Sportradar Group

Executive Summary & Investment Thesis

We initiate coverage of Sportradar Group (SRAD) with a BUY rating and a 12-month target price of $19, ~41% above the current ~$13.50. Sportradar is the leading global B2B sports-technology company — the dominant supplier of official sports data, odds, live streaming, and integrity services to bookmakers, media, and leagues worldwide. It is, in effect, the infrastructure toll booth on the global betting industry: it monetizes rising betting volumes across every major operator without taking any betting risk itself. After a sharp de-rating on near-term noise, we see a structurally advantaged, FCF-inflecting compounder trading at an undemanding multiple.

FY2025 was a standout: revenue rose 17% to €1.29bn, adjusted EBITDA jumped 33% to €297m (margin expanding toward ~23%, with Q4 at a record 29%), profit nearly tripled to ~€100m, and free cash flow more than doubled. The November 2025 acquisition of IMG Arena from Endeavor strengthened an already-dominant rights portfolio. Yet the shares fell after a Q1 2026 print pressured by FX and adverse sport outcomes, plus a short-seller report alleging illegal-market exposure (which management rebutted). The disconnect between a de-rated stock and an accelerating fundamental story — underscored by the founder-CEO’s open-market buying and a $1bn buyback — is the opportunity.

Core Thesis — Why The Market Is Mispricing SRAD

Key Catalysts (Next 12 Months)

• ▸FY2026 guidance delivery: Continued mid-teens revenue growth with margin expansion and ongoing buybacks — proof the FY25 inflection is structural, not a one-off.
• ▸IMG Arena integration & synergies: Evidence of margin accretion and cross-sell from the acquired rights would validate the deal thesis.
• ▸Prediction-markets tailwind: As Kalshi/Polymarket scale regulated sports event-contracts, demand for Sportradar’s data, odds, and integrity services could open a new high-growth client vertical.
• ▸Short-thesis resolution: Continued rebuttal/clarity on the illegal-market allegations removes an overhang weighing on the multiple.
• ▸Capital returns: Execution of the expanded $1bn buyback (a large fraction of the float) is highly accretive at the current depressed valuation.

Valuation Summary

Our $19 target blends a DCF (anchored on accelerating free cash flow, WACC ~10.5%, terminal growth ~4%) with an EV/EBITDA cross-check. SRAD trades at ~10–11x 2026E EV/adjusted EBITDA — modest for a net-cash, ~mid-teens-growth, high-retention (114–127% NRR) infrastructure business with expanding margins. Sell-side consensus is materially higher (average ~$30, “Strong Buy”); we set $19 conservatively to reflect FX volatility, sport-outcome variance, and the unresolved short thesis, while still capturing substantial upside from a depressed base.

Company Overview & Business Model

Founded in 2001 and led since by founder-CEO Carsten Koerl, Sportradar is a Switzerland-based (St. Gallen) global sports-technology company and the leading B2B provider to the sports-betting and media industries. It collects, processes, and distributes official sports data, betting odds, live streaming, integrity (fraud-detection) services, and marketing solutions to bookmakers, media companies, and sports leagues across 100+ countries. It reports in two principal segments: Betting Technology & Solutions and Sports Content, Technology & Services.

Business & Revenue Segmentation (FY2025)

How Sportradar Makes Money

• ▸Data & odds feeds: Recurring, often volume- or revenue-share-linked contracts supplying official data and pricing to bookmakers — the core, high-retention engine.
• ▸Live streaming & managed trading: Audiovisual content and outsourced risk/trading for operators — deepens the relationship and raises switching costs.
• ▸Integrity & league services: Fraud-detection and data services sold to leagues — sticky, reputation-critical, relationship-broadening.
• ▸Cost centers: Sport-rights costs (the largest and rising line — ATP, MLB, NBA, plus IMG Arena content), personnel, technology/AI, and purchased services. Rights inflation is the key margin variable.

Competitive Moat — Porter’s Five Forces

Moat verdict: Sportradar’s moat is exclusive official rights (multi-year league contracts that are expensive and hard to dislodge), scale economies across a global client base, high switching costs (operators embed its feeds into live products), and a data/integrity network few can match. We assess the moat as wide and widening (reinforced by IMG Arena). The chief structural tension is the rising cost of sport rights — a recurring squeeze on margins that scale and product mix must continually offset.

