right but major league baseball has partnered with us to move forward with their data and we'll certainly look for the best ways to monetize that and they did announce in their release that we are part of their equation as their official data partner. We certainly feel we'll have the same with NHL. We already have the same with the NHL. We certainly believe we'll have the same with the NBA. So our league partners are working with us to figure out how to monetize their data. They just want to be protective of their data and make sure it's used in the right way, which is appropriate here as we enter a new ecosystem.

Eric Handler, Analyst — ROTH Capital

And I know it's still early stages.

Craig Fallenstein, CFO

One of the questions I've always been getting is, you know, a bet on a predictive market or let's say calci is not apples to apples with a bet with um you know an island sportsbook like draft king how does that impact how you're contracting with them yeah so right now we still haven't done a significant deal with a a market maker or an exchange for that matter so all of these will be very different when you're dealing with an osb it's a pretty much a contained ecosystem when you're dealing with the prediction markets a lot of the opportunities are broken down amongst a variety of players so you're going to have to figure out what works best and what products are warranted for an exchange for example and how that product and ask is different for a market maker and then certainly for a broker so each one of these customers is going to have different needs and wants and will cultivate what i'd say is the right revenue relationship with each of them to make sure it works for us and works for them and you know let's let's move over now to to img arena that closed late last year and you know with that acquisition you know what sort of metrics or synergies are you expecting to achieve over the next not only in 2026 but the next several years and how is that enhancing your offerings for sportsbooks yeah what do you think about IMG it was a very unique deal for us and for those of you who don't know we closed on our IMG deal in November of last year and as part of that deal we were actually paid to take the rights away from img and that really does speak to the fact that we are the scale leader in the the sports data ecosystem we have relationships with 800 sports books globally as i mentioned earlier that allows us to monetize these rights across what i would say is a wide array of uh relationships and you already started to see that a little bit in the fourth quarter of 2025 and when you think about 2026, we expect our revenue growth, which was 17% in 2025, to be between 23 and 25% in 2026 on a constant currency basis. A lot of that is due to the fact that we think we can leverage the relationship with IMG content across all of our sportsbook partners that we already have. And that, again, speaks to the scale of who we are. When we did this deal, there were a few things that had to be done. One was we wanted to make sure it was accretive from a revenue perspective two is we wanted to make sure it was accretive from a ebitda margin perspective and three is we wanted to make sure it was accretive from a free cash flow perspective and all of those things are already happening and will i would say expand in 26 and potentially in 2027 when you think about the opportunity it really comes down to we've had relationships in this ecosystem for 20 years so we know what our sportsbook partners want so when we did this transaction and we acquired a bunch of basketball rights, a bunch of tennis rights, a bunch of soccer rights, we know that our sportsbook partners want this type of content. And when we closed the deal in November and we reached out to everybody and said, we now have it, are you interested? The response has been very, very positive. We already have seen a significant amount of take-up from our Tier 1 operators, and we expect to continue to build on that in 2026.

Eric Handler, Analyst — ROTH Capital

Okay, and I guess it does bring up a question. as you think about other M&A opportunities for you? Are there still holes in the portfolio that you'd like to fill? Are there areas that you're thinking about for M&A?

Craig Fallenstein, CFO

When you think about our company, one of the really big positives right now is we have a really strong balance sheet. When you think about the fact that we have close to 365 million in euros in cash at the end of the year, we're generating 167 million in free cash flow in 2025. We'll certainly expect that to grow in 2026. So there's a significant amount of cash that we have on our balance sheet. There's a significant amount of cash coming in, and we also don't have any debt. There is what I would say is an opportunity to put that cash to work. And when we think about that opportunity, we look at it in a variety of ways. First, we love to invest in our business. We love to invest in the core and build new products and build new opportunities, and we certainly are doing that. Second, we do continue to look for M&A opportunities. When you have the kind of revenue growth that we're generating and the margin expansion that we're delivering and the cash flow that we're generating, any M&A that you're going to do has to fit an additive piece of that equation. It can't be diluted from any of those perspectives. So it's really hard to find. All that being said, there is opportunities out there that could augment our technology. It could augment our content. It could augment some of the markets that we offer. so there are opportunities out there and we will continue to look for them but we don't have to do a transaction right now when you think about the where our stock sits today and ultimately where we think the ultimate value of our company is we think the best opportunity for cash today is to actually buy back our own stock and we we've been pretty aggressive in that format over the last several months uh once the img deal closed we've been pretty aggressive overall returning capital to shareholders we did increase the buyback plan that we have at the company from 300 million to a billion dollars uh pretty aggressively from our board in the last earnings call so we do think right now that we'll look at returning capital to shareholders through buybacks is probably the

