Sportradar (SRAD) 2026年第三季財報電話會議：隨著預測市場擴張，營收成長24%

重點摘要

• Sportradar 2026 年第三季營收達 3.63 億歐元，年增 24%，主要受惠於 IMG ARENA 內容以及新興預測市場的需求帶動。
• 調整後 EBITDA 成長 21% 至 1.02 億歐元。調整後 EBITDA 利潤率為 28.2%，IMG 內容的季節性因素限制了利潤率的年增幅度。
• 美國地區營收成長 47%，占總營收的 27%；全球其他地區營收則成長 17%。
• 博彩與遊戲內容 (Betting & Gaming Content) 營收成長 37%。託管博彩服務 (Managed Betting Services) 營收下降 3%，主因不利的歐洲足總 (UEFA) 及歐洲足球比賽結果降低了交易利潤率。
• 管理層維持其 2026 年展望，預計按固定匯率計算的營收成長率為 19%-21%，調整後 EBITDA 成長率為 24%-27%。
• 該公司在前九個月以約 4.08 億美元買回 2,800 萬股股票，相當於 2026 年初公開流通股數的 24%。

關鍵財務數據

業務與營運表現

IMG ARENA 整合

收購一年後，管理層表示 IMG ARENA 的表現優於原本 25% 的營收綜效目標。Sportradar 已將收購的內容發送給 800 多家客戶，並新增包括進階視覺化工具、即時賽事追蹤器 (Live Match Trackers)、球員與微型市場 (micro markets) 以及 4Sight 串流等產品。

體育版權費用上升 54% 至 1.12 億歐元，主要歸因於 IMG 內容及其網球、高爾夫與足球賽程。儘管加入了 IMG 員工，調整後人事費用仍下降 5% 至 6,800 萬歐元。

預測市場

第三季是預測市場首次實現正面貢獻的季度。Sportradar 向交易所、經紀商與造市商提供服務，包括 Polymarket、Kalshi、Novig 與 Robinhood。

該公司已與約 10 家造市商簽約，並確認了超過 300 家潛在參與者。管理層認為造市商是最大的商機，因為他們對超低延遲的官方數據與 AI 支援的數據饋送有著強烈需求。

協議包含固定費用與變動費用部分，使 Sportradar 能隨著交易量的成長同步獲益。管理層表示，進入預測市場所需的增量投資極少，因為公司使用的是現有的版權、技術與團隊。

區域與產品趨勢

美國地區營收成長 47%，反映出對 Sportradar 內容與產品（包括預測市場服務）的需求。全球其他地區營收則成長 17%。

行銷與媒體服務受益於媒體和科技客戶支出的增加，以及預測市場交易所和體育博彩商的獲客活動。管理層亦指出，AI 助理與大型語言模型對官方體育數據的需求正在不斷成長。

Playradar 仍處於早期開發階段。Sportradar 計劃在取得額外的監管認證及一線 (Tier 1) 客戶後，於 2027 年第一季推出全天候 (24/7) iGaming 平台。管理層提醒投資人，不應期望該產品明年就能貢獻數億美元的營收。

投資組合與資本配置

Sportradar 同意以 1.7 億美元將 Atrium Sports 出售給 Teamworks Innovations。該處分案不包含 Sportradar 保留的技術資產，包括自動化製作攝影機、圖形解決方案及特定電腦視覺功能。

公司預計在 2026 年第四季收到來自 IMG 的另一筆 5,000 萬美元付款，並於 2027 年 11 月再收到 5,000 萬美元。管理層計劃將流動資金用於核心投資、選擇性併購 (M&A) 及股票買回。

管理層業績展望

此展望排除處分 Atrium Sports 的任何影響，因為交易完成日期仍未確定。

隨著 Sportradar 跨越收購 IMG 的比較基期並進一步變現預測市場，管理層預期第四季及全年的調整後 EBITDA 利潤率將有所擴大。由於體育版權付款時點及預測市場現金流影響，第四季現金轉化率預計為負值。若扣除非常規法律訴訟支出，全年自由現金流轉化率預計仍將超越 2025 年的 56%。

針對 2027 年，管理層預期營收將持續成長、利潤率大幅擴大且自由現金流增加，但未提供正式財測。預測市場、線上體育博彩及 iGaming 等相鄰市場機會被列為主要成長驅動因素。

風險與關注事項

• 巴西市場：管理層估計與巴西相關的年營收略高於 6,000 萬歐元。影響體育博彩的臨時措施仍由國會與最高法院審查中。第四季財測假設為年營收運轉率的約四分之一，而潛在的成本削減尚未實質展開。
• 預測市場監管：美國部分州已對預測市場採取限制措施。管理層表示目前對營收的影響並不重大，但合約規定禁止客戶在該類活動遭限制的地區使用 Sportradar 的內容。
• MLB 勞資風險：潛在的封館可能會減少可用的 MLB 內容。Sportradar 表示其合約包含保護條款，且 ATP、PGA、WNBA、高爾夫及網球內容可部分抵銷業務中斷的影響。
• 體育賽事結果：儘管投注額實現雙位數成長，但第三季不利的歐洲足總 (UEFA) 及歐洲足球比賽結果仍壓縮了託管博彩服務的交易利潤率。
• 外匯與成本：第三季淨利包含 600 萬歐元的未實現外幣匯兌損失，而巴西營運及相鄰市場的投資則導致營業費用上升。

分析師問答集錦

• 管理層拒絕量化預測市場的年度營收，並指出實際結果將取決於新合約、交易結構及交易量。儘管如此，公司仍預期 2027 年將實現大幅成長。
• 該公司表示，NBA 對官方數據的要求鞏固了 Sportradar 的市場地位，儘管預期第四季來自 NBA 的貢獻已包含在財測中。
• 管理層堅持其在 2025 年投資人日所提出的 2027 年框架依然適用。傳統線上體育博彩成長放緩的部分，正由預測市場彌補，而成本槓桿效益的展現大致符合預期。
• 關於股票買回，管理層表示資產負債表提供了足夠空間，可在繼續資助內部投資及評估併購 (M&A) 的同時保持買回積極度。

法說會逐字稿全文

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完整財報電話會議逐字稿

管理層陳述

Operator

Hello, everyone. Thank you for joining us, and welcome to the Sportradar Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Jim Bombassei, Senior Vice President, Investor Relations and Corporate Finance. Please go ahead.

