Good morning and welcome to Super Group's Second Quarter of 2022 Earnings Conference Call. Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the conference over to Lisa Kampf, Vice President of Investor Relations.

Good morning everyone and thank you for joining our call today to discuss Super Group's results for the Second Quarter of 2022 and outlook for the year. During this call we may make comments of a forward-looking nature that are subject to risks, uncertainties and other factors discussed further in our SEC filings that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility to update forward-looking statements other than as required by law. Additionally on today's call, we may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and serve as substitutes for measures of financial performance prepared in accordance with GAAP. The reconciliation of historical non-GAAP financial measures to the most comparable GAAP figures are included in the press release issued earlier today and available on the Investor Relation page of Super Group's website. Also, please note that we have posted a supplemental presentation to the Investor Relations section of our company website, along with the press release, the link to the replay of this webcast, and filings with the SEC. The presentation includes the financial information that will be referred to during this call. Today I'm joined with Neal Menashe, Chief Executive Officer and Alinda Van Wyk, Chief Financial Officer. After our prepared remarks, we will open the call up for questions, and we will also be joined by Richard Hasson, President and Chief Operating Officer. And now I would like to turn the call over to Neal.

Thank you, Lisa. Good morning everyone and thank you for joining us today. Super Group is and continues to be uniquely positioned to take full advantage of the particular growth in the global online betting and gaming market; a sector expected to exceed $145 billion by 2025. Our Betway and Spin brands enjoyed worldwide reach and recognition, and we are actively working on a number of geographic opportunities that will allow us to deliver future growth, and most importantly, our business is not only profitable but also highly cash generative. This quarter we demonstrated the benefits of our global model and the recently formed holding company structure, which saw good progress made in a number of areas. We grew average monthly active customers to 2.7 million, up 3% from the second quarter of 2021. We saw good growth in key markets such as Africa and Asia Pacific. Our sports betting continued to deliver positive growth. We kept a smooth transition in the license process, with the transition of Betway into the regulated regime, with Spin to follow next week. Additionally, we have progressed the U.S. state-by-state licensing of Super Group, which is a prerequisite for the acquisition of Digital Gaming Corporation (DGC). Our results for this quarter show a net gaming revenue of €316 million and adjusted EBITDA of €54 million, and for the first half of the year, net gaming revenue of €631 million and adjusted EBITDA of €117 million remain resilient despite the impact of the normalization of entertainment spending patterns post-COVID and the current headwinds of general economic uncertainty on discretionary spending. We expect that these effects will continue to be felt for the remainder of the year and have updated our guidance accordingly. Alinda will discuss both our results and our guidance in more detail shortly, but I want to emphasize two things: first, I believe that our year-on-year results do not appropriately reflect our achievements over the last 12 months. Our continued progress across the globe is better reflected by growing global sales and ongoing growth in active customer numbers. Second, ongoing regulatory change plus post-COVID normalization will ultimately benefit Super Group, because we have an efficient cost structure and over 20 years of trading profitably through thick and thin. Importantly, our control of the marketing for our products and our operating costs give us a number of levers to optimize. Here is what we are doing: First, maintaining efficient brand spending to keep global awareness, where we will continue to optimize our portfolio of over 60 global partnerships by focusing on profit. Second, we will enter new markets and expand in existing markets, particularly where regulatory changes provide opportunity. In the absence of cost-effective returns on investment, we will reduce or delay spending. Third, over the next 18 months, as we realize cost efficiencies arising from the formation of the holding company, we expect significant savings to be delivered in 2023. Turning now to some specific market-related updates: In Canada, we are pleased to report the recent contingency of Betway with Ontario’s regulatory environment, and we expect Spin to migrate next week. Given the regulatory restrictions on public advertising of bonuses in Ontario, we don't expect to see the same level of unsustainable price competition that occurred in the United States. We remain confident that, based on past experience, regulations will ultimately be favorable for us in the medium and long run, and we hope to see regulations introduced in Canada’s other provinces in due course. In the meantime, we will continue to operate as before and expect that Canada will continue to underpin our 20-year track record of consistent profitability and cash generation. Some historically key Western European markets continue to be on hold. We are still awaiting licensing in the Netherlands in anticipation of the launch and have not yet concluded the assessment of ongoing viability of casino gaming in Germany following the new regulation. In the United States, our goal of completing the acquisition of DGC remains on track for the end of this year, which is of course subject to various regulatory timelines. To recap, DGC is a brand licensee of Betway, currently live in seven states and with secured market access in up to 12. DGC will be a tremendous addition to Super Group and the fastest and most efficient way for us to enter the U.S. We look forward to completing the regular approvals and having DGC become part of Super Group as soon as possible. Moving on to the balance sheet: Consistent cash generation has built a strong balance sheet that is an asset to Super Group. For cash on hand, we are considering various opportunities including investing in brand and other marketing channels to generate profitable long-term growth; M&A for expansion into new and existing markets; or the acquisition of useful technology. DGC is a good example of this and returning cash to shareholders. Under returning cash, our first Annual General Meeting in September will ask you for authorization to buy back shares. This is standard practice for a company in our position, and we want that authorization to be able to act if it’s in the company’s best interest. However, we are paying close attention to the market conditions, and any use of this authorization would consider that in mind. In conclusion, let me summarize: We believe that online gaming businesses are resilient, but they are not immune to macroeconomic pressures. What Super Group has is a global footprint and a competitive cost structure that we intend to keep and improve. We are experiencing these pressures, but our underlying business is healthy and we’ll continue to grow over time. Our balance sheet remains strong, our business fundamentals are sound, and we are staying focused on long-term opportunities around the world. Thank you. I’ll now turn the call over to Alinda for a detailed discussion of our financial results.

