Super Group (SGHC) Ltd

Thank you for standing by. My name is Jael, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Supergroup Second 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'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, simply press star one again. I would now like to turn the conference over to Ink Ojibwe, Head of Investor Relations for Supergroup. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today to discuss Supergroup's results for the second quarter 2026. During this call, Supergroup may make comments of a forward-looking nature that are subject to risk, uncertainties, and other factors discussed further in its SEC violence which could cause actual results to differ materially from historical results or from our forecast. We assume no responsibility to update forward-looking statements other than is required by law. On today's call, we may refer to certain non-GAAP financial measures. These measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. Reconciliations to the most comparable gap metrics are included in the press release issued yesterday and available on the investor relations page of our website. We recommend that investors refer to the supplementary presentation posted on our website. Today, I'm joined by Neal Menashe, Chief Executive Officer, and Alinda Van Wyk, 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 Neal. Thank you, Inc., and good morning, everyone.

I'm pleased to report that the second quarter 2026 marked another exceptional period for Supergroup, surpassing the record set in the first quarter. Revenue, adjusted EBITDA, deposits and wagering activity all reached new highs, supported by strong underlying momentum across the business and increased engagement during the FIFA World Cup. As announced yesterday, we are super excited about our landmark partnership with Manchester United, making Betway the club's principal partner and exclusive global betting partner for the upcoming English Premier League season starting later this month. This partnership will further enhance Betway's profile across United's massive worldwide fan base. Man U status as arguably Africa's most popular football club strongly aligns with our long-term brand and growth objectives. The World Cup drove exceptional customer acquisition and solid cross-sell across the business. New customer acquisition increased more than threefold compared with the prior World Cup period. During the tournament, customers placed over 166 million football bets. Approximately 60% of those bets, or $100 million, were on World Cup matches. Our sports margin is a record 17% for the quarter, reflecting improved pricing and risk management, the continued growth of parlays, and most importantly, the quality and durability of our customer base. Our focus remains on acquiring and retaining customers who generate sustainable long-term value. Our super-persistent annuity revenue model is intended to sustain customer cohorts that generate predictable revenues and profits. This disciplined approach is intended to ensure robust long-term returns that are coupled with healthy and sustainable unit economics. We see this working particularly well in Africa, which delivered another outstanding quarter. Revenue grew 36% year over year, while adjusted EBITDA increased 47% to $133 million, driven by broad-based growth across the region. Sports and casino wages were up 5% and 28%, respectively, year over year. Looking ahead, We continue to see attractive opportunities to expand our footprint and remain on track for the expected launch of Nanibia in Q4. We also remain focused on increasing the utility of our ZAR supercoin. We are expanding wallet functionality, broadening exchange access, and advancing the phase rollout strategy while building the foundation for broader adoption and remittance across keen African markets. International grew 7% year-over-year, X the US it was 12%, while adjusted EBITDA held steady at $84 million, with strong underlying growth offset by the UK tax and short-term cost of strategic generosity key campaigns that we expect will deliver ongoing benefits in due course. In Europe, revenue grew 22%, led by a 34% increase in the UK, which delivered record revenue in May. Island was up 18% year-over-year. We expect to launch slots in Germany this month, bringing our full product suite to the market. North America, excluding the U.S., grew 9%. Canada ex-Ontario delivered 11% revenue growth, supported by strong retention and continued product enhancement. In Alberta, revenue was up 8% year-over-year, ahead of the province's regulated market launch on July the 13th. We are approaching the rollout in a disciplined and phased manner to support sustainable long-term growth. Rest of world revenue increased 6%, led by strong performance in New Zealand, which grew 14% year over year despite reduced marketing spend. We are preparing for local licensing and positioning the business for a seamless transition to a regulated market. With that, I'll turn the call over to Alinda.

Thank you, Neal. Fortitude 2026 delivered a record total revenue of $684 million, up 18% year-over-year, while adjusted EBITDA grew 30% to $204 million. Adjusted EBITDA margins expanded to 50% compared with 27% in the prior year period. Average monthly active customers reached 6.2 million, up 13% year-over-year. Total wagering increased 8% for sports and 15% for casino. Pre-cash flow conversion reached 68% in the first half of the year. We closed the quarter with $548 million in cash, up 39% year-over-year, even after returning $25 million to shareholders this past quarter and $218 million over the last 12 months. Discipline cost management, the enduring strength of our casino business, a boost in sports performance driven by the World Cup, enhanced pricing, and our commitment to high return markets are all reflected in these results. Supported by our efficient approach to capital allocation, our balance sheet remains as robust as ever. Finally, as a result of our strong first half of performance, and a solid start to the third quarter, we are pleased to raise our full year 2026 guidance. We now expect total revenue to be more than $2.6 billion and adjusted EBITDA to be greater than $710 million. I will now hand back to Neal for closing remarks.