James Bombassei

Thank you, operator. Hello, everyone, and thank you for joining us for Sportradar's earnings call for the third quarter of 2026. Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at investors.sportradar.com and will be posted on our website at the conclusion of this call. A replay of today's call will also be available on our website.

After our prepared remarks, we will open up the call to questions from analysts and investors. In the interest of time, please limit yourself to one question and one follow-up.

Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation those regarding revenue and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in our annual report on Form 20-F and Form 6-K filed with the SEC, along with the associated earnings release. We assume no obligation to update any forward-looking statements or information we speak as of the respective dates.

Also during today's call, we will present IFRS and non-IFRS financial measures and operating metrics. Additional disclosures regarding these measures and metrics, including a reconciliation of IFRS to non-IFRS measures, are included in the earnings release, supplemental slides, and our filings with the SEC, each of which is posted to our Investor Relations website. We may also discuss certain forward-looking non-IFRS financial measures that cannot be reconciled to the most directly comparable IFRS financial measure without unreasonable efforts.

Joining me today are Carsten Koerl, our CEO; and Craig Felenstein, our CFO. Now I'll turn the call over to Carsten.

Carsten Koerl

Good morning, everyone, and thank you for joining us. Before I get into the results, I want to touch on how our industry is evolving and what it means for Sportradar. Sport has never been more valuable nor fragmented in terms of how fans engage and consume it.

A fan today might watch a game on a broadcast network or streaming platform, check stats with AI assistant, place a bet with a sportsbook, or trade a contract with a prediction market. Every one of those experiences depends on a critical element: official, real-time, and reliable data, and the technology that turns it into the insights that engage sport fans.

As the sports ecosystem expands into new channels and ways to consume sport, competitive intensity is increasing, driving greater demand for what Sportradar provides. We have seen this dynamic in sports betting for years, and we are now seeing it in play out in prediction markets.

At the same time, our media and technology clients are increasingly looking to us to help them engage fans in new and innovative ways. Sportradar will realize outsized benefits from these trends, given our unmatched position, which is the result of 3 things that are very hard to replicate: our scale in official data rights, the breadth of our product suite, and our industry-leading technology and AI capabilities. This quarter is a clear example of that position at work.

With that, I want to highlight a number of key takeaways for the quarter. First, we delivered strong growth on revenue, adjusted EBITDA, and free cash flow, fueled by momentum across our business. IMG ARENA continues to meaningfully contribute to our betting gaming business, and one year in, we have successfully integrated and monetized the largest sport rights portfolio acquisition in our space.

Second, this is the first quarter we saw the benefits of the extension of our flywheel in prediction markets with exchanges. While it took some time to strike deals with league prediction market players, we have now established Sportradar as the leading sports data and technology solution partner for the sports prediction market ecosystem.

We continue to expand our exchange relationships and have signed up market makers and brokers, and the NBA recently authorized prediction markets requiring the use of official data. These partnerships are already starting to contribute to our results, and we expect that contribution to grow as trading volumes increase and as we add more partners.

Third, demand for our official data, visualizations, and AI-enabled technology is growing beyond betting, with an expanding media technology and iGaming client base. And fourth, we are sharpening our focus on the business that will drive our growth.

Last month, we announced the sale of Atrium Sports for $170 million, which represents a premium multiple, and the proceeds will further strengthen our balance sheet and support our capital allocation priorities.

Let's cover each of this in more detail. Our third quarter results demonstrate strength across the business. Total company revenues increased 24% year-over-year, as we benefit from strong performance in Betting & Gaming Content, as well as our Marketing & Media Services. We delivered an adjusted EBITDA margin of 28% and generated significant free cash flow. Results are benefited from continued strong execution on monetization of IMG ARENA rights, as well from our prediction markets.

It has now been 1 year since we acquired IMG ARENA, the largest content acquisition in our industry, and our teams have done an excellent job integrating these rights into our flywheel. As a result, the portfolio is performing ahead of our original revenue synergy target expectation of 25%. The integration has expanded our product portfolio. We added IMG ARENA's premium golf and MMA products, and made them available across our entire client base.

These products combine extensive odds streaming and advanced visualizations into a single offering. We have also used IMG content to expand our next-gen offerings, rolling out player and micro markets, 4Sight streaming and virtual live match trackers across the Tennis Grand Slams. We have secured key renewals, including Euroleague Basketball, this quarter, and these rights are creating new opportunities beyond betting, including in iGaming.

In terms of underlying market dynamics in the U.S., market growth improved in the third quarter, while the rest of the world, we generally saw continued strong growth. Touching on developments in Brazil for a moment. We've been a long-term partner to some of the leading Brazilian federations and operators, and that commitment hasn't changed. The provisional measure signed in September remains in effect while Congress considers it, and the Supreme Court is reviewing the industry requests for an injunction with a public hearing set for today.

We're following both processes closely and staying in close contact with our partners, clients, and stakeholders in the market. Our experience across regulated markets globally is that a well-regulated framework is the best way to protect fans, betters, and sport.

Turning into prediction markets, we see prediction markets as a meaningful expansion of the global sports TAM. They are bringing in new participants, new formats, and new demand for sports content, and they are doing it alongside regulated sports betting, not in replacing it. Just as we did in online sports betting, we are powering every layer of this market: exchanges, market makers, and brokers.

