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Filed pursuant to 424(b)(4)
Registration No. 333-258882

PROSPECTUS

 

 

 

LOGO

SPORTRADAR GROUP AG

 

   
19,000,000 CLASS A ORDINARY SHARES   $27.00 PER SHARE

This is the initial public offering of our Class A ordinary shares. We are selling 19,000,000 of our Class A ordinary shares in this offering. The initial public offering price is $27.00 per share of our Class A ordinary shares.

We will have two classes of ordinary shares outstanding after this offering: Class A ordinary shares and Class B ordinary shares. The rights of the holders of Class A ordinary shares and Class B ordinary shares are identical, except for their nominal value. Each share of Class A and Class B ordinary shares is entitled to one vote per share. As the nominal value of Class B ordinary shares is ten times lower than the nominal value of Class A ordinary shares, Class B shareholders have ten times more voting power with the same amount of capital invested as Class A shareholders on all matters, except for certain reserved matters under Swiss law. Following the completion of this offering, Carsten Koerl, our founder (“Founder”), Chief Executive Officer and a member of our board of directors, will be the only holder of our Class B ordinary shares, and will hold approximately 81.79% of the voting power of our outstanding share capital; assuming no exercise by the underwriters of their option to purchase additional shares of Class A ordinary shares. As a result, our Founder, through his ownership of our Class B ordinary shares, will be able to significantly influence certain actions requiring the approval of our shareholders. See “Description of Share Capital and Articles of Association.”

The underwriters may also exercise their option to purchase up to 2,850,000 additional Class A ordinary shares from one of our existing shareholders (the “Selling Shareholder”) at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus. We will not receive any proceeds from the sale of Class A ordinary shares by the Selling Shareholder.

We have been approved to list our Class A ordinary shares on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “SRAD.”

We are both an “emerging growth company” and a “foreign private issuer” under applicable U.S. Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements. See “Prospectus Summary—Implications of Being an ‘Emerging Growth Company’ and a ‘Foreign Private Issuer.’”

In concurrent private placements, entities affiliated with Eldridge (“Eldridge”), entities affiliated with Radcliff Management LLC and certain other investors have agreed, subject to certain regulatory conditions, to purchase Class A ordinary shares at a price per Class A ordinary share equal to the initial public offering price in return for the aggregate sum of $164.0 million. Based upon the initial public offering price of $27.00 per Class A ordinary share, the investors in the concurrent private placements will purchase 6,074,074 Class A ordinary shares. Our agreements with Eldridge, entities affiliated with Radcliff Management LLC and certain other investors are contingent upon, and are scheduled to close immediately subsequent to, the closing of this offering as well as the satisfaction of certain conditions to closing as further described in “Concurrent Private Placements.”

 

 

INVESTING IN OUR CLASS A ORDINARY SHARES INVOLVES RISKS. SEE “RISK FACTORS” BEGINNING ON PAGE 27.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

 

    PER SHARE      TOTAL  

Initial Public Offering Price

  $ 27.00      $ 513,000,000  

Underwriting Discount(1)

  $ 1.64      $ 31,100,625  

Proceeds to us (before expenses)

  $ 25.36      $ 481,899,375  

 

 

(1) We refer you to “Underwriting” for additional information regarding underwriting compensation.

 

 

The underwriters expect to deliver the shares to purchasers on or about September 16, 2021 through the book-entry facilities of The Depository Trust Company.

 

 

(listed in alphabetical order)

JOINT BOOK-RUNNING MANAGERS

 

J.P. MORGAN   MORGAN STANLEY

 

CITIGROUP   UBS INVESTMENT BANK

 

BofA SECURITIES   DEUTSCHE BANK SECURITIES   JEFFERIES    CANACCORD GENUITY
CO-MANAGERS  
NEEDHAM & COMPANY   BENCHMARK COMPANY   CRAIG-HALLUM

 

SIEBERT WILLIAMS SHANK

  TELSEY ADVISORY GROUP

Prospectus dated September 13, 2021


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TABLE OF CONTENTS

 

Presentation of financial and other information

     iv  

Prospectus summary

     1  

Risk factors

     27  

Cautionary statement regarding forward-looking statements

     71  

Market and industry data

     73  

Use of proceeds

     74  

Dividend policy

     75  

Capitalization

     76  

Dilution

     78  

Selected consolidated financial data

     80  

Management’s discussion and analysis of financial condition and results of operations

     82  

Business

     108  

Regulation and Licensing

     146  

Management

     163  

Principal and selling shareholders

     178  

Related party transactions

     181  

Description of share capital and articles of association

     183  

Comparison of Swiss law and Delaware law

     194  

Description of indebtedness

     206  

Shares eligible for future sale

     209  

Material tax considerations

     212  

Underwriting

     221  

Expenses of the offering

     232  

Legal matters

     233  

Experts

     233  

Enforceability of civil liabilities

     234  

Where you can find more information

     236  

Index to consolidated financial statements

     F-1  

 

 

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our Class A ordinary shares and the distribution of this prospectus outside the United States.

We are a stock corporation organized under the laws of Switzerland, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission (the “SEC”), we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We are responsible for the information contained in this prospectus. Neither we, the Selling Shareholder nor the underwriters have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared, and neither we, the Selling Shareholder nor the underwriters take responsibility for, and can provide no assurance as to the reliability of, any other information others may give you. We, the Selling Shareholder and the underwriters are not making an offer to sell, or seeking offers to buy, these securities in any jurisdiction where the offer or sale is not permitted.

You should not assume that the information contained in this prospectus is accurate as of any date other than its date, regardless of the time of delivery of this prospectus or of any sale of the Class A ordinary shares.

 

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Letter from Carsten Koerl

Founder and Chief Executive Officer

It is a privilege to share our story with you. Sportradar means everything to me. This incredibly special company is the manifestation of over 20 years of learning, building, innovating, serving customers, and pushing the boundaries. I am so proud of this pioneering company and the team that has gotten us to this point.

Sportradar was born out of a combination of my passion for sports and engineering. I have been in the digital and sports betting industry my entire career. I founded Sportradar in 2001 when online sports betting was in its infancy. Since that time, we have evolved as a company and have defined the B2B sports data and technology industry. Twenty years later, we sit on the precipice of significant change. The pace of innovation is compounding, all driven by technology and data. We have a unique opportunity ahead of us to re-define what it means to be a sports fan.

For me, sport is all about competition and positive challenges, driven by the spirit of fairness and surrounded by positive emotion. There is nothing better than watching two tennis players or basketball teams battle it out on the court for hours. I have always been an active sportsman and continue to thrive on any opportunity to race to the top of the mountain or face-off on the other side of the net. I have built my entire professional career around that same spirit of competition. It is fuel for creativity, teamwork, and continuous improvement. My team and I bring the passion that we have for sports to Sportradar, every day.

Sport is also all about data and, increasingly, leveraging cutting edge technology to store and process the exponentially growing amount of sports data. As an engineer by training, I value every shot, serve, and touchdown as a data point to test new hypotheses and create new learnings. The marriage of sports and data led me to sports betting. In 1995, I co-founded Betandwin (later known as Bwin), an online sports betting platform. While building that business, I saw first-hand the inefficiencies that riddled sports data and the lack of quality engineering infrastructure supporting the industry. Sports betting requires accuracy in predictions and data interpretation with mathematical models. I started Sportradar as a passion project after parting ways with Bwin. While Sportradar was initially built in a world where betting operators were simply looking for accurate data, comparison and match schedules on their sites, we have taught them to expect so much more.

Data and technology have never been more valuable to the sports and entertainment ecosystem. We’re grateful to all of our customers who choose Sportradar to power their offerings. We’re humbled to play a part in helping them grow and are committed to innovating alongside them. We are also honored to partner with some of the biggest sports leagues around the world to help them understand and harness the power of their own data. Since the founding of our business we have always cared deeply about the integrity and fairness of competition. We partner with leagues and sports around the world to advance our vision of fair and transparent competition. Our latest innovation in this sector is a revolutionizing analytical system to support anti-doping agencies globally.

Sitting here today, I see numerous opportunities for growth, especially as new sports betting markets such as the U.S. accelerate and our customers turn to us for new products and continued innovation. We are living in a transformational time. At Sportradar we are focused on constantly improving our company and its services. Machine learning and artificial intelligence, in particular, will help us to get brand new insights around team and player performance. Cloud computing gives us the GPU power, combined with low latency connections to all our clients around the world, to serve the next generation of analytical and entertainment products.

We put sport fans at the center of our thinking. The future digital sport fan wants to have much deeper, faster and condensed information about his or her favorite team and player. This all must be driven by an intelligent back-end system, which optimizes for the nuances of sport and the personalized digital experiences that sport fans demand. Sports betting is an important part of this; but, the opportunity is much bigger, as the whole digital sport ecosystem is on the verge of a digital transformation. The global pandemic accelerated this transformation. The digital sport fan today needs customized information, streams and visualizations. Teams and players need

 

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deeper insights to optimize their performance. Sportradar is the back-end technology for all of this across sports, media and betting. By leveraging our sports analytics expertise, rich datasets, artificial intelligence and machine learning capabilities, global network, and connections to sports leagues around the world, we believe that we will shape the future of sports.

We are excited about what’s ahead! We thank you for considering an investment in Sportradar. I hope that you’ll join us as an investor in the next phase of our journey as a public company.

Carsten

 

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Consolidated Financial Statements

We report under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). We maintain our financial books and records and publish our consolidated financial statements in Euros, which is our functional and reporting currency.

Following this offering, Sportradar Holding AG will be the predecessor of Sportradar Group AG for financial reporting purposes. Immediately following the reorganization transactions described under “Prospectus Summary—The Reorganization Transactions,” Sportradar Group AG will be a publicly listed holding company and its sole material asset will be its direct and indirect equity interest in Sportradar Holding AG. As the sole direct or indirect holder of equity in Sportradar Holding AG, Sportradar Group AG will operate the business and control the strategic decisions and day-to-day operations of Sportradar Holding AG. As a result, we will consolidate the financial results of Sportradar Holding AG.

This prospectus contains our Sportradar Holding AG audited consolidated financial statements as of December 31, 2020 and 2019, and for each of the years in the two-year period ended December 31, 2020, which were each approved by our board of directors on April 15, 2021 and February 18, 2021, respectively, for purposes of inclusion in this prospectus. This prospectus also contains our Sportradar Holding AG unaudited interim condensed consolidated financial statements as of June 30, 2021 and for each of the six month periods ended June 30, 2021 and 2020. In addition, given the planned reorganization expected to take place subsequent to this offering, this prospectus also contains our Sportradar Group AG audited financial information as of June 24, 2021 (date of incorporation of the entity).

Our financial information is presented in Euros. For the convenience of the reader, in this prospectus, unless otherwise indicated, translations from Euros into U.S. dollars were made at the rate of €1.00 to $1.18, which was the noon buying rate of the Federal Reserve Bank of New York on June 30, 2021. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of Euros at the dates indicated. All references in this prospectus to “$” mean U.S. dollars, all references to “€” mean Euros and all references to “CHF” mean Swiss Francs.

Certain figures included in this prospectus and in our financial statements contained herein have been rounded for ease of presentation. Percentage and variance figures included in this prospectus have in some cases been calculated on the basis of such figures prior to rounding. For this reason, certain percentage and variance amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in this prospectus and in the consolidated financial statements contained herein. Additionally, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Key Financial and Operational Performance Indicators

Throughout this prospectus, we provide a number of key financial and operational performance indicators used by our management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Operational Performance Indicators.” We define certain terms used in this prospectus as follows:

 

   

“Adjusted EBITDA” represents earnings before interest, tax, depreciation and amortization, adjusted for impairment of intangible assets and financial assets, loss from loss of control of subsidiary, foreign exchange gains/losses, other finance income/costs and amortization of sports rights. Adjusted EBITDA is a non-IFRS measure and a reconciliation to profit for the year, its most directly comparable IFRS measure, is included in “Prospectus Summary—Summary Consolidated Financial and Other Data” together with an explanation of why we consider Adjusted EBITDA useful.

 

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“Adjusted EBITDA margin” is the ratio of Adjusted EBITDA to revenue. See “Prospectus Summary—Summary Consolidated Financial and Other Data” for the explanation of why we consider the ratio of Adjusted EBITDA to revenue useful in evaluating our operating performance. The most directly comparable IFRS measure to Adjusted EBITDA margin is profit for the year as a percentage of revenue.

 

   

“Adjusted Free Cash Flow” represents net cash from operating activities adjusted for payments for lease liabilities, acquisition of property and equipment, acquisition of intangible assets (excluding certain intangible assets required to further support an acquired business). Adjusted Free Cash Flow is a non-IFRS measure and a reconciliation to net cash from operating activities, its most directly comparable IFRS measure, is included in “Prospectus Summary—Summary Consolidated Financial and Other Data” together with an explanation of why we consider Adjusted Free Cash Flow useful.

 

   

“Cash Flow Conversion” is the ratio of Adjusted Free Cash Flow to Adjusted EBITDA. See “Prospectus Summary—Summary Consolidated Financial and Other Data” for the explanation of why we consider the ratio of Adjusted Free Cash Flow to Adjusted EBITDA useful in evaluating our operating performance. The most directly comparable IFRS measure to Cash Flow Conversion is net cash from operating activities as a percentage of profit for the year.

 

   

“Dollar-Based Net Retention Rate” is calculated for a given period by starting with the reported annual revenue, which includes both subscription-based and revenue sharing revenue, from our top 200 customers as of twelve months prior to such period end, or Prior Period revenue. We then calculate the reported annual revenue from the same customer cohort as of the current period end, or Current Period revenue. Current Period revenue includes any upsells and is net of contraction and attrition over the trailing twelve months, but excludes revenue from new customers in the current period. We then divide the total Current Period revenue by the total Prior Period revenue to arrive at our Dollar-Based Net Retention Rate.

Market and Industry Data

We obtained the industry, market and competitive position data in this prospectus from publicly available information, industry and general publications and research, surveys and studies conducted by third parties. In addition, certain statistics, data and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to our business and markets in this prospectus are not based on published data obtained from independent third parties or extrapolations therefrom, but rather are based upon our own internal estimates and research, which are in turn based upon multiple third party sources, including PricewaterhouseCoopers (“PwC”)’s 2021 Sports Outlook for North America report, Consumer intelligence series, Sports Survey 2019 and Sports Survey 2020 (collectively, “PwC Reports”), N.J. Division of Gaming Enforcement, H2 Gambling Capital’s Global All Product Summary (the “H2 Report”), Gambling Compliance’s January 2021 U.S. Sports Betting Tracker (the “Gambling Compliance Tracker”), Statista data regarding sports betting, eSports and global sports events (“Statista Data”) and data published by Boston Consulting Group (the “BCG Reports”).

 

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information that may be important to you before deciding to invest in our Class A ordinary shares, and we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated audited financial statements, including the notes thereto, included in this prospectus, before deciding to invest in our ordinary shares.

Except where the context otherwise requires or where otherwise indicated, the terms “Sportradar,” the “Company,” “the Group,” “we,” “us,” “our,” “our company” and “our business” refer to Sportradar Group AG, in each case together with its consolidated subsidiaries as a consolidated entity following the Reorganization Transactions.

Overview

Sportradar is a leading technology platform enabling next generation engagement in sports, and the number one provider of business-to-business (“B2B”) solutions to the global sports betting industry based on revenue. We provide mission-critical software, data and content via subscription and revenue share arrangements to sports leagues, betting operators and media companies. Since our founding in 2001, we have been at the forefront of innovation in the sports betting industry and we continue to be a global leader in understanding, leveraging and monetizing the power of sports data. Our mission is to enhance sports fan engagement globally through our fully integrated technology and services platform.

Sportradar offers one of the most robust and fully integrated sports data and technology platforms. We serve as a critical data infrastructure and content layer to the sports betting and media industries. On top of that infrastructure layer, we have built one of the most advanced and comprehensive software offerings. Our products simplify our customers’ operations, drive efficiencies and enrich fan experiences.

Our end-to-end offering, integrated technology and global footprint make us important partners to our customers and deeply embedded across the sports ecosystem:

 

   

Betting Operators: For our over 900 sports betting operator customers, we cover over 750,000 events annually across 83 sports, including live data coverage of 600,000 events across 37 sports. The breadth of our data offering and sports coverage is an important differentiator for Sportradar, especially in the U.S. market where we are the #1 provider of data to bookmakers. We supply sports data, in many cases as the sole provider, to over 85% of all bookmakers in the United States, who in turn manage nearly every legal sports bet placed by U.S. sports bettors. Our offerings include pre-match data and odds, live data and odds, as well as sports audiovisual content. Our full-suite of software solutions includes managed trading services (“MTS”), managed platform services, betting entertainment tools, virtual games and programmatic advertising solutions. We are the only independent one-stop-shop provider across the value chain.

 

   

Sports League: For our over 150 sports league partners, we provide access to over 900 sports betting operators and over 350 media companies to distribute their data and content globally. We give them greater reach and serve as an intermediary to the highly regulated betting industry. We also provide our sports leagues partners with technology, data collection tools, and integrity services.

 

   

Media Companies: For our over 350 media customers including both traditional and digital leaders, we provide products and services to help reach and engage sports fans across distribution channels.

Our deep relationships across the sports value chain have been developed over the course of nearly twenty years, and have powerful network effects. The more betting operators and media companies we bring onto our platform,


 

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the broader distribution we have to sports fans and bettors. This attracts new sports leagues to partner with us. Each new league partner adds more events to our portfolio and new opportunities for us to help betting operators and media companies engage their customers. This feedback loop strengthens our value proposition in the ecosystem.

At the heart of what we do is our proprietary technology stack. Our product strategy is centered on speed, reliability and scalability to match the demands of our customers. We use advanced algorithms to create scalable, customized insights in real-time with latency averaging 700 milliseconds (“ms”). We have one of the industry’s leading cloud native storage and distribution platforms. We leverage AI and machine learning capabilities, based on our rich data lake, to provide the most accurate odds. We are innovators at the forefront of revolutionary new technologies in sports data and analytics including computer vision, data visualization, virtual gaming and simulated reality.

Sportradar leads on breadth of events coverage for sports data and odds. We offer the largest volume of data in the world across our peers, leveraging nearly 20 years of historical sports information. We collect over 1.2 billion live data points per year from over 600,000 events in 37 sports. In 2020, we generated 3.7 billion live and pre-match odds changes, collected 1.9 billion betting tickets and processed 21 billion odds changes from betting operators. We have a strong betting data rights portfolio, including non-exclusive rights to the National Basketball Association (NBA) and the Major League Baseball (MLB) in the United States, as well as exclusive rights on a global basis to the NBA (excluding the United States and China), MLB (excluding the United States) and National Hockey League (NHL). In addition, we hold exclusive and worldwide media data rights for the NBA and MLB (including in the United States). We also hold data rights to more than 500 other sports leagues and competitions across the world on both an exclusive and non-exclusive basis. We are highly diversified across tiers of customers and tiers of sports content. The breadth and quality of our sports betting data coverage separates us from our competition.

In addition to sports data, we provide our customers with the largest sports audiovisual content offering including 200,000 events per year across tier 1 and other-tier sports leagues. Sportradar provides global coverage, with strong U.S. market positioning, including rights for major U.S. sports leagues.

Sportradar’s software solutions address the entire sports betting value chain from traffic generation and advertising technology, to the collection, processing and extrapolation of data and odds, to visualization solutions, risk management and platform services. We have designed our platform to solve the challenges that sports betting operators face competing in a complex ecosystem, in real-time, and on a global scale. Sportradar offers full-service, turn-key software packages, as well as flexible, modular products depending on the size and capabilities of our customers. Our valuable data assets and analytics capabilities enrich all of our software offerings.

Our platform is used globally by organizations of all sizes from large enterprises to small start-up businesses. As of December 31, 2019 and 2020, we had 1,601 and 1,612 customers, respectively. As our customers experience the benefits of our platform, they typically expand both their usage and the number of products and services that they purchase from us. Many of our sports betting customers have automated entire workflows that would have otherwise been done manually in-house. Our ability to expand within our customer base as well as our ability to grow alongside our customers is best demonstrated by our Dollar-Based Net Retention Rate for our top 200 customers. As of December 31, 2020 and 2019, our Dollar-Based Net Retention Rate was 113% and 118%, respectively. As of June 30, 2021, our Dollar-Based Net Retention Rate was 138%. The increase in the Dollar-Based Net Retention Rate as of June 30, 2021, as compared to December 31, 2020 and 2019, is primarily due to the negative impact that the COVID-19 pandemic had on revenue retention of our top 200 customers in the first half of 2020, as many of our top 200 customers reduced their spending under existing contracts during such period given the cancellation or postponement of various sporting events. Following the resumption of live sporting events in the first half of 2021, we saw an increase in revenue generation levels among our top 200 customers, along with additional revenue as a result of many 2020 postponed events occurring in the first half of 2021. This resulted in a spike in the Dollar-Based Net Retention Rate during the six month period ended June 30, 2021. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Business” for additional information regarding our Dollar-Based Net Retention Rate.


 

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We have grown through both organic and inorganic expansion. For the years ended December 31, 2020 and 2019, our revenue was €404.9 million and €380.4 million, respectively, representing year-over-year growth of 6.4%. Historically we have been able to achieve a 20% revenue compound annual growth rate (“CAGR”) from 2016 to 2020. Our business is profitable and benefits from positive Adjusted Free Cash Flow generation. For the years ended December 31, 2020 and 2019, respectively, our profit for the year was €14.8 million and €11.7 million, representing year-over-year growth of 26.5%. Our Adjusted EBITDA was €76.9 million and €63.2 million for the years ended December 31, 2020 and 2019, respectively, representing year-over-year growth of 21.7%, profit for the period as a percentage of revenue of 3.7% and 3.1% and Adjusted EBITDA margin of 19.0% and 16.6%, respectively. Our net cash from operating activities as a percentage of profit was 1,021.6% and 1,251.3% for the years ended December 31, 2020 and 2019. We had strong Cash Flow Conversion, defined as Adjusted Free Cash Flow as a percentage of Adjusted EBITDA, of 69.6% for the year ended December 31, 2020 and 87.3% for the year ended December 31, 2019. Our net cash from operating activities was €151.3 million and €146.0 million for the years ended December 31, 2020 and 2019, and we have been Adjusted Free Cash Flow positive since 2013, including for the years ended December 31, 2020 and 2019, with €53.5 million and €55.3 million of Adjusted Free Cash Flow, respectively.

For the six month periods ended June 30, 2021 and 2020, our revenue was €272.1 million and €191.6 million, respectively, representing period-over-period growth of 42.0%. For the six month periods ended June 30, 2021 and 2020, respectively, our profit for the period was €17.7 million and €20.2 million. Our Adjusted EBITDA was €59.8 million and €40.8 million for the six month periods ended June 30, 2021 and 2020, respectively, representing period-over-period growth of 46.5%. For the six month periods ended June 30, 2021 and 2020, profit for the period as a percentage of revenue was 6.5% and 10.6%, respectively, and Adjusted EBITDA margin was 22.0% and 21.3%, respectively. Our net cash from operating activities as a percentage of profit was 382.6% and 374.9% for the six month periods ended June 30, 2021 and 2020, respectively. We had Cash Flow Conversion of 6.9% and 80.7% for the six month periods ended June 30, 2021 and 2020, respectively. Our net cash from operating activities was €67.5 million and €75.9 million in the six month periods ended June 30, 2021 and 2020, respectively, and we had Adjusted Free Cash Flow in the six month periods ended June 30, 2021 and 2020 of €4.1 million and €32.9 million, respectively.

In our mature markets, where sports betting has been legal for many years, we are highly profitable. Revenue in the RoW Betting segment was €235.0 million and €224.7 million for the years ended December 31, 2020 and 2019, respectively. Revenue in the RoW AV segment was €105.9 million and €102.7 million over the same time periods, respectively. Revenue in the United States segment, where we have been investing heavily in data, content, technology, personnel and operations, was €34.4 million and €22.9 million over the same time periods, respectively. Revenue in the RoW Betting segment was €148.5 million and €108.4 million for the six month periods ended June 30, 2021 and 2020, respectively. Revenue in the RoW AV segment was €75.6 million and €56.7 million for the six month periods ended June 30, 2021 and 2020, respectively. Revenue in the United States segment was €28.9 million and €13.4 million for the six months periods ended June 30, 2021 and 2020, respectively.

As a result of our investments, we are nimble, innovative and prepared for global growth. In addition to investments in strategic markets like the United States, which we believe will fuel significant growth in our business, we have also invested in new high growth products including programmatic advertising, e-Sports and gaming technology such as virtual sports and simulated sports events. We expect these investments to expand the scope of our value proposition, increase our total addressable market (“TAM”) and drive wallet share with customers.

We are part of a founder-led organization with a strategy that is focused on innovation and long-term value creation. Our Founder and Chief Executive Officer, Carsten Koerl has been at the forefront of the online sports betting industry since its early days. Our investor base includes top-tier investors such as CPP Investments and Technology Crossover Ventures (“TCV”), as well as notable sports industry individuals such as Ted Leonsis,


 

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Mark Cuban and Michael Jordan, who each hold less than 5% minority interest. References to these individuals are included in this prospectus because they are leading figures in the global sports industry, which is the industry in which we operate, and distinguished members of our existing investor base. We believe that disclosing the identity of such investors provides potential new investors with a better understanding of the entities and individuals in the sports industry that have financially supported our growth by investing in our business.

Industry Background

The way sports fans and bettors consume and interact with sports is changing.

Sports fans today are connected to their favorite teams at all times. They demand multi-platform experiences, personalization, and deeper interaction than ever before. According to the PwC Reports, 86% of sports industry leaders believe that live sports viewing will become significantly richer, immersive and interactive in the future. New use cases are emerging in virtual reality (“VR”) and augmented reality (“AR”), real-time data capture and distribution, live betting, and to-the-second synchronized content across mobile devices and the live game. The evolution of e-Sports from recreational activity to a professionalized market with a 495 million global audience highlights the appetite for new interactive sports media, according to Statista Data and the PwC Reports.

Sports betting is a key catalyst for these changing consumption patterns, because bettors more deeply engage with sports data and content than casual viewers. The ubiquity of mobile betting is further driving accessibility of sports betting and interactivity. Live in-game betting, as an example, allows users to bet on specific plays and other events within a game. Consequently, mobile betting is the highest growing sports betting channel with 20% growth through 2025, according to the H2 Report.

Sports betting legalization is rapidly accelerating, globally.

Sports betting is the fastest growing category within the broader gaming market. Sports betting is the fastest growing category within the broader gaming market. The global sports betting market is projected to grow from $47 billion in 2021 to $81 billion, representing a combined 2025 market estimate for the rest of the world plus a United States market estimate for 2030, (the “Global Sports Betting Markets Maturity”), according to a BCG Report market study. Excluding the US, the sports betting market is $44 billion in 2021 growing 7% to $58 billion in 2025, according to industry research. Sports betting has been legal for many years in a number of major global markets, such as the United Kingdom, Australia, Italy and other parts of Europe and Asia Pacific. According to the H2 Report, these large, mature sports betting markets are expected to grow 6-7% per year through 2025, as a result of increasing accessibility of sports betting on mobile and online, intensifying customer engagement from expansion of sports betting coverage to more events, enhanced consumer technologies and new forms of sports betting such as virtual sports, e-Sports and simulated reality. Other large markets, including the United States, are increasingly legalizing sports betting, leading to accelerated sports betting market growth and geographic expansion opportunities for both operators and sports data and technology providers. Countries in Latin America, such as Brazil, India and other countries across Africa and Asia Pacific, continue to contemplate or progress regulatory efforts to shift from illegal betting to regulated betting markets. The COVID-19 pandemic magnified government funding deficits and we see governments becoming increasingly receptive to legalizing sports betting as a new source of income.

In the United States alone, sports betting is anticipated to expand from a $1 billion market in 2019 to a $23 billion market at maturity. Following the repeal of the Professional and Amateur Sports Protection Act (“PASPA”) in 2018, the sports betting industry has benefitted from rapid growth. As more states legalize sports betting and the volume of sports betting in currently operational states increases, we expect significant market opportunity in the United States.

 


 

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Sports leagues, betting operators, and media companies are focused on their core competencies.

The growing complexity and magnitude of data, content and technology underlying the sports ecosystem presents challenges for the various constituents. Technological requirements are more substantial today than ever before. Computer vision is radically transforming the volume and speed of data points available, enabling new sports betting use cases like player acceleration and intent-driven insights such as type of shot. This data is also increasingly important to leagues who can use it to improve game strategy and athlete training, as well as to drive direct engagement with fans. First-party user data from digital media and online sports betting platforms is also enabling in-depth customer profiling and segmentation, critical insights for every party in the sports and sports betting ecosystem. Proficiency in these new data categories requires technology investment, specialized talent and organizational focus.

At the same time, consumer tolerance of technical failures has decreased dramatically. Rising expectations present a major challenge for companies working with sports data. Significant investments are required for full resilience and the transition to public cloud environments.

The speed of change is blistering and requires dedicated research and development (“R&D”). Falling behind has direct monetary consequences not only from a user acquisition and retention perspective, but also from a risk management and profitability perspective. Sports leagues, betting operators and media companies are focused elsewhere and, as a result, increasingly turn to third parties like Sportradar.

There is a need for a holistic, integrated, end-to-end sports data and technology platform

While point solutions exist across the sports data, content, and technology value chain, they are fragmented and don’t provide a holistic solution to optimize performance. The opportunity to harness technology and data to accelerate growth and operate more efficiently exists, but is often lost. Any technology solution proposing to modernize the sports ecosystem should meet the challenging requirements that businesses face operating in real time on a global scale. We believe that includes:

 

   

Broad Portfolio of Content and Data: access to data and content from sporting events across the world, including niche and emerging sports such as virtual sports and e-Sports

 

   

Fast, Accurate and Reliable: low-latency, near 100% accurate, consistently structured, and reliably available 24/7 and 365 days a year

 

   

Advanced Insights and Innovation: leverage AI, machine learning and other new forms of technology to constantly drive innovation

 

   

Fully Integrated: integrated data, content and software to drive decision making across customer acquisition, engagement and retention and risk management

 

   

Trusted Partner: trust from the various constituents and the ability to help combat fraud and manipulation in sports

Sportradar Platform

Sportradar’s platform simplifies the complex, fragmented and, in the case of betting, regulated, sports ecosystem. While sports leagues, betting operators and media companies focus on their respective core competencies, we focus on leveraging data and technology to help our customers run their businesses efficiently and create more engaging experiences. We are experts in sports data and building technology-enabled solutions empowered by that data. We offer the most comprehensive solution in the marketplace which positions us to cover the end-to-end needs of our clients. Our value proposition to each of the key constituents is clear:

 

   

Betting Operators:

 

   

Fast, accurate, and reliable data married with deep analytics and technology to enable sports betting and drive bettors’ engagement


 

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Access to the broadest global coverage of sports betting data and content

 

   

State-of-the-art technology to automate processes that would otherwise be conducted manually

 

   

Speed to market, cost efficiency and reduction of operational risk or complexity

 

   

Sports Leagues:

 

   

Trusted intermediary to the sports betting and media ecosystem

 

   

Gateway to the end users of 1,612 sports betting and media companies globally as of December 31, 2020

 

   

Innovator in sports data and analytics enabling deeper fan engagement

 

   

Partner in ensuring integrity of the game and allowing sports leagues to monetize their data without becoming directly regulated

 

   

Providers of sports technology and analytics to professional sports teams

 

   

Media Companies:

 

   

Extensive live data and event coverage, married with deep analytics to better engage sports fans

 

   

New forms of interactive content

Our Data Engine

Sports data is at the core of everything we do. We deliver value to our customers by providing access to more and higher quality content and data which we distribute at low-latency and with seamless integration into our customers’ platforms. Simultaneously we embed fast data inferencing across our product portfolio to build higher value software products. Our deep sports data archive, real-time data capture, sports rights, sports expertise and artificial intelligence (“AI”) capabilities provide us with a unique position in the market and a powerful foundation upon which to continuously expand the business.

Our platform is underpinned by high quality and fast data, which we have collected for nearly two decades. We benefit from significant barriers to entry when it comes to data collection – both from the rich, extensive volume of historical data that we have, as well as the extensive global infrastructure that is required to provide viable live coverage to operate as a market-leading sports data provider. Our infrastructure allows us to gather, consolidate, quality check, transfer, distribute and analyze sports data in real-time, globally. The scale of our data operation is immense. We work with over 8,300 independently contracted data journalists who use our proprietary technology tools to collect live data from over 600,000 events every year across 37 sports.

Competitive Strengths

The only end-to-end data and software solutions provider with a global footprint

We are the only company providing software solutions that address the entire sports betting value chain, from traffic generation and advertising technology, to the collection, processing and extrapolation of data and odds, to visualization solutions, risk management and platform services. We provide these solutions to our customers in over 120 countries around the world. The breadth of our offering and global reach allows us to serve the greatest number of sports betting operators, from large to small, regardless of their needs, and to provide our customers with simplicityall the solutions in one place and from one provider.


 

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Integrated platform for business-critical needs of betting operators and media partners

We are deeply integrated with our customers from an operational and technology perspective, making it difficult for them to switch providers and serving as a strong barrier to entry. Our solutions are business-critical and power the day-to-day operations of sports betting companies, enabling them to grow gross gaming revenue and to operate more efficiently.

Our proprietary technology engine

We have been investing into our data, models and technology platform for the past two decades and we will continue to do so. Our proprietary technology engine has been developed with the needs of our customers and industry in mind, ensuring low-latency, scalability, automated handling of big data and resiliency. Our cloud native strategy and platform enables rapid scaling and resiliency, handling millions of end users, betting tickets and streaming sessions, with up to 4 gb per second in traffic.

We have made significant R&D investments into new data collection and processing technology including computer vision and audio recognition technology. These investments enrich the data we collect, reduce the cost of data collection through automation, reduce latency and enable new AI use cases.

Market leading portfolio of sports data and content

We cover the largest number of events and have a stronger data rights portfolio as compared to our competitors. We collect data on more than 80 sports around the world, from tier 1 leagues such as the NBA and DFL to high-volume leagues such as the ITF. We also collect data from tier 2 and tier 3 sports as well as from regional sports leagues including the National Basketball League (NBL) and AFC. We have more than 20 years of sports data in our proprietary database which provides us with a competitive advantage in odds generation and the creation of virtual sports content that is difficult to replicate.

Deeply embedded position with sports leagues

We have long-standing and deeply embedded partnerships with more than 150 leagues, clubs and federations across 29 sports globally. We have made meaningful investments into sports league partnerships around the world, including providing technology, insight and media solutions, and have grown these partnerships over time. In addition, we provide sports leagues with integrity services and solutions to increase fan engagement, creating closer working relationships with and access to key decision makers in sports leagues around the world.

Powerful network effects accelerate our value proposition

We benefit from powerful network effects, which further accelerate our value proposition. The more betting operators and media companies we bring onto our platform, the broader distribution we have to fans globally. This attracts new sports leagues to partner with us. And with each new league partner comes more events, deeper sports data and insights, and new opportunities for betting operators and media companies to engage fans.

Visionary founder-led team supported by world class investors

Our Founder and Chief Executive Officer, Carsten Koerl, is a successful entrepreneur in the sports betting market and is the driving force behind our vision, mission and culture. Carsten founded the online betting platform, betandwin Interactive Entertainment, in 1997 and led the company through a successful listing on the Vienna stock market in 2000, where it traded until it was purchased by GVC Holdings in 2016. Carsten has been at the forefront of the online sports betting industry since the beginning. Carsten is supported by an experienced, customer-centric leadership team, which enables us to rapidly develop new products and move more quickly than our competition to capture growth opportunities.

 


 

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High margin, sustainable growth financial model

We have a highly attractive business model characterized by robust growth and strong profitability. We generate revenue through a combination of subscription and revenue-sharing contracts, representing 78% and 22% of our total revenue, respectively, for the year ended December 31, 2020. This provides us with a steady, predicable revenue and significant upside as the sports betting market grows. We also have a track record of growing wallet share with existing customers. As of December 31, 2020 and 2019, our Dollar-Based Net Retention Rate was 113% and 118%, respectively. As of June 30, 2021, our Dollar-Based Net Retention Rate was 138%. The increase in the Dollar-Based Net Retention Rate as of June 30, 2021, as compared to December 31, 2020 and 2019, is primarily due to the negative impact that the COVID-19 pandemic had on revenue retention of our top 200 customers in the first half of 2020, as many of our top 200 customers reduced their spending under existing contracts during such period given the cancellation or postponement of various sporting events. Following the resumption of live sporting events in the first half of 2021, we saw an increase in revenue generation levels among our top 200 customers, along with additional revenue as a result of many 2020 postponed events occurring in the first half of 2021. This resulted in a spike in the Dollar-Based Net Retention Rate during the six month period ended June 30, 2021. A unique aspect of our model is the structurally high margins stemming, in part, from our ability to sell a product to various customers with different end uses which allows us to generate high levels of profitability at scale.

Market Opportunity

Sports is the most important category in entertainment, captivating and connecting billions of people and touching many of the largest sectors in the global economy, from betting, online gaming and digital platforms to live events, retail, broadcasting, sponsorship and merchandising.

