Super Group (SGHC) Ltd

All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Lisa Kemp, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining our call today to discuss Supergroup's results for the first quarter of 2023. During this call, we made comments of a forward-looking nature that are subject to risks, 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 earlier today and available on the Investor Relations page of Supergroup's website. In addition, we will speak to our financial results and metrics for the first quarter of 2023 in two parts, highlighting our profitable and cash-generative global business separately from our investment in the U.S. This aligns with the annual guidance that we have provided for 2023 and is consistent with both how we view our business internally and how we will report going forward. We recommend that investors refer to our supplementary presentation posted to our website. On this call, I am joined by Neil Menashe, Chief Executive Officer, Richard Hessens, President, COO, and Alinda Von Weick, Chief Financial 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, we reported strong first-quarter financial results with net revenue excluding the U.S. of €332 million and operational EBITDA of €51 million. Separately for the U.S., our net investment for the quarter was €17 million. Year-over-year comparisons for our non-U.S. business are difficult this quarter for three reasons. Firstly, our business in Canada in quarter one, 2022, was still benefiting from COVID lockdown. Secondly, in 2023, many of the local currencies in which we trade, including the Canadian dollar, depreciated meaningfully against the Euro, our reporting currency. And thirdly, our brand B has materially reduced. So it's hopeful to look at our results sequentially to appreciate the progress we have made. Net revenue for the fourth quarter of 2022 was boosted by the FIFA and Cricket World Cup. So it's an achievement that quarter one of 2023 managed to have additional net revenue growth on top of that. Even more impressive, our operational EBITDA increased significantly, up 21% from the fourth quarter of 2022. And Linda will go through our financial results for the first quarter in greater detail in a moment, and Richard is here with us today to guide you with an update on the U.S. Our efforts to strengthen the company continue, as evidenced by ongoing discussions with our software partner, Apricot, towards bringing even more of our tech back in-house, and our continuous evaluation of growth opportunities in current and new markets around the world. Operationally, we remain focused on achieving economies of scale in a targeted manner towards our goal of a medium-term operational EBITDA margin in excess of 20%. Our largest expense line item is marketing. Currently, we are spending 27% of net revenue to support the long-term growth of the business. This is a conscious decision to spend more than the sector average, and I'm watching it very carefully to ensure we are seeing returns. On economies of scale, I want to point out that this is a market-by-market objective. Key costs, such as regulatory, staffing, and technology, do not generally rise directly in line with revenue. Therefore, as revenue grows, disciplined spending ensures that operating leverage kicks in. This is key to our business model. Once our fixed costs are covered, then incremental revenue is far more profitable and significantly improves our EBITDA margin. I'm very pleased to say this was well illustrated in the month of March, where record numbers for customers, polls, and net revenue resulted in operational EBITDA margin of over 20% for the month. So far this year, we have set multiple records, one after the other, for daily active customers, with March constantly breaking the monthly record when it exceeded 3.8 million for the month. For the quarter, average active customers significantly increased to 3.5 million per month from 2.6 million in the prior quarter, a 34% increase. Financially, we remain strong and flexible. There is 246 million euros of unrestricted cash on our balance sheet, which we're using to support the expansion of our U.S. footprint and other markets, as well as for gaining further control of our tech stack in support of the continued growth of our business. In addition to this, our consistent profitability and cash generation also allow us to explore potential M&A opportunities, as well as flexibility in returning capital to shareholders. Now, turning over to some of our key markets. Firstly, after much anticipation, the UK's proposed gaming reforms were released at the end of April. We are pleased that this results in a further clarity for the industry and a level playing field for all operators. Supergroup took steps early on to actively prepare for this, so expect that proposed reforms will have minimal impact on our UK business. Overall for Supergoop, European markets are looking up. The UK in particular has seen strong growth in Betway's Willow Spin, which has benefited from the inclusion of Jumpman Gaming. In Canada, revenue has reduced year-on-year due to unfavourable currency fluctuations and the short-term impact of Ontario's regulatory transition. Trends in Ontario are encouraging, and Canada's business remains robust and profitable, including in Ontario. Africa has to continue to perform very well. The African markets are a great example of where we have quickly realized lasting spend efficiency, led by our worldwide global brand awareness for Betway, complemented by targeted, localized marketing. This has resulted in multiple new records in customer numbers in both sports betting and casino, and record net revenue in EBITDA, despite negative currency fluctuation. Africa's strong performance highlights how business continues to evolve and diversify. Together with growth in Europe, this has given us an improved global geographic balance. Overall, I'm very happy with the competitive progress globally, and I'm proud of the record results achieved in March, all of which, I'm pleased to say, were exceeded in the month of April, even with one day less in the month. I'll now turn the call over to Richard to discuss our progress in the U.S.