Thank you, Alinda. Over the first half of 2026, we have once again demonstrated the strength of our brand Business Model and Customer Base. We are driving growth through disciplined execution and operational excellence. Given our exceptional performance and the strength of our balance sheet, capital allocation is very much front of mind for both management and the board. While we remain committed to maintaining a strong balance sheet, we recognize that we have excess cash. As shareholders ourselves, our interests are closely aligned with yours and we're actively evaluating the most effective ways to deploy our capital to maximize long-term shareholder value. With steady momentum, a highly engaged customer base, our new menu partnership kicking off the football season, and multiple growth drivers at play, we believe Supergroup is well positioned for the remainder of 2026. Operator, please can you open the call out for questions?

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And again, to ask a question, it is star 1. Your first question comes from the line of Jed Kelly of Oppenheimer. Your line is open.

Hey, great. Thanks for taking my question in another nice quarter. Just circling back, I guess, given all the engagement in the World Cup, can you just talk about your MAUs and your marketing being down, I think it was down 2% year over year, and just kind of your choice to maybe not market as much as we thought, and then some of the sequential decline we saw in MAUs. Thanks.

Sure. No problem. Yes, the headline number for Max is down, but it's not a concern for us. There are a number of reasons. The World Cup was great for acquisition and we saw super engagement from those customers. But you must bear in mind it was only two weeks of the quarter and three weeks before that there was no soccer at all. So what we're seeing is very normal seasonality for the quarter as a whole. The quarter, we also had some tax effects to deal with in two smaller African markets. This had an impact on customer accounts at the lower value end, but revenue still grew sequentially if these markets max grew sequentially, so we're very happy with that. Overall, we expect resumption of customers in Q3 and Q4 in line with prior quarters on the back of the new EPL season, of course, the Man U Partnership. But remember, this is also key for us. The key driver for us is super persistent annuity, profitable revenue per customer. And I think you see that coming through in our results. And on the marketing half of the service.

Thanks, JJ. If the marketing is down around 1%, seasonality plays a role because quarter two is normally a much quieter period for us around marketing. We're also pleased with our World Cup acquisition campaigns, but we did not spend as much as that you would expect. The reason for that is, remember, the time zones for the World Cup is quite not ideal for our book, and a large portion for our customers is outside the time zones. And we expect a revision back to our guide of around 21% to 22% for the remainder of the year.

Great. And then just for my follow-up, Linda, can you just help us think about the back half cadence between Remember 2024 was a very hard comp.

and then we had the adverse effects of the sports in Q4 2025. We expect, you know, that's what makes guidance quite difficult for us around the sports and we're quite consistent in our approach just to be a bit more conservative around that. It will be normal levels that you've seen in the first half of the year. Our marketing discipline, like I said, will be back at 21, 22% and we've got high confidence in our business and in our customers So we still have embedded in the half-year guide of organic growth, no aggressive persistency assumptions, and we still see the continued support and the momentum from the customers post the World Cup. And then we've also just embedded the UK tax effect and Alberta taxes from July onwards in our guide for the half-year, but very consistent to what we've previously put out.

Thank you.

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

Hey, everyone. Good morning. I want to start in Nigeria. Still early days there. I know you've been looking at the strategy in the country this year, but how has that strategy and product evolved over the course of the year, and how do you anticipate to be competitive with the two top operators there that have a strong retail presence in that market? Thank you.

Hi, I'm Neal here. So, Nigeria is obviously a big opportunity. It's the largest population in Africa, growing tans, etc. What we're doing, and we've been doing it and we're still doing it, is improved technology, improving our product, our teams and our benchmarking. We signed Don Jazzy as an ambassador, so we're driving acquisition and brand recognition there. We're diversifying our marketing channels. So, remember, Nigeria is still very small. Nkem Ojougboh

Okay, thank you. And then, Neal, at the end of the paragraph, you kind of circled back to the capital allocation piece. Is there any change to how you think about how you're allocating capital outside of your dividend? You kind of talked about the most effective ways. I'm just kind of curious, is that changed in your mind of how you want to allocate capital? Thank you.