We are well-positioned at the intersection of the global sports betting and gaming industry and the global sports market. Global gaming represents a TAM opportunity of roughly $209 billion in 2021, growing to $272 billion in 2025 at a 7% CAGR, according to the H2 Report. The global sports market is estimated at $172 billion in 2021 and growing at 4% CAGR through 2025 to $203 billion, according to the BCG Reports. Within this market, media rights and gate revenues represent $102 billion in 2021 growing to $121 billion in 2025 at a 4% CAGR.

Sports Betting and Gaming

The total gaming market is estimated to be $209 billion in 2021. Of this, the global sports betting market, including the United States, is estimated to be $47 billion in 2021 and to grow to $81 billion at Global Sports Betting Markets Maturity, according to the H2 Report and BCG Reports.

Sports Media and Events

Global Sports Media and Events is estimated to be a $176 billion market in 2021, of which $102 billion represents sports rights and gate revenue, according to the PwC Reports and Statista Data. This massive market is undergoing a transformation due to changing fan engagement patters, increasing demands for streaming and interactive solutions, increasing importance of niche sports and the proliferation of data in sports.

Our Growth Strategy

Our vision is to entertain sports fans and bettors globally through engagement across media, betting, gaming and beyond. We have continually broadened our product portfolio to better serve our customers and increase our touchpoints with end users across the sports betting value chain. The more knowledge of the end user that we are able to collect, the more valuable our insights and platform services become to leagues, sports betting companies


 

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and media companies. These network effects also enable us to enhance our product portfolio, serving as a key element of our growth strategy. Other elements of our growth strategy are:

Capture Growth in Global Markets. We intend to capture significant growth from new and existing markets around the world. Leveraging the breadth and depth of our technology, sports league and customer relationships and 105-strong global sales force, we have the infrastructure in place to take advantage of expected growth in various markets.

Expand Offerings in B2B Products and Services. We will continue to drive innovation and increased adoption of new and existing products in order to further grow our share of wallet with customers. We believe that our MTS and Ad:s solutions provide customers with significant value and these products are currently underpenetrated in our existing betting customer base. As we enter new markets around the world, and specifically in the United States, we expect uptake of these innovative solutions to be higher, as betting companies in the U.S. market will primarily be focused on gaining market share and customers.

Cover Entire End-User Journey to Better Serve our Customers. We see considerable value in combining our deep knowledge of sports data, built over the last 20 years, with the increasing amount of user data we collect across our products. In particular, we collect meaningful end-user data and feedback from our MTS, Ad:s, betting, AV and over-the-top (“OTT”) products. These versatile touchpoints with end users allow us to better understand and analyze their behavior, preferences and the entire end-user journey. These insights will enable us to cross-reference end-users from betting to entertainment and vice-versa, improve user experience on behalf of our customers and consequently build better products.

Invest in Alternative Content Capabilities and Services. We continue to expand our content offering beyond live sports betting into e-Sports, virtual sports and gaming. Sports betting is currently constrained by the number of live matches occurring at any given time and we believe that our betting operator customers are looking for ways to provide their customers with more variety and flexibility in their content offering. Alternative content that is not dependent on live sports is becoming increasingly important and COVID-19 has accelerated the adoption of new categories of real and virtual sports.

Grow Top of Funnel Capabilities and Offerings. We believe there is significant opportunity to provide advanced capabilities in the programmatic advertising market for sports betting operators. Bookmakers are expected to inject vast amounts of capital into this underpenetrated customer acquisition channel as they seek more efficient methods of acquiring new customers. We believe that of the universe of sports fans, approximately 20% are bettors. We plan to increase engagement for all sports fans and better serve them by leveraging data and insights we have on end-user behavior and preferences, betting frequency and lifetime value to advance our programmatic advertising capabilities and making Ad:s one of the most sophisticated forms of digital marketing for sports with the ability to provide insights into and differentiate between customer behavior.

Our Products

Sportradar sells mission-critical data, content and software solutions to sports betting operators, media companies and sports leagues. We are experts in sports data and building technology-enabled solutions empowered by that data. We have evolved our product offerings from point solutions into fully-integrated software solutions that are essential to the core operations of our customers. We offer the most comprehensive solution in the marketplace.

 

   

Pre-Match Odds Services: We offer an extensive pre-match odds service including fully automated provision of pre-match content and trading tools to manage content.

 

   

Live Data: We are the leading source for reliable and comprehensive real-time sports data with unrivaled depth of data to support more betting markets than any competitor. Our live data solution includes the fully automated provision of sport match data points such as goals, corner kicks, penalties, substitutions and points.


 

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Live Odds: Sportradar is the most popular live odds service in the market, used by over 200 bookmaker customers worldwide. We offer fully automated provision of in-play content and related trading tools enabling operators to offer live betting opportunities during matches. Our live odds service includes odds, odds management tools, score information and results confirmation.

 

   

Managed Trading Services (MTS): Our MTS offering is a sophisticated, turn-key trading, risk, live odds, and liability management solution. MTS is flexible and modular enabling customers of all sizes and maturities to configure service components according to their need.

 

   

Managed Platform Services: Sportradar, through its acquisition of Optima, offers a complete turnkey betting solution. The multi-channel solution includes player management with a full 360-degree view of the user’s activity across all channels with real-time data from one central system. It further includes payment processing, accounting, transaction management, business intelligence and reporting systems and a communications gateway service.

 

   

Virtual Games: We build realistic motion capture simulations to help bookmakers keep fans engaged during off-seasons. We currently offer virtual soccer, horse and dog racing, basketball, tennis and baseball.

 

   

Simulated Reality: Our Simulated Reality product is an AI-driven product which combines the power of our sports data, predictive analytics and visualization technology.

 

   

Betting Entertainment Tools: Betting Entertainment Tools are on-screen visualization tools designed to further increase user engagement.

 

   

Integrity Services: our Monitoring, Prevention, and Intelligence Solutions support in the fight against betting-related match-fixing and doping, while at the same time protecting Sportradar’s core business. Through our proprietary Fraud Detection System (“FDS”), and other advanced monitoring and detection services, we monitor the entire global betting market and detect betting-related fraud in sport.

 

   

Other Gaming: Sportradar’s Numbers Betting is the world’s leading and most comprehensive lotteries betting solution on the market. Available for online and retail betting operators and platform providers, it offers bettors 24/7 fixed odds betting on numerous markets and outcomes selections, with upwards of 44,000 real state lottery draws per month from over 70 countries. In e-Sports, Sportradar offers live data, odds, MTS and AV. Sportradar’s sharp odds are compiled by specialized e-Sports algorithms and traders.

 

   

Audio-Visual Content: We combine audiovisual content, which is to a great extent non-televised, and comprehensive content from our highly attractive media rights portfolio. Our diversified portfolio of 200,000 live events per year includes DFL, the Australian Open, TA and ITF Tennis Tournaments, NBA, MLB and other events from 19 different sports.

 

   

Global API: State-of-the-art, flexible application programming interface (“API”) for access to sports data feeds. We provide customers with a modern infrastructure with no legacy issues. Developers can choose the format (.xml or .json). Over 50 APIs for more than 30 sports are available in more than 40 languages.

 

   

Broadcast Services: Our broadcast platform includes game notes, graphics library, on-call research desk and custom broadcast solutions.

 

   

Digital Services: We offer easy-to-integrate widgets and fully-hosted sports page solutions. Sportradar’s embeddable widgets come with data and content required to run a modern media platform, including scores, standings, play-by-play, statistics, game centers, leaderboards, recaps and more.


 

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Analytics and Research Platform: Our Radar360 features an extensive database of sports statistics combined with powerful search and filter capabilities for uncovering compelling stats and storylines.

 

   

Ad:s Marketing Services: Our Ad:s offering provides data driven marketing services for betting operators. We offer a range of capabilities built to meet the needs of bookmakers and to improve marketing return-on-investments.

 

   

OTT Streaming Solutions: We provide betting operators and media companies OTT and streaming solutions including a video management platform and sports data extensions including automated content and visualizations, recommendations and personalization.

Our Technology

The majority of our technology development is handled in-house by our over 740 software engineers. We build and operate our technology to have high availability, horizontal scalability, low-latency and continuous security monitoring. Our technology enables us to move quickly with minimal risk of system interruption.

Sportradar’s cutting edge data AI, machine learning, and visualization capabilities put us at the forefront of technological innovation in the sector. Our R&D efforts have enabled new use cases for our customers across our product offerings.

Technology Architecture

Engineering within Sportradar is driven according to a set of core architectural principles:

 

   

Scalable Cloud-Based Infrastructure. All new systems are designed to support horizontal scaling without necessitating higher-spec server hardware deployment.

 

   

Optimized for rapid data ingest and low-latency. Speed in acquiring and distributing data is key to driving revenue and lowering costs. We acquire data to power our AI models, feed our betting products and provide insights into matches. The latency between a single data element being published and it being available to our internal systems and customers alike is a key metric. With recent advances in data acquisition we are now able to acquire data from third parties and make it available to both internal and external consumers at sub-second speeds.

 

   

Build for High System Resilience and Availability. Our systems have been built for top security, data integrity and loss prevention. They are highly available and resilient to guarantee that our solutions are available when our customers need them.

 

   

Observability ensures we are delivering. In addition to constant internal monitoring of our applications to evaluate their performance and reliability, we also utilize synthetic transaction monitoring. This allows us to monitor the service as if we were an end user of our products.

 

   

Embed security at every level. Our systems are built to be secure on the basis of a Defense In Depth approach to software development. We work to ensure that our developers are aware of best practices, new risks and other security patterns that aid them in building market leading security into our products.

 

   

Rapid Updates and Agile Development. Engineers within our core teams are empowered to make the decisions required to build world class products, and work within a “build, release, operate” mentality.


 

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Leveraging Our Unique Data Assets

Each element of data we process is stored within our data lake where it can be easily retrieved. Over the years Sportradar has moved beyond just the basic sports statistics, for example, scores, goals and line-ups, to also capture and store a diverse range of other datasets. For example, we collect the locations of players on a playing field, detailed player statistics, and a vast library of video footage for past sporting events. The depth and breadth of this data make us uniquely placed in the market to deliver innovative products. As of February 2021, our data lake contained 20 billion data files ingested from various systems and 190 billion rows of structured, queryable data extracted from these data files.

Our Customers

We have a large, blue-chip customer base, which consists of 1,612 customers as of December 31, 2020 and partners across more than 120 countries globally, including more than 900 sports betting operator customers and over 350 media and digital platforms. Our customers include many of the largest U.S. and global sports betting operators such as Bet365, Caesars, DraftKings, Entain, FanDuel, Flutter and William Hill; leading internet and digital companies such as Apple, Facebook, Google, Twitter and Yahoo Sports; broadcasters and other media companies such as CBS Sports, ESPN, Fox Sports and NBC Sports; and league partners such as the NBA and ITF. We have also built a global, market-leading portfolio of over 150 league, clubs and federations relationships across 29 sports.

Corporate Information

We are a Swiss stock corporation (Aktiengesellschaft) organized under the laws of Switzerland, currently registered in the commercial register of the Canton of St. Gallen (the “Commercial Register”) under CHE-164.043.805. Our principal executive offices are located at Feldlistrasse 2, CH-9000 St. Gallen, Switzerland. Our telephone number at this address is +41 71 517 72 00. Our website address is https://www.sportradar.com. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus. We have included our website address as an inactive textual reference only.

We have proprietary rights to certain trademarks used in this prospectus that are important to our business, many of which are registered under applicable intellectual property laws.

Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

The Reorganization Transactions

In connection with this offering, we will complete a series of reorganization transactions whereby all of the outstanding ordinary shares and participation certificates of Sportradar Holding AG (excluding directly or indirectly held treasury shares) will be contributed and transferred, directly or indirectly, to Sportradar Group AG


 

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in exchange for newly issued Class A and Class B ordinary shares of Sportradar Group AG, which collectively are referred to herein as the “Reorganization Transactions.” The Reorganization Transactions include, or will include, the following:

 

   

Formation of Sportradar Group AG. On June 24, 2021, Carsten Koerl, our Founder, duly incorporated Sportradar Group AG, a Swiss corporation, contributing CHF 100,000 and receiving 1,000,000 ordinary shares of Sportradar Group AG, CHF 0.10 nominal value per share.

 

   

Contribution of ordinary shares and participation certificates in Sportradar Holding AG. Prior to the completion of this offering, (i) all of our existing shareholders and holders of participation certificates (other than Carsten Koerl) will contribute their ordinary shares and/or participation certificates of Sportradar Holding AG to Sportradar Group AG and will receive Class A ordinary shares in Sportradar Group AG and (ii) Carsten Koerl will contribute his ordinary shares of Sportradar Holding AG to Sportradar Group AG and will receive (a) 2,850,000 Class A ordinary shares and (b) 903,670,701 Class B ordinary shares, in each case, of Sportradar Group AG.

 

   

Contribution of participation certificates under our Management Participation Program. Certain of our directors and executive officers participate in our Management Participation Program (the “MPP”), under which participants indirectly purchased participation certificates of Sportradar Holding AG through Slam InvestCo S.à r.l. (“MPP Co”), a special purpose vehicle established to hold participation certificates of Sportradar Holding AG for the MPP. In connection with this offering, MPP participants will contribute their shares of MPP Co to Sportradar Group AG and MPP Co will become a subsidiary of Sportradar Group AG. The MPP participants will, in exchange, receive Class A ordinary shares, a portion of which will be vested and no longer subject to repurchase and a portion of which will initially be unvested and subject to repurchase by us upon a termination of employment in certain circumstances. The vesting schedule generally provides for 35% of each participant’s Class A ordinary shares to vest immediately upon the consummation of this offering and for the remaining 65% to vest in three equal installments on each of December 31, 2022, 2023 and 2024. The MPP participants will receive approximately 9,566,464 Class A ordinary shares as part of the Reorganization Transactions, based upon the initial public offering price per share of $27.00 See “Management—Compensation—Management Participation Program.”

 

   

Conversion of options under our Phantom Option Plan. We maintain for certain key employees, who are not executive officers, a Phantom Option Plan (the “POP”), under which participants are entitled to bonus payments calculated by reference to the value of a hypothetical option to purchase shares of Sportradar Holding AG. Prior to the completion of this offering, phantom options will convert into restricted share units, or replacement awards, to be issued under our 2021 Plan (as defined under “—Omnibus Stock Plan”). Based upon the initial public offering price of $27.00, the outstanding awards under the POP will be converted into approximately 66,744 restricted stock units, which will be granted to the POP participants pursuant to (and come out of the number of shares available for issuance under) our 2021 Plan.

As a result of the foregoing Reorganization Transactions, Sportradar Holding AG will become a wholly owned subsidiary of Sportradar Group AG and the current shareholders of Sportradar Holding AG will become the shareholders of Sportradar Group AG.

Recent Developments

On July 22, 2021, we entered into a 10-year global partnership with the National Hockey League and certain of its affiliated companies (“NHL”) (the “NHL License Agreement”). Under the terms of the NHL License Agreement, we were named as the official betting data rights, official betting streaming rights and official media data rights partner of the NHL, as well as an official integrity partner of the NHL. Pursuant to the terms of the


 

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NHL License Agreement, on a pro forma basis giving effect to the Reorganization Transactions, based upon the initial public offering price of $27.00 per share of Class A ordinary shares, we granted the NHL the right to acquire an aggregate of up to 1,116,540 Class A ordinary shares for an exercise price of €7.59, and an amount of Class A ordinary shares calculated by dividing $30 million by the initial public offering price. Additionally, we granted the NHL a warrant to exercise 1,353,740 Class A ordinary shares at a subscription price of €19.87 per Class A ordinary share.

Risks Factors Summary

Our business is subject to a number of risks of which you should be aware before making an investment decision. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under the “Risk Factors” section of this prospectus in deciding whether to invest in our securities. Among these important risks are the following:

 

   

economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition or results of operations;

 

   

the global COVID-19 pandemic has had and may continue to have an adverse effect on our business or results of operations;

 

   

we depend on the success of our strategic relationships with our sports league partners;

 

   

social responsibility concerns and public opinion regarding responsible gambling, gambling by minors, match-fixing and related matters may adversely impact our reputation;

 

   

changes in public and consumer tastes and preferences and industry trends could reduce demand for our products, services and content offerings;

 

   

potential changes in competitive landscape, including new market entrants or disintermediation by participants in the industry, could harm our business;

 

   

our potential inability to anticipate and adopt new technology in response to changing industry and regulatory standards and evolving customer needs may adversely affect our competitiveness;

 

   

real or perceived errors, failures or bugs in our products could materially and adversely affect our financial conditions or results of operations;

 

   

our inability to protect our systems and data from continually evolving cybersecurity risks, security breaches or other technological risks could affect our reputation among our customers, consumers, and regulators, and may expose us to liability;

 

   

interruptions and failures in our systems or infrastructure, including as a result of cyber-attacks, natural catastrophic events, geopolitical events, disruptions in our workforce, system breakdowns or fraud may have a significant adverse effect on our business;

 

   

we and our customers may be subject to a variety of U.S. and foreign laws on sports betting, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business;

 

   

a significant amount of our revenue is indirectly derived from jurisdictions where we or our customers are not required to hold a license or limited regulatory framework exists and the legality of sports betting varies from jurisdiction to jurisdiction and is subject to uncertainties;

 

   

our growth prospects depend on the legal and regulatory status of real money gambling and betting legislation applicable to our customers;


 

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failure to comply with regulatory requirements in a particular jurisdiction, or the failure to successfully obtain a supplier license or authorization applied for in a particular jurisdiction, could impact our ability to comply with or cause rejection of licensing in other jurisdictions;

 

   

we have identified material weaknesses in our internal control over financial reporting;

 

   

we are subject to evolving governmental regulations and other legal obligations, particularly related to privacy, data protection and information security, and consumer protection laws across different markets where we conduct our business;

 

   

failure to obtain, maintain, protect, enforce and defend our intellectual property rights, or to obtain intellectual property protection that is sufficiently broad, may diminish our competitive advantages or interfere with our ability to develop, market and promote our products and services;

 

   

failure to obtain and maintain sufficient data rights from major sports leagues, including exclusive rights;

 

   

we may not be able to secure additional financing in a timely manner, or at all, to meet our long-term future capital needs, which could impair our ability to execute our business plan; and

 

   

acquisitions create certain risks and may adversely affect our business, financial condition or results of operations.

Implications of Being an “Emerging Growth Company” and a “Foreign Private Issuer”

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). As such, we are eligible, for up to five years, to take advantage of certain exemptions from various reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies. These exemptions include:

 

   

the ability to present more limited financial data, including presenting only two years of audited financial statements and only two years of selected financial data in the registration statement on Form F-1 of which this prospectus is a part;

 

   

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”);

 

   

not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

 

   

not being required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes;” and

 

   

not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering or such earlier time that we are no longer an emerging growth company, at which time, we will be required to comply with the auditor attestation requirements of Section 404, among other requirements. As a result, we do not know if some investors will find our Class A ordinary shares less attractive. The result may be a less active trading market for our Class A ordinary shares, and the price of our Class A ordinary shares may become more volatile.


 

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We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue exceed $1.07 billion; (ii) the last day of the fiscal year following the fifth anniversary of the date of this offering; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class A ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1 billion in non-convertible debt securities during any three-year period.

Upon consummation of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

   

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

 

   

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

   

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited interim condensed consolidated financial statements and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events.

Foreign private issuers, like emerging growth companies, are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of public companies that are neither an emerging growth company nor a foreign private issuer.


 

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The Offering

 

Class A ordinary shares offered by us

19,000,000 Class A ordinary shares

 

Class A ordinary shares sold in the concurrent private placements

Immediately subsequent to the closing of this offering, and subject to certain conditions of closing as described in “Concurrent Private Placements,” Eldridge, entities affiliated with Radcliff Management LLC and certain other investors have agreed, subject to certain regulatory conditions, to purchase Class A ordinary shares from us in a private placement at a price per Class A ordinary share equal to the initial public offering price in return for the aggregate sum of $164.0 million. Based on the initial public offering price of $27.00 per Class A ordinary share, the investors in the concurrent private placements will purchase 6,074,074 Class A ordinary shares.

 

  The sale of the Class A ordinary shares in the private placements is contingent upon the completion of this offering. The sale of these Class A ordinary shares to Eldridge, entities affiliated with Radcliff Management LLC and certain other investors will not be registered in this offering and will be subject to lock-up agreements with the underwriters for a period of up to 180 days after the date of this prospectus. See “Shares Eligible for Future Sale—Lock-Up Agreements” for additional information regarding such restrictions. We refer to these private placements as the concurrent private placements.

 

Class A ordinary shares to be outstanding after this offering and the concurrent private placements

205,454,977 Class A ordinary shares

 

 

 

Class B ordinary shares to be outstanding after this offering and the concurrent private placements

903,670,701 Class B ordinary shares

 

 

Class A ordinary shares and Class B ordinary shares to be outstanding after this offering and the concurrent private placements

1,109,125,678 ordinary shares

 

 

Option to purchase additional shares

from the Selling Shareholder

The Selling Shareholder has granted the underwriters an option to purchase up to 2,850,000 additional Class A ordinary shares within 30 days of the date of this prospectus.

 

Use of proceeds

The net proceeds to us from this offering and the concurrent private placements will be approximately $634.6 million, based upon the initial public offering price of $27.00 per share of Class A ordinary share and after deducting the underwriting discounts and commissions and offering expenses of this offering and the concurrent private


 

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placements payable by us. We will not receive any proceeds from the sale of Class A ordinary shares by the Selling Shareholder.

 

  We intend to use the net proceeds from this offering and the concurrent private placements for working capital, to fund incremental growth and future acquisition of, or investment in, companies, technologies, products or assets that complement our business and other general corporate purposes. See “Use of Proceeds.”

 

Voting and conversion rights

We have two classes of ordinary shares: Class A ordinary shares and Class B ordinary shares. After this offering and the concurrent private placements, we will have 205,454,977 Class A ordinary shares outstanding and 903,670,701 Class B ordinary shares outstanding.

 

  Holders of our Class A ordinary shares and the holder of our Class B ordinary shares will vote together as a single class on all matters presented to shareholders for their vote or approval, except as otherwise required by Swiss law or our amended articles of association (the “Amended Articles”). Each share of Class A and Class B ordinary shares will entitle its holder to one vote per share.

 

  Ten Class B ordinary shares will be convertible into one Class A ordinary share at any time, at the option of the holder. Additionally, Class B ordinary shares will automatically convert into Class A ordinary shares upon certain mandatory conversion events, including the earlier to occur of the following: (i) death of Carsten Koerl, our Founder; (ii) dismissal of our Founder as Chief Executive Officer for cause (as defined under article 340c para. 2 of the Swiss CO); (iii) September 30, 2028; or (iv) if Carsten Koerl, our Founder, ceases to hold, directly or indirectly, shares with an aggregate nominal value representing 15% or more of the aggregate nominal value of the total issued and outstanding share capital of the Company, from time to time.

 

  At the conversion rate of ten Class B ordinary shares for every one Class A ordinary share, our 903,670,701 Class B ordinary shares will be convertible into 90,367,070 Class A ordinary shares.

 

  Upon the completion of this offering and the concurrent private placements, (i) holders of our Class A ordinary shares will hold 18.52% of the total voting power of our outstanding ordinary shares and (ii) Carsten Koerl, our Founder and the sole holder of our Class B ordinary shares, will hold 81.79% of the total voting power of our outstanding ordinary shares.

 

Concentration of ownership

Carsten Koerl, our Founder, will be the sole holder of our Class B ordinary shares. As such, our Founder will hold approximately 81.79% of the voting power of our outstanding share capital following this offering (assuming no exercise by the underwriters of their option to purchase additional shares of Class A ordinary shares)


 

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and will have the ability to control the outcome of certain matters submitted to our shareholders for approval. See “Principal and Selling Shareholders” and “Description of Share Capital and Articles of Association.”

 

Dividend policy

We have never paid or declared any cash dividends on our shares, and we do not anticipate paying any cash dividends on our Class A ordinary shares or Class B ordinary shares in the foreseeable future. See “Dividend Policy.”

 

Risk factors

See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our Class A ordinary shares.

 

Listing

We have been approved to list our Class A ordinary shares on Nasdaq, under the symbol “SRAD.”

The number of our Class A and Class B ordinary shares issued after this offering and the concurrent private placements on a pro forma as adjusted basis is 205,454,977 Class A ordinary shares and 903,670,701 Class B ordinary shares, based on issued shares as of June 30, 2021 and, unless otherwise indicated, excludes:

 

   

29,257,126 Class A ordinary shares reserved for future issuance (e.g., out of conditional or authorized capital) under our 2021 Plan as described in “Management—Compensation—Omnibus Stock Plan”;

 

   

5,916,441 Class A ordinary shares reserved for future issuance (e.g., out of conditional or authorized capital) under our ESPP as described in “Management—Compensation—Employee Share Purchase Plan”; and

 

   

3,581,391 Class A ordinary shares reserved for future issuance under the NHL License Agreement. See “Prospectus Summary—Recent Developments.”

Unless otherwise indicated, all information contained in this prospectus assumes or gives effect to:

 

   

the Reorganization Transactions;

 

   

no exercise by the underwriters of their option to purchase 2,850,000 additional Class A ordinary shares from the Selling Shareholders;

 

   

the issuance and sale by us in the concurrent private placements of Class A ordinary shares with an aggregate purchase price of approximately $164.0 million, at a price per share equal to the initial public offering price to Eldridge, entities affiliated with Radcliff Management LLC and certain other investors. Based upon the initial public offering price of $27.00 per Class A ordinary share, the investors in the concurrent private placements will purchase 6,074,074 Class A ordinary shares; and

 

   

the initial public offering price of $27.00 per share of Class A ordinary shares.


 

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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The summary historical consolidated financial information presented for the years ended December 31, 2019 and 2020 has been derived from our consolidated financial statements included elsewhere in this prospectus. The summary historical consolidated financial information presented as of June 30, 2021 and for the six month periods ended June 30, 2020 and 2021 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on a consistent basis as our audited consolidated financial statements. In the opinion of management, the unaudited data reflects all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the financial information in those statements. Our historical results for any prior period are not necessarily indicative of results expected in any future period.

We maintain our books and records in Euros and report our financial results in Euros. For the convenience of the reader, we have translated Euros amounts in the tables below at the noon buying rate of the Federal Reserve Bank of New York on June 30, 2021, which was €1.00 to $1.18. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at that or any other exchange rate as of that or any other date.

The financial data set forth below should be read in conjunction with, and are qualified by reference to, “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus.

 

    Years Ended December 31,     Six Month Periods Ended June 30,  
          2019                 2020                 2020                 2020                 2021                2021        
    (in millions, except share and per share data)        

Consolidated Statement of Profit or Loss:

           

Revenue

  380.4     404.9     $ 477.8     191.6     272.1     $ 321.0  

Purchased services and licenses (excluding depreciation and amortization)

    (61.4     (89.3     (105.4     (37.3     (56.6     (66.7

Internally-developed software cost capitalized

    7.9       6.1       7.2       3.2       5.9       7.0  

Personnel expenses

    (119.1     (121.3     (143.1     (55.6     (85.4     (100.8

Other operating expenses

    (46.7     (41.3     (48.8     (17.9     (34.9     (41.2

Depreciation and amortization

    (112.8     (106.2     (125.4     (52.9     (64.1     (75.6

Impairment of intangible assets

    (39.5     (26.2     (30.9     —         —         —    

Impairment (loss)/gain on trade receivables, contract assets and other financial assets

    (5.3     (4.6     (5.5     (2.0     (0.1     (0.1

Impairment of equity-accounted investee

    —         (4.6     (5.4     —         —         —    

Share of loss of equity-accounted investees

    (0.2     (1.0     (1.2     (1.0     (1.1     (1.3

Loss from loss of control of subsidiary

    (2.8     —         —         —         —         —    

Finance income

    17.4       41.7       49.2       9.4       13.0       15.4  

Finance costs

    (28.1     (36.1     (42.6     (12.7     (23.4     (27.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) / income before tax

    (10.2     22.1       26.1       24.7       25.3       29.9  

Income tax benefit (expense)

    21.9       (7.3     (8.6     (4.5     (7.7     (9.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

  11.7     14.8     $ 17.5     20.2     17.7     $ 20.8  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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    Years Ended December 31,     Six Month Periods Ended June 30,  
          2019                 2020                 2020                 2020                 2021                2021        
    (in millions, except share and per share data)        

Profit per ordinary share attributable to owners of Sportradar Holding AG (Basic and diluted)

  22.24     28.89   $ 34.09     38.36     32.95     $ 38.88  

Weighted average shares outstanding of Sportradar Holding AG (Basic and diluted)

    344,611       344,611     344,611       344,611       344,611       344,611  

Pro forma profit per Class A ordinary share attributable to owners of Sportradar Group AG (Basic) (unaudited)(1a)

    0.06     $ 0.07       0.06     $ 0.07  

Pro forma weighted average Class A shares outstanding of Sportradar Group AG (Basic) (unaudited)(1a)

      171,372,838       171,372,838         171,997,788       171,997,788  

Pro forma profit per Class B ordinary share attributable to owners of Sportradar Group AG (Basic) (unaudited)(1a)

    0.06     $ 0.07       0.06     $ 0.07  

Pro forma weighted average Class B shares outstanding of Sportradar Group AG (Basic) (unaudited)(1a)

      90,367,070       90,367,070         90,367,070       90,367,070  

Pro forma profit per Class A ordinary share attributable to owners of Sportradar Group AG (Diluted) (unaudited)(1b)

    0.06     $ 0.07       0.06     $ 0.07  

Pro forma weighted average Class A shares outstanding of Sportradar Group AG (Diluted) (unaudited)(1b)

      268,997,056       268,997,056         269,529,675       269,529,675  

 

     Years Ended December 31,     Six Month Periods Ended June 30,  
     2019     2020     2020     2020     2021     2021  
     (in millions)        

Consolidated Statement of Cash Flows:

            

Net cash from operating activities

   146.0     151.3     $ 178.5     75.8     67.5     $ 79.7  

Net cash used in investing activities

     (114.3     (98.1 )     (115.8     (42.5     (259.4     (306.1

Net cash (used in) / from financing activities

     (4.7     274.5     324.0       (6.7     (2.5     (3.0

 

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     Years Ended December 31,     Six Month Periods Ended
June 30,
 
     2019     2020     2020     2021  
     (in millions)  

Other Data(2):

        

Profit for the Period

   11.7     14.8     20.2     17.7  

Adjusted EBITDA(3)

   63.2     76.9     40.8     59.8  

Profit for the period as a percentage of revenue

     3.1     3.7     10.6     6.5

Adjusted EBITDA margin(4)

     16.6     19.0     21.3     22.0

Adjusted Free Cash Flow(5)

   55.3     53.5     32.9     4.1  

Net cash from operating activities as a percentage of profit for the period

  

 

1,251.3

    1,021.6     374.9     382.6

Cash Flow Conversion(6)

     87.3     69.6     80.7     6.9

Dollar-Based Net Retention Rate

     118     113     103     138

 

            As of June 30, 2021  
     Actual      Actual      Pro Forma As
Adjusted(7)
     Pro Forma As
Adjusted(7)
 
            (in millions)  

Consolidated Statement of Financial Position:

           

Cash

   190.7      $ 225.0      728.6      $ 859.7  

Total assets

     1,005.9        1,187.0        1,543.7        1,821.6  

Total loans and borrowings, including current portion

     436.1        514.6        436.1        514.6  

Total liabilities

     799.6        943.5        799.6        943.5  

Total equity

     206.3        243.5        744.1        878.2  

Total capitalization

     642.4        758.1        1,180.2        1,392.8  

 

(1)

a) Pro forma basic profit per ordinary share attributable to owners of Sportradar Group AG and Pro forma basic weighted average ordinary shares of Sportradar Group AG give effect to the Reorganization Transactions, as if it had occurred on January 1, 2020. The Pro Forma basic weighted average Class B ordinary shares have been calculated based on their participating rights.

Profit attributable to ordinary shareholders was calculated as follows:

 

     Year Ended
December 31, 2020
     Six Month Period
Ended
June 30, 2021
 
     (in millions)  

Profit for the year/period attributable to ordinary shareholders of Sportradar Group AG

   15.3      17.4  

Undistributed earnings to participating securities*

     (0.4      (0.4

Profit attributable to ordinary shareholders of Sportradar Group AG

     14.9        17.0  

Allocation of profit attributable to Class A ordinary shareholders of Sportradar Group AG

   9.8      11.1  

Allocation of profit attributable to Class B ordinary shareholders of Sportradar Group AG

   5.1      5.9  

* Earnings attributable to unvested Class A ordinary shares related to MPP and those issued to management and founders of Atrium Sports, Inc.


 

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Pro forma basic weighted average Class A shares outstanding used in the calculation above include the impact of Class A ordinary shares under our MPP, the issuance of Class A ordinary shares relating to the vested RSUs under our POP and the Class A ordinary shares issued to management and founders of Atrium Sports, Inc. that vest in connection with this offering.

b) Pro forma diluted profit per Class A ordinary share attributable to owners of Sportradar Group AG is calculated by dividing profit for year/period attributable to Class A ordinary shareholders of Sportradar Group AG by the pro forma basic weighted average Class A shares outstanding after giving effect to the conversion of Class B ordinary shares, the issuance of unvested Class A ordinary shares under our MPP and shares issued to management and founders of Atrium Sports, Inc., and the issuance of Class A ordinary shares relating to the unvested RSUs under our POP, if dilutive.

Converted shares used in the calculation of pro forma diluted profit per Class A ordinary share attributable to owners of Sportradar Group AG, which gives effect to the conversion of all 903,670,701 Class B ordinary shares into Class A ordinary shares at a ratio of ten Class B ordinary shares into one Class A ordinary share, reflects the following:

     Year Ended
December 31, 2020
     Six Month Period
Ended
June 30, 2021
 

Conversion of Class B ordinary shares

     90,367,070        90,367,070  

Other dilutive shares (MPP, Atrium, POP, as applicable)

     7,257,148        7,164,817  

 

(2)

See the definitions of key operating and financial metrics in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Operational Performance Indicators.” See below for reconciliation of the key non-IFRS financial metrics to the most directly comparable IFRS financial performance measure.

 

(3)

Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, IFRS. Adjusted EBITDA should not be considered as an alternative to profit for the period.

Adjusted EBITDA represents earnings before interest, tax, depreciation and amortization adjusted for impairment of intangible assets and financial assets, loss from loss of control of subsidiary, foreign exchange gains/losses, other finance income/costs and amortization of sports rights.

License fees relating to sport rights are a key component of how we generate revenue and one of our main operating expenses. Such license fees are presented either under purchased services and licenses or under depreciation and amortization, depending on the accounting treatment of each relevant license. Only licenses that meet the recognition criteria of IAS 38 are capitalized. The primary distinction for whether a license is capitalized or not capitalized is the contracted length of the applicable license. Therefore, the type of license we enter into can have a significant impact on our results of operations depending on whether we are able to capitalize the relevant license. Our presentation of Adjusted EBITDA removes this difference in classification by decreasing our EBITDA by our amortization of sports rights. As such, our presentation of Adjusted EBITDA reflects the full costs of our sports rights licenses. Management believes that, by deducting the full amount of amortization of sport rights in its calculation of Adjusted EBITDA, the result is a financial metric that is both more meaningful and comparable for management and our investors while also being more indicative of our ongoing operating performance.

We present Adjusted EBITDA because management believes that some items excluded are non-recurring in nature and this information is relevant in evaluating the results of the respective segments relative to other entities that operate in the same industry. Management believes Adjusted EBITDA is useful to investors for evaluating Sportradar’s operating performance against competitors, which commonly disclose similar performance measures. However, Sportradar’s calculation of Adjusted EBITDA may not be comparable to


 

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other similarly titled performance measures of other companies. Adjusted EBITDA is not intended to be a substitute for any IFRS financial measure.

Items excluded from Adjusted EBITDA include significant components in understanding and assessing financial performance. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation, or as an alternative to, or a substitutes for, profit for the period, revenue or other financial statement data presented in our consolidated financial statements as indicators of financial performance. We compensate for these limitations by relying primarily on our IFRS results and using Adjusted EBITDA only as a supplemental measure.

The following table reconciles Adjusted EBITDA to the most directly comparable IFRS financial performance measure, which is profit for the period:

 

     Years Ended December 31,     Six Month Periods
Ended June 30,
 
     2019     2020     2020     2020     2021     2021  
     (in millions)        

Profit for the period

   11.7     14.8     $ 17.5     20.2     17.7     $ 20.8  

Share based compensation

     —         2.3       2.7       —         8.5       10.0  

Depreciation and amortization

     112.8       106.2       125.4       52.9       64.1       75.6  

Amortization of sports rights

     (93.9     (80.6     (95.1     (40.1     (48.9     (57.7

Impairment of intangible assets

     39.5       26.2       30.9       —         —         —    

Impairment of equity-accounted investee

     —         4.6       5.4       —         —         —    

Impairment loss on other financial assets

     1.6       1.7       2.0       —         0.3       0.4  

Loss from loss of control of subsidiary

     2.8       —         —         —         —         —    

Finance income

     (17.5     (41.7     (49.2     (9.4     (13.0     (15.4

Finance cost

     28.1       36.1       42.6       12.7       23.4       27.7  

Income tax (benefit) expense

     (21.9     7.3       8.6       4.5       7.7       9.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   63.2     76.9     $ 90.7     40.8     59.8     $ 70.5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(4)

Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA to revenue. Management uses Adjusted EBITDA margin as an operational metric because it allows the Company to assess operational performance compared to revenues over time. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general.

