Super Group Reports First Quarter 2022 Financial Results

Rhea-AI Summary

Super Group (SGHC) Limited reported Q1 2022 results showing a revenue increase of 7% to €334.5 million, driven by African and Asia-Pacific markets. However, the company faced a loss after tax of €163.2 million, largely due to €201.5 million in costs from its recent business combination with Sports Entertainment Acquisition Corp. Adjusted EBITDA rose 14% to €61.5 million. Cash reserves grew by 39% year-over-year, totaling €272.7 million. Despite industry headwinds, Super Group aims to expand its market presence through new partnerships and product offerings.

Positive

• Revenue increased by 7% to €334.5 million.
• Adjusted EBITDA up 14% to €61.5 million.
• Cash and cash equivalents grew by 39% year-over-year to €272.7 million.
• Increased Monthly Average Customers by 10% to 2.6 million.
• Expansion into new regulated markets and nine new partnerships signed.

Negative

• Loss after tax hit €163.2 million, compared to a profit of €38.6 million in the previous year.
• Loss included €201.5 million in costs associated with the business combination and listing.
• EBITDA decreased to a loss of €138.2 million.

• Revenue of €334.5 million up 7% period over period
• Adjusted EBITDA of €61.5 million up 14% period over period
• Loss after tax of €163.2 million includes €201.5 million of costs and changes in fair values associated with the business combination and listing as a public company
• Cash and cash equivalents increased 39% to €272.7 million at March 31, 2022 from March 31, 2021
• Management to host conference call today at 8:30 a.m. ET

NEW YORK--(BUSINESS WIRE)-- 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 first quarter 2022 financial results for its operating subsidiary, SGHC Limited.

Super Group completed a business combination on January 27, 2022, with Sports Entertainment Acquisition Corp. (“SEAC”) as a result of which all of the shareholders of SGHC Limited also exchanged their shares for shares of Super Group in a pre-closing reorganization. Prior to January 27, 2022, SGHC did not conduct any operations other than incurring costs to effect the reorganization and business combination.

Neal Menashe, CEO of Super Group, commented: “During the first quarter of 2022, Super Group began operating as a U.S. publicly listed company and continued to expand in both existing and new markets in line with our growth strategy.” Mr. Menashe continued, “Our team has become accustomed to navigating the business through changing and challenging environments, and we believe the strategies that we are executing on will enable us to continue doing so as we take Super Group from strength to strength.”

Alinda van Wyk, CFO of Super Group commented, “The results for the first quarter of 2022 reflected revenue growth and strong cash generation but were challenged on a period over period comparative basis due to industry and economic headwinds and costs related to our business combination and listing as a public company in January. Ms. van Wyk stated, “Despite tough period over period comparisons, Super Group experienced revenue growth and a period over period 39% increase in cash and cash equivalents.”

Financial Highlights

• Revenue increased 7% to €334.5 million for first quarter 2022 from €311.8 million in the same period from the prior year driven by growth in African and Asia-Pacific markets partially offset by adverse impacts from tightening regulation, and in some cases, ceasing in some European markets. Revenue for the first quarter of 2021 was also impacted by continued shutdowns from the COVID pandemic in many markets which resulted in increased gaming activity.
• Loss after tax for the first quarter of 2022 was €163.2 million compared to a profit of €38.6 million in the same period of the prior year. Loss for the first quarter of 2022 included €201.5 million of costs and adjustments related to the business combination and the listing on January 27, 2022, including €21.4 million of transaction costs incurred as well as €180.1 million of non-cash costs and adjustments as follows:
  • €126.3 million for share listing expense;
  • €29.4 million for a fair value adjustment of warrant liabilities; and
  • €24.4 million for a fair value adjustment of earn out liabilities.

The transaction fees and share listing expense are one-time costs.

