Ulrich Harmuth: Yes. Thanks Carsten and David. Good to hear from you. So, in the 2023 guidance, on the revenue side, we see continued strong momentum in our two key growth segments, which together account for almost 75% of our growth. The first one being the rest of the world, I think business where we grow primarily as a result of moving customers up the data value chain, as we have seen also in this quarter, moving customers to our match betting services. And the second one is the growth in the U.S. betting business, driven by three factors. First of all, our growth based on our customers’ growth since we are participating in their revenues. Secondly, the increased adoption of in-play betting, where we simply as Sportradar have a bigger revenue opportunity compared to pre-match.
And thirdly, as a result of the expansion of our customer relationships, that what we have just seen with FanDuel. Therefore, we are very confident about our revenue growth. And with regards to the margin expansion, we have basically seen in the third quarter, the operational leverage in our business. We have grown our revenues by 31%, sports rights costs only grew by 20%, personnel costs only grew by 27%. We are normalizing for M&A effects. And our operational expenses even declined. And taking all these factors into consideration and despite adverse market conditions, we feel very strongly and very positive about the business prospects for the next year. And are confident to be able to continue our path to grow revenues, while expanding our profitability and our cash flow in parallel.
David Karnovsky: Thanks.
Operator: Our next question comes from David Katz with Jefferies. Your line is open.
David Katz: Good morning everyone. This may be another version of some of what you discussed. But I am just eyeing the guidance and seeing what the revenue amount of growth is as compared to the EBITDA growth. Can you just discuss a little further what the impact to flow through is on that guidance? And why there isn’t just a bit more of the revenue reaching the bottom line? Thank you.
Carsten Koerl: Ulrich, that is a question for the CFO?
Ulrich Harmuth: Yes. No, happy to answer that. I think we discussed this already on previous calls. So, we have some adverse market conditions that we have to face. And as a result, we also had to change somehow our product mix. And some of the high margin revenue that we were expecting coming from some of the markets that we can’t serve at the moment, are simply not hitting our EBITDA line. And we grow faster than we projected in our advertising business. And that is a lower margin business. And that’s the reason why we increased our revenue guidance. And despite the adverse market conditions, only increased the lower margin of our EBITDA guidance.
David Katz: Perfect. Thank you.
Operator: Our next question comes from Michael Graham with Canaccord. Your line is open.
Michael Graham: Thank you and congrats on the U.S. profitability. Just could you maybe at a high level talk about now that you expect the U.S. to be profitable, just the pace of margin expansion that we should expect to see there at a high level? And then I thought it was interesting you mentioned acquisitions in your prepared remarks, if you just maybe talk broadly about what types of assets you think the business might need?
Carsten Koerl: Yes, Michael happy to take on this question. So, looking now to the U.S., like I highlighted the main thing is really for us focusing on whatever is real-time. Real-time is generating the highest value for Sportradar in all the business lines. Real-time in this specific case means live betting. So, whatever we can do here to create innovative services, where we stimulate live betting is what we do. And we do this very consistent with our league partners. We are doing workshops with our clients and with the league partners to figure out what kind of product can help best to stimulate this. It’s simply, there is a big trend there. And yes, like I mentioned several times, we see that the U.S. is following the past what we learned in all other markets in the world.
So, that is giving us your confidence. Now, looking to those investments, it’s things like how can we improve with a new algorithm, new pricing models that we trade a little bit better, and that makes for us a big, big difference. So, if we are hiring, the profitability of our managed trading services only was the half a percentage point. That means for us bottom line 10x more cash, which we get with this considering that is 5% to 6% profitability on a single bet which you have there. So, these are exciting things. Of course, there is a lot of things ongoing in visualization, which is also leading into this trend, how can you visualize the match better to get more fan engagement. More fan engagement is leading into live betting. And the third one, which we see there is, of course, the state-by-state opening.
We have not expected that California is opening up. Our models are saying 2024. So, there was still a good chance that our models are right with California also opening up for sports betting. But we see that the strategies state-by-state opening is going very, very well hand-in-hand with our predictions. And of course, that’s beneficial for us.