The most directly comparable IFRS measure of profit for the period as a percentage of revenue is disclosed below:

 

     Years Ended December 31,     Six Month Periods
Ended June 30,
 
           2019               2020           2020     2021     2021  
     (in millions)                    

Profit for the period

   11.7     14.8     20.2     17.7     $ 20.8  

Revenue

   380.4     404.9     191.6     272.1     $ 321.0  

Profit for the period as a percentage of revenue

     3.1     3.7     10.6     6.5     6.5

 

(5)

Adjusted Free Cash Flow is a supplemental measure of our liquidity that is not required by, or presented in accordance with, IFRS. Adjusted Free Cash Flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of other IFRS financial measures, such as net cash from operating activities. Adjusted Free Cash Flow does not reflect our ability to meet future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.


 

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Adjusted Free Cash Flow represents net cash from operating activities adjusted for payments for lease liabilities, acquisition of property and equipment, acquisition of intangible assets (excluding certain intangible assets required to further support an acquired business). We consider Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchase of property and equipment, of intangible assets and payment of lease liabilities, which can then be used to, among other things, to invest in our business and make strategic acquisitions. A limitation of the utility of Adjusted Free Cash Flow as a measure of liquidity is that it does not represent the total increase or decrease in our cash balance for the year.

The most directly comparable IFRS measure of net cash from operating activities as a percentage of profit for the period is disclosed below:

 

     Years Ended
December 31,
    Six Month Periods Ended
June 30,
 
     2019     2020     2020     2021     2021  
     (in millions)                    

Net cash from operating activities

   146.0     151.3     75.8     67.5     $ 79.7  

Profit for the period

   11.7     14.8     20.2     17.7     $ 20.8  

Net cash from operating activities as a percentage of profit for the period

     1,247.9     1,022.3     374.9     382.6     382.6

The following table reconciles Adjusted Free Cash Flow to the most directly comparable IFRS financial performance measure, which is net cash from operating activities:

 

     Years Ended December 31,     Six Month Periods
Ended June 30,
 
       2019         2020         2020       2020     2021     2021  
     (in millions)        

Net cash from operating activities

   146.0     151.3     $ 178.5     75.8     67.5     $ 79.7  

Acquisition of intangible assets (excluding certain intangible assets required to further support an acquired business)(a)

     (78.9     (92.0     (108.5     (40.3     (58.3     (68.8

Acquisition of property and equipment

     (6.7     (2.0     (2.4     (1.1     (2.1     (2.4

Payment of lease liabilities

     (5.1     (3.8     (4.5     (1.5     (3.0     (3.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Free Cash Flow

   55.3     53.5     $ 63.1     32.9     4.1     $ 4.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

(a)

Acquisition of intangible assets for the year ended December 31, 2019 excludes €12.6 million of intangible assets related to the acquisition of Optima. In 2019, as we were finalizing our acquisition of Optima, we were required to acquire a perpetual license that Optima needed in order to continue to operate its business. The acquisition of such perpetual license was ancillary to the acquisition of Optima, but nevertheless was an integral part of the acquisition given that Optima was required to purchase the license in order to continue operating. As such, the acquisition of the perpetual license was a one-time cost, and one that is not expected to recur in future periods, but a critical component of our acquisition of Optima. Unlike other intangible assets that form part of our consolidated financial statements, where the costs are recurring in nature and/or not integral to any acquisition, the perpetual license purchased concurrently with the closing of our acquisition of Optima was intrinsically related to our acquisition of Optima and necessary to enable us to continue to operate Optima as a functioning business. Because we consider the acquisition of this license to be a cost inherently connected to the acquisition of Optima and one-time in nature, such license was excluded from our calculation of Adjusted Free Cash Flow.

 

(6)

Cash Flow Conversion is the ratio of Adjusted Free Cash Flow to Adjusted EBITDA. Management considers Cash Flow Conversion to be a useful measure of our ability to convert generated earnings to


 

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  actual cash that is available to invest into the business and/or make strategic acquisitions. Management also believes that Cash Flow Conversion provides useful information regarding how cash provided by operating activities compares to the capital expenditures required to maintain and grow our business, and our available liquidity, after funding such capital expenditures, to service our debt, fund strategic initiatives and strengthen our balance sheet, as well as our ability to convert our earnings to cash. Additionally, we believe Cash Flow Conversion is widely used by investors, securities analysis, ratings agencies and other parties in evaluating liquidity and debt-service capabilities of companies in our industry.

 

(7)

The pro forma as adjusted information gives effect to (i) the Reorganization Transactions, as if it had occurred on June 30, 2021 and (ii) the issuance of 21,850,000 Class A ordinary shares in this offering and the concurrent private placements at the initial public offering price of $27.00 per Class A ordinary share, after deducting underwriting discounts and commissions and costs of this offering and the concurrent private placements payable by us.


 

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RISK FACTORS

You should carefully consider the risks described below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of our Class A ordinary shares could decline due to any of these risks, and you may lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus.

Risks Related to Our Business and Industry

Macroeconomic Risks

Economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition or results of operations.

Our financial performance is subject to global economic conditions and their impact on levels of entertainment and discretionary consumer spending. Economic recessions have had, and may continue to have, far reaching adverse consequences across many industries, including the global sports entertainment and gaming industries, which may adversely affect our business and financial condition. In the past decade, global and U.S. economies have experienced tepid growth following the financial crisis of 2008 and 2009 and there appears to be an increasing risk of a recession due to international trade and monetary policy, the global COVID-19 pandemic and other changes. Unfavorable changes in general economic conditions, including recessions, economic slowdowns, sustained high levels of unemployment, and rising prices or the perception by consumers of weak or weakening economic conditions, may reduce our customers’ needs for our products due to lower users’ disposable income or fewer individuals engaging in entertainment and leisure activities such as daily fantasy sports, sports betting and consumption of sports media and content.

In addition, changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy as a whole may reduce the demand for sports media, entertainment and betting products and services. Any one of these changes could have a material adverse effect on our business, financial condition or results of operations.

The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.

We are a multinational company headquartered in Switzerland with worldwide operations, including business operations in North America, South America, Europe, Africa, Middle East and the Asia Pacific. Following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020 and subsequently ratified a trade and cooperation agreement governing its future relationship with the European Union. The agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European Parliament and the Council of the European Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.

The uncertainty around these developments, or the perception that any related developments or that similar EU Member State separations could occur, has had and may continue to have a material adverse effect on global

 

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economic conditions and financial markets and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings have been and may continue to be subject to increased market volatility. Lack of clarity about future U.K. laws and regulations as the United Kingdom determines which European Union laws to replace or replicate, including free trade agreements, tax and customs laws, intellectual property rights, environmental, health and safety laws and regulations, immigration laws, employment laws and transport laws could increase costs, disrupt supply chains, depress economic activity and restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial condition or results of operations.

Risks associated with international operations and foreign currencies could adversely affect our business, financial condition or results of operations.

We provide products and services to 1,612 customers as of December 31, 2020 in over 120 countries and intend to continue to expand into additional markets around the globe. As of December 31, 2020, we also have 2,366 full time equivalent employees (“FTE”) in 30 offices in 19 different countries. As of December 31, 2019, we had 2,156 FTEs. Our extensive global presence and ability to grow in international markets could be harmed by a number of factors, including:

 

   

Sports betting products and services may be limited or prohibited by existing law or new legislation. We may be required to cease operations in particular countries due to political uncertainties or government restrictions imposed by the United States government or foreign governments, including the United Kingdom and EU countries.

 

   

Economic or political instability, natural disasters or civil unrest may cause currency devaluation that makes exchange rates difficult to manage, sporting events or matches to be postponed, cancelled or modified or our offices and employees in such regions to be negatively impacted. These risks could negatively impact our ability to offer our services and as a result could adversely affect our business, financial condition or results of operations.

 

   

The general state of technological infrastructure in some lesser developed countries, including countries where we have a large number of customers, creates operational risks for us that generally are not present in our operations in Europe and other more developed countries.

 

   

Reduced respect and protection for intellectual property rights in some jurisdictions.

As a global business, we also have assets and liabilities denominated in currencies other than our Euros reporting and functioning currency, such as our purchased license rights, which are subject to foreign exchange rate risk.

Although we use derivative financial instruments to hedge against some of our risk exposures arising from our obligations in foreign currencies, there can be no assurance that our hedging activities will effectively manage our foreign exchange risks. In particular, we may not fully hedge our positions in certain currencies and may not always obtain funding in all the currencies we require. Therefore, to the extent we are unable to hedge our position in a currency or is imperfectly hedged in respect of that currency, we may experience unrealized or realized losses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures of Market Risks—Foreign currency risk.”

The global COVID-19 pandemic has had and may continue to have an adverse effect on our business or results of operations.

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19. These measures, including “shelter-in-place” orders, quarantines and travel restrictions suggested or mandated by governmental authorities, have adversely affected workforces, customers, customer confidence, economies and financial markets, and, along with decreased customer spending and increased unemployment, have led to an economic downturn globally.

 

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Government mandated closures of offices or other restrictions on workplaces and voluntary precautionary measures we take has and may continue to impact our ability to operate effectively, our ability to serve our customers, implement regulatory and technology changes, and our ability, and the ability of our service providers, to undertake on-site audits or assessments that might be required by law or regulation. It may also become more challenging for us to manage a growing workforce, as our ability to maintain our company culture and integrate new employees are affected by work-from-home policies. It is possible that our systems and controls are less effective as a result of our compliance and risk teams and other staff not being able to work from our offices. Failure to maintain adequate systems and controls may expose us to operational and regulatory risk.

As a result of the COVID-19 pandemic, significant suspension or cancellation of sporting events, such as the postponement of the 2020 Football European Championship, has occurred, leading to declines in the available content we deliver to our customers, our ability to access sports venues to collect data and sporting events on which bets can be placed. Additionally, as a result of the cancellation of major and professional sporting events, bookmakers have increased demand for lower-tier events. Providing data for such lower-tier and amateur events to meet this demand exposes our business to additional risk, including risks related to fraud, corruption or negligence, reputational harm, regulatory risk, privacy risk and certain other risks related to our international operations. Governments could also enhance restrictions on the advertising of gambling and betting products in light of the COVID-19 pandemic. If, as a result of the COVID-19 pandemic, the global economic downturn continues or worsens, government restrictions to reduce the spread of the virus are prolonged or live sporting events and matches continue to be postponed, cancelled or modified, we could experience a greater drop in demand for our products and services, which could adversely affect our business, financial condition or results of operations. For additional discussion related to COVID-19, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19.”

Governments have taken unprecedented actions in an attempt to address and rectify the extreme market and economic conditions caused by the COVID-19 pandemic by providing liquidity and stability to financial markets. If these actions are not successful, the return of adverse economic conditions may have a material impact on our operations and/or our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those relating to our liquidity, business interruptions and market expansion opportunities.

Business Model Risks

We depend on the success of our strategic relationships with our sports league partners. Overreliance or our inability to extend existing relationships or agree to new relationships may cause loss of competitive advantage, unanticipated costs for us or require us to modify, limit or discontinue certain offerings, which could materially affect our business, financial condition and results of operations.

We rely on strategic relationships with more than 150 sports leagues, federations and teams globally, including the NBA and MLB for data and statistics fundamental to our products and services. These long-term relationships provide us with a competitive advantage in distributing accurate and fast data feeds to our customers and in certain jurisdictions, the legal requirement to only use official data increases our reliance on such sports league partners. The partners with whom we have arrangements also provide data and statistics to other companies, including other sports intelligence and software solutions platforms with whom we compete. In the event that any of our existing relationships or our future relationships with these strategic partners fail to provide official (live) data and streaming rights to us in accordance with the terms of our arrangement, we are unable to renew such contracts on commercially acceptable terms, or at all, and we are not able to find suitable alternatives, we may lose our competitive advantage or be required to discontinue or limit our offerings or services. Our ability to provide our products and services would be harmed and in turn adversely affect our business operations, financial condition or results of operations.

 

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Social responsibility concerns and public opinion regarding responsible gambling, gambling by minors, match-fixing and related matters could cause the popularity of sports betting to decline and significantly influence the regulation of sports betting and impact responsible gaming requirements, which may adversely impact our reputation.

We provide products and services to more than 900 sports betting operator customers around the globe and as of each of the fiscal years ended December 31, 2019 and December 31, 2020, we generated 59.1%, 27.0% and 6.0%, and 58.0%, 26.2% and 8.5% of our total revenue from our RoW Betting, RoW AV and Unites States segments, respectively. For the six month periods ended June 30, 2021 and 2020, we generated 54.6%, 27.8% and 10.6%, and 56.6%, 29.6% and 7.0% of our total revenue from our RoW Betting, RoW AV and Unites States segments, respectively. We also operate in a public-facing industry where negative publicity, whether or not justified, can spread rapidly through, among other things, social media. To the extent that we are unable to respond timely and appropriately to negative publicity, our reputation and brand could be harmed. Moreover, even if we are able to respond in a timely and appropriate manner, we cannot predict how negative publicity may affect our reputation and business.

Unfavorable publicity regarding us or the actions of third parties with whom we have relationships or the underlying sports (including declining popularity of the sports or athletes) could seriously harm our reputation. Negative publicity, including related to the use of fixed-odds betting terminals, gambling by minors and gambling online, even if not directly or indirectly connected with us or our products and services and lack of diversity in the industry may adversely impact our reputation and the willingness of the public to participate in sports betting. In particular, the attraction of sports betting to players for whom betting and gaming activities assume too great a role in their lives poses a challenge to the sports betting industry. If the perception that the sports betting industry is failing to adequately protect vulnerable players, regulators may impose additional restrictions on the offering of sports betting services to such players. Furthermore, negative publicity and reputational harm may give our sports league partners a termination right to discontinue their contracts with us and our business and results of operations may be adversely affected.

In addition, public opinion can significantly influence the regulation of sports betting. A negative shift in the perception of sports betting by the public or by politicians, lobbyists or others could affect future legislation or regulation in different jurisdictions. Among other things, such a shift could cause jurisdictions to abandon proposals to legalize or liberalize sports betting or introduce legislative restrictions, resulting in monopolies or total prohibitions, thereby limiting the number of bookmaker customers to which and/or jurisdictions in which we can potentially expand into. Increasingly negative public perception could also lead to new restrictions on, or the prohibition of, sports betting-related services where we currently, or may in the future, operate. If we are required to restrict our marketing or product offerings or incur increased compliance costs as a result, this could have a material adverse effect on our revenue and could increase operating expenses. For instance, further changes to the United Kingdom’s or other European states’ betting or gaming laws or regulations in reaction to the current adverse media coverage in that jurisdiction, including changes in the political or social attitude to online betting caused by such coverage, could have a material impact on our business, financial condition or results of operations.

Changes in public and consumer tastes and preferences and industry trends could reduce demand for our products, services and content offerings and adversely affect our business.

Our ability to offer sports content solutions to increase sponsor and fan engagement is increasingly important to the success of our business and our ability to generate revenue, which is sensitive to rapidly changing consumer preferences and industry trends, and depend on our ability to satisfy consumer tastes and expectations in a consistent manner. A reduction in consumer spending and time spent in our customers’ products could affect our business. This is especially true in jurisdictions where we operate under a revenue-share model. Our customers will demand fewer products if their users reduce their spending and time, thereby affecting our business and revenue. Our success depends on our ability to offer our products and services, including our sports content and

 

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media, that meet the changing preferences of the sports content consumer market, including those of our television, cable network and broadcast partners, and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of sports content. We invest in our sports image and editorial APIs, including in the creation of high quality content, and our Insights and sports page solutions. Our failure to avoid a negative perception among consumers or anticipate and respond to changes in consumer preferences, including in the form of content creation or distribution, could result in reduced demand for our products, services and content offerings or those of our partners. Furthermore, a lack of popularity of our content offerings, as well as labor disputes, unavailability of a star athlete, cost overruns or disputes with production teams, could have an adverse effect on our business, financial condition or results of operations.

Our market is competitive and we may lose customers and relationships to both existing and future competitors.

The markets for sports data, media, entertainment and betting are competitive and rapidly changing, especially the sports media industry. Competition in these markets may be further exacerbated if economic conditions or other circumstances, such as COVID-19, cause customer bases and customer spending to decrease and service providers to compete for fewer customer resources. Our existing competitors, or future competitors, may have or obtain greater name recognition, larger customer bases, better technology or data, thus providing cheaper services and better offers to operators, organizations and partners, or greater financial, technical or marketing resources, allowing them to respond more quickly to new or emerging technologies or changes in user requirements. For instance, we currently still rely on data journalists to attend events to collect data. If our competitors develop technology that replaces the need for data journalists before we do, our business could be materially harmed. Further, if competitors gain access to faster visual feeds from stadiums, the value of our in-stadium rights would be reduced and our revenue could decline. If we are unable to retain customers or obtain new customers or maintain or develop relationships with sports organizations, our revenue could also decline. Increased competition for exclusive league partnerships could result in lower revenue and higher expenses, which would reduce our profitability. In addition, competitors may reach deals for exclusive rights with sports leagues in one or more particular countries and therefore block our access to such market.

Potential changes in competitive landscape, including new market entrants or disintermediation by participants in the industry, could harm our business.

The global sports data media, entertainment and betting industries that we operate within and provide products and services to, is comprised of diverse products and offerings that compete for consumer’s time and disposable income. We compete with a range of providers, each of whom may provide a component of our platform. For certain services and solutions, our primary competition are other sports data and software solution companies and sports content providers.

As the industry grows, jurisdictions legalize sports betting and current operational jurisdictions progress toward maturity, we expect the competitive landscape will continue to change in a variety of ways, including:

 

   

rapid and significant changes in technology, resulting in new and innovative sports entertainment and content options, that could place us at a competitive disadvantage and reduce the use of our products and services;

 

   

direct competitors, such as sports data and solution providers and indirect competitors, such as the sports betting bookmakers and media companies we serve or the league partners we rely on for (live) data and streaming rights, other industry participants and/or new market entrants (including technology and social media companies) may develop products and services that compete with or replace our products and services; and

 

   

participants in the sports media, entertainment and betting industries may undergo disintermediation of service providers and establish direct business relationships with sports leagues and teams for data, statistics and content.

 

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Certain competitors could use strong or dominant positions in one or more markets to gain a competitive advantage against us, such as by integrating competing platforms or features into products they control such as search engines, web browsers, mobile device operating systems or social networks; by making acquisitions; by making access to our platform more difficult; or by employing more aggressive bidding strategies with our sports league partners. Further, current and future competitors could choose to offer a different pricing model or to undercut prices in the market or our prices in an effort to increase their market share. Failure to compete effectively against any of these or other competitive threats could adversely affect our business, financial condition or results of operations.

If we fail to attract new customers, if the revenue generated by new customers differs significantly from our experiences, or if our customer acquisition costs increase, our business, revenue and growth will be harmed.

We must continually attract new customers in existing markets and expand into new markets in order to grow our business. Our ability to do so depends in large part on the success of our marketing efforts, our ability to enhance our services and our overall customer experience, to keep pace with changes in technology and our competitors and to expand our marketing partnerships and disbursement network.

Successful promotion of our brand will depend on a number of factors, including the effectiveness of our marketing efforts, including thought leadership, our ability to provide high-quality, reliable and cost-effective products and services, the perceived value of our products and services and our ability to provide quality customer success and support experience. We spent €3.2 million on marketing and communications and €25.8 million on central engineering technology and infrastructure costs, including personnel costs, in 2020, representing 0.8% and 6.4% of total revenue for the year, and we expect to continue to spend significant amounts to acquire new customers, primarily through product and content marketing that focuses on digital and direct channels to reach the customer from the beginning of their journey. We will continue to invest in brand-building marketing and communications and growing our awareness in emerging and growth markets. Our experience in markets in which we presently have low penetration rates may differ from our more established markets. If our estimates and assumptions regarding the gross profit we can generate from new customers prove incorrect, or if the gross profit generated from new customers differs significantly from that of prior customers, we may be unable to recover our customer acquisition costs or generate profits from our investment in acquiring new customers. Moreover, if our customer acquisition costs or our operating costs increase, the return on our investment may be lower than we anticipate irrespective of the gross profit generated from new customers. We cannot assure you that the gross profit from customers we acquire will ultimately exceed the marketing and technology and development costs associated with acquiring these customers. If we cannot generate profits from this investment, we may need to alter our growth strategy, and our growth rate or results of operations may be harmed.

Our expansion into new markets is also dependent upon our ability to adapt our existing technology and offerings or to develop new or innovative applications to meet the particular service needs of each new market. In order to do so, we will need to anticipate and react to market changes and devote appropriate financial and technical resources to our development efforts, and there can be no assurance that we will be successful in these efforts.

Furthermore, we may expand into new geographic markets, in which we do not currently have any operating experience. We cannot assure you that we will be able to successfully continue such expansion efforts due to our lack of experience in such markets and the multitude of risks associated with global operations, including the possibility of needing to obtain appropriate regulatory approval. Any failure to successfully expand may have a material adverse effect on our business, financial condition or results of operations.

We may not be able to acquire new customers in sufficient numbers to continue to grow our business due to macroeconomic factors, including global economic downturn, including as a result of the COVID-19 pandemic, exchange rate fluctuations, increased competition, new and/or stricter regulations and licensing requirements that may be harmful to our or our bookmaker customers’ businesses or other factors, or we may be required to incur significantly higher marketing expenses in order to acquire new customers. A decrease in customer acquisition growth would harm our business, financial conditions or results of operations.

 

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Our ability to retain our customers is dependent on the quality of our products and service, and our failure to offer high quality products and services could have a material adverse effect on our sales and results of operations.

We must continually retain existing customers and expand existing customers’ usage of our products and services, as well as increase our penetration and service offerings within our existing markets of operation, in order to grow our business. For the fiscal years ended December 31, 2019 and 2020, we generated 10.4% and 9.8% of total revenue from a single customer, respectively, and 22.6% and 24.1% of total revenue from our top ten customers combined, respectively. Our ability to retain our significant customers largely depends on whether we can enhance our products and services, and our overall customer experience and keep pace with changes in technology and our competitors. Our product quality must maintain the consistent level of low-latency and high accuracy to fulfill our customers’ requirements.

Once our products are deployed and integrated with our customers’ existing information technology investments and data, our customers depend on our customer service to resolve any issues relating to our products. Increasingly, our products have been deployed in large-scale, complex technology environments, and we believe our future success will depend on our ability to increase sales of our products for use in such deployments. Further, our ability to provide effective ongoing support, or to provide such support in a timely, efficient, or scalable manner, may depend in part on our customers’ environments and their upgrading to the latest versions of our products and participating in our centralized product management and services.

In addition, our ability to provide effective customer services is largely dependent on our ability to attract, train, and retain qualified personnel with experience in supporting customers. The number of our customers has grown significantly, and that growth has and may continue to put additional pressure on our services teams. While our goal is to provide high quality support 24 hours a day, and we may be unable to respond quickly enough to accommodate short-term increases in customer demand for our support services. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect our business and results of operations. In addition, as we continue to grow our operations and expand globally, we need to be able to provide efficient services that meet our customers’ needs globally at scale, and our services teams may face additional challenges, including those associated with operating the platforms and delivering support, training, and documentation in different languages and providing services across expanded time-zones. If we are unable to provide efficient customer service globally at scale, our ability to grow our operations may be harmed, and we may need to hire additional services personnel, which could negatively impact our business, financial condition or results of operations.

For some of our products, the customers may need training in the proper use of and the variety of benefits that can be derived from our products to maximize their potential. If we do not effectively deploy, update, or upgrade our products, succeed in helping our customers quickly resolve post-deployment issues, and provide effective ongoing services, our ability to sell additional products and services to existing customers could be adversely affected, we may face negative publicity, and our reputation with potential customers could be damaged. Many enterprise and government customers require higher levels of services than smaller customers. If we fail to meet the requirements of the larger customers, it may be more difficult to execute on our strategy to increase our penetration with larger customers. As a result, our failure to maintain high quality services may have a material adverse effect on our business, financial condition or results of operations.

If customer confidence in our brands and product quality, and business deteriorates, our business, financial condition or results of operations could be adversely affected.

Customer confidence in our brands and product quality, and the ability to provide fast, secure and validated data and content are critical to our success. A number of factors could erode our customers’ confidence in our business, or in the sports media, entertainment and betting industries generally, many of which are beyond our control and could have an adverse impact on our results of operations.

 

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Our business model is based on our ability to provide rapid, reliable and customizable products and services, and customer confidence in our business largely depends on the quality of our service and product experience and our ability to meet evolving customer needs and preferences. If we fail to maintain high quality service, or if there are pervasive customer complaints or negative publicity about our products or services, the confidence and trust customers have in our brands and business may decrease. Other factors include, but are not limited to delays between the live event in the stadium and the visualization at the customer, as well as any significant interruption in our systems, including as a result of unauthorized entry and computer viruses, fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, or disruptions in our workforce, including as a result of the COVID-19 pandemic and any breach, or reported breach, of our computer systems or other data storage facilities, or of certain of our third-party providers, resulting in a compromise of personal or other data.

We are subject to reputational risks related to betting-related match fixing, doping, and other sports integrity threats.

Many factors influence our reputation and the value of our brands, including the perception held by our customers, business partners, investors, other industry stakeholders and the communities in which we operate. Our Sportradar Integrity Services supplies sports integrity solutions for sports governing bodies, anti-doping organizations, law enforcement agencies, among others, to support them in the fight against betting-related match-fixing, doping and integrity treats. As a leading supplier of integrity solutions, we have faced, and will likely continue to face, increased scrutiny related to our solutions and consulting services, and our reputation and the value of our brands can be materially adversely harmed if a user of our solutions is involved in a major match-fixing or doping scandal. Fraud, corruption or negligence by our employees or contracted statisticians collecting data on behalf of us or third parties could also potential have an impact on our reputation. Operational errors, whether by us or our competitors, could also harm our reputation or the sports data, sports betting, online gaming and sports marketing industries. Any association with the illegal, unethical or fraudulent activities of our customers or our partners could expose us to potential reputational damage and financial loss. Any harm to our reputation could impact employee engagement and retention, and the willingness of customers and partners to do business with us, which could have a materially adverse effect on our business operations, financial conditions or results of operations.

Because we rely on third-party vendors to provide products and services, we could be adversely impacted if they fail to fulfill their obligations, experience disruption or cease providing services adequately or at all.

Some services relating to our business, such as cloud-based software service providers, software application support, data centers, parts of development, hosting and maintenance of our operating systems, call center services and other operating activities are outsourced to third-party vendors. Any changes to our failures in these systems that degrade the functionality of our products and services, impose additional costs or requirements on it or give preferential treatment to competitors’ services, including their own services, could materially and adversely affect usage of our products and services. In the event our agreements with our third-party vendors are terminated, or if we cannot renew the contracts on terms favorable to us, or at all, or if we cannot find alternative sources of such services or otherwise replace these third-party vendors quickly, we may experience a disruption in our services, and our business and operations could be adversely affected.

The failure of our third-party vendors to perform their obligations and provide the products and services we obtain from them in a timely manner for any reason, including as a result of damage or interruption from, among other things, fire, natural disaster, pandemics (including the COVID-19 pandemic), power loss, telecommunications failure, unauthorized entry, computer viruses, denial-of-service attacks, acts of terrorism, human error, vandalism or sabotage, financial insolvency, bankruptcy and similar events, could adversely affect our operations and profitability due to, among other consequences:

 

   

loss of revenue;

 

   

loss of customers;

 

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loss of customer data;

 

   

loss of sports league partnerships;

 

   

harm to our business or reputation resulting from negative publicity;

 

   

exposure to fraud losses or other liabilities;

 

   

additional operating and development costs; or

 

   

diversion of management, technical and other resources.

Indemnity provisions in customer and other third-party agreements potentially expose us to substantial liability for intellectual property infringement and other losses.

Many of our agreements with customers and other third parties include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from our products or other acts or omissions. The term of these contractual provisions often survives termination or expiration of the applicable agreement. Large indemnity payments of damage claims from intellectual property infringement or other claims could harm our business, results of operations and financial condition. Although we attempt to contractually limit our liability with respect to such obligations, we may still incur substantial liability related to them. Any dispute with a customer or other third party with respect to such obligations could have adverse effects on our relationship with that customer or third party and other current and prospective customers and other third parties, reduce demand for our products and services, damage our reputation and harm our business, results of operations and financial condition.

If we fail to manage our growth effectively, our brands, results of operations and business could be harmed.

We have experienced rapid growth in our headcount and revenue, which places substantial demands on our management and operational infrastructure. Our headcount grew from 2,010 FTEs as of December 31, 2018 to 2,366 FTEs as of December 31, 2020. As of December 31, 2019, we had 2,156 FTEs. Additionally, we may not be able to hire new employees quickly enough to meet our needs. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees, while maintaining the beneficial aspects of our company culture. If we fail, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and operating results could be harmed.

Our total revenue increased from €380.4 million in 2019 to €404.9 million in 2020, and from €191.6 million in the six month period ended June 30, 2020 to €272.1 million in the six month period ended June 30, 2021. We will need to continue to improve our operational, financial and management controls, and our reporting systems and procedures in order to manage this growth. If we do not manage the growth of our business and operations effectively, the quality of our products and services and efficiency of our operations could suffer, which could harm our business, financial condition or results of operations.

Our ability to recruit, retain and develop qualified personnel is critical to our success and growth.

All of our businesses function at the intersection of rapidly changing technological, social, economic and regulatory environments that require a wide range of expertise and intellectual capital. In addition, certain jurisdictions where we hold B2B gambling and/or betting supplier licenses, such as the United Kingdom or the United States, require certain management functions and key personnel to hold personal or management licenses or authorizations. For us to successfully compete and grow, we must recruit, retain and develop personnel from diverse backgrounds and who can provide the necessary expertise across a broad spectrum of intellectual capital needs. In addition, we must develop, maintain and, as necessary, implement appropriate succession plans to assure we have the necessary human resources capable of maintaining continuity in our business.

 

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For instance, we are highly dependent on the expertise and leadership of our Chief Executive Officer, Carsten Koerl, and other members of our senior management. The market for qualified and diverse personnel, particularly for specialty technology and development skills in the EEA, such as software engineers and data scientists, is competitive, and we also maintain an expansive network of data journalists and specialized data operators to allow us to cover live matches globally. We may not succeed in recruiting additional personnel for these positions, or may fail to effectively replace current personnel who depart with qualified or effective successors. In particular, the COVID-19 pandemic may make it challenging for us to manage a growing workforce, as our ability to sustain our company culture and integrate new employees are affected by working from home policies.

In addition, from time to time, there may be changes in our management team that may be disruptive to our business. If our management team, including any new hires that we make, fails to work together effectively and to execute our plans and strategies on a timely basis, or fails to maintain the required licenses or authorizations, our business could be harmed.

Our effort to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. We cannot assure that key personnel, including our executive officers, will continue to be employed or that we will be able to attract and retain qualified personnel in the future. Failure to recruit, retain or develop qualified personnel could adversely affect our business, financial condition or results of operations.

Our business is not fully mature, and our industry is evolving, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

Our business is not fully mature, which makes it difficult to effectively assess our future prospects. You should consider our business and prospects in light of the risks and difficulties we encounter in this evolving market. These risks and difficulties include our ability to, among other things:

 

   

retain an active customer base and attract new customers;

 

   

avoid interruptions or disruptions in our service;

 

   

improve the quality of the customer experience on our platforms;

 

   

earn and preserve our customers’ trust with respect to the quality of our products and services;

 

   

process, store and use personal customer data in compliance with governmental regulation and other legal obligations related to privacy;

 

   

comply with extensive existing and new laws and regulations, including licensing requirements for B2B suppliers to the gambling and betting industry;

 

   

effectively maintain a scalable, high-performance technology infrastructure that can efficiently and reliably handle our customer’s needs globally;

 

   

successfully deploy new or enhanced features and services;

 

   

compete with other companies that are currently in, or may in the future enter, the sports data business;

 

   

hire, integrate and retain world-class talent; and

 

   

expand our business into new markets.

If the market for sports media, entertainment and betting does not evolve as we expect, or if we fail to address the needs of this market, our business may be harmed. We may not be able to successfully address these risks and challenges, including those described elsewhere in these risk factors. Failure to adequately address these risks and challenges could harm our business, financial results or results of operations.

 

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Technology Risks

Our potential inability to anticipate and adopt new technology and develop and gain market acceptance of new and enhanced products and services in response to changing industry and regulatory standards and evolving customer needs may adversely affect our competitiveness.

Our industry is subject to rapid and significant technological advancements, with the constant introduction of new and enhanced products and services and evolving industry and regulatory standards and customer needs and preferences. We expect that new services and technologies applicable to the sports media, entertainment and sports betting industries will continue to emerge, which could have the effect of driving down the cost to access data and content and lead to more competitive pricing. Our business and financial success will depend on our ability to continue to anticipate the needs of customers and potential customers, to achieve and maintain broad market acceptance for our existing and future products and services, to successfully introduce new and upgraded products and services and to successfully implement our current and future geographic expansion plans. Through we actively seek to respond in a timely manner to changes in customer needs and preferences, technology advances, new and enhanced products and services and competitive pricing, failure to respond timely and well to these changes could adversely impact, on both a short-term and long-term basis, our business, financial condition or results of operations. Further, any new product or service we develop or acquire might not be introduced in a timely or cost-effective manner and might not achieve the broad market acceptance necessary to generate significant revenue. Expanding into new markets and investing resources towards increasing the depth of our coverage within existing markets also impose additional burdens on our research, systems development, sales, marketing and general managerial resources. In addition, these solutions could become subject to legal or regulatory requirements, which could prohibit or slow the development and provision of such new solutions and/or our adoption thereof. If we are unable to anticipate or respond to technological or industry standard changes on a timely basis, our ability to remain competitive could be adversely affected.

Real or perceived errors, failures or bugs in our products could materially and adversely affect our financial conditions or results of operations.

We provide data feeds regarding schedules, results, performance and outcomes of sporting events to our wide array of customers, who rely on our data to settle bets, create content and generate analysis. The software underlying our products is highly technical and complex. Our software has previously contained, and may now or in the future contain, undetected errors, bugs or vulnerabilities. For example, in October 2018, we experienced a half-day temporary data center outage that impacted our services outside of the United States, as a result of defects in third-party networking software. While we have remediated our network topology as a result of this incident, we cannot protect against all possible future defects. In addition, errors, failures and bugs may be contained in open-source or other third-party software utilized in building and operating our products or may result from errors in the deployment or configuration of open-source or third-party software. Some errors in our software may only be discovered after the software has been deployed or may never be generally known. Any errors, bugs or vulnerabilities in our software could result in interruptions in data availability, product malfunctioning or data breaches, and thereby result in damage to our reputation, adverse effects upon customers and users, loss of customers and relationships with third parties, loss of revenue or liability for damages. In some instances, we may not be able to identify the cause or causes of these problems or risks, or be able to take effective steps to remediate such problems or risks, within an acceptable period of time.

Our inability to protect our systems and data from continually evolving cybersecurity risks, security breaches or other technological risks could affect our reputation among our customers, consumers, and regulators, and may expose us to liability.

In conducting our business, we collect, process, transmit, store and otherwise use sensitive business information and personally identifiable information or personal data about our customers, employees, partners, vendors and other parties. This information may include account access credentials, credit and debit card numbers, bank account numbers, social security numbers, driver’s license numbers, names and addresses and other types of sensitive business or personal information.

 

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In addition, as a provider of real-time sports data and content, our products and services may themselves be targets of cyber-attacks that attempt to intercept, breach, sabotage or otherwise disable or gain access to them or the data processed thereby, and the defensive and preventative measures we take ultimately may not be able to effectively detect, prevent, or protect against or otherwise mitigate losses from all cyber-attacks. Despite our efforts to create security barriers against such threats, it is virtually impossible for us to eliminate these risks entirely. Any such breach could enable betting manipulation, compromise our networks, create system disruptions or slowdowns and exploit security vulnerabilities of our products. Additionally, the information stored on our networks, including proprietary information and other intellectual property, could be accessed, publicly disclosed, lost or stolen, any of which could subject us to liability and cause us financial harm. These breaches, or any perceived breach, may also result in damage to our reputation, negative publicity, loss of key partners, customers and transactions, regulatory complaints, investigations and penalties increased costs to remedy any problem and costly litigation and may therefore adversely impact market acceptance of our products and services and may seriously affect our business, financial condition or results of operations.

We have previously been the target of malicious third-party attempts to identify and exploit system vulnerabilities, and/or penetrate or bypass our security measures, in order to gain unauthorized access to our networks and systems or those of third parties associated with us. For example, in October 2019, we experienced a takeover of an email account, which resulted in a person’s inbox being downloaded by an unauthorized party. Although no material adverse effects were suffered from this takeover, if any future attempts are successful, it could lead to the compromise of sensitive, business, personal or confidential information. While we employ multiple methods at different layers of our systems to defend against intrusion and attack and to protect our data, we cannot be certain that these measures are sufficient to counter all current and emerging technology threats.

