Super Group (SGHC) Ltd Q3 FY2025 Earnings Call

Hello, everyone and thank you for joining the Super Group's Third Quarter 2025 Earnings Webcast and Conference Call. My name is Lucy and I'll be coordinating your call today. It is now my pleasure to 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 third 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 the 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 Super Group's website. Super Group recommends that investors refer to the supplementary presentation posted to the company's website. Today, I'm joined by Neal Menashe, Chief Executive Officer; and Alinda Van Wyk, Chief Financial Officer. After our prepared remarks, we'll open the call up 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 Third Quarter 2025 Earnings Call. We delivered another strong and resilient performance this quarter, powered by consistent execution, record customer engagement and continued focus on margin expansion. We achieved this despite customer-friendly sports results in September and with customer acquisition up very nicely year-on-year, we are positioned for a good fourth quarter. We enjoyed seeing many of you in our London office for our Investor Day in September. Now we would like to share some key takeaways since then. First, we hit a record of 6 million monthly active customers in September, which we have already surpassed in October. This reflects the depth of our global footprint, our localized execution and the value loyal customers continue to place on our products and platforms. Second, we are proud to officially announce the upcoming Q4 launch of Super Coin, our South African rand-pegged digital asset stablecoin initiative. This marks a significant and strategic step forward in how we think about payments, rewards and engagement. Finally, despite unfavorable sports outcomes in September, rolling marginally into October, we are raising our full-year group revenue and EBITDA 2025 guidance. Before I turn to Alinda for the financial details, I wanted to offer a quick overview of our operational performance this quarter and elaborate more on Super Coin. Europe's revenue surged 46% year-over-year with the U.K. and Spain leading the charge, up 71% and 11%, respectively. This outstanding performance reflects a combination of regulatory stability, product innovation and enhanced marketing execution. In contrast, Germany continued to be impacted by tighter regulatory restrictions as well as an intentionally reduced marketing spend to preserve unit economics in a challenging environment. Africa delivered 36% year-over-year growth, driven by strong performance across all markets. Botswana remains a standout with continued momentum since launch. Malawi and Tanzania also posted solid gains, while South Africa grew 23% year-over-year. In Nigeria, we have successfully completed the migration to our new technology platform, which positions us for improved scalability and customer experience. In Zambia, we are proactively navigating casino tax headwinds and are making good progress. North America grew 14% year-over-year. Canada excluding Ontario increased 15%, supported by higher deposit volumes and strong customer retention. Ontario increased 3%. We are planning to launch our new casino client there in the first half of 2026. APAC revenue was also up 3% year-over-year, marking a solid improvement from last quarter's 6% decline. In New Zealand, revenue declined 2%, primarily driven by continued marketing restrictions. We are obviously actively addressing this issue. We are on track to launch the ZAR Super Coin in late November in partnership with Luno, the largest consumer crypto exchange in South Africa. This new South African rand-pegged stablecoin is designed to deepen customer loyalty, reward engagement and enable cross-platform benefits across the Super Group ecosystem. We intend Super Coin to be more than just a rewards tool. It marks a crucial first step in integrating digital assets into our product stack. Our digital asset wallet is expected to launch in Q1 2026, starting in South Africa, where adoption of alternative payment methods continues to accelerate. This wallet will provide customers with a seamless and secure way to store, send and transact using Super Coin and we expect it will lead to cost efficiencies over time. In the longer term, we plan to expand availability in line with local regulatory frameworks.

Thank you, Neal. Let's now walk through the financials. We had an exceptional July and August. And despite those sports outcomes that Neal mentioned, our core business outperformed, enabling us to confidently raise our full-year guidance above previous Investor Day targets. The group generated a total revenue of $557 million, up 26% year-over-year. Group adjusted EBITDA reached $152 million, representing 65% year-over-year growth with a robust margin of approximately 27%. This quarter's margin improvement reinforces the strength of our model. We are investing in markets that deliver the best returns while maintaining cost discipline and increasing operational efficiency, including expanded use of AI across customer support and trading. We again improved our marketing ratio and still drove record customer engagement and wagering growth. These fundamentals, disciplined reinvestment, efficiency gains and sharper ROI positions us to finish this year strongly and carry momentum into 2026. The quarter was also driven by strong sports outcomes in July and August and increased uptake of parlays. Growth was further supported by favorable wagering activity with sports betting wagers hitting $901 million for the quarter, up 12% and casino wagers up 20% year-over-year. Our sportsbook margins also improved from 11% in Q3 2024 to 12.8% in Q3 2025. Our balance sheet remains strong. We ended the quarter with $462 million cash on the balance sheet. Over the last 12 months, we have returned $136 million to shareholders, including $20 million paid out in the past quarter, once again demonstrating our robust free cash flow generation and careful capital allocation strategies. Today, we are raising our full-year 2025 group revenue to be between $2.17 billion and $2.27 billion and group adjusted EBITDA guidance to between $555 million and $565 million. This uplift reflects our robust growth in monthly active customers, diversification in our revenue mix and steady start to quarter 4.

