Super Group (SGHC) Ltd

Good morning and welcome to Supergroup's second quarter of 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Following management's prepared remarks, we will open the call for Q&A. To ask a question, you may press star then one 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 call over to Lisa Kemp, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today to discuss Supergroup's results for the second quarter of 2023. 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 filing 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. On today's call, we may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not 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 Q2 2023 in two parts, highlighting our profitable and cash-generative global business separately from our investment into the U.S. This aligns with the annual guidance we have provided for 2023 and is consistent with both how we view our business internally and how we report going forward. We recommend that investors refer to our supplementary presentation posted to our website. On this call, I am joined by Neil Menasche, Chief Executive Officer, and Alinda Von Weich, Chief Financial Officer. During the Q&A session, we will also be joined by Richard Hessen, 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, we are delighted to report a strong set of financial results for quarter two, 2023. Total revenue for the quarter ex-US was 374 million euros, an increase of 16% year on year. Ex-US operational EBITDA grew even more strongly to 83 million euros, a 54% increase year on year. Separately for the U.S., our net EBITDA investment for the quarter was 13 million euros. We experienced continued growth of our customer base with strong momentum continuing on from where quarter one left off. April was really good with a new monthly record of 3.9 million active customers in the month. For the quarter, we achieved a new record of 3.7 million average active customers per month. compared to $2.7 million in the prior year quarter, a 40% increase. Our strategy of investing into markets where we see the greatest returns is reflected in our strong quarterly results. We achieved EBITDA margins of at least 20% in three of the last four months up to June, with the EBITDA margin for the second quarter averaging a solid 22%. Our quarterly results further demonstrate the market-by-market economies of scale that we are achieving. I want to reiterate that operating leverage is at the core of our business model, which when combined with additional cost synergies is ultimately the key to sustaining an EBITDA margin of greater than 20% over the longer term. As a business, we remain committed to investing for the long term. Central to this strategy is our marketing spend, which was 22% of net revenue for the quarter. While this is slightly lower than last quarter, it does not reflect any change in our marketing strategy, but rather some specific market factors in the quarter that we do not expect to prevent us from achieving our target level of investment for the full year. In recent weeks, we further strengthened our really impressive brand partnership portfolio, becoming the official partner of U.S. Major League Cricket and also the official betting partner of Toronto's National Bank Open. These partnerships will further expand Betway's international cricket and tennis audience and enhance global brand recognition. Now, turning to some of our key markets. Africa continues to be a strong performer, setting new records for customer numbers, net revenue, and EBITDA, despite some adverse currency fluctuations during the quarter. We continue to refine our proprietary technology platform by also increasing brand awareness through a combination of global and localized marketing efforts, an approach that continues to generate impressive results. In Europe, we saw continuing momentum driven largely by the UK and Spain. In the UK, Casino benefited from the inclusion of Jumpman Gaming, but we also saw strength in the sports product, an encouraging sign following the recent regulatory pressures faced in this market. Canada remains an important region for us. Canada ex-Ontario performed well with year-over-year growth despite adverse movement of the Canadian dollar against the euro last year. In Ontario, we remain encouraged, and despite tough comparisons this quarter, our performance is tracking well and is in line with our expectations. Moving to the U.S., we are now live in nine states, with Louisiana having gone live earlier this month. Our priority remains migrating all states onto the bedrock global technology before we begin ramping up marketing spend. Optimizing the tech in all of these states is a big undertaking, And then we know that it will take time and investment. But this is something that we have done successfully for the last two decades, and we remain confident with our approach. Looking at our balance sheet, we continue to show a strong cash position with €229 million of unrestricted cash and no debt. Our priorities for using our cash remain unchanged from what we have discussed in previous earnings calls. To that end, we're pleased to announce that earlier this month, Supergroup bought a majority stake in SportsCC, a data-enabled provider of sports media content. We believe that this acquisition will be a great help in driving improvements in our sporting content and will ultimately serve as a strong customer acquisition tool. On the same front, we're making good progress in our discussions with our sports software provider, Apricot, and are advancing towards completion of the acquisition of a dedicated sportsbook from them. I will now turn the call to Linda to discuss the financial results in greater detail.