Our computer systems could be subject to breaches, and our data protection measures may not prevent unauthorized access. While we believe the procedures and processes we have implemented to detect, prevent and otherwise handle an attack are adequate, the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to anticipate or detect. Threats to our systems and associated third-party systems can originate from human error or negligence, fraud or malice on the part of employees or third parties or simply from accidental technological failure. Computer viruses and other malware can be distributed and could infiltrate our systems or those of associated third parties. In addition, denial of service or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities. Our defensive measures may not prevent unplanned downtime, or the unauthorized access, unauthorized use, or other compromise of sensitive data. While we maintain cyber errors and omissions insurance coverage that covers certain aspects of cyber risks, our insurance coverage may be insufficient to cover all losses. Further, while we select our associated third parties carefully, we do not control their actions. Any problems experienced by these third parties, including those resulting from breakdowns or other disruptions in the services provided by such parties or cyber-attacks and security breaches, could adversely affect our ability to service our customers or otherwise conduct our business or otherwise result in liabilities or other costs and expenses.

We could also be subject to liability for claims relating to misuse of personal information, such as unauthorized marketing purposes, improper collection, analysis, disclosure or other misuse of personal data, and violation of customer protection or data privacy laws. We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our service providers who have access to customer data will be followed or will be adequate to prevent such misuse. In addition, we are subject to obligations under certain of our agreements with respect to data privacy and security, including to take certain protective measures to ensure the confidentiality of customer data and to notify affected parties in the event of a breach. The costs of systems and procedures associated with such protective measures may increase and could adversely affect our ability to compete effectively. Any failure to adequately enforce or provide these protective measures or otherwise comply with our obligations could result in liability, protracted and costly litigation, governmental intervention and fines and, with respect to misuse of personal information of our customers, lost revenue, lost sports league partnerships and reputational harm.

 

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Any type of security breach, attack or misuse of data, whether experienced by us or an associated third party, could harm our reputation or deter existing or prospective customers or leagues from using our services, increase our operating expenses in order to contain and remediate the incident, expose us to unbudgeted or uninsured liability, disrupt our operations (including potential service interruptions), divert management focus away from other priorities, increase our risk of regulatory scrutiny or result in the imposition of penalties and fines under domestic or foreign laws. Also, prospective customers, partners or other third parties may choose to terminate their relationship with us, or delay or choose not to consider us for their needs. Any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.

Interruptions and failures in our systems or infrastructure, including as a result of cyber-attacks, natural catastrophic events, geopolitical events, disruptions in our workforce, system breakdowns or fraud may have a significant adverse effect on our business.

Our ability to provide fast, secure and validated products and services largely depends on the efficient and uninterrupted operation of our business processes, computer information systems and infrastructure. Any significant interruptions could harm our business and reputation and result in a loss of business. These systems, processes, operations and infrastructure could be exposed to damage, interruption or operational challenges from unauthorized entry and computer viruses and computer denial-of-service-attacks as discussed in this “Risk Factors” section under the caption “Our inability to protect our systems and data from continually evolving cybersecurity risks, security breaches or other technological risks could affect our reputation among our customers, consumers, and regulators and may expose us to liability,” human error, hardware or software defects or malfunctions, earthquakes, floods, fires, natural disaster, pandemics, such as the COVID-19 pandemic, power loss, telecommunications failure, terrorism, vendor failure, geopolitical events, foreign state attacks, system breakdowns of our informational technology or cloud infrastructure or other causes, many of which may be beyond our control. We currently maintain a disaster recovery and business continuity plan, however, our plan may not adequately protect us from such delays and interruptions. While we also maintain business interruption insurance, our coverage may be insufficient to compensate us for all losses that may result from interruptions in our service as a result of system failures and similar events.

Further, we have been and continue to be the subject of cyber-attacks, including routine port scanning by external parties. These attackers and attacks, which may even be initiated by nation-states, have continued to become more sophisticated and are primarily aimed at interrupting our business, exposing us to financial losses, or exploiting information security vulnerabilities. Historically, none of these attacks or breaches has individually or in the aggregate resulted in any material liability to us or any material damage to our reputation, and disruptions related to cybersecurity have not caused any material disruption to our business. The safeguards we have designed to help prevent future security incidents and systems disruptions and comply with applicable contractual, regulatory and other legal requirements may not be successful, and we may experience material security incidents, disruptions or other problems in the future. We also may experience software defects, development delays and other systems problems, which could harm our business and reputation and expose us to potential liability, which may not be fully covered by our business interruption insurance. In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. These applications may not be sufficient to address technological advances, regulatory requirements, changing market conditions or other developments.

Additionally, if our customer base and engagement continue to grow, and the amount and types of services and product offerings continue to grow and evolve, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy our users’ needs. Such infrastructure expansion may be complex, and unanticipated delays in completing these projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of our services or product offerings. In addition, there may be issues related to this infrastructure that are not identified during the testing phases of design and implementation, which may become evident only after

 

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we have started to fully use the underlying equipment or software, that could further degrade the user experience or increase our costs. As such, we could fail to continue to effectively scale and grow our technical infrastructure to accommodate increased demands.

We depend on computing infrastructure operated by Amazon Web Services (“AWS”), Microsoft, and other third parties to support some of our customers and any errors, disruption, performance problems, or failure in their or our operational infrastructure could adversely affect our business, financial condition or results of operations.

We rely on the technology, infrastructure, and software applications, including software-as-a-service offerings, of certain third parties, such as AWS and Microsoft Azure, in order to host or operate some or all of certain key platform features or functions of our business, including our cloud-based services, customer relationship management activities, billing and order management, and financial accounting services. Additionally, we rely on computer hardware purchased in order to deliver our platforms and services. We do not have control over the operations of the facilities of the third parties that we use. If any of these third-party services experience errors, disruptions, security issues, or other performance deficiencies, if they are updated such that our platforms become incompatible, if these services, software, or hardware fail or become unavailable due to extended outages, interruptions, defects, or otherwise, or if they are no longer available on commercially reasonable terms or prices (or at all), these issues could result in errors or defects in our platforms, cause our platforms to fail, our revenue and margins could decline, or our reputation and brand to be damaged, we could be exposed to legal or contractual liability, our expenses could increase, our ability to manage our operations could be interrupted, and our processes for managing our sales and servicing our customers could be impaired until equivalent services or technology, if available, are identified, procured, and implemented, all of which may take significant time and resources, increase our costs, and could adversely affect our business. Many of these third-party providers attempt to impose limitations on their liability for such errors, disruptions, defects, performance deficiencies, or failures, and if enforceable, we may have additional liability to our customers or third-party providers.

We may in the future experience, disruptions, failures, data loss, outages, and other performance problems with our infrastructure and cloud-based offerings due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, employee misconduct, capacity constraints, denial of service attacks, phishing attacks, computer viruses, malicious or destructive code, or other security-related incidents, and our disaster recovery planning may not be sufficient for all situations. If we experience disruptions, failures, data loss, outages, or other performance problems, our business, financial condition or results of operations could be adversely affected.

Our systems and the third-party systems upon which we and our customers rely are also vulnerable to damage or interruption from catastrophic occurrences such as earthquakes, floods, fires, power loss, telecommunication failures, cybersecurity threats, terrorist attacks, natural disasters, public health crises such as the COVID-19 pandemic, geopolitical and similar events, or acts of misconduct. Despite any precautions we may take, the occurrence of a catastrophic disaster or other unanticipated problems at our or our third-party vendors’ hosting facilities, or within our systems or the systems of third parties upon which we rely, could result in interruptions, performance problems, or failure of our infrastructure, technology, or platforms, which may adversely impact our business. In addition, our ability to conduct normal business operations could be severely affected. In the event of significant physical damage to one of these facilities, it may take a significant period of time to achieve full resumption of our services, and our disaster recovery planning may not account for all eventualities. In addition, any negative publicity arising from these disruptions could harm our reputation and brand and adversely affect our business.

Any interruption in our service, whether as a result of an internal or third-party issue, could damage our brand and reputation, cause our customers to terminate or not renew their contracts with us or decrease use of our platforms and services, require us to indemnify our customers against certain losses, result in our issuing credit or paying penalties or fines, subject us to other losses or liabilities, cause our platforms to be perceived as unreliable

 

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or unsecure, and prevent us from gaining new or additional business from current or future customers, any of which could harm our business, financial condition or results of operations.

Moreover, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition or results of operations could be adversely affected. The provisioning of additional cloud hosting capacity requires lead time. AWS, Microsoft Azure, and other third parties have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If AWS, Microsoft Azure, or other third-parties increase pricing terms, terminate or seek to terminate our contractual relationship, establish more favorable relationships with our competitors, or change or interpret their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to transfer to other cloud providers or invest in a private cloud. If we are required to transfer to other cloud providers or invest in a private cloud, we could incur significant costs and experience possible service interruption in connection with doing so, or risk loss of customer contracts if they are unwilling to accept such a change.

A failure to maintain our relationships with our third-party providers (or obtain adequate replacements), and to receive services from such providers that do not contain any material errors or defects, could adversely affect our ability to deliver effective products and solutions to our customers and adversely affect our business and results of operations.

The competitive position of our XML or application programming interfaces feeds depends in part on their ability to integrate, operate and share data with our customers’ applications.

The competitive position of our XML and API feeds depends in part on their ability to integrate, operate and share data with the visualization tools, software and technology infrastructure of our customers. As such, we must continuously modify and enhance our XML and API feeds to adapt to changes in website applications and mobile apps and to ensure efficiency, speed and scale. If the interoperability of our XML and API feeds with our customers’ decreases, we could become less attractive to users of our products, lose market share or be required to spend more costs to enhance compatibility. We intend to facilitate the compatibility of our XML and API feeds with various third-party software and infrastructure by maintaining and expanding our business and technical relationships. If we are not successful in achieving this goal, our business, financial condition or results of operations could be adversely affected.

Issues in the use of artificial intelligence, including machine learning, in our platforms may result in reputational harm or liability.

AI and machine learning is enabled by or integrated into some of our products, such as Simulated Reality, an AI-driven product for professional sports matches and a range of pre-match and live (in-play) betting opportunities. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed. Datasets may be insufficient, of poor quality, or contain biased information. Inappropriate or controversial data practices by data scientists, engineers, and end users of our systems could impair the acceptance of AI solutions. If the recommendations, forecasts, or analyzes that AI applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability, and brand or reputational harm. Some AI scenarios present ethical issues. Though our business practices are designed to mitigate many of these risks, if we enable or offer AI solutions that are controversial because of their purported or real impact on human rights, privacy, employment, or other social issues, we may experience brand or reputational harm.

Legal and Regulatory Risks

We and our customers may be subject to a variety of U.S. and foreign laws on sports betting, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business. Any

 

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change in existing regulations or their interpretation or the regulatory climate could adversely impact our ability to operate our business or decrease the demand for our products and services. The introduction of licensing requirements for the supply of products and services to the gambling and betting industry may adversely impact our ability to operate in such jurisdictions.

Many of the customers we serve and our business offered under the brand “Betradar,” which offers products and services to bookmakers around the world to enhance their sportsbook operations, may be subject to laws and regulations relating to sports betting and online betting and gaming in those jurisdictions in which our customers or we offer our services. See “Regulation and Licensing.”

Future legislative and regulatory action, court decisions, including by the Court of Justice of the European Union (“CJEU”), or other governmental action, such as the future regulation of sports betting in further jurisdictions in Europe and the United States, which may be affected by, among other things, political pressures, attitudes and climates, as well as personal biases and an increasingly negative tendency towards all forms of sports betting and gambling in politics and the wider society, may have a material impact on the legislation and licensing requirements applicable to our and our customers’ businesses and/or our operations and financial results. Stricter legislation, licensing and regulatory requirements as well as an increase in restrictions on the advertising of sports betting and gambling products may decrease the demand for our products and services or prevent us from providing these services entirely.

Our failure to obtain licenses in jurisdictions that introduce licensing requirements for supplying products and services to the gambling and betting industry (as well as our failure to maintain any of our existing licenses) may result in us having to change, restrict, suspend or cease our supply services and may ultimately result in a loss of revenue, the imposition of sanctions and penalties, including contractual fines and/or reputational damage. In case of licensing requirements being introduced in jurisdictions where we have local presence or other assets and/or from where we provide services that become subject to licensing, failure to obtain a license may result in changes to our business model and/or to the locations from where we operate the related parts of our business and ultimately to a forced temporary or permanent closure of such local presence, loss of revenue and/or reputational damages.

There can be no assurance that legally enforceable legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our and our customers’ businesses to prohibit, legislate or regulate various aspects of the sports betting industry (or that existing laws in those jurisdictions will not be interpreted negatively), including the introduction of new licensing and authorization requirements for our and our customers’ businesses and the introduction of licensing requirements for B2B suppliers of products and services to the gambling and betting industry. In particular, some jurisdictions have introduced regulations attempting to restrict, monopolize or prohibit online gambling and/or betting, while others have taken the position that online gaming should be licensed and regulated and have adopted or are in the process of considering legislation and regulations to enable that to happen. Changes to existing forms of regulation may include the introduction of punitive tax regimes, requirements for large bonds or other financial guarantees, limitations on product offerings, requirements for ring-fenced liquidity, requirements to obtain licenses and/or caps on the number of licensees, restrictions on permitted marketing activities or restrictions on third-party service providers to sports betting operators. In addition, some jurisdictions in which we may operate could presently be unregulated or partially regulated and therefore more susceptible to the enactment or change of laws and regulations.

Any adverse changes to the regulation of sports betting, the interpretation of these laws, regulations, government action and licensing requirements by relevant regulators or the revocation of operating licenses could materially adversely affect our ability to conduct our operations and generate revenue in the relevant jurisdiction. In particular, it may become commercially undesirable or impractical for us to provide sports betting services in certain jurisdictions as the local license or approval costs increase, our returns from or scope of service in such jurisdictions may be reduced or we may be forced to withdrawal from such jurisdictions entirely, with a material financial loss due to restrictions to our customers located in these jurisdictions.

 

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Additionally, governmental authorities could view us as having violated local laws, despite efforts to obtain all applicable licenses or approvals. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities or incumbent monopoly providers, or private individuals, could be initiated against participants in the sports betting industry. Such potential proceedings could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon us, our customers or other business partners, while diverting the attention of key executives. Such proceedings could have a material adverse effect on our business, financial condition or results of operations, as well as impact our reputation. In addition, there is a risk that the provision of products and services to customers who are not in compliance with gambling and betting legislation and/or regulatory requirements in certain jurisdictions, despite efforts to ensure that our products and services are made available only to customers who comply with all applicable legislation, including gambling and betting legislation, may lead to sanctions and penalties being issued against us based on aiding and abetting an illicit gambling or betting offer. This may also result in us being found unsuitable to maintain our existing regulatory licenses or obtain future licenses and authorizations.

A significant amount of our revenue is indirectly derived from jurisdictions where we or our customers are not required to hold a license or limited regulatory framework exists and the approach to regulation and the legality of sports betting varies from jurisdiction to jurisdiction and is subject to uncertainties.

The regulation and legality of sports betting and approaches to enforcement vary from jurisdiction to jurisdiction (from open licensing regimes to regimes that impose sanctions or prohibitions), including within the European Union single market, as well as across jurisdictions in the United States, and in certain jurisdictions there is no or limited legislation which is directly applicable to ours or our customers’ businesses. See “Regulation and Licensing.” While the majority of gambling and betting laws in Europe do not require us to hold licenses for providing our products and services to the betting industry on a B2B basis and thus, in most European jurisdictions, our business is not subject to holding a supplier license, some jurisdictions, including the United States and certain European jurisdictions, such as the United Kingdom and Malta, require us to hold a supplier license issued by the competent gambling and betting regulatory authority. In jurisdictions where the provision of B2B supply services to the betting industry is not subject to holding a supplier license, we operate our business based on agreements in which our customers warrant and represent that their respective business-to-customer (“B2C”) gambling and betting services comply with the applicable local legislation.

The legality of the supply of sports betting services in certain jurisdictions is not clear or is open to interpretation. In many jurisdictions, there are conflicting laws and/or regulations, conflicting interpretations, divergent approaches by enforcement agencies and/or inconsistent enforcement policies and, therefore, some or all forms of sports betting could be determined to be illegal in some of these jurisdictions, either when operated within the jurisdiction and/or when accessed by persons located in that jurisdiction. Moreover, the legality of sports betting is subject to uncertainties arising from differing approaches among jurisdictions as to the determination of where sports betting activities take place and which authorities have jurisdiction over such activities and/or those who participate in or facilitate them.

There is a risk that regulators or prosecutors in jurisdictions where we provide online gambling and/or betting services to customers without a local license or pursuant to a multi-jurisdictional license may take legal action against our operations and any defense we may raise may not be successful. These actions may include criminal sanctions and penalties, as well as civil and administrative enforcement actions, fines, funds and asset seizures, authorities seeking to seize funds generated from the allegedly illegal activity as well as payment blocks and internet service provider (“ISP”) blacklisting, some of which may be more readily enforceable within an economic area such as the EEA. Even if such claims are successfully defended, the process may result in a loss of reputation, potential loss of revenue and diversion of management resources and time.

In addition, there are many jurisdictions around the world where the legality of various forms of gambling is open to interpretation, often arising from a delay or failure to update gambling laws to reflect the availability of

 

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modern remote betting products. In those cases, there are justifiable arguments to support various forms of betting and gaming activities on the basis that they are not expressly prohibited, that their application to off-shore activities is unclear, that betting and gaming products are readily available within the particular jurisdiction and/or that there is no history of enforcement of betting and gaming regulations. Changes in regulation in a given jurisdiction could result in it being re-assessed as a restricted territory without the potential to generate revenue on an ongoing basis. Our inability to operate and work with customers in a large betting or gaming market in the future, for example Germany, or a number of smaller betting or gaming markets which collectively are material, could have a material adverse effect on our ability to generate revenue and our profit margins due to a decrease in economies of scale.

We determine whether to permit customers in a given jurisdiction to access any one or more of our products and services and whether to engage in various types of marketing activity and customer outreach based on a number of factors, including but not limited to:

 

  (a)

the laws and regulations of the jurisdiction;

 

  (b)

the terms of our betting licenses;

 

  (c)

the approach by regulatory and other authorities to the application or enforcement of such laws and regulations, including the approach of such authorities to the extraterritorial application and enforcement of such laws;

 

  (d)

state, federal or supranational law, including EU law if applicable;

 

  (e)

any changes to these factors; and

 

  (f)

internal rules and policies.

However, our assessment of the factors referred to above may not always accurately predict the likelihood of one or more jurisdictions taking enforcement or other adverse action against us, our customers or third-party suppliers, which could lead to fines, criminal sanctions and/or the termination of our operations in such jurisdictions.

As a supplier to the gambling and betting industry, our growth prospects depend on the legal and regulatory status of real money gambling and betting legislation applicable to our customers. Additionally, even if jurisdictions legalize real money gambling and betting, this may be accompanied by legislative or regulatory restrictions and/or taxes that make it impracticable or less attractive for our customers to operate in those jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may take longer than we anticipate, which may lead to a decreased demand for our products and services and adversely affect our business.

As a B2B supplier to the gambling and betting industry, the legal and regulatory landscape that our customers, including operators of real money gambling and betting offers, are facing impacts the results of our business. Several jurisdictions have regulated or are currently regulating or considering regulating the provision of real money gambling and betting to end consumers. Our business, financial condition and results of operations are significantly dependent upon the regulation that is applicable to and directly impacts our customers.

Certain jurisdictions in which laws currently prohibit or restrict sports betting or the marketing of those services, or protect monopoly providers, may implement changes to open their markets through the adoption of competitive licensing and regulatory frameworks. We have and still intend to expand our offering of sports betting services into such clarified or liberalized jurisdictions and markets, including within North America (in particular, following the U.S. Supreme Court’s decision to strike down the PASPA in May 2018), Europe and elsewhere internationally.

 

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While clarification and liberalization of the regulation of sports betting in certain jurisdictions and markets may provide our customers and us growth opportunities, successful expansion into each potential new jurisdiction or market will present its own complexities and challenges. Efforts to access a new jurisdiction or market may require us to incur significant costs, such as capital, local resources, local infrastructure, specific technology, marketing, legal and other costs, as well as the commitment of significant senior management time and resources. Notwithstanding such efforts, our ability to successfully enter such jurisdictions or markets may be affected by future developments in state/regional, national and/or supranational policy and regulation, limitations on market access, ability of our customers to successfully enter, competition from third parties and other factors that we are unable to predict at this time or are beyond our control. As a result, there can be no assurance that we will be successful in expanding our offering of sports betting services into such jurisdictions or markets or that our service and product offerings will grow at expected rates or be successful in the long term at all.

For example, the failure of state/regional, national and/or supranational regulators (particularly in various U.S. states) to implement a regulatory framework for provision of betting and gaming services in their jurisdictions in a timely manner, or at all, may prevent, restrict or delay our customers and us from accessing such markets. In addition, any regulation ultimately implemented may prohibit or materially restrict our customers’ and our ability to enter such jurisdictions. In particular, where licensing regimes are introduced in certain markets, there is no guarantee that our customer and we will be successful in obtaining or retaining a license to operate in such markets. Further, even if we do, any such license may be subject to onerous licensing requirements, together with sanctions for breach thereof and/or taxation liabilities that may make the market unattractive or impose restrictions that limit our ability to offer certain of our key products or services. Additionally, a license may require us to offer our products in partnership or cooperation with a local market participant, thereby exposing us to the risk of poor or non-performance by such participant, which could in turn disrupt or restrict our ability to effectively compete and offer our products in the relevant market. Finally, the complexity from the introduction of multiple state/regional regulatory regimes, particularly within the United States where multiple states are expected to introduce varying regulatory regimes, may result in considerable operational, legal and administrative costs for us, especially in the short term.

Furthermore, our competitors or their partners, may already be established in a jurisdiction or market. If regulation is liberalized or clarified in such jurisdictions or markets, we may face increased competition from other providers and this may in turn increase the overall competitiveness of the sports betting industry. We may face difficulty in competing with providers that take a more aggressive approach to regulation and are consequently able to generate revenue in markets from which we do not accept customers or in which we do not advertise. We may also face operational difficulties in successfully entering new markets, even where regulatory issues do not materially restrict such entity.

Failure to comply with regulatory requirements in a particular jurisdiction, or the failure to successfully obtain a supplier license or authorization applied for in a particular jurisdiction, could impact our ability to comply with licensing and regulatory requirements in other jurisdictions, or could cause the rejection of license applications or the restriction, condition, suspension or revocation of existing licenses in other jurisdictions.

Compliance with the various regulations applicable to our business in the context of offering products and services as a supplier to the gambling and betting industry is costly and time-consuming. In jurisdictions where we are required to hold such supplier licenses, the regulatory authorities regularly have broad powers with respect to the regulation and licensing of our business and may restrict, condition, suspend or ultimately revoke our licenses, impose substantial fines on us and take other actions, any one of which could have a material adverse effect on our business, financial condition or results of operations. These laws and regulations are dynamic and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current laws or regulations or enact new laws and regulations regarding these matters. Non-compliance with any such legislation or regulations could expose us to claims, legal or regulatory proceedings, license reviews, litigation and investigations by regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.

 

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Any of our existing supplier licenses may be restricted, conditioned suspended or ultimately revoked. The loss, suspension or review of a license or any condition imposed on a license held in one jurisdiction could trigger restrictions, conditions, suspension or loss of a license or affect our suitability and eligibility for such a license in another jurisdiction, and any of such restrictions, conditions, suspension or losses, or potential for such restriction, condition, suspension or loss, could cause us to cease offering some or all of our offerings in the impacted jurisdictions. We may be unable to obtain or maintain all necessary registrations, licenses, permits or approvals, and could incur fines or experience delays related to the licensing process, which could adversely affect our operations. For example, we currently have license applications pending in the European jurisdiction of Gibraltar. Our delay or failure to obtain or maintain licenses in any jurisdiction may prevent us from providing our products and services, increasing our customer base and/or generating revenue. Any failure to maintain or renew our existing licenses, registrations, permits, authorizations, or approvals could have a material adverse effect on our business, financial condition or results of operations.

We face the risk of loss, revocation, non-renewal or change in the terms of our existing supplier licenses

Our existing supplier licenses typically include a right for the regulatory authority to restrict, condition, suspend or revoke the license in certain circumstances, for example, where the licensee is in breach of the relevant regulatory requirements. In addition, the suitability process as part of any renewal or continuation application may be expensive and time-consuming and any costs incurred are unlikely to be recoverable if the application is unsuccessful. If any of our existing supplier licenses are not renewed or renewal is delayed, or if such licenses are restricted, conditioned, suspended, revoked or renewed on terms materially less favorable to our business, this may restrict us from providing some or all of our services to customers in such jurisdiction and may require us to restrict or suspend our services to customers in relation to such jurisdiction or to withdraw from that jurisdiction either temporarily or permanently, each of which would have a consequent negative impact on our revenue.

To date, we have obtained all licenses, authorizations, findings of suitability, registrations, permits and approvals necessary for our operations. Our supplier licenses tend to be issued for fixed periods of time, after which a renewal of the license is required. For example, certain of our licenses will expire and will need to be renewed in 2021, including our one year-term U.S. betting licenses for Arkansas, West Virginia and Tennessee. However, we can give no assurance that any additional licenses, permits and approvals that may be required will be given or that existing ones will be renewed or will not be revoked. Renewal is subject to, among other things, continued satisfaction of suitability and eligibility requirements of our directors, officers, key employees and personnel and shareholders. Any failure to renew or maintain our licenses or to receive new licenses when necessary would have a material adverse effect on our business.

In some jurisdictions our key executives and officers, certain employees, key personnel, or other individuals related to the business are subject to licensing and/or compliance requirements. Failure by such individuals to obtain the necessary licenses or comply with individual regulatory obligations, could cause our business to be non-compliant with its regulatory obligations, or imperil our ability to obtain or maintain the supplier licenses necessary to conduct our business. In some cases, the remedy to such situation may require the removal of a key executive or employee and the mandatory redemption or transfer of such person’s equity securities.

As part of obtaining and maintaining supplier licenses and authorizations, the competent gambling and betting regulatory authorities will generally determine suitability of certain directors, officers and employees and, in some instances, shareholders holding an equity participation or voting rights exceeding certain materiality thresholds. The criteria used by gambling and betting regulatory authorities to make determinations as to who requires a finding of suitability or the suitability of an applicant to conduct gaming operations vary across jurisdictions, but generally, and in particular in the United States, the competent authorities require extensive and detailed application disclosures. The competent authorities regularly have broad discretion in determining whether an applicant should be found suitable to conduct operations within a given jurisdiction. If any competent authority with jurisdiction over our business were to find an officer, director, employee, any key personnel or

 

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significant shareholder unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever our relationship with that person and be forced to appoint a different individual who meets the authority’s suitability requirements, which could result in having a material adverse effect on our business, financial condition or results of operations.

Additionally, a gambling and betting regulatory authority may refuse to issue or renew a supplier license or restrict, condition, suspend or ultimately revoke any existing supplier license, based on any past or present activities of our directors, officers, key employees and personnel, shareholders or third parties with whom we have relationships, which could adversely affect our business. Further, there is a risk that going forward our existing and/or any future key officers, directors, key employees and personnel or significant shareholders will not meet all suitability and eligibility criteria necessary for us to maintain or obtain the supplier licenses and authorizations required for operating our business, which may result in the need to replace the respective individual who fails to meet the suitability and eligibility criteria imposed by a gambling and betting regulatory authority. Any failure to renew or maintain such licenses or to receive new licenses when necessary would have a material adverse effect on our business, financial condition or results of operations.

There have been various attempts in the European Union to apply domestic criminal and administrative laws to prevent our sports betting operator clients licensed in other Member States from operating in or providing services to customers within their territory; the case law of the CJEU on this issue continues to evolve and the reactions of the governments of Member States create uncertainty for online betting operators.

There have been attempts by regulatory authorities, state licensees and incumbent operators, including monopoly operators, in certain Member States to apply domestic criminal and administrative laws to prevent, or attempt to prevent, sports betting operators licensed in other Member States from operating in or providing services to customers within their territories. Although certain Member States are subject to infringement proceedings initiated by the European Commission in relation to the laws that they apply to betting as being contrary to the EU law principles of free movement of services, the application and enforcement of these principles by the CJEU, the domestic courts and regulatory authorities in various Member States, remains subject to continuing clarification. There have been a considerable number of relevant proceedings before the domestic courts of various Member States and the CJEU.

If the jurisprudence of the CJEU continues to recognize that Member States may, subject to certain conditions, establish or maintain exclusive licensing regimes that restrict the offering of sports betting services by operators licensed in other Member States, our sports betting operator clients’ ability to allow their customers in a given Member State to access one or more of their sports betting services and to engage in certain types of marketing activity and customer contact may be impacted. Depending on the national courts’ or competent authorities’ interpretation of the EU law, our clients may have to submit to local licensing, regulation and/or taxation in more Member States and/or exclude customers in certain Member States, either entirely or from certain product offerings. Any such consequences could potentially indirectly reduce our revenue in the European Union.

We are subject to evolving governmental regulations and other legal obligations, particularly related to privacy, data protection and information security, and consumer protection laws across different markets where we conduct our business. Our actual or perceived failure to comply with such obligations could harm our business.

As part of our business, we collect personal information including personally identifiable information or personal data and other potentially sensitive and/or regulated data from our customers and employees and other parties, including bank account numbers, social security numbers, credit and debit card information, identification numbers and images of government identification cards. Laws and regulations in the United States and around the world restrict and regulate how personal information is collected, processed, stored, used and disclosed, including by setting standards for its security, implementing notice requirements regarding privacy practices, and providing individuals with certain rights regarding the use, storage, disclosure and sale of their protected personal

 

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information. In the United Kingdom, as well as the European Union, we are subject to laws and regulations that are more restrictive in certain respects than those in the United States. For example, the EU General Data Protection Regulation (“GDPR”), which came into force on May 25, 2018, implemented stringent operational requirements for the collection, use, retention, protection, disclosure, transfer and other processing of personal data. The European regime also includes directives which, among other things, require EU member states to regulate marketing by electronic means and the use of web cookies and other tracking technology. EU member states have transposed the requirements of these directives into their own national data privacy regimes, and therefore the laws may differ between jurisdictions. These are also under reform and might be replaced by a regulation that could provide consistent requirements across the European Union.

The GDPR introduced more stringent requirements (which will continue to be interpreted through guidance and decisions over the coming years) and requires organizations to erase an individual’s information upon request and limit the purposes for which personal data may be used. The GDPR also imposed mandatory data breach notification requirements and additional new obligations on service providers. A U.K.-only adaptation of the GDPR took effect on January 1, 2021 after the end of the United Kingdom’s transition period for its withdrawal from the European Union, which exposes us to two parallel regimes, each of which potentially authorizes similar fines for certain violations. Other countries have also passed or are considering passing laws requiring local data residency and/or restricting the international transfer of data. Additionally, the CJEU’s decision of July 16, 2020 in the “Schrems II” matter invalidated the EU-U.S. Privacy Shield and raised questions about whether one of its primary alternatives, namely, the European Commission’s Standard Contractual Clauses, can lawfully be used for personal data transfers from the European Union to the United States or most other countries. At present, there are few, if any, viable alternatives to the EU-U.S. Privacy Shield and the Standard Contractual Clauses. This may impact our ability to transfer personal data from Europe to the United States and other jurisdictions.

In recent years, U.S. and European lawmakers and regulators have expressed concern over electronic marketing and the use of third-party cookies, web beacons and similar technology for online behavioral advertising. In the European Union, marketing is defined broadly to include any promotional material and the rules specifically on e-marketing are currently set out in the ePrivacy Directive which will be replaced by a new ePrivacy Regulation. While no official time frame has been given for the ePrivacy Regulation, there will be a transition period after the ePrivacy Regulation is agreed for compliance. On June 20, 2019, the United Kingdom’s Information Commissioner (the “ICO”) published a report setting out its views on advertising technology, specifically the use of personal data in “real time bidding” (i.e. in-play betting), and the key privacy compliance challenges arising from it. In its report, which is a status update rather than formal guidance, several key deficiencies are noted. The ICO paused its investigation into real time bidding and the adtech industry in May 2020 in response to the COVID-19 pandemic, but announced in January 2021 that such investigation has resumed. We are likely to be required to expend further capital and other resources to ensure compliance with these changing laws and regulations. While we have numerous mitigation controls in place, advertisements produced by us may be erroneously served on websites that are not suitable for the advertising content of gambling (e.g., websites predominantly aimed at children). There is also a risk that gambling advertisements are viewed by people who do not want to view them, or who have taken measures not to receive them (for example, individuals on “self-exclusion” lists). In each case this may have adverse legal and reputational effects on our business. Our media customers may also use our services to target jurisdictions where they are not permitted to advertise, and our risk mitigation controls may fail to identify and/or prevent this, which could cause our business to suffer adverse legal and reputational effects.

In the United States, both the federal and various state governments have adopted or are considering laws, guidelines or rules for the collection, distribution, processing, transmission, storage and other use of personal information collected from or about customers or their devices. For example, California enacted the California Consumer Privacy Act (“CCPA”), which became effective January 1, 2020, and requires new disclosures to California consumers, imposes new rules for collecting or using information about minors, and affords consumers new abilities to opt out of certain disclosures of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The effects of the CCPA and its implementing regulations, particularly in light of uncertainties

 

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about the scope and applicability of exemptions that may apply to our business, are potentially significant and may require us to modify our data collection or processing practices and policies, particularly with respect to online advertising and data analytics, and to incur substantial costs and expenses in an effort to comply. Other states are considering the implementation of similar statutes. Moreover, a newly passed privacy law, the California Privacy Rights Act (“CPRA”), which will become operational in 2023, significantly modifies and expands on the CCPA, creating new consumer rights and protections, including the right to correct inaccurate personal information, the right to opt out of the use of personal information in automated decision making, the right to opt out of “sharing” consumer’s personal information for cross-context behavioral advertising, and the right to restrict use of and disclosure of sensitive personal information, including geolocation data to third parties.

Restrictions on the collection, use, sharing or disclosure of personally identifiable information or personal data or additional requirements and liability for security and data integrity could require us to modify our products and services, possibly in a material manner, could limit our ability to develop new products and services and could subject us to increased compliance obligations and regulatory scrutiny. Current and proposed regulation addressing consumer privacy and data use and security could also increase our costs of operations.

These laws and regulations are constantly evolving, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our practices and our efforts to comply with the evolving data protection rules may be unsuccessful. We must devote significant resources to understanding and complying with this changing landscape. If our privacy or data security measures fail to comply with applicable current or future laws and regulations, we may be subject to litigation, regulatory investigations and fines, enforcement notices requiring us to change the way we use personal data or our marketing practices, and significant costs for remediation. For example, under the GDPR we may be subject to fines of up to €20 million or up to 4% of the total worldwide annual group turnover of the preceding financial year (whichever is higher). We may also be subject to other liabilities, such as civil litigation claims by data subjects, as well as negative publicity and a potential loss of business, business partners, consumer trust and market confidence. Recently, a group of U.K. football players issued a data subject access request under the GDPR to various participants in the sports data and sports betting industries, including us. If the request (named “Project Red Card”) develops into legal action, it could significantly alter the way we collect and use sports data relating to players, could subject us to fees or other damages and could materially affect the sports data industry as whole. Under the terms of our existing contractual arrangements, any adverse judgments could impact the validity of such contractual arrangements and/or our ability to rely on intellectual property rights to prevent third-party infringement, which may force us to alter our business strategy and have an adverse effect on our business. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity. Any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.

Failure to obtain, maintain, protect, enforce and defend our intellectual property rights, or to obtain intellectual property protection that is sufficiently broad may diminish our competitive advantages or interfere with our ability to develop, market and promote our products and services.

Our patents, trademarks, trade names, trade secrets, know-how, proprietary technology and other intellectual property rights are important to our success. While it is our policy to protect and defend our intellectual property rights vigorously, we cannot predict whether the steps we take to obtain, maintain, protect and enforce our intellectual property will be adequate to prevent infringement, misappropriation, dilution or other potential violations of our intellectual property rights. We may not be able to register our intellectual property rights in all jurisdictions where we do business, and in certain circumstances, we may determine that it is not commercially desirable to obtain registered protection for our products, software, databases or other technology. In such situations, we must rely on laws governing the protection of unregistered intellectual property rights, and contractual confidentiality and/ or exclusivity provisions to protect our data and technology, which may limit the remedies available to us in the event of unauthorized use by third parties. If we are unable to protect our proprietary offerings, technology and features via relevant laws or contractual exclusivity, competitors may copy

 

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them. Even if we seek to register our intellectual property rights, third parties may contest our applications, and even if we are able to obtain registrations, third parties may challenge the validity or enforceability of the registered intellectual property. Further, we cannot guarantee that our patents, registered trademarks or other intellectual property will be of sufficient scope or strength to provide us with meaningful protection or competitive advantage. We also cannot guarantee that others will not independently develop technology with the same or similar functions to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Unauthorized parties may attempt to reverse engineer our technology to develop applications with the same or similar functionality as our solutions, and competitors and other third parties may also adopt trade names or trademarks similar to ours. Further, competitors and other third parties have in the past and may in the future attempt to make unauthorized use of our data. Monitoring and policing unauthorized use of our data, technology and intellectual property rights is difficult and may not be effective, and we cannot assure you that we will have adequate resources to police and enforce our intellectual property rights. Uncertainty may also result from changes to intellectual property laws or to the interpretation of those laws by applicable courts and agencies. For example, the legal position in all jurisdictions in relation to the ownership and permitted use of sports data and databases is subject to change. This area may receive focus in the United States following the lifting of the PASPA ban. As such, we cannot be certain that our current uses of data from publicly available sources or otherwise, which are not known to infringe, misappropriate or otherwise violate third-party intellectual property today, will not result in claims for infringement, misappropriation or other violations of third-party intellectual property in the future. If we are unable to maintain the proprietary nature of our technologies, our business, financial condition and results of operations could be materially adversely affected. Any litigation to enforce our intellectual property rights or defend ourselves against oppositions or other proceedings regarding our registered or applied-for intellectual property could be costly, divert attention of management and may not ultimately be resolved in our favor.

