Super Group (SGHC) Ltd

Good morning, everyone, and thank you for joining us today to discuss Supergroup's results for the fourth quarter and full year 2023. During this call, Supergroup may make comments of a forward-looking nature that are subject to risks, uncertainties, and other factors discussed further in its SEC filings that could cause its actual results to differ materially from historical results or from the company's forecast. Supergroup assumes no responsibility to update forward-looking statements other than as required by law. On today's call, Supergroup 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. Supergroup has provided a reconciliation of the non-GAAP financial measures to the most comparable GAAP measures or figures, excuse me, in the press release issued earlier today and available on the investor relations page of Supergroup's website. In addition, Supergroup will speak to its financial results and metrics in two parts, highlighting Supergroup's profitable and cash generative global business separately from its investment into the U.S. This aligns with the annual guidance that Supergroup has provided for both 2023 and 2024 and is consistent with both how Supergroup views its business internally and how Supergroup will report going forward. Supergroup recommends that investors refer to its supplementary presentation posted to their website. On this call, I am joined by Neil Menasche, Chief Executive Officer, and Alinda VanVyck, Chief Financial Officer. During the Q&A session, we will also be joined by Richard Hasson, President and Chief Operating Officer. 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 one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. And now, I would like to turn the call over to Neil.

thank you good morning everyone and welcome to supergroup's quarter four and year end 2023 earnings call we have made tremendous strides in 2023 we are cementing our position as a profitable and geographically diverse online sports betting and i gaming operator we have a clear and sustainable path to future long-term growth i'm so proud of what we achieved in the last year And I'm really excited about the outlook for 2024. We feel like we are just getting started as we head into our third year as a New York listed business. We are determined to deliver meaningful, long-term shareholder returns. Let's take a quick look at our 2023 numbers, excluding the U.S. For the full year, we set a new annual record for total revenue of 1.406 billion euros. And for operational EBITDA, we achieved a total of 255 million euros, meaning that we easily surpassed guidance on both fronts. Moving on to Q4, total revenue came in at 352 million euros, with operational EBITDA of €54 million. The fourth quarter had its challenges, with October's unprecedented low sports margin, driven by soccer results and the closure of the Indian market. However, we made a strong recovery and set some new records. Total revenue was the highest ever for a fourth quarter, and December was our best ever EBITDA month. The ability to navigate these bumps in the road is a testament to our diverse and loyal customer base. Our customers are active across both sports betting and casino. Over 85% of our net revenue in the fourth quarter came from casino, proving that even when the sports results go against us, we still have the ability to deliver record-breaking results. In the U.S., our net EBITDA loss for the quarter was €18 million, taking our full-year investment to €57 million. Worldwide, our customer growth is impressive. Even without India, our customer numbers grew to an average of 4.7 million unique active monthly customers. That is 1.2 million more customers than we had at the same point last year. and 700,000 more customers than last quarter. Our customer retention remains strong, and this, along with new customer acquisitions, drove us to new highs for daily customers and daily deposits. Each quarter this year, we set records on each of those fronts and consistently surpassed them. We are a technology-driven business with customers being at the center of our universe. And it's great to see continuous engagement from both new and existing customers, some of which have been playing with us for over 20 years. These strong metrics make us confident that we will achieve the double-digit top-line growth that we are projecting for 2024. Now to provide an update in some of our key jurisdictions. starting with Africa we had another quarter of strong revenue growth we accomplished this even though the African market was a key driver behind the negative sports margin for the business in October moving forward we continue to explore the introduction of new products and brands into both new and existing markets just last month we successfully launched our jackpot city brand into our first African market And we are super excited about the prospects that a Sina specific brand presents for us across the continent. In Europe, we're encouraged to see growth in markets, which we would typically define as more mature and established. In particular, Italy and Spain were standout performers. Both regions grew their casino segment significantly year on year by offering new localized gaming content. In the UK, Betway delivered strong growth. Jumpman delivered its most profitable quarter ever. And similar to Africa, we rolled out the Jackpot City brand. We are well positioned to handle the UK Gambling Commission's plan to introduce a cap per spin for online slot games later this year. We expect this to have a limited impact on revenue because of the nature of our UK business and the composition of the customer base. In Canada, casino grew well, and overall, this remains a strong market for us. In Ontario, industry regulation prompted an initial dip, but our customer retention is now exceeding what it was before the new rules took effect. Customer values are as good as they ever were, and revenues, which initially stabilized, are now growing. In the U.S., while we continue with our previously communicated technology migration and marketing plan, we are not pleased with the status quo. Given the size of the investment required, the competitive landscape, and the relatively small number of states that are currently regulated for iGaming, we are actively evaluating our U.S. strategy on a state-by-state basis and will make changes as required. We announced in February that we completed the sale of DGC's B2B assets to Games Global. The B2B division of DGC is in great hands, and we wish all the parties the best of luck moving forward. The completion of the transactions aligns with our goals, which is the growth of our worldwide B2C business. Finally, I'm pleased to let you know that we are very close to finalizing commercial terms and agreements with Apricot to assume full control of our Betway Global Sportsbook technology. This includes a favorable risk-sharing deal structure, which comprises an upfront consideration and an earn-out. Once completed, this will be a monumental milestone for our business and will allow the global rollout of the software to new and existing markets. whether both organically or through M&A. We look forward to getting this wrapped up and will provide an update before the end of the month. I will now hand the call over to Linda to discuss the financials in greater detail. Linda.

