Super Group Reports Second Quarter 2023 Financial Results

Super Group (SGHC) Limited (NYSE: SGHC) (“SGHC” or “Super Group”), the parent company of Betway, a leading online sports betting and gaming business, and Spin, the multi-brand online casino, today announced second quarter 2023 consolidated financial results.

Neal Menashe, Chief Executive Officer of Super Group, commented: “Super Group has delivered financial results that reflect our ongoing focus on both an optimized global footprint and investment in long-term growth. This quarter's strong revenue performance has delivered enhanced economies of scale in multiple markets, resulting in significant year-over-year growth in Operational EBITDA, ex-US. We remain confident in our business model and focused in our search for future growth opportunities in the global online casino and sports betting industry.”

Alinda van Wyk, Chief Financial Officer of Super Group, stated: “Our second quarter results, ex-US included record revenue and solid Operational EBITDA of €82.6 million. Our monthly active customer numbers continue to show momentum reaching 3.7 million which we believe is a key driver for future growth. Achieving scale in each of our markets, combined with driving cost efficiencies throughout the business remain our focus for long-term growth and bringing us back to consistent ex-US EBITDA margin from operations of greater than 20%. With regards to the US, the business is tracking in-line with expectations and we are confident in our strategy."

Financial Highlights

• Revenue increased by 19% to €380.8 million for the second quarter 2023 from €320.8 million in the same period from the prior year driven by growth from Africa and Middle East and European markets partially offset by declines from North America (predominantly in Canada due to regulatory changes in Ontario) and Asia-Pacific markets.
• Profit for the period for the second quarter 2023 was €27.6 million, which included a non-cash charge of €6.1 million related to the increase in fair value of a liability for a call option granted to a third-party to purchase the B2B division of Digital Gaming Corporation Limited ("DGC"), which Super Group acquired in January 2023. Profit for the period of €298.6 million for the second quarter of 2022 included the positive impact of non-cash adjustments of €283.3 million related to the business combination and SGHC's public listing on January 27, 2022.
• Operational EBITDA was €70.0 million for the second quarter 2023 compared to €53.6 million in the second quarter of 2022. The measure for the second quarter 2023 was comprised of €82.6 million ex-US and a loss of €12.6 million in the US.
• Monthly Active Customers increased 40% to 3.7 million during the second quarter 2023 from 2.7 million in the second quarter of 2022.
• Cash and cash equivalents was €228.7 million at June 30, 2023, down from €254.8 million at December 31, 2022. This net reduction during the second quarter 2023 was the result of:
  • Inflows from operating activities amounting to €53.2 million;
  • Inflows from investing activities of €54.1 million. This was mainly attributable to a transfer of €138.5 million of restricted cash for the DGC bank lending facility into the available cash balance, reduced by a preceding injection into the facility of €18.6 million. There was an additional increase of €3.9 million resulting from interest and receipts from loans receivable. These increases were offset by the further investment in tangible and intangible assets of €25.7 million, predominantly due to the capitalization expenditure on software; issuance of loans of €39.8 million to Apricot Investments Limited; as well as the cash paid on the acquisition of DGC of €11.7 million net of €7.7 million acquired from DGC;
  • Outflows from financing activities of €125.2 million was primarily due to DGC settling its bank lending facility of €139.5 million, offset by proceeds from interest-bearing borrowings of €18.5 million; and
  • A loss of €8.1 million was a result of foreign currency fluctuations on foreign cash balances held over this period.

Revenue by Geographical Region for the Three Months Ended June 30, 2023 in € ‘000s:

Revenue by Geographical Region for the Three Months Ended June 30, 2022 in € ‘000s:

Revenue by Geographical Region for the Six Months Ended June 30, 2023 in € ‘000s:

Revenue by Geographical Region for the Six Months Ended June 30, 2022 in € ‘000s:

Revenue by product line for the Three Months Ended June 30, 2023 in € ‘000s:

Revenue by product line for the Three Months Ended June 30, 2022 in € ‘000s:

¹ Sports betting and online casino revenues are not within the scope of IFRS 15 ‘Revenue from Contracts with Customers’ and are treated as derivatives under IFRS 9 ‘Financial Instruments’.
² Brand licensing revenues are within the scope of IFRS 15 ‘Revenue from Contracts with Customers’.
³ Other relates to profit share, royalties and outsource fees from external customers.

Revenue by product line for the Six Months Ended June 30, 2023 in € ‘000s:

Revenue by product line for the Six Months Ended June 30, 2022 in € ‘000s:

¹ Sports betting and online casino revenues are not within the scope of IFRS 15 ‘Revenue from Contracts with Customers’ and are treated as derivatives under IFRS 9 ‘Financial Instruments’.
² Brand licensing revenues are within the scope of IFRS 15 ‘Revenue from Contracts with Customers’.
³ Other relates to profit share, royalties and outsource fees from external customers.

Non-GAAP Financial Information

This press release includes non-GAAP financial information not presented in accordance with the International Financial Reporting Standards (“IFRS”).

EBITDA, Adjusted EBITDA and Operational EBITDA are non-GAAP company-specific performance measures that Super Group uses to supplement the Company’s results presented in accordance with IFRS. EBITDA is defined as profit before depreciation, amortization, financial income, financial expense and income tax expense/credit. Adjusted EBITDA is defined as EBITDA less gain on derivative contracts and gain on bargain purchase plus transaction costs, share listing expense, change in fair value of option, adjusted RSU expense and change in fair value of warrant liabilities and earnout liabilities, associated foreign exchange movements and unrealized foreign currency gains and losses. Operational EBITDA is Adjusted EBITDA further adjusted to exclude other non-recurring adjustments outside of the current year’s operations as may be deemed appropriate by the company’s audit committee.

Super Group believes that these non-GAAP measures are useful in evaluating the Company’s operating performance as they are similar to measures reported by the Company’s public competitors and are regularly used by securities analysts, institutional investors and other interested parties in analyzing operating performance and prospects.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with IFRS. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by IFRS to be recorded in Super Group’s financial statements. In order to compensate for these limitations, management presents non-GAAP financial measures together with IFRS results. Non-GAAP measures should be considered in addition to results and guidance prepared in accordance with IFRS, but should not be considered a substitute for, or superior to, IFRS results.

Reconciliation tables of the most comparable IFRS financial measure to the non-GAAP financial measures used in this press release and supplemental materials are included below. Super Group urges investors to review the reconciliation and not to rely on any single financial measure to evaluate its business. In addition, other companies, including companies in our industry, may calculate similarly named non-GAAP measures differently than we do, which limits their usefulness in comparing our financial results with theirs.

Reconciliation of Profit after tax to EBITDA and Adjusted EBITDA and Operational EBITDA

in € ‘000s: