Super Group (SGHC) Ltd

Thank you for standing by and welcome to the Supergroup first quarter 2026 earnings webcast and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Nekem Ojibwe, Head of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining us today to discuss Supergroup's results for the first quarter 2026. During this call, Supergroup may make comments of a forward-looking nature that is subject to risk, or to entities and other factors discussed further in its SEC filings that could cause the actual results to differ materially from 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 a 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 yesterday and available on the investor relations page on our website. who recommend that investors refer to the supplementary presentation posted to our website. Today, I'm joined by Neil Menashe, Chief Executive Officer, and Alinda Von Vaid, Chief Financial Officer. After our prepared remarks, we will open the call for questions. And now, I'd like to turn the call over to Neil.

Thank you, Inc., and good morning, everyone. The first quarter of 2026 marked a record-breaking start for Supergroup. We deliver all-time high quarterly revenue and unprecedented monthly active customers. Deposits and wagering also reach peak levels, extending our Q4 momentum. These results reflect the strength of our strategy, our brand, and our people. As our business evolves, so does our reporting. We are introducing a new reporting structure consisting of two segments. Africa and international. Africa includes all revenue generated across the African continent, while international includes all revenue generated outside of Africa. This new approach highlights the distinct operating models across our four regions, providing shareholders with deeper insight into each unit's drivers and growth potential. The executors responsible for these segments remain unchanged. Africa delivered an excellent QY. Revenue for the quarter grew 53% year over year, with adjusted EBITDA up 21% to $98 million. Sports and casino wages were up 33% and 36%, respectively, year over year. Botswana continues to perform well. I recently spent time on the ground with our team in Nigeria, and the actions we're taking there will strengthen our growth profile as we ramp up execution. The phase rollout of our ZAR Supercoin consumer wallet began in mid-April with a soft beta launch for our Betway South Africa customers. Our goal is simple. Expand utility and gradually increase customer engagement across our ecosystems. We will reach a key milestone late in the quarter with additional listings on OVEX and Vela, two of the largest exchanges in South Africa. These listings significantly enhance liquidity and accessibility and provide a solid foundation for broader adoption as we optimize engagement and unit economics. For the international segment, revenue was up 9% with adjusted EBITDA growing 26% to $73 million. European revenue growth of 18% year-over-year was strongly driven by a 29% increase in the UK, where we are capturing market share thanks to record customer acquisition off the back of continued product improvement and a successful Cheltenham Festival. We remain encouraged by Ireland's growth of 13%, with local regulation expected in the second half of this year. In North America, Canada ex-Ontario delivered 16% revenue growth, supported by retention and product enhancements. Despite an increasingly competitive environment, Ontario achieved a post-regulation record for new customers. Alberta, up 22% year-over-year, remains on track for local regulation in July with a fade and regimen brand rollout. Overall, North America, excluding the U.S., grew 15%. Rest of the world saw revenue growth of 8%, with New Zealand growing 6% year over year, which is particularly encouraging after last quarter's 5% decline. We remain disciplined while we await the anticipated local regulations framework. Overall, our sports business continues to enjoy strong margins. We are fortifying our sports trading and risk management capabilities ahead of the World Cup, This quarter we implemented targeted changes to materially improve margin resilience within our promotional mechanics, pricing, and payout structures. These measures proved their value in February, which was a particularly challenging month for sports due to customer-friendly outcomes. Meanwhile, our casino business remains the super reliable, steady, and constant engine of Supergroup. We don't take this for granted. We continue to. innovate, extend, and improve in numerous and meaningful ways. We have made it easier for our customers to discover content. We are personalizing their experiences and we are stepping up gamification and engagement. The result is targeted product and incentive management that delivers strong retention and responsible, consistent, and profitable customer behavior. Net effect, a business where 80% of our revenue is driven by predictable, high-quality, and super-persistent annuity revenue streams that offer shareholders unwavering reliability and confidence. With that, I'll turn it over to Alinda.

