Prospectus summary
PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information that may be important to you before deciding to invest in our Class A ordinary shares, and we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated audited financial statements, including the notes thereto, included in this prospectus, before deciding to invest in our ordinary shares.Except where the context otherwise requires or where otherwise indicated, the terms “Sportradar,” the “Company,” “the Group,” “we,” “us,” “our,” “our company” and “our business” refer to Sportradar Group AG, in each case together with its consolidated subsidiaries as a consolidated entity following the Reorganization Transactions.
Overview
Sportradar is a leading technology platform enabling next generation engagement in sports, and the number one provider of business-to-business (“B2B”) solutions to the global sports betting industry based on revenue. We provide mission-critical software, data and content via subscription and revenue share arrangements to sports leagues, betting operators and media companies. Since our founding in 2001, we have been at the forefront of innovation in the sports betting industry and we continue to be a global leader in understanding, leveraging and monetizing the power of sports data. Our mission is to enhance sports fan engagement globally through our fully integrated technology and services platform.
Sportradar offers one of the most robust and fully integrated sports data and technology platforms. We serve as a critical data infrastructure and content layer to the sports betting and media industries. On top of that infrastructure layer, we have built one of the most advanced and comprehensive software offerings. Our products simplify our customers’ operations, drive efficiencies and enrich fan experiences.
Our end-to-end offering, integrated technology and global footprint make us important partners to our customers and deeply embedded across the sports ecosystem:
Our deep relationships across the sports value chain have been developed over the course of nearly twenty years, and have powerful network effects. The more betting operators and media companies we bring onto our platform, the broader distribution we have to sports fans and bettors. This attracts new sports leagues to partner with us. Each new league partner adds more events to our portfolio and new opportunities for us to help betting operators and media companies engage their customers. This feedback loop strengthens our value proposition in the ecosystem.
At the heart of what we do is our proprietary technology stack. Our product strategy is centered on speed, reliability and scalability to match the demands of our customers. We use advanced algorithms to create scalable, customized insights in real-time with latency averaging 700 milliseconds (“ms”). We have one of the industry’s leading cloud native storage and distribution platforms. We leverage AI and machine learning capabilities, based on our rich data lake, to provide the most accurate odds. We are innovators at the forefront of revolutionary new technologies in sports data and analytics including computer vision, data visualization, virtual gaming and simulated reality.
Sportradar leads on breadth of events coverage for sports data and odds. We offer the largest volume of data in the world across our peers, leveraging nearly 20 years of historical sports information. We collect over 1.2 billion live data points per year from over 600,000 events in 37 sports. In 2020, we generated 3.7 billion live and pre-match odds changes, collected 1.9 billion betting tickets and processed 21 billion odds changes from betting operators. We have a strong betting data rights portfolio, including non-exclusive rights to the National Basketball Association (NBA) and the Major League Baseball (MLB) in the United States, as well as exclusive rights on a global basis to the NBA (excluding the United States and China), MLB (excluding the United States) and National Hockey League (NHL). In addition, we hold exclusive and worldwide media data rights for the NBA and MLB (including in the United States). We also hold data rights to more than 500 other sports leagues and competitions across the world on both an exclusive and non-exclusive basis. We are highly diversified across tiers of customers and tiers of sports content. The breadth and quality of our sports betting data coverage separates us from our competition.
In addition to sports data, we provide our customers with the largest sports audiovisual content offering including 200,000 events per year across tier 1 and other-tier sports leagues. Sportradar provides global coverage, with strong U.S. market positioning, including rights for major U.S. sports leagues.
Sportradar’s software solutions address the entire sports betting value chain from traffic generation and advertising technology, to the collection, processing and extrapolation of data and odds, to visualization solutions, risk management and platform services. We have designed our platform to solve the challenges that sports betting operators face competing in a complex ecosystem, in real-time, and on a global scale. Sportradar offers full-service, turn-key software packages, as well as flexible, modular products depending on the size and capabilities of our customers. Our valuable data assets and analytics capabilities enrich all of our software offerings.
