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spk06: Greetings and welcome to the Supergroup Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lisa Kumpf, Head of Investor Relations for Supergroup. Thank you.
spk01: You may begin. Good morning, everyone. I'm Lisa Katz, and I'm delighted to have recently joined Supergroup as the Head of Investor Relations. I'm based in New York, and I look forward to engaging with many of you virtually and in person in the coming days. Joining me today to discuss Supergroup's results are Neil Manashi, Chief Executive Officer, Richard Hassan, President and Chief Operating Officer, and Alinda Zanzake, Chief Financial Officer. Also with us today during the Q&A session is Spencer McNally, Group Head of Data and Analytics. By now, everyone should have access to the company's full-year earnings press release issued earlier this morning. The press release is available on the Investor Relations page of Supergroup's website at investors.sghc.com. During this call and in our earnings press release, we will be making or have made comments of a forward-looking nature. These forward-looking statements include statements related to supergroups' anticipated financial performance and operating results, market opportunity, and business strategy and plans. These statements are neither promises nor guarantees and are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. The company assumes no obligation to update these statements after today's call, except as required by law. Please refer to today's press release and the company's filings with the SEC, including the risk factors section in the company's report on Form 20F, filed on February 2nd, 2022, and in the annual report on Form 20F for the year ended December 31st, 2021, to be filed with the SEC later this month. for the detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Additionally, on today's call, we 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. 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 relations page of Supergroup's website. As a result of uncertainty regarding the potential variability of reconciling items, we have not reconciled our expectations as to adjusted EBITDA. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to our results computed in accordance with GAAP. Also note that we have posted a supplemental presentation to the investor relations section of our company website, along with the earnings release, the link to this webcast, and filings with the SEC. And now I would like to turn the call over to Neil.
spk10: Thanks, Lisa. It's great to have you on board. Good morning, everyone, and thank you for joining us today on our first earnings call as a public company. I'm Neil Manashi, and I've been with the business in various leadership positions for over two decades. and I've been the Chief Executive Officer of Supergroup since it was incorporated as our group holding company in 2020. As you know, Supergroup stocks began trading under the ticker SJC on the New York Stock Exchange in January 2022. We are excited and humbled to have this amazing opportunity and look forward to this new chapter. I would like to thank our existing investors and our new shareholders as we embark on this very exciting journey. Most importantly, I want to thank our team at Supergroup for their relentless dedication and commitment through such a challenging environment over the last two years, and also for their fantastic efforts that have contributed to Supergroup becoming a publicly traded company. Our team truly understands the core mission of delivering first-class, safe, and responsible gaming entertainment to our customers. We are excited to communicate with you on a quarterly basis as we continue to discuss our current business initiatives and developments towards our long-term goals. In our press release issued earlier today, Supergroup announced tremendous results across all of our key financial metrics, exceeding our outlook on both net gaming revenue and adjusted EBITDA. Net gaming revenue, or NGR, at a constant currency was $1.53 billion for 2021, exceeding our forecast of $1.5 billion. Adjusted EBITDA at constant currency was $368 million, better than our forecast of $350 million. Using actual exchange rates during 2021, this translates to $1.48 billion of NGR and $358 million of adjusted EBITDA. Given that this is our first earnings call as a public company, I will spend a few minutes providing some background on who we are, our mission, and what we believe makes us different. I will then hand over to Richard, our president and COO, to explain the progress we have made as we continue to grow in existing markets, enter new markets, and how we plan to continue gaining traction in the large and growing worldwide market of online gaming and sports betting. After that, Alinda, our CFO, will discuss our financial performance over the past year. Supergroup is the parent company for two leading global online sports betting and gaming businesses. Firstly, Betway, which