• EBITDA, a non-GAAP measure, decreased to a loss of €138.2 million in the first quarter of 2022 compared to earnings of €64.1 million in the same period from the prior year.
• Adjusted EBITDA, which excludes transaction costs, share listing expense, changes in valuations of warrants and earn-out liabilities, gains on derivative contracts and bargain purchases, increased 14% to €61.5 million compared to €54.0 million in the same period from the prior year.
• Monthly Average Customers for the quarter increased 10% to 2.6 million during the first quarter of 2022 from 2.4 million in the first quarter of 2021 despite closure and restrictions in certain European countries and the first quarter of 2021 benefiting from a resurgence of the COVID pandemic.
• Cash and cash equivalents was €272.7 million at March 31, 2022 and €293.8 million at December 31, 2021. The decrease was primarily the result of cash used to redeem shares in connection with closing the business combination, offset in part by cash released from SEAC’s trust account to Super Group upon the closing. Cash and cash equivalents increased 40% to €272.7 million at March 31, 2022 from €196.2 million at March 31, 2021.

Business Highlights

• During the first quarter of 2022, Super Group increased its regulated market presence through the launch of both a sports betting and casino offering in Bulgaria.
• Nine new partnerships were signed during the first quarter of 2022, including the Milwaukee Bucks, the Stock Car Pro Series Brazil and the Ghana Women’s Football League.
• As of March 31, 2022, Super Group had over 70 brand partnerships in over 20 jurisdictions.
• In Ontario, registration has been awarded for the Betway brand, and SGHC anticipates imminent registration for the Spin brands. Currently, Betway and Spin continue to operate in Ontario with the knowledge of the regulator.

Geographical Information for the Three Months Ended March 31
	2022		2022		2022
	Betway		Spin		Total
	€ '000s		€ '000s		€ '000s
Africa and Middle East	63,786		1,337		65,123
Asia and Pacific	55,250		23,989		79,239
Europe	30,192		2,525		32,717
North America	34,467		115,984		150,451
South/Latin America	3,285		3,663		6,948
	186,980		147,498		334,478
	%		%		%
Africa and Middle East	34%		1%		19%
Asia and Pacific	30%		16%		24%
Europe	16%		2%		10%
North America	18%		79%		45%
South/Latin America	2%		2%		2%
	2021		2021		2021
	Betway		Spin		Total
	€ '000s		€ '000s		€ '000s
Africa and Middle East	40,624		1,591		42,215
Asia and Pacific	40,592		27,352		67,944
Europe	37,771		8,697		46,468
North America	34,036		114,661		148,697
South/Latin America	2,811		3,676		6,487
	155,834		155,977		311,811
	%		%		%
Africa and Middle East	26%		1%		14%
Asia and Pacific	26%		18%		22%
Europe	24%		6%		15%
North America	22%		73%		47%
South/Latin America	2%		2%		2%

Disaggregation of Revenue by Product Line   For the Three Months ended March 31, 2022:
		Betway		Spin		Total
		€ '000s		€ '000s		€ '000s
Online casino		57,456		147,046		204,502
Sports betting		109,037		452		109,489
Brand licensing		19,890		‐		19,890
Other		597		‐		597
Total Group revenue		186,980		147,498		334,478
For the Three Months ended March 31, 2021:
		Betway		Spin		Total
		€ '000s		€ '000s		€ '000s
Online casino		55,566		154,913		210,479
Sports betting		82,905		1,064		83,969
Brand licensing		17,363		‐		17,363
Total Group revenue		155,834		155,977		311,811

Reorganization Timeline

Over the last three years, the business conducted a restructuring by combining existing, stand-alone companies into the newly formed Super Group. The only acquisition affecting the periods presented in this press release is Raging River, acquired on January 11, 2021.

SGHC Limited was formed on July 6, 2020.

The following transactions took place during 2019, 2020, 2021 and 2022 as part of the reorganization:

• Pindus is the predecessor entity, and its results are reflected in the financial statements prior to July 31, 2019.
• July 26, 2019 - Fengari was deemed to have been acquired.
• April 1, 2020 - Pelion was deemed to have been acquired.
• May 4, 2020 - Pelion acquired Lanester.
• September 30, 2020 - Yakira and Gazelle were both acquired.
• January 11, 2021 - Raging River was deemed to have been acquired.
• April 9, 2021 - Webhost, Partner Media and Buffalo were acquired.
• April 14, 2021 - DigiProc Consolidated was acquired.
• April 19, 2021 - Raichu Investments was acquired.
• September 2, 2021 - SGHC purchased 100% of the outstanding shares of Smart Business Solutions S.A.
• December 1, 2021 - SGHC purchased 100% of the outstanding shares in Haber Investments, and Red Interactive.
• January 27, 2022 - Business combination with SEAC.