Our platform is used globally by organizations of all sizes from large enterprises to small start-up businesses. As of December 31, 2019 and 2020, we had 1,601 and 1,612 customers, respectively. As our customers experience the benefits of our platform, they typically expand both their usage and the number of products and services that they purchase from us. Many of our sports betting customers have automated entire workflows that would have otherwise been done manually in-house. Our ability to expand within our customer base as well as our ability to grow alongside our customers is best demonstrated by our Dollar-Based Net Retention Rate for our top 200 customers. As of December 31, 2020 and 2019, our Dollar-Based Net Retention Rate was 113% and 118%, respectively. As of June 30, 2021, our Dollar-Based Net Retention Rate was 138%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Business” for additional information regarding our Dollar-Based Net Retention Rate.
We have grown through both organic and inorganic expansion. For the years ended December 31, 2020 and 2019, our revenue was €404.9 million and €380.4 million, respectively, representing year-over-year growth of 6.4%. Historically we have been able to achieve a 25% revenue compound annual growth rate (“CAGR”) from 2016 to 2020. Our business is profitable and benefits from positive Adjusted Free Cash Flow generation. For the years ended December 31, 2020 and 2019, respectively, our profit for the year was €14.8 million and €11.7 million, representing year-over-year growth of 26.5%. Our Adjusted EBITDA was €76.9 million and €63.2 million for the years ended December 31, 2020 and 2019, respectively, representing year-over-year growth of 21.7%, profit for the period as a percentage of revenue of 3.7% and 3.1% and Adjusted EBITDA margin of 19.0% and 16.6%, respectively. Our net cash from operating activities as a percentage of profit was 1,021.6% and 1,251.3% for the years ended December 31, 2020 and 2019. We had strong Cash Flow Conversion, defined as Adjusted Free Cash Flow as a percentage of Adjusted EBITDA, of 69.6% for the year ended December 31, 2020 and 87.3% for the year ended December 31, 2019. Our net cash from operating activities was €151.3 million and €146.0 million for the years ended December 31, 2020 and 2019, and we have been Adjusted Free Cash Flow positive since 2013, including for the years ended December 31, 2020 and 2019, with €53.5 million and €55.3 million of Adjusted Free Cash Flow, respectively.
For the six month periods ended June 30, 2021 and 2020, our revenue was €272.1 million and €191.6 million, respectively, representing period-over-period growth of 42.0%. For the six month periods ended June 30, 2021 and 2020, respectively, our profit for the period was €17.7 million and €20.2 million. Our Adjusted EBITDA was €59.8 million and €40.8 million for the six month periods ended June 30, 2021 and 2020, respectively, representing period-over-period growth of 46.5%. For the six month periods ended June 30, 2021 and 2020, profit for the period as a percentage of revenue was 6.5% and 10.6%, respectively, and Adjusted EBITDA margin was 22.0% and 21.3%, respectively. Our net cash from operating activities as a percentage of profit was 382.6% and 374.9% for the six month periods ended June 30, 2021 and 2020, respectively. We had Cash Flow Conversion of 6.9% and 80.7% for the six month periods ended June 30, 2021 and 2020, respectively. Our net cash from operating activities was €67.5 million and €75.9 million in the six month periods ended June 30, 2021 and 2020, respectively, and we had Adjusted Free Cash Flow in the six month periods ended June 30, 2021 and 2020 of €4.1 million and €32.9 million, respectively.
In our mature markets, where sports betting has been legal for many years, we are highly profitable. Revenue in the RoW Betting segment was €235.0 million and €224.7 million for the years ended December 31, 2020 and 2019, respectively. Revenue in the RoW AV segment was €105.9 million and €102.7 million over the same time periods, respectively. Revenue in the United States segment, where we have been investing heavily in data, content, technology, personnel and operations, was €34.4 million and €22.9 million over the same time periods, respectively. Revenue in the RoW Betting segment was €148.5 million and €108.4 million for the six month periods ended June 30, 2021 and 2020, respectively. Revenue in the RoW AV segment was €75.6 million and €56.7 million for the six month periods ended June 30, 2021 and 2020, respectively. Revenue in the United States segment was €28.9 million and €13.4 million for the six months periods ended June 30, 2021 and 2020, respectively.
As a result of our investments, we are nimble, innovative and prepared for global growth. In addition to investments in strategic markets like the United States, which we believe will fuel significant growth in our business, we have also invested in new high growth products including programmatic advertising, e-Sports and gaming technology such as virtual sports and simulated sports events. We expect these investments to expand the scope of our value proposition, increase our total addressable market (“TAM”) and drive wallet share with customers.