Eric Handler, Analyst — ROTH Capital

primary use of capital but we will continue to look for m a opportunities at the same time all right so you're sort of leading in leading into this question i'm gonna give you a chance to talk about the value proposition of your stock this year has been a very challenging year for technology software companies lots of AI fears and we could talk about AI and how that's a benefit to your business but you know the stock has retraced quite a bit but your fundamental outlook has actually improved what do you think is just not being appreciated in the shares right now yeah listen I don't I don't think there's things that are not being appreciated as much as I think there's noise in the space right and I think that noise creates uncertainty and

Craig Fallenstein, CFO

uncertainty creates questions but for us the key is just to reiterate for everybody some of the drivers that we talked about earlier which is we are the scaled leader in the ecosystem we are vital to that ecosystem we have 800 sportsbook partners we have 900 technology and media partners we have 400 league partners we deliver data on over a million matches a year so we are literally the player at the middle of the the entire ecosystem that's providing the data to drive the data set so when you think about that opportunity just reinforcing to everybody that we are vital to the ecosystem is one two is we talked about the cost structure of the company it's very much manageable very much predictable so we know we're going to have margin expansion and i think that's a unique opportunity and then the cash flow on top of that when you layer all those things together with what i would say is the appropriate return of capital to shareholders it's a pretty unique story and you know we can talk about uh some of the other things that are are holding us back from a valuation perspective but for us what the phrase that i like to use which is somebody that i used to work for taught me which is the monotony of consistent performance is not a bad thing right and as much as we want to talk about prediction markets and ai and all the other things that are driving things in the ecosystem today for us we're focused on doing what our business does best which is delivering tools and opportunities to our our betting and media partners that's great let's let's talk about a new part of the business today

Eric Handler, Analyst — ROTH Capital

you came out with an announcement about iGaming. Can you talk to us about what exactly are you doing in iGaming? Maybe you could sort of size the market and sort of like the roadmap for growth in iGaming over the next couple of years.

Craig Fallenstein, CFO

Yeah, so we announced today the launch of a new brand called PlayRadar, which is an offshoot of our SportRadar brand. And we've talked about the fact that iGaming, we think, is a unique opportunity for our company for a while. And Karsten even brought this up at our investor day about a year ago. And the reason we think it's a unique opportunity is because of the relationships that we already have in the ecosystem. Those 800 sports books that I mentioned earlier, 70 to 80 percent of them do have a iGaming component to their business. So why not take advantage of the marrying of the sports opportunity and the iGaming opportunity, given where we sit in the ecosystem? When you layer on top of the relationships we have that we deliver 500,000 video streams annually of our product to our sportsbook partners, it provides a platform for us to actually develop product and create value for those sportsbook partners. The iGaming marketplace today, the last number that I saw was something like over $100 billion worth of value in that marketplace. place. So why should we not take advantage of that? And we'll do that by using some of the data we already have, some of the historical sports data we have, some of the live sports data we have, but also by utilizing those video streams in a way where we can provide what I would say is an opportunity to cross over between iGaming and sports gaming. And there really is nobody else doing that today. And where we sit provides that opportunity. So we're really excited about what it looks like moving forward.

Eric Handler, Analyst — ROTH Capital

We are not going to invest a significant ton of money today to make that happen you're not going to see us lower our overall margins because of this investment but we'll incrementalize our way in over time and we think there's a unique opportunity to build value over a multi-year period that's great now you know when you think about all the data that you guys have access to you know every day and you know what you know about the uh each customer is very significant it has a lot of value um how are you thinking about you know different ways to monetize it that maybe you're not doing today you know you have a competitor that's you know sort of branching out into sort of branded ad tech

Craig Fallenstein, CFO

uh capabilities you know how how are you looking at sort of media services uh as your business yeah one of the advantages that we have is we've been around and doing this for a really long time you know i know in the u.s this whole business is relatively young having only you know legalized about seven years ago when we think about the international markets we've been doing this for for over 20 years so we have relationships with all these customers for a really long period of time so we know what they want we know what they need we understand their their concerns their desires so when we're building product we're building product for them based off of the conversations we're having with them and you've seen that on some of the product development that we've had over time whether it's fan engagement tools whether it is our mts business whether it is dealing with media partners but the the one of the areas that is a growth opportunity for us is the ad business right we do two things today one is we acquire customers for our sportsbook partners we've done that for a multi-year period we'll continue to do that we've invested in capabilities on both the uh crm side but also on the uh affiliate side and we've done a really nice job of acquiring customers for them we do see an opportunity moving forward to take further advantage of some of the data that we already have in our ecosystem to attract what I would say is non-sports work partners to build value for brands that are interested in what I would call a young male demographic. And we're working with some of our lead partners today to find out what data is available so we can partner with some of these larger brands and create additional value for both sides of the equation.