Thank you, Alinda. Q3 showcased the power of our diversified global footprint, efficient cost structure and strong operating leverage. Even in a tough sports hold environment, we delivered record customer activity, 65% year-over-year growth in EBITDA and consistent reinvestment in our product and tech platforms. As we move into the final quarter of 2025, we remain focused on executing our growth strategy, unlocking further margin expansion and delivering long-term value to our shareholders. I'll now turn the call over to the operator to open the call up for questions.

The first question comes from Jason Tilchen of Canaccord Genuity.

One thing I'm curious about, if you could share a little more detail regarding the magnitude of the difference in payments costs in Africa relative to some of the other markets you operate in and a little bit more about maybe the level of investment required in this initiative relative to the potential savings over time from reduced payments costs.

Yes. Not yet. So in Africa, because of the wallets and such, it's significantly more than other markets in the world. So with this initiative, it can over time, obviously, reduce that. And yet, the cost involved in implementing the Super Coin hasn't been excessive at all. It's actually quite manageable. And over time, obviously, with the engagement in the customer base going forward, we are really excited about this opportunity.

And just to follow-up on that. You mentioned in your prepared remarks a few times about rewards. I'm just curious what the opportunity is to potentially use this as a mechanism to drive retention for the user base in those markets.

Yes, listen, it's all about our customer acquisition, retaining our customers and keeping them in our ecosystem. So with the Super Coin, there are lots of different benefits we can give them as they start interacting with that because it's a method that we will control and we're in total control of that destiny. So for us, it's a very exciting opportunity because of that. This bonus money where you can give them, there's lots of different things you can provide.

The next question comes from Jordan Bender of Citizens.

I want to start on guidance. Adjusting for the tough sports comp in the prior year, 4Q revenue still implies slowing growth trends from what we've seen year-to-date. Are you seeing anything into November that would imply anything slowing across some of your major KPIs outside of just some of the poor sports results that have bled into October?

Thank you, Jordan, for your question. In the guidance for the remainder of the year, we just assumed a normalized sports hold in line with around 14%. As you can see in the investor presentation, we've prepared a slide on that. We can't, as you know, it's very tricky for us to have any understanding of the impact of when it does have an outlier like in September. But what happened in September is well because July and August were so significantly higher, you do have an equalized quarter. So that’s why we just kept it normalized. And we're also very excited about the continued momentum in customer activity, fueled by also marketing efficiencies in line with our prior quarters. So that all will help deliver that last part of the year. Furthermore, we just have to rely on consistent execution and a seasonal supportive calendar.

And also I'll just add in, Jordan, that obviously, Q4 2024 was a hard comp because the sports margin was at 15.9%.

Perfect. And then just maybe a follow-up on the U.S. business. Anything left from a revenue or a cost standpoint we should be expecting in the fourth quarter?

Yes. The gaming operations in the U.S. are completely finished. The only thing remaining is the operational wind down. We have reflected this in our Q4 guidance, and it is an insignificant amount. Therefore, we do not anticipate any revenues in Q4.

The next question comes from Jed Kelly of Oppenheimer.

I think you highlighted we're kind of watching some tax developments here in a couple of countries in Africa and then potentially in the U.K. Can you just remind us how much of a tax cushion you baked in, in sort of some of the medium-term guidance you laid out at your recent Investor Day?

Yes. So remember, taxes, obviously, with us, the way to mitigate taxes is, #1, cost efficiencies. There's cost efficiencies in everything we do, then it's the product efficiencies and it's the marketing efficiencies. So all of that is coming together. And for us, we have lots of headroom there to take some of these tax increases. The big one, obviously, for everyone's mind is the U.K. and how much they plan to go up. But for us, we've got a resilient business model and we're growing. So yes, it might take some of the extra profit out of it. But with all the other savings coming in, we hope to mitigate against them.

But just to go back to the reference to Africa, the only real impact at the moment on tax in Africa is around Zambia and that's been embedded in the Q4 guidance forecast.