is our premier global online sports betting brand, and then Spin, which is our multi-brand casino offering. Our sports betting and online gaming offerings are underpinned by scalable technology, enabling fast and effective entry into new markets. while proprietary marketing and data analytics engines empower us to provide a unique, customized, safe, and responsible gaming experience. We believe that we have a number of advantages and differentiators over our competitors, and I'm briefly going to highlight some of the more significant ones. Firstly, Betway is the only sportsbook brand that we promote, and we do so in a consistent manner worldwide. We have marketing and sponsorship arrangements with more than 70 sports teams, events, leagues, and franchises worldwide. And our single brand means that we are able to optimize marketing ROI rather than spread it out less efficiently over multiple brands. Campaigns targeted at one country generate revenue for us worldwide. And the cost of even a single country campaign can be amortized across the entire globe. This compares to some of our competitors who only trade in a few markets and therefore can't amortize their spend or generate worldwide revenue like we can. or others who have multiple brands which may dilute the effectiveness of their spend in the big traditional media channels where sports betting is advertised. Secondly, while there are many markets in which large-scale traditional brand marketing is possible for sports, that's rarely the case for online casinos, where instead a wide range of brands is required for strategy with a greater weight towards online marketing. spins well-established and diverse portfolio of online casino brands gives us extra shelf space over single-brand competitors and the ability to suitably service different sectors of this market. Thirdly, we own or control under long-term contracts all of the key components of our tech stack, with the exception of temporary third-party tech for regulatory purposes in select new markets. Even then, we aim to convert this to one of our existing technology options at the earliest possible time with the ultimate goal of owning or controlling all key aspects of the front end and back end for all of our casino and sports products critically we do always own or control all of the competitive advantage technology related to data and analytics and all of the key components required for interacting with customers in real time amongst many other things this means that we're able to launch into more markets more quickly adapt more quickly to the changing needs of existing markets, and in particular, that we can move more quickly and effectively, adapt our products to the complexities of a world in which regulation and customer needs are changing all the time. Our fourth major competitive advantage relates to data and analytics, and in particular, how we use proprietary models and systems plus massive amounts of granular data to understand our customers in real time, to enhance our interactions with them in real time in order to customize and optimize the individual experiences of our products safely, responsibly, and profitably, again, all in real time. I want to emphasize that these are well-calibrated, proven commercial models, not black box or outsourced AI algorithms that no one understands and which could randomly go haywire at any time. Our models are all proprietary. we've shown that we can predict individual customer possibilities with remarkable accuracy. And together with our proprietary interaction system, we're therefore able to offer our products to customers both profitably and responsibly or in real time. That's a quick summary of what makes us different. I hope that you have found it useful. I'll now pass it over to Richard to provide more detail on the global market opportunity for Supergroup, as well as current business initiatives and development. Richard.
spk12: Thank you, Neil.
spk11: It's great to be on our first earnings call as a public company. And I first want to thank all our partners, shareholders, employees, and investors for joining us on this journey. 2021 was a great year for Supergroup, during which we continued to execute on our global strategy, both in existing and new markets. In 2021, Betway and Spin launched with licenses in nine new markets around the world. Betway launched in France, Tanzania, and Germany. spin in mexico and the betway brand was launched by our soon to be acquired partner bgt in colorado indiana iowa pennsylvania and new jersey as we've previously discussed in some detail those u.s markets are not yet using the best way global technology and we're of course aiming to change that in the not too distant future but we're happy to say that in 2022 DGC has recently gone live in Arizona on the Betway Global technology platform, and that launch is also notable as DGC's first tribal gaming deal. We're fortunate at Supergroup to be operating in a large and growing market, and we still see a lot of headroom. Globally, the