May 19: ‘We live in a big data world’ says Sportradar

Sportradar Q1, DraftKings investor presentation, Acroud Q1 +More

Wagers.com Earnings+More

May 19

Good morning. On today’s agenda:

Sportradar says big data is the ‘mega-trend’ of today.
Jason Park at DraftKings says the company will be ‘sticking to the playbook’.

Next time might be your time. Click below:

Sportradar Q1

Revenue up 31% to €167.8m; US revenue up 124% to €25.7m.
Adj. EBITDA down 5% to €26.7m.

Alpha industry: CEO Carsten Koerl said that AI was the “mega-trend of our times” and suggested those with the most data have the “most potential to generate alpha”.

“We have systems in place to analyze all the data in sport events all over the world, which we acquire across our verticals to expand our product offering,” Koerl added.

Managing upwards: Sportradar’s managed trading and platform services business units were the key drivers to the increase in the rest of world segment which saw revenues rise 25% over the period to €86.7m.

The Synergy acquisition also helped revenues in the RoW betting segment and the RoW audio-visual segment where revenues rose 17% to €45.9m.
The US boost was driven by new state launches including New York but it was increased investment in this segment which saw adj. EBITDA rose from minus $3.6m to minus $6.4m.

For better, for worse: In Q1 Sportradar had suggested a ”worst-case scenario” for adj. EBITDA should it have to shutter its services to the Russian market would be €110m (compared to its forecast €123m-€133m). Koerl suggested yesterday that this scenario was now more unlikely.

“We are now a distance from the worst-case scenario,” he added.

Soothing words: Asked about the impact of the macroeconomic situation, Koerl suggested that gambling’s resilience in the face of economic downturns would mean there would be unlikely to be any impact on the sector.

Valuation disconnect: He added that having cash on the balance sheet was useful when it came to potential M&A opportunities. But he noted the disconnect between public and private valuations at the current time.

‘The trouble here is that public and private market valuations are a little bit detached,” he said. “There is very soon the opportunity to make acquisitions at a different valuation level.”

Graduation day: Noting the recent opening up of US Colleges to data partnerships, Koerl said that their data needs were different compared with the Major Leagues.

“For colleges it is important to have a partner that can provide for all needs,” he said. “Integrity is key.”

Marketing updates: Speaking about Sportradar’s recent acquisition of VAIX, the AI-driven marketing personalization tool. Koerl said that compared with other BI programs which reported on the impact of a marketing campaign within two-to-three weeks, the VAIX platform did the same task in just two-to-three days.

Analyst quick take: Deutsche Bank noted that Sportradar had ended the quarterly reporting season (for the big names at least) the same way it began - solid earnings overlooked on recessionary fears.

“From here, we still believe SRAD gives investors… a pure-play way to get leverage to the theme through a profitable and majority subscription-based, B2B operating model.”

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DraftKings investor presentation

Don’t let me be misunderstood: Speaking at the Moffett Nathanson Annual Media Summit CFO Jason Park said he understood the current discount placed on companies that were not yet cash-flow positive.

However, DraftKings’ primary use of cash is for marketing and is “working really well with really strong CACs” and recruitment numbers. “We’re sticking to the playbook.”
On the $300m synergies the group plans to generate through its acquisition of Golden Nugget Online Gaming, Park said the group would “turbocharge GNOG marketing to generate scale”.
“GNOG is more outsourced on its games library and content aggregation. We have all that in-house. We’ll work on developing our own content and that will drive through to the bottom line with saved costs and gross margin synergies.”

Costs and capabilities: The group brought forward its fixed costs in the past 18 months “to meet the capabilities of our most notable competitors and we signaled we would have lower growth in fixed costs going into 2023”.

Must-have: Asked about the impact of single-game parlays on hold levels and notably the returns FanDuel generates, Park said that post-migration to in-house tech stack in Q321 DraftKings had only had SGPs for the NFL for one year vs. three years at FanDuel.

“Once we get the parlay mix right we’ll catch up, it won’t take three years to reach those hold levels,” Park said.

Lean in: With FanDuel apparently “leaning in” where competitors’ marketing levels had dropped in NJ, PA and MI, Park said: “We have real-time insights into LTVs and as long as CACs are in line with our three-year payback we’ll continue to invest. As for market share, the proof is in the pudding: you also need great customer support, product and strong CRM levels.”

Note: DraftKings went live in Ontario yesterday. The launch comes six weeks after the first wave of legal online gambling platforms debuted in Ontario.

On social

Matt Kalish @mattkalish

Excited to share that @DKSportsbook is now LIVE in Ontario! We are really proud of the app & will always take pride in giving you a great service. I hope you’ll join us for the launch festivities 🇨🇦

Earnings+More podcast #8

The regular podcast newsletter will be sent later but for this who can’t wait, the eighth pod is available via YouTube.

Earnings in brief

Acroud: The gaming affiliate and affiliate platform provider said revenues rose 26% to €7m with organic growth hitting 15.5%. EBITDA rose 56% to €2.2m. Having divested itself of its financial services affiliation sites, the new wholly-focused igaming affiliate and support business reiterated its recent forecast for FY22 EBITDA of between €8m-€10m.

The company also said it is progressing with a refinancing of its bond.

Datalines

Arkansas Apr22: Betting and gaming revenues were down 9.1% to $54.8m, slots revneues were down 11.6% to $48.2m, table games increased 17.4% to $5.8m. Sports betting handle was up 111.4% to $8.6m.

Connecticut Apr22: Gambing and betting revenues were up 32.8% to $100m. Slots were down 3.9% to $72.3m, online sports betting handle was down 7.1% to $109.4m, GGR was down 3.3% to $8.6m.

Leaders: FanDuel leads in OSB market share for GGR with $4.9m (+5.2%). Retail betting handle was down 20.2% to $7m, Rush Street Ineractive’’s retail GGR was down 29.8% to $580K. Online casino revenues were up 0.8% to $18.4m. DraftKings leads in icasino GGR with $9.8 (-4.2%), with FanDuel just behind with GGR of $8.6m (+7.2%).

Regulatory roundup

Ohio: The launch date for regulated sports betting will be clarified when the state’s Casino Control Commission meets on June 1. However, it’s unlikely to coincide with the start of the NFL season as the Commision wants to carry out due diligence on around 3,000 applications before going live. The Commission’s website stated that the launch date will "likely to be close to, if not exactly on, January 1, 2023." That day marks the latest possible launch date for Ohio sports betting, per state law. The Swedish government’s new bill for re-regulation of the country’s gambling industry has been welcomed by the online gambling trade association BOS who noted that the omission of a ban on television marketing was welcome, as advertising has been the target of gambling reform advocates in the country for the past year.

Newslines

Amelco is now live in Arkansas with its online sports betting solution for BetSaracen, the online wagering platform of the Quapaw Nation.

Makers market: Australian sportsbook platform provider Betmakers will provide its tote and horse racing wagering technology to the Royal Sabah Turf Club’s Tambalang Racecourse in Malaysia for the next five years.