Thank you, Neal. As we are well aware, 2022 has been a difficult year for many industries, including the global digital gaming industry. With changes in consumer behavior driven by economic uncertainty, revenue growth has slowed down. In the second quarter, Super Group’s net gaming revenue was €316 million, down 7% versus the prior year's quarter. However, on a consistent basis, excluding the European market that will close for us this year due to regulatory changes, net gaming revenue in the second quarter has decreased by 5%. Looking at the first half of this year, Super Group’s net gaming revenue is down by only 1% from 2021 to €631 million. Back to the focused results: We also experienced a shift in revenue mix. In the second quarter of 2021, our net gaming revenue was 50/50 between Betway and Spin. This year during the second quarter, Betway grew to 55%, while Spin decreased to 45%, as sports betting grew while casino gaming declined. The shift in revenue mix negatively impacts our EBITDA margin, owing to Betway’s lower operating margin as compared to Spin. Starting with our sportsbook revenue: Compared to Q2 last year, sportsbook revenue increased by €6 million or 6%, mainly due to good growth in key markets in Africa and APAC regions, despite being partially offset by declines in Europe and Canada. Growth in sports betting net gaming revenue from Africa and APAC markets represents positive momentum, resulting from continued good growth in customer base and retention rates, especially in markets where the COVID lockdowns had limited impact. The growth in APAC was also due to the full IPL season during 2022, following the cancellation of the IPL season in 2021 due to COVID. The decline in Europe was mostly due to regulatory changes in Germany and the Netherlands, as well as fewer sports offerings in June this year, particularly limited soccer matches. On that note, the English Premier League and France's League One kicked off again last weekend, and we are seeing an encouraging increase in activity. We look forward to other major European leagues starting this weekend. In conjunction with our EPL brand partnership, about half of the games here will feature some of Betway’s branding, including our sponsorships with them. Other upcoming events include the T20 Cricket World Cup in October-November, followed by the FIFA Soccer World Cup in November and December. Moving on to Casino: Casino net gaming revenue decreased by €29 million or 12% compared with the same quarter in 2021, of which €4 million can be attributed to the closure of the Netherlands, with the remainder primarily due to declining I-gaming revenue in Canada. We believe that the decline in Canada is due to a combination of two factors: reverting to normal behavior post-COVID and inflation putting pressure on spending. Similar factors can be seen in several of our markets across the globe, but the impact is most stark in Canada as it is our largest market. Despite all of this, our total average monthly active customers increased over 3% to 2.7 million compared to 2.6 million in the prior year's quarter. Super Group is well on its way to achieving a diverse mass market business. Moving on to EBITDA: We continue to present adjusted EBITDA, which is EBITDA adjusted for fair value adjustments on warrants and earn-out liabilities, associated foreign exchange movements, and non-recurring expenses. On that basis, adjusted EBITDA for the second quarter was down 36% or €30 million to €54 million compared to €84 million in the prior year's period. Looking at the half year, adjusted EBITDA for the six-month period was €117 million, a decrease of only 21% from 2021. This quarter, the steeper decline in EBITDA compared to the decline in net gaming revenue resulted from several factors. Brand licensing revenue declined by €12 million in the second quarter of 2022. On the expense side, variable or direct expenses decreased by 2% compared to the prior year's quarter. Gaming taxes and product costs fell in line with revenue, but this was offset by an increase in payment processing and related