Thank you, Neil. Quarter 1, 2026 marked an outstanding start to the year for Supergroup, and I couldn't be more pleased to share these results. We have delivered a record total revenue of $612 million, up 18% year-over-year, while adjusted EBITDA grew 36% to $152 million. Our margin expanded to 25%, compared with 22% in the prior year period. Driven by strong acquisition and retention strategies, average monthly active customers reach a record 6.4 million. up 18% year over year, with March setting a new monthly high of 6.5 million customers. Total wagering increased 23% for sports and 20% for casino compared to last year. Discipline cost management, controlled marketing spend, and strong operating leverage are clearly reflected in our results. With continued focus on AI-driven efficiencies and high return markets, we are well positioned to pursue sustainable long-term growth. Our balance sheet remains really strong, supported by high-quality earnings and measured capital allocation. We ended the quarter with $422 million in cash. This represents a 20% increase year-over-year, despite returning $152 million to shareholders, including the special dividends paid in February. our free cash flow conversion of 75% remains strong, reinforcing the confidence that we showed when we recently increased our minimum quarterly dividend target to $0.05 per share. Building on the strong momentum of Q1, we are entering the rest of the year with confidence. Q2 is tracking positively with growth opportunities ahead, bolstered by an action-packed World Cup calendar. our focus on marketing and operational efficiencies remains unchanged. As a result, we are reaffirming our full year 2026 guidance with total revenue expected to reach at least $2.55 billion and adjusted EBITDA to be more than $680 million. I will now hand back to Neil for closing remarks.

Thank you, Linda. This quarter underscores the effectiveness of Supergroup strategy and discipline. We are building momentum across regions, bolstering margins resilience, and enhancing our product and customer experience. With a strong start to the year, strengthening our casino business, an attractive global sporting calendar ahead, and a strengthened leadership team focused on execution and efficiencies, Supergroup is well positioned for the remainder of 2026 and beyond. Operator, please open the column for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Your first question comes from a line of Michael Hickey from StoneX. Your line is open.

Hey Neil, Alinda Inc., congratulations guys on a great 1Q. Two questions from us, Neil, just on Alinda. On your 1Q performance here, obviously a strong beat versus expectations, and the malgrowth was exceptional, plus 18%. I think you hit a record of 6.5 million in March. So I guess how are you thinking about the decision here, Alinda, Neil, to reaffirm your guidance for raising for the full year at this stage?

OK, so hi, Mike. Thanks. So our guidance, as you know, was for revenue greater than $2.55 billion and very importantly EBITDA greater than $680 million. So we were confident about those numbers when we told them to you in February. Now, after Q1, we remain confident. But this isn't the first time that we've outperformed Viking Q1. We've never increased guidance at this stage of the year. It's just not something we do so early on in the year. We obviously are focused, as you know, on executing and delivering growth, and we're not finessing predictions and guidance. It's really this simple.

And just to add to that, I think it's important also to note we're just not in that beat and race treadmill game, as you all know. We are tracking ahead of our expectations, and we're very encouraged by what we're seeing in the momentum, but we're only 25% into the year.

Nice. Thanks, guys. Next question from us, just on the World Cup. You gave some great data here in your deck. It looks like 80%, 88 plus percent of your revenue James Onley- generated from World World Cup participating markets and 73% of your GDR from football so obviously it looks like World Cup here is shaping up to be a significant catalyst for you guys Q2 Q3 So how should we think about. James Onley- The potential uplift both player activity and revenue during the tournament period. And then the follow-up, you know, how should we think about the timing and scale of the cross-sell of these incremental players to casino, which, of course, would make this World Cup catalyst durable? Thanks, guys.

All right. So, I mean, listen, I love this data point that basically, and I thought a lot about this, that 40% of the countries we operate in are participating in the World Cup, and that represents almost 88% of our 2025 revenue. So, What we will get is we're super confident about the engagement of our customers in these markets. We've obviously got a strong product stability enhancements we've done ahead of the tournament, and we're focusing on the scale and the customer experience. A bit different this World Cup to the 2022 World Cup. The 2022 World Cup was played because it was in the winter months. It was played in November and December and had 64 matches. Because there are more teams in this year, it's now, as you know, June and July, it's 104 matches. So literally 63% more matches with more engagement. So for us, it's all about giving us the content for our customers. And the first half of the competition, because there are 48 teams, There might be, you know, in our business, it's all about the favorites drawing or losing. So hopefully, let's see how the first half goes. But obviously, as they get into the knockout stages, which will be at the beginning of July, we will see what happens there. But again, it's about engagement in the sports and then the cross-sell into our casinos. Yeah. And the cross-sell normally is like 60% to 70% into casinos. Nice. Awesome. Thanks, guys. Good luck.

Your next question comes from a line of Ryan Siddall from Craig Hallam. Your line is open.

Hey, good day, Neil, Inc., Linda. I want to stick just one follow-up on the guidance. Are you willing to comment on trends you've seen in April? And may I get the reason to reiterate this early in the year, but curious if you've seen any deceleration in the business or any trends or anything to really give you concern?

All right. So this quarter started off great. And Obviously, you know, in February, remember quarter one had a big loss in February on one day when all the favorites basically won and our customers won. But we haven't seen any deceleration. Remember, our guidance is greater than $680 million. So we are confident about that. And remember, our business is 80% casino, stable, consistent, and we are annuity income on top of that every single day.