Non-GAAP Financial Information

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

EBITDA and Adjusted 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 and fair value adjustments on warrant liabilities and earnout liabilities.

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 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 to Adjusted EBITDA for the Three Months Ended March 31:
		2022			2021
		€ '000s			€ '000s
Profit (Loss) for the period		(163,222	)		38,571
Income tax expense		8,959			2,920
Finance income		(313	)		(338	)
Finance expense		349			2,879
Depreciation and amortization expense		15,990			20,022
EBITDA		(138,237	)		64,054
Transaction costs		21,405			‐
Gain on derivative contracts		(1,712	)		‐
Share listing expense		126,252			‐
Fair value ‐ warrant liability		29,374			‐
Fair value ‐ earnout liability		24,385			‐
Gain on bargain purchase		‐			(10,047	)
Adjusted EBITDA		61,467			54,007

Webcast Details

The Company will host a webcast at 8:30 a.m. ET today to discuss the first quarter 2022 financial results. For ease of year-over-year comparison and analysis the Company may discuss pro-forma consolidated results, including Adjusted EBITDA, which pro-forma results are included in the 2022 Earnings Review presentation posted on Investor Relations section of SGHC.com.

Participants may access the live webcast and supplemental earnings presentation on the events & presentations page of the Super Group Investor Relations website at:
https://investors.sghc.com/events-and-presentations/default.aspx.

About Super Group (SGHC) Limited

Super Group (SGHC) Limited is the holding company for leading global online sports betting and gaming businesses: Betway, a premier online sports betting brand, and Spin, a multi-brand online casino offering. The group is licensed in multiple jurisdictions, with leading positions in key markets throughout Europe, the Americas and Africa. The group’s sports betting and online gaming offerings are underpinned by its scale and leading technology, enabling fast and effective entry into new markets. Its proprietary marketing and data analytics engine empowers it to responsibly provide a unique and personalized customer experience. For more information, visit www.sghc.com.

Forward-Looking Statements

Certain statements made in this press release are “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995.

These forward-looking statements include, but are not limited to, expectations and timing related to market entries and expansion, projections of market opportunity and growth, expected growth of Super Group’s customer base, expansion into new markets and receipt of regulatory approvals.

These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) the ability to implement business plans, forecasts and other expectations, and identify and realize additional opportunities; (ii) the ability to maintain the listing of Super Group’s securities on a national securities exchange; (iii) changes in the competitive and regulated industries in which Super Group operates; (iv) variations in operating performance across competitors; (v) changes in laws and regulations affecting Super Group’s business; (vi) Super Group’s inability to meet or exceed its financial projections; (vii) changes in general economic conditions, including as a result of the COVID-19 pandemic; (viii) changes in domestic and foreign business, market, financial, political and legal conditions; (ix) future global, regional or local economic and market conditions affecting the sports betting and gaming industry; (x) changes in existing laws and regulations, or their interpretation or enforcement, or the regulatory climate with respect to the sports betting and gaming industry; (xi) the ability of Super Group’s customers to deposit funds in order to participate in Super Group’s gaming products; (xii) compliance with regulatory requirements in a particular regulated jurisdiction, or Super Group’s ability to successfully obtain a license or permit applied for in a particular regulated jurisdiction, or maintain, renew or expand existing licenses; (xiii) the technological solutions Super Group has in place to block customers in certain jurisdictions, including jurisdictions where Super Group’s business is illegal, or which are sanctioned by countries in which Super Group operates from accessing its offerings; (xiv) Super Group’s ability to restrict and manage betting limits at the individual customer level based on individual customer profiles and risk level to the enterprise; (xv) the ability by Super Group’s key executives, certain employees or other individuals related to the business, including significant shareholders, to obtain the necessary licenses or comply with individual regulatory obligations in certain jurisdictions; (xvi) protection or enforcement of Super Group’s intellectual property rights, the confidentiality of its trade secrets and confidential information, or the costs involved in protecting or enforcing Super Group’s intellectual property rights and confidential information; (xvii) compliance with applicable data protection and privacy laws in Super Group’s collection, storage and use, including sharing and international transfers, of personal data; (xviii) failures, errors, defects or disruptions in Super Group’s information technology and other systems and platforms; (xix) Super Group’s ability to develop new products, services, and solutions, bring them to market in a timely manner, and make enhancements to its platform; (xx) Super Group’s ability to maintain and grow its market share, including its ability to enter new markets and acquire and retain paying customers; (xxi) the success, including win or hold rates, of existing and future online betting and gaming products; (xxii) competition within the broader entertainment industry; (xxiii) Super Group’s reliance on strategic relationships with land based casinos, sports teams, event planners, local licensing partners and advertisers; (xxiv) events or media coverage relating to, or the popularity of, online betting and gaming industry; (xxv) trading, liability management and pricing risk related to Super Group’s participation in the sports betting and gaming industry; (xxvi) accessibility to the services of banks, credit card issuers and payment processing services providers due to the nature of Super Group’s business; (xxvii) the regulatory approvals related to Super Group’s acquisition of DGC; (xxviii) the integration of the DGC business; and (xxix) other risks and uncertainties indicated from time to time for Super Group including those under the heading “Risk Factors” in our Annual Report on Form 20-F filed with the SEC on April 20, 2022, and in Super Group’s other filings with the SEC. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in other documents filed or that may be filed by Super Group from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Super Group assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Super Group does not give any assurance that it will achieve its expectations.