foreign exchange costs due to growth in markets where those costs are structurally higher. Super Group’s marketing costs went down by €7 million or 8% on a net basis, a reduction of our variable marketing, partially offset by continued marketing investments in partnership deals for long-term brand and revenue growth. General and administrative costs, which are largely fixed in nature, increased by €6 million or 10%. Reasons for this increase include nominal annual salary increases, increased technology and infrastructure costs, and the cost of additional corporate governance requirements following our public listing back in January. Looking at our financial position, our balance sheet remains strong with unrestricted cash and cash equivalents of €220 million at the end of June, with no debt. Our cash flow ratio for the year so far is 74%. Moving on to our guidance: In addition to revising our guidance to account for the current conditions, we will be reporting a review as opposed to net gaming revenue going forward. This is because of the structure in Ontario, as well as certain other jurisdictions, with the company operating as an agent of the authority or the license holder. In simple terms, our reported revenue will include net gaming revenue in some jurisdictions, agency revenues net of fees in other jurisdictions, and other revenues such as brand license income. Back to the numbers: For the full year, we project revenue for 2022 under the new definitions to range between €1.15 billion and €1.28 billion, and adjusted EBITDA to range between €200 million and €250 million. For the EBITDA bridge to the original guidance, please refer to the presentation on the website. I want to emphasize that our new revenue projections do not appear here because of the change I just mentioned. However, India still remains at our core. Some of the material assumptions underpinning our revised guidance: firstly, projected revenue has been reduced from prior guidance after taking into consideration expected ongoing pressures from multiple economic and regulatory headwinds, together with some further degree of post-COVID normalization. Brand license revenue for the remainder of 2022 is expected to remain lower at approximately €2 million per month. Brand marketing is being kept at levels consistent with our earlier forecast because our focus on investing remains for the long term; and finally, operating costs are expected to be higher in 2022 due to inflation and additional costs of being a public company. The net effect is that we expect EBITDA margins to be approximately 17% to 19%. This is not the margin that we consider acceptable in the long term, and we are actively reviewing and optimizing all of our costs while working to extract the benefits from the holding company structure implemented in connection with our public company transition just over six months ago. We expect some of the benefits from this to accrue this year, but meaningful impacts will be realized in 2023 when we expect to see a €20 million to €25 million reduction in annual overhead costs due to efficiencies. I also want to briefly touch on our projections. We received justified critical feedback following our withdrawal of estimates coupled with a lack of specific details during our call last quarter. We run our global business with a long-term mindset, making and then possibly adjusting projections in the short term is something new to us, and we have taken steps to improve our ability and comfort in providing more transparency while still protecting our company’s interests. In conclusion, results for the second quarter of 2022 are evidence of the challenges of dealing with regulatory changes, post-COVID normalization, and economic uncertainties. We are focused on implementing a leaner cost structure, carefully balanced against future growth prospects in order to preserve our financial strength as we continue to expand our global footprint and drive new and existing revenues wherever possible, regardless of the challenge. I will now turn the call back to Neal for his final remarks.