We attempt to protect our intellectual property and proprietary information by (i) implementing industry-standard administrative, technical and physical practices, including source code access controls, to secure our proprietary information, and (ii) requiring all of our employees and consultants and certain of our contractors to execute confidentiality and invention assignment agreements. However, we may not be able to obtain these agreements in all circumstances. Furthermore, we cannot guarantee that all employees, consultants and contractors will comply with the terms of these agreements, or that the agreements will effectively protect our proprietary information or protect our ownership of our intellectual property rights. Accordingly, we may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements despite the existence generally of confidentiality agreements, access controls, industry standard practices and other contractual restrictions. Monitoring unauthorized uses and disclosures is difficult and costly, and we do not know whether the steps we have taken to protect our proprietary technologies and information will be effective. In addition, courts outside the United States are sometimes less willing to protect trade secrets, know-how and other proprietary information. We also we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.

We employ individuals who were previously employed at other companies in our field, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we are unsuccessful in defending any such claims, we may be liable for damages, and we may also be prevented from using certain intellectual property, which in turn could materially adversely affect our business, financial condition or results of operations. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.

 

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Our use of “open-source” software could adversely affect our ability to offer our products and services and subject us to possible litigation.

We use open-source software in connection with our proprietary software and expect to continue to use open-source software in the future. Use and distribution of open-source software may entail greater risks than use of other third-party commercial software, as licensors of open-source software generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the licensed code. Some open-source licenses may require licensees that incorporate open-source code into their proprietary software, or that distribute their proprietary software with or link their proprietary software to open-source code, to publicly disclose their proprietary source code, or may prohibit the licensees from charging a fee to other parties for use of such software. In addition, the public availability of open-source software may make it easier for others to compromise or reproduce our services or product offerings.

While we try to insulate our proprietary code from the effects of such open-source license provisions, we cannot guarantee we will be successful. Accordingly, we may face claims from others claiming ownership of software, or seeking to enforce open-source license terms with respect to our software, including by demanding release of our proprietary source code that was developed or distributed with or linked to such software. Any such release could allow our competitors to create similar technologies with less development effort and in less time and could lead to a loss of sales of our products and services. These claims could also result in litigation, require us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which would have a negative effect on our business or results of operations. In addition, if the license terms for the open-source code change, we may be forced to re-engineer our software or incur additional costs. The use of certain open-source software can also lead to greater risks than the use of third-party commercial software, as open-source licensors generally do not provide warranties or controls on the origin of software which, thus, may contain security vulnerabilities or infringing or broken code. Any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.

If we are not able to maintain, enhance and protect our reputation and brand recognition, including through the maintenance and protection of trademarks, our business will be harmed.

We believe that maintaining and enhancing our reputation and brand recognition is critical to our relationships with our partners and customers and to our ability to attract new partners and customers. The promotion of our brand may require us to make substantial investments and we anticipate that, as our market becomes increasingly competitive, these marketing initiatives may become increasingly difficult and expensive. If we fail to adequately protect or enforce our rights under trademarks that are important to our business, we may lose the ability to use those trademarks or to prevent others from using them, which could adversely harm our reputation and our business. It is possible that others may assert senior rights to similar trademarks, in the United States and internationally, and seek to prevent our use and registration of our trademarks in certain jurisdictions. Our pending trademark applications may not result in such trademarks being registered, and we may not be able to use these trademarks to commercialize our products and services in the relevant jurisdictions.

Our registered or unregistered trademarks may be challenged, infringed, circumvented, diluted, declared generic, lapsed or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks, which we need in order to build name recognition with partners and customers. If we are unable to adequately protect our trademarks or to establish name recognition based on our trademarks, our ability to build brand identity could be impeded and possibly lead to market confusion, we may not be able to compete effectively, and our business, financial condition and results of operations may be adversely affected.

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property or similar proprietary rights, the outcome of which would be uncertain and could have a material adverse effect on our business, financial condition and results of operations.

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proprietary rights of third parties. Whether merited or not, we have faced, and may in the future face, claims of infringement, misappropriation or other violation of third-party intellectual property or similar proprietary rights that could interfere with our ability to market and promote our brands, products and services. This could include claims that the content made available through our products and services violates individuals’ (including athletes’) rights of publicity or privacy or utilizes without authorization, infringes upon, dilutes or otherwise violates third-party trademarks or brand names. Any litigation to defend ourselves against claims of infringement, misappropriation or other violation of third-party intellectual property or similar proprietary rights could be costly, divert attention of management and may not ultimately be resolved in our favor. Moreover, failure to successfully settle or defend against claims that we have infringed, misappropriated or otherwise violated the intellectual property or similar proprietary rights of others may require us to stop using certain intellectual property or commercializing certain products and services, obtain licenses, modify our services and technology while we develop non-infringing substitutes, incur substantial damages or settlement costs, or face a temporary or permanent injunction prohibiting us from marketing or providing the affected products and services. If we require a third-party license, it may not be available on reasonable terms or at all, and we may have to pay substantial royalties and upfront or ongoing fees. Such licenses may also be non-exclusive, which could allow competitors and other parties to use the subject technology in competition with us. We may also have to redesign our services and technologies so they do not infringe, misappropriate or otherwise violate third-party intellectual property or similar proprietary rights, which may not be possible or may require substantial monetary expenditures and time, during which our technology may not be available for commercialization or use.

Some third parties may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our Class A ordinary shares. Moreover, any uncertainties resulting from the initiation and continuation of any legal proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. Any of the foregoing could materially adversely affect our business, financial condition and results of operations.

Our ability to commercialize our technology and products are subject, in part, to the terms and conditions of licenses granted to us by others.

We are reliant upon licenses to certain data and other intellectual property rights that are important to our products and services, including from strategic partners such as the NBA and MLB. These and other licenses are generally non-exclusive, and may not provide us with sufficient rights to use such data and other intellectual property rights, including in all territories in which we may wish to commercialize our products and services. As a result, we may not be able to prevent competitors or parties from commercializing competitive products and services. In spite of our best efforts, our licensors might conclude that we have materially breached our license agreements and might therefore terminate the license agreements, thereby removing our ability to commercialize our products and services covered by these license agreements. Even if these agreements are not terminated, upon their expiration, we may be required to re-negotiate or renew these agreements with our licensors, or enter into new agreements with other rights holders, in order to commercialize our products and services. There is significant competition for such licenses, and we cannot guarantee that we will be able to renew our licenses. Furthermore, as rights holders develop their own offerings, they may be unwilling to provide us with access to certain data or content, such as data and content for popular or highly-anticipated game broadcasts or series. If our licensors and other rights holders are not willing or able to license us data, content or other materials upon terms acceptable to us (or at all), our ability to commercialize our products and services may be impaired or our costs could increase. In addition, we may seek to obtain additional licenses from our licensors and, in order to obtain such licenses, we may have to agree to amend our existing licenses in a manner that may be more

 

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favorable to the licensors. Any of the foregoing could materially adversely affect our business, financial condition and results of operations.

We could be subject to changes in tax laws or their interpretations or additional taxes in or out of the United States and Switzerland, or could otherwise have exposure to additional tax liabilities, which could reduce our profitability.

We are subject to tax laws in each jurisdiction where we do business. Changes in tax laws or their interpretations could decrease the amount of revenue we receive, the value of any tax loss carry-forwards and tax credits recorded on our balance sheet and the amount of our cash flow, and adversely affect our business, financial condition or results of operations. In addition, other factors or events, including business combinations and investment transactions, changes in the valuation of our deferred tax assets and liabilities, adjustments to taxes upon finalization of various tax returns or as a result of deficiencies asserted by taxing authorities, increases in expenses not deductible for tax purposes, changes in available tax credits, changes in transfer pricing methodologies, other changes in the apportionment of our income and other activities among tax jurisdictions, and changes in tax rates, could also increase our future effective tax rate.

Our tax filings are subject to review or audit by the U.S. Internal Revenue Service (the “IRS”) and state, local and non-U.S. taxing authorities. We exercise judgment in determining our worldwide provision for taxes and, in the ordinary course of our business, there may be transactions and calculations where the proper tax treatment is uncertain. We may also be liable for taxes in connection with businesses we acquire. Our determinations are not binding on the IRS or any other taxing authorities, and accordingly the final determination in an audit or other proceeding may be materially different than the treatment reflected in our tax provisions, accruals and returns. An assessment of additional taxes because of an audit could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further changes in the tax laws of non-U.S. jurisdictions could arise, in particular, as a result of the base erosion and profit shifting project that was undertaken by the Organization for Economic Co-operation and Development, or OECD. The OECD, which represents a coalition of member countries, recommended changes to numerous long-standing tax principles. These changes, if adopted, could increase tax uncertainty and may adversely affect our provision for income taxes and increase our tax liabilities.

Due to the Swiss corporate tax law reform that took effect on January 1, 2020, all Swiss cantons, including the Canton of St. Gallen, have abolished the cantonal tax privileges. Therefore, since January 1, 2020, we are subject to standard cantonal taxation. The standard effective corporate tax rate in St. Gallen, Canton of St. Gallen, can change from time to time. The standard combined (federal, cantonal, communal) effective corporate income tax rate, except for dividend income for which we could claim a participation exemption, for 2020 in St. Gallen will be approximately 14.50%. Further, the available tax loss carryforward could be limited in case an entity changes from a preferential to the ordinary tax regime.

Our failure to comply with the anti-corruption, anti-bribery, economic sanctions and export controls, anti-money laundering and similar laws of the U.S. and various international jurisdictions could negatively impact our reputation and results of operations.

Doing business on a worldwide basis requires us to comply with anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, which may include the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act 2010 (“U.K. Bribery Act”), as well as the laws of the other countries and territories where we do business. The FCPA, the U.K. Bribery Act, and other applicable laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to “foreign officials” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The U.K. Bribery Act also prohibits non-governmental “commercial” bribery and accepting bribes.

 

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We are subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring our personnel and representatives into contact with “foreign officials,” including those responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental regulations. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption.

Our business also must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, the Swiss State Secretariat For Economic Affairs (“SECO”), the European Union, European Union member states, and Her Majesty’s Treasury of the United Kingdom, and other relevant sanctions authorities.

Our international operations expose us to the risk of violating, or being accused of violating, anti-corruption, economic sanctions and export control laws and regulations. Our failure to successfully comply with these laws and regulations may expose us to reputational harm, as well as significant sanctions, including criminal fines, imprisonment, civil penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. We have policies and procedures designed to comply with applicable anti-corruption, economic sanctions and export control laws and regulations. However, there can be no guarantee that our policies and procedures will effectively prevent violations by our employees or business partners acting on our behalf, for which we may be held responsible, and any such violation could adversely affect our reputation, business, financial condition and results of operations.

Financial and Capital Risks

We have identified material weaknesses in our internal control over financial reporting. If our remediation of such material weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to design and maintain effective internal control over financial reporting, our ability to timely and accurately report our financial condition and results of operations or comply with applicable laws and regulations could be impaired, which may adversely affect investor confidence in us and, as a result, the value of our ordinary shares.

Prior to this offering, we have been a private company with limited accounting personnel and other relevant resources with which to address our internal controls and procedures. Although we are not yet subject to the certification or attestation requirements of Section 404, in the course of reviewing our financial statements in preparation for this offering, our management and our independent registered public accounting firm identified deficiencies that we concluded represented material weaknesses in our internal control over financial reporting primarily attributable to our lack of an effective control structure and sufficient financial reporting and accounting personnel. As a public company, we are required to maintain internal control over financial reporting and will be required to evaluate and determine the effectiveness of our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement in our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. We identified a material weakness in our internal control over financial reporting related to our financial reporting infrastructure as of December 31, 2019. Specifically, this material weakness relates to the insufficient design and implementation of processes, controls, IT systems, and other matters including segregation of duties, lack of evidence of review for significant agreements and documentation of judgments made by management. We have also identified a second material weakness related to the lack of sufficient accounting and financial reporting personnel with requisite knowledge and experience in the application of IFRS. We have concluded that these material weaknesses arose because, as a private company, we did not have the necessary processes, systems, personnel and related internal controls in place. We are in the process of designing and implementing measures to improve our internal control over financial reporting to remediate the identified material weaknesses.

 

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To date, we have begun to hire key finance and technical IFRS accounting resources and are continuing to evaluate the need for additional resources of this type. At the time of this registration statement, these material weaknesses have not been remediated.

We have engaged third-party specialists to assist in our remediation efforts, who will be advising on additional finance and technical IFRS accounting resources we need to support effective internal controls. Additionally, they will be assisting us in designing business and IT processes and controls to remediate these material weaknesses, and ultimately supporting our future certification of Section 404. Additionally, we are beginning an IT system implementation which will allow for an effective internal control framework. We believe we will make progress in our remediation plan by December 31, 2021 and achieve significant progress during 2022, but cannot provide assurance that we will be able to complete full remediation by then or will be able to avoid the identification of additional material weaknesses in the future. We expect to incur significant costs to execute the various aspects of our remediation plan but cannot provide a reasonable estimate of such costs at this time. Additionally, there is also no assurance that we have identified all our material weaknesses or that we will not in the future have additional material weaknesses.

The process of designing and implementing internal control over financial reporting required to remediate our material weaknesses and comply with the disclosure and attestation requirements of Section 404 will be time consuming and require significant costs, for which we cannot provide a reasonable estimate at this time. If during the evaluation and testing process we identify additional material weaknesses in our internal control over financial reporting or determine that existing material weaknesses have not been remediated, our management will be unable to assert that our internal control over financial reporting is effective and additional remediation efforts and associated costs will be required. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal control over financial reporting. If we fail to remediate the material weaknesses or to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our ordinary shares could be adversely affected and we could become subject to litigation or investigations by our stock exchange, the SEC, or other regulatory authorities, which could require additional financial and management resources.

Our operating results and operating metrics are subject to seasonality and volatility, which could result in fluctuations in our quarterly revenue and operating results or in perceptions of our business prospects.

We have experienced, and expect to continue to experience, some degree of seasonal fluctuations in our revenue, which can vary by region. For the data packages that we offer, we only charge during active months of each sport and prorate for optional preseason or postseason coverage. The broad geographical mix of our customer base also impacts the effect of seasonality as customers in different territories will place differing importance on different sporting competitions, which often have different calendars. As such, our revenue has historically been strongest during the first quarter when most playoffs and championship games occur and has historically seen decreased or stalled growth rates during off-seasons. Our revenue may also be affected by the scheduling of major sporting events that do not occur annually, or the cancellation or postponement of sporting events and races, such as the postponement of the 2020 Football European Championship. We also experience volatility in certain other metrics, such as revenue shares and trading performance. Volatility in our key operating metrics or their rates of growth could result in fluctuations in our financial condition or results of operations, make forecasting our future business results and needs more difficult, adversely affect our ability to manage working capital and may lead to adverse inferences about our prospects, which could result in declines in our share price.

We may not be able to secure additional financing in a timely manner, or at all, to meet our long-term future capital needs, which could impair our ability to execute our business plan.

We believe that our existing cash, available borrowing under our credit facilities and expected cash flow from operations, will be sufficient to meet our operating and capital requirements for at least the next 24 months.

 

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Although we are Adjusted EBITDA-positive, we may require additional capital to respond to future business opportunities, including increasing the number of customers acquired, new league deals, challenges, acquisitions or unforeseen circumstances and may determine to engage in equity or debt financings for other reasons. Our ability to obtain additional capital, if and when required, will depend on our business plans, investor demand, our operating performance, markets conditions, our credit rating and other factors. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we decide to raise additional funds by issuing equity or equity-linked securities, those securities may have rights, preferences or privileges senior to the rights of our currently issued and outstanding equity, and our existing shareholders may experience dilution. We may not be able to secure additional debt or equity financing in a timely manner, or at all, which could require us to scale back our future business plan and operations.

We may not be able to generate sufficient revenue to maintain profitability or to generate positive cash flow on a sustained basis, and our revenue growth rate may decline.

We may experience losses after tax in the future, and we cannot assure you that we will generate sufficient revenue to offset the cost of maintaining our platform and maintaining and growing our business. Although our revenue grew at 20% CAGR from 2016 to 2020, we cannot assure you that our revenue will continue to grow at the same pace or at all or will not decline. You should not consider our historical revenue growth or operating expenses as indicative of our future performance. Reduced demand, whether due to a weakening of the global economy, reduction in consumer spending, competition or other reasons, may result in decreased revenue and growth, adversely affecting our operating results. If our revenue growth rate declines or our operating expenses exceed our expectations, our financial performance will be adversely affected.

Additionally, we also expect our costs to increase in future periods, which could negatively affect our future operating results and ability to achieve and sustain profitability. We expect to continue to invest substantial financial and other resources on technology development, marketing and human capital. These investments may not result in increased revenue or growth in our business. If we cannot successfully generate revenue at a rate that exceeds the costs associated with our business, we will not be able to achieve profitability and our revenue growth rate may decline. Even with sustained or increasing revenue growth rates, we may not be able to maintain profitability or generate positive cash flow on a continuous basis, if our costs grow in tandem. If we fail to continue to grow our revenue and overall business, our business, financial condition or results of operations could be materially adversely affected.

Acquisitions create certain risks and may adversely affect our business, financial condition or results of operations.

A key element of our business strategy is to complement our organic growth with acquisitions. We routinely explore acquiring other businesses and assets, and we have acquired businesses in the past and may continue to make acquisitions of businesses or assets in the future.

However, we may be unable to identify or complete promising acquisitions for many reasons, including any misjudgment of the key elements of an acquisition, competition among buyers, the high valuations of businesses in our industry, the need for regulatory and other approvals, lack of internal resources to actively pursue all attractive opportunities and availability of capital.

When we do identify potential acquisition targets, the acquisition and integration of businesses or assets involves a number of risks. These risks include valuation (determining a fair price for the business or assets), structuring (including, when necessary, carving out the target entity from the seller) integration (managing the process of integrating the acquired business’ people, products, technology and other assets to extract the value and synergies projected to be realized in connection with the acquisition), regulation (obtaining regulatory or other government

 

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approvals, including antitrust approvals, that may be necessary to complete the acquisition and integrate thereafter) and due diligence (including identifying risks to the prospects of the business, including undisclosed or unknown liabilities or restrictions to be assumed in the acquisition). In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets. We are required to test goodwill and any other intangible assets with an indefinite life for possible impairment on an annual basis, or more frequently when circumstances indicate that impairment may have occurred. We are also required to evaluate amortizable intangible assets and fixed assets for impairment if there are indicators of a possible impairment. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our results of operations based on this impairment assessment process, which could adversely affect our results of operations.

In addition, to the extent we pursue acquisition of foreign businesses and assets, these potential acquisitions often involve additional or increased risks, including:

 

   

managing geographically separated organizations, systems and facilities;

 

   

integrating personnel with diverse business backgrounds and organizational cultures;

 

   

complying with additional regulatory and other legal requirements, including the requirement to maintain or transfer licenses and authorizations following a change of control in the acquired business or obtain new licenses or authorizations;

 

   

addressing financial and other impacts to our business resulting from fluctuations in currency exchange rates and unit economics across multiple jurisdictions;

 

   

obtaining, maintaining, protecting and enforcing intellectual property rights internationally;

 

   

difficulty entering new international markets due to, among other things, customer acceptance and business knowledge of these markets; and

 

   

general economic and political conditions.

In addition, our ability to realize the benefits we anticipate from our acquisition activities, including any anticipated sales growth, cost synergies and other anticipated benefits, will depend in large part upon whether we are able to integrate such businesses efficiently and effectively. Integration is an ongoing process, and we may not be able to fully integrate such businesses smoothly or successfully, and the process may take longer than expected. Further, the integration of certain operations and the differences in operational culture following such activity will continue to require the dedication of significant management resources, which may distract management’s attention from day-to-day business operations. There may also be unasserted claims or assessments that we failed or were unable to discover or identify in the course of performing due diligence investigations of target businesses. If we are unable to successfully integrate the operations of acquired businesses into our business, we may be unable to realize the sales growth, cost synergies and other anticipated benefits of such transactions, and our business, financial condition or results of operations could be adversely affected.

Our indebtedness could adversely affect our financial health and competitive position.

Our indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. It could also have effects on our business. For example, it could:

 

   

limit our ability to pay distributions and repurchase capital stock;

 

   

increase our vulnerability to general adverse economic and industry conditions;

 

   

require us to dedicate a material portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow for working capital, capital expenditures and other general corporate purposes;

 

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limit our flexibility in planning for, or reacting to, changes in our business and industry; and

 

   

limit our ability to incur additional indebtedness.

The credit agreement our subsidiary Sportradar Management Ltd entered into with J.P. Morgan Securities PLC, Citigroup Global Markets Limited, Credit Suisse International, Goldman Sachs Bank USA, UBS AG London Branch and UBS Switzerland AG (as Mandated Lead Arrangers), J.P. Morgan AG (as Agent) and Lucid Trustee Services Limited (as Security Agent) in November 2020 (the “Credit Agreement”) contains, and any agreements evidencing or governing other future indebtedness may contain, certain restrictive covenants that will limit our ability to engage in certain activities that are in our long-term best interest. For example, the Credit Agreement limits our ability to incur additional indebtedness and for the RCF, requires us to meet certain financial conditions. We have not previously breached and are not in breach of any of the covenants under the Credit Agreement; however our failure to comply with covenants in the Credit Agreement or in agreements governing any future indebtedness could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity, and we cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Failure to refinance our indebtedness on terms we believe to be acceptable could have a material adverse effect on our business, financial condition or results of operations.

We have and could continue to be required to record impairment charges to our intangible assets.

We have substantial intangible assets, in the form of license rights with sports leagues, recorded on our balance sheet. As of June 30, 2021 and December 31, 2020, we had €552.6 million and €346.1 million of intangible assets and goodwill, respectively, of which €167.1 million and €201.7 million were related specifically to sports league license rights, respectively, on our consolidated balance sheet. In 2019, an impairment test performed for our NBA and National Football League (“NFL”) license rights resulted in impairment charges for NBA in the amount of €36.0 million and for NFL in the amount of €2.4 million. Such impairment was related to the impact of the U.S. Supreme Court’s holding in Murphy v. National Collegiate Athletic Association (2018), in which the court upheld the legality of a New Jersey law permitting sports betting at casinos and racetracks and overturned the Professional and Amateur Sports Protection Act. While the court’s holding in such case was viewed at the time as a significant driver towards the legalization of sports betting across the United States, the legalization of sports betting is a matter of state law and, as such, depends on state legislatures adopting statutes and regulations permitting sports betting. The impairment we recognized related to the above was caused by a lower than expected number of states adopting statutes and regulations legalizing sports betting as compared to the expectations of management at the time the holding in Murphy v. National Collegiate Athletic Association was issued by the court. In 2020, impairment tests conducted indicated (i) a goodwill impairment of €10.4 million for the United States segment and (ii) an impairment of intangible assets for sports rights of €13.2 million and €2.6 million related to the NBA and NFL licenses, respectively. These impairments were primarily caused by the COVID-19 pandemic, which resulted in professional leagues across sports suspending most live events, and a slow reopening of the sports market in the United States in 2020. As a result of such suspension, our U.S. business underperformed and our expectations relating to the NBA and NFL licenses were not met, which caused us to recognize these impairments.

In the future, if we make changes in our business strategy or if market or other conditions continue to adversely affect our business operations, we may be forced to record additional impairment charges related to these intangible assets, which would adversely impact our results of operations. Circumstances could also arise whereby certain new license agreements could result in a future impairment charge either from day one, if not supported by direct and indirect revenue at the date of execution, or during the course of the arrangement.

 

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Impairment testing inherently involves assumptions about discounted estimated cash flows generated from the continuing use and ultimate disposal of these intangible assets. Future events and changes in market conditions, underlying business operations, competition or technologies may impact our assumptions as to prices, costs, holding periods, or other factors that may result in changes in our estimates of future cash flows. Although we believe the assumptions we used in testing for impairment are reasonable, we will continue to evaluate the recoverability of the carrying amount of our intangible assets on an ongoing basis, and significant changes in any one of our assumptions could produce a significantly different result. In such a circumstance, we may incur additional substantial impairment charges, which would adversely affect our financial results.

We face risks in completing the implementation of our enterprise resource planning system.

We began implementing a company-wide enterprise resource planning (“ERP”) system in 2020. Implementation requires us to integrate the new ERP system with multiple new and existing information systems and business processes, and the ERP system is designed to accurately maintain our books and records and provide information to our management team important to the operation of the business. The design and implementation of this new ERP system will require a significant investment of personnel and financial resources, including substantial expenditures for outside consultants and software. As of June 30, 2021, we have entered into multiple licensing, implementation and application hosting agreements with outside providers. We do not view any of these contractual commitments as material.

We may not be able to implement the ERP system successfully without experiencing delays, increased costs and other difficulties, including potential design defects, miscalculations, testing requirements, and the diversion of management’s attention from day-to-day business operations. If the ERP system rollout is not effectively implemented as planned, the conversion from our old system to the ERP system causes inefficiencies, or the ERP system does not operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected or our ability to assess those controls adequately could be delayed. If there are significant delays in documenting, reviewing and testing our internal controls over financial reporting, we may fail to prevent or detect material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A ordinary shares may decline.

If we are unable to successfully complete the implementation of the ERP system, it could have a material adverse effect on our business, financial condition or results of operations.

Risks Related to the Offering and Ownership of our Class A Ordinary Shares

The dual class structure of our ordinary shares has the effect of concentrating voting power with our Founder, which will limit your ability to influence the outcome of important transactions, including a change in control.

As the nominal value of Class B ordinary shares is ten times lower than the nominal value of Class A ordinary shares, Class B shareholders have more voting power with the same amount of capital invested as Class A shareholders on all matters presented to our shareholders for their vote or approval, except for (i) the matters set forth in article 693 para. 3 of the Swiss Code of Obligations (the “Swiss CO”) (e.g., election of the independent auditor; appointment of experts to audit the company’s business management or parts thereof; any resolution concerning the instigation of a special audit and any resolution concerning the initiation of a liability action) and (ii) selected important matters under Swiss law that require an absolute majority of the nominal value of shares represented. See “Description of Share Capital and Articles of Association.”

Upon the completion of this offering, our Founder, Carsten Koerl, will hold all of the issued and outstanding shares of our Class B ordinary shares, which constitutes approximately 81.79% of the voting power of our outstanding share capital; assuming no exercise by the under writers of their option to purchase additional shares of Class A ordinary shares. Accordingly, upon the completion of this offering, our Founder will be able to significantly influence matters submitted to our shareholders for approval, including the election of directors,

 

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amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions. Our Founder may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our shareholders of an opportunity to receive a premium for their share capital as part of a sale of our company and might ultimately affect the market price of our Class A ordinary shares.

In addition, our Amended Articles will contain provisions stating that if an individual or legal entity acquires Class A ordinary shares and, as a result, directly or indirectly, has voting rights with respect to more than 10% of the share capital registered in the Commercial Register, the Class A ordinary shares exceeding the limit of 10% shall be entered in the share register as shares without voting rights. However, any shareholders holding more than 10% of the share capital prior to the registration with the Commercial Register of our Amended Articles will remain registered with voting rights for such shares. This may, in certain instances, allow our existing shareholders to exercise more influence over us than our other shareholders despite holding the same amount of Class A ordinary shares.

Future transfers by the holders of Class B ordinary shares will result in those shares converting into 90,367,070 shares of Class A ordinary shares. In addition, each ten shares of Class B ordinary shares will convert automatically into one Class A ordinary share upon:

 

(i)

death of the Founder;

 

(ii)

dismissal of the Founder as Chief Executive Officer for good cause, being any dismissal and/or replacement of the Chief Executive Officer pursuant to article 340c para. 2 of the Swiss CO;

 

(iii)

September 30, 2028; or

 

(iv)

the holder of Class B ordinary shares ceases to hold, directly or indirectly, shares with an aggregate nominal value representing 15% or more of the aggregate nominal value of the total issued and outstanding share capital of the Company, from time to time.

For additional information about our dual class structure, see “Description of Share Capital and Articles of Association.”

We cannot predict the impact our dual class structure may have on the price of our Class A ordinary shares.

We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A ordinary shares or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. In July 2017, FTSE Russell and S&P Dow Jones announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. We cannot assure you that other stock indexes will not take similar actions. Under the announced policies, our dual class capital structure would make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices will be precluded from investing in our shares. These policies are still fairly new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may make our Class A ordinary shares less attractive to other investors and depress the market price of our Class A ordinary shares compared to that of other similar companies that are included in such indices.

 

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Optional and mandatory conversions of our Class B ordinary shares may be dilutive to holders of our Class A ordinary shares.

Our Amended Articles provide for two classes of ordinary shares, Class A ordinary shares and Class B ordinary shares.

Each ten shares of Class B ordinary shares are convertible at any time at the option of the holder into one share of Class A ordinary shares. In addition, following the completion of this offering, shares of Class B ordinary shares will automatically convert into shares of Class A ordinary shares upon certain mandatory conversion events, including (i) death of the Founder; (ii) dismissal of the Founder as Chief Executive Officer for good cause, being any dismissal and/or replacement of the Chief Executive Officer pursuant to article 340c para. 2 of the Swiss CO; (iii) the occurrence of September 30, 2028; or (iv) if the holder of Class B ordinary shares ceases to hold, directly or indirectly, shares with an aggregate nominal value representing 15% or more of the aggregate nominal value of the total issued and outstanding share capital of the Company, from time to time. See “Description of Share Capital and Articles of Association—Conversion of Class B Ordinary Shares.”

Such optional and mandatory conversions of our Class B ordinary shares may be dilutive to the holders of our Class A ordinary shares and may lead to an increase in the number of shares of Class A ordinary shares eligible for resale in the public market. Substantial dilution and/or a substantial increase in the number of shares of Class A ordinary shares available for future resale may adversely affect prevailing market prices for our Class A ordinary shares.

We are eligible to be treated as an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A ordinary shares less attractive to investors because we may rely on these reduced disclosure requirements.

We are eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the JOBS Act.

For as long as we continue to be an emerging growth company, we may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial data and not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. As a result, our shareholders may not have access to certain information that they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if our total annual revenue exceeds $1.07 billion, if we issue more than $1.0 billion in non-convertible debt securities during any three-year period, or if before that time we are a “large accelerated filer” under U.S. securities laws. We cannot predict if investors will find our Class A ordinary shares less attractive because we may rely on these exemptions. If some investors find our Class A ordinary shares less attractive as a result, there may be a less active trading market for our Class A ordinary shares and our share price may be more volatile.

We will be a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly

 

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reports on Form 10-Q containing unaudited interim condensed consolidated financial statements and other specified information. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2021. In the future, we would lose our foreign private issuer status if (i) more than 50% of our outstanding voting securities are owned by U.S. residents and (ii) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange. These expenses will relate to, among other things, the obligation to present our financial information in accordance with U.S. GAAP in the future.

As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all corporate governance requirements.

As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to the rules for Nasdaq. We may in the future elect to follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

We have broad discretion in the use of the net proceeds from this offering and the concurrent private placements and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and the concurrent private placements and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our Class A ordinary shares. We intend to use the net proceeds from this offering for working capital, to fund incremental growth and future acquisition of, or investment in, companies, technologies, products or assets that complement our business and other general corporate purposes. However, our use of these proceeds may differ substantially from our current plans. The failure by our management to apply these funds effectively could result in financial losses that could adversely affect our business and cause the price of our Class A ordinary shares to decline. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

 

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If you purchase Class A ordinary shares in this offering, you will suffer immediate and substantial dilution of your investment.

The initial public offering price of our Class A ordinary shares is substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding Class A ordinary shares (after giving effect to the Pre-IPO Conversion) and Class B ordinary shares prior to the completion of the offering. Therefore, if you purchase our Class A ordinary shares in this offering, you will pay a price per share that substantially exceeds our pro forma as adjusted net tangible book value per share after this offering. Based on the initial public offering price of $27.00 per Class A ordinary share, you will experience immediate dilution of $26.24 per share, representing the difference between our pro forma as adjusted net tangible book value per share after giving effect to this offering and the concurrent private placements at the initial public offering price. We also have a number of outstanding options to purchase Class A ordinary shares with exercise prices that are below the initial public offering price of our Class A ordinary shares. To the extent that these options are exercised, you will experience further dilution. See “Dilution” for more detail.

As a public reporting company, we will be subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. If we fail to put in place appropriate and effective internal controls over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results, or report them in a timely manner, which may adversely affect investor confidence in us and, as a result, the value of our Class A ordinary shares.

As a public company, we will be required to report, among other things, control deficiencies that constitute a “material weakness” or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

If our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on our internal control over financial reporting, when required, or if additional material weaknesses or deficiencies in our internal controls are identified, we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our share price may be adversely affected.

A significant portion of our total issued and outstanding Class A ordinary shares are eligible to be sold into the market in the near future, which could cause the market price of our Class A ordinary shares to drop significantly, even if our business is doing well.

Sales of a substantial number of our Class A ordinary shares in the public market, or the perception in the market that the holders of a large number of Class A ordinary shares intend to sell, could reduce the market price of our Class A ordinary shares. After giving effect to the sale of Class A ordinary shares in this offering and the concurrent private placements, we will have 205,454,977 Class A ordinary shares and 903,670,701 Class B ordinary shares (which is convertible into shares of Class A ordinary shares at the option of the holder) outstanding. The Class A ordinary shares sold in this offering or issuable pursuant to the equity awards we grant will be freely tradable without restriction under the Securities Act, except as described in the next paragraph with respect to the lock-up arrangements and for any of our Class A ordinary shares that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available.

We, our executive officers, directors and certain other holders of our existing Class A ordinary shares, including the Selling Shareholder, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our Class A ordinary shares or securities convertible into or exchangeable for Class A ordinary shares during the

 

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period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of two of the four representatives of the underwriters. Such Class A ordinary shares will, however, be able to be resold after the expiration of the lock-up periods, as well as pursuant to customary exceptions thereto or upon the waiver of the lock-up arrangements. See “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our Class A ordinary shares after this offering.

In addition, the Class A ordinary shares sold in the concurrent private placements will be subject to lock-up agreements with the underwriters for a period of up to 180 days after the date of this prospectus. Following the expiration of the lock-up period, the ordinary shares subject to these lock-up agreements will be available for sale in the public markets subject to the requirements of Rule 144. See “Shares Eligible for Future Sale.”

In addition, upon expiration of the 180-day lock-up period, the Margin Loan Borrower (as defined herein) may consider it advisable, from time to time, subject to certain requirements under the terms of the Margin Loan (as defined herein, and if entered into), to sell shares in order to finance the repayment of the Margin Loan, which number of shares may individually or in the aggregate be significant. In addition, if the price of our shares declines to a level that results in a margin call, absent a repayment of the Margin Loan, the Margin Loan Borrower would be required to provide additional collateral. In the case of nonpayment at maturity or another event of default (including but not limited to the Margin Loan Borrower’s inability to satisfy a margin call as described above), the lender may, in addition to other remedies, exercise its rights under the Margin Loan to foreclose on and sell or cause the sale of the Class A ordinary shares anticipated to be pledged by the Margin Loan Borrower under the Margin Loan. If shares are sold by the Margin Loan Borrower or by or on behalf of the lender, such sales could cause our share price to decline. See “Underwriting—Other Relationships” for more information.

In the future, we may also issue additional securities if we need to raise capital or make acquisitions, which could constitute a material portion of our then-issued and outstanding Class A ordinary shares. Under Swiss law, shareholders have pre-emptive rights or advance subscription rights to subscribe on a pro rata basis for issuances of equity or other securities that are convertible into equity that can be withdrawn or limited in certain instances by a resolution passed at a general meeting of shareholders by two-thirds of the votes represented and the absolute majority of the nominal value of the shares represented that authorizes the board of directors to withdraw or limit the pre-emptive rights or advance subscription rights. However, due to the laws and regulations in certain jurisdictions, shareholders in certain jurisdictions may not be able to exercise such rights, unless the company registers or otherwise qualifies the rights offering, including by complying with prospectus requirements under the laws of that jurisdiction. There can be no assurance that we will take any action to register or otherwise qualify an offering of subscription rights or shares under the laws of any jurisdiction where the offering of such rights is restricted, other than the United States. If shareholders in such jurisdictions are unable to exercise their subscription rights, their ownership interest will be diluted.