Got it. That's helpful. And then just circling back to Ontario. I think you highlighted it's growing 3%. I think overall, Canada is growing high teens. How should we think about Alberta's growth rate when that market legalizes? Should we think that grows mid-single digits? Or should we think you can maintain sort of that strong growth you're seeing in the rest of Canada?

I believe we've learned important lessons, particularly in Ontario. We will soon launch new clients in Canada, specifically in Ontario, and we are also improving our products. These efforts should enable us to achieve better results in Alberta. I would anticipate that Alberta's growth will be in the higher teens, aligning more closely with the overall trends we observe in Canada.

The next question comes from Bernie McTernan of Needham.

This is Stefanos Crist, calling in for Bernie. Pretty healthy margin level despite some negative sports results. Can you just talk about the puts and takes on margin in the quarter and if that's sustainable going forward?

Yes. Stefanos, directionally, 100%, our model benefits from a mix towards higher-quality casino revenue. We also have strong geographic diversification. And what we've been seeing, even though the sports results have been under pressure, we've seen increased parlay contribution, which had a favorable impact. Otherwise, what Neal and I constantly talk about are structural efficiencies as we roll out AI-enabled operations and disciplined processing negotiations, et cetera. We definitely believe that this margin is sustainable.

Got it. And then you called out strength in the U.K. and Spain. Just anything specific to call out there?

So I think if you take the U.K. and Spain, it's the product, again, remember, we closed a lot of markets. And I keep telling people that when we close those markets, we then focus the resources on the markets where we're winning. And that you can see that in obviously the U.K. and stuff. So all the stuff we're doing on parlays, the product, the processing, everything that happens in the product, you're seeing a direct correlation of how those numbers are going. So it's not a fluke. This is dedicated resource allocation and we keep pushing more and more. And our brand strength, obviously, is compounding. Spain, we've got like the Super Club loyalty introduced, ongoing product upgrades. And so all of that is coming together. And that's all about this operating leverage that sits in our platforms.

The next question comes from Clark Lampen of BTIG.

Neal, maybe I can follow up a little bit on that comment around U.K. growth and the product, I guess, sort of driver underpinning it. Was that Apricot driven? And if so, is that something that we should think about maybe being sort of early stages with the U.K. sportsbook? And then sort of second question, as we think about the sportsbook business overall, maybe as sort of a follow-up on Jordan's question around the forward outlook. If we sort of run forward the numbers with seasonal improvements in your customers in line with what we've seen in the past, it would seem like there was a pretty significant downtick on a per customer basis. Is that in any way sort of related to engagement patterns? Have you seen any downtick? Or maybe should we read this as just sort of a prudent way of approaching, I guess, the sort of Q4 setup and modeling?

Okay. So just back on the U.K., obviously, I always think we under-index. The brand was really good in the U.K. But as we've got more focus on the product, you've seen an uptick there. Plus remember, we've also launched the casino over at Jackpot City, etc., and we put a lot of effort into that. So all of that is coming together. Plus you've got the parlay mix of that product, which we purchased from Apricot, that we're almost finally getting over the line and owning it in the next few months is all coming together because we actually own 100% of the roadmap there and what's happening. So that's all coming together for what I call Betway Global internationally. Obviously, Betway Africa has always been running a superb product, right? So that all helps. No, I think when it comes to the outlook and stuff, we are always prudent as you know. This is how we operate. Again, we're still 80% in this quarter, I think it was 83% or something in casino. It just depends how the football lay of the land actually unfolds, because football is our #1 sport. I think in September, what we saw with the Champions League was that all the favorites were winning in the Champions League round robin. But now we're starting to move and we'll move into the next couple of months into the next phase and that's when the favorites don't always win. So for us, it's just being prudent. We've got, listen, all about our customers in the house and how they engage, and we’re delivering more and more of those month-on-month. And that's why I said October numbers of customers in the house worth even more than September.

Okay. If I could throw one more in, your Africa growth was up 36% this quarter. Anything that you would call out sort of along the lines of the same sort of underpinning drivers with product in that territory? And maybe more importantly, how should we think about the sustainability of growth at an elevated pace?

It's definitely more durable, broad-based growth. We do obviously see Botswana as a standout in the mix when it comes to the first launch. I mean Botswana was about 4% in Q1, 4.5% in Q2 and now 6.5% in Q3. So that just shows how that one country contributed to the growth of Africa. But generalized, the growth is around the consistent performance across all the African countries. And we've also just completed the Nigeria tech migration, which we hope to see a nice uplift in stability in the next couple of months. And then just to conclude, remember, we've launched Jackpot City as a secondary casino brand in Africa. It's now live in South Africa, Ghana, Malawi and Tanzania. And we foresee that Ghana will be launched now.

