The sports betting technology provider laid out its three-year growth plan at its Investor Day.
Sportradar Group (NASDAQ:SRAD) executives laid out the firm’s long-term growth strategy at its Investor Day on Tuesday, which featured some heavy hitters from the world of sports.
Among the speakers were NBA Commissioner Adam Silver and NHL Commissioner Gary Bettman, along with DraftKings (NASDAQ:DKNG) CEO Jason Robins. But the focus of the event was on CEO Carsten Koerl and CFO Craig Felenstein, who laid out the company’s priorities and growth opportunities.
Investors were clearly impressed with the outlook, as shares of Sportradar stock were up more than 5% on Tuesday.
The sports betting technology and content provider has seen its stock price soar over the past year. Sportradar stock is up 30% year-to-date and 95% over the past 12 months. And its growth appears to be gaining momentum.
Inflection Point
Sportradar is positioned at the intersection of the sports, media and betting industries. The Switzerland-based company provides technology and analytics, like real-time betting odds, analytics, content, and other features, for sports books, media companies, and leagues. It also streams live events for its partners and customers.
The company’s partners include DraftKings, FanDuel, the NBA, Major League Baseball, NASCAR, the NHL, Wimbledon, and Caesars sportsbook, among others. It recently acquired IMG Arena’s portfolio, which includes global betting rights from over 70 rightsholders covering more than 39,000 events. It also brings some 30,000 streaming events across 14 global sports on six continents.
Overall, Sportradar has more than 2,100 partners and covers close to 1 million sporting events worldwide on an annual basis.
At the investor Day, officials said the company was at an “inflection point” to drive revenue growth and expand margins. The company cited its industry-leading scale, competitive advantages, and major sports rights secured for the long-term as key growth catalysts. The depth, breadth, and scale, along with its diverse portfolio and expansive distribution network, create high barriers to entry.
In other words, it has built a formidable moat around it business, and it is well-positioned to widen that moat and expand.
“As the market leader in sports technology, Sportradar is uniquely positioned at the center of the sports ecosystem,” Koerl said. “With our leading scale, unparalleled global distribution network and history of innovation we are confident in our ability to continue our strong momentum and deliver tremendous value for our clients, partners and shareholders.”
15% Annual Revenue Growth Targeted
At the center of the Investor Day was the firm’s projections for growth over the next three years. Sportradar management is calling for revenue of at least €1.7 billion in 2027, which would represent a compound annual growth rate (CAGR) of 15%.
Further, adjusted EBITDA is anticipated to hit at least €455 million, which suggests a 27% CAGR. The adjusted EBITDA margin is projected to expand by 700 basis points. In addition, the firm targets free cash flow of approximately €275 million in 2027, which would be up from €118 million at the end of 2024. Sportradar also intends to increase free cash flow conversion to at least 60% by 2027.
Sportradar should benefit from being part of a sports betting market that is just scratching the surface of its growth potential. The global addressable sports betting market is expected to grow at a double-digit CAGR over the next four years.
Further, the company projects to outpace industry growth and increase its market share through its scale and competitive advantages, along with its commitment to drive efficiencies and investments through innovation.
Additionally, it sees opportunities from adjacent markets, particularly the online casino market and its $2 billion serviceable addressable market (SAM).
Sportradar stock is not cheap, with a forward P/E of 76, but it is considered an overwhelming buy among analysts, with a median price target of about $27 per share. That would be up about 18% from the current $22.66 price.