Second question, just the UK tax effect went in effect recently here. What are you seeing in the market from your competitors? What have you done from a marketing, promotion, et cetera standpoint? And really nice quarter results and momentum, it seems like, in that business despite that. But just curious for kind of an industry and company update there.

Yes, thanks for the question. We called out around 6% pre-mitigation of 2025 EBITDA as a hint. It's around the $30 million dollar hint. However, we have started to pull multiple levers in order to mitigate that, as we said. We've obviously done, even with the April numbers already in effect, We haven't seen that massive impact because of operating leverage in the way we manage our marketing. So we feel in a confident position to see this through Q2.

And also, we did call out that it would say it only kicked in on 1 April, so only like a couple of weeks and five weeks in, that the marketing rates will start coming down when everyone starts doing their numbers. You know, they have to get used to this new world of taxes, and obviously we have to be efficient. And that's part of our two segments, being international in Africa and bringing international together has effectively given us this operating leverage. Very good. Thanks, guys.

Good luck.

Thank you.

Your next question comes from a line of Bernie McCarran from Needham & Company. Your line is open.

Great. Good morning. Thanks for taking the questions. First, I just wanted to ask about the new breakdown in terms of EBITDA. I greatly appreciate being able to see Africa versus international. Alinda, can you just talk about the margin opportunity in Africa? Maybe any thoughts on incremental margins just as the region continues to grow, how we should expect margins to scale with it? And then I have a follow-up. Thank you.

Thanks for the question, Bernie. I'm glad to be able to share that. transparency now to the market to see what what it brings us to supergroup the difference between africa and international so it's not so heavily weighted you know the expectation probably was it was very heavily weighted towards africa um saying that that gives us the ability to have really strong possibilities to still have that market margin expansion and we always do it in two kind of strategies. The one is our return on investment, how we make sure the marketing that we spend in that jurisdiction is very localized, it's bespoke for that customer, and we see strong returns on that. And then secondly, our product mixers, getting that product really fit for purpose for that local market, getting the pricing right. That really, really helps us with the expansion of not just in South Africa, but the rest of Africa, the margins.

Bottom line, yes, and then I can add. We've got huge cross pollination between the international side of the business and the African side, and I think we've really in the last six months have scaled that up from the call centers. Same software to the risk and fraud to all of that. So we really are are seeing super and cost coming through there. And also in Africa, we've been pushing on different sports, e-soccer, cricket, tennis, et cetera. So it's all coming together. And we've also mentioned our trading. We are really getting stuck into the trading of all the various sports.

Understood. Thank you both. And then in the slide deck, it references Nigeria ramp up underway to strengthen growth profile.

what would success look like uh this year in nigeria for you guys thank you i think that the niger is an interesting one we've been on the ground there it's super interesting i think what's what we have seen in african content and maybe led by nigeria is that the country as a whole is doing much better the free flow of the of the of the currencies improving so we have to listen double treble our our our business size there at least right so so so as you know it's the largest population in Africa, the growing TAM, and we're getting our product rights and that. And again, we can build or buy across the ways. And we can do both. So it's really top of our mind.

Thank you. Your next question comes from a line of Jed Kelly from Oppenheimer. Your line is open.

Hey, great. Thanks for taking my questions and another great quarter. Just on the margin cadence between the two segments, How should we be thinking about that, particularly in the international margins? I know you have, you've got the UK taxes, and then you're launching Canada in July. So can you just give us a sense how we should be thinking about that? And then with Africa, should we expect revenue to grow faster than EBITDA over the medium term? Thanks.

Thank you. Great question. First of all, on the international side, how we look at international is the continued customer momentum. So our assumptions in the guide is definitely on organic growth assumption. There's no aggressive persistency assumptions made in there. But we're also making sure that we have that marketing discipline of around 22%. And then if we caveat then to Africa, That 22% of marketing as a guide towards the spend of revenue is much lower in Africa because of the jurisdiction and the localization of marketing. So that gives that ability for the EBITDA margin to grow as strong as the revenue market targets that we set for Africa. But the interesting thing here is that it's a very equal business. Even though you have probably most of the scale of the growth of the customer base out of Africa, the revenue and the EBITDA margin growth is very similar.

And I could just add, and this is probably a point on Alberta, it's very different Alberta regulation to Ontario. Ontario was what we call the big bang approach. You had to move all your existing customers over onto the new software on day one before you could even market the new software. In Alberta, you can market to the new software first and have a period of three months or so to be able to move your existing customers over. So that for us is a massive, massive difference. We tried for that in Ontario, but it didn't happen at the time. But now it can happen in Alberta.