So we've done that. So I think the moment we set out, we've got to get our casinos in all the markets we're operating in. And that's the same for the U.K., same for Africa. We're now hopefully coming soon to Spain. And then the last one, obviously, is Germany that we still got some tech stuff to do there because it's quite restrictive of what we have to do.

The next question comes from Ryan Sigdahl of Craig-Hallum.

The results are quite impressive. I want to focus on the sportsbook's performance in September. Looking at August, it seemed to be an unusually strong month for the sportsbook in terms of win percentages, which was then balanced out by September's results. Can you provide a summary of the overall impact of sports gross margin on the quarter compared to what you initially anticipated?

So I think it's on Slide 12 in the investor deck. We've included quite a nice slide now just to explain the ebbs and flows of sports margin, which is obviously you can't really predict any of that. So what we've just started to see, like Neal explained, is the timing of the matches and how the outcomes will now be a bit more favorable for Betway, not for the customers maybe, because in the beginning, you have much more favorable outcomes. But on this slide, you will see we had a high of 18.8% and a low of 7.3%. So we've marked that now. So that average of 14% is what we kind of project forward. But net-net, over a period of time, the margin is increasing due to everything that Neal has mentioned about the rollout of the parlay product in other parts of our platform, which was quite dominant in Africa but now in other parts of the world as well, as just customer engagement.

Is South Africa the initial launch for Super Coin? Are there plans to introduce a similar coin in Nigeria and other markets, or will this be a trial to evaluate before making further strategic decisions?

Yes. South Africa was the first place to start just because of the licensing and high digital wallet adoption there. And so also we've got a big customer base there. So we tried it out there. And as it works there, then we'll see the other markets, and we are actively looking at other markets. But we rather want to start in one country and then move as opposed to trying to do it in so many countries all at once. I mean there’s quite a lot of technical lift that has to happen here, and with Luno being the largest consumer exchange, having the biggest customer base in South Africa, we decided to start there first. So there's a road to go there. This is obviously the first part, listing on the exchange and then you would get into the wallet adoption into Betway, which I said would probably happen in Q1, towards the end of Q1.

Maybe just a follow-up on that and maybe a naive question on crypto but can you launch the same Super Coin in other markets? Or would it have to be a kind of full separate infrastructure and coin?

Yes. Essentially, each coin will be a ZAR coin and a Super Coin, along with various currency coins for each market. However, they all utilize the same technology. We just need to ensure we list them on the appropriate exchanges in the countries we choose, in accordance with their legal regulations.

The next question comes from Mike Hickey of Benchmark Company.

Neal, Alinda, Nkem, Super Group team, congrats guys on a great quarter and a great year, definitely getting a real picture here of 2025, Neal. Just curious when you look at sort of the drivers here of your growth and there's a lot of them, just curious sort of the main drivers, the most durable drivers that you think will also be a positive impact to your '26 outlook. So I guess, Neal, just curious if you can kind of give us what '26 looks like, growing off such a great '25 and how much are existing drivers of growth versus new drivers like Super Coin? I mean Super Coin sounds great. It's just hard to sort of understand the impact and how material you think it could be. It seems like it could be great on revenue and costs. But I guess just getting a better idea of '26 would be great.

I won't comment on 2026 yet but I can share what we've accomplished so far. We've improved marketing efficiencies across the business, with our marketing spend for 2025 around $500 million. We're making strides in efficiency by exploring new channels and exiting markets where profitability seems unlikely. This redeployment is benefiting products and successful markets like Ontario, where we're seeing new clients and developments. Product quality is essential, and in Africa, we have a standout offering. We're improving competitiveness in other regions, particularly the U.K., and as we reach parity, we see better customer behavior and loyalty. We're also focused on process efficiencies, especially payment efficiencies. Processing costs in Africa can be high due to frequent redeposits and cash outs. We're hoping that with our Super Coin initiative, we can retain balances within our ecosystem and avoid paying multiple deposit fees. In contrast, processing fees in the U.S. and U.K. are minimal. We've been committed to operational efficiencies, learning how to grow our business without doubling our costs, and we're finally seeing results from new call center software and enhanced risk management. In markets like Germany, where we face regulatory challenges, we previously had to wait to separate our casino wallet from our sports wallet, but now we can begin offering casino options. It takes time to implement these changes, but progress is being made. Looking ahead to 2026, we are setting goals aligned with what we discussed on Investor Day about increasing revenue and gaining operating leverage. We expect to provide more insights about 2026 during our end-of-year wrap-up in February. Our deposits and net revenue are performing well, which revolves around our customer base. We need to ensure that we treat our growing customer base of 6 million effectively, as everything we do revolves around serving our customers.

