Good morning, everyone, and thank you for joining us today to discuss Super Group's results for the first quarter of 2024. My name is Jake Pisano, Vice President of ICR. During this call, Super Group may make comments of a forward-looking nature that are subject to risks, uncertainties and other factors discussed further in its SEC filings that could cause its actual results to differ materially from historical results or from the company's forecast. Super Group assumes no responsibility to update forward-looking statements other than as required by law. On today's call, Super Group may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. Super Group has provided a reconciliation of the non-GAAP financial measures to the most comparable GAAP figures in the press release issued earlier today and available on the Investor Relations page of Super Group's website. In addition, Super Group will speak to its financial results and metrics in two parts, highlighting Super Group's profitable and cash-generative global business separately from its investment into the U.S. This aligns with the annual guidance that Super Group has provided for 2024 and is consistent with both how Super Group views its business internally and how Super Group will report going forward. Super Group recommends that investors refer to a supplementary presentation posted on their website. On this call, I am joined by Neal Menashe, Chief Executive Officer. And during the Q&A session, we will be joined by Alinda Van Wyk, Chief Financial Officer; and Richard Hasson, President and Chief Commercial Officer. And now I would like to turn the call over to Neal. Neal?

Thank you. Good morning, everyone, and welcome to Super Group's First Quarter 2024 Earnings Call. Before I discuss this quarter, I'd like to quickly touch on a change to the format of our earnings calls. Starting today, our prepared remarks will be shorter than before, but we are posting a more detailed investor presentation to our website. We hope to use this time each quarter for greater dialogue with the sell-side community and to answer as many questions as possible. Let's now dive into the quarter. We are off to a phenomenal start for Q1. Total revenue ex U.S. was the highest ever for a first quarter at EUR 374 million. This represents growth of 13%, which in constant currency is even more impressive at 17%. Adjusted EBITDA ex U.S. also set a first quarter record at EUR 69 million. That's 29% growth from last year and a healthy margin of over 18%. The strong performance this quarter can be largely attributed to our focused and continued investment into core markets. We continue to invest in marketing, and as a percentage of net revenue, it was 27%. This ratio is always higher in the first half of the year, and we expect this to trend back towards 25% for the full year. Thus, the approach here is simple. We enhance our future growth profile by ongoing reinvestment into areas that are yielding the highest ROI. We are pleased with the progress we have made on the realization of cost efficiencies. Our operating expenses as a percentage of net revenue fell to below 19% for the quarter as compared to 22% in Q1 2023. This is an ongoing process. And while we continue to invest in high-growth areas of the business, we remain focused on streamlining our expenses, creating a leaner, more efficient operating model. This then further enhances the operating leverage that is inherent in our business with every bit of incremental revenue meaningfully contributing to our EBITDA margin. Across the globe, we continue to optimize our footprint. Outside the U.S., we have identified a handful of smaller markets where we do not see a long-term path to profitability and are in the process of shutting them down. Within the U.S., the review of our strategy continues. We are in the midst of analyzing our broad range of options and look forward to updating you in the near future. I'm glad to inform you that we have entered into definitive agreements to assume full control of the sportsbook software technology. As highlighted in today's press release, we have agreed on a favorable risk-sharing deal structure, which includes an upfront consideration and a contingent earnout. Pending the necessary regulatory approvals, we are excited to finalize this deal, and we'll be working closely with our dedicated Apricot team to further integrate the technology into our business. As for our balance sheet, our financial position remains really strong with no debt and unrestricted cash of EUR 289 million at the end of the quarter. We continue to assess the best use of this balance, including the possibility of returning cash to our shareholders. And a final note, our terrific Q1 momentum extended right into April. I'll now turn the call over to the operator to open the call for questions. Operator?

Our first question comes from Jed Kelly of Oppenheimer.

Can you discuss the choice to bring your technology stack in-house and how that might speed up your sports betting initiatives? Additionally, as we consider the remainder of the year, are there any comparisons we should keep in mind for the latter half? Also, since you exceeded Q1 EBITDA estimates by EUR 10 million, why didn't you feel it was necessary to adjust your guidance?

Okay, it's Neal here. We've been in extended negotiations to secure our Betway global tech stack, and now we have it for sports. This is crucial for us as it enables us to manage our teams collectively. We can make more informed decisions about our roadmaps and precisely define our goals. Remember, we are a tech company, and everything revolves around the customer—the software we provide and the experiences we create for them. This has been in the works for a long time, and we're really excited about it.

Thank you for your question regarding the raising of guidance. As we mentioned, we anticipated that Q1 would begin with strong momentum continuing into April, but it's still very early in the year, and we will evaluate our position toward the end of Q2.

Got it. And then just as a follow-up, can you just give us how we should view your success of high casino in Canada? Where is that coming from? And then can you speak to any potential impact if Alberta legalizes betting?

