Super Group (SGHC) Ltd Q1 FY2025 Earnings Call

Hello, everyone and thank you for joining the Super Group First Quarter 2025 Earnings Webcast and Conference Call. My name is Lucy and I will be coordinating your call today. I will now hand over to your host Nkem Ojougboh, Head of Investor Relations to begin. Please go ahead.

Good morning, everyone and thank you for joining us today to discuss Super Group’s results for the first quarter 2025. 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 yesterday and available on the Investor Relations page of the Super Group’s website. In addition, Super Group has reported its financial results and metrics in two parts, highlighting Super Group’s profitable and cash-generative global business separately from its investments into the U.S. This aligns with the annual guidance that Super Group has provided for 2025. Going forward, Super Group will report on combined results. Super Group recommends that investors refer to its supplementary presentation posted to the website. Today, I am joined by Neal Menashe, Chief Executive Officer and Alinda Van Wyk, Chief Financial Officer. After our prepared remarks, we will open the call for questions. And now I’d like to turn the call over to Neal.

Thank you, Nkem. Good morning, everyone and welcome to Super Group’s first quarter 2025 earnings call. We kicked off 2025 with a powerful quarter, delivering impressive growth in revenue and customer numbers. We remain strategically focused on making smart adjustments to our global operations, cultivating our growth areas, enhancing our technology and product offerings and spending wisely on operations and marketing, all while continuing to deliver meaningful shareholder returns. Before we dig into our numbers, we have four important announcements. First, please join me in expressing our deepest thanks and gratitude to Richard Hasson, former President and CCO, for everything that he has done for Super Group over the last 13 years. It has been a super journey. We wish him every success in his next chapter. Second, from today going forward, we will be reporting our financial results in U.S. dollars to enhance comparability with our U.S. listed peers and provide more relevant information to investors. Third, also from today going forward, our results presentation will be inclusive of our U.S. business, unless stated. Finally, we are excited to reintroduce Super Group to you at our upcoming Investor Day on Thursday, September 18, 2025 in London. And we are eager to present our new office hub. This event will reflect the significant transformation that we have made since Super Group listed over 3 years ago. Turning now to our numbers, we comfortably beat our internal ex-U.S. and U.S. expectations for both total revenue and adjusted EBITDA for quarter one 2025. The combined group delivered an all-time high first quarter total revenue of $517 million, growing 25% year-over-year. Total combined group adjusted EBITDA, also a first quarter record, increased by 120% year-over-year to $111 million, with a combined margin of approximately 22%. We delivered all of this without compromising our strategy of reinvesting for growth, with a marketing ratio of 26% of net revenue. Growth was fueled by exceptional wages for both sports betting, up 7% year-over-year and casino, up 23% year-over-year. Total revenue ex the U.S. was the highest first quarter ever, growing 24% year-over-year to $502 million. Adjusted EBITDA ex the U.S. grew 62% to $121 million, with a margin of 24%. Analyzing the ex-U.S. numbers, key drivers were as follows. Africa grew 54% year-over-year, driven by steady development in South Africa, Ghana, Malawi and the recent launch of Botswana. Botswana is off to the races as one of the most successful launches we have ever seen. While Nigeria is receiving strategic attention that we believe will be fruitful. In Africa, casino and sports were up 31% and 38% year-over-year, respectively, thanks to continued growth in our customer base and the strength of our market-leading global brand. The end result is that we continue to occupy podium positions in multiple markets across the continent. Europe was up 53% year-over-year, the UK continues to be a bright spot, with revenue up 87%, thanks to strong growth from Jackpot City and Betway, together with improved marketing and product experience. Spain is up 20% over the same period due to growth in casinos, as well as the relaxation of the Royal Decree around sponsorship and marketing. Overall, Canada grew 13% year-over-year, Ontario grew 2%, while the rest of Canada grew 16% over the same period. Our performance highlights the continued strength of our brands across Canada, where profitability remains very good. We maintain tight control of overhead and are holding marketing spend stable as a percentage of revenue. In Alberta, we are preparing for potential launch of local regulations in 2026. Lastly, APAC was significantly affected by currency weakness and the closure of non-performing markets, ending down 13% year-over-year. Our largest market in APAC is New Zealand, which was in line with last year in constant currency, but down 7% year-over-year in dollar terms. Growth in New Zealand is constrained by regulatory limits on marketing, but we believe that we have plans in place to address this in order to return New Zealand to growth. At the EBITDA level, this quarter clearly shows how the operating leverage inherent within our business fuels scalable and profitable growth. As our established markets reach scale, a substantial portion of every incremental dollar of revenue converts to super profits at our bottom line. By aggressively reinvesting on our existing footprints and maintaining a disciplined cost structure, we are driving sustainable margin expansion and we expect this trend to continue. In the U.S., our iGaming business is progressing according to plan. First quarter 2025 picked up from fourth quarter 2024, with EBITDA improving to a $10 million loss in quarter one 2025 from an $11 million loss in quarter four 2024. In March 2025, we introduced Spin Palace Casino in New Jersey and Pennsylvania, replacing our sports-focused brand Betway. We are monitoring what a proposed tax hike in New Jersey could mean for profitability, but we are currently satisfied with the progress of the U.S. business. We are meeting our KPI goals and remain on track for expected breakeven in 2027. We are really pleased with the new records we set this quarter, including a new high for unique monthly active customers, which averaged 5.4 million for the quarter and a new record for total sports wagering, excluding India, which reached $899 million for the quarter, up 7% year-over-year, even while gross margin in the sportsbook improved from 11.1% in quarter one 2024 to 13.8% in quarter one 2025. Our balance sheet remains stellar as we finish this quarter, with unrestricted cash of $351 million and no debt. In February, you’ll recall that we increased our minimum quarterly dividend target to $0.04 per share, which resulted in $20 million being declared and paid to our shareholders at the end of March 2025. In the last 12 months, we have returned $146 million to our shareholders. This highlights our very strong free cash flow profile. Turning to guidance, on February 21, 2025, we guided to fiscal year group revenue of greater than €1.915 billion and group adjusted EBITDA of greater than €400 million. In dollar terms, converted at the average rate for the first quarter of 2025 of 1.052, that’s equivalent to a combined total revenue of greater than $2 billion and adjusted EBITDA of greater than $421 million. So today, we are maintaining our guidance. Super Group does not update guidance on a quarterly basis, but we do continuously assess performance as the year progresses. Though not factored into our guidance, we continue to see opportunities and potential for further growth in markets, both inside and outside of our current footprint. In closing, April was another super month across the board in Africa, Canada, Europe, APAC, and the U.S. The second quarter is therefore off to a great start. We are growing consistently with an opportunity and the technology to support, retain and attract customers around the world. We are excited about the year ahead. I will now turn the call over to the operator to open the call up for questions.