OSB and gaming market is expected to exceed $120 billion by 2025. Our gross gaming revenue, or GGR, for 2021 was around $1.8 billion, which means we have lots of opportunity to grow both in the US and elsewhere. Besides the market launches already mentioned, we're obviously also looking at other commercial opportunities for growth. We've already given a lot of detail about the planned DGC acquisition, and that's still on track for closing in the latter part of H2. Canada is currently our biggest market, and obviously the regulatory environment there is key. Currently, only Ontario is in the process of regulating, and we're busy doing what we need to in order to comply with the requirements for that market. The relevant applications have been lodged with the Ontario regulator in the required timeframes, and we are going through the process. In the meanwhile, we continue operating in Ontario with the knowledge of the regulator. Ultimately, we're bullish on the effects of the regulation in the Ontario market because we expect that the pie will grow in the medium to long term, and we're coming at it with a significant head start over most of the competition. We also expect this regulation to open up additional marketing opportunities in Ontario and bring with it some cost efficiencies to offset the gaming duties. So net-net, we think that this market still has some solid potential upside for us in terms of both revenues and profits. On the marketing front, our team had a busy 2021, bringing in more than 30 new brand partnerships for Betway. As of today, the total portfolio now stands at an excess of 70 active partnerships in 17 different countries, spread across all the major international sports, including soccer, basketball, tennis, esports, and golf. Our reach is far and wide. We've got seven different esports fields. We have 11 tennis fields in eight different countries. And in the English Premier League, our Betway brand is visible in every stadium at least once a season, in many stadiums for almost every game, and overall in around two-thirds of all games. In the NBA, we've got deals with the Bulls, the Warriors, the Mavs, the Cavs, the Clippers, the 76ers, the Heat, the Bucks, and the Timberwolves. Plus, there's also ice hockey, horse racing, cricket, rugby, and motorsports. That's a long list of partnerships and sponsorships that are continuously reinforcing the Betway brand around the world. helping to support all of our other marketing activity and thereby the growth of the business. And of course, we actively monitor other major sports properties around the world for what we see as attractive and potentially profitable entry points. In terms of customer numbers, we had a very good year. On the back of continued strong customer acquisition and equally good retention, H2 finished with an average monthly active customer count in excess of 2.7 million. That average is around 45% up on the prior year same period and around 150% higher than the same period in 2019. For the full year, those percentages were around 74% as compared to 2020 and around 160% better than 2019. We're obviously very proud of the strong customer growth, but we're mindful of the possibility that at least some of that growth would have come from the secular shift to online that was brought about by the COVID pandemic. We're certainly aiming for continued strong growth in our customer base numbers 2022 and beyond. But equally, we want to keep expectations realistic in this regard. So our guidance for 2022, which Alinda will discuss shortly, assumes growth in our customer base at a lower rate than 2021. In terms of customer value, without going into too much detail, we're satisfied that 2021 developed as expected. In our mature continuing markets, customer values remain broadly consistent with prior years, with the exception of the UK, where as expected, regulatory and other changes to the structure of the market resulted in continued reductions in average deposits and NGR per customer. In some of our foster growing markets, we're pleased to see customer values holding up nicely despite the continued growth, with moderate improvements in some cases. In other cases, we saw moderate reductions in monthly values, which is usually what you would expect from markets that have been growing fast and are not yet mature. Overall, average customer values were down against 2020, continuing a trend that has been in evidence for a couple of years at least. Again, this is to be expected as a result of our market mix shifting over time due to faster growth in developing markets where average customer values are naturally lower than in mature markets. So in sum, 2021 delivered largely as expected. And overall, we saw a pleasing trend towards a more diversified mass market business that continues to line up nicely with the aim of providing first-class, safe, secure, and responsible gaming to all of our customers around the world. With that, I will turn it over to Elinda to review our financials. Elinda?