Polymarket now uses our full suite of prediction market services across their 20 leagues, including the NBA, ATP Tour, MLB, NHL, and the Bundesliga. In a matter of months, that relationship has grown from a single sport into an end-to-end partnership. Kalshi is using our solutions across official data, ops, integrity services, fan engagement, and customer acquisition. Novig has become our third leading exchange partner, and we recently signed our first broker agreement with Robinhood.

We have also signed agreements with a number of market makers who are looking for our real-time data to optimize their performance and trade sport event contracts with greater speed. The opportunity in prediction market goes beyond data. The rapid expansion of prediction markets is increasing competitive intensity, and our clients are investing heavily to acquire and engage users, and that is driving growth in our Marketing & Media Services businesses.

Entering the prediction markets require minimal incremental investment. We are using the same rights, the same technology, and the same teams that already power our betting business. Our agreements are structured so that we participate as volumes grow. We are still in the early innings, and we have an active pipeline across exchanges, brokers, and market makers globally. We expect prediction markets to become an increasing meaningful contributor to our growth going forward.

Moving to our media business, we see demand for sports data and our AI-enabled technology solutions continuing to grow beyond betting, driven by an expanding base of media and technology customers seeking to leverage our capabilities.

One of the drivers is AI. As fans increasingly turn into AI assistants and large language models for sports information, for live scores, to player stats, and game recaps, these platforms need accurate, real-time official data to deliver reliable answers. Sportradar has longstanding relationships with many of the world's largest technology companies, and our data powers sports experiences across a number of the leading AI platforms today.

Turning to our Playradar iGaming business, we continue to make great progress. Leveraging our unparalleled video streaming portfolio and our unique live betting capabilities, we are creating immersive data and video experiences. These players can watch and engage with live sports 24/7 through live betting, casino-style games, and community jackpots. This engagement will help extend our player journey for a sportsbook.

As we get set to launch for our 24/7 destination early next year, we continue to build momentum, including having secured additional iGaming regulatory certifications and additional Tier 1 clients. We also took steps this past quarter to streamline our operations as we focus on our core betting, gaming, and media businesses.

Last month, we announced sales of Atrium Sports, the Coaching & Scouting business of Synergy Sports, to Teamworks Innovations for USD 170 million. This represents an accretive double-digit EBITDA multiple relative to Sportradar's market valuation. The divestiture of this non-core asset streamlines our business as we focus on our key growth priorities.

We are retaining key technology assets and capabilities that are already integrated into our business, including automated sports production cameras, automated graphic solutions, certain computer vision capabilities, and competition management products. These will continue to support growth and innovation going forward.

The proceeds from this sale will further strengthen our balance sheet and support our capital allocation priorities as we continue to repurchase shares and take advantage of the volatility in the market, as well as the value we see in our shares.

In closing, this quarter's outstanding performance was underscored by our position as the critical technology partner powering sports, betting media, and now prediction markets. Our scale in official sports data rights, the breadth of our product suites, and our industry-leading technology capabilities make us mission-critical in betting, and we are now able to leverage this position in prediction markets.

Entering this space requires minimal investment and produces high incremental margins. We see continued opportunity ahead as we provide increasing value to our sportsbook, media, and marketing clients, capitalize on prediction markets, and invest in iGaming. This will enable us to deliver robust growth in the months and years ahead.

Thank you. I will now hand the call over to Craig, who will discuss our financial results in greater detail.

Craig Felenstein

Thanks, Carsten, and thank you, everyone, for joining us this morning. Sportradar's strong third quarter results further demonstrate the growing demand for our best-in-class product suite, diversified content portfolio, and cutting-edge technology and services solutions. This is true for existing customers across our unmatched global distribution network, who are taking more and more of our products and services, and also true for new entrants who recognize the value of what we have built and the appeal it will have for their clients and partners.

The sports, media, and betting industries are rapidly evolving, giving fans more ways than ever to engage with and experience the sports they love. Sportradar is ideally positioned to take advantage of these compelling new growth opportunities by leveraging the robust platform and content portfolio we have already built, and through new products and offerings we can quickly develop, given our deep experience and advanced technological capabilities.

Turning to our third quarter results, Sportradar generated revenues of EUR 363 million, an increase of EUR 70 million or 24% compared with the third quarter of 2025. Growth was driven by strong demand across our product portfolio, including continued strong uptake of IMG content and diverse new prediction market opportunities. The rapid evolution of prediction markets has further expanded our addressable market and once again reinforces the value of Sportradar's premium data, content, and technology offerings.

Turning to our individual product groupings, growth was driven by our Betting Technology & Solutions products, with revenue of EUR 297 million, increasing 27% versus the third quarter a year ago.

This growth was due to a 37% increase in Betting & Gaming Content revenues, reflecting strong demand for our streaming and betting engagement products, as well as odds and live data products, most notably from additional contributions related to our IMG acquisition and growing demand for prediction markets.

We are very much in the early innings of monetizing prediction markets and see significant additional growth opportunities as these markets continue to expand, as we deepen the partnerships we have already established, and as we broaden our reach across all facets of the ecosystem.

Managed Betting Services revenues declined 3% versus the same quarter a year ago, as strong turnover growth at Managed Trading Services was more than offset primarily by lower trading margins due to unfavorable UEFA and European soccer outcomes in late August and early September.

Moving to our other product group, sports content, technology, and services delivered revenues of EUR 66 million, an increase of 11% year on year, driven by growth in Marketing & Media Services as we benefited from increased spend from media and technology customers, as well as increased affiliate marketing spending as prediction market exchanges and sportsbook customers ramped up their customer acquisition campaigns.

Geographically, our revenue growth in the quarter was broad-based, with U.S. revenue up 47% and rest of world revenue up 17% year-on-year. U.S. revenues expanded to 27% of our revenue mix as we capitalized on the growing demand for our breadth of content and innovative product solutions, including new opportunities across the U.S. prediction market ecosystem. The strong revenue growth across our product portfolio translated into significant adjusted EBITDA growth in the third quarter, with adjusted EBITDA of EUR 102 million, up 21% year-on-year.