We are part of a founder-led organization with a strategy that is focused on innovation and long-term value creation. Our Founder and Chief Executive Officer, Carsten Koerl has been at the forefront of the online sports betting industry since its early days. Our investor base includes top-tier investors such as CPP Investments and Technology Crossover Ventures (“TCV”), as well as notable sports industry individuals such as Ted Leonsis, Mark Cuban and Michael Jordan, who each hold less than 5% minority interest. References to these individuals are included in this prospectus because they are leading figures in the global sports industry, which is the industry in which we operate, and distinguished members of our existing investor base. We believe that disclosing the identity of such investors provides potential new investors with a better understanding of the entities and individuals in the sports industry that have financially supported our growth by investing in our business.
Industry Background
The way sports fans and bettors consume and interact with sports is changing.
Sports fans today are connected to their favorite teams at all times. They demand multi-platform experiences, personalization, and deeper interaction than ever before. According to the PwC Reports, 86% of sports industry leaders believe that live sports viewing will become significantly richer, immersive and interactive in the future. New use cases are emerging in virtual reality (“VR”) and augmented reality (“AR”), real-time data capture and distribution, live betting, and to-the-second synchronized content across mobile devices and the live game. The evolution of e-Sports from recreational activity to a professionalized market with a 495 million global audience highlights the appetite for new interactive sports media, according to Statista Data and the PwC Reports.
Sports betting is a key catalyst for these changing consumption patterns, because bettors more deeply engage with sports data and content than casual viewers. The ubiquity of mobile betting is further driving accessibility of sports betting and interactivity. Live in-game betting, as an example, allows users to bet on specific plays and other events within a game. Consequently, mobile betting is the highest growing sports betting channel with 20% growth through 2025, according to the H2 Report.
Sports betting legalization is rapidly accelerating, globally.
Sports betting is the fastest growing category within the broader gaming market. Sports betting is the fastest growing category within the broader gaming market. The global sports betting market is projected to grow from $47 billion in 2021 to $81 billion, representing a combined 2025 market estimate for the rest of the world plus a United States market estimate for 2030, (the “Global Sports Betting Markets Maturity”), according to a BCG Report market study. Excluding the US, the sports betting market is $44 billion in 2021 growing 7% to $58 billion in 2025, according to industry research. Sports betting has been legal for many years in a number of major global markets, such as the United Kingdom, Australia, Italy and other parts of Europe and Asia Pacific. According to the H2 Report, these large, mature sports betting markets are expected to grow 6-7% per year through 2025, as a result of increasing accessibility of sports betting on mobile and online, intensifying customer engagement from expansion of sports betting coverage to more events, enhanced consumer technologies and new forms of sports betting such as virtual sports, e-Sports and simulated reality. Other large markets, including the United States, are increasingly legalizing sports betting, leading to accelerated sports betting market growth and geographic expansion opportunities for both operators and sports data and technology providers. Countries in Latin America, such as Brazil, India and other countries across Africa and Asia Pacific, continue to contemplate or progress regulatory efforts to shift from illegal betting to regulated betting markets. The COVID-19 pandemic magnified government funding deficits and we see governments becoming increasingly receptive to legalizing sports betting as a new source of income.
In the United States alone, sports betting is anticipated to expand from a $1 billion market in 2019 to a $23 billion market at maturity. Following the repeal of the Professional and Amateur Sports Protection Act (“PASPA”) in 2018, the sports betting industry has benefitted from rapid growth. As more states legalize sports betting and the volume of sports betting in currently operational states increases, we expect significant market opportunity in the United States.
Sports leagues, betting operators, and media companies are focused on their core competencies.
The growing complexity and magnitude of data, content and technology underlying the sports ecosystem presents challenges for the various constituents. Technological requirements are more substantial today than ever before. Computer vision is radically transforming the volume and speed of data points available, enabling new sports betting use cases like player acceleration and intent-driven insights such as type of shot. This data is also increasingly important to leagues who can use it to improve game strategy and athlete training, as well as to drive direct engagement with fans. First-party user data from digital media and online sports betting platforms is also enabling in-depth customer profiling and segmentation, critical insights for every party in the sports and sports betting ecosystem. Proficiency in these new data categories requires technology investment, specialized talent and organizational focus.
