Riding a two-thirds increase in U.S. revenue and 21 percent overseas, Sportradar beat Wall Street estimates for the second quarter of 2022, even though cash flow did not meet expectations.
The company raised its full-year revenue projection from €665 million to €715 million. Considerably higher (38 percent more) labor expenses helped account for the miss in EBITDA (earnings before interest, taxes, depreciation, and amortization), as did 40 percent more in sports-rights costs and the effects of the continuing Russian invasion in Ukraine.
Still, there were many positives to report, including a 38 percent increase in ad sales and an advance of the company’s profitability target – originally pegged for 2025 – by 12 months. Sportradar also paid down €200 million in debt.
“From here, we continue to believe SRAD gives investors, who are interested in gaining exposure to the rapidly growing sports betting industry, a pure-play way to get leverage to the theme, through a profitable and majority subscription-based [business-to-business] operating model,” wrote Deutsche Bank analyst Steven Pizzella, raising the bank’s price target from $13 per share to $16.
Jefferies Equity Research analyst David Katz was comparably sanguine, reiterating his “buy” rating on SRAD shares. He called the 2Q22 numbers “mixed vs. expectations,” but liked the advanced profitability timeline, adding, “At the same time, foreign exchange is expected to have little to no impact on near-term results, while the impact of Russia/Ukraine crisis is baked in at this point. Overall, we maintain the company is well positioned in a rapidly evolving space.”
Sportradar’s €177.2 million of second-quarter revenue surpassed Wall Street’s €169 million consensus, while the Street expected €30.4 million of cash flow and got €27.6 million in EBITDA instead. The company is standing by its full-year EBITDA range of €123 million to €133 million.