It's Neal here. We've seen strong year-on-year growth in Canada, and it continues to be a valuable market for us. In Ontario, we are pleased with our performance. Our customer retention in Ontario has improved compared to before regulation, and our customer values are as high as they've ever been. We analyze Canada province by province, so just as we learned from the regulation experience in Ontario, we will apply those insights to any other provinces that may follow suit.

Our next question comes from Jason Tilchen of Canaccord.

First thing I wanted to ask about is Africa. There's been really strong momentum there for several quarters now. Your revenue mix is up significantly year-over-year in that market. I'm just wondering if there's anything additional you could provide in terms of what's working there from a product perspective? And sort of what does the roadmap look like for additional markets that you could enter in Africa over the next year or two?

It's Neal again. Africa is performing very well for us. We have recently launched our Jackpot City pure-play casino across the continent, which has a lot of potential for growth. We are experiencing strong customer acquisition and retention. In seven African markets, there is still room for growth in each individual market. Some markets are clearly outperforming others, so our goal is to ensure that every market performs as well as our two largest ones. Our product offering is distinctive, and we have our own technology stack in place, allowing us to cater specifically to this region.

Great. That's really helpful. One or two other quick follow-ups. In terms of the Apricot deal, I was wondering if there's a way you can quantify sort of the cost savings that you expect to generate on an annual basis by having the sort of full ownership rather than having to sort of pay as a licensor.

Jason, Alinda here. We are very excited about that possibility because you have now previously two significant teams on different sides now working together. And we are quite far ahead with planning around resourcing and integrating the teams to work more effectively together and to have a better output as well as just tracking against one set of expectations. The teams just effectively work better together. So that was definitely on the forefront of doing this deal is to make it more cost-efficient for us as a company.

Neal here, and I want to emphasize that with our tech stack, we can also leverage it in our Africa business when necessary. Additionally, if any M&A opportunities arise, we have the technology in place to support that. While the negotiations took a considerable amount of time, we have finally reached completion.

Okay. Great. That's really helpful. And just one quick final cleanup question here. In terms of the U.S., the loss sort of expanded year-over-year. Just wondering if there's anything to call out. Was there anything one-time in the quarter? And any sort of additional color you can provide on that strategic review?

Jason, looking at quarter 1, it was the end of the completion of the migration onto the Betway Global Technologies that happened during March, some investment into marketing during the quarter. And then as we look to Q2, we expect the investment to be lower than it was during quarter 1.

The next question comes from Mike Hickey of Benchmark.

Congrats, guys. Great quarter. Just again on Apricot, the rather unique burn out there, Neal. I'm sort of curious on that piece, if you have anything incremental, it looks like some longevity there to maybe a payment. And then you talk about flexibility for organic growth and M&A opportunities. I'm curious on that, and if there's any sort of potential benefit to the USP study, you're obviously trying to figure out.

I’ll start by discussing Apricot. It includes a contingent earn-out, which means we need to more than double the current revenue. This reflects a risk-sharing model, with earn-outs linked to various thresholds of net gaming revenue generated by the sportsbook. It’s structured to incentivize long-term success. The initial payment of over EUR 100 million, along with an additional EUR 40 million, seems like a solid deal considering the technology we’re acquiring. We’ve reached a good agreement that benefits both parties and positions us to execute this deal effectively. Moving forward, as Alinda mentioned, this will enable us to integrate our teams, understand our priorities, and potentially expand our offerings, such as our African business, within our trading platform. Overall, I believe this strategy lays a strong foundation for the future. Now, I'll hand it over to Richard for updates on M&A.

So I think the point that Neal was making is our ability now that we own the sportsbook technology is to apply that should we proceed with any M&A, we're able to apply the ability to those businesses that we may acquire.

Yes, I guess the question was, is this M&A and organic growth with your own tech stack, does that help your U.S. business? Is that part of sort of the thinking about the broad brush strokes and how you sort of reshape the U.S. business, does that play into that potentially?

Yes. So the technology definitely forms part of our evaluation. As we said before, we're going through a detailed analysis of our options in the U.S. and the technology will be something which we consider as part of that process.

I guess is it worth sort of just laying out thinking about just, again, broad brush strokes here, guys, in terms of some of the options you're considering on your U.S. business?

Sure. So high-level, we're evaluating everything apart from the status quo, right? So as we told you in the last release, we are not happy with the status quo. Nothing is off the table at this stage, and it ranges from a complete exit all the way to status quo and everything in between. So we're going through extensive analysis at this point with the intention of coming back to you as soon as we can.

Okay. Fair enough. Given your extensive experience running the global business, I'm curious if you have any updates on the U.S. regulatory environment. What kind of pressure are you experiencing at this stage, and how does that affect your business? Additionally, how are you planning to adjust your approach in the U.S.?

