Super Group (SGHC) Ltd

Good morning, and welcome to the Supergroup Fourth Quarter and Full Year 2022 Earnings Call. All participants will be in a listen-only mode, and should you need any assistance during the call, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw a question, please press star, then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Lisa Kampf, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining our call today to discuss Supergroup's results for the fourth quarter and full year of 2022. 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. We have provided a reconciliation of the non-GAAP financial measures to the most comparable GAAP figures in the press release issued today and available on the Investor Relations page of the Supergroup's website. We suggest that all investors refer to the supplemental presentation posted to the IR section of our website, which includes the financial information that we are referring to during this call and additional information for the quarter. Today, I am joined by Neil Menashe, Chief Executive Officer, and Alinda Von Zeich, Chief Financial Officer. After our prepared remarks, we will open the call for questions, when we will also be joined by Richard Hasson, President and Chief Operating Officer. And now, I'd like to turn the call over to Neil. Thank you, Lisa.

Good morning, everyone, and thank you for joining us today. Welcome to our call to discuss the results for 2022's fourth quarter and the full year. 2022 was a very significant year for Supergroup, including becoming a publicly traded company in January. Total revenue for the year of 1.3 billion euros exceeded our guidance range, and operational EBITDA came in at our mid-range at 208 million euros. During the year, we continued to grow and invest in many markets, focusing on the long term. Our 2022 revenues decreased 2% for 2021, but remained 25% above 2020 levels, and we continue to generate profits and cash. The 2022 financial results were impacted by a few factors. Comps and macro factors were difficult because 2021 benefited from COVID lockdowns and because consumers began to feel the effects of inflation in certain markets. We had a significant decrease in our contractor brand license fee. Some key markets introduced new regulation. And we incurred significant additional overhead costs due to being a public company. Despite these challenges, for the fourth quarter, Adelaide's monthly active customers increased to 3.4 million from 2.9 million in the prior year, a 21% increase, helped by the FIFA Soccer World Cup and T20 Cricket World Cup, and the acquisition of Jumpman Gaming towards the end of Q3 2022. For the full year, we averaged 2.9 monthly active customers, up 11% from 2.6 million in 2021. We are truly a global business with licenses in over 20 jurisdictions, on the ground teams in 22 countries, supporting 29 languages. We continue to optimize our global footprint, which means opening new markets where we see opportunity and being prepared to close existing markets that are no longer attractive. Of course, in 2023, our global footprint will clearly grow overall, with digital gaming corporation DGC now being part of Supergroup, with its eighth life stage and access and up to an additional five. On the back of Supergroup being fully licensed in these days, welcome DGC to the Supergroup family. We believe the company is uniquely positioned in the industry as we embark on 2023. Our strategic priorities for the year are aligned with how we allocate our cash. Firstly, we are an online-only technology business and remain focused on improving the customer experience with ongoing enhancements to our global platforms in order to optimize engagement, customer value, and adapting and localizing to each market in which we operate. Achieving this is only possible with control of both the front end and the back end of the product. Discussions with our key technology providers, Apricot, are therefore ongoing as we look to ultimately take ownership of our sportsbook technology, which will give us full control over costs and even closer direction of product enhancements and deployment into new markets. Our conversations are progressing well and we'll provide additional updates as soon as available. Secondly, we'll focus on optimizing our global footprint. We're excited about entering the U.S. market, which is $53 billion. We will be approaching the eight markets that we are activating with a disciplined and measured approach. We will apply the same toolkit to these markets that we have successfully built and implemented across the globe over the last two decades. To be clear, we see the U.S. as an attractive opportunity and we're going to invest while constantly re-evaluating the spend and returns being generated on a state-by-state basis. From an investment perspective, the U.S. entry is simply creating optionality for us. Our global ex-U.S. business continues to grow and generate cash and the U.S. presents upside potential on top of that. Keep in mind that it's not a growth at all costs scenario. We've been disciplined in our spending since inception, and we tend to manage this expansion in the same way. The U.S. over the next three to five years is going to require significant investment into a number of areas, including tech, marketing, and customer service, as we directly apply our proven strategies in the U.S. market the same way that we have in other markets worldwide. The investment required for DGC will be funded by the constant cash flow that the remainder of our business generates elsewhere around the globe. Of the eight states that Betway currently lag in, three of those are operating on the Betway Global Tech. And while still very early days, Ohio, the latest days to launch on this technology, is definitely showing some promising metrics and proof of concept. We are working on optimizing our technology and customer journeys in the other markets and look forward to further investment in these states once all components are correctly allowed. We are planning on sharing more data about the U.S. in the coming months. Moving on to non-U.S. markets. The transition to the regulated online casino and sports betting Ontario market and the German sports betting market continues. We've incurred development costs to optimize the customer experience and provide an easy transition, and both markets are tracking in line with expectations. Our majority stake of Jump Bank Gaming is performing well, adding a sizable iGaming customer base from a more recreational segment of the UK market and contributing to our profit. We have taken this opportunity to learn more about this segment with the possibility of using its proprietary tech stacks in other markets around the world. Overall, our approach to our global footprint is strategic and selective, and we continually reevaluate the market that we should enter and the market that we're really operating in. We will never stay in a market only for the sake of a larger footprint. If a market doesn't continue to present us with a feasible case for long-term growth and profitability, then we will leave that market. On the marketing front, we continue to invest in brand and other marketing channels to reinforce both this bet way and spin brands around the world to ensure future growth. Spin, our portfolio of online casinos that now includes the Jumpman brands, focuses on targets and marketing campaigns with ongoing detailed and careful analysis of spend and ROI. Betway, our sports betting brand, allows for marketing at scale and boasts a portfolio of over 60 brand partnerships, continually reinforcing the Betway brand globally. We are continually evaluating strategies in order to deliver meaningful shareholder returns. Given our liquidity position, the Board of Directors approved the share repurchase program in January, and we intend to be disciplined within the authorization provided. In December last year, we successfully completed a warrant exchange at a very moderate cost, cleaning up our capital structure and all outstanding warrants and earn-out rights, and therefore any potential future shelter dilution from these instruments. I would like to point out that all our pre-listing shareholders participated in that exchange at zero cost to the company. In addition, we continue to set a number of strategic acquisition opportunities around the world. In conclusion, on the back of successful 2022, we're excited about the opportunities we have to both strengthen and expand our business while remaining profitable, cash-generative, and debt-free. We are running the business with a long-term outlook in continued pursuit of increased shareholder value. I'll now turn the call over to Linda to talk about a profitable quarter and year, as well as discussing our 2023 guidance. Linda.