Thanks for the question. We're actively working with our board around this, and we recognize that we have excess cash. With that said, there's no change in our approach at this point. Discipline comes first, but we remain flexible. We believe in organic growth, so we're going after opportunities with a higher return of investment. Like we said, we'll up the marketing spend again, but we also have dividends and buybacks always in front of mind. And for M&A, stay disciplined around opportunities that make sense to us, bold on opportunities that will strengthen our core. So very consistent to prior approaches, but it's definitely, we focus on it all the time.

And I can just add in there, you know, obviously when it comes to even M&A, you know, we selected and also we don't have lots of debt, basically minimal debt, and we don't want to lack the flexibility. So we're really in a good place. And the operating cash flow is coming into the business.

Perfect. Thank you.

Your next question comes from the line of Bernie McTernan of Needham and Company. Your line is open.

Great. Thanks for taking questions. Maybe just to start, we'd love to dive into Alberta a little bit more, maybe in terms of what the underlying guidance is assuming in terms of, you know, either retaining the revenue that you have in the region now or even growing it.

Okay. So, oh, okay. So, let's start with Alberta. So, obviously, all brands have to follow the local regulation by the middle of October. So we focused on obviously the regulation readiness and getting at the tech, everything working really well there. We're taking on a phased brand rollout approach, unlike Ontario, which was a big bang here to move everyone over on a set date. So for us, it's making sure the UX is right, focus on our HVC, the VIP cohorts to ensure the retention. But overall, we expect also a more rational competitive environment in Alberta versus what happened in Ontario. But we've got time for the next few months to do it. So everything's on track and our teams are very happy with it.

That's great. And then maybe just a quick follow up for Alinda. We saw G&A, the adjusted G&A step up this quarter sequentially from about 90 million to 100 million. Was there any Any one-time in nature there or any increased costs that we should be thinking about going forward?

Great pick-up, Bernie. It is 100%, like you said, 40% of that increase is about one source cost. There was some audit alignment for 2025 audit and some additional tech and infrastructure costs. Also keep in mind that we've acquired two operational businesses. We brought in the apricot business operational business, so about 100 headcount, as well as a small e-market, a marketing company called eMarket. So that's by DG&A, but the savings in the operating leverage will now standardize that call and stabilize that amount towards the end of this quarter, down again to a more normal benchmark of high 90 million.

Alinda Van Wyk, Alon Ben-David, Neal Menashe, Nkem Ojougboh, Kirsty Farrah Ross Alinda Van Wyk, Alon Ben-David, Neal Menashe, Nkem Ojougboh, Kirsty Farrah Ross

Okay, so I think funny enough,

Nkem Ojougboh, Nkem Ojougboh, Kirsty Farrah Ross Almost 30%, right? Which is even ahead of our own expectations, right? And also, we also have cross-sell opportunities. But I think we are really super happy with our teams, our product teams, our training teams. And we're finally working as one supergroup and bringing the best to every country we operate in.

If we look at slide eight, African new market expansion potential. Good to see Namib. Namibia, coming in Q4. You mentioned excess cash and trying to figure out what to do with it. I count seven additional adjacent countries there that seem very logical places to place some of that cash as an investment. But how do you think about kind of expansion, the need for cash, and if that's a potential use for it, and then the timeline to expand it in those countries, and if some of your recent expansions maybe accelerate some of that timeline that you talked about in the past?

Yeah, so we're all excited about Namibia. Remember, it borders Botswana and South Africa, so the brand recognition there is really high. And there are the other markets around there as well, but we have to get the taxes right and how the money flows. You know, there's Zimbabwe, Rwanda, there's lots of them. So we also aim to launch probably one to three countries a year. I think three would be the top end, but like one or two, but it's got to make sense. And of course, we've got this Nkem Ojougboh, Kirsty Farrah Ross And then I would add that, you know, you have the headline of the Man U partnership, but I think what everyone needs to understand is if you take the top three teams who came first, second and third in the English Premier League, the EPL last season, we are now the exclusive global betting partner for every single one of it. So it's Arsenal, Man City and Man U. So when you see those games, you're only going to be seeing Betway. And remember, football, soccer in Africa is our number one bet on sport. And that's definitely the biggest leap.

All done. Thanks, guys. Good luck.

Thank you.

Your next question comes from the line of Mike Hickey of StoneX. Your line is open.