Industry Analysis & Competitive Landscape

Market Dynamics & TAM

The global online sports-betting market (~$50bn 2026, ~13% CAGR to ~$92bn by 2031) is Sportradar’s demand driver: every legal operator needs official data, odds, and content, and Sportradar takes a recurring cut of that growth without betting risk. As US legalization deepens and live/in-play betting (data-intensive by nature) grows, the B2B data layer benefits disproportionately. An emerging tailwind is prediction markets: as Kalshi and Polymarket scale regulated sports event-contracts, they too need accurate, low-latency data, pricing, and integrity services — a potential new client vertical for the infrastructure layer.

Peer Benchmarking

Competitive Positioning — The Picks-and-Shovels Advantage

Sportradar’s structural appeal is that it wins regardless of which operator wins. In a US market where FanDuel and DraftKings battle for share at high marketing cost, Sportradar supplies them both — capturing industry growth at lower risk and with higher retention than any single operator. Against direct rival Genius Sports, Sportradar leads on scale and breadth of rights (reinforced by IMG Arena), though rights competition keeps both honest. The model’s net-cash balance sheet and recurring, high-retention revenue make it one of the highest-quality business models across the entire betting value chain — the ‘toll booth’ rather than the toll-payer.

Financial Analysis & Historical Performance

Sportradar’s financials show the signature of a high-quality infrastructure compounder: durable mid-to-high-teens revenue growth, expanding margins (operating leverage), strong and accelerating free cash flow, very high customer retention, and a net-cash balance sheet. FY2025 crystallized the inflection — adjusted EBITDA +33% on revenue +17% (margin expansion), profit nearly tripling to ~€100m, and free cash flow more than doubling.

• ▸Operating leverage: Clear and compounding — adj. EBITDA consistently grows faster than revenue as fixed tech/data infrastructure scales; Q4 2025 margin hit a record 29%.
• ▸Free cash flow: Accelerating (FY24 FCF +133% to €118m; FY25 more than doubled again) — the validation that reported profitability converts to cash.
• ▸Capital allocation: Net-cash balance sheet funding both M&A (IMG Arena) and large buybacks — the repurchase plan was expanded from $200m to $300m to $1bn, highly accretive at the depressed price.
• ▸Retention & pricing power: Net retention above 100% (114–127%) means existing customers spend more each year — the clearest evidence of the moat and pricing power.

Financial Forecast & Outlook (FY2026–FY2029E)

We model continued mid-teens revenue growth decelerating gently as the base scales, with steady margin expansion as operating leverage and IMG Arena accretion outpace sport-rights inflation. These illustrative figures assume disciplined rights spending and continued high retention; they are scenario framing consistent with management’s margin-expansion guidance, not company guidance.

Key Financial Driver Assumptions

Narrative Justification

• ▸Operating leverage drives margins higher: fixed data/tech infrastructure means incremental revenue carries high contribution; we model adj. EBITDA margin rising from ~23% toward ~30%+.
• ▸Sport-rights inflation is the key offset: ATP/MLB/NBA and IMG content costs pressure margins near-term; the thesis assumes scale and product mix progressively outpace rights inflation.
• ▸IMG Arena is accretive: immediately margin-accretive premium rights add growth and cross-sell in the most-bet-upon sports.
• ▸FCF conversion improves: as rights-payment timing normalizes and EBITDA scales, FCF conversion rises — funding buybacks and optional M&A.
• ▸Prediction-markets optionality: not in the base case — a scaling regulated event-contract industry would be incremental demand for data/odds/integrity services.

Valuation Analysis

A. Discounted Cash Flow (Primary)

DCF output: Discounting accelerating free cash flow at ~10.5% WACC with a ~4% terminal growth rate — appropriate for a high-retention infrastructure compounder — yields an equity value of roughly $18–20 per share, aided by the net-cash balance sheet (no debt drag on equity value). The model is most sensitive to the terminal margin and sport-rights cost assumptions.