Eric Handler, Analyst — ROTH Capital

And that's where we're going to spend our time and energy. That's great. One of the things I've always fascinated, you guys have very strong retention with your customers and the ability to keep increasing the amount that these customers are spending on every year basis in the double digits. Can you talk about maybe the life cycle of some of your sportsbook partners? Not every sportsbook is created equal, but once you get them in the door and then all the services that you can offer.

Craig Fallenstein, CFO

Sure.

Eric Handler, Analyst — ROTH Capital

When you think about an evolution of a sports book is very different sometimes domestically than it is internationally.

Craig Fallenstein, CFO

When you think about the products that we have to offer, we offer 80-some lot of products to our customers. But at the core of what we do is the data that we actually provide. We collect it from the various matches and we provide the data to our clients in a way that they could utilize it either through their odds that they're providing or we can provide the odds for them. But ultimately, that's the core of what we do. Over time, A lot of these sports books are looking for more what I would call engagement opportunities, whether it be AV streams, whether it be fan engagement tools, whether it be managed services, whether it be ultimately working with them on how to ultimately offer more micro markets, whatever it might be. There's a variety of ways that we can deal with our customers, and every one of them is different. So for us, there is not a you start out at point A and go to point B and go to point C. It literally is. It's like a menu of opportunities that you can choose from. And as they become more successful, they tend to want more content, they tend to want more products, and as a result, our share of wallet goes up. At the same time for us, we have to continue to build new and innovative products. You know, recently on our earnings call, we talked about our basketball foundational model. And what that does is it takes billions of data points that we are able to capture as part of an NBA game and does a better job of predicting what's going to happen next. You know, how many points are going to be scored for this possession? Is this player going to probably score in this possession? What is the outcome if player chooses A or chooses B? And when you get a better outcome, ultimately it lowers the risk for the sports book. So developing products like that is ultimately important. So we have what I would say is a runway ahead of us where we can either sell more of the products we've already developed, which we're doing today, but also selling new products that we are developing through the use of AI AI or through the use of just our traditional experiences, which allows us to capture more of that wallet. The cherry on top for us, as I mentioned earlier, is a lot of the costs are already locked in. We build a new product for basketball. We've already paid for those NBA rights. We don't need to pay again. So we're building revenue opportunities in the back of costs that are already spent, and that allows us to increase our margins.

Eric Handler, Analyst — ROTH Capital

That's great. Since you brought up AI like this, no conversation would be complete without finishing off with an AI conversation AI there's a lot of fears in the marketplace and AI AI seems very beneficial to you can you talk about how you're using AI in your products why it's beneficial and are there any competitive fears are there you know disruptions that AI could take place with you know with the business sure we look at AI much like I think a lot of others look at AI which is it was really a unique opportunity when you think about our business we've been building models using ai for quite some time so it's not like ai is new to us ai has has always driven a lot of the data collection that we've done and will continue to

Craig Fallenstein, CFO

do so moving forward what it's doing right now is it's actually allowing you to collect more data points than ever before when you think about historically we've only collected about 50 of our data from computer vision and we do believe there's an opportunity to take that from the 50 percent that we do today to closer to 75 to 80 percent over time so we'll be able to collect way more data points than we ever could before with computers as opposed to just using scouts additionally it provides you way more data points themselves so you can offer more micro markets you can offer more unique bets than you ever could because you have those data points so you're collecting a lot more data through ai two is i just talked a little bit about the product development you are able to create new and innovative products on the back of these models and the AI technology that allows you to come up with new and innovative ideas. And we are seeing that today across the product portfolio, not just for basketball, but for tennis and soccer and volleyball and so on and so forth. So one is certainly collecting more content. Two is certainly product development. And then three for us is certainly customer service. We get hundreds of thousands of requests every year for what I would call data insights. Now a lot of that is being handled by AI. So you combine that with what you can do on the finance and the legal and the HR side. All of those things mean your costs will come in a little bit lower. You'll have much more data to deal with. And overall, it'll generate a whole lot of positive for the business.

Eric Handler, Analyst — ROTH Capital

And more free cash flow.

Craig Fallenstein, CFO

We like cash flow.

Eric Handler, Analyst — ROTH Capital

Craig, thank you so much. It's been very helpful.