Thanks, Neal. The other piece on Africa, obviously, it just seems like an incredible opportunity for you guys near and long-term. We noticed that Kenya has made a change to their tax scheme. And we know that you exited Kenya because of some, I guess, you could say ridiculous tax environment. Obviously, it wasn't great. You laughed and now they've got a change. Just curious your thoughts on that change and if you think it’s significant enough that maybe you can reexamine that market as an opportunity. And if you think the new tax scheme may have positive implications for other countries where you operate?

Yes. I think that's a very good point. If you bring up Kenya, they had this excise tax on sports and casino where you could actually do it on sports; you couldn't actually apply it to casino. And it takes them like what, 2 years or almost to do it. So yes, absolutely, that's a case that we could go back in and turn on the software. And it just means they finally found a mechanism that they are more comfortable in, which is taxing on deposits in and out, which is a much fairer and easier way for them to monitor tax collection. So Zambia also went against this excise tax. But I think the first time what we saw in Zambia is, as an industry, all of us came together to lobby the government to finally say you don't have a casino there, you'll lose all this revenue and they're slowly lifting it. And in Kenya, as we do it, Kenya goes with the exact model that we suggested for Zambia. So I think it's the ebb and flow. And as these new businesses come in, we are working with the government. So absolutely. And for us, I think the point is that you have always got opportunities to go back in. And so that's what we will do. And our products there, we just got to get the resource to be able to just turn it back on.

And Neal, regarding your last question, when Laurence spoke about Africa during the Investor Day, he mentioned four countries that could potentially be opportunities for us, and I believe Kenya was one of them. While I know you can't go into specifics about 2026, I appreciate your insights. The total addressable market he discussed is quite substantial. Should we consider this a potential opportunity, or is it still unlikely? Given our current success, it seems like it could be a possibility.

No. We haven't gone into them yet but we are far down the line, getting the model right, getting how the money has been charged, etc. So we're all over them and there are a lot of them. They've got the capacity to deliver them. The question is at what stage next year we will be launching them. But that's definitely 100% part of our plan. It's all about revenue generation, yes, absolutely.

The next question comes from Chad Beynon of Macquarie.

Nice results. So wanted to start with the New Zealand regulatory news that we've seen in terms of the online gambling tax change and I guess, it's a fairly different licensing regime. I know that's been a smaller market and one that hasn't led to as much growth as others. But Neal, can you maybe just kind of touch on how you're feeling about the market and how you think operators will react to this?

So again, all these regulations are still being discussed in various committees in New Zealand. We are actively monitoring the situation. It’s just a matter of when they will finally decide to fully regulate it, particularly regarding casinos. We are fully engaged in this and have been for a while, complying with certain advertising restrictions that are very important, especially since some competitors are not following them. For us, it's about the long-term sustainability of that market. We're able to conduct specific marketing activities while refraining from others. This is why you see the growth not being as strong, and it’s also impacted by the devaluation of the New Zealand dollar.

And just to add to Neal's point, remember, New Zealand has been taxed for a very long time. So we pay a GST tax in New Zealand for a very long time already. And mid-last year, they introduced a smaller gaming tax. And the noise around tax is just how the regulation is now coming to maturity to peg that rate of tax. And I think there has been rumors to increase it a bit more. But like Neal said, this is very early days. But the point I'm just making is that we have been paying tax there for a while, even though there wasn't a regulation regime at that point in time.

Great. And then lastly, just in terms of the strong capital position that you're in, any update in terms of how you're thinking about tuck-in or bolt-on M&A in this market?

We are very selective in our approach to acquisitions. We aim to strike a balance between not overpaying and not underpaying. Currently, we are making small, incremental acquisitions, particularly in marketing, always ensuring they are priced appropriately and effective. We cannot rely solely on potential synergies; each acquisition must be viable on its own. We have a long list of potential targets and are actively searching for the right opportunities that align with our strategy. Operationally, we are identifying areas where we need to make additions, including in marketing and other sectors. For instance, with the Super Coin acquisition, we purchased a license that was essential for us. We remain open to smaller acquisitions as we progress.

We currently have no further questions. So I'd like to hand back to Neal for any closing remarks.

So thanks, everyone, for joining us today. We are really proud of our performance this quarter and excited about how well we are positioned for the future. We will speak to you all again soon. Thank you.

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