And that is absolutely the objective we have in mind. So, you will see margin expansion and stronger operating leverage across most likely all of those line items, as we evolve to ’25 and ’26, ’27. So, from our point of view, the business is structurally set up in a way that if we can continue to do what we’ve been doing for the last years – in other words, continuing to drive value for our client base, drive revenue growth – you’re going to see a change in dynamic where whether it’s your personnel costs, whether it’s improved premium flow-through from our revenue base or from a stable Sports Rights portfolio, you’re going to see operating leverage. And, you know, that’s essentially what we’ve been saying up until now. We just tried to make it a little bit crisper and clearer at this time, because essentially ’24 is a transition year when you bring in two material premium rights like ATP and NBA.
But given the actions we’re taking, you will clearly see in the P&L a different profile from an operating expense point of view that is set up for unlocking further operating leverage, as we grow the company over the coming years.
Jordan Bender: Thank you very much.
Operator: Thank you. Our next question comes from the line of Stefanos Christ with Needham and Company. Your line is now open.
Stefanos Christ: Thanks for taking our questions. This is Steph calling in for Bernie. I just wanted to ask on the NBA. Are there any extra products or capabilities that you bring to the NBA in the new season? And then, have you been able to sign up any other sportsbooks to reflect the new NBA deal in addition to BetMGM last week?
Carsten Koerl: We signed up all of them. So, it’s an all-account at the moment, 40 operators in the U.S. There might be one or the other tribe, which we do not account here. But all of them signed up for the additional content package and for the new deal for the next eight years. So, that’s the whole United States and all operators there. The interesting piece here is, we’re moving up with this deal from a data provider into a solution partner with the NBA and for our clients. And that unlocks, in the future, much more potential around this immersive gaming experience, live betting experience, the things which we highlighted there. But, the deal is consistently deployed over all operators in the U.S.
Stefanos Christ: Thank you.
Operator: Thank you. One moment for our next question, please. The next question comes from the line of Shaun Kelley with Bank of America. Your line is now open.
Shaun Kelley: Hi, everyone. Thank you for taking my questions. Two from me. First would be on – just as we look out to the fourth quarter and we kind of move past, some of these whole – or sports-outcome related issues – you know, just trying to kind of think through, you know, the guidance as laid out still implies, you know, revenue to reaccelerate. So, if we didn’t have the sporting-outcome related issues, would that be enough to hit, you know, sort of what you’re – the roughly 20% growth rate that your 4Q outlook implies? Or are you also expecting to see some seasonality and some uplift from the start of the NBA season? I know, seasonally, you know, some of these contracts kick in. So, is that part of why revenue should reaccelerate in the fourth quarter. So, that’s my first question.
Carsten Koerl: So, on the guide.
Gerard Griffin: Yes…
Carsten Koerl: Go ahead, Gerard. Go ahead.
Gerard Griffin: Thanks, Carsten. From a – we do expect seasonality will kick in in Q4. And also, as Carsten indicated in his remarks, we do have the roll-out of the Taiwan Lottery, which will be more of a benefit in Q4 than it was in Q3. So, while we still expect some pressure against the business as it relates to MTS and we’ve taken a more cautious view as we look at Q4, we do expect to see a reacceleration of growth. So, when you look at it from a year-over-year perspective, you’re back into the 20s.
Shaun Kelley: Great.
Carsten Koerl: So, maybe…
Shaun Kelley: Sorry, Carsten.
Carsten Koerl: Maybe, let me add one thing because I think it’s very important. The guidance says, we are midpoint 20% top-line growth for 2023 and we will deliver this. The guidance says we are midpoints on a 31% year-over-year from an EBITDA perspective and we will deliver this. So, I think it’s a strong growth business. And we managed and showed that we have leverage from a profitability perspective. With that, please your second question, Shaun.
Shaun Kelley: Thanks. You know, my second question is really just on free cash flow conversion. I know this is an area you’ve been working on a little bit with payment terms and some other things with vendors. But, can you just remind us may be, medium or long term, what’s the right, you know, kind of way to think about your EBITDA to free cash flow conversion for the business broadly?
Carsten Koerl: Gerard, please.
Gerard Griffin: Yes. As we said in the past, we’re targeting to drive to at least a 50% conversion. And while we don’t disclose that metric, you have the details to help you figure it out for both year to date, which is around 43% and actually for Q3 was above 50% because it was a very good cash quarter. Q4, we expect to be a bit more compressed. But, overall, we’re progressing through the year to a stronger cash conversion.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of David Katz with Jefferies. Your line is now open.
David Katz: Hi, good morning everyone. Thanks for squeezing me in. This has been asked a few different ways because it is unique. It’s not all that common that we would get a high growth outlook, coupled with, you know, a kind of a cost cutting – call it cost cutting a restructuring or however you want to characterize it. The way that these two – should we look at those two in a discrete fashion, or does the restructuring, you know, enable for better growth? Or does it, in some way, you know, dial back the growth opportunities? Or are these just completely separate issues, and the cost side is just symptomatic of how the business has evolved?
Carsten Koerl: David, this is always connected with each other – the revenue and the costs. Restructuring is not a restructuring. So, a company like Microsoft is taking out 10% of the workforce every year, and I can give you many more samples of this. I think what we’re doing here is we’re getting a more mature business. We are focusing on delivering returns for our stakeholders. We are focusing to prepare us for the next level of growth. We are strengthening our cash abilities which we have. So, we are growing this; we are converting cash. And, for me, that belongs to how you operate and run the business in a responsible way. I would not call it restructuring, but we are refining our products and our processes and organization structure.