Thanks. And just as a quick follow-up, How should we view World Cup net win margins relative to your historical net win margins? Thanks.

You've got to hope that the smaller teams like Haiti, et cetera, just draw with the bigger teams in the early rounds. The early rounds might be a little bit hairy, but it doesn't matter because, remember, it's all about if they win on those games, what happens on the next games, and most importantly, what happens in our casinos. So let's see. I think it's going to be interesting. We've never had this many teams. But I think on the plus side, you've got engagement with so many games. I said there's like 63% more game matches. It's actually unbelievable. So I think the audience and what we're going to have in our ecosystem should be really, really, really good. Thank you.

And the cross-sell of 60% that you pulled out. I think that's the big benefit as well.

Yeah, absolutely. All right, looking forward to it. Thanks.

Your next question comes from a line of Clark Lampin from BTIG. Your line is open.

Thanks very much. Maybe I can start with a little bit of a follow-up on Jed's last question. I think in the past, your sportsbook margins have basically peaked at sort of an 18% to 19%-ish level, maybe a little bit higher. But I guess what I'm wondering is after you sort of fortified the – the sports trading and I think pricing, I'm paraphrasing, I guess, from the language in the presentation. But what I'm curious is, are book-friendly months potentially going to produce higher structural sports margins now on a go-forward basis? Quick follow-up question would be on the leadership team comments that you guys put in the release. Sorry if you've already elaborated on this in the release or in the presentation, but if not, could you give us an update on sort of where you've made hires and where you believe you're sort of strengthening the overall business now?

Thanks. All right. Okay. So firstly, on the sports margin, we obviously put out there that, you know, that's the average of the two sports books, International and Africa. Okay. But yes, as we fortify our pricing and the promotions we give in the sportsbook, we would think in months where favourites are not winning or destroying that we are seeing increased margin. That's absolutely, that's for us. But our trailing 24-month average is almost at like 13%, 13.1%. And that means Africa's high and then international's a bit low, but we've seen increases in international. When it comes to our leadership team, listen, for me and Alinda and actually all of us, even our board, it's all about having the right people in the right seats, and then you will create a super team. So we've appointed Kirsty Ross as our chief operating officer. I mean, she was our chief of staff, but as operations officer, I think we are seeing huge, huge efficiencies. And then we hired Justin Stock, who's being our external counsel and helped us to deliver the business to where it is today, we've finally taken him in-house and he's our lead of commercial and M&A. And of course, as you know, We've got Alon Ben David as our CTO, so we really have a great team at the C-suite level of Supergroup. But then when you go into the rest of our companies, we absolutely got great people there. And with the international and Africa being these two segments, we're bolstering all of this. But in order to grow and keep growing, it's about our people. It's about our platforms. It's about the tech that we're going to use. And we need the best of the best to help us make these decisions. And that's what we have done up till now and are taking to the next level.

Neil, if I could just follow up quickly. It's the goal of, I guess, some of that hiring activity to continue driving your corporate costs and the sort of corporate EBITDA that you've now itemized for us down or Maybe it's something different. I guess I'm just curious what you're driving at.

Both. I think it's definitely always to centralize the cost, not to go to so many third parties. Remember our legal piece can be a lot, especially if you do M&A and other things. But with AI, et cetera, it's to definitely bring it down and be able to do much more volume based on our current cost base. So it's everything, but again, we've got to make the right decisions and we have to make them with the best information we have. And for that, I need the best people around us. I appreciate the color. Thank you.

Your next question comes from a line of Chad Bennett from Macquarie. Your line is open.

Hi, good morning. Neil and Linda, nice quarter. Wanted to start with these are super coin adoption rates Peter Andreea- kind of where this is how it compares to your expectations, I know that you said in the slide deck you know you have plans to roll it out further in the back half, but just wanted to test your temperature on on how this is going, thus far, thanks.

Peter Andreea- Okay, so remember we did call out, we said it's going to take adoption it's going to take time. And so obviously we've done a beta now in South Africa. So it's gone quite well in terms of our beta, but it's only a beta. We are obviously getting the utility of the coin in there. But what we have to do is it's going to be a slow process to get them adopted. But for us, it's not only about the super coin. It's also about the processing fees. Remember, I have to remind everyone in Africa, a single biggest after taxes expense are these processing fees. And especially on the sports book, where depositing in, cashing out, redepositing in, this in and out of the same money costs a lot of money. So that ecosystem, we are getting right. And we're just going to be patient with this R3 Bitcoin and see how it goes. In other markets, we obviously will bring it there once we've seen how it works in South Africa. And there's different legislations. Obviously, we all have the legislations. in our other seven markets in Africa. And we hope to bring it there as soon as we get this part right in South Africa. But very encouraging. It's stunning new. It's new for the consumer. So let's see how we go. But something that was new a year ago is now normal now. So that's kind of what we base it on.