We also delivered strong adjusted EBITDA margins of 28.2% during the quarter, as we continue to be diligent across our cost infrastructure as revenues expand. As we anticipated on our last call, Q3 margins did decline slightly compared with a year ago, due in large part to the seasonality of IMG content.

But as we lap our IMG acquisition in November and further capitalize on the prediction market opportunity, we anticipate adjusted EBITDA margin expansion in the fourth quarter and for the full year.

Looking at the individual cost buckets, I will be speaking to adjusted expenses to provide a breakdown of the expenses that impact adjusted EBITDA. We have detailed in the earnings release and the financial section of the earnings presentation the bridge from IFRS amounts.

This past quarter, sports rights expense increased 54% year-on-year to EUR 112 million, driven primarily to the addition of IMG content, which from a seasonality perspective, has a higher volume of matches in the second and third quarters, given the tennis, golf, and soccer calendar.

To a lesser extent, the quarter also included rights costs related to certain prediction market opportunities that are tied directly to revenue generation. With our major rights deals locked in long-term and predominantly being amortized on a straight-line basis, and with prediction market rights aligned with revenue generation, we remain confident in our ability to drive operating leverage from our high-demand sports portfolio and the premium products we have developed for our expanding global customer base.

Adjusted personnel expenses were EUR 68 million in the quarter, down 5% year-on-year, despite the inclusion of IMG headcount, as we continue to realize the benefits of the cost efficiency initiatives that we implemented earlier this year, and from a reduced bonus accrual versus a year ago.

Our streamlined operating structure has better aligned resources with our strategic priorities, and going forward, we will continue to capitalize on efficiencies while focusing resources on the most profitable growth opportunities.

Adjusted purchase services were EUR 51 million, up 24% year-on-year, primarily due to the inclusion of IMG, as well as higher cloud and traffic costs. Adjusted other operating expenses of EUR 29 million in the quarter were up 34% year-on-year, with the increase predominantly driven by costs related to our Brazil operations and expenses due in part to supporting adjacent market growth opportunities.

Overall, we continue to see margin expansion opportunity over the long term, given the inherent scale we have in our business and our long-term cost visibility. As we drive further revenue opportunities, we will continue to closely manage our cost structure, delivering more of every dollar of revenue to our bottom line.

Looking at the full P&L, profit for the quarter increased EUR 5 million to EUR 27 million, as our operating growth was partially offset by unrealized foreign currency losses of EUR 6 million, primarily associated with our U.S. dollar-denominated sports rights, and restructuring costs of EUR 4 million related to ongoing efficiency initiatives we outlined on our second quarter call.

Turning to the balance sheet, Sportradar remains in a very strong liquidity position, closing the quarter with EUR 190 million in cash and cash equivalents, an undrawn EUR 250 million revolving credit facility, and no debt outstanding.

In the first 9 months of the year, the company generated free cash flow of EUR 177 million, an increase of 18% from the same period a year ago. We continue to convert more of each dollar of EBITDA into free cash flow, as demonstrated by a free cash flow conversion rate of 72%.

Fourth quarter cash conversion will likely be negative, due primarily to the timing of rights payments and prediction market cash flows, but we continue to anticipate strong free cash flow growth for the full year, with free cash flow conversion above last year's rate of 56%, excluding non-routine legal payments. Cash and cash equivalents declined EUR 175 million since year-end 2025, as the strong free cash flow generation was more than offset by accelerated share repurchases.

During the quarter, we completed the previously announced $250 million enhanced open market repurchase program and continued to be active repurchasing shares under the broader $1 billion share repurchase authorization, reflecting our conviction in our business, our durable growth trajectory, and the value creation opportunities we see ahead.

Year-to-date, we have already repurchased 28 million shares for approximately $408 million, which is 24% of our free float at the beginning of the year. In the fourth quarter, 2 additional cash inflows will further strengthen our strong balance sheet. The first is a $50 million payment from IMG in relation to the acquisition that was completed a year ago.

A second $50 million IMG payment will be received in November 2027. Additionally, later this quarter, we anticipate payment of $170 million upon closing our divestiture of Atrium Sports, following regulatory approval.

As Carsten mentioned, this was a business that was not core to our future growth plans, and we will use the proceeds to support our operational, strategic, and capital allocation priorities. In terms of sizing, Atrium made up nearly all of the sports performance revenue line in our P&L, and you can assume it was operating with adjusted EBITDA margins slightly above 30% on a standalone basis.

Turning to our expectations for the remainder of the year, the second half opportunities we outlined last quarter are playing out as expected, including the continued realization of IMG synergies, the expansion of our addressable market through prediction market ecosystem, and several successful global customer renewals.

As such, we continue to anticipate constant currency revenue growth of 19% to 21%, which at current FX rates is expected to be between EUR 1.518 billion and EUR 1.533 billion reported.

We expect to drive operating leverage on this revenue growth with adjusted EBITDA growth of 24% to 27% on a constant currency basis, which at current FX rates is expected to be EUR 360 million to EUR 368 million reported. While this guidance remains unchanged, it is important to note that the 2026 outlook does not yet include any impact from the divestiture of Atrium Sports, given the uncertainty around the timing of closing.

Looking ahead, we will provide 2027 guidance on our fourth quarter earnings call. But given the current uncertainty regarding Brazil, for modeling purposes, we estimate that Brazil-related revenues are a little over EUR 60 million annually.

Overall, the investments we have made in content, technology, and product to leverage the global scale we have developed continue to deliver strong financial results. Our position and portfolio are unmatched and underpins our ability to deliver sustainable revenue growth.

IMG content is now fully integrated and delivering value across our global customer base, and prediction markets have become a meaningful new revenue stream, demonstrating our ability to monetize our core capabilities in adjacent markets.