spk05: Thank you, Richard. I am especially delighted to present you with supergroups financial results on our first earnings call because 2021 was a good year for us, continuing our strong growth in previous years with excellent year-on-year increases in all the headline key metrics, including net growth, revenue, adjusted EBITDA, and the other. Despite industry headwinds in certain quarters and some markets with regulatory challenges, we were able to achieve our key financial goals. Before I get into the details, I want to highlight that we are reporting in Europe and not U.S. dollars. We've made the decision to do so because currently we do not have any meaningful part of our business trading in dollars, at least not until we acquire DGC, sometimes in the latter half of this year. So reporting in U.S. dollars really just introduces unnecessary currency fluctuations into our results, and in particular makes prior year comparisons much more difficult. The numbers we are presenting are pro forma consolidated numbers, as a sum total of all our groups, irrespective of the timing of the company's reorganization, which occurred during both 2020 and 2021. The numbers presented are adjusted EBITDA, which is the EBITDA numbers adjusted for transaction expenses relating to the lifting, employment of goodwill, and deduction of some non-recurring expenses. I will now turn to our financial results. Net gaming revenue for the full year increased by 29% year-on-year to €1.26 billion, which reflects good growth in markets categorized as business as usual and where we are therefore able to appropriately offer and market our products in 2021 as we did in 2020 and before. For markets where that was not the case, including some which closed during the year, such as Netherlands, or as in Germany, where regulations tightened significantly, we estimate that net gaming revenue was negatively impacted by around 40 to 45 million euros compared with how those markets had performed in 2020. I'm particularly pleased that we were able to offset these negative impacts and still deliver strong net gaming revenue growth for the year. Adjusted EBITDA for the full year grew with 41% to €302 million for 2021. This was helped in part by some operating leverage and economies of scale in general administrative costs, which are generally fixed and increased by only 16% compared to 2020. This is a very good result given that net gaming revenue grew, as mentioned, by 29%. As expected, direct expenses, which are largely variable, and marketing costs, which are a mix of variable and fixed, grew broadly in line with net gain in revenue. Cash generated from operating activities increased from 156 million euros in 2020 to 229 million in 2021. That's a growth rate of 47% and reflects the continued high rate of profitability. Free cash flow grew in line from 183 million euros in 2020 to 249 million euros in 2021. Free cash flow as a percentage of adjusted EBITDA was therefore 82% in 2021, a small reduction from 84% in 2020 due to the increases in tax and capital expenditure. Following from that, cash-in-cash equivalents more than doubled from €139 million at the start of the year to €294 million at the end of the year, again reflecting the strong cash-generating abilities of the business and thanks to a debt-free balance sheet. As for the fourth quarter on a standalone basis, net gaming revenue for the quarter came in 15% higher at €320 million in comparison to the same period last year despite a very challenging October in sports for the entire industry and helped by some sports margin recovery in November. Fourth quarter adjusted EBITDA was €69 million, down 2% from the previous year, driven by an increase in brand marketing expenditure, which was predominantly USA-focused. Regarding our guidance for 2022, we see no reason yet to change what has previously been provided. Of course, it's still early in the year and our outlook could change, but for now we're comfortable confirming our prior guidance, which is detailed in the presentation posted to our website. If you don't recognize those numbers, it's because we previously provided our forecast in US dollars, and those figures are in the Euro equivalent values using the exchange rate at the time we originally announced the guidance. In line with what I've mentioned earlier, we're now stating our guidance in Euro to align the reporting of our financials going forward. Finally, I'm very proud of how we've managed to get through our first year in earnings, both in terms of the results and process. The requirements of public markets are obviously new to many members of our team, so I want to thank them for the hard work and congratulate them on getting everything done to such a high standard. Thank you very much. I will now hand back to Neil for his closing remarks.
spk10: Thank you, Alinda. Supergroup has had an extraordinary year. Everybody listening to this call knows how much time, bandwidth, and resources the process of becoming a public company can be. The listing process onto the New York Stock Exchange took up all of 2021 with most of our senior executives and many members of our operational management. And despite that extraordinary focus, our team delivered record levels of new and returning customers, record revenues, and record profits with strong growth in all of these metrics. With the listing and 2021 behind us, we're looking forward to this year and beyond as we continue to enter new markets and grow existing ones with our Betway and Spin brands. We're confident that we can drive this business onwards into the online gaming behemoth that we know it will become. And we hope that all of you are as excited for the future as we are. With that, we open the call to questions. Operator?
spk06: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Stephen Grambling with Goldman Sachs. Please proceed with your question.
spk03: Hey, thanks for taking the question. Maybe the first one, just on the regulatory changes in Canada, it seems like folks have started to launch there. Curious how that progression has compared to your own expectations and how you're thinking about that market.
spk11: Hi, Stephen. Richard here. So, yeah, we're currently going through the process, as we mentioned, all active conversations with the Ontario regulator, very comfortable with where we are in the process, very comfortable with the timing and confident in completing that application process with the regulator. And for now, as we mentioned, we continue operating in Ontario with the knowledge of the regulator.
spk03: And I guess from a competitive standpoint, has it been surprising? Have you seen any kind of changes in advertising, promotions, et cetera, as some of the peers have started to ramp up there?