We may not pay dividends on our Class A ordinary shares in the future and, consequently, your ability to achieve a return on your investment will depend on the appreciation in the price of our Class A ordinary shares.

We have never paid cash dividends and may not pay any cash dividends on our Class A ordinary shares in the foreseeable future. Under Swiss law, any dividend must be proposed by our board of directors and approved by a general meeting of shareholders. In addition, our independent auditor must confirm that the dividend proposal of our board of directors conforms to Swiss statutory law and our Amended Articles. The amount of any future dividend payments we may make will also depend on, among other factors, our strategy, future earnings, financial condition, cash flow, working capital requirements, capital expenditures and applicable provisions of our Amended Articles. In addition, our ability to pay dividends is, and may be, limited by covenants of existing and any future outstanding indebtedness we or our subsidiaries incur. Therefore, any return on investment in our Class A ordinary shares is solely dependent upon the appreciation of the price of our Class A ordinary shares on the open market, which may not occur. See “Dividend Policy.”

 

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Anti-takeover provisions in our Amended Articles may discourage or prevent a change of control, even if an acquisition would be beneficial to our shareholders, which could depress the price of our Class A ordinary shares and prevent attempts by our shareholders to replace or remove our current management.

Our Amended Articles contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. The provisions to be included in our Amended Articles will:

 

   

allow our board of directors not to record any acquirer of ordinary shares, or several acquirers acting in concert, in our share register as a shareholder with voting rights with respect to more than 10% of our share capital registered in the commercial register;

 

   

restrict shareholders from exercising voting rights with respect to own or represented shares in excess of 10% of our share capital registered in the Commercial Register; and

 

   

require two-thirds of the votes represented at a general meeting of shareholders for amending or repealing the abovementioned registration and voting restrictions, and the provision for indemnification of the members of our board of directors and our executive management as set forth in our Amended Articles.

Taken together, these provisions may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our Class A ordinary shares. See “Description of Share Capital and Articles of Association.”

The implementation of the share capital increases may be challenged or blocked.

Prior to the completion of this offering, we have obtained a shareholder resolution for, among other things, the increase in ordinary share capital and the creation of authorized share capital necessary to source the Class A ordinary shares to be sold in this offering and the concurrent private placements. Effective as of January 1, 2021, as with all share capital increases in Switzerland, (i) a third party, such as shareholders or creditors, may (subject to satisfaction of certain requirements) at least temporarily block the registration of the capital increases in the Commercial Register by requesting the competent court to grant an ex parte preliminary injunction, in which we would not be entitled to appear, and (ii) a shareholder may challenge the underlying shareholders’ resolution within two months after such general meeting of shareholders and, therefore, prevent or delay the completion of this offering. In addition, as a result of the COVID-19 pandemic, the Commercial Register might be understaffed and may not review or record the capital increase within the anticipated timeframe, with the effect that the creation of the ordinary shares and completion of this offering may be delayed. There can be no assurance that the implementation of the share capital increases will not be delayed, challenged or blocked.

Certain protections of Swiss law that apply to Swiss domestic listed companies do not apply to us.

Because our Class A ordinary shares will be listed exclusively on Nasdaq and not in Switzerland, our shareholders will not benefit from the protection afforded by certain provisions of Swiss law that are designed to protect shareholders in the event of a public takeover offer or a change-of-control transaction. In particular, the rules of the Financial Market Infrastructure Act (“FMIA”) on disclosure of shareholdings and tender offer rules, including mandatory tender offer requirements and regulations of voluntary tender offers, which typically apply in relation to Swiss companies listed in Switzerland, will not apply to us as we will not be listed in Switzerland. Furthermore, since Swiss law restricts our ability to implement rights plans or U.S.-style “poison pills,” our ability to resist an unsolicited takeover attempt or to protect minority shareholders in the event of a change of control transaction may be limited. Therefore, our shareholders may not be protected in the same degree in a public takeover offer or a change-of-control transaction as are shareholders in a Swiss company listed in Switzerland.

 

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The rights of our shareholders differ from the rights of shareholders in companies governed by the laws of U.S. jurisdictions and may, inter alia, limit our flexibility to raise capital, issue dividends and otherwise manage ongoing capital needs.

We are a Swiss stock corporation. Our corporate affairs are governed by our Amended Articles and by the laws governing companies, including listed companies, incorporated in Switzerland. The rights of our shareholders and the responsibilities of members of our board of directors may be different from the rights and obligations of shareholders and directors of companies governed by the laws of U.S. jurisdictions.

Specifically, Swiss law reserves for approval by shareholders certain corporate actions over which a board of directors would have authority in some other jurisdictions. For example, the payment of dividends and cancellation of treasury shares must be approved by shareholders. Swiss law also requires that our shareholders themselves resolve to, or authorize our board of directors to, increase our share capital. While our shareholders may authorize share capital that can be issued by our board of directors without additional shareholder approval, Swiss law limits this authorization to 50% of the issued share capital at the time of the authorization. Furthermore, although proposed revisions to modernize certain aspects of Swiss law (which are expected to come into force in the near- to mid-term) will expand the authorization to up to five years and allow for a capital decrease, such authorization under current Swiss law is limited for a duration of only up to two years and must be renewed by the shareholders from time to time thereafter in order to be available for raising capital. See “Description of Share Capital and Articles of Association.” Additionally, subject to specified exceptions, including exceptions explicitly described in our Amended Articles, Swiss law grants pre-emptive rights to existing shareholders to subscribe for new issuances of shares.

Swiss law also does not provide as much flexibility in the various rights and regulations that can attach to different categories of shares as do the laws of some other jurisdictions. These Swiss law requirements relating to our capital management may limit our flexibility, and situations may arise where greater flexibility would have provided benefits to our shareholders.

In addition, in the performance of its duties, our board of directors is required by Swiss law to consider the interests of our company, our shareholders, our employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, shareholders’ interests. Swiss law limits the ability of our shareholders to challenge resolutions made or other actions taken by our board of directors in court. Our shareholders generally are not permitted to file a suit to reverse a decision or an action taken by our board of directors, but are instead only permitted to seek damages for breaches of fiduciary duty. As a matter of Swiss law, shareholder claims against a member of our board of directors for breach of fiduciary duty would have to be brought to the competent courts in Switzerland, or where the relevant member of our board of directors is domiciled. In addition, under Swiss law, any claims by our shareholders against us must be brought exclusively to the competent courts in Switzerland. See “Description of Share Capital and Articles of Association” for a summary of selected applicable Swiss law.

There can be no assurance that Swiss law will not change in the future, which could adversely affect the rights of our shareholders, or that Swiss law will protect our shareholders in a similar fashion as under U.S. corporate law principles.

There may be difficulties in enforcing foreign judgments against us, our directors or our management, as well as against the Selling Shareholder.

Certain of our directors and management and certain of the other parties named in this prospectus reside outside the United States. Most of our assets and such persons’ assets are located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. See “Enforceability of Civil Liabilities.”

 

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In particular, investors should be aware that there is uncertainty as to whether the courts of Switzerland or any other applicable jurisdictions would recognize and enforce judgments of U.S. courts obtained against us or our directors or our management as well as against the Selling Shareholder predicated upon the civil liability provisions of the securities laws of the United States, or any state in the United States or entertain original actions brought in Switzerland or any other applicable jurisdictions courts against us, our directors or our management, as well as against the Selling Shareholder predicated upon the securities laws of the United States or any state in the United States.

Sportradar Group AG is a holding company with no operations of its own and, as such, it depends on its subsidiaries for cash to fund its operations and expenses, including future dividend payments, if any.

As a holding company, our principal source of cash flow will be distributions or payments from our operating subsidiaries. Therefore, our ability to fund and conduct our business, service our debt and pay dividends, if any, in the future will depend on the ability of our subsidiaries and intermediate holding companies to make upstream cash distributions or payments to us, which may be impacted, for example, by their ability to generate sufficient cash flow or limitations on the ability to repatriate funds whether as a result of currency liquidity restrictions, monetary or exchange controls or otherwise. Our operating subsidiaries and intermediate holding companies are separate legal entities, and although they are directly or indirectly wholly owned and controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. To the extent the ability of any of our subsidiaries to distribute dividends or other payments to us is limited in any way, our ability to fund and conduct our business, service our debt and pay dividends, if any, could be harmed.

We may be treated as a passive foreign investment company, which could result in material adverse tax consequences for investors in our Class A ordinary shares subject to U.S. federal income tax.

We will be classified as a passive foreign investment company (a “PFIC”) for any taxable year if either: (1) at least 75% of our gross income is “passive income” for purposes of the PFIC rules, or (2) at least 50% of the value of our assets, determined on the basis of a quarterly average, is attributable to assets that produce or are held for the production of passive income. Based on the anticipated market price of our Class A ordinary shares in the offering and the current and anticipated composition of our income, assets and operations, we do not expect to be treated as a PFIC for the current taxable year or in the foreseeable future. However, our status as a PFIC in any taxable year requires a factual determination that depends on, among other things, the composition of our income and assets and the market value of our Class A ordinary shares and assets from time to time, and thus can only be made annually after the close of each taxable year. Therefore, there can be no assurance that we will not be classified as a PFIC for the current taxable year or for any future taxable year. If we are treated as a PFIC for any taxable year during which a U.S. Holder (as defined in “Material Tax Considerations—Material U.S. Federal Income Tax Considerations for U.S. Holders”) holds the Class A ordinary shares, the U.S. Holder may be subject to material adverse tax consequences upon a sale or other disposition of the Class A ordinary shares, or upon the receipt of distributions in respect of the Class A ordinary shares. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are a PFIC for any taxable year. U.S. Holders should consult their tax advisors about the potential application of the PFIC rules to their investment in the Class A ordinary shares. For further discussion, see “Material Tax Considerations—Material U.S. Federal Income Tax Considerations for U.S. Holders.”

If a United States person is treated as owning at least 10% of the total combined voting power or the total value of all classes of our share capital, such holder may be subject to adverse U.S. federal income tax consequences.

As a result of the comprehensive U.S. tax reform bill signed into law on December 22, 2017, many of our non-U.S. subsidiaries will be classified as “controlled foreign corporations” for U.S. federal income tax purposes due to the expanded application of certain ownership attribution rules within a multinational corporate group. If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or

 

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voting power of all classes of our shares, such person may be treated as a “United States shareholder” with respect to one or more of our controlled foreign corporation subsidiaries. In addition, if the value or voting power of all classes of our shares are treated as owned more than 50% by United States shareholders, we would be treated as a controlled foreign corporation. A United States shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income, as ordinary income, its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not we make any distributions to such United States shareholder. An individual United States shareholder generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a corporate United States shareholder with respect to a controlled foreign corporation. A failure by a United States shareholder to comply with its reporting obligations may subject the United States shareholder to significant monetary penalties, loss of foreign tax credits, and may extend the statute of limitations with respect to the United States shareholder’s U.S. federal income tax return for the year for which such reporting was due. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are controlled foreign corporations or whether any investor is a United States shareholder with respect to any such controlled foreign corporations. We also cannot guarantee that we will furnish to United States shareholders information that may be necessary to comply with the aforementioned obligations. United States investors should consult their tax advisors regarding the potential application of these rules to their investment in the Class A ordinary shares. The risk of being subject to increased taxation may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our Class A ordinary shares.

General Risk Factors

From time to time, we have been and may in the future be subject to various legal proceedings and investigations, including class action litigation, and regulatory investigations and actions, which could result in settlements, judgments, fines or penalties that adversely affect our business, financial condition or results of operations.

We have been, and may be in the future, subject to legal proceedings, including purported class action litigation and regulatory investigations and actions alleging violations of gambling laws, customer protection, and other laws or regulations, both in the United States and in other countries in which we operate or have operated. We are also subject to claims asserted by our customers based on individual transactions. There is also a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities or incumbent providers, or private individuals, could be initiated against us, Internet service providers, credit card and other payment processors, advertisers and others involved in sports betting and online gaming industries. In addition, we are currently and may in the future be the subject of litigation by our competitors with respect to our data collection practices and exclusive data rights deals. We intend to defend the claims made against us and to prosecute the counterclaims presented.

However, there can be no guarantee that we will be successful in defending ourselves in these matters, and the outcome of allegations, complaints, claims, litigation, investigations and other actions cannot be predicted and are difficult to assess or quantify but may result in substantial damages, settlements, judgments, fines, penalties and expenses, as well as revocation, cancellation or non-renewal of required licenses or registrations or the loss of authorizations. The cost of litigation can be expensive, regardless of outcome, and any of these outcomes may adversely affect our business, financial condition, regulatory position or results of operations. There may also be adverse publicity associated with lawsuits, investigations and actions that could affect our reputation with customers and sports leagues. Plaintiffs, governments or regulatory agencies in these lawsuits, investigations or actions may seek recovery of very large amounts, and the magnitude of these actions may remain unknown for substantial periods of time. The cost to defend or settle future lawsuits or investigations or actions may be significant.

In addition, such matters can be time consuming, divert management’s attention and resources and cause us to incur significant expenses. Our insurance or indemnities may not cover all claims that may be asserted against us, and any

 

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claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. If we are unsuccessful in our defense in these litigation matters, or any other legal proceeding, we may be forced to pay damages or fines, enter into consent decrees, change our business practices or lose licenses and authorizations, any of which could adversely affect our business, financial condition or results of operations.

We cannot assure you that a market will develop for our Class A ordinary shares or what the price of our Class A ordinary shares will be, and public trading markets may experience volatility. Investors may not be able to resell their Class A ordinary shares at or above the initial public offering price.

Before this offering, there was no public trading market for our Class A ordinary shares, and we cannot assure you that one will develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your Class A ordinary shares. Public trading markets may also experience volatility and disruption. This may affect the pricing of the Class A ordinary shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Class A ordinary shares and the extent of regulation applicable to us. We cannot predict the prices at which our Class A ordinary shares will trade. The initial public offering price for our Class A ordinary shares will be determined through our negotiations with the underwriters and may not bear any relationship to the market price at which our Class A ordinary shares will trade after this offering or to any other established criteria of the value of our business. It is possible that, in future quarters, our results of operations may be below the expectations of securities analysts and investors. As a result of these and other factors, the price of our Class A ordinary shares may decline.

In addition, the terms of the Margin Loan, if entered into, will restrict the Margin Loan Borrower from selling the Class A ordinary shares anticipated to be pledged as security thereunder unless certain requirements are met at the time of the sale. As a result, a portion of the outstanding Class A ordinary shares will be subject to restrictions on sale during the term of the Margin Loan, if entered into, which may also affect the pricing of the Class A ordinary shares in the secondary market and the liquidity of the Class A ordinary shares.

Our results of operations and Class A ordinary share price may be volatile, and the market price of our Class A ordinary shares after this offering may drop below the price you pay.

Our quarterly results of operations are likely to fluctuate in the future in response to numerous factors, many of which are beyond our control, including each of the factors set forth above. In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could subject the market price of our Class A ordinary shares to wide price fluctuations regardless of our operating performance. Our results of operations and the trading price of our Class A ordinary shares may fluctuate in response to various factors, including the risks described above.

These and other factors, many of which are beyond our control, may cause our results of operations and the market price and demand for our Class A ordinary shares to fluctuate substantially. Fluctuations in our quarterly results of operations could limit or prevent investors from readily selling their Class A ordinary shares and may otherwise negatively affect the market price and liquidity of Class A ordinary shares. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued the shares. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our Class A ordinary shares adversely, our share price and trading volume of our Class A ordinary shares could decline.

The trading market for our Class A ordinary shares is influenced by the research and reports that industry or securities analysts publish about us, our business, our market or our competitors. If any of the securities or industry analysts who

 

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cover us or may cover us in the future change their recommendation regarding our Class A ordinary shares adversely, or provide more favorable relative recommendations about our competitors, the price of our Class A ordinary shares would likely decline. If any securities or industry analyst who covers us or may cover us in the future were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume of our Class A ordinary shares to decline.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and could also make it more difficult for us to attract and retain qualified members of our board of directors.

We are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We are not currently required to comply with the rules of the SEC implementing Section 404 and therefore are not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a publicly traded company, we will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our annual reports and provide an annual management report on the effectiveness of control over financial reporting. Though we will be required to disclose material changes in internal control over financial reporting on an annual basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. Additionally, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. We currently have limited accounting personnel and we have begun the process of evaluating the adequacy of our accounting personnel staffing level and other matters related to our internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses once we are a public company, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. As a result, the market price of our Class A ordinary shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in “Risk Factors” and the following:

 

   

economy downturns and political and market conditions beyond our control;

 

   

the global COVID-19 pandemic and its adverse effects on our business;

 

   

dependence on our strategic relationships with our sports league partners;

 

   

effect of social responsibility concerns and public opinion on responsible gaming requirements on our reputation;

 

   

potential adverse changes in public and consumer tastes and preferences and industry trends;

 

   

potential changes in competitive landscape, including new market entrants or disintermediation;

 

   

potential inability to anticipate and adopt new technology;

 

   

potential errors, failures or bugs in our products;

 

   

inability to protect our systems and data from continually evolving cybersecurity risks, security breaches or other technological risks;

 

   

potential interruptions and failures in our systems or infrastructure;

 

   

our ability to comply with governmental laws, rules, regulations, and other legal obligations, related to data privacy, protection and security;

 

   

ability to comply with the variety of unsettled and developing U.S. and foreign laws on sports betting;

 

   

dependence on jurisdictions with uncertain regulatory frameworks for our revenue;

 

   

changes in the legal and regulatory status of real money gambling and betting legislation for our customers;

 

   

our inability to maintain or obtain regulatory compliance in the jurisdictions in which we conduct our business;

 

   

our ability to obtain, maintain, protect, enforce and defend our intellectual property rights;

 

   

our ability to obtain and maintain sufficient data rights from major sports leagues, including exclusive rights;

 

   

material weaknesses identified in our internal control over financial reporting;

 

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inability to secure additional financing in a timely manner, or at all, to meet our long-term future capital needs; and

 

   

risks related to future acquisitions.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may be materially different from what we expect.

 

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MARKET AND INDUSTRY DATA

We obtained the industry, market and competitive position data in this prospectus from publicly available information, industry and general publications and research, surveys and studies conducted by third parties. In addition, certain statistics, data and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to our business and markets in this prospectus are not based on published data obtained from independent third parties or extrapolations therefrom, but rather are based upon our own internal estimates and research, which are in turn based upon multiple third party sources, including the PwC Reports, N.J. Division of Gaming Enforcement, the H2 Report, Gambling Compliance Tracker and Statista Data.

Industry publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus.

 

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USE OF PROCEEDS

The net proceeds to us from this offering and the concurrent private placements will be approximately $634.6 million, based upon the initial public offering price per share of $27.00 and after deducting the underwriting discounts and commissions and expenses of this offering and the concurrent private placements that are payable by us. Expenses of this offering will be paid by us.

We will not receive any proceeds from the sale of Class A ordinary shares by the Selling Shareholder.

The principal purposes of this offering and the concurrent private placements are to create a public market for our Class A ordinary shares, facilitate access to the public equity markets, increase our visibility in the marketplace, as well as to obtain additional capital. We intend to use the net proceeds from this offering and the concurrent private placements for working capital, to fund incremental growth and future acquisition of, or investment in, companies, technologies, products or assets that complement our business and other general corporate purposes. However, we do not currently have any definitive or preliminary plans with respect to the use of proceeds for such purposes.

The amount of what, and timing of when, we actually spend for these purposes may vary significantly and will depend on a number of factors, including our future revenue and cash generated by operations and the other factors described in “Risk Factors.” Accordingly, our board of directors will have broad discretion in deploying the net proceeds of this offering and the concurrent private placements.

 

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DIVIDEND POLICY

Since our incorporation, we have never paid a dividend, and we do not anticipate paying dividends in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. As a result, investors in our Class A ordinary shares will benefit in the foreseeable future only if our Class A ordinary shares appreciate in value.

Under Swiss law, any dividend must be proposed by our board of directors and approved by a general meeting of shareholders. In addition, our independent auditor must confirm that the dividend proposal of our board of directors conforms to Swiss statutory law and our Amended Articles. A Swiss stock corporation may pay dividends only if it has sufficient distributable profits brought forward from the previous financial years (Gewinnvortrag) or if it has distributable reserves (frei verfügbare Reserven), each as evidenced by its audited stand-alone statutory balance sheet prepared pursuant to Swiss law and after allocations to reserves required by Swiss law and its articles of association have been deducted. Distributable reserves are generally booked either as “free reserves” (freie Kapitalreserven) or as “reserve from capital contributions” (Reserven aus Kapitaleinlagen). Distributions out of issued share capital, which is the aggregate nominal value of a corporation’s issued shares, may be made only by way of a share capital reduction. See “Description of Share Capital and Articles of Association.”

The amount of any future dividend payments we may make will depend on, among other factors, our strategy, future earnings, financial condition, cash flow, working capital requirements, capital expenditures and applicable provisions of our Amended Articles. Any profits or share premium we declare as dividends will not be available to be reinvested in our operations.

Moreover, we are a holding company that does not conduct any business operations of our own. As a result, we are dependent upon cash dividends, distributions and other transfers from our subsidiaries to make dividend payments.

 

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CAPITALIZATION

The table below sets forth our cash and capitalization as of June 30, 2021:

 

   

on an actual basis;

 

   

on a pro forma basis giving effect to the Reorganization Transactions, in each case as if such transactions had occurred on June 30, 2021; and

 

   

on a pro forma as adjusted basis to reflect the issuance and sale of Class A ordinary shares in this offering and the concurrent private placements at the initial public offering price of $27.00 per share, after deducting underwriting discounts and commissions and offering expenses of this offering and the concurrent private placements payable by us.

Investors should read this table in conjunction with our audited financial statements included in this Prospectus as well as “Use of Proceeds,” “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no significant adjustments to our capitalization since June 30, 2021.

For the convenience of the reader, we have translated Euros amounts in the table below as of June 30, 2021 into U.S. dollars at the noon buying rate of the Federal Reserve Bank of New York on June 30, 2021, which was €1.00 to $1.18. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at that or any other exchange rate as of that or any other date.

 

     As of June 30, 2021  
(in millions, except share and per share data)    Actual     Actual     Pro Forma(1)     Pro Forma     Pro Forma As
Adjusted
    Pro Forma As
Adjusted
 

Cash

   190.7     $ 225.0     190.8     $ 225.1     728.6     $ 859.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans and borrowings, including current portion

     436.1       514.6       436.1       514.6       436.1       514.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity:

            

Share capital

     0.3       0.4       —         —         —         —    

Participation certificates

     0.2       0.2       —         —         —         —    

Class A ordinary shares

     —         —         16.4       19.4       18.7       22.1  

Class B ordinary shares

     —         —         8.2       9.7       8.2       9.7  

Treasury shares

     (0.6     (0.7     —         —         —         —    

Additional paid-in capital

     116.2       137.1       91.5       108.0       627.0       739.9  

Retained earnings

     91.7       108.2       91.7       108.2       91.7       108.2  

Other reserves

     1.5       1.8       1.5       1.8       1.5       1.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity attributable to owners of the Company

     209.3       247.0       209.3       247.1       747.1       881.7  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-controlling interest

     (3.0     (3.5     (3.0     (3.5     (3.0     (3.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     206.3       243.5       206.3       243.6       744.1       878.2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capitalization

   642.4     $ 758.1     642.4     $ 758.2     1,180.2     $ 1,392.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

These amounts include the anticipated impact of the exchange of MPP Co shares for Class A ordinary shares under our MPP and the issuance of Class A ordinary shares relating to the vested RSUs under our POP in connection with this offering, as described in “Management—Compensation.”

 

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Pro Forma and Pro Forma As Adjusted shareholders’ equity amounts shown in the table above exclude the impact of:

 

   

29,257,126 Class A ordinary shares reserved for future issuance (e.g., out of conditional or authorized capital) under our 2021 Plan as described in “Management—Compensation—Omnibus Stock Plan”;

 

   

5,916,441 Class A ordinary shares reserved for future issuance (e.g., out of conditional or authorized capital) under our ESPP as described in “Management—Compensation—Employee Share Purchase Plan”; and

 

   

3,581,391 Class A ordinary shares reserved for future issuance under the NHL License Agreement. See “Prospectus Summary— Recent Developments.”

 

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DILUTION

If you invest in our Class A ordinary shares, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A ordinary shares and the pro forma as adjusted net tangible book value per share of our Class A and Class B ordinary shares after this offering and the concurrent private placements.

At June 30, 2021, we had a pro forma historical net tangible book value of $(408.7 million) (€(346.3 million)), corresponding to a pro forma net tangible book value of $(1.51) per share (€(1.28) per share). Pro forma net tangible book value per share represents the amount of our total assets less our total liabilities, excluding goodwill and other intangible assets, divided by the total number of shares of our Class A ordinary shares and Class B ordinary shares outstanding as of June 30, 2021, after giving effect to the Reorganization Transactions, as if such Reorganization Transactions conversion occurred on June 30, 2021.

After giving effect to the sale by us of 21,850,000 Class A ordinary shares in this offering and the concurrent private placements at the initial public offering price of $27.00 per share and after deducting the underwriting discounts and commissions and offering expenses of this offering and the concurrent private placements payable by us, our pro forma as adjusted net tangible book value at June 30, 2021 would have been approximately $225.9 million (€191.5 million), representing $0.76 per share (€0.65 per share). This represents an immediate increase in pro forma net tangible book value of $2.27 per share (€1.93 per share) to existing shareholders and an immediate dilution in pro forma net tangible book value of $26.24 per share (€22.23 per share) to new investors purchasing Class A ordinary shares in this offering and the concurrent private placements at the initial public offering price. Dilution in pro forma net tangible book value per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering and the concurrent private placements from the initial public offering price per share paid by new investors.

The following table illustrates this dilution to new investors purchasing Class A ordinary shares in the offering and the concurrent private placements.

 

Initial public offering price

    $ 27.00  

Pro forma net tangible book value per share as of June 30, 2021

  $ (1.51  

Increase in pro forma net tangible book value per share attributable to this offering and the concurrent private placements

  $ 2.27    
 

 

 

   

Pro forma as adjusted net tangible book value per share after this offering and the concurrent private placements

    $ 0.76  
   

 

 

 

Dilution in pro forma net tangible book value per share to new Class A ordinary shares investors in this offering and the concurrent private placements

    $ 26.24  

If the underwriters exercise their option to purchase additional Class A ordinary shares from the Selling Shareholder in full, our pro forma as adjusted net tangible book value per share after this offering would be $0.76 per share (€0.65 per share), representing an immediate increase in pro forma as adjusted net tangible book value per share of $2.27 per share (€1.93 per share) to existing shareholders and immediate dilution of $26.24 per share (€22.23 per share) in pro forma as adjusted net tangible book value per share to new investors purchasing Class A ordinary shares in this offering, based upon the initial public offering price of $27.00 per share of Class A ordinary shares.

 

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The following table summarizes, on a pro forma as adjusted basis, as of June 30, 2021, after giving effect to the Reorganization Transactions, the total number of Class A ordinary shares purchased from us, the total consideration paid to us and the average price per share paid by the existing shareholders and by new investors purchasing Class A ordinary shares in this offering:

 

    Shares
Purchased
    Total
Consideration
    Average Price
Per Share
 
    Percent     Number     Percent     Number  

Existing shareholders

    91.6   $ 194,005,870       22.3   $ 0.72  

New investors

    6.4   $ 513,000,000       58.9   $ 27.00  

Concurrent private placement investors

    2.0   $ 163,999,966       18.8   $ 27.00  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    100   $ 871,005,836       100   $ 2.94  
 

 

 

   

 

 

   

 

 

   

 

 

 

The total number of shares reflected in the discussion and tables above is based on 205,454,977 Class A ordinary shares and 90,367,070 Class B ordinary shares outstanding as of June 30, 2021 on a pro forma as adjusted basis giving effect to the full conversion of the Class B ordinary shares into Class A ordinary shares, and does not reflect the Class A ordinary shares purchased by new investors from the Selling Shareholder.

If the underwriters exercise their option to purchase additional Class A ordinary shares from the Selling Shareholder in full, the following will occur:

 

   

the percentage of our Class A ordinary shares and Class B ordinary shares held by existing shareholders will decrease to 90.6% of the total number of Class A ordinary shares and Class B ordinary shares after this offering and the concurrent private placements; and

 

   

the percentage of our Class A ordinary shares and Class B ordinary shares held by new investors will increase to approximately 7.4% of the total number of Class A ordinary shares and Class B ordinary shares after this offering and the concurrent private placements.

 

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SELECTED CONSOLIDATED FINANCIAL DATA

We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The selected historical consolidated financial information presented as of and for the years ended December 31, 2019 and 2020 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial information presented as of June 30, 2021 and for the six month periods ended June 30, 2020 and 2021 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on a consistent basis as our audited consolidated financial statements. In the opinion of management, the unaudited data reflects all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the financial information in those statements. Our historical results for any prior period are not necessarily indicative of results expected in any future period.

We maintain our books and records in Euros and report our financial results in Euros. For the convenience of the reader, we have translated Euros amounts in the tables below at the noon buying rate of the Federal Reserve Bank of New York on June 30, 2021, which was €1.00 to $1.18. These translations should not be considered representations that any such amounts have been, could have been or could be converted into U.S. dollars at that or any other exchange rate as of that or any other date.

The financial data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus.

 

     Years Ended December 31,     Six Month
Periods Ended
June 30,
 
     2019     2020     2020     2020     2021     2021  
     (in millions)  

Consolidated Statement of Profit or Loss:

            

Revenue

   380.4     404.9     $ 477.8      191.6      272.1     $ 321.0  

Purchased services and licenses (excluding depreciation and amortization)

     (61.4     (89.3     (105.4     (37.3     (56.6     (66.7

Internally-developed software cost capitalized

     7.9       6.1       7.2       3.2       5.9       7.0  

Personnel expenses

     (119.1     (121.3     (143.1     (55.6     (85.4     (100.8

Other operating expenses

     (46.7     (41.3     (48.8     (17.9     (34.9     (41.2

Depreciation and amortization

     (112.8     (106.2     (125.4     (52.9     (64.1     (75.6

Impairment of intangible assets

     (39.5     (26.2     (30.9     —         —         —    

Impairment loss on trade receivables, contract assets and other financial asset

     (5.3     (4.6     (5.5     (2.0     (0.1     (0.1

Impairment of equity-accounted investees

     —         (4.6     (5.4     —         —         —    

Share of loss of equity-accounted investees

     (0.2     (1.0     (1.2     (1.0     (1.1     (1.3

Loss from loss of control of subsidiary

     (2.8     —         —         —         —         —    

Finance income

     17.4       41.7       49.2       9.4       13.0       15.4  

Finance costs

     (28.1     (36.1     (42.6     (12.7     (23.4     (27.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) / income before tax

     (10.2     22.1       26.1       24.7       25.3       29.9  

Income tax benefit (expense)

     21.9       (7.3     (8.6     (4.5     (7.7     (9.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

   11.7     14.8     $ 17.5     20.2     17.7     $ 20.8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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     Years Ended December 31,     Six Month
Periods Ended
June 30,
 
     2019     2020     2020     2020     2021     2021  
     (in millions)  

Consolidated Statement of Cash Flows:

            

Net cash from operating activities

   146.0      151.3     $ 178.5     75.8     67.5     $ 79.7  

Net cash used in investing activities

     (114.3     (98.1     (116.3     (42.5     (259.4     (306.1

Net cash (used in) / from financing activities

     (4.7     274.5       325.3       (6.7     (2.5     (3.0

 

     As of December 31,      As of June 30,  
     2019      2020      2020      2021      2021  
     (in millions)  

Consolidated Statement of Financial Position:

              

Current assets

    112.3       449.8      $ 530.8      276.5      $ 326.3  

Total assets

     709.9        957.0        1,129.3        1,005.9        1,187.0  

Total liabilities

     555.9        792.9        935.6        799.6        943.6  

Share capital

     0.3        0.3        0.4        0.3        0.4  

Retained earnings

     50.8        68.0        80.3        91.8        108.3  

Equity attributable to owners of the Company

     157.0        167.3        197.4        209.3        247.0  

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Selected Consolidated Financial Data,” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Actual results could differ materially from those contained in any forward-looking statements.

Overview

Sportradar is a leading technology platform enabling next generation engagement in sports, and the number one provider of B2B solutions to the global sports betting industry based on revenue. We provide mission-critical software, data and content via subscription and revenue share arrangements to sports leagues, betting operators and media companies. We offer one of the industry’s most advanced and comprehensive platform with software solutions that transform large sets of data into actionable information and insights, enabling us to simplify our customers’ operations, drive efficiencies and enrich the experiences of sports fans around the world. Since our inception, we have been at the forefront of innovation in the sports betting industry and we continue to be a global leader in understanding, leveraging and monetizing the power of sports data.

Sportradar’s origins began in 2001, with its primary offering of pre-match betting services to the sports betting market. Since then, we have achieved a number of milestones that have secured our position as the leading platform at the nexus of sports, data and technology, including:

 

   

2004: Launch of Live Data services

 

   

2005: Launch of Live Odds services

 

   

2007: Signed integrity partnership with Union of European Football Associations (UEFA) to monitor betting movements on European football matches

 

   

2012: Secured partnership with the ITF

 

   

2013: Started our AV streaming service offering

 

   

2013: Started U.S. market entry with the acquisition of Cloud Sports Data, LLC, a Minneapolis based, technologically advanced sports data provider including live data services on U.S. sports.

 

   

2014: Established our MTS offering

 

   

2014: Established partnership with the NFL as first league deal with a major US league

 

   

2015/16: Secured partnerships with the NBA and National Hockey League (“NHL”), demonstrating our ability to expand geographically

 

   

2015: Launched a new first-of-its-kind e-Sports offering through Betradar and reached a multi-year deal with the Electronic Sports League (ESL)

 

   

2015: Welcomed U.S. investors such as Ted Leonsis, Mark Cuban and Michael Jordan

 

   

2016: Strengthened AV offerings via the acquisition of Sportsman

 

   

2018: Established a key partnership with Fox Sports, boosting their data-driven storytelling

 

   

2019: Launched our digital advertising service

 

   

2019: Expanded into broader end-user management, via the acquisition of Optima

 

   

2020: Diversification into content not directly linked to live sports events, in reaction to the COVID-19 pandemic

 

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LOGO

We provide our customers with solutions across betting and gaming, sports entertainment and AV. In the year ended December 31, 2020, 58% of our total revenue was generated from RoW Betting, 26% from RoW AV, 8% from solutions sold into the U.S. market and 7% from other. In the six month period ended June 30, 2021, 55% of our total revenue was generated from RoW Betting, 28% from RoW AV, 11% from solutions sold into the U.S. market and 7% from other. All of our solutions are powered by our proprietary technology platform and are fueled by the largest volume of sports data in the world, leveraging nearly 20 years of historical sports information. We collected over 1.2 billion live data points and covered over 600,000 events across more than 37 sports for the year ended December 31, 2020. Our data capabilities and proprietary technology engine allow us to provide end-to-end solutions across the sports betting value chain, from traffic generation to the collection, processing and computation of data and odds, management of trading risk on behalf of our clients, visualization solutions, platform services and integrity services. In the year ended December 31, 2020, our RoW Betting segment revenue consisted of 72% betting data and entertainment tools, 20% Managed Betting Services (“MBS”) and 8% Virtual Gaming and e-Sports, and in the six month period ended June 30, 2021, our RoW Betting segment revenue consisted of 69% betting data and entertainment tools, 25% Managed Betting Services (“MBS”) and 6% Virtual Gaming and e-Sports.

Our platform is used globally in over 120 countries, including in mature markets in our RoW segments, and new, high-growth markets such as the United States. Our business is highly diversified with our largest billing country, the United Kingdom, representing only 14% of total revenue for the year ended December 31, 2020. We believe that we are well-positioned to grow globally due to investments made in strategic markets and continued investments in our product offering. In particular, we have made significant investments in the United States where we have established important league relationships, such as with the NBA, MLB, NHL, FIFA and NASCAR, and local infrastructure and operations with 262 FTEs based in the United States as of December 31, 2020. These investments were funded organically from the profit generated in our more mature markets, such as RoW Betting, which achieved revenue of €235.0 million and for the year ended December 31, 2020 and revenue of €148.5 million for the six month period ended June 30, 2021. We expect to benefit from strong operating leverage in our U.S. segment, which is currently not profitable. As our U.S. business develops, we expect meaningful revenue growth and improved profitability in our U.S. segment.

 

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As a result of our investments in technology and content, we believe that we are nimble, innovative and prepared for growth. We continue to implement new technologies in the sports data and analytics industry including computer vision, data visualization and simulated reality, among others. We have proven high-velocity development capabilities that allow us to remain agile and innovative, quickly responding to changes in the market and launching new products. We have strong operating leverage as our historical investments in data and technology continue to generate significant revenue over time. Moreover, our products are interconnected and build upon each other. For example, our live data offerings feed into our live odds offerings, which in turn power our MTS solutions. Additionally, we benefit from generating and controlling the inputs to our own products across the entire value chain, and consequently our business is highly scalable as we sell similar products based on our content to many customers.