That's great. Thank you. And then with respect to the M&A environment, obviously strong Q1, you're tracking at least ahead of expectations for the year, 400 plus million of cash on the balance sheet. How are you thinking about M&A opportunities given your position of strength? Thanks.

Thanks for the question. We still, as we've always been highly selective on what we pursue, we don't need M&A to hit our plan. Our plan is based on consistent organic growth. That will be just an added bonus if the right opportunity comes along and at the right price. And it's supposed to be a bolt on, you know, to improve our business overall if we pull the trigger on something. We're also looking at vertical opportunities such as improving technology product or maybe marketing efficiencies. But in the long run, there's always something on the table that we're assessing. And we've got the right balance sheet for it. So we'll just remain disciplined until the right opportunity, the right price comes.

Thank you all. And I always say to them, and we always say to each other, we're not overpaying for stuff. If it makes sense, we'll do it. And I think as we've got a facility, I think you've seen lots of our competitors have acquired over the last five or 10 years. And when you're laden with debt after that, these businesses have to perform. So we've still got 75% free cash flow because You know, that's what we do. So if we find the right one, we'll do it. But we are not overpaying and that's not how we've operated up until now. Thank you.

Your next question comes from a line of Matt Weber from Ken Accord Genuity. Your line is open.

Thanks so much for taking the question and congrats on the strong quarter. I just wanted to ask if there's any update you could share on the Apricot transaction and just maybe more broadly how that transaction is framing your key product initiatives for the balance of the year. And then relatedly, could you just give an AI the topic du jour of every earnings call? Could you maybe just touch on what you were doing there in that space? Thanks so much.

Okay, so the apricot, we finally closed the transaction at the end of February. We've got all the IP, so the sportsbook finally is owned by us, so we're very happy about it. We've done the process of moving all the development resources that support the sportsbook. They're now becoming part of our team. expect over 100 people, even more, to move over to Supergroup, be part of our structures, how we work, what we do. So we're really starting to see overall realized cost savings will obviously come over time. But for us, it's about the product. That's near Our product teams here, the teams are together. And I think we've seen that with the Global Best Way Sportsbook. We've improved speed, flexibility, efficiency. So there's lots to come there. We really are pushing, pushing hard. And since we've exited the U.S., I've got these teams not having to worry about the eight states in the U.S. We can worry about all the markets that we're currently in.

And then just on your follow-up question on AI, I think it's front of mind for everyone. It's definitely at the moment for us a tool, two initiatives that we use for risk and fraud There is definitely some elements being used in development and allowing us to be more efficient and more faster in deploying certain parts of our development and our businesses. It's definitely starting to have a big impact even on my world in finance and how we reconcile and look at accounts and disclosures. So it's definitely all in all enhancing efficiencies, but we have to be disciplined. We are working closely along our CPI's packing lead on making sure there's a custodian that creates the boundaries around this so that we are disciplined around it. But major impacts. I think the only thing we know is that it's changing fast.

Fair enough. Thanks for the call.

Your next question comes from a line of Jordan Bender from Citizens. Your line is open.

Hi, this is Isabel Slavin on for Jordan Bender. Thank you for taking our questions. We just want to ask about Europe. What drove the app performance there and do you expect this to continue throughout the year? Thank you.

Yes, so I think Europe, again, as we exit a country that we didn't see a possibility, US being one, Belgium, Italy, et cetera, we focus on the UK, Spain, Ireland. And so, if you take the UK as an example, as we're dropping more product enhancements, the brand is well known, we are seeing the stickiness of our customers, our marketing's been really driving record acquisitions, because finally the Betway product can now start competing head-on with our major competitors there. Same with Spain, we've got Focus to Casino, we've got new stuff happening there, Ireland as well. So it's all about the front office being the product and our brilliant back office coming together. And then in Africa, we have got a brilliant product and we've got a back office and we're improving the back office to make it as good as the international side. And if we get all of those two worlds working, that's when you see Navarra. And that's where you see our retention rates, et cetera, going increasingly.

Okay, thank you. And there are no further questions. I will now turn the call back over to Neil Menashe for closing remarks.

So thank you, everyone, for joining today's call. We are really proud of our teams across the globe and their super performance this quarter. We are very encouraged by the momentum we have built early in the year, and we will speak to you again soon. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.