SGHC Limited
Unaudited Interim Condensed Consolidated Statements of Profit or Loss
and Other Comprehensive Income
for the three months ended March 31, 2022 and 2021
	2022			2021
	€ '000s			€ '000s
Revenue	334,478			311,811
Direct and marketing expenses	(240,717	)		(214,449	)
Other operating income	2,407			263
General and administration expenses	(34,701	)		(43,618	)
Depreciation and amortization expense	(15,990	)		(20,022	)
Transaction fees	(21,405	)		‐
Profit from operations	24,072			33,985
Finance income	313			338
Finance expense	(349	)		(2,879	)
Gain on derivative contracts	1,712			‐
Share listing expense	(126,252	)		‐
Change in fair value of warrant liability	(29,374	)		‐
Change in fair value of earnout liability	(24,385	)		‐
Gain on bargain purchase	‐			10,047
(Loss)/profit before taxation	(154,263	)		41,491
Income tax expense	(8,959	)		(2,920	)
(Loss)/profit for the period attributable to owners of the parent	(163,222	)		38,571
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation	1,117			526
Other comprehensive income for the period	1,117			526
Total comprehensive (loss)/profit for the period attributable to owners of the parent	(162,105	)		39,097
Weighted average shares outstanding, basic and diluted	488,324,769			460,395,838
(Loss)/Net profit per share, basic and diluted	(0.33	)		0.08

SGHC Limited
Unaudited Interim Condensed Consolidated Statements of Financial Position
as at March 31, 2022 and December 31, 2021
	2022			2021
ASSETS	€ '000s			€ '000s
Non‐current assets
Intangible assets	165,904			172,954
Goodwill	25,003			25,023
Property, plant and equipment	13,707			12,498
Right‐of‐use assets	13,887			14,541
Deferred tax assets	29,422			24,108
Regulatory deposits	8,980			8,594
Loans receivable	7,500			25,516
Financial assets	1,686			1,686
	266,089			284,920
Current assets
Trade and other receivables	167,154			169,252
Income tax receivables	33,923			35,806
Restricted cash	88,231			60,296
Cash and cash equivalents	272,684			293,798
	561,992			559,152
TOTAL ASSETS	828,081			844,072
Non‐current liabilities
Lease liabilities	10,938			10,896
Deferred tax liability	9,634			9,248
Interest‐bearing loans and borrowings	532			764
	21,104			20,908
Current liabilities
Earnout liability	274,340			‐
Warrant liability	76,489			‐
Lease liabilities	4,807			5,353
Deferred consideration	‐			13,200
Shareholders’ repurchase payable	44,311			‐
Interest‐bearing loans and borrowings	3,294			3,008
Trade and other payables	150,561			147,353
Customer liabilities	52,883			51,959
Provisions	47,920			47,715
Income tax payables	47,708			40,524
	702,313			309,112
TOTAL LIABILITIES	723,417			330,020
EQUITY
Issued capital	273,436			269,338
Earnout reserve	(249,955	)		‐
Foreign exchange reserve	(977	)		(2,094	)
Retained profit	82,160			246,808
TOTAL EQUITY	104,664			514,052
TOTAL LIABILITIES AND SHARHOLDERS' EQUITY	828,081			844,072