Thank you, Alinda. In summary, we generated a healthy level of revenue and EBITDA for the quarter and we remain uniquely positioned in the global online gaming universe. We are digital-only. We have a diverse global footprint across sports betting and iGaming. We are in control of our tech stack, our data, and our algorithms. We are profitable, debt-free, and highly cash generative. Our team has weathered these challenges for over two decades. Some challenges may persist for a few quarters, but Super Group is a strong company with a healthy balance sheet, and we will continue to focus on profitable growth. Thank you. I will now turn the call over to the operator to open the call for questions.

Yeah, good morning, thanks for taking the questions. I just wanted to focus on Canada a bit. You mentioned both inflationary pressures and sort of normalizing behavior compared to the COVID impact from last year for the declines there. I'm just wondering if the read-through there is that competition from more operators in the market is not a factor there or just less of a factor. Then maybe you can just as a follow-up also touch on the delay in the licensing for Spin and whether last quarter you talked about you’re still able to operate as you were previously with regulatory knowledge. I’m wondering if that took place throughout the entire period from last quarter through now or if there has been any change to that. Thanks a lot.

Okay, so I'll take that. Yes, with Canada and with all other markets we operate in, there is competition, competition in all our markets. For us, Canada is the same company we were a year ago. Canada is now all about going regulated in Ontario with Betway going live last week and Spin going live next week. Until now, they have been operating on the old software, which has now moved over. Betway has been in line with our expectations for the last seven to eight days, and we are learning from that experience to implement it into Spin.

Great! Thank you for taking the questions. Maybe to start, we talk about the €20 million to €25 million of cost reductions. Just to be clear on the timing, are those all happening in '22 so you'll receive the full benefit in '23, and then given the cost reductions, is a 25% EBITDA margin something that is achievable in '23?

Thanks, Bernie. Alinda here. We started the process, and this has been a continuous process since our listing to look at our cost base. In my presentation, I reference 2022 as where we really started to focus. We will see its impact in the last quarter coming to fruition, but the €20 million to €25 million is expected to yield benefits in 2023, which will be visible on the margin. Regarding the 25% margin, that isn’t where we would like to be. The 17% to 19% margin is not acceptable to us long-term, and we are aiming for 20% continual growth in that margin while focusing on top-line growth.

Understood. I would also love some commentary on what you're seeing from the customer lifetime values due to the macroeconomic conditions, comparing it to the COVID impacts – whether it's players turning off altogether, or whether people are playing less and engaging less. If it's smaller bet sizes or less overall handle. We would just like to understand what's happening beneath the surface.

First of all, it's consistent globally. Because we operate globally, various markets exhibit different trends. But definitely, from our point of view, the discretionary spending among our customers has decreased. However, in markets where we have seen growth, we now have more customers, so they may be spending slightly less, but they are spending more time with us, which balances out. It is a definite macroeconomic headwind, but as we recover from COVID, we are still experiencing growth, with 2.7 million users engaging on our platform, which is increasing.

Hey Neal, Richard, Alinda! Thanks guys. Good morning or afternoon, wherever you are, and thanks for taking the questions. I guess just to delve deeper into the macro again: it seemed like the online casino player has historically been fairly resilient during times of economic distress. While we have inflation, we also have strong employment, and of course you are global. So, I guess can you sort of help us understand why it's different this time? I think I heard you mention that perhaps your sports betting clients are doing better than your gaming clients. Is that correct, and why is that?

First of all, gaming is not immune; it’s resilient, but we haven't faced inflation like this in 40 to 50 years. While we’ve seen downturns previously, such as during the financial crisis in 2008, this inflation affects our customers' discretionary spending. Yet, because we operate globally, customers in different markets have varied engagement habits. Again, it depends on what's happening in each country and the ways customers engage with our platform.

