Sportradar (SRAD) Q2 FY26 earnings call: guidance and Q&A

Can you dissect the guidance revision, including puts and takes for the back half of the year, and discuss catalysts for 2027?

The guidance revision was primarily due to prediction market deals taking longer to finalize than expected, delaying revenue, and the advertising market recovery not fully offsetting the Q1 shortfall. Softness in the U.S. market also contributed. For 2027, fundamentals remain strong, with expectations for continued outperformance, margin expansion, and free cash flow generation.

“The challenge is, is that the prediction market deals having got some time to come to completion. So just because we were ready for them to go at the end of the first quarter call, the reality is it took a little while for that to happen.”

asked by Eric Handler · answered by Craig Felenstein

Could you elaborate on U.S. market trends, specifically if deceleration occurred through Q2 and the World Cup's impact? Also, what are the expectations for Playradar uptake in H2?

U.S. market trends were relatively flat in Q2, with no significant acceleration expected for the rest of the year, though slight improvement is needed for guidance. The World Cup generated $2.5 billion in turnover and 350 million tickets, with the Q3 final being record-breaking. Playradar is in its early stages, launching in late September, aiming to connect live sports with iGaming to significantly increase player lifetime value.

“Well, the product is on a very early stage of its life cycle, but we will present end of September in Lisbon at the SBC when, by the way, together with Michael Jordan on stage, Playradar, and we will launch this in a bigger style.”

asked by Chad Beynon · answered by Carsten Koerl

Given the high decremental leverage and slowing growth, does the company's strategy for long-term fixed-cost rights deals change, perhaps by shortening renewals to match industry volumes?

The strategy for rights deals remains unchanged. Sportradar maintains a strong mix of content and is margin-positive on its Tier 1 rights. The expanding addressable market, including prediction markets, leverages existing rights. Deals are executed with discipline, ensuring they contribute to target margins, and delays in prediction market deals were partly due to league partners.

“I don't think our strategy is changing here at all. The reality is we have a really nice mix of content that we have strong partnerships with major Tier 1 sports leagues.”

asked by Ryan Sigdahl · answered by Craig Felenstein

Can you explain the economics or deal structure with Polymarket (fixed, variable, or combination) and if it serves as a template for future prediction market agreements?

Prediction market deals, including Polymarket, typically have both fixed and variable fee components to capture upside as the market expands. Each deal is unique and tailored to the specific needs of the exchange, market maker, or broker. These robust deals cover data, odds, fan engagement, and marketing services, and are designed to be accretive compared to historical OSB deals.

“you can assume that the deals that we're doing with the prediction markets, especially the ones that we've done thus far, have a fixed fee component and a variable fee component, which allows us to capture the upside as the market expands.”

asked by Joe (on behalf of Clark Lampen) · answered by Craig Felenstein

Does the delay in prediction market deals imply a bigger benefit for 2027 and 2028, and how does this layer into the Investor Day guideposts?

The delay in 2026 means a ramp-up in prediction market revenue is expected for 2027 and 2028, with 2026 being focused on negotiations and securing league support. The company is optimistic about the framework established, particularly for market makers needing low latency and deep data. The overall opportunity for prediction markets is seen as very exciting, building on the Investor Day tenets of content, product, and services to outperform the market.

“Of course, it implies that '27 and '28, we will see a ramp-up here. It was for us in '26, a lot of work to negotiate the deals, but also to convince our league partners that they're going into this.”

asked by Zach (on behalf of Trey Bowers) · answered by Carsten Koerl

Does the back half guidance assume U.S. market trends improve, and are there opportunities to shift contract economics from handle to GGR/NGR for renewals?

While the guidance assumes a slight improvement in the U.S. market, there's variability from prediction market expansion or GGR growth that could also contribute. The company does not foresee a significant change in contract structure, as the long-term variable component is considered positive. Many contracts are already long-term, making short-term changes difficult.

“I don't think we're looking for anything significant to change in the U.S. market. Yes, we're assuming that the market does get a little bit better in the U.S., but there's a variety of variability that can happen...”

asked by Jeffrey Stantial · answered by Craig Felenstein

Beyond selling data/models, could Sportradar directly participate in market making for prediction markets, similar to its MTS business?

Market making is a significant opportunity. Sportradar's focus is on providing lowest latency feeds (e.g., U.S. Open tracking, NBA) and deep data for modeling (e.g., foundation model predicting events in 3-6 seconds) to market makers. These technical abilities and league partnerships with deep data are highly valuable for market makers to optimize their risk spread.

“So you are spot on with these opportunities. At the moment, we do not monetize really significant with market makers. What they first need is latency, lowest latency.”

asked by Michael Hickey · answered by Carsten Koerl