Super Group (SGHC) Ltd

Good morning, everyone, and thank you for joining us today to discuss Supergroup's results for the first quarter of 2024. My name is Jake Bozzano, Vice President of ICR. 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 an 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 figures 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 2024, and it's 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 during the Q&A session, we will be joined by Linda VanVick, Chief Financial Officer, and Richard Hasson, President and Chief Commercial Officer. And now I would like to turn the call over to Neil. Neil?

Thank you. Good morning, everyone, and welcome to Supergroup's first quarter 2024 earnings call. Before I discuss this quarter, I'd like to quickly touch on a change to the format of our earnings calls. Starting today, our prepared remarks will be shorted in before, but we are posting a more detailed investor presentation to our website. We hope to use this time each quarter for greater dialogue with the sales side community and to answer as many questions as possible. Let's now dive into the quarter. We are off to a phenomenal start for Q1. Total revenue ex-US was the highest ever for first quarter at 374 million euros. This represents growth of 13%, which in constant currency is even more impressive at 17%. Adjusted EBITDA ex-US also set a first quarter record at 69 million euros. That's 29% growth from last year and a healthy margin of over 18%. The strong performance this quarter can be largely attributed to our focus and continued investment into core markets. We continue to invest in marketing and as a percentage of net revenue was 27%. This ratio It's always higher in the first half of the year, and we expect this to trend back towards 25% for the full year. The approach here is simple. We enhance our future growth profile by ongoing reinvestment into areas that are yielding the highest ROI. We are pleased with the progress we have made on the realization of cost efficiencies. Our operating expenses as a percentage of net revenue fell to below 19% for the quarter, as compared to 22% in Q1 2023. This is an ongoing process, and while we continue to invest into high growth areas of the business, we remain focused on streamlining our expenses, creating leaner, more efficient operating model. This then further enhances the operating leverage that is inherent in our business. with every bit of incremental revenue meaningfully contributing to our EBITDA margin. Across the globe, we continue to optimize our footprint. Outside the U.S., we have identified a handful of smaller markets where we do not see a long-term path to profitability and in the process of shutting them down. Within the U.S., the review of our strategy continues. We are in the midst of analyzing our broad range of options and look forward to updating you in the near future. I'm glad to inform you that we've entered into definitive agreements to assume full control of the Sportsbook software technology. As highlighted in today's press release, we have agreed on a favorable risk-sharing deal structure, which includes an upfront consideration and a contingent earn-out. Pending the necessary regulatory approvals, we are excited to put this deal to bed and will be working closely with our dedicated Apricot team to further integrate the technology into our business. As for our balance sheet, our financial position remains really strong, with no debt and unrestricted cash of €289 million at the end of the quarter. We continue to assess the best use of this balance, including the possibility of returning cash to our shareholders. And a final note, our terrific Q1 momentum extended right into April. I'll now turn the call over to the operator to open the call up for questions. Operator?

Thanks, Neil. We'll now begin the question and answer session. Should you have a question, please press the star key followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star key followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Please give us a moment to compile the queue. First question comes from the line of Jed Kelly of Oppenheimer. Jed, please go ahead.