Combined with a leaner cost structure, we are well-positioned to deliver significant margin expansion and further expand free cash flow, driving additional shareholder value in the months and years ahead.

Thank you for your time this morning, and now Carsten and I will be happy to answer any questions you may have.

Operator

[Operator Instructions] Your first question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

分析師問答

Ryan Sigdahl

Craig, I want to start with where you ended just on Brazil. I appreciate the EUR 60 million annual revenue. That's helpful context. What is assumed in the 2026 guidance for Q4 from both a cost and a revenue standpoint? Then maybe Carsten, for you on Brazil, just how you think about strategy in the country and what you guys are looking for to make potentially a bigger decision to invest more or the reverse, I guess.

Craig Felenstein

Sure. I'll start, Carsten, and then I'll turn it over to you. Ryan, thank you for the question. When you think about Brazil, for us, the EUR 60 million that we talked about as a current run rate annually for the business on the top line side, there will be some significant savings on the EBITDA side over time as we take out some additional costs, if that ultimately does not come to fruition, or ultimately the business doesn't come back to fruition.

But we should have some savings both on the office side, we should have some savings on the personnel side, and we should have some savings certainly on the sports right side. You don't see much of that yet in the fourth quarter, just given that has ultimately come through with the current situation, and we don't know ultimately how it's going to play itself out.

So the cost-out hasn't yet started, but when you look at it for a full year 2027, you'd have some significant cost-out as well. When you think about the phasing for 2026, you would assume that it's pretty much straight line throughout the 4 quarters. So if you're assuming EUR 60 million for the year, you can assume about 25% of that in the fourth quarter.

Carsten Koerl

Ryan, Carsten here. Taking on Brazil from a strategic perspective. Fact is, on 25th of September, President Lula gave the provisional measure to put sports betting on hold and wind it down. That takes now 60 days, to our knowledge, which president provisional measure takes.

Then the Congress need to decide on this, need to either accept this and make a law for it or refuse it. And in between, we understand today there is a hearing from the Supreme Court on the request of the operators to get an immediate injunction on this. So this is very much in the flow. We expect by end of the week that we have more clarity on this. We have a lot of league partners there. We have, of course, plenty of operators as our partners there, and they are serving the sport fans.

So the first thing where we want to focus on is we deeply believe that a regulated market and a regulation is necessary in a country which is doing sports betting. So we believe that this would serve the sport fans, it would serve the market, of course, and it will serve the sport.

Sport is lobbying heavily into a direction of keeping the regulation so these things will be monitored. And not at least, we have roughly around about 50 of our employees in the country, and they deserve that we are dealing responsible with this matter. We are looking now what the Supreme Court is deciding, and then we take step by step, together with our partners, the next measures. But as I said, our belief is the regulated market is the only alternative to protect the sport fans, the betters, and the interest of the leagues.

Ryan Sigdahl

We are certainly hopeful logic prevails there, but I appreciate the dynamic nature of kind of how you guys can react either way. In the spirit of getting expectations fully level set with all the moving mixed dynamics in the industry, second question would just be on MLB. Given there's an all but certain lockout that's coming, not expecting you guys to have a crystal ball to know precisely what will happen or how long it'll happen, et cetera. But can you help us talk through the puts and takes, think about that market specifically with the league, how material it is or is not for Sportradar? My hunch is it's not nearly as large or impactful to overall numbers as many fear. But any way you can help us frame that would be helpful.

Carsten Koerl

Yes. Ryan, I think Rob Manfred has the bigger crystal ball to look in the future than I have. But we would applaud if this lockout doesn't happen because it's for the sport fans and for the interested betters, of course, a much better situation if there is a regular season.

If there is not a regular season, it can be going in a lot of directions, so limited number of matches or no matches. We have contractual protections for this scenario in our existing contract framework. In Q4, we will, of course, know more and report more about this. But we have a very strong Tier 1 sport portfolio, which can replace an MLB partly lockout or complete lockout.

So the first thing is ATP with all the matches in this time. PGA, because of IMG, we have plenty of new golf content. It's the WNBA, which is fully in play at this time, and many majors in the golf and tennis world. So we think we have a good Tier 1 replacement. We believe that the betters will place bets on alternative sports, if there is no Major League Baseball content available. Having said this, we hope that the lockout will not happen and that we will see a regular season.

Operator

Your next question comes from Shaun Kelley with Bank of America.

Shaun Kelley

If somebody could give us a little color on just sort of the pros and cons of prediction markets. Obviously, 47% U.S. growth in the quarter is really strong. So wanted to see or get a sense are you already seeing some of the prediction market contribution in that number? Then just what are you seeing in the early stages of the NBA contract? Are we seeing an uplift? Because we didn't see, I think, implied Q4 revenue guidance much above what we were expecting. So wondering how that plays in maybe relative to the Brazil -- any Brazil impact you factored in for 4Q as well.

Carsten Koerl

Shaun. Carsten here. So, prediction markets in this quarter, you see the first time the impact. I think we all agree that this is a very positive impact. It took us some quarters to negotiate a complex framework with our league partners together with the operators out there. But we saw now the first quarter with a very positive impact on this.

For us, prediction market is splitted into 3 elements. Exchanges, where we mentioned we are cooperating here now with 3 of them. We extended from on the beginning single sport coverage now to the full flywheel, including marketing and the technical services. So that is a good signal. Looking to the brokers, we have now the first broker which we signed. There are more to follow. And the most interesting is the market makers. So we have now roughly 10 contracts with market makers.

This is a segment where we see much stronger growth opportunities. We developed the prediction market feed especially for the lowest possible latency. So we aggregate there the deep data from our sport partners. For example, in tennis, we get the line calls 0.2 seconds faster than anybody else, faster than the lights are flashing on the court, because of the cooperation with the official feed provided there. This is embedded then in the prediction market feed, and that can help high-speed trading algorithms with the lowest latency. There's a lot of things to be done with co-location and all those kind of things to reduce the latency of the line, but this is an element of constant developments to serve the needs of the market.