Yes. I think we've definitely observed changes in regulation that fluctuate between being stricter and more relaxed, similar to what we’ve seen in the U.K. and Spain. For the U.S., it's still an early phase in this process, and it largely depends on regulations and tax rates, which we are considering in our strategies. Our approach to U.S. states is akin to that of different countries; if we identify a path to profitability, we will pursue it. If not, we need to adjust our approach. Ultimately, it's about maximizing revenue and margins in each state and country. Our global operating leverage is near its peak because every additional revenue we generate significantly increases our EBITDA margins, which is crucial for our business. We aim to optimize these margins by enhancing our marketing effectiveness and investment in these regions to ensure we achieve the best possible returns. Over the past two years, our focus has been on this and on refining our cost structure.

When you're in states in the U.S. that have casino and sportsbook, so you've got your Betway and Spin sort of working together. What's the profitability of those particular states?

I believe the potential is greater in states that have casinos. These states are significantly more profitable for us. Currently, about 80% of the revenue from Betway and Spin comes from casinos. It's clear where the financial opportunities lie, and we need to focus more on that. This is why we are particularly enthusiastic about our expansion in Africa and the launch of Jackpot City, as it introduces additional casino revenue into our portfolio.

I guess, Neal, there is sort of, I think, the view that U.S. is a sportsbook market, but it seems like with only 6% of the population here legalized on casino. The feeling is that maybe the second stage of growth is the legalization of casino, which is sort of your lead spot. So I'm sort of curious, do you believe that the U.S. is in a position to sort of accelerate legalization and the casino over time? And do you think that, that, in fact, would be maybe the inflection point where you have both of those vehicles, your Betway and Spin working together that you could sort of elevate your profitability potential and growth?

I think definitely. However, casino regulations often take much longer than those for sports. Different countries and states have varying perspectives on sports and casinos. For us globally, sports and casinos represent our ideal market. My main concern regarding these markets, as we've discussed previously, is the presence of black market operators and how regulators address them. We've seen in some European countries that while they regulate our operations, black market operators still thrive, creating a disconnect between what regulated companies can do and what the unregulated ones can. This poses challenges alongside the regulations. Nonetheless, we have a strong brand in sports with Betway, which also has a significant casino business. Additionally, we have Spin. We are well-positioned to capitalize on these opportunities, but we need to focus on the right ones that will provide us with the desired profitability and returns.

Yes. Neal, last question for me. You've been gracious. I mean, given sort of how crucial the U.S. market is and given the opportunity to sort of awaken the casino side and really getting your sweet spot running both those assets together. I mean how would you weight the probability, I guess, of a full exit in the U.S. versus maybe just a recalibration of the states where you can concentrate and minimize your losses and/or potential M&A, which I don't know your appetite for a transformational deal, but I think they're out there. It just seems like the idea of exiting, given how much potential there is particularly in casino, like you said, maybe it takes some time, but the upside here could be tremendous. So could you just sort of help us work through...

Yes, I think your explanation is accurate. When it comes to transformational mergers and acquisitions, it's crucial that the other party is not overvalued. You only have one opportunity for a transformational deal, and it has to be fair for everyone involved. That’s the first point. Secondly, regarding the U.S., we are indeed evaluating all possible options. We understand the landscape and need to make a long-term decision that serves our best interests. As you mentioned, casinos are our core business, and we want to achieve profitability in those markets. This is a waiting game; over time, different states may implement regulations, and we need to be positioned to seize that opportunity. However, there is a cost associated with being active in this space, and we must carefully assess what that cost is and how it weighs against our goals.

Our next question comes from Bernie McTernan of Needham.

This is Stefanos Crist calling in for Bernie. First on Africa, kind of a nitpicky question, but the wording, so the transaction brings Super Group closer to its goal of fully owning and controlling its tech. Are there other parts of the tech stack that you're looking to acquire or maybe build in-house? Just your thoughts there.

Yes. So just to clarify, different segments of our business have varying ownership of our PAM, and the sportsbook will be fully owned once we obtain regulatory approval. That's what I was referring to. While there are portions of the PAM that we do not own, other businesses do possess that ownership. He have now secured all the necessary components in the tech stack that we need.

Got it. And then the migration onto the Betway Global Technology completed at the end of March. Just anything you could speak to since that integration, I guess it's been a little over a month now.

Yes. It's just that it has been a relatively short period of time and all of that data, which we're now getting post migration is the exact data that we're using and analyzing in order to make the best decision about exactly what the right strategy is for the U.S. So it's still a matter of weeks. And that process, obviously, is being prioritized at the highest level that we're going through that data from this new platform. And that's what's going to feed into the ultimate decision about the best way forward.

I mean I'll just add in there, but it definitely is much better than what we were on before that significantly.

Got it. And then just last one for me. If there are any updates on Brazil regulation or anything you're looking to come in the near term?

We are actively monitoring the market and understanding the licensing process. We are also evaluating our ability to achieve long-term profits in any regulated market, and if appropriate, we will apply for a license there.

At this time, there are no more questions. Thank you again for joining today's call. The conference call has now ended.