Super Group (SGHC) Ltd

Mr. Malott, you may begin. Thank you. Good morning, everyone, and thank you for joining us today to discuss Supergroup's results for the third quarter of 2024. During this call, Supergroup made 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 the company's forecast. Supergroup assumes no responsibility to update forward-looking statements other than 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 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 the financial results and metrics in two parts, finding Supergroup's profitable and cash-generative global business separately from its investments into the U.S., This aligns with the annual guidance the Supergroup has provided for 2024 and is consistent with both how Supergroup views its business internally and how Supergroup will report going forward. To re-recommend that the investors refer to supplemental presentation posted on the website. On this call, I'm joined by Neil Manashi, Chief Executive Officer, and during the Q&A session, we'll also be joined by Linda Van Wick, Chief Financial Officer, and Richard Hodgson, President and Chief Commercial Officer. And now, I'll turn the call over to Neil.

Thank you. Good morning, everyone, and welcome to Supergroup's third quarter 2024 earnings call. Quarter three was a super quarter. Total revenues, x the US, was an all-time high for a third quarter, growing 13% year over year to 395 million euros. Adjusted EBITDA x the US also set a third quarter record, growing 52% year over year to 95 million euros. We are successfully executing our strategy of growing key markets while realizing cost efficiency with a particular focus on optimizing our optics and marketing. These efforts are clearly reflected in our margins. 24% for the second quarter in a row and that's well ahead of our 20% target our casino business is experiencing super growth casino represents 83% of overall net revenue for the quarter we expect continued growth as we utilize our decades of expertise to expand in key markets this includes rolling out our spin brands into existing markets, which aligns with our multi-brand strategy. When it comes to key markets, we'd like to highlight the continent of Africa, where we see success and significant opportunity. For the second quarter running, Africa provides the largest portion of our revenue. We have operated in Africa for more than a decade and have built a super strong competitive moat. Our footprint spans seven locally regulated markets, and we hold podium positions in five of them. And there's more to come. We have a healthy pipeline of new markets that will be viable in the next 12 months. Beyond that, the continent is expected to grow by a billion people, reaching 2.5 billion people by 2050. We are well positioned to capitalize on this growth with our purpose-built platform, local marketing expertise, fully dedicated teams, and deep relationships with key stakeholders. We expect to perform very well in this growing market. Second to Africa is Canada. We are experiencing strong year-over-year growth across both sports and casinos. And I want to note that Jackpot City continues to be a leading brand across the entire country. While we plan to continue growing our presence in Africa and Canada, the U.S. has proven to be trickier. We've completed the shutdown of our U.S. sportsbook operation. I'm pleased that the associated costs came in around 9 million euros less than our previous estimate of 45 million euros. We continue to assess our iGaming business in New Jersey and Pennsylvania. We are closely tracking KPIs, and if we can't reach our goals, we will take decisive action. As we've always said, in order to continue operating in the US or any market, we must be able to see a sustainable path to profitability. We expect our quarter four investment to be less than what we invested in quarter three, and we are pleased to be seeing some green shoots. Moving on to the balance sheet. Our financial position is robust, and we finished the quarter with unrestricted cash of €297 million and no debt. This is after having paid the 10 cents per share initial dividend in July. We are exploring ways to return cash to our shareholders, including our plan to initiate a regular dividend of 2.5 cents per quarter to begin in the first quarter of 2025. In the meantime, an option we are considering in the near term is a further special dividend before the end of the year, a possibility we intend to discuss with our board at our next meeting at the beginning of December. and which may be assessed each year subject to performance and market conditions. Finally, given the strong performance to date, in particular a spectacular October, and assuming normalized sports results for November and December, we are revising our ex-US adjusted EBITDA guidance to exceed €345 million, representing a margin of 22%. We are seeing the operating leverage in our business kick in, and we are really pleased to be above our long-term target margin of over 20%. We look forward to capitalizing on our momentum and closing out a super year for Supergeek. I'll now turn the call over to the operator to open the call up for questions.

Operator? We will now begin the question and answer sessions. To ask a question, please press star then one to enter the queue. If your question has already been addressed and you would like to withdraw it, please press star two. We will now pause momentarily to assemble our roster. Our first question comes from Jed Kelly of Oppenheimer. Please go ahead.