Hey, Neal, Linda, Inc. Great quarter, guys. Congratulations. I guess just on the World Cup, obviously, you gave us some really incremental data on your success there. But, Neal, just curious overall, maybe relative to your expectations, how you view the success of the World Cup now that you've So, okay, when it comes to the World Cup, right, is

Obviously, it was really a meaningful acquisition and engagement catalyst. So that's for us, you know, with the sports inflows. We did almost 50% cross-sell into casino from those new customers. But here's the mad stuff about the World Cup, and I did mention this before, right? The time zones were not ideal for a vast majority of our customers. And remember, in the World Cup, a big part of our business is parlays. But they want 10 deep, 12 deep, 14 deep. You don't get that in the World Cup. So for us, the World Cup was great, but it was not like this unbelievable event that we have. And our unbelievable events are what's about to start in August, September with the soccer season. But we are very happy with how it's gone and how the activation of those customs. And the cost has been great, as I said. And again, I mean, I keep saying this, sorry, we keep bringing this up, and I think we have to. The persistency of our cohorts continues to be as strong as ever. And even in our investor deck, I think on page 10 it is, showing the cohort analysis. We put it in the deck this time along. You can see that lag taking is as it needs to be, you know? Makes Spencer very happy.

A follow-up on the Africa question from Ryan is, Is Angola a new launch country? I know we've got Namibia for Q4. Are we also doing Angola now? And is that new to your guidance?

No, it's not. We just showed some of the countries. All these countries are on play. We just have to make sure that, again, the taxes and the way we can operate in those markets make sense. So it's all fluid. We've got lots of them on the go, but the ones which will come to mission is if we can get the banking and everything right. So they're all within our sights, and it's just got to make sense financially to be able to do this.

All right, great. Last question. Congrats on the Manchester United deal. Obviously, you already have some significant sponsorship deals. How are you able to and Manchester to your stable of other IP here and keep costs manageable like it sounds like they're going to be in the second half. And how quickly do you think this new partnership can start to be a contributor for you in terms of customer acquisition and revenue? Thanks guys.

So I think remember, and Alinda's point to this, we aim to be between 21% to 22% of revenue. So this is within that guide. And remember, our total marketing brand is a portion of the total marketing. And I think with Man United, it is one of the most recognizable sports clubs in the world. And in Africa, I think it's got the biggest fan base. So for us, it's just adding another team on top of that. But we've still got the other teams we've got. We've still got the other leagues we do. So it's all part of our strategy. But again, this is not our strategy. It's a portion of the strategy. And this is what, given our leadership in Africa, partnering with them is just natural for us. And I think this is a long-term investment in our brand strength. that then supports our sustainable customer growth across the key markets and just adds to then our digital marketing comes on top of that, et cetera. So this is really exciting and not that I'm a Man U fan, but I understand how unbelievable this football team is worldwide.

Nice.

Thanks, guys. Good luck.

Your next question comes from the line of Chad Bannon of Macquarie. Your line is open.

Morning all, nice quarter, thanks for taking my question. Wanted to ask about the UK business. I know previously you talked about the mitigation efforts and what the expected impact would be post the iGaming tax increase back in April. It sounds like the revenues and the profits are definitely better than expected. Can you just kind of talk about the cadence of what's happening in the market, and if you expect to see maybe mitigation vary versus what you originally announced? Thank you.

Thanks, Chad, for your question. We had significant product improvements this quarter as well in the UK. You can see it from the revenue uplift. Our marketing is really returning to what we're spending at the moment, which is really good strategy and happy with that performance. We continue to, like we said previously, if your taxes go up, you have to be efficient around your marketing spend, actually around all your economics. And we have to improve every single dollar we spend in the UK. So we're very happy with how the UK is going. We see obviously the impact on the EBITDA at this point in time and the international results, but it is so important to note that by optimizing marketing to be becoming efficient in the way we operate in that market would just deliver better margin in that jurisdiction.

And I'll just add, as we deploy more of our sports product enhancements, we think the Nkem Ojougboh

Thank you both. And then maybe related to the UK, I know there was an announcement during the quarter from a competitor just in terms of an acquisition. So with your $500 million of cash and no debt, how are you prioritizing M&A and are there markets that You know, we're more on your radar versus what you had previously talked about at the Investor Day recently. Thank you.

Yes, yes. Listen, we, M&A is always top of mind. I think we've been right so far. We need to be highly selective, and the price must be right. We must be able to add value. We will not overpay, and we do not need to rush. But again, we're always looking on Bolton. We're always looking at M&A, and you're right. We've got this money. We've got our shares. We've got lots of things to be able to use, but the deal has to make sense. And I think we'll see a better pricing over the coming months and years. Your next question comes from the line of Matt Weber of Canaccord Genuity. Your line is open.