Thank you. Our first question is from Jed Kelly of Oppenheimer. Jed, your line is now open. Please go ahead.

Hey, great. Thanks for taking my question. Nice job on the quarter. Just looking at sports and looking at the presentation, it looks like your handle excluding the U.S. was up 14%. So can you just expound on what’s working there? And then just circling back to the U.S. seeing a lot of good revenue growth, you are seeing some of the products with land-based presences start to increase their share as well in states like New Jersey. Can you just talk about how you are thinking about the U.S. competitively given that you’re competing with some more well-known brands and products with a land-based partnership? Thanks.

Okay, so hi. Sports is all about the product as well. So we’ve had huge product development across the world. And as we deploy this in, we get more engagement with our customers. And of course, we’ve got this huge marketing budget that as we make that more effective, we get more people into the funnel. So I think that’s all a process of keeping the customers engaged. And then of course as you know, 80% of our business is actually casino, right, even from the sports customers mixed up with the Betway ones with the Spin. So we are seeing good traction there. When it comes to the U.S., again, our focus is solely on casino and we compete with land-based casinos all over the world. What we are doing is enhancing the product offering there. As you know, we launched Spin Palace Casino, which took over from Betway. So now we’ve got Jackpot City and Spin Palace Casino in New Jersey and Pennsylvania. We’ve got more enhancements coming and we’ve got good marketing in place. Remember, for us to breakeven requires a much lower amount as time goes on. So we are getting closer to what we believe is our net revenue that our operating leverage can then kick in after that. But it’s all about the product, it’s all about the marketing, it's all about the efficiencies. And that’s what we are focusing on.

Okay, great. And then just my follow-up, just on Alberta potentially going legal at the beginning of next year, can you sort of talk about how you are going to approach that market and some of the strategies you might have learned from the Ontario launch? Thanks.

Yes. So Alberta, according to us, it might only be the latter half of 2026 just based on where the regulation is currently, but we learned how we migrate our customer databases from Ontario, and we’ve learned from some of the mistakes we made then and we will not make those same mistakes twice. So we wait for the regulations. The product is being built and ready. We will be prepared for all the regulations, and we know exactly what we need to do then.

Thank you and good quarter.

Thanks.

The next question comes from Jason Tilchen of Canaccord Genuity. Jason, your line is now open. Please go ahead.

Thanks. Good morning and thanks for taking the question. Africa has been a really key growth driver for the company over the past year or two. I am just wondering if you could talk a little bit high level first, how much growth you still think is in the existing markets that you’ve been operating in for some time versus growth that is going to come from some of the newer markets that you’re planning on entering going forward? And if you could talk a little bit specifically around the competitive landscape in Nigeria, how that’s different from other markets? And you talked about strategic attention being put there, what does that entail going forward? Thanks.