Fair enough. With players under strain, how do you adjust your playbook or app to account for that weakness? How does that change your targeting? What adjustments have you made or plan to make for players facing macro challenges that could last for another six to 18 months?

That always comes down to customer engagement. It’s crucial to have more customers spending slightly less, but it also varies by market. From our perspective, this business is mass market-oriented, not a high-value customer market. It’s about the base number of customers and software capabilities to provide a superior experience in those markets, offering them the entertainment they desire while also adjusting our games to suit lower bet sizes. Our algorithms are individualized to the customers' behaviors, which allows us to adapt. The same principle applies to sports betting, where we are offering customers a variety of events to engage with. The upcoming World Cup in November and December will contribute significantly to customer interaction on our platform.

Okay, fair enough. The last question from me pertains to the U.S. market. If I missed it, I apologize. Can you clarify the timeline on DGC? It seems like it’s been pending for quite some time. Additionally, given the rapid changes in macro conditions, how do you view the U.S. market now compared to six months or a year ago, and how do you anticipate it impacting your 2023 numbers? I believe Alinda previously indicated that it was estimated to be an €8 million to €13 million annual negative adjusted EBITDA impact. Is that still in that range, and how are you adjusting your strategy for the U.S. market amid this volatility?

Hi there! Richard here. The closing of the DGC acquisition is still on track for our target goal of having it done by the end of the year. As we mentioned before, several licenses at Super Group need to be granted before that time. We are working according to the timelines set by the regulators in those various states, so that remains our goal. In terms of the U.S., our plan remains very much the same. For 2023 targets, we expect the range of impact to EBITDA, assuming DGC was part of Super Group the entire year, to be between €50 million and €70 million, with our target breakeven point set for the end of 2024, beginning of 2025.

Hey! Great! Thanks for taking my question. Just two if I may. Circling back to the macro, can you detail which regions are seeing an impact and whether it's due to a stronger U.S. dollar? Just trying to reconcile what you are observing globally with what we've heard from some North American operators who are not seeing an impact, as well as reports that travel in Europe is strong. Are you experiencing more of an impact in APAC and Africa?

Okay, I’ll add to that. We operate as we always have been, and because we are in the global marketplace, we are subject to currency fluctuations impacting markets in Africa, APAC, etc. We may experience revenue growth in those markets, even if slightly offset by some currency losses, but that's part of our global operations. It’s important to note that we can't comment on competitors, but the factors impacting our markets and our operations globally vary.

Yes, and just regarding your question about guidance or revenue: the guidance should reflect high-quality revenue. I am being very precise in the reported costs to ensure that it’s a strong, achievable target for all our business lines, and that our teams are focused on achieving it for the remainder of the year.

As you roll into Ontario, should we expect any margin drag from higher tax rates or anything now that you're becoming a regulated operator there? How should we view that in the back half of the year?

Like previously stated, the initial introduction to the regulatory environment often impacts margin. However, we have measures in place to ensure that margins recover toward the end of the year. The most significant factor here is that while we’re incurring agency fees related to taxes, the associated costs will also theoretically decrease thanks to improved processing capabilities and reduced variable costs. So, our cost base will remain intact during the Ontario transition, ensuring our margins align with the guidance provided.

Got it! One more from me. As we look ahead to next year regarding countries like the Netherlands and Germany, where you are facing regulatory headwinds, do you expect to be operating in those countries next year, and could that actually become a tailwind? How should we approach that?

No. In Germany, we are still operating, although there is currently no casino gaming. In the Netherlands, we are still working with the regulator, but it's not included in our guidance for 2022.

What about '23? Would you expect to be operating there?

Yes, for Germany, we are currently live. As for the Netherlands, it depends entirely on the regulator’s decision.

Okay, so that would be an additional market you would be live in next year?

Yes, we are currently active in Germany. It depends on the high casino requirements and the regulations in Germany regarding high-stakes casino gaming.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session and thus concludes our call today. We appreciate your interest and participation. You may now disconnect your lines.