spk11: Yeah, I think it's still relatively early days. You know, obviously only earlier this month. There are obviously new operators in the market, but I think it's too early to make a call on that.
spk03: And then maybe a question on guidance, recognizing that you reiterated the guidance for the year. I'm curious. I mean, it's been a while. I feel like I should say that there's been a number of external events that have happened over the past couple of months. So I'm wondering if you could just walk through any kind of big puts and takes as you see it that are maybe offsetting each other as we think about the guidance. And then any color you can provide on kind of the cadence of the year so that you know, we can make sure that we're not, you know, off sides in any given period.
spk12: Thanks.
spk04: Hi, Alinda here.
spk05: Yeah, as previously stated and noted in the call, we still feel very comfortable that our guidance as outset in the previous presentations is still relevant and within our reach. We have, however, just adjusted it for the time being back to euros, as the US dollar conversion obviously creates expectations that we can't control due to the fluctuations. Therefore, just looking through the year, we have adjusted our report calls according to regulatory happenings in, for example, Netherlands and Germany to adjust for that.
spk04: and the expectation of Victoria, but we feel comfortable that we're on track of what we previously provided.
spk12: Great. Thanks so much.
spk06: Thank you. Our next question comes from the line of Jed Kelly with Oppenheimer & Company. Please proceed with your question.
spk13: Hey, great. Thanks for taking my questions. Just going back to Canada, can you discuss your Canadian iGaming customer Do they have a lot of overlap with the sports bettors, or do you think the amount of the new sports betting companies coming in are not real? I guess your iGaming customers, are they mostly just iGaming, or do they bet sports as well, just trying to get a sense of your iGaming customer profile?
spk10: Okay, I'll take that as Neil, yeah. So generally, we've seen across the world, and we always see, and I talk about this a lot, is that The specific iGaming customer casino compared to the sports is very different. The person who plays at Betway Sportsbook, who then goes and plays in the casino that Betway offers, is a fundamentally different customer who plays on our spin rack. They are not the same. And that's why we have both of them in our arsenal. So when you basically look at our business, you've got Betway and Spin, and together they make about 50%, 50-50 the revenue, or Betway slightly more, but overall the casino revenue comes in at about 70%. But it's different customers in Betway as they are in Spin. And that's why we've got the dual offering wherever we can across the globe. And it's very important they're not the same customers at all.
spk13: Got it. And would you say your Canadian customers, is that spread out relative to the population of each province, like Ontario, a certain percentage versus British Columbia?
spk10: It doesn't actually, funny enough, doesn't go according to the population. So it's less than the population. So that's why with Canada regulating by province, we've got province by province. So this is obviously the first province of Ontario to regulate.
spk13: Got it. And then just, I guess, back on guidance, I guess, you know, you have report, you know, you had your 1Q numbers. Could you give us a sense on, you know, how we should expect quarterly revenue in the trend? Should it be a similar seasonality to last year?
spk10: I mean, generally, I mean, I'll start and then Linda can add in. But generally, it goes seasonality. But remember, casino is very different to sports. Sports, you can have a bad hold in one month because of the sports event. And different countries will have different holds. So for us, yes, it's quarter by quarter, but it's more to look at the half-year revenues, et cetera, as you said, because, for example, last year in October was a terrible month, but then November and December then obviously started to claw back. It just so happened that was all in the same quarter, whereas if you had exceptional bad hold in the end of one quarter, it can then roll into the next quarter. And then you know you've got... COVID, obviously, from two years ago where you had sports restrictions, et cetera, then obviously that we've now ramped out of that so that all sports events are now open as usual.
spk13: And then just one last one for me. When you look at the World Cup this year, how much is that a benefit to your 22 outlook?
spk10: The World Cup is towards the latter end of the year. So from our point of view, yes, it's in there, but remember, it still flows. So we've got some of it in there, but then we've got lots of other competitions happening all the time. So this business is about all sports events, whether it's the EPL, the NBA, the IPL, so esports, et cetera. So for sports, we try and do the range across the globe, and that's why we've had a classes, one brand, a best way. So we open for every sports event across the globe with our customers in all the 25 different jurisdictions that we operate in and grow. And that's key. We're obviously with casino, it's more about the random number generator and getting customers into the casino, which is obviously open to as many as seven days a week.
