Gerard Griffin: Yes. What we’ve said, at least, Joe, in my tenure and I know it’s been said in the past. We take a very strong ROI approach to Sports Rights. And it’s one of the reasons that we walked away from certain rights that, you know, in a world where you are not worried about profitability, you’d probably say – well, let’s add them to the portfolio. What we see right now with the addition of the NBA and ATP is that we have the portfolio that is basically the foundation for our long range planning right now. It’s not to say that if we found another right that would actually amplify our revenue growth at the right profitability, we wouldn’t execute against it. But I think there has been a perception in the past that it’s always up until the right, we have to keep buying more rights to drive revenue growth.
The answer is, it’s not that case – at least, not from our perspective. If you look at the breadth and depth of our portfolio, it can more than serve the needs of our client base in the U.S. and our client base internationally. So, from our point of view, it’s not necessarily a change but it’s something I think we have to say very clearly – because I think there is a concern which – if you want to take the bear case that Sports Rights are always going to go up – our Sports Rights right now, when we look at the larger rights, they are long-term rights that are locked in. And as we said, as it relates to the NBA, it’s also a commitment from our client base to engage in that deal. So, from our point of view, the structure of Sports Rights – the only way that your Sports Rights will materially grow from where I stand here today is if you do add another major right or you have a major adjustment to your right.
But, right now, we feel good about the portfolio rights. And that portfolio we believe can sustain us. So, from our point of view, we have stability in Sports Rights and that’s an important factor because it will allow us to focus on the rest of our P&L from the point of view of managing, you know, obviously our run rate in terms of our personnel costs and our other external costs.
Jason Bazinet: That’s great. Thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Stephen Grambling with Morgan Stanley. Your line is now open.
Stephen Grambling: Hi, thanks. And this is maybe a clarification of some comments at the beginning. It’s not that often that you see a company talking about 20%-plus top line growth – that’s above consensus – but then also announcing a global workforce reduction of this size. I mean, basically, you’ve got some temporary top-line hits, but still talking about shrinking the future. So, maybe you can just clarify again what the impetus for the workforce reduction was? And also, just any other details you can give on what the new org structure might look like? Thank you.
Carsten Koerl: Stephen…
Gerard Griffin: Carsten, would you?
Carsten Koerl: Yes, I will take that one quickly.
Gerard Griffin: Okay.
Carsten Koerl: I can’t give you an update about new org structures. We are constantly reviewing the process that we are more efficiently, that we more client-centric, and that is a constant process, which I think every company needs to do. Looking to why we did the reduction in the workforce, which is a tough step, which we did in the last days, we believe that it’s the right thing to do to prepare our business to be fit for the future growth. And it’s a plan which we’re executing now since a couple of months. So, those things have to be well planned. We know and we announced this that we have two major big deals with the NBA and with the ATP, with amazing opportunities for us. But we are going to need to handle also the cost aspect for this, and that’s what we are doing.
So, we are focusing on client-centricity; we are streamlining the processes; we are looking that we allocate our resources on the right products; we took a couple of products out, and we took a couple of our products into a maintenance mode to focus on those which are driving our growth. And as a last sentence, the team follows this amazingly even if these are more difficult decisions. We all understand it’s necessary for the future acceleration of our growth. That’s the reason why we did it. And we want to deliver this return to our shareholders and to all the stakeholders in the company.
Stephen Grambling: Thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Jordan Bender from JMP Securities. Your line is now open.
Jordan Bender: Great, thanks for taking my question. Two from me. Several operators called out in the U.K. just some of the friction relating to the regulatory environment during the quarter. I was wondering if that had any impact on your results during the third quarter and could that be a potential risk into the fourth quarter with just some of those changes ongoing. And then, second, flow-through for next year, plus or minus 20% as well. I mean you kind of talked about rightsizing the cost structure. So, you know, how should we think about that flow-through past ’24. What I guess – what’s the right way to think about on a mature business? Thank you.
Carsten Koerl: Hi, Jordan. So, I’ll take the first question and then I leave the outlook into 2025-plus to Gerard. U.K. regulators, yes, they tightened the regime which we welcome a lot – because it’s the aspect of player protection. It’s responsible gaming, and we believe that’s the only way to really grow and to be accountable with this. So, that’s a measurement, which some of the operators might suffer, some of them might not. It’s very much depending on how you’re integrating this and how you’re using it also as an opportunity. From our base, we have the recurring revenue model with all the U.K. operators. So, there is little component in with the revenue share. But, usually, we’re running a SaaS business there. We don’t see any weakness here.
And thanks to our worldwide distribution base, we have not a significant risk in the U.K. that we have too many client accounts there. We are well spreaded and well distributed around the world. Now, to the second piece, outlook 2025. Gerard, please.
Gerard Griffin: Yes, I’m going to talk more broadly than ’25. I think it’s ’25, ’26, ’27. You know, Jordan, the way to think about it is – if you look at 20% growth, at least 20% growth in ’24, top and bottom, that implies that we’re holding EBITDA margins broadly flat. And the reason for that is – we believe that we’re going to deliver meaningful – we will unlock meaningful operating leverage from personnel cost of sales and all other operating costs. And that’s to a variety of initiatives around, you know, our product portfolio, the actions we’ve announced today, and continually challenging every aspect of the business. But in ’24, it’s covering a step-up – a one-time step-up in Sports Rights. When you look out into ’25 and ’26 and ’27 on the assumption of continued strong revenue growth, all of those line items in a stable environment should be growing at a lesser pace than your revenue.