SGHC Limited
Unaudited Interim Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2022 and 2021
	2022			2021
	€ '000s			€ '000s
Cash flows from operating activities
(Loss)/profit for the period	(163,222	)		38,571
Add back:
Income tax expense	8,959			2,920
Loss on disposal of assets	‐			(7	)
Fair value ‐ warrant liability	29,374			‐
Fair value ‐ earnout liability	24,385			‐
Share listing expense	126,252			‐
Depreciation of property, plant and equipment	1,323			587
Waiver of loans	‐			462
Gain on bargain purchase	‐			(10,047	)
Amortization of right‐of‐use assets	1,162			542
Amortization of intangible assets	13,505			18,893
Increase in provisions	387			255
Finance income	(313	)		(338	)
Finance expense	242			2,770
Unrealized foreign currency (loss)/gain	(1,688	)		2,483
Changes in working capital:
Decrease in trade and other receivables	2,289			19,161
Decrease in trade and other payables	(20,128	)		(17,083	)
Increase in customer liabilities	924			6,302
Change in restricted cash	(731	)		(1,169	)
Cash from operating activities	22,720			64,302
Dividends tax paid	(5,461	)		(154	)
Corporation tax rebates received	1,846			2,387
Corporation tax paid	(1,422	)		(3,292	)
Net cash flows from operating activities	17,683			63,243
Cash flows from investing activities
Cash received in interest	237			200
Acquisition of intangible assets	(6,252	)		(3,628	)
Acquisition of property, plant and equipment	(2,533	)		(524	)
Acquisition of businesses, net of cash acquired	-			10,301
Restricted cash guarantee	(27,204	)		‐
Receipts from loans receivable	17,541			1,041
Issuance of loans receivable	(6	)		(25	)
Cash used in regulatory deposits	(386	)		(463	)
Net cash flows from investing activities	(18,603	)		6,902
Cash flows used in financing activities
Shares repurchased	(179,985	)		(10,733	)
Capitalized transaction fees	(1,488	)		-
Proceeds from shares issued	172,119			-
Cash paid for deferred consideration	(13,200	)		‐
Repayment of interest‐bearing loans and borrowings	(349	)		(1,932	)
Repayment of lease liabilities ‐ interest	(261	)		(352	)
Repayment of lease liabilities ‐ principal	(1,186	)		(1,027	)
Net cash flows used in financing activities	(24,350	)		(14,044	)
(Decrease)/increase in cash and cash equivalents	(25,270	)		56,101
Cash and cash equivalents at beginning of the period	293,798			138,540
Effects of exchange rate fluctuations on cash held	4,156			1,553
Cash and cash equivalents at end of the period	272,684			196,194

.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220524005945/en/

Investors:

investors@sghc.com

Media:

media@sghc.com

Source: Super Group

FAQ

What were Super Group's Q1 2022 earnings results?

Super Group reported Q1 2022 revenue of €334.5 million, a 7% increase, but a loss after tax of €163.2 million.

How did Super Group's adjusted EBITDA perform in Q1 2022?

Adjusted EBITDA for Q1 2022 was €61.5 million, up 14% from €54.0 million in the previous year.

What caused the loss after tax for SGHC in Q1 2022?

The loss after tax of €163.2 million was largely driven by €201.5 million in costs related to the business combination and public listing.

What is the cash position of Super Group as of March 31, 2022?

Super Group reported cash and cash equivalents of €272.7 million, a 39% increase year-over-year.