Super Group (SGHC) Ltd

Good morning and welcome to Supergroup's second quarter of 2022 earnings conference call. Following management's prepared remarks, we will open the call for Q&A. I would now like to turn the conference over to Lisa Kampf, Vice President of Investor Relations.

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

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