But as I said, the market makers are for us a bigger opportunity, and we are doubling and tripling down on the technology to make the lowest latency data available. These are the 3 segments, and we see that this is growing. The NBA has started in quarter 4, as you know, so it's a bit too early to say something, but the statement is very strong and very clear from the NBA commissioner that there is a strict compliance framework for the exchanges involved in there. That was always very important for our partner, NBA. We fully support this, and we are very happy that the NBA is promoting the official data as the only source to settle the markets there.

So that can be only positive, but we said in the last quarter that the numbers of the NBA uplift are already implied in our numbers, which we see for the end of the year.

Operator

Your next question comes from David Katz with Jefferies.

David Katz

Excluding the unknown, right, with Major League Baseball, if you could talk about just how you see, with all the moving parts, your business algo for 2027. Not asking for guidance, of course, but just help us with the building blocks or bridge or some sense of how you see the business, and then MLB will do what it does.

Craig Felenstein

Sure. Thank you, David. So when you think about 2027, the growth algorithm that we've been laid out here for quite some time still is very much in place. That is, we at Sportradar will be able to take advantage of market expansion, and be able to outperform that market expansion. And when you think about market expansion and what that means moving forward, it really now has 2 distinct parts. It has the expansion of the OSB market, but it also has the expansion of the prediction market ecosystem. Those 2 things are expanding our overall addressable market.

So when we think about our 2027 growth, once again, we will take our cue from the market overall growth. We will outperform the market growth by delivering high-quality products, high-quality solutions to our customers, like we've done for quite some time. And then, we'll also start to look for adjacent market opportunities, like iGaming and other areas, that can take that growth even higher. So from a revenue perspective, I'd say the story is very much intact.

At the same time, we have some nice opportunity to continue to expand margins. A significant portion of our revenue growth will fall to our bottom line. We expect to deliver significant margin expansion in 2027, and that comes with additional free cash flow generation as well. So when you layer in what we kind of laid out at our Investor Day a little over a year ago, which is steady, predictable revenue growth, margin expansion consistently, and free cash flow generation, that should continue very much into 2027.

Operator

Your next question comes from Robin Farley with UBS.

Robin Farley

I wonder if you could kind of help us think about prediction market contribution on an annualized basis. It sounds like from a lot of the agreements you highlighted that things have just been ramping up, just so we can think about what that contribution looks like today if you annualize it, knowing that there could be other agreements or other things that grow that, but just kind of where that is now.

And then also by the way, just a clarification. You reiterated your guidance today. You talked about how Brazil is going to -- you're going to lose revenue but still have the expense. So is reiterating your guidance including that Brazil loss? In other words, is it actually sort of a raise if it weren't for Brazil? Just how to think about that in your reiteration.

Craig Felenstein

Sure. So let's start with the prediction market opportunity annually. We are not going to guide to a specific piece of our business and what that looks like in 2027. What I will say is, our prediction market deals that we have struck thus far have a very mixed component to it. There are some fixed fee components to it when you think about some of the products and services that we are offering, and there are some variable components to it that will grow as those markets grow.

So the ultimate contribution from prediction markets will be determined by the number of new deals that we strike. It will be determined by the types of deals that we strike, and it will be determined by ultimately the volumes that grow in that space that we get to take advantage of. So we do expect there to be some significant growth from prediction markets next year. It is just really hard for us to quantify that specifically as an individual piece of our business.

When you think about our guidance for this year, there is a reason why we give a range with guidance, because there are a lot of ins and outs and a lot of moving parts that come with it. When you have upside on certain items, you have downside on others. And right now, we are certainly seeing some nice momentum across our business, across our Betting & Gaming business, across our Marketing & Media Services business. We are seeing some nice upside for prediction markets. But then you have this flip side, which is the Brazil reality, which is the uncertainty around Brazil. So when we give our guidance, we are factoring in some of the positives and some of the negatives related to that, and that is why we give a range ultimately over time.

Operator

Your next question comes from Barry Jonas with Truist.

Barry Jonas

Can you talk a little bit more about the Playradar launch next year? How should we be thinking about the ramp and ultimately the materiality this could bring?

Carsten Koerl

Barry, Carsten here. So we had a great SBC show in this one, together with Jason Robins and Michael Jordan on stage, promoting Playradar, and seeing how the audience likes the idea of connecting live sport content and iGaming. That's the core idea here. So we have the assets, we have the content, the video feeds, and the live data, and connecting this now with casino-style chip games to make it very quick and very quick transaction, and adding some community features like jackpot, et cetera, PP, that's the core idea.

So we got great interest. We signed up a couple of Tier 1 clients. We are ramping up on the territories from a regulatory perspective, and we're expecting quarter 1 to launch a new 24/7 channel where you see the live content and you have the betting opportunities. This is still on the startup stage, so it is not a mature business which we have here. That makes it very difficult to predict. But what we see in the amount of interest is astonishing, and we are in possession of the content which is driving this iGaming experience.

This is going all into real time, so it's the point-by-point match play in tennis. It is the free throws in basketball, very speedy, very quick opportunities, which are relating then into the iGaming. Don't expect hundreds of millions next year from this. We want to grow this deliberately and on a long-term perspective, not on the short term and quick money-making. But the ramp-up, as I explained, was great.

As a second element, we are using a lot of AI here to help our clients to get much, much quicker in creating slots and casino-style games. This is a complete agentic development studio, which is doing the design, which is doing the mathematical models, producing, for example, land-based slot machines. Our belief here in the whole thing is that it goes all away from the traditional way how you can set up the matches by yourself, choose the colors, and those things, into a fully customized solution. So the solution will be provided on the fly with a complete validation and verification from the regulator side and from the design side. This is the direction of travel. It will take a while, but we see that this has a mega opportunity, and we continue to slowly, step by step, develop the iGaming space.