So, Africa has been a great continent for us, but remember it’s made up of lots of countries. Every country we are in, it’s all about the product, the offering, the banking, and the marketing. As we keep tweaking all of those, we are seeing good uplift. Remember, we’ve also launched our Jackpot City Casino in some of the markets. We haven’t even penetrated all of them yet. For us, it’s understanding that Botswana is a new market, and we went in there with a strong product, and it got off to a flying start. We have a pipeline of other markets, but we need to ensure that the taxes are right and that banking operations are profitable for us. Nigeria is more complicated; the product is not up to scratch, and we have to make it more localized, which we are working on. We’ve seen great traction in South Africa, Ghana, Tanzania, etc., with localizing the product, but again, it requires constant adjustments. So it’s just the beginning as these product offerings get developed and deployed in the markets one by one.

Okay, very helpful. And I guess a quick follow-up there. You mentioned Jackpot City in the context of Africa; you have also seen really strong performance in New Jersey relative to the Betway brand since you launched there. I’m just wondering if you could share a little bit more about what differentiates Jackpot City and why you’ve seen such strong results with that brand and how that’s resonating?

Okay. Remember our thesis has always been that a customer who bets on Betway and then plays casino is different from someone who looks for a pure-play casino. Pure-play casino customers are significant, but Jackpot City is the largest for us. The brand resonates well; it has been around in Canada for a long time, and we brought it to the UK as well. We are seeing great traction again, partly due to the worldwide branding helping. That’s a different customer base, and we will continue expanding with brands like Spin Palace Casino. That’s always been our strategy. It's important to remember that we started this business with Jackpot City, Spin Palace, etc., and we are just introducing that to more countries.

The next question comes from Clark Lampen of BTIG. Clark, your line is now open. Please go ahead.

Thanks very much. I have got a couple here. I will start on Africa. Neal, I wanted to see if you could help us frame performance sort of between your countries. Very impressive 54% growth; was performance disproportionately levered to one specific territory? And then as we are thinking about expansion in Africa over the balance of the year, I am curious, are the basic ingredients for success across markets and particularly with new markets consistent enough that we are ramping in new territories faster than in the past or is each territory so distinct and different that we shouldn’t necessarily draw comparisons between Botswana's performance and what we might be able to achieve in the next launch?

Firstly, we don’t break it down by country, but our podium positions, as shown in our presentation, include South Africa, Ghana, etc. We are seeing good growth in all our markets, including Nigeria, all of which are profitable. The additional revenue has considerable positive impact on the bottom line. We have to keep enhancing the product and introducing new features, which help improve our performance across different markets. The tech stack allows us to roll out features in multiple markets simultaneously, and we maintain a strong brand presence. Banks and telcos are eager to collaborate with us due to our brand's resonance. Customer service, rapid payout processes and navigating regulations are also crucial for our success.

And just to add to Neal’s point, Clark, I want to reference that Africa is home to 13 of the 20 fastest-growing economies in the world at the moment. The scale at which the population is growing also gives us that potential for expansion as well. Additionally, the processing and the regulations in Africa tend to be more favorable compared to those in, for example, the USA. Our experience over the past 15 years has allowed us to navigate each country's regulatory landscape smoothly, which has significantly aided our expansion.

Thank you. That’s helpful. If I may ask as a follow-up, a question on the U.S. iGaming push. I am curious if you could share a little more detail around the experience in New Jersey and Pennsylvania so far, and whether you might be open to either launching additional brands in those same states as a means of accentuating the current push, or if you prefer to build presence in additional legal markets in the U.S. Thank you.

We are seeing growth in both New Jersey and Pennsylvania, reaching around $15 million for the quarter, which averages about $5 million a month. We are nearing the revenue needed to break even. The situation in those two states requires higher net gaming revenue due to partner fees with land-based operators. In terms of marketing, we still have budgets available to accelerate growth and consider acquisitions to aid that growth. While we could certainly launch a couple more casino brands, we believe that we currently have a strong enough position with the two we have and will assess as needed.

The next question comes from Bernie McTernan of Needham. Bernie, your line is now open. Please go ahead.

Great. Thanks for taking the question. I wanted to ask a follow-up on Africa. As I look at Slide 8, which shows your net revenue by geography and how Africa has grown from 37% last first quarter to 39% this one. How large do you think it can get, considering the strong growth of 54%? How large do you think you can become in terms of your total share of the global market mix? And then I have a follow-up.

It’s all about the profitability as well; remember, the secret for Africa is that every bit of extra revenue is highly profitable. So if we grow revenue by 30% or 40%, you could almost double your profits there. Our strategy is to maintain and grow our existing market presence while also entering new markets. As we proceed with our guidance, we see that these markets are indeed thriving. We have a substantial marketing budget and that is key in our success.