B. Relative Valuation

On EV/EBITDA, SRAD trades at ~10–11x 2026E — a discount to its mid-teens growth, ~30%+ retention-driven quality, and to adjacent infrastructure peers (Genius Sports, Evolution) that command higher multiples for similar or lower growth. Applying a still-reasonable ~13–14x to 2027E adjusted EBITDA (~€460m) implies an EV around €6bn and, with net cash, equity value comfortably above the current price — supporting our target.

C. Valuation Conclusion

Target Price: $19 (~41% upside). DCF ≈ $18–20; EV/EBITDA cross-check ≈ $19–21. We set $19 deliberately below sell-side consensus (avg ~$30, ‘Strong Buy’) to reflect FX volatility, sport-outcome variance, and the unresolved short thesis — while still capturing substantial upside. The founder-CEO’s open-market buying near $13.40 and the $1bn buyback corroborate that the current price undervalues the business.

Investment Risks & Scenario Analysis

Key Bear Risks

• ▸1. Sport-rights cost inflation: Rising costs for premium rights (ATP, MLB, NBA, IMG content) are the chief structural margin pressure; if rights inflation outpaces scale benefits, the modeled margin expansion stalls — the core risk to the thesis.
• ▸2. Short-seller thesis & reputational risk: A bear report alleged Sportradar facilitates illegal markets; management rebutted it, but unresolved scrutiny (and any regulatory follow-through) is an overhang on the multiple and a genuine tail risk for a data/integrity provider whose reputation is its product.
• ▸3. FX, sport-outcome variance & customer concentration: EUR-reporting / USD-listed FX swings and revenue-share exposure to sport outcomes drive quarterly volatility (the Q1 2026 miss); operator consolidation or in-housing of data/trading could pressure pricing over time.

Additional risks: competition from Genius Sports on rights; the dual-class / founder-controlled governance structure (Koerl’s concentrated control); integration risk on IMG Arena; and dependence on continued legal-market expansion. Note that the same prediction-markets growth that offers upside could, if it diverts betting volume in disruptive ways, reshape operator demand.

Scenario Analysis

The risk-reward is favorably skewed from a de-rated base. The base case (~$19) assumes mid-teens growth with steady margin expansion and buyback execution; the bull case (~$28) adds prediction-markets demand, faster margin gains, and a re-rating to infrastructure-peer multiples; the bear case (~$11) reflects rights-cost squeeze, persistent FX/outcome volatility, and a short-thesis overhang, but sits not far below the current price — where the founder has been buying — bounding downside relative to the upside if the FCF inflection continues.

IMPORTANT DISCLOSURES. This report is a model/illustrative equity research document prepared for analytical and educational purposes. It is not investment advice, a recommendation, or an offer to buy or sell any security. The author is not a registered investment adviser or broker-dealer.

DATA & ESTIMATES. Figures from Sportradar FY2025 results (revenue €1,290m +17%; adjusted EBITDA €297m +33%, margin ~23%, Q4 record 29%; profit ~€100m +~194%; FCF more than doubled; customer net retention 114–127%; net-cash balance sheet; IMG Arena acquired from Endeavor Nov 2025; share buyback expanded to $1bn) with analyst-style estimates that are inherently uncertain. Founder-CEO Carsten Koerl made open-market Class A share purchases (~500k+ shares, ~$6m+) in early May 2026 near $13.40; he owns ~3% directly. Sell-side consensus average target ~$30 (“Strong Buy”); Morgan Stanley cut its target to $16 from $25 (May 2026). Forward projections, DCF, multiples, and target prices are the author’s estimates and may differ materially. Sportradar reports in EUR and lists on Nasdaq in USD; conversions fluctuate. Price ~$13.50 / market cap ~$4bn referenced around late May / early June 2026; these move daily.

FORWARD-LOOKING STATEMENTS are subject to risks including sport-rights cost inflation, FX volatility, sport-outcome variance, competition (Genius Sports), customer in-housing/concentration, founder-controlled governance, IMG Arena integration, the unresolved short-seller allegations, and regulatory conditions. A short-seller report alleged illegal-market exposure; management has rebutted it, but the matter remains a consideration. Past performance does not indicate future results. Independently verify all figures against primary sources (Sportradar SEC/investor filings) before any decision.