spk12: Thank you.
spk06: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of Bernie McTernan with Needham & Company. Please proceed with your question.
spk02: Great. Thanks for taking the questions. Just thinking on Canada, I was just wondering if there was anything, I know there's a lot to talk about competition, but What are you guys doing from a customer retention standpoint to make sure that you can retain your own customers in light of this new competition? Are there any changes in strategy that you're doing now relative to six or 12 months ago?
spk07: Hi, Spencer, Bernie. Look, I think from a general point of view, our belief in our methodology is strong. We take a customer by customer view on every single individual. using a very, very broad range of metrics across a significant range of timeframes. We're evaluating that data in close to real time. We're responding to that in close to real time. And we're offering the customer in a responsible way what we think is the appropriate product and at the appropriate values and so on and so forth for them. And we don't think that anything changes just because we now may see more competitors or we may see slightly differing regulations. A lot of the things that are in the regulations are things that we were doing already. And again, that only applies to Ontario where anything's changing. So I don't know that we see the need to change the game plan. It works around the world in regulated jurisdictions everywhere. Ontario is joining that list. It hasn't changed very much from our point of view.
spk02: And so I guess the point being that the new competition isn't throwing off your actuarial tables or whatever it may be in terms of what the impact is on your customers.
spk07: Look, I'm tempted to tell a joke about insurance companies and actuaries. They say the actor is the guy who looks out the back window and tells you which way to go. The truth is that it's a little early to tell whether anything's going to change. My favorite saying is that the only thing you know about forecasts is if they're going to be wrong. It's just a question of how wrong they're going to be. But we're comfortable that we're not seeing anything at this stage that is particularly scary. uh you know we're really not seeing anything at all all scary little and particularly uh so no i i guess as i said we don't see the game changes we we've we've got a strategy that's worked for many years and all the signs are that it will continue to work and we are you know continuing to refine it and improve it as we go yeah i mean i'll i'm miss milga and i'll just add in you know
spk10: You've seen in New York with this huge bonus money and then the tax on bonus money, we've always been very careful with our bonus strategy, and we'll continue to do that. You can bring them in the front door, but if your strategies are all wrong, you can't keep changing the odds of the game by giving free bonuses. That costs you more than actually the lifetime value of the customers. We've had this our whole two decades, and this is no different. We've learned over the last two decades from regulation from one market to another. So Ontario is no different. And remember, it's only one province in Canada.
spk02: Understood. And then when you finally do gain regulatory approval in Canada, will there be any blackout period from when you get approval to when you launch where you have to kind of cease operations as a, you know, whether it be a couple of days or whatever it may be where you wouldn't be able to operate anymore?
spk10: No, no, no. Business as usual and you roll in from the dot-com into the regulated world, which has happened in other countries.
spk02: Understood. Okay, and maybe just lastly, as a follow-up to Stephen's question, just any impact on, Russia, Ukraine, that's implied in the guide or any way to think about the potential impact?
spk10: Okay, so firstly, I'll take that. Firstly, for Ukraine, our hearts go out to everyone there. We've got no exposure there. We've had no developers there in Ukraine, no business in Ukraine. And funny enough, when it comes to Russia, Supergroup had basically no business in Russia. So we've had no impact from there. But obviously, it's a terrible situation that's gone on there, and it's all going on.
spk02: Agreed. Great. Well, thanks for taking all the questions. Appreciate it.
spk06: Thank you. Our next question comes from the line of Michael Graham with Canaccord Genuity. Please proceed with your question.
spk09: Thank you, and thanks for all the new information. Congrats on getting all those numbers out. I just had two questions. The first one is maybe talk about the long-term, you know, growth the relative growth that you expect to see across the business between online casino and sports betting. Just wondering, you know, sort of where you see those growth rates evolving to. And then I also wanted to just ask about how you're feeling about the balance sheet. It looks like, you know, you ended up with just under 300 million euros of cash on the balance sheet. So just wondering, you know, how you're thinking about liquidity and sort of, you know, the balance sheet going forward. Thanks.