Understood. And Neal, just to double-check, so the incremental margins in Africa are higher than your global averages?

Yes, absolutely.

Okay. And then just wanted to ask about the puts and takes on the guidance for the rest of the year. Is there anything we need to be thinking about from a comparability perspective, given the strong performance in this quarter while maintaining the guidance for the year? Thanks.

Yes. Remember, we do not monitor guidance on a quarterly basis. We assess the overall year as it progresses and will provide an update after the second quarter results.

If you consider the historical seasonality, comparing to previous years, you can see that as we enter quarter two, the football or soccer leagues will be finishing in May, resulting in reduced marketing budgets in June and July.

The final question comes from Mike Hickey of The Benchmark Company. Mike, your line is now open. Please go ahead.

Awesome. Thanks. Neal, Alinda, congratulations on a great quarter. Thanks for taking our questions. Let me know if you can’t hear me. I will switch off these earbuds. They don’t work.

You are all good.

Okay. Thanks, Neal. Obviously, you have got great podium positions in key African markets, Neal. Can you sort of quantify your market share and your largest markets like South Africa? Just trying to figure out how concentrated the revenue is within those top markets for you.

It's hard to quantify market shares accurately as they don't publish comprehensive reports. In South Africa and Ghana, our share might be around 30 to 40%, but it’s challenging to determine precisely because unlike the UK or Ontario, these countries do not release similar data. We are still comparatively small in the UK, despite having good revenues there. The key is that as we enhance marketing efficiencies and product offerings, we are seeing incremental revenue increase, especially after consolidating our presence in profitable markets and diminishing focus on less profitable ones.

That’s why they have, Neal. I guess obviously, you are a global business in Africa. How competitive is Africa relative to the other markets in terms of promotional intensity and pricing perspective? Given how incredible Africa is for an online gaming market, should we expect more entrants in the region this year or next?

There are always new entrants in every market we operate in. However, in markets where we hold podium positions, we see ourselves as a formidable presence, similar to how FanDuel and DraftKings operate in the U.S. By ensuring effective marketing and product enhancements, we build a solid customer base and see substantial volumes coming in regularly. Efficient operations in CRM, risk management, processing fees, and marketing funnels will help us handle competition effectively. Our brand strength and customer loyalty will continue to be our focus.

Yes. How do the taxes change in end markets, and how do you see the long-term stability of those?

The tax situation, as we stated, is that Africa is a highly regulated business, and it always has been. We work very closely with tax authorities to ensure they understand the industry and that taxation is fair for both the revenue side and the operator side. Regulations have remained relatively stable, though we have seen a few increases, but those changes have always been reasonable considering the industry dynamics. Our relationships with the regulators and operators have been constructive.

The key issue globally is the taxes while also addressing the black market. Regulators where we pay taxes need to control the black market as well. For instance, they think they are collecting significant revenue in Germany, but in reality, their revenues are falling due to the unregulated operators capturing the market. Proper regulation across both licensed and unlicensed markets is crucial, and we are proactively working with regulators to ensure fair practices.

Last question from us, but I just want to clarify, how impactful was Botswana for the quarter, and would you expect to achieve either number one or sort of top market share in this market after it stabilizes over a couple of quarters? And then, do you expect any other new markets to open up here for you in the medium-term within Africa? Thanks guys.

Botswana was only launched in February, so it’s early days in terms of its impact for this quarter. It’s a small country neighboring South Africa, but we've seen positive brand awareness, and the product launch has gone well. We have a pipeline of other markets like Ethiopia, Ivory Coast, Angola, etc., on the horizon. However, we need to ensure that all operational aspects, including taxes and repatriation of earnings, are favorable for us before moving forward. There is plenty of opportunity for growth as we have yet to penetrate various countries in North Africa and the West Coast.

I mean Neal, when you look at new markets, you have a strong balance sheet. Do you still consider taking an organic approach to new market entry, or are you in a position today to pursue M&A opportunities?

We can definitely pursue M&A. We have the cash flow, and we are observing many opportunities. However, they must be the right price and fit. We consistently evaluate potential acquisitions, and our strong financial position gives us that capability. We're continually looking at options as we’re aiming for consistent growth across our business.

Just as a follow-up, Neal, I mean would you look to do something in M&A within the U.S., or do you still prefer to grind out on your current path?

We’ll explore all options available to us. But I also believe our current performance demonstrates that we are a formidable company with strong cash reserves. While we will consider acquisitions, we are focused on deploying our resources in a methodical and profitable manner. Okay. So, thanks everyone. Thanks for joining. We will talk to you in August when we release our second quarter results, and we are really looking forward to meeting all of you on September 18th in London. Thank you. See you soon.

This concludes today’s call. Thank you for joining. You may now disconnect your lines.