Hi, good morning, guys, and congrats on the strong quarter. Thanks for taking the question. Maybe just to dive a little deeper on the World Cup, I think I saw a 21% World Cup gross margin versus 11% in 2022. Could you just unpack a little bit more how much of that is structural from increasing parlay adoption versus maybe more outcome-driven? And then I have a quick follow-up.

Well, I think definitely structural, and also remember the Africa business is much bigger now than it was four years ago. But I think it's everything. It's our pricing, it's how we've done it, it's how we price the markets, what the product has to offer. So I think from that point of view, it was definitely for us a great World Cup. But remember, we should expect our sports margins to be between 13% to 14% combined. That's for international and Africa. And that's, I think, a good cadence for you guys. But the sports on the margin, we are really getting better at. And I think the team has done a great job there. Got it, thanks.

And then, appreciate your comments earlier on the casino cross-sell. Just curious how the 53% number of the World Cup cohort that has already placed a casino wager, how does that compare to the 2022 cohort? And what are your expectations in terms of, you know, engagement from that group, say, a year out from now? Thanks.

Okay, so I think the cross-sell for 2022 was 23%. That's really, really, really, we were all over this. This was one of our key areas. And remember why it was important for us to do this cross-sell? The time zones were not right. So we were even more adamant to keep the customers in our ecosystems. So we're really happy with that. And I think the World Cup, January did really well, but I think we're even more excited now for the start of the new football season, the EPL, the La Liga, etc. And that will start towards the end of August. Thank you.

Your last question comes from the line of Clark Lampin at BTIG. Your line is open.

Thanks very much for squeezing me in. Maybe one just to come back to sort of the margin point. Neal, you made some comments earlier that made it sound like this was sort of an important transition quarter from an operational standpoint. And I'm curious, when we get into 2027 and you're annualizing some of these improvements and changes, how should we think about sort of medium-term margin trajectory? Are we coasting towards a number that's sort of consistent with what we saw in Q2? Are there other sort of important puts and takes that we need to consider from Thank you for your question.

We're obviously very excited about this quarter being a 30% EBITDA margin. It's the first time we called out a solid 30%, which is definitely the right direction. Operating leverage is our primary driver for this EBITDA margin expansion. Remember, it's quite simple. Our revenue grows faster than our cost base at this stage, which makes it very efficient. And we are realizing efficiency across the board. It's not just in one specific place, it's around trading, marketing, Thank you very much. All in all, we continue to build brand and partnerships so that we can work on the acquisition numbers.

Yeah. And then 2027, I imagine is, 2027 is, yes, we'll get closer to the 30%. Obviously, this quarter slightly less of marketing quarter two as you would expect, but overall is that. Nkem Ojougboh, Kirsty Farrah Ross And I'll end off with this, the cross-pollination of our international Africa is really starting to show great signs, which we knew it would, you know?

If I may actually just sort of squeeze in one additional one, I know at points in time in the past, you guys have sort of given, you know, either entry or exit rates from a customer account standpoint. If you have a July number handy, could you give us a feel for where the active base is sort of trending right now? And maybe alongside that, What have you seen, if anything, if it's notable to call out from a results standpoint to start Q3? We've heard from some operators that the World Cup was a tailwind to performance. Did you experience something similar to start Q3? Thank you.

So I think obviously there was the World Cup in the beginning of the first two weeks of July. So yes, we saw good momentum and we've seen good momentum in July. I also think weird enough is that we don't have the World Cup. and I'll give you an example like last night is there were so many bets on these other leagues, the Champions League, Europa League, etc., these games that did really great volume because a game for a large portion of our customer base, it's all about these parlays and that's what we need and the World Cup never gave that and it didn't give us the right time zone. So it was really an add-on Thank you, Josh. Yeah, and I think both for Melinda and I and the whole team, the ecosystem is in a great place. From cost-based, cost-efficiencies, products, it's all coming together.

With no further questions, that concludes our Q&A session. I'll now turn the conference back over to Neal Menashe for closing remarks.

Thanks, everyone, for joining today's call. We are really, really proud of the team's execution, and we remain focused on delivering against our strategy and creating long-term shareholder value. We look forward to speaking to you all again soon. Thank you.

This concludes today's conference call. You may now disconnect.