spk04: Thank you, Michael. Alinda, yeah.
spk05: So the cash on the balance sheet is well noted. It's more than doubled. There is obviously now being looked at certain opportunities for investment purposes going forward. That's under discussion with management. But furthermore, we're also looking at a potential dividend policy, but that is very early days. But we remain as a strong cash flow generated business. On your question on long-term guidance, there's so much going on in the world at the moment. As a business, we have decided that we're going to internally look really at the numbers halfway through the year. As you've noted well, that it took a lot of us to get the first 2021 year-end results out in such a short time, which is new to us for a listed entity. With the guidance, we'll rework it through the course of the half-year mark and then maybe put out something during the fall or the later part of the year on what 2023 will look like. I don't think we project three, four years. We look at some trends, but it's impossible to make that as accurate due to what's happening in the world.
spk12: Okay. That's very helpful. Thank you.
spk06: Thank you. Our next question comes from the line of Mike Hickey with The Benchmark Company. Please proceed with your question.
spk08: Hey, Neil, Richard, Linda, Lisa. Good morning, guys. Congratulations on all your success. Just a couple questions for me. On Canada, hot topic here. Just curious if you could break out your revenue and profit contribution from Canada. And then specifically, now that at least Ontario is moving to a regulated market, what is the presumed impact net on your guidance from that region? You know, thinking about taxes and marketing expense and everything that's going to sort of change now that you're regulated and not operating in the grain market.
spk12: I have a follow-up, thanks. Hi, Mike. Excuse me. Hi, Mike.
spk11: Richard, I'll start with the first and Heather for the second. In terms of the country breakdown, we don't provide that specific level of detail, but I will refer you to the presentation where you will see some familiar charts from previous where we've split out the 2021 revenue by geography, and you'll know that the majority of that number made up of the Americas is Canada. Of course, also in there is Central and South America. And that also has context. That figure of the Americas excludes Digital Gaming Corporation because that's not yet part of the super group.
spk12: Okay.
spk00: The question is... Go ahead, Amanda. Okay.
spk05: Your question around the impact on EBITDA, especially around Centorio, two things are happening with our business. I mean, we have made notes on operating leverage, so the more we grow, the more we understand our business. We are getting efficiencies, especially in our variable costs, and that rolls over into Centorio as well. But remember, even though you might have a tax paid, you have much more efficiencies in, for example, your cost of processing funds in the country. And actually, on average, your marketing becomes competitive and less expensive. So there is some good returns as well for becoming fully regulated in a jurisdiction because it does bring some other efficiencies and reduction in costs.
spk10: And I'll just add in here, Neil, is that remember this is only one province in Canada. It's not the whole country regulating as one, which is quite different to, let's say, Germany and some other markets. So for us, there's lots of opportunity with them in Canada. And again, we've got Bethway and Spen, and we've got a lot of opportunity across the globe. So it's the same way we would look at each province in Canada as a new market, a new existing market. You would look at DGC each state as a market. And that's how we look at it across the globe. And it's about being localized in each of these markets and having the product localized and being the most efficient it can be in each of these countries across the globe. And that's been our business model, and that's why we've got 4,000 people, and we've got teams who run continents and then run the country, and in this case, in DGC's case, the states, and then Canada, obviously, the province of Ontario, and then the rest of the dot-com. But this has been our business for the last two decades, is following it as markets have become regulated.
spk07: Does that maybe add a slightly active point to you? know in a very short term it's really hard to call exactly what's going to happen our experience in the past is that these markets grow in size once they become regulated and between the operational and cost efficiencies that linda referred to and that your overall bottom line benefits that's uh taking a sort of a medium term onwards view in the very very short term you know it remains to be seen it's very very early what's happening we're feeling quietly confident but you know, it's too early to tell exactly what's going to happen in the very short term.
spk08: Okay, thanks. Just to confirm, the Canadian piece of your 22 guide, that's business as usual. I mean, just confirm that. And do we run the risk here that you, when you change that to ADAPT, so now that's regulated, so it's not the same scenario that when you originally gave guidance, there's a risk that you have to lower numbers in the near term given taxes and marketing and everything else that's part of being a regulated market?
