Super Group (SGHC) Ltd

forward-looking nature that's subject to risk, uncertainties, and other factors discussed further in its SEC violence that could cause the actual results to differ materially from historical results of the company's forecast. Supergroup assumes no responsibility to update forward-looking statements other than is 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 figures in a press release issued yesterday and available on the investor relations page of the Supergroup website. In addition, Supergroup has reported its financial results and metrics in two parts, highlighting Supergroup's profitable and cash-generated global business separately from its investment into the U.S. This aligns with annual guidance that Supergroup has provided for 2025. Going forward, Supergroup will report on the combined results. Supergroup recommends that investors refer to the supplementary presentation posted to the website. Today, I'm joined by Neil Menashe, Chief Executive Officer, and Alinda Van Wyk, Chief Financial Officer. After a few better remarks, we will open the call out for questions. And now, I'd like to turn the call over to Neil.

Thank you, Inc. Good morning, everyone, and welcome to Supergroup's first quarter 2025 earnings call. We kicked off 2025 with a powerful quarter, delivering impressive growth in revenue and customer numbers. We remain strategically focused on making smart adjustments to our global operations, cultivating our growth areas, enhancing our technology and product offerings, and spending wisely on operations and marketing, all while continuing to deliver meaningful shareholder returns. Before we dig into our numbers, we have four important announcements. First, please join me in expressing our deepest thanks and gratitude to Richard Hassett, former president and CCO, for everything that he has done for Supergroup over the last 13 years. It has been a super journey. We wish him every success in his next chapter. Second, from today going forward, we will be reporting our financial results in U.S. dollars. to enhance comparability with our U.S. listed peers and provide more relevant information to investors. Third, also from today going forward, our results presentation will be inclusive of our U.S. business, unless stated. Finally, we are excited to reintroduce Supergroup to you at our upcoming Investor Day on Thursday, September 18, 2025 in London. And we are eager to present our new office hub. This event will reflect the significant transformation that we have made since Supergroup listed over three years ago. Turning now to our numbers, we comfortably beat our internal ex-US and US expectations for both total revenue and adjusted EBITDA for quarter one 2025. The combined group delivered an all-time high first quarter total revenue of $517 million, growing 25% year over year. Total combined group adjusted EBITDA, also a first quarter record, increased by 120% year over year to $111 million, with a combined margin of approximately 22%. We delivered all of this. without compromising our strategy of reinvesting for growth, with a marketing ratio of 26% of net revenue. Growth was fueled by exceptional wages for both sports betting, up 7% year-over-year, and casino, up 23% year-over-year. Total revenue ex the U.S. was the highest first quarter ever, growing 24% year-over-year to $502 million. Adjusted EBITDA X the U.S. grew 62% to $121 million, with a margin of 24%. Analyzing the X U.S. numbers, key drivers were as follows. African grew 34% year-over-year, driven by steady development in South Africa, Ghana, Malawi, and the recent launch of Botswana. Botswana is off to the races as one of the most successful launches we have ever seen. while Nigeria is receiving strategic attention that we believe will be fruitful. In Africa, casino and sports were up 31% and 38% year-over-year, respectively, thanks to continued growth in our customer base and the strength of our market-leading global brand. The end result is that we continue to occupy podium positions in multiple markets across the continent. Europe was up 53% year-over-year, The UK continues to be a bright spot, with revenue up 87%, thanks to strong growth from Jackpot City and Bestway, together with improved marketing and product experience. Spain is up 20% over the same period due to growth in casinos, as well as the relaxation of the Royal Decree around sponsorship and marketing. Overall, Canada grew 13% year over year, Ontario grew 2%, while the rest of Canada grew 16% over the same period. Our performance highlights the continued strength of our brands across Canada, where profitability remains very good. We maintain tight control of overhead and are holding marketing spend stable as a percentage of revenue. In Alberta, we're preparing for potential launch of local regulations in 2026. Lastly, APEC was significantly affected by currency weakness and the closure of non-performing markets, ending down 13% year-over-year. Our largest market in APEC is New Zealand, which was in line with last year in constant currency, but down 7% year-over-year in dollar terms. Growth in New Zealand is constrained by regulatory limits on marketing, but we believe that we have plans in place to address this in order to return New Zealand to growth. At the EBITDA level, this quarter clearly shows how the operating leverage inherent within our business fuels scalable and profitable growth. As our established markets reach scale, a substantial portion of every incremental dollar of revenue converts to super profits at our bottom line. By aggressively reinvesting our existing footprints and maintaining a disciplined cost structure, we are driving sustainable margin expansion and we expect this trend to continue. In the U.S., our iGaming business is progressing according to plan. First quarter 2025 picked up from fourth quarter 2024, with EBITDA improving to a $10 million loss in quarter one 2025 from an $11 million loss in quarter four 2024. In March 2025, we introduced Spin Pallet Casino in New Jersey and Pennsylvania, replacing our sports-focused brand Betway. We are monitoring what a proposed tax hike in New Jersey could mean for profitability, but we are currently satisfied with the progress of the U.S. business. We are meeting our KPI goals and remain on track for expected break-even in 2027. We are really pleased with the new records we set this quarter, including a new high for unique monthly active customers, which averaged $5.4 million for the quarter. And a new record for total sports wagering, Ex-India, which reached $899 million for the quarter, up 7% year-over-year, even while gross margin in the sportsbook improved from 11.1% in quarter one 2024 to 13.8% in quarter one 2025. Our balance sheet remains stellar as we finish this quarter with unrestricted cash of $351 million and no debt. In February, you'll recall that we increased our minimum quarterly dividend target to $0.04 per share, which resulted in $20 million being declared and paid to our shareholders at the end of March 2025. In the last 12 months, we have returned $146 million to our shareholders. This highlights our very strong free cash flow profile. Turning to guidance. On February 21, 2025, we guided to fiscal year group revenue of greater than €1.915 billion and group-adjusted EBITDA of greater than €400 million. In dollar terms, converted at the average rate for the first quarter of 2025 of 1.052, that's equivalent to a combined total revenue of greater than $2 billion and adjusted EBITDA of greater than $421 million. So today, we are maintaining our guidance. Supergroup does not update guidance on a quarterly basis, but we do continuously assess performance as the year progresses. Though not factored into our guidance, we continue to see opportunities and potential for further growth in markets, both inside and outside of our current footprint. In closing, April was another super month across the board in Africa, Canada, Europe, APAC, and the US. The second quarter is therefore off to a great start. We are growing consistently with an iron opportunity and the technology to support, retain, and attract customers around the world. We are excited about the year ahead. I will now turn the call over to the operator to open the call up for questions. Operator?

Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Jed Kelly of Oppenheimer. Jed, your line is now open. Please go ahead.