Barry Jonas

That sounds great. Then just for a follow-up, some states have successfully banned prediction markets, and I guess it's possible we could see a few more before there's a potential Supreme Court ruling. Just curious how we should think about potential implications to your prediction market revenues and contracts.

Carsten Koerl

First of all, Barry, we are very happy that we have now prediction market live, and that delivers very, very strong results. In our contracts with the operators, we have the clauses in that if it is not possible to offer that content in the market, they cannot use our content for serving that specific market.

For the rest, at the moment, the markets which are excluded are not really the significant ones. So for the moment, we see that the growth is continuing and accelerating. But this is a regulated perspective. We cannot influence it, and we keep monitoring the situation. But so far, we see the impact on prediction markets not as material from the states which are excluding this.

Operator

Your next question comes from Peter Supino with Wolfe Research.

Peter Supino

I wondered, as you look into 2027, how you are thinking about the growth relative to the 2027 targets that you outlined in April of 2025. I know elements of that have been touched on this call, but thought maybe that framing might invite a different answer. I also want to just pause and comment that having Jim and Craig on this call is making this media analyst feel like I dialed into the wrong conference call.

Craig Felenstein

Thanks, Peter. I appreciate that. The 2027 targets that we laid out at our Investor Day at the start of 2025 have not changed except for one, I would say, specific factor, and that is the market growth, right? The market growth that we laid out at Investor Day, at that point, the market growth was growing well into the double digits. Today, the traditional OSB market is growing a lot less than that. Now, what you have seen replace some of that, as we talked a lot about on this call, is the prediction market opportunity, and we are just starting to scrape the bottom of that opportunity with the deals that we have struck.

So over time, we certainly expect to be able to deliver really strong growth when you factor in that the addressable market of our business has expanded between OSBs and prediction markets when you add those 2 things together. But that is the biggest variable that I would say that has changed from where we were several years ago, which is the market growth is very different than it was then.

What I would say on the cost side of the equation is the cost side is going very much as we expected, which is we do have very, very much significant leverage on the back of our sports rights as we leverage them across a variety of different ecosystems. That continues. We've been, I would say, somewhat aggressive with regards to the personnel side of the house, the operating expense side of the house, to make sure that we get exact leverage from an EBITDA perspective. We delivered 290 basis points of margin expansion last year. We're going to deliver close to 100 basis points of margin expansion this year. We expect to accelerate that next year.

So a lot of the facets of what we said at Investor Day are holding true, and at the end of the day, the free cash flow generation that we talked about this year will be ahead of where we were last year at 56%. We're getting close to that 60% that we laid out at Investor Day. So, I would say the targets that we laid out are very much in play versus where we are today versus where we were then.

Operator

Your next question comes from Jeff Stantial with Stifel.

Jeffrey Stantial

Maybe just starting off on the IMG acquisition, which we still see as fitting, just given today is the 1-year anniversary of closing that deal. Carsten and then Craig, could you just give us a little bit deeper of a postmortem update on that acquisition? Meaning, where are you pacing currently in terms of that original 25% revenue synergy target? Where could that ultimately land? And then what are some of the key opportunities that are still being executed on as you look ahead to the remainder of the year and into 2027?

Craig Felenstein

Sure. Thank you for the question, Jeff. When you look at IMG, it gets lost a little bit because of all the other noise around the space and all the other noise with the ins and outs of the company, but it really was a significant success for Sportradar. When you think about the fact -- first, when you even ignore the results of the business, but you look at the fact that we were able to secure these rights and get paid to do so, you see some of that upside from the EUR 50 million that we're going to collect this year with regards to IMG. We'll collect another EUR 50 million next year. So, we got paid to take on rights, and the ecosystem that we've built here at Sportradar allows us to take advantage of those rights significantly. And you've seen that on the revenue side.

One of the biggest things for me that I look at when I look at this business is it's now not IMG versus traditional Sportradar. We're selling this content together and ultimately driving more value for our customers, and that is ultimately what comes about. So, it's been a really strong success on the revenue side. The revenue contribution is, I would say, definitely above the 25% synergy that we laid out for you when we closed the deal. And the margin accretive nature of this content has been recognized in our results as well.

So you're seeing strong revenue synergies, you're seeing strong margin expansion, and then one of the other things that we don't talk about that much, but we've been able to do, is we've been able to be much more efficient with regards to the cash generation and collection at that business. So all of these things together have been very, very positive for the company here in 2026, and we'll be able to build on this now that we have this content as we head into 2027. So overall, a very, very positive transaction for us.

Carsten Koerl

Maybe let me add one more thing. So yes, it's the integration of the content to our 800-plus clients. That was always the thesis, that we have much more clients than IMG. We successfully managed this, but even more important, it is not only the content, it's the products which we created on top of the content: the visualizations, the Live Match Trackers, the in-play match trackers, in-play match opportunities. So these are the things which IMG has not developed, so we developed those things and we deployed it to the clients. That's high-margin products, and that's well adopted. That is in tennis, that is in golf, it's for Major League Soccer, it's for UFC fighting. So that was a lot of work, but the team executed this sensationally.

Operator

Your next question comes from Jordan Bender from Citizens.

Jordan Bender

Where are you guys in terms of signing up market makers without pipeline, and as time has kind of moved on, are market makers asking for different types or quality of data? Then I have a follow-up.

Carsten Koerl

Absolutely, Jordan. So we have now around about 10 market makers. Of course, in the first wave, we focused on the big ones. The model is the same, so there is a minimum, and then there's a revenue share component. Some of the deals are a bit different structured here, but these are the 2 components. There are well over 300 market makers, probably even a bit more, depending on what exchanges we are looking to. And this ranges from big teams to very, very small 5 to 10 people teams around the world.

They all have one thing in common. It is ultra-low latency feeds. With the technology, which I said before, our prediction market feed is exactly targeting this. We are enriching it already with deep data from our official league partnerships to get even more reliable and faster information into those feeds. We are speaking here also about server co-location and the latency reductions in the lines. This is exactly what the market makers are really looking for.