We have achieved healthy growth through both organic and inorganic expansion. Since 2010, we have successfully completed 13 acquisitions, improving and extending our capabilities. We have proven our discipline, execution and ability to add significant value to the businesses we acquire. We will continue to evaluate strategic acquisitions that expand our platform, such as providing new technical capabilities and products, to better serve our customers and league partners.

The year ended December 31, 2020 and the six month period ended June 30, 2021 were significantly affected by the COVID-19 pandemic. However, our financial performance for those periods demonstrates our innovation, resilience and adaptability. For the years ended December 31, 2020 and 2019, our revenue was €404.9 million and €380.4 million, respectively, representing year-over-year growth of 6.4% despite pressures due to live sporting event cancellations during the first months of the pandemic. For the six month periods ended June 30, 2021 and 2020, our revenue was €272.1 million and €191.6 million, respectively, representing period-over-period growth of 42.0%. Although the COVID-19 pandemic impacted our business due to cancelled sporting events throughout the spring and summer, proactive management actions limited the extent of the impact. We sourced and developed alternative live, niche sports events in countries without lockdowns, e-Sports and virtual content that allowed bettors to stay connected. In the second quarters of 2020 and 2021, this alternative content made up 41% and 8% of our revenue, respectively. As a result of these mitigating factors, we maintained positive growth and strong profitability for the year ended December 31, 2020 and for the six month period ended June 30, 2021.

We have a strong profitability profile and high cash conversion as a percent of Adjusted EBITDA. Profit for the year was €14.8 million and €11.7 million for the years ended December 31, 2020 and 2019, respectively, representing year-over-year growth of 26.5%. For the six month periods ended June 30, 2021 and 2020, our profit for the period was €17.7 million and €20.2 million, respectively, representing period-over-period decline of 12.4%, which was largely the result of increased finance costs related to our business. For the years ended December 31, 2020 and 2019, our Adjusted EBITDA was €76.9 million and €63.2 million, respectively, representing year-over-year growth of 21.7%, profit for the period as a percentage of revenue was 3.7% and 3.1%, respectively, and Adjusted EBITDA margin was 19.0% and 16.6%, respectively. Our Adjusted EBITDA was €59.8 million and €40.8 million for the six month periods ended June 30, 2021 and 2020, respectively, representing period-over-period growth of 46.5%. For the six month periods ended June 30, 2021 and 2020, profit for the period as a percentage of revenue was 6.5% and 10.6%, respectively, and Adjusted EBITDA margin was 22.0% and 21.3%, respectively. Our net cash from operating activities as a percentage of profit was 1,021.6% and 1,251.3% for the years ended December 31, 2020 and 2019. We had strong Cash Flow Conversion, defined as Adjusted Free Cash Flow as a percentage of Adjusted EBITDA, of 69.6% for the year ended December 31, 2020 and 87.3% for the year ended December 31, 2019. Our net cash from operating activities as a percentage of profit was 382.6% and 374.9% for the six month periods ended June 30, 2021 and 2020, respectively. Our Cash Flow Conversion was 6.9% and 80.7% for the six month periods ended June 30, 2021 and 2020, respectively.

Our Customers and Business Model

We sell our products to a diverse customer base of betting operators, sports leagues and media companies globally. For the year ended December 31, 2020, sports betting companies represented approximately 59% of the

 

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total number of our customers, while sports media companies represented approximately 30% and sports leagues represented approximately 11% of the total number of our customers. In total, we serve 1,612 customers globally as of December 31, 2020, but the top 200 customers represent 80% of our revenue. We believe our top 200 customers represent a good proxy for analyzing trends in our business and customer behavior.

We generate revenue primarily via two types of contracts: subscription and revenue sharing. We believe this mix of subscription-based revenue and revenue sharing provides us with a stable, predictable base of revenue and allows us to participate in the upside from growing betting volume around the world, especially in more nascent geographies. Typically our contracts related to Betting services are renewed every year, while Betting AV contracts tend to be longer in duration as they are frequently linked to the duration of our major AV rights.

For the year ended December 31, 2020, 78% of our total revenue was generated from subscription contracts which are priced based on the amount of matches, data and the types of products received and include surcharge components based on scale or usage where relevant. Many of these contracts include a price escalation clause, and we have a track record of upselling additional data and matches as well as cross-selling products to our customers. The following products and services operate under this subscription model: Betting Data / Betting Entertainment Tools and Betting AV. The remaining 22% of our revenue for the year ended December 31, 2020 was generated from revenue sharing contracts, whereby we receive a fixed percentage of the gross gaming revenue (“GGR”) or of the net gaming revenue (“NGR”) generated by our betting company customers. These contracts are typically structured with an agreed minimum fee but allow us to benefit from high betting volume. Revenue for our MTS product and for Virtual Gaming is generated on a revenue sharing basis. Some MTS contracts include a loss participation clause. Our U.S. business, which includes sports entertainment, betting and gaming, also primarily operates using revenue sharing contracts.

Our revenue generation has a high degree of predictability because we have developed longstanding relationships with our customers. Our top 200 customers have been with us for 8.3 years on average. Our low net revenue churn rate, defined as lost revenue from customers that stopped using our services in any given period divided by total revenue from the comparable period from the prior fiscal year, for our top 200 customers of 0.65% and 0.64% for the years ended December 31, 2020 and 2019, respectively, and 1.28% and 7.8% for the six month periods ended June 30, 2021 and 2020, respectively, demonstrates the mission-critical nature of our products and our ability to continually meet our customers’ expansive and evolving needs through market-leading offerings and investments in our platform. Our products are deeply embedded into our customers’ workflows and fuel their ability to generate revenue, creating a resilient stream of revenue generation for us. Additionally, we have demonstrated success in growing revenue over time through both upselling and cross-selling opportunities.

Key Factors Affecting Our Business

We believe that the growth and future success of our business depends on many factors, including the following.

Selling More Products to Our Existing Customer Base

Our customers typically increase the scope of their services with us, and also purchase additional products over time. Typically, new customers start with Sportradar by purchasing a single product. Over time, these customers increase the scope of this service. For example, upsale happens when our customers purchase live data for more sports or more matches in more geographies. On top of that, cross-sale happens when our customers add additional solutions, including our AV content and Ad:s marketing services. We also see customers move up the value chain from purchasing our live data solutions to MTS offering. In 2020, 52% of our sports betting customers bought multiple products from us, up from 47% in 2019. We believe there is significant runway for continued expansion with our existing customer base through these cross-sell, upsell and value-add opportunities.

Our Dollar-Based Net Retention Rate highlights our ability to successfully expand the scope of services that we provide to our customers, as well as our ability to grow alongside our customers, including from revenue-sharing arrangements. We consider Dollar-Based Net Retention Rate to be an indicator of our ability to retain and expand

 

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revenue from our existing customers over time and grow alongside our customers. For our top 200 customers, which comprise approximately 80% of our revenue for each of the years ended December 31, 2020 and 2019, our Dollar-Based Net Retention Rate was 113% and 118% for the years ending December 31, 2020 and 2019, respectively, and 138% for the six month period ended June 30, 2021. The increase in the Dollar-Based Net Retention Rate as of June 30, 2021, as compared to December 31, 2020 and 2019, is primarily due to the negative impact that the COVID-19 pandemic had on revenue retention of our top 200 customers in the first half of 2020, as many of our top 200 customers reduced their spending under existing contracts during such period given the cancellation or postponement of various sporting events. Following the resumption of live sporting events in the first half of 2021, we saw an increase in revenue generation levels among our top 200 customers, along with additional revenue as a result of many 2020 postponed events occurring in the first half of 2021. This resulted in a spike in the Dollar-Based Net Retention Rate during the six month period ended June 30, 2021.

We calculate our Dollar-Based Net Retention Rate for a given period by starting with the annual revenue, which includes both subscription-based and revenue sharing revenue, from a cohort of customers as of twelve months prior to such period end, or Prior Period revenue. We then calculate the annual revenue from the same customer cohort as of the current period end, or Current Period revenue. Current Period revenue includes any upsells and is net of contraction and attrition over the trailing twelve months, but excludes revenue from new customers in the current period. We then divide the total Current Period revenue by the total Prior Period revenue to arrive at our Dollar-Based Net Retention Rate.

Cohort analysis further illustrates our ability to increase our revenue from existing customers over longer periods of time. Each cohort represents customers who made their initial purchase from us in a given year. For example, the year 2015 cohort represents all customers who made their initial purchase from us between January 1, 2015 and December 31, 2015. By increasing annual revenue with existing customers over time, we significantly increase the return on our upfront investments in data, content, and technology.

Cohort Analysis

(in €millions)

LOGO

 

*

Earliest data points are taken from 2008 and thus start dates for customers who started prior to 2008 default to 2008.

**

2017 cohort impacted by change in internal reporting systems.

Capturing Share in New Legalized Sports Betting Markets by Expanding into New Geographies with Existing Customers and Adding New Customers

The continued legalization of sports betting in the United States and abroad is a growth driver that is expanding the addressable market for our solutions. We believe that although the legalization of sports betting is still in its early days, there is promising regulatory momentum, particularly in the United States. With the number one market share in the United States, significant investments in place, and deeply embedded relationships, Sportradar is well-positioned for sustained U.S. market leadership.

 

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According to the Gambling Compliance Tracker, as of July 20, 2021, twenty-four (24) states (including the District of Columbia), have legalized sports betting and are operational and seven (7) additional states have passed enabling laws, but have not yet implemented regulations. Additionally, nineteen (19) states (including the District of Columbia) have legalized online/mobile sports betting. While the timing for additional regulatory changes is uncertain, we believe there is a desire for new avenues of growth for both governments and professional sports leagues.

We intend to continue to invest in our international operations to grow our business outside of our existing markets as legalization progresses. We believe that the global demand for sports data, content and technology will continue to increase. As we expand our geographic footprint, we expect to acquire new customers in new geographies and expand into new geographies with our existing customers.

Developing New Innovative Products to Sell to Our Existing Customer Base

We intend to extend our leadership position by continuing to innovate and bring new products and technologies to market. We have a history of introducing successful new capabilities on our platform and extending our value proposition with customers. For example, we have added new high value solutions to our product suite such as AV streaming, managed trading services, digital advertising, e-Sports, virtual games and simulated reality, among others. Given the rapidly changing nature of the sports ecosystem, we expect to invest in research and development to expand the value of our offerings for our customers. In developing new products, we benefit from the depth and breadth of our existing relationships with sports leagues, betting operators and media companies. We are recognized as innovators at the forefront of sports data and continue to invest heavily in new capabilities such as computer vision, e-Sports, virtual sports, simulated reality and fully integrated platform services.

Expanding Our Partnerships with Sports Leagues

Sportradar has valuable relationships with sports leagues across the globe. We intend to continue to expand the breadth and depth of our partnership with sports leagues, including by pursuing new partnerships with sports leagues, big and small, in existing geographies, as well as in new geographies and in new sports categories. To our existing league partners, we provide critical technology and infrastructure which allows them to collect, analyze and distribute data to the rest of the media, teams and league analysts and sports betting ecosystem. Our deep integrations into both the supply (leagues) and demand (betting operators and media companies) allow us to serve as truly trusted, mission-critical partner. We intend to use that strong positioning with the leagues to accelerate innovation and to expand the scope and value proposition of the services that we provide.

Achieving Operating Leverage as We Scale

We have made significant investments in strategic growth markets, including the United States. The infrastructure, content, technology and organization we have in place in the United States position us for profitable growth well into the future. In the short-term, however, entering new geographies results in depressed margins, relative to more mature markets such as Europe. For example, we had negative Adjusted EBITDA in the United States for the year ended December 31, 2020, in comparison to our positive Adjusted EBITDA during the same period for RoW Betting. As we scale, we expect to achieve operating leverage across markets.

Acquisition Strategy and Integration

As part of our growth strategy, we have made and expect to continue to make targeted acquisitions of, and investments in, complementary businesses, products and technologies, and believe we are well-positioned to successfully execute on our acquisition strategy by leveraging our scale, global reach and data assets. Our management team has a proven track record of executing value accretive transactions. Since 2010, we have successfully completed 13 acquisitions. These acquisitions have expanded our footprint into new geographies and have added to, or improved upon, a range of our capabilities such as platform services, video distribution and solutions we provide to sports leagues. Our ability to acquire complementary technologies for our portfolio and integrate these acquisitions into our business will be important to our success and may affect comparability of our results of operations from period to period.

 

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Seasonality

We have experienced, and expect to continue to experience, some degree of seasonal fluctuations in our revenue, which can vary by region. For the data packages that we offer, we only charge during active months of each sport and prorate for optional preseason or postseason coverage. The broad geographical mix of our customer base also impacts the effect of seasonality as customers in different territories will place differing importance on different sporting competitions, which often have different calendars. As such, our revenue has historically been strongest during the first quarter when most playoffs and championship games occur and has historically seen decreased or stalled growth rates during off-seasons. Our revenue may also be affected by the scheduling of major sporting events that do not occur annually, or the cancellation or postponement of sporting events and races, such as the postponement of the 2020 Football European Championship.

Impact of COVID-19

The COVID-19 pandemic has caused disruption in the global sports industry beginning in March 2020. Although the pandemic adversely impacted our business due to cancelled live sporting events, management actions have helped to partially mitigate the extent of the impact and we have demonstrated our ability to rapidly adapt to challenging environments. When reacting to the crisis, we focused on two objectives: (1) supporting our customers with mission-critical alternative content throughout a period where traditional sports events were no longer available and (2) streamlining our own operations to preserve profitability and cash generation.

Foremost, we swiftly developed alternative content to provide mission-critical offerings to our customers during this period and strengthened our competitive position in the market. Within weeks of the pandemic, we sourced and created alternative live and virtual content (e-Sports, virtual sports, niche tier 2 or tier 3 sports from different geographies and tournaments) that allowed bettors to stay connected to their favorite sports and betting companies to continue operating while live play was suspended. This alternative content made up nearly 41% of revenue in the second quarter of 2020 when most live sports were not being played, and as a result of these mitigating factors, we maintained positive year-over-year annual growth in 2020, despite a challenging year for sports. We believe that COVID-19 has accelerated the adoption of alternative content which will further differentiate Sportradar from its competitors and allow for new avenues of growth.

Additionally, we took proactive measures to maintain our financial strength. Although our profitability was affected, we implemented a number of cost saving and cash preservation actions to limit the impact to our profitability. In 2020, we secured €29 million of one-time savings, as compared to our budget, in personnel costs by implementing a number of initiatives including temporary working hour reductions, voluntary pay cuts, salary increase freezes and hiring freeze and/or delays. We also utilized funding from government programs to minimize the impact on employee compensation. We lowered sports rights costs through one-time savings of €34 million during the period of suspended live sports, by successfully delaying or cancelling payments for all postponed or cancelled matches, respectively. Finally, we successfully reduced or eliminated all non-critical projects and expenses, resulting in €10 million of savings in 2020. Despite these actions, we continued to invest in our technology platform further strengthening our customer proposition. Our ability to quickly generate alternative content and reduce operating costs resulted in our achieving Adjusted EBITDA profitability each quarter of the year ended December 31, 2020 and for the six month period ended June 30, 2021.

We also implemented other operational initiatives to support our employees, customers and partners. We followed local government guidance on having our employees work remotely to minimize the risk of COVID-19 to our employees and the communities in which we operate. We effectively shifted our data collection methods to be less reliant on live data journalists and accelerated the development of computer-aided data collection. To better manage receivables during the period of suspended live sporting events, we took a number of measures to enable continued invoicing and payments through contract amendments with key customers by adjusting package sizes and putting customers on hold. This ensured that contracts were extended to cover postponed events, which otherwise would have been out-of-period for existing contracts.

 

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All of the above initiatives relating to both revenue generation and cash preservation allowed us to rapidly recover from the adverse impact of the pandemic that most acutely affected us during the second quarter of 2020. We recovered a significantly higher proportion of revenue than anticipated and our financial performance improved throughout the year. We have also implemented some of our then-temporary initiatives as enduring changes and adapted to new learnings from managing our business during this time, resulting in a permanent reduction of €10 million from our cost structure.

Following the resumption of live sporting events, we have largely returned to pre-pandemic revenue generation levels and have not observed changes in our customer behavior. Only a few of our smaller customers faced challenges. Additionally, we continued to evaluate our liquidity position throughout fiscal year 2020. As of December 31, 2020, we had €385.5 million of cash, compared to €57.0 million as of December 31, 2019. As of June 30, 2021, we had €190.7 million of cash, compared to €83.9 million as of June 30, 2020. As of June 30, 2021, we had €420.0 million drawn under the Term Loan Facility and €110.0 million available but not drawn under the RCF. See “Description of Indebtedness.” For additional discussion related to COVID-19, see “Risk Factors—Risks Related to Our Business and Industry—The global COVID-19 pandemic has had and may continue to have an adverse effect on our business or results of operations.”

Acquisition of Atrium Sports, Inc.

On May 6, 2021, we acquired 100% of the voting interest in Atrium Sports, Inc., a market leader in data and video analytics in the college and professional sports space. The consideration transferred included cash consideration of €183 million plus 1,805 participation certificates of Sportradar Holding AG. The fair value of the 1,805 participation certificates was determined to be €22 million as of May 6, 2021. The participation certificates are subject to certain non-market performance vesting conditions and service vesting conditions. A portion of the participation certificates, amounting to €9 million, was determined to be part of the total consideration and the remaining €13 million of the participation certificates was determined to be remuneration. The fair value of the participation certificates determined to be remuneration will be recognized as a share-based payment expense through 2024 on a graded vesting basis.

We acquired Atrium Sports, Inc. because it is a market leading data and video analytics platform in the college and professional sports space in the United States, which is one of our strategic growth markets. We believe that the acquisition of Atrium Sports, Inc. complements and extends our product suite, as well as supports our drive to deepen and broaden our relationships with key sports organizations globally. In the United States, Atrium Sports, Inc. has league-wide relationships with the NBA and MLB, as well as all of NCAA Division I women’s and men’s basketball and over 90% of NCAA Division I men’s baseball. Outside of the United States, Atrium Sports, Inc. has a partnership with The International Basketball Federation to create FIBA Connected Stadium, an end-to-end platform that is intended to provide basketball teams, leagues and federations with automated video production and graphics technology. In addition, we intend to build on the popularity of Atrium Sports, Inc.’s best in-class video technology, the Synergy Automated Camera System, by layering our video and OTT product suite, which we believe will result in the development of deeper technology-enabled relationships with sports organizations globally.

As part of the Company’s initial assessment, intangible assets acquired relate to existing technology, brands and customer relationships.

Atrium’s revenue and net loss before tax for the year ended December 31, 2020 was $21.2 million (€18 million) and $16.5 million (€14 million), respectively. Atrium’s revenue and net loss before tax for the period ended May 6, 2021 was €6.9 million and €19.3 million, respectively.

If the acquisition had occurred as of January 1, 2020, the pro forma consolidated revenue and net loss before tax for the year ended December 31, 2020 would have been €421 million and €2 million, respectively. The consolidated pro forma revenue and net income before tax for the six months ended June 30, 2021 would have

 

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been €279 million and €2.7 million, respectively. This principally includes adjustments from the impact of the amortization of intangible assets and remuneration from the vesting of participation certificates.

NHL License Agreement

On July 22, 2021, we entered into a 10-year global partnership with the NHL. Under the terms of the NHL License Agreement, we were named as the official betting data rights, official betting streaming rights and official media data rights partner of the NHL, as well as an official integrity partner of the NHL. Pursuant to the terms of the NHL License Agreement, on a pro forma basis giving effect to the Reorganization Transactions, based upon the initial public offering price of $27.00 per share of Class A ordinary shares, we granted the NHL the right to acquire an aggregate of up to 1,116,540 Class A ordinary shares for an exercise price of €7.59, and an amount of Class A ordinary shares calculated by dividing $30 million by the initial public offering price. Additionally, we granted the NHL a warrant to exercise 1,353,740 Class A ordinary shares at a subscription price of €19.87 per Class A ordinary share.

Key Financial and Operational Performance Indicators

The following table sets forth our key financial and operational performance indicators for the years ended December 31, 2019 and 2020 and for the six month periods ended June 30, 2020 and 2021:

 

     Years Ended December 31,     Six Month Periods
Ended
June 30,
 
         2019             2020             2020             2021      
     (in millions)  

Profit for the Period

   11.7     14.8     20.2     17.7  

Adjusted EBITDA

   63.2     76.9     40.8     59.8  

Profit for the period as a percentage of revenue

     3.1     3.7     10.6     6.5

Adjusted EBITDA margin

     16.6     19.0     21.3     22.0

Adjusted Free Cash Flow

   55.3     53.5     32.9     4.1  

Net cash from operating activities as a percentage of profit for the period

     1,251.3     1,021.6     374.9     382.6

Cash Flow Conversion

     87.3     69.6     80.7     6.9

Dollar-Based Net Retention Rate

     118     113     103     138

Key Financial Measures

Adjusted EBITDA represents earnings before interest, tax, depreciation and amortization, adjusted for impairment of intangible assets and financial assets, loss from loss of control of subsidiary, foreign exchange gains/losses, other finance income/costs and amortization of sports rights. Adjusted EBITDA is a non-IFRS measure and a reconciliation to profit for the year/period, its most directly comparable IFRS measure, is included in “Prospectus Summary—Summary Consolidated Financial and Other Data” together with an explanation of why we consider Adjusted EBITDA useful.

Adjusted Free Cash Flow represents net cash from operating activities adjusted for payments for lease liabilities, acquisition of property and equipment, acquisition of intangible assets (excluding certain intangible assets required to further support an acquired business). Adjusted Free Cash Flow is a non-IFRS measure and a reconciliation to net cash from operating activities, its most directly comparable IFRS measure, is included in “Prospectus Summary—Summary Consolidated Financial and Other Data” together with an explanation of why we consider Adjusted Free Cash Flow useful.

 

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Key Operational Measures

Adjusted EBITDA margin is the ratio of Adjusted EBITDA to revenue. See “Prospectus Summary—Summary Consolidated Financial and Other Data” for the explanation of why we consider Adjusted EBITDA margin useful.

Cash Flow Conversion is the ratio of Adjusted Free Cash Flow to Adjusted EBITDA. See “Prospectus Summary—Summary Consolidated Financial and Other Data” for the explanation of why we consider Cash Flow Conversion useful.

Dollar-Based Net Retention Rate is calculated for a given period by starting with the reported annual revenue, which includes both subscription-based and revenue sharing revenue, from our top 200 customers as of twelve months prior to such period end, or Prior Period revenue. We then calculate the reported annual revenue from the same customer cohort as of the current period end, or Current Period revenue. Current Period revenue includes any upsells and is net of contraction and attrition over the trailing twelve months, but excludes revenue from new customers in the current period. We then divide the total Current Period revenue by the total Prior Period revenue to arrive at our Dollar-Based Net Retention Rate.

Components of our Results of Operations

The following briefly describes the components of revenue and expenses as presented in our consolidated statement of profit or loss and other comprehensive income.

Revenue

Betting. Betting includes revenue derived from betting data and betting entertainment tools, managed betting services and virtual gaming and e-Sports. Below is a description of each:

Betting Data / Betting Entertainment Tools Revenue. For Betting Data and Betting Entertainment Tools clients, a service is provided for an agreed number of matches, with sports data to be retrieved on demand over a contract period (referred to as the stand ready service). At any time, customers also have the ability to select additional matches (“single match booking” or “SMB”) over and above the agreed upon package. These matches are often used for premium events but may be used for any other normal events. The SMBs are a separate contract for distinct services sold at their standalone prices.

The stand ready service is provided over a period of time. As the performance obligations and associated method of satisfaction measurement are substantially the same, the stand ready service represents a series. In general, there is one performance obligation for the series and therefore, revenue is recognized on a straight-line basis over the contract period. The data and service level commitments are generally consistent on a monthly basis over the term of the arrangement. As the service is provided evenly over the contract term, a straight-line measure of progress is appropriate for recognizing revenue. Revenue is recognized on a straight-line basis consistent with the entity’s efforts to fulfill the contract which are even throughout the period. In assessing the nature of the obligation, Sportradar considered all relevant facts and circumstances, including the timing of transfer of goods or services, and concluded that the entity’s efforts are expended evenly throughout the contract period.

SMBs are provided on request from customers and result in separate contracts. The price for each match is determined on a stand-alone basis and revenue relating to SMBs is recognized at a point in time, which generally coincides with the performance of the actual matches.

There are some Sports Betting contracts with customers that incorporate a revenue share scheme. Sportradar receives a share of revenue based on the gaming revenue generated from the betting activity on the match. The revenue share gives rise to variable consideration for each match, which is initially constrained until the related performance obligation is satisfied at the point in time when the customer generates gaming revenue. The revenue share is generated from live betting events and recognized at the point in time of the actual

 

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customer sale performance. Sportradar’s fee on the revenue share is recognized at the point of time the customer has itself generated gaming revenue from an individual bet, which is the difference between the bet and payout.

MBS Revenue includes both Managed Trading Services (“MTS”) and Managed Platform Services (“MPS”). MTS revenue consists of the percentage of winnings and fees charged to clients if a “bet slip” is accepted and successful. MPS revenue consists of platform set-up fees for our turnkey solution.

MTS clients forward their proposed bets “bet slips” to us for consideration as to whether or not the bet is advisable. We have the ability to accept or decline this bet slip. If a bet slip is accepted, we will receive a share of the revenue or loss made by the client on the bet. MTS agreements typically specify an agreed minimum fee and revenue share percentage and the actual fee is determined as the higher of the minimum fee and revenue share. The revenue share is based on gross or net gaming revenue. Gross gaming revenue is the total volume of bets in excess of the total amount of payouts to betting customers. Net gaming revenue is gross gaming revenue less applicable taxes and other contractually agreed adjustments. Most of MTS contracts also include a loss participation clause (i.e. in case the gross/net gaming revenue is negative). We are exposed to the losses by the agreed loss participation percentage (typically the same percentage as the revenue share). Revenue is recognized monthly on the basis of actual performance (revenue share or minimum fee, if the revenue share, is below agreed minimum fee).

MPS is part of our MBS business following the acquisition of Optima in 2019 and provides a complete turnkey solution (including platform set-up, maintenance and support) to our clients. The platform set-up fee is recognized over the time the platform is built. Maintenance and support fees are recognized on a monthly basis or on the basis of actual performance for revenue share arrangements.

Virtual Gaming and e-Sports Revenue consists of income from a revenue share arrangement with clients in exchange for the provision of virtual sports data, for Virtual Gaming, and fees charged to clients for e-Sports data packages, for e-Sports.

For Virtual Gaming, we receive income from a revenue share arrangement with clients in exchange for the provision of virtual sports data. We receive a share of revenue based on the gaming revenue generated from the betting activity on the virtual game. The revenue share gives rise to variable consideration for each match, which is initially constrained until the related performance obligation is satisfied. The revenue share is generated from live betting events and revenue is recognized at the point in time of the actual customer sale performance. Our fee on the revenue share is recognized at the point of time the customer has itself generated gaming revenue from an individual bet, which is the difference between the bet and payout.

For E-Sports, revenue recognition is consistent with the recognition for Betting Data, except it includes E-Sports data rather than real sports data. Revenue is recognized similar to Betting Data as described above.

Betting AV. Betting AV Revenue consists of revenue from the sale of a live streaming solution for online, mobile and retail sports betting offers. The stand ready service is provided over a period of time. As the performance obligations and associated method of satisfaction measurement are substantially the same, the stand ready service represents a series. In general, there is one performance obligation for the series and, therefore, revenue is recognized on a straight-line basis over the contract term. Should the customer have demand that exceeds the level of performance in the contract, we provide this additional service level at the standalone market selling price. The additional obligation is satisfied and the revenue recorded in the period of over performance.

United States. United States Revenue consist of primarily media revenue from APIs, whereby we offer extensive sports data from over 60 sports and more than 400,000 games worldwide. Customers can access both live and historical data via API products. Customer contracts include multiple sports and the products offered are accessible throughout the duration of the contract. The stand ready services represent one performance obligation performed over time. Revenue is recognized on a straight-line basis over the contract term. United States revenue also includes betting and betting AV revenue.

 

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Other. Other Revenue includes various revenue streams, amongst others the media revenue for the rest of the world and integrity services.

Costs and Expenses

Purchased services and licenses (excluding depreciation and amortization). Purchased services and licenses (excluding depreciation and amortization) consists of the costs of delivering the service to our customers, which does not include license amortization and personnel costs. This consists primarily of fees paid to data journalists and freelancer for gathering sports data, fees to sales agents, production costs, revenue shares for third-party content, “Ad:s acquisition costs”, consultancy fees, licenses and sports rights expenses that did not meet the recognition criteria, as well as IT development costs and other external service costs. These costs are primarily expensed as they are incurred.

Internally-developed software cost capitalized. Internally-developed software cost capitalized consists primarily of personnel costs involved in software development and which meet the qualifying criteria for capitalization. Such costs are capitalized as part of the corresponding intangible asset as incurred.

Personnel expenses. Personnel expenses consists primarily of salaries, payroll taxes, social benefits and expenses for pension plans. Personnel expenses are expensed as incurred. Personnel expenses include costs related to internally-developed software meeting the qualifying criteria for capitalization, as such those costs are recognized as part of the capitalized internally developed software cost.

Other operating expenses. Other operating expenses consists primarily of legal and other consulting expenses, telecommunications and IT expenses, advertising and marketing expenses, travel expenses, and other expenses, all of which are recognized on an accrual basis, being expensed as incurred.

Depreciation and amortization

Depreciation primarily relates to the depreciation of IT and office equipment and buildings. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, which are estimated between one to 15 years.

Amortization expense relates to the amortization of intangible assets over their estimated useful life. Our amortization expense primarily relates to sports rights licenses, customer base, software, brand name, capitalized computer software and other rights and contract costs.

Impairment of intangible assets

Impairment of intangible assets is recognized where we determine that the investment made in the respective intangible asset is not fully recoverable. For the year ended December 31, 2020, we recognized impairments on our NBA and NFL licenses primarily due to the impact of the COVID-19 pandemic, which resulted in professional leagues across sports suspending most live events. As a result of such suspension, our U.S. business underperformed and the original expectations for to the NBA and NFL licenses were not met, which caused us to recognize these impairments. In addition, we recognized an impairment on goodwill related to CGU Sports Media—US of €10.4 million due to significant losses and expected decline in future performance.

We also recognized impairments related to the impact of the U.S. Supreme Court’s holding in Murphy v. National Collegiate Athletic Association (2018), in which the court upheld the legality of a New Jersey law permitting sports betting at casinos and racetracks and overturned the Professional and Amateur Sports Protection Act. While the court’s holding in such case was viewed at the time as a significant driver towards the legalization of sports betting across the United States, the legalization of sports betting is a matter of state law and, as such, depends on state legislatures adopting statutes and regulations permitting sports betting. The

 

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impairments we recognized in 2019 were caused by a lower than expected number of states adopting statutes and regulations legalizing betting as compared to the expectations of management at the time the holding in Murphy v. National Collegiate Athletic Association was issued by the court.

Impairment loss on trade receivables, contract assets and other financial assets

Impairment loss on trade receivables, contract assets and other financial assets consists primarily of impairment on loans granted by us to clients and management and the provision for expected credit losses in respect of trade receivables and contract assets. For the year ended December 31, 2020, we recognized an impairment on loans granted to clients and an accretion to the provision for expected credit losses in respect of trade receivables and contract assets totaling €1.7 million.

Share of loss of equity-accounted investees

Share of loss of equity-accounted investees consists primarily of our share of the results of operations of associates and joint ventures over which we have significant influence but not control or joint control.

Loss from loss of control of subsidiary

Loss from loss of control of subsidiary represents the loss of control in NSoft d.o.o. (“NSoft”) as a result of the expiration of the option to purchase an additional 11% of its remaining shares in March 2019.

Finance income

Finance income consists primarily of gain on foreign exchange differences and interest income from loans and bank accounts.

Finance costs

Finance costs consist primarily of losses on foreign exchange differences and interest expense on license payables fees and loans and borrowings.

Segments

We manage and report operating results through three reportable segments:

 

   

RoW Betting (59% of 2019 revenue, 58% of 2020 revenue and 55% of our six month period ended June 30, 2021 revenue): The RoW Betting segment includes customers located outside the United States, including the United Kingdom, Malta and Switzerland, and represents revenue generated from betting and gaming solutions.

 

   

RoW AV (27% of 2019 revenue, 26% of 2020 revenue and 28% of our six month period ended June 30, 2021 revenue): The RoW AV segment represents revenue generated from live streaming solutions for online, mobile and retail sports betting from customers outside the United States.

 

   

United States (6% of 2019 revenue, 8% of 2020 revenue and 11% of our six month period ended June 30, 2021 revenue): The United States segment represents revenue generated from sports entertainment, betting and gaming in the United States.

 

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     Segment Revenue      Segment Adjusted
EBITDA
 
     Years Ended December 31,      Years Ended
December 31,
 
           2019                  2020            2019     2020  
     (in thousands)         

RoW Betting

   224,734      234,991      129,233     118,676  

RoW AV

     102,740        105,892        25,724       26,759  

United States

     22,869        34,407        (40,095     (16,373

Other

     30,060        29,634        (1,516     (1,383
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   380,403      404,924      113,346     127,679  
  

 

 

    

 

 

    

 

 

   

 

 

 

Unallocated corporate expense(1)

           (50,153     (50,811
        

 

 

   

 

 

 

Adjusted EBITDA(2)

         63,193     76,868  

Profit for the Year

         11,665     14,806  
        

 

 

   

 

 

 

 

(1)

Unallocated corporate expenses primarily consists of salaries and wages for Group management, legal, human resources, finance, office, technology and other costs not allocated to the segments.

(2)

Adjusted EBITDA is a non-IFRS measure and a reconciliation from profit for the year, its most directly comparable IFRS measure, is included in “Prospectus Summary—Summary Consolidated Financial and Other Data” together with an explanation of why we consider Adjusted EBITDA useful.

 

     Segment Revenue      Segment Adjusted
EBITDA
 
     Six Month
Periods Ended
June 30,
     Six Month
Periods Ended
June 30,
 
           2020                  2021                  2020                 2021        
     (in thousands)         

RoW Betting

   108,375      148,522      56,812     86,586  

RoW AV

     56,723        75,603        18,210       19,640  

United States

     13,358        28,916        (12,386     (8,262

Other

     13,144        19,031        218       (1,691
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   191,600      272,072      62,854     96,273  
  

 

 

    

 

 

    

 

 

   

 

 

 

Unallocated corporate expense(1)

           (22,067     (36,506
        

 

 

   

 

 

 

Adjusted EBITDA(2)

         40,787     59,767  

Profit for the Period

         20,231     17,650  
        

 

 

   

 

 

 

 

(1)

Unallocated corporate expenses primarily consists of salaries and wages for Group management, legal, human resources, finance, office, technology and other costs not allocated to the segments.

(2)

Adjusted EBITDA is a non-IFRS measure and a reconciliation from net (loss) / income before tax, its most directly comparable IFRS measure, is included in “Prospectus Summary—Summary Consolidated Financial and Other Data” together with an explanation of why we consider Adjusted EBITDA useful.

 

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Comparison of Results For the Six Month Periods Ended June 30, 2020 and 2021

The following table sets forth the interim consolidated statements of profit or loss in Euros and as a percentage of revenue for the periods presented.

 

    Six Month
Periods Ended
June 30,
2020
    % of
Revenue
    Six Month
Periods Ended
June 30,
2021
    % of
Revenue
    € change     %
change
 
    (in thousands)           (in thousands)           (in thousands)        

Revenue

  191,600       100.0   272,072       100.0   80,472       42.0

Purchased services and licenses (excluding depreciation and amortization)

    (37,257     (19.4 )%      (56,563     (20.8 )%      (19,306     51.8

Internally-developed software cost capitalized

    3,155       1.6     5,917       2.2     2,762       87.5

Personnel expenses

    (55,619     (29.0 )%      (85,445     (31.4 )%      (29,826     53.6

Other operating expenses

    (17,925     (9.4 )%      (34,941     (12.8 )%      (17,016     94.9

Depreciation and amortization

    (52,907     (27.6 )%      (64,089     (23.6 )%      (11,182     21.1

Impairment loss on trade receivables, contract assets and other financial assets

    (2,047     (1.1 )%      (102     0.0     1,945       (95.0 )% 

Share of loss of equity-accounted investees

    (1,043     (0.5 )%      (1,090 )       (0.4 )%      (47     4.5

Finance income

    9,436       4.9     13,017       4.8     3,581       38.0

Finance costs

    (12,698     (6.6 )%      (23,449     (8.6 )%      (10,751     84.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income before tax

    24,695       12.9     25,327       9.3     632       2.6

Income tax expense

    (4,464     (2.3 )%      (7,677     (2.8 )%      (3,213     72.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

  20,231       10.6   17,650       6.5   (2,581     (12.8 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

Revenue was €272.1 million for the six month period ended June 30, 2021, an increase of €80.5 million, or 42.0%, compared to €191.6 million for the six month period ended June 30, 2020. This increase was driven by growth of €25.0 million from Betting data / Betting entertainment tools due to selling additional content (from new and returned sports) in live odds/live data, price increases and growth in MBS of €16.1 million as a result of strong trading. Additionally, our revenue increase was caused by an increase of Betting AV of €18.9 million, which was due to our negatively impacted first half 2020 as a result of the COVID-19 pandemic, and an upsell on existing customers for alternative content. Lastly, the increase was also due to an increase in United States revenue of €15.6 million as compared to six month period ended June 30, 2020 United States revenue as a result of market growth within the United States and a high number of customer acquisitions. €4.4 million of additional US revenues for the six month period ended June 30, 2021 resulted from the acquisition of Atrium.

