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Rating Action: Moody's upgrades the rating of Sportradar Group AG to Ba3 from B2, based on solid 2022 financial performance and debt pre-payment; outlook is stableGlobal Credit Research - 07 Sep 2022London, September 07, 2022 -- Moody's Investors Service ("Moody's") has today upgraded to Ba3 from B2 Sportradar Group AG's ("Sportradar" or "the company") corporate family rating (CFR). Moody's has also upgraded to Ba3-PD from B2-PD the company´s probability of default rating (PDR). Concurrently, Moody's has upgraded to Ba3 from B2 the rating on the outstanding EUR 220 million senior secured TLB ("TLB") due 2027 issued by Sportradar Capital S.a r.l and the EUR 110 million senior secured multicurrency Revolving Credit Facility ("RCF"). The rating outlook for both entities remains stable."Today's upgrade reflects the company's solid 2022 financial performance and significant debt reduction following the EUR 200 million early repayment of the TLB (EUR 420 million were initially issued in 2020) which brings the debt to EBITDA ratio to 2.6x from 4.6x as of June 2022. The upgrade also reflects the expectation of positive free cash flow generation in 2022 and 2023.Moody's believes the company has significant financial resources to execute on its investment plan and any future acquisitions will largely be EBITDA accretive to support the overall growth and diversification of its business", says Stefano Cavalleri, Vice President - Senior Analyst and lead analyst for Sportradar.RATINGS RATIONALEThe Ba3 rating is supported by Sportradar's (1) market leading position, with the highest revenue, largest market share in its core markets and largest volume of sports data amongst its peers; (2) well-invested proprietary technology and strong geographic coverage with more than 8,300 trained data journalists, which act as barriers to entry; (3) established long term relationships with key sports betting and media companies, sports federations, authorities and content rights providers; (4) deeply embedded workflows with customers resulting in high switching costs and low churn; (5) moderately conservative financial policy with no plans for shareholder distributions and negative net debt.Sportradar's rating is also constrained by the (1) company's high fixed cost base resulting from its dependence on acquiring ongoing sports rights, mitigated by the proven ability to reduce sports rights payments during live sports disruptions; (2) technology disruption in data collection and processing by other competitors; (3) risk of a sizeable M&A transaction and its integration; (4) negative EBITDA from the US operations which are ramping up ahead of plan and will breakeven in 2023/2024; (5) some keyman risk on the principal founder and CEO of the business, who also control the majority of the voting rights.ESG CONSIDERATIONSSportradar is highly exposed to social risks because it provides sports data used for betting purposes. Whilst the company is a service provider to the betting operators, it remains exposed to tighter regulation. At the same time, the introduction of regulatory frameworks also provides a business opportunity as is the case in the USA. Sportradar is a publicly listed company although with a short track record. The company raised over $600 million through an IPO and it has significant liquidity to fund its growth plans. The recent debt pre-payment also points to a conservative financial policy coupled with a zero dividend policy. However, the company has not well articulated its appetite for leverage and there is material concentration of voting rights with the founder and CEO.LIQUIDITYSportradar's liquidity position is very strong thanks to significant cash on balance sheet EUR 529 million as of July 2022 and no debt maturities until 2027. Additionally the company can draw on further liquidity from the EUR 110 million RCF facility and is expected to have positive free cash flow profile going forward.Moody's expect use of cash on balance sheet for M&A to be gradual and to support revenue diversification away from sports rights.RATIONALE FOR THE STABLE OUTLOOKThe stable rating outlook reflects our view that, in the next 12-18 months, the sports data market will continue to growth at double digit supported by online migration and more states opening up in the USA and that Sportradar leading market share will continue to drive EBITDA growth bringing the company's leverage below 2.0x.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA rating upgrade is predicated upon further strengthening of the company's business profile including a longer track record of integrating acquisitions and growing the revenue base through cross selling of new products. An upgrade is also likely if margins improve as a result of the US operations becoming profitable. Lower M&A risk and better articulation of the company's appetite for leverage would also be considered positively in the rating.Downward pressure on the ratings could occur if the company's (1) Moody's-adjusted gross leverage is maintained for a prolonged period of time above 3.0x; (2) Interest coverage falls below 3.0x; (3) changes to its financial policy resulting in greater appetite for leverage. A downgrade could also occur as a result of free cash flow generation being negative for a sustained period of time.PRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Business and Consumer Services published in November 2021 and available at https://ratings.moodys.com/api/rmc-documents/356424. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.COMPANY PROFILE Sportradar is a leading service provider globally of end-to-end sports data analytics solutions to both betting and media industries, as well as to sport federations and authorities. Sportradar covers the entire value chain of collecting, processing, marketing and monitoring of sports-related live data as well as providing sports-related services, including a proprietary fraud detection system. Sportradar serves over 1,700 customers and partners in over 123 countries around the world, with over 8,300 data journalists, covering over 890,000 events annually across 90+ sports. The company generated revenue for the last twelve months to 30 June 2022 of 634.2 million and company-adjusted EBITDA of 96.5 million.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.At least one ESG consideration was material to the credit rating action (s) announced and described above.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Stefano Cavalleri Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service Ltd. One Canada Square Canary Wharf London, E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Mario Santangelo Associate Managing Director Corporate Finance Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. 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