From an algorithm perspective, the next development is that, for example, our foundation model, which we did for the NBA, where we try to predict on very complex math, what is the next 5 seconds doing? We have that with CNBC and the Peacock feed in there. This helps us to predict now with a high accuracy the next couple of seconds. So that is the next wave of innovation, which goes then into this prediction market feed. What it should do, it should help the market makers to get a little bit an edge, same like you know it from the financial markets.

So this is one of the areas where AI is put in place from a development perspective, and where we will see very strong iterations here. As I said before, we see this as a real big market opportunity for us.

Jordan Bender

And on my follow-up, Craig, this might be a better question for offline, but I will try it here anyways. If I take the midpoint of the EBITDA guidance, I assume free cash flow conversion negative in the fourth quarter, add back a couple million of the litigation expenses, I have free cash flow conversion still down year-over-year in the updated guidance. You said you are expecting to grow that over 2025. Can you just help us with the bridge or what I am missing in that calculation?

Craig Felenstein

Yes, we can get into the details after the call. My guess is you are underestimating the potential legal expense or the legal expense that we paid earlier in the year related to a settlement, which obviously has cash implications, but does not have EBITDA implications. But we will take that one offline to make sure. But when you factor that out, we do expect free cash flow conversion to be up year-on-year versus 2025. So we will walk you through it.

Operator

Your next question comes from Michael Hickey with StoneX.

Michael Hickey

Carsten, Craig, Jim. Great quarter, guys, and congrats on getting the NBA deal done. That's awesome. It was great news that day.

Just 2 questions from us. The first question on Managed Betting Services, a little pressure in the quarter. I guess just looking beyond unfavorable sports results that had an impact, how healthy overall do you see the demand for Managed Trading Services? And then sort of your thinking on the opportunity on prediction market platforms for a similar service. And then I have a second question.

Craig Felenstein

Sure. Let me talk a little bit about the impact of the sports outcomes, and then Carsten, you can talk a little more about the MTS business from your perspective.

Listen, I think that the reality of our MTS business is that it's operationally doing very, very well. When you look at it from a turnover perspective in the third quarter, you had significant double-digit turnover growth as we continue to see more volume from existing customers, as we add new customers. We did get a nice pop from a turnover perspective with the World Cup, about $2.5 billion of additional turnover. So really nice growth on the turnover side of the house. The sports outcomes just didn't work in our favor, and as a result, that's why you see the down results in the quarter.

If you had actually had the same trading margin a year ago -- sorry, this year that you would have had a year ago, you would have seen double-digit revenue growth at MTS this quarter. So very much an outcome-driven result here for the quarter, but the momentum across the business remains very, very strong.

So I will turn it over to Carsten for anything else he wants to add.

Carsten Koerl

Well, we spoke a lot about prediction markets already. It is something where -- what we see at the moment is the first quarter where we see a positive impact. As I said, the exchanges, we have now a working model with all of them. We are in the very early innings with the market makers and the brokers.

From a technology perspective, it goes all into the low latency and real time, and the biggest opportunity for sure is here with the market makers. I think one thing strategically what is important to note is both the CFTC and the leagues very clearly said that official data must be the data for the raw material for the models, but also for the settlement and for the integrity requirements. We have 3 of the top 4 leagues. All the 3 leagues which we have, they gave a clearing for prediction markets. So that gives us the confidence for 2027 that the growth which we see now is continuing.

Michael Hickey

Nice. On the second question, topic Marketing & Media, looked like you got some pretty good revenue growth in the quarter, about 15%, so it was a strong double-digit. What is driving the stronger marketing demand, and do you expect it to continue here and into 2027?

Carsten Koerl

Well, what we saw in the last quarter is a strong demand for the World Cup. Of course, this is also connected now to prediction markets. As we know, there is a furious fight out there for clients, so there is a lot of money in the market, which is looking for, from an acquisition perspective, to do the acquisition of the future better. That is very helpful for programmatic advertising. We build it here, an engine by ourself with all the elements there, and we show strong performance in this area. So we see this growing. As prediction markets are growing, we see more competition in there. So that's definitely one of the business areas where we have hopes that we can do significant more in '27.

James Bombassei

Operator, we have time for one more question.

Operator

Your final question comes from Chad Beynon with Macquarie Capital.

Chad Beynon

Just in terms of the share repurchase, this is the second quarter in a row at these elevated levels, $300 million between Q2 and Q3. As we think about the incoming cash from Atrium, the current liquidity that you have on the balance sheet, Craig, how are you guys thinking about repurchases in the near term and beyond?

Craig Felenstein

Sure. Thanks, Chad, for the question. When we think about capital allocation for our business, our thought process really hasn't wavered, even as the stock price has, which is the reality of our cash usage is ideally we want to put it to work in our business to create additional long-term value opportunities for the company.

So investing in the core assets of the business, investing in new opportunities like Playradar. We also certainly will look at M&A opportunities to see what can create additional long-term opportunities. The challenge with finding M&A opportunities that are better than your core business it's hard to find those that are growing faster than the revenue growth we're delivering, the margins that we're delivering, and the cash flow that we're delivering.

So the strength of our balance sheet allows us to continue to be active with regards to the buyback program, even as we do the other things, which is invest in our business and look at M&A. And given where the share price is today and given the long-term value that we believe we're creating as a company, we do believe that there are significant opportunities to continue to repurchase shares.

But we will always weigh those 3 things together when looking at the best uses of our capital moving forward. We did complete the $250 million enhanced share repurchase program in the start of September, and now we continue to buy under our new plan, which is a new grid, as we look to take advantage of the dislocation between the value we're creating and the share price. And we'll continue to evaluate that as we move forward.

James Bombassei

We want to thank everyone for joining us for our Q3 call, and I will turn it back to the operator.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.