spk05: Just to reiterate, we did look after the regulations become imminent, we did readjust the guidance and we still feel comfortable with the adjustment. As of effective April 2022, we would reach the target as set out previously.
spk10: So we took into account all the taxes, et cetera, coming into just the province of.
spk07: Yeah, the only unknown is exactly how the regulations are going to be interpreted by the regulator, but I think that's going to take a while to play out. And on the face of what you're seeing there, there's nothing particularly unusual. We've seen other markets regulate with deposit limits explicitly specified by the regulator. or very onerous marketing conditions. None of that's happening in Ontario. So on the face of what the regulations are reading like, we're not seeing a huge change in operating conditions.
spk08: Okay, great. Thanks, guys. Second question for me. On the U.S., can you just sort of talk through the the playbook there once you finish your acquisition, sort of how you're thinking about the financial impact and sort of updated thoughts on user acquisition and how you think about bringing in players and sort of overcoming not having a database like some of your peers do. Thanks, guys.
spk11: Hi, Mike. So... As Neil said earlier, when we look at any new market, be it a new U.S. state or a new country, we look at it on an individual market basis, and we'll apply the same toolkit as we have to all other markets around the world to each of these U.S. states. Where we stand today, TGC is live in six states with market access and up to 12. And once TGC becomes part of Supergroup, those will be treated as every other market within the supergroup is treated. So it will be the power of the NetWave brand, the underlying use of data and analytics to understand the customers, and of course having the localized teams in each and every state in this case that are obsessing about the local detail and understanding the customers on an individual basis in each of these markets. So it's taking what we've learned in the last 20 plus years, it's taking what we've applied to all other markets around the world, and in this case, applying it to each of those states as we do to other countries around the world.
spk00: Thank you.
spk06: Thank you. Our final question comes from the line of Stephen Grambling with Goldman Sachs. Please proceed with your question.
spk03: Hey, thanks for sneaking me back in. One other one on just the guidance and assumptions there. On the branding fee that you get from, I guess it's a combination of Thailand, China, and the U.S., how do we think about the visibility on that and what will drive that year over year and how that's trended? Thank you.
spk11: Hey again, Stephen. So on the brand fee, that is a fee that we earn for other businesses making use of our brand. Obviously, the strength of our brand globally is obvious. And the brand for itself is not looked at in isolation. So it forms part of our thinking around the total amount spent and invested into the brand across the world. So when we look at what's today the portfolio of over 70 partnerships, for the Betway brand, we will consider in those conversations and in those investment decisions, we will consider what we expect to earn as a brand fee from those partners. So any adjustments in that brand field, potential adjustments will be considered in the branding decisions and ultimately brand, when we look at the brand relative to our revenue, you know, the brand will be a part of the marketing investment, obviously alongside the other forms of marketing. And, you know, in summary, that brand is looked at in conjunction with all other marketing decisions made. It's not looked at in isolation.
spk10: So I'll just add, it's important to know because we've got this one sports brand, We can have marketing at a brand level that affects this global marketing. But we don't take all the money of marketing and just spend it on brand. Brand is one portion of Betway's budget, and that's very important. So the brand feed comes into that, but because we've got this global reach, we've got enough volume in all our marketing to be able to have an effect. But it's not just the business. It's not just built on brand. Built-on brand is one part, and then you've got all the other marketing, the localized marketing that goes on, and that's very important.
spk03: But just to clarify, so that's not a percentage of GGR, you know, generated by those operating partners? That's kind of like a year-to-year adjustment that's made based on the spend that you have?
spk12: Yeah.
spk03: It's not a revenue.
spk12: No, that's not a revenue.
spk03: And so you generally think of that as being break-even then, or that's an EBITDA contributing segment?
spk10: Yeah. So we just take some income from that. We'll help go towards the brand spend. We have a cost to close. Just in accounting terms, you have to kind of separate the two when you disclose it.
spk12: Got it. Okay. Thank you.
spk06: Thank you. Ladies and gentlemen, this concludes our question and answer session and thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.
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