Thank you, Neil. Reflecting on 2023, I'm pleased with how the teams have navigated various challenges to deliver strong growth across both the top and the bottom line. our business model remains adaptable, resilient, and primed for future growth. Let's get straight into the numbers. For 2023, we set a new record for X years total revenue, which came in at 1.406 billion euro, up 8% year-on-year and 19% in constant currency, and therefore comfortably beating our total revenue guidance of 1.35 billion euro. We also delivered the highest ever total revenue for the fourth quarter of €352 million, up 7% year-on-year and 15% in constant currency. As we touched on the last earnings call, sportsbook revenue was impacted in the fourth quarter due to October's customer-friendly results in soccer. We rebounded in November and even performed better in December, but sportsbook revenue still declined for the quarter to 53 million euros, a decrease of 39% year-on-year and 34% in constant currency. This decline was further impacted by the closure of the Indian market, which of course is included in the comparative quarter. Moving on to casino, net revenue came in at 289 million euros, an increase of 22% year-on-year or 32% in constant currency. This growth was driven by strong performance in Africa, Canada, and some of our European markets. Despite the strong performance in this segment, growth was offset by the closure of India. I'm very pleased with the progress we've made in optimizing costs in the right areas. We are not about cutting costs for the sake of improved margins. Instead, we continuously analyze our costs and understand the areas where we can operate more efficiently. We are investing in technology, AI, and enhanced processes to drive long-term efficiencies and innovation. All of this allowed us to reduce our headcount over the year by more than 11%. This focus has led to our total operating costs as a percentage of net revenue in the fourth quarter falling to 19%. compared to 22% in the same quarter of last year. This is a huge saving of 3% of net revenue. Another area where we will continue to invest is our marketing. We spent 29% of net revenue on marketing during the fourth quarter. We scrutinized the return on investment per market and per channel to ensure optimal delivery of our revenue targets and to deliver top-line growth. we never want to sacrifice long-term growth for the sake of short-term margin improvements. Our operational EBITDA X years for the full year came in at €255 million, being 22% year-on-year growth, comfortably beating our 2023 guidance of at least €240 million. Our EBITDA margin for the year was 18%, an improvement of 200 basis points as compared to 2022. This is a positive step in the direction of our long-term target of maintaining EBITDA margins of above 20%. For the quarter, operational EBITDA grew 29% year-on-year to €54 million, resulting in a margin of 15%. The margin for the quarter was impacted by the COVID sports results, which actually resulted in negative EBITDA for the month. In December and November, we achieved EBITDA margin of around 24% and 22% respectively, demonstrating the strong end to the year and our operating leverage kicking in. The U.S. EBITDA loss for the year was 18 million euros, resulting in negative operation on EBITDA for 2023 of 57 million euros, being slightly less than our forecasted spend of 16 to 65 million euros. Moving to 2024 ex-US guidance. We estimate that our top line will continue to grow strongly, with year-on-year growth of just over 10% to €1.55 billion. Going forward, and to ensure that we are aligned with best practice, we will now report on adjusted EBITDA instead of operational EBITDA. The difference in 2023 between these two metrics was immaterial. Our 2024 guidance for ex-U.S. adjusted EBITDA is a minimum of €280 million. In the U.S., we have started the year's spending at a similar rate to last year. As expected, we are constantly evaluating the spend and the returns being generated. And while we are still in the process of assessing various options for the U.S. market, I do not think that it is likely that our 2024 adjusted EBITDA loss will exceed what we spent last year. Lastly, we ended the year with a strong balance sheet, which includes unrestricted cash of €242 million and no debt. I will now turn the call back to Neil. Thank you.