The following table sets forth our revenue components for the periods presented.

 

     Six Month Periods Ended
June 30,
 
     2020      2021  
     (in thousands)  

Betting data / Betting entertainment tools

   78,082      103,047  

MBS

     21,409        37,549  

Virtual Gaming and e-Sports

     8,884        7,926  

RoW Betting revenue

     108,375        148,522  

RoW AV revenue

     56,723        75,603  

Other revenue

     13,144        19,031  
  

 

 

    

 

 

 

RoW revenue

     178,242        243,156  

United States revenue

     13,358        28,916  
  

 

 

    

 

 

 

Total Revenue

   191,600      272,072  
  

 

 

    

 

 

 

 

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Purchased services and licenses (excluding depreciation and amortization)

Purchased services and licenses (excluding depreciation and amortization) was €56.6 million for the six months ended June 30, 2021, an increase of €19.3 million, or 51.8%, compared to €37.3 million for the six months ended June 30, 2020. This increase was primarily driven by additional licenses and sport rights expenses of €6.8 million, which we were driven by higher non-capitalizable license and sports rights expenses, as compared to the second quarter of 2020. Additionally, as compared to the second quarter of 2020, there were a number of live events scheduled during the second quarter of 2021, which resulted in increased costs of €5.1 million, primarily attributable to the growth of our Ad:s business.

Internally-developed software cost capitalized

Internally-developed software cost capitalized was €5.9 million for the six months ended June 30, 2021, an increase of €2.8 million, or 87.5%, compared to €3.2 million for the six months ended June 30, 2020. This increase was primarily driven by a resumption of development projects after the COVID-19 pandemic, as certain projects were placed on hold due to the COVID-19 pandemic in 2020.

Personnel expenses

Personnel expenses was €85.4 million for the six months ended June 30, 2021, an increase of €29.8 million, or 53.6%, compared to €55.6 million for the six months ended June 30, 2020. This increase was primarily driven by the return of regular salary payments (without short-time work and salary-cuts impact) leading to an increase of €17.8 million of salaries and wages, a share-based compensation of €8.5 million and €2.4 million of related social security payments.

Other operating expenses

Other operating expenses was €34.9 million for the six months ended June 30, 2021, an increase of €17.0 million, or 94.9%, compared to €17.9 million for the six months ended June 30, 2020. This increase was primarily driven by increased legal and consultancy costs of €14.5 million as a result of advisor fees in regards to the IPO and by an increase of administrative software license and telecommunication/IT costs of €3.4 million, which was partially offset by reduced marketing expenses of €0.9 million driven by reduced exhibitions and events and reduced travel costs of €1.0 million as a result of travel restrictions in connection with the COVID-19 pandemic.

Depreciation and amortization

Depreciation and amortization was €64.1 million for the six months ended June 30, 2021, an increase of €11.2 million, or 21.1%, compared to €52.9 million for the six months ended June 30, 2020. This increase was primarily driven by higher amortization on sport rights of €8.8 million as a result of reductions received for delivering fewer live events for the six months ended June 30, 2020, by higher amortization on self-developed software of €1.5 million and amortization of intangible assets in relation to newly acquired businesses of €1.7 million.

Impairment loss on trade receivables, contract assets and other financial assets

Impairment loss on trade receivables, contract assets and other financial assets was €(0.1) million for the six months ended June 30, 2021, a decrease of €1.9 million, or 95.0%, compared to €2.1 million for the six months ended June 30, 2020. This decrease was primarily driven by a higher credit risk during the onset of the COVID-19 pandemic when event restrictions were most extensive.

Finance income

Finance income was €13.0 million for the six months ended June 30, 2021, an increase of €3.6 million, or 38%, compared to €9.4 million for the six months ended June 30, 2020. This increase was driven by higher foreign exchange gains of €3.8 million, resulting from the development of U.S. dollars to Euros exchange rate on trade payables denominated in U.S. dollars.

 

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Finance costs

Finance costs was €23.5 million for the six months ended June 30, 2021, an increase of €10.8 million, or 84.7%, compared to €12.7 million for the six months ended June 30, 2020. This increase was primarily driven by higher interest expenses to banks of €8.8 million in regards to the new CFA and increased foreign exchange losses of €1.9 million mainly resulting from the development of U.S. dollars to Euros exchange rate on trade payables denominated in U.S. dollars.

Income tax expense

Income tax expense was €7.7 million for the six month period ended June 30, 2021, an increase of €3.2 million, or 72.0%, compared to an income tax expense of €4.5 million for the six month period ended June 30, 2020.

Our effective tax rate for the six month period ended June 30, 2021 increased to 30.3%, in comparison to our effective tax rate of 18.1% for the six month period ended June 30, 2020. The main drivers for the increase were the share based compensation relating to the MPP share awards and awards granted to the sellers of Atrium and the participation certificates issued to a director of the Group, which are non-tax deductible and the effect of tax losses in the Luxembourg entity and Sportradar Holding AG not recognized as a deferred tax asset.

Comparison of Results For the Fiscal Years Ended December 31, 2019 and 2020

The following table sets forth the consolidated statements of profit or loss in Euros and as a percentage of revenue for the periods presented.

 

     Year Ended
December 31,
2019
    % of
Revenue
    Year Ended
December 31,
2020
    % of
Revenue
    € change     %
change
 
     (in thousands)           (in thousands)           (in thousands)        

Revenue

   380,403           100.0  %    404,924       100.0  %    24,521       6.4  % 

Purchased services and licenses (excluding depreciation and amortization)

     (61,395     (16.1 )%      (89,307     (22.1 )%      (27,912     (45.5 )% 

Internally-developed software cost capitalized

     7,863       2.1  %      6,093       1.5  %      (1,770     (22.5 )% 

Personnel expenses

     (119,078     (31.3 )%      (121,286     (30.0 )%      (2,208     (1.9 )% 

Other operating expenses

     (46,727     (12.3 )%      (41,339     (10.2 )%      5,388       11.5  % 

Depreciation and amortization

     (112,803     (29.7 )%      (106,229     (26.2 )%      6,574       5.8  % 

Impairment of intangible assets

     (39,482     (10.4 )%      (26,184     (6.5 )%      13,298       33.7  % 

Impairment loss on trade receivables, contract assets and other financial assets

     (5,303     (1.4 )%      (4,645     (1.2 )%      658       12.4  % 

Impairment of equity-accounted investee

     —         —    %      (4,578     (1.1 )%      (4,578     —    

Share of loss of equity-accounted investees

     (235     (0.1 )%      (989     (0.2 )%      (754     (320 )% 

Loss from loss of control of subsidiary

     (2,825     (0.7 )%      —         —    %      2,825       100  % 

Finance income

     17,445       4.6  %      41,733       10.3  %      24,288       139.2  % 

Finance costs

     (28,108     (7.4 )%      (36,068     (8.9 )%      (7,960     (28.3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) / income before tax

     (10,245     (2.7 )%      22,125       5.5  %      32,370       316.0  % 

Income tax benefit (expense)

     21,910       5.8  %      (7,319     (1.8 )%      (29,229     (133.4 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   11,665       3.1  %    14,806       3.7  %    3,141       26.9  % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Revenue

Revenue was €404.9 million for the year ended December 31, 2020, an increase of €24.5 million, or 6.4%, compared to €380.4 million for the year ended December 31, 2019. This increase was driven by MBS growth of €12.5 million as a result of strong performance in MTS, which made up €5.0 million of the increase which was largely driven by new customer acquisitions, and full year revenue consideration of Optima (MPS), which made up €7.5 million of the increase. The increase in revenue was also the result of United States revenue growth of €11.5 million driven by an increasing number of states re-opening, Virtual Gaming and e-Sports growth of €3.7 million driven by virtual sports substituting live sports during first lockdown and partially offset by a decrease in Betting data/Betting entertainment tools of €6.0 million due to COVID-19 impacts, which led to package and price reductions.

The following table sets forth our revenue components for the periods presented.

 

     Years Ended
December 31,
 
     2019      2020  
     (in thousands)  

Betting data / Betting entertainment tools

   176,041      170,044  

MBS

     34,068        46,604  

Virtual Gaming and e-Sports

     14,625        18,343  

RoW Betting revenue

     224,734        234,991  

RoW AV revenue

     102,740        105,892  

Other revenue

     30,060        29,634  
  

 

 

    

 

 

 

RoW revenue

     357,534        370,517  

United States revenue

     22,869        34,407  

Total Revenue

   380,403      404,924  
  

 

 

    

 

 

 

Purchased services and licenses (excluding depreciation and amortization)

Purchased services and licenses (excluding depreciation and amortization) was €89.3 million for the year ended December 31, 2020, an increase of €27.9 million, or 45.5%, compared to €61.4 million for the year ended December 31, 2019. This increase was primarily driven by additional licenses and sports rights expenses of €28.1 million from alternative content, which do not meet the criteria for capitalization and was newly sourced and developed in 2020 when most live sports were not played.

Internally-developed software cost capitalized

Internally-developed software cost capitalized was €6.1 million for the year ended December 31, 2020, a decrease of €1.8 million, or 22.5%, compared to €7.9 million for the year ended December 31, 2019. This decrease was primarily driven by certain software development projects that were put on hold due to reduced working hours in the second quarter of 2020 related to COVID-19 and resumed in the third quarter of 2020.

Personnel expenses

Personnel expenses was €121.3 million for the year ended December 31, 2020, an increase of €2.2 million, or 1.9%, compared to €119.1 million for the year ended December 31, 2019. This increase was primarily driven by share-based payment expenses of €2.3 million. Growth in workforce was offset by cost reduction due to reduced working hours in relation to COVID-19.

Other operating expenses

Other operating expenses was €41.3 million for the year ended December 31, 2020, a decrease of €5.4 million, or 11.5%, compared to €46.7 million for the year ended December 31, 2019. This decrease was primarily driven by

 

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reduced travel expenses of €4.2 million as a result of travel restrictions in connection with the COVID-19 pandemic and marketing expenses of €3.2 million driven by reduced exhibitions and events, which is offset by an increase of administrative software license costs of €1.5 million.

Depreciation and amortization

Depreciation and amortization was €106.2 million for the year ended December 31, 2020, a decrease of €6.6 million, or 5.8%, compared to €112.8 million for the year ended December 31, 2019. This decrease was primarily driven by reduced amortization of sports rights in the amount of €13.3 million, resulting from reductions on license payments because of suspended or cancelled sports events resulting from the COVID-19 pandemic, partially offset by €5.2 million due to amortization of IGT licenses.

Impairment of intangible assets

Impairment of intangible assets was €26.1 million for the year ended December 31, 2020, a decrease of €13.3 million, or 33.7%, compared to €39.5 million for the year ended December 31, 2019, which consisted of €36.0 million impairment on NBA license rights, €2.4 million of NFL license rights and €1.1 million on BTD customer base as a result of the BTD business discontinuation in 2019. In 2020, impairment of intangible assets consisted of €13.2 million on NBA license rights, €10.4 million on goodwill of CGU Sportsmedia—US and €2.6 million of NFL license rights.

Impairment loss on trade receivables, contract assets and other financial assets

Impairment loss on trade receivables, contract assets and other financial assets was €4.6 million for the year ended December 31, 2020, a decrease of €0.7 million, or 13.2%, compared to €5.3 million for the year ended December 31, 2019, which consisted of €3.7 million provision charge on expected credit losses on trade receivables and contract assets and €1.6 million impairment on loan receivables granted by us to business partners. In 2020, the impairment loss on trade receivables consists primarily of €2.9 million provision charges on expected credit losses from trade receivables and contract assets and €1.7 million on loan receivables granted by us to business partners.

Impairment of equity-accounted investee

Impairment of equity-accounted investee was €4.6 million for the year ended December 31, 2020 and was recorded in connection with the impairment over the Company’s equity investment on NSoft.

Loss from loss of control of subsidiary

No loss from loss of control of subsidiary occurred for the year ended December 31, 2020, a decrease of €2.8 million, or 100.0%, compared to €2.8 million for the year ended December 31, 2019, which consisted of the loss resulting from the expiration of the option to acquire an additional 11% in NSoft during the year.

Finance income

Finance income was €41.7 million for the year ended December 31, 2020, an increase of €24.3 million, or 139.2%, compared to €17.4 million for the year ended December 31, 2019. This increase was primarily driven by increased foreign exchange gains of €20.1 million, which were mainly driven by the development of U.S. dollars to Euros foreign currency rate on trade payables denominated in U.S. dollars.

Finance costs

Finance costs was €36.1 million for the year ended December 31, 2020, an increase of €8 million, or 28.3%, compared to €28.1 million for the year ended December 31, 2019. This increase was primarily driven by increased interest expense on loans and borrowings of €4.1 million and increased foreign exchange losses of €4.8 million on mainly trade payables in U.S. dollars.

 

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Income tax benefit (expense)

Income tax expense of €7.3 million for the year ended December 31, 2020, an increase of €29.2 million, or 132.7%, compared to an income tax benefit of €21.9 million for the year ended December 31, 2019. Current income tax expense in 2020 amounted to €2.7 million compared to €1.5 million in 2019, €1.1 million in 2020 and €4.4 million in 2019 corresponded to changes in estimates related to prior years mainly on a tax litigation in Norway and a loss of €3.7 million in 2020 and a gain of €30.1 million in 2019 related to the origination and reversal of temporary differences in the deferred income tax, which was primarily driven by changes in Swiss tax law that allowed recognition of goodwill of €17 million with tax deductible amortization thereon and an increase in the effective tax rate from 9% to 14.5% that occurred on January 1, 2020.

Liquidity and Capital Resources

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital and capital expenditure needs, future acquisitions and general corporate purposes, with cash flows from operations and other sources of funding. Our current working capital needs relate mainly to sports rights fees and scouting costs, as well as compensation and benefits of our employees. Our ability to expand and grow our business will depend on many factors, including our working capital needs and the evolution of our operating cash flows.

Since our inception, we have financed our operations primarily through cash generated by our operating activities, from borrowings under our credit facilities and from proceeds of issuances of participation certificates. As of December 31, 2020 and June 30, 2021, we had cash of €385.5 million and €190.7 million, respectively. Our cash consist of cash in bank accounts and in hand. We believe that our sources of liquidity and capital will be sufficient to meet our existing business needs for at least the next 12 months.

Borrowings

On September 24, 2018, we entered into a credit facility with UBS Switzerland AG and ING Bank (the “Credit Facility”) that provided for term loan facilities of (i) a senior amortizing term loan facility of up to €60.0 million, (ii) a senior non-amortizing term loan facility of up to €90.0 million and (iii) an acquisition term loan facility of up to €100.0 million, and a revolving credit facility of up to €50.0 million of borrowings that can be used for general corporate and working capital purposes. In September 2020, we reached an agreement with the lender syndicate to amend the covenants of this Credit Facility from September 2020 onwards. As of December 31, 2019, €150.0 million was remaining for withdrawal under the Credit Facility for permitted acquisitions and our general corporate and working capital purposes.

In November 2020, we replaced the Credit Facility by entering into a Credit Agreement with J.P. Morgan Securities PLC, Citigroup Global Markets Limited, Credit Suisse International, Goldman Sachs Bank USA, UBS AG London Branch and UBS Switzerland AG (as Mandated Lead Arrangers), J.P. Morgan AG (as Agent) and Lucid Trustee Services Limited (as Security Agent) that provided a €420.0 million senior secured term loan facility repayable in seven years (the “Term Loan Facility”) and a €110.0 million multicurrency senior secured revolving credit facility repayable on the last day of the relevant interest period of that loan (the “RCF”). As of December 31, 2020 and June 30, 2021, we had €420.0 million and €420.0 million drawn under the Term Loan Facility and €110.0 million and €110.0 million, respectively, available but not drawn under the RCF. See “Description of Indebtedness.”

Equity

Participation certificates are shares without voting rights, which are entitled to participate with ordinary shareholders in dividends and unallocated income. As of June 30, 2021, Sportradar Holding AG has issued participation capital of €164,000, compromising 186,397 registered participation certificates with a nominal value of CHF 1.00 per participation certificate.

 

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For the year ended December 31, 2020, our shareholders’ equity increased by €10.3 million to €167.3 million, compared to €157.0 million for the year ended December 31, 2019. This is mainly due to the net income of the fiscal year 2020 of €15.2 million. For the six months period ended June 30, 2021, our shareholders’ equity increased by €42.0 million to €209.3 million, compared to €167.3 million for the year ended December 31, 2020. This is mainly due to issuance of participation certificates of €7.8 million and issuance of MPP share awards of €1.7 million and the connected reclassification of unpaid contribution of capital of €6.1 million. Additionally the equity increased due to the profit for the six months ended June 30, 2021 of €17.4 million and the equity settled share-based payments of €8.5 million.

Capital Expenditures

Our capital expenditures consist primarily of payments for capitalized sports rights and capitalized personnel expenditures for self-developed software. Our capital expenditures during the fiscal year ended December 31, 2020 were €94.0 million. Our capital expenditures during the six month period ended June 30, 2021 were €60.4 million.

We began implementing a company-wide ERP system in 2020. Implementation requires us to integrate the new ERP system with multiple new and existing information systems and business processes, and the ERP system is designed to accurately maintain our books and records and provide information to our management team important to the operation of the business. The design and implementation of this new ERP system will require a significant investment of personnel and financial resources, including substantial expenditures for outside consultants and software. As of June 30, 2021, we have entered into multiple licensing, implementation and application hosting agreements with outside providers. While we do not view any of these contractual commitments as material, we expect to incur approximately €0.8 million of capital expenditures in connection with the implementation of our company-wide ERP system in 2021.

Cash Flows

The following table presents the summary consolidated cash flow information for the periods presented.

 

     Years Ended December 31,  
         2019             2020      
     (in millions)  

Net cash from operating activities

   146.   151.3  

Net cash used in investing activities

     (114. 3)      (98.1

Net cash (used in) / from financing activities

     (4. 7)      274.5  

 

     Six Month Periods
Ended June 30,
 
         2020              2021      
     (in millions)  

Net cash from operating activities

   75.8      67.5  

Net cash used in investing activities

     (42.5      (259.4

Net cash (used in) / from financing activities

     6.7        2.5  

Net cash from operating activities

Net cash from operating activities was €151.3 million for the year ended December 31, 2020, an increase of €5.3 million, from €146.0 million for the year ended December 31, 2019. This increase was mainly due to a positive impact in working capital movement of €4.6 million.

Net cash from operating activities was €67.5 million for the six month period ended June 30, 2021, a decrease of €8.3 million, from €75.9 million for the six month period ended June 30, 2020. This decrease was mainly due to

 

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negative impact in working capital movement of €24.2 million, increased interest payments of €8.9 million and increased payments on income taxes of €3.0 million, offset by a significant higher amount on non-cash effective expenses, including equity-settled share based payments of €8.5 million and increased amortization of €11.3 million.

Net cash used in investing activities

Net cash used in investing activities was €98.1 million for the year ended December 31, 2020, a decrease of €16.2 million, from €114.3 million for the year ended December 31, 2019. This decrease was mainly due to a reduction in acquisitions of subsidiaries and contribution to equity-accounted investees of €8.5 million, a reduction in the purchase of property and equipment of €4.7 million and lower issuances of loans receivable to business partners of €1.5 million.

Net cash used in investing activities was €259.4 million for the six month period ended June 30, 2021, an increase of €216.9 million, from €42.5 million for the six month period ended June 30, 2020. This increase was mainly due to the acquisition of the newly acquired subsidiaries of €197.9 million and increased payments for capitalized sport rights of €18.0 million.

Net cash (used in) / from financing activities

Net cash from financing activities was €274.5 million for the year ended December 31, 2020, an increase of €279.2 million, from (€4.7) million for the year ended December 31, 2019. This increase was mainly due to €462.1 million of proceeds from bank debt of which €420.0 million were related to the refinancing of the Credit Facility under the new Term Loan Facility, which was reduced by €11.2 million of transaction related costs, and €2.3 million of proceeds from the issuance of MPP share awards, partially offset by the repayment of the prior bank loan of €150.7 million and €3.8 million of purchase of MPP share awards.

Net cash from financing activities was €2.5 million for the six month period ended June 30, 2021, a decrease of €4.1 million, from €6.7 million for the six month period ended June 30, 2020. This decrease mainly resulted as we received proceeds from the issuance of MPP share awards €1.7 million and from proceeds from issuance of participation certificates €1.0 million in the six month period ended June 30, 2021.

Off-Balance Sheet Arrangements

At June 30, 2021, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The preparation of these historical financial statements in conformity with IFRS requires management to make estimates, assumptions and judgments in certain circumstances that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have provided a summary of our significant accounting policies, as well as a discussion of our evaluation of the impact of recent accounting pronouncements regarding prepayment features with negative compensation, income tax treatment, business combinations, borrowing costs, pension expenses and long-term interests in associates and joint ventures, in Note 2 to our audited consolidated financial statements, which are included elsewhere in this prospectus. The following critical accounting discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective or complex

 

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judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations and cash flows to those of other companies.

Revenue Recognition

Our service offerings primarily deliver a service to a customer satisfied over time. Revenue is primarily subscription-based or through revenue-sharing arrangements in exchange for sports betting and AV services. Revenues from contracts with customers are recognized under IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). Revenue involves the use of various techniques to estimate total contract revenue and costs. Due to uncertainties inherent in the estimation process, it is possible that estimates of variable consideration will be revised in the near-term. Management reviews and updates its estimates and records adjustments as needed.

Variable Consideration

If consideration in a contract includes a variable amount, management estimates the amount of consideration to which it will be entitled in exchange for services rendered to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal will not occur when the related uncertainty is subsequently resolved. The revenue sharing and discounts give rise to variable consideration.

Allocation of Transaction Price to Performance Obligations

Contracts with customers as described above may include multiple performance obligations. For such contracts, the transaction price is allocated to performance obligations on a relative standalone selling price basis. Standalone selling prices are estimated based on observable data of our sales for services sold separately in similar circumstances and to similar customers. If the standalone selling price cannot be determined based on observable group data, we will apply a cost plus mark-up approach.

Price Adjustments or Discounts

Contractually agreed price adjustments or discounts are taken into consideration for revenue recognition over the service period on a straight line basis for contracts in which revenue is recognized over time.

Further details in relation to revenue from contracts with customers are discussed in Note 2 and Note 5 to our consolidated financial statements included elsewhere in this prospectus.

Intangibles–License Agreements

We typically enter into license agreements with sports leagues for the right to supply data and/or live video feeds to the betting industry (and the media). License agreements fulfill the definition of an intangible asset. There remains uncertainty regarding the timing of initial recognition as an intangible asset and whether those agreements could be considered as executory contracts that should only lead to asset recognition when payments are made. IFRS does not provide industry specific guidance for such license agreements. Therefore, the general recognition requirements of IAS 38 Intangible assets (“IAS 38”) need to be applied to develop an accounting policy.

The license agreements we enter into are complex and the specific rights granted can vary by agreement. Therefore, the conclusion for the accounting of each license agreement involves a significant degree of judgment. Further details in relation to license agreements are discussed in Note 2 and Note 11 to our consolidated financial statements included elsewhere in this prospectus.

We generally amortize our license agreements on a straight-line basis over the respective seasons. During 2019, amortization of the NBA license agreement was based on the expected increasing usage of the rights over the

 

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license term, which is impacted by factors such as the opening of the betting market in the United States and correlated user growth. The impairment test for the NBA license agreement performed at the end of 2019 which resulted in an impairment of €36.0 million indicated that the expected usage could no longer be considered as a reliable measure of the consumption of economic benefits. Therefore, with effect from January 1, 2020, we changed our amortization method of the NBA license agreement from an expected usage basis to a straight-line basis. For the year ended December 31, 2020, the change in estimate resulted in an increase in the amortization expense by €2,993,000. For 2021, the amortization expense will increase by €207,000. For 2022 and 2023, the amortization expense will decrease by €417,000 and €612,000, respectively.

Impairment of Intangible Assets and Goodwill

Impairment testing for goodwill, license agreements and other intangible assets is generally based on discounted estimated cash flows generated from the continuing use and ultimate disposal of the assets. Factors such as lower than anticipated sales and reduced net cash flows, as well as changes in the discount rates used can lead to impairments.

For the purpose of impairment testing, goodwill is allocated to a cash-generating unit representing the lowest level within the Group at which goodwill is monitored for internal management purposes and which is not higher than our operating segments. License rights and other intangible assets are tested for impairment at the individual asset level. The key assumptions used to determine the recoverable amount, including a sensitivity analysis, are disclosed and further explained in Note 11 to our consolidated financial statements included elsewhere in this prospectus.

Income Tax—Deferred Tax

Deferred tax assets are recognized to the extent that it is probable future taxable profits will be available against which the temporary differences can be utilized. The key area of judgment is therefore an assessment of whether it is probable that there will be suitable taxable profits against which any deferred tax assets can be utilized. We operate in a number of international tax jurisdictions. Judgment is required in respect of the interpretation of state, federal and international tax law and practices as the industry and tax continues to evolve.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

The recognition of the deferred tax asset for the tax step-up is generally based on future estimated taxable income. Factors such as lower than anticipated taxable results can lead to an impairment of the deferred tax asset. Further details in relation to deferred tax are discussed in Note 2 and Note 9 to our consolidated financial statements included elsewhere in this prospectus.

Recently Adopted and Issued Accounting Pronouncements

Recently issued and adopted accounting pronouncements are described in Note 2.1—New and amended standards and interpretations, to our consolidated financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosures of Market Risks

Our future income, cash flows and fair values relevant to financial instruments are subject to liquidity risk, credit risk, foreign currency exchange rate risk and interest rate risk.

Liquidity risk

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure that, as far as possible, we will have sufficient liquidity to meet our liabilities when they become due.

 

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Cash flow forecasting is performed in our operating entities on a monthly basis and then aggregated by our central finance department which closely monitors the actual status per company and the rolling forecasts of our liquidity. See Note 24.4 to our consolidated financial statements included elsewhere in this prospectus.

Credit risk

Credit risk is the risk of financial loss to us if a customer or counterparty to financial instruments fails to meet its contractual obligations. We are exposed to credit risk from our operating activities (primarily trade receivables), unpaid capital contributions, loans granted and its deposits with banks and financial institutions.

The carrying amounts of financial assets and contract assets represent the maximum credit exposure, for categories of financial instruments, please see Note 24.1 in our consolidated financial statements included elsewhere in this prospectus. At the reporting date, there are no arrangements which will reduce the maximum credit risk.

Impairment losses on financial assets and contract assets recognized in the consolidated statement of profit or loss and other comprehensive income are disclosed in Note 15 and Note 16 in our consolidated financial statements included elsewhere in this prospectus.

As our risk exposure is mainly influenced by the individual characteristics of each customer, we continuously analyze the creditworthiness of significant debtors. Due to our international operations and expanding business based on a diversified customer structure, we experience an increasing but still low concentration of credit risk arising from trade receivables. We had one customer that accounted for 10.4% of revenues in 2019 with revenues amounting to €39.4 million and for the year ended December 31, 2020 no individual customer accounted for more than 10% of revenues. For banks and financial institutions, only parties with a high credit rating are accepted. Furthermore, we continuously track the financial information of the counterparties of loans granted. Impairment losses are recognized when the counterparty is not meeting its payment obligations and when further financial information cannot be obtained. See Note 24.5 to our consolidated financial statements included elsewhere in this prospectus.

Foreign currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign exchange risk arises from future commercial transactions and recognized financial assets and liabilities. Sportradar AG invoices more than 85% of its business in its functional currency the Euro. However, license rights are often purchased in foreign currencies and this exposes us to a significant risk from changes in foreign exchange rates; in particular, against the U.S. Dollar following the purchase of the NBA sports data and media rights by Sportradar AG. Furthermore, some of the subsidiaries operate in local currencies, mainly AUD, GBP, CHF, NOK and USD. Exchange rates are monitored by our central finance department on a monthly basis, to ensure that adequate measures are taken if fluctuations increase.

In the normal course of business, we enter into financial instruments (derivatives) to manage our normal business exposures in relation to foreign currency exchange rates. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one to 12 months. The transaction risk on foreign currency cash flows is monitored on an ongoing basis by our Treasury. The main transaction risk is represented by the U.S. Dollar, while other currencies pose minor sources of risk. As of December 31, 2019 and 2020, the Group’s net liability exposure in U.S. Dollars was €196.9 million and €138.7 million, respectively. See Note 25.6 to our consolidated financial statements included elsewhere in this prospectus.

 

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Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. We do not actively manage our interest rate exposure. See Note 24.7 to our consolidated financial statements included elsewhere in this prospectus.

We are mainly exposed to cash flow interest rate risk in connection with borrowings. The interest rate is based on market interest rate plus a margin which is based on a leverage ratio as defined in the Credit Facility.

For the €420.0 million syndicated loan outstanding as of December 31, 2020, the foreseeable interest expense for 2021 will be €17.9 million, based on 6-months-EURIBOR or at least 0% interest, if the EURIBOR is below 0%, plus margin of 425 base points (determined on the senior secured net leverage ratio). Financial analysts do not expect EURIBOR to increase above 0%. However, a theoretical increase of 100 base points (one percentage point) above zero increases the interest expenditure for 12 months by €4.2 million.

We incur negative interest rate on cash due to the current interest level in Switzerland.

Loans granted to customers bore fixed interest. They do not expose us to any interest rate risk. See Note 15 to our consolidated financial statements included elsewhere in this prospectus.

JOBS Act

We are an emerging growth company, as defined in the JOBS Act. We intend to rely on certain of the exemptions and reduced reporting requirements provided by the JOBS Act. As an emerging growth company, we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, and (ii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis).

 

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BUSINESS

Overview

When a home run sails over the wall or a touchdown is caught in the final seconds, we are all connected for a moment by our love of the game and the passion we share for sports. Shared moments in sports are tightly woven into the fabric of daily life for billions of people worldwide. In an age of accelerating technology enablement, fandom is 24/7, 365 days-a-year and fans are engaging in deeper ways with sports content and data than ever before. Sportradar sits at this nexus of sports, data and technology. Our mission is to enhance sports fan engagement globally through our fully integrated technology and services platform.

Sportradar is a leading technology platform enabling next generation engagement in sports, and the number one provider of B2B solutions to the global sports betting industry based on revenue. We provide mission-critical software, data and content via subscription and revenue share arrangements to sports leagues, betting operators and media companies. Since our founding in 2001, we have been at the forefront of innovation in the sports betting industry and we continue to be a global leader in understanding, leveraging and monetizing the power of sports data.

Sports fanatics are no longer content with only watching games in person or on TV. Fans crave multi-platform experiences, immediate insights with predictive analytics and highly personalized content. The $184 billion sports market, as of 2019, according to the PwC Reports, is also ripe for disruption as new levels of interactivity such as gamification, data visualizations and augmented reality accelerate alongside significant growth in sports betting. The accelerating trend towards legalization of sports betting globally is providing new avenues for fan engagement, and the proliferation of mobile betting applications and live in-game betting is fueling heightened interactivity. Mobile sports betting is the fastest growing sports betting channel and is expected to account for approximately 50% of total gross gaming revenue by 2025. Furthermore, live in-game betting is optimized for mobile devices and enables bettors to bet on every snap, at-bat, shot and other in-game events. These offerings require more sports data and better technology than ever before. As a result of these trends, the global sports betting market is massive, $41 billion in 2019 and growing. In the United States alone, sports betting is anticipated to expand from a $1 billion market in 2019 to a $23 billion market at maturity.

With new consumer engagement models and rapid technological change comes complexity for sports leagues, media companies and betting operators. Sport is global and live. To be relevant requires access to content from thousands of leagues, instantaneous distribution and differentiated insights. The stakes are high and business decisions must be made in nanoseconds via machine learning and AI. For most betting operators and media companies, the cost associated with building a global network of rights and league partnerships, technology infrastructure, risk management services and R&D is prohibitive. Sportradar enables its customers to focus on their core competencies including customer acquisition, branding, monetization and creating compelling user interfaces, while it powers the operations of these businesses. These capabilities are not in their core competency; rather, they do, and should, focus on customer acquisition, branding, monetization and creating compelling user interfaces. As the sports data and technology partner of choice for sports leagues, betting operators and media companies globally, Sportradar provides these mission critical capabilities and allows its customers to focus on their users and fans.

Sportradar offers one of the most robust and fully integrated sports data and technology platforms. We serve as a critical data infrastructure and content layer to the sports betting and media industries. On top of that infrastructure layer, we have built one of the most advanced and comprehensive software offerings. Our products simplify our customers’ operations, drive efficiencies and enrich fan experiences. For example, through our MTS platform, we provide live data and odds to our betting customers, and also facilitate their end-to-end trading operations including risk management via our proprietary software programs. MTS enables our customers to run their businesses more efficiently and profitably, while also providing us with rich sports betting data that we feed back into our platform to further enhance the power of our algorithms and new uses cases.

 

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Our end-to-end offering, integrated technology and global footprint make us important partners to our customers and deeply embedded across the sports ecosystem:

 

   

Betting Operators: For our over 900 sports betting operator customers, we cover over 750,000 events annually across 83 sports, including live data coverage of 600,000 events across 37 sports. The breadth of our data offering and sports coverage is an important differentiator for Sportradar, especially in the U.S. market where we are the number one provider of data to bookmakers. We supply sports data, in many cases as the sole provider, to over 85% of all bookmakers in the United States, who in turn manage nearly every legal sports bet placed by U.S. sports bettors. Our offerings include pre-match data and odds, live data and odds, as well as sports audiovisual content. Our full-suite of software solutions includes managed trading services, managed platform services, betting entertainment tools, virtual games and programmatic advertising solutions. Our software offerings facilitate scalability, speed to market, cost efficiency and reduction of operational risk and complexity. We are the only independent one-stop-shop provider across the value chain.

 

   

Sports League: For our over 150 sports league partners, we provide access to over 900 sports betting operators and over 350 media companies to distribute their data and content globally. We give them greater reach and serve as an intermediary to the highly regulated betting industry. We also provide our sports leagues partners with technology, data collection tools, and integrity services. Our deep integrations into both the supply (leagues) and demand (betting operators and media companies) allow us to serve as a truly trusted, mission-critical partner. We also provide leagues with a range of tech-enabled solutions including fraud and manipulating monitoring, anti-doping, professional sports team technology and services, and OTT production and technology.

 

   

Media Companies: For our over 350 media customers including both traditional and digital leaders, we provide products and services to help reach and engage sports fans across distribution channels. Sportradar provides a range of services to media companies including data feeds and APIs, sports audiovisual content, broadcasting solutions, digital services, research and analytics, OTT streaming solutions and programmatic advertising solutions.

Sportradar Is a Critical Intermediary Which Enables

a More Robust Sports Betting and Media Ecosystem

(Illustrative)

 

 

LOGO

Our deep relationships across the sports value chain have been developed over the course of nearly twenty years, and have powerful network effects. The more betting operators and media companies we bring onto our platform,

 

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the broader distribution we have to sports fans and bettors. This attracts new sports leagues to partner with us. Each new league partner adds more events to our portfolio and new opportunities for us to help betting operators and media companies engage their customers. This feedback loop strengthens our value proposition in the ecosystem.

At the heart of what we do is our proprietary technology stack. Our product strategy is centered on speed, reliability and scalability to match the demands of our customers. We use advanced algorithms to create scalable, customized insights in real-time with latency averaging 700 ms. We have one of the industry’s leading cloud native storage and distribution platforms. We leverage AI and machine learning capabilities, based on our rich data lake, to provide the most accurate odds. Our models also power advanced use cases such as real-time betting outcome probabilities, guaranteed pricing models, customer risk modeling, neural networking for event-based predictions and algorithmic detection of suspicious betting activities. We are innovators at the forefront of revolutionary new technologies in sports data and analytics including computer vision, data visualization, virtual gaming and simulated reality.

Sportradar leads on breadth of events coverage for sports data and odds. We offer the largest volume of data in the world across our peers, leveraging nearly 20 years of historical sports information. We collect over 1.2 billion live data points per year from over 600,000 events in 37 sports. In 2020, we generated 3.7 billion live and pre-match odds changes collected 1.9 billion betting tickets and processed 21 billion odds changes from betting operators. We have a strong betting data rights portfolio, including non-exclusive rights to the National Basketball Association (NBA) and the Major League Baseball (MLB) in the United States, as well as exclusive rights on a global basis to the NBA (excluding the United States and China) and MLB (excluding the United States). In addition, we hold exclusive and worldwide media data rights for the NBA and MLB (including in the United States). We also have exclusive and worldwide betting data rights to the International Tennis Federation (ITF), Tennis Australia (TA) and Formula 1 and non-exclusive rights to the Deutsche Fu&szli