At the same time, consumer tolerance of technical failures has decreased dramatically. Rising expectations present a major challenge for companies working with sports data. Significant investments are required for full resilience and the transition to public cloud environments.
The speed of change is blistering and requires dedicated research and development (“R&D”). Falling behind has direct monetary consequences not only from a user acquisition and retention perspective, but also from a risk management and profitability perspective. Sports leagues, betting operators and media companies are focused elsewhere and, as a result, increasingly turn to third parties like Sportradar.
There is a need for a holistic, integrated, end-to-end sports data and technology platform
While point solutions exist across the sports data, content, and technology value chain, they are fragmented and don’t provide a holistic solution to optimize performance. The opportunity to harness technology and data to accelerate growth and operate more efficiently exists, but is often lost. Any technology solution proposing to modernize the sports ecosystem should meet the challenging requirements that businesses face operating in real time on a global scale. We believe that includes:
Sportradar Platform
Sportradar’s platform simplifies the complex, fragmented and, in the case of betting, regulated, sports ecosystem. While sports leagues, betting operators and media companies focus on their respective core competencies, we focus on leveraging data and technology to help our customers run their businesses efficiently and create more engaging experiences. We are experts in sports data and building technology-enabled solutions empowered by that data. We offer the most comprehensive solution in the marketplace which positions us to cover the end-to-end needs of our clients. Our value proposition to each of the key constituents is clear:
Our Data Engine
Sports data is at the core of everything we do. We deliver value to our customers by providing access to more and higher quality content and data which we distribute at low-latency and with seamless integration into our customers’ platforms. Simultaneously we embed fast data inferencing across our product portfolio to build higher value software products. Our deep sports data archive, real-time data capture, sports rights, sports expertise and artificial intelligence (“AI”) capabilities provide us with a unique position in the market and a powerful foundation upon which to continuously expand the business.
Our platform is underpinned by high quality and fast data, which we have collected for nearly two decades. We benefit from significant barriers to entry when it comes to data collection – both from the rich, extensive volume of historical data that we have, as well as the extensive global infrastructure that is required to provide viable live coverage to operate as a market-leading sports data provider. Our infrastructure allows us to gather, consolidate, quality check, transfer, distribute and analyze sports data in real-time, globally. The scale of our data operation is immense. We work with over 8,300 independently contracted data journalists who use our proprietary technology tools to collect live data from over 600,000 events every year across 37 sports.
Competitive Strengths
The only end-to-end data and software solutions provider with a global footprint
We are the only company providing software solutions that address the entire sports betting value chain, from traffic generation and advertising technology, to the collection, processing and extrapolation of data and odds, to visualization solutions, risk management and platform services. We provide these solutions to our customers in over 120 countries around the world. The breadth of our offering and global reach allows us to serve the greatest number of sports betting operators, from large to small, regardless of their needs, and to provide our customers with simplicity—all the solutions in one place and from one provider.
Integrated platform for business-critical needs of betting operators and media partners
We are deeply integrated with our customers from an operational and technology perspective, making it difficult for them to switch providers and serving as a strong barrier to entry. Our solutions are business-critical and power the day-to-day operations of sports betting companies, enabling them to grow gross gaming revenue and to operate more efficiently.
Our proprietary technology engine
We have been investing into our data, models and technology platform for the past two decades and we will continue to do so. Our proprietary technology engine has been developed with the needs of our customers and industry in mind, ensuring low-latency, scalability, automated handling of big data and resiliency. Our cloud native strategy and platform enables rapid scaling and resiliency, handling millions of end users, betting tickets and streaming sessions, with up to 4gb per second in traffic.
We have made significant R&D investments into new data collection and processing technology including computer vision and audio recognition technology. These investments enrich the data we collect, reduce the cost of data collection through automation, reduce latency and enable new AI use cases.
Market leading portfolio of sports data and content
We cover the largest number of events and have a stronger data rights portfolio as compared to our competitors. We collect data on more than 83 sports around the world, from tier 1 leagues such as the NBA and DFL to high-volume leagues such as the ITF. We also collect data from tier 2 and tier 3 sports as well as from regional sports leagues including the National Basketball League (NBL) and AFC. We have more than 20 years of sports data in our proprietary database which provides us with a competitive advantage in odds generation and the creation of virtual sports content that is difficult to replicate.