Super Group Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

Super Group (SGHC) Limited reported third quarter 2022 revenue of €307.8 million, a 2% decline from €312.6 million year-over-year. Profit after tax fell to €34.9 million from €50.5 million a year earlier, and Adjusted EBITDA decreased 26% to €56.1 million. Although cash and cash equivalents were at €266.0 million, a reduction from €293.8 million as of December 31, 2021, the company saw a 7% increase in Monthly Average Customers to 2.7 million. Management remains focused on technology and marketing investments for long-term growth.

Positive

• Monthly Average Customers increased by 7% to 2.7 million compared to 2.5 million in Q3 2021.
• Strategic investments in technology and marketing continue to enhance customer engagement.

Negative

• Revenue decreased by 2% from €312.6 million to €307.8 million year-over-year.
• Profit after tax declined from €50.5 million to €34.9 million.
• Adjusted EBITDA dropped 26% from €75.9 million to €56.1 million.

• Third Quarter 2022 Revenue of €307.8 million
• Profit after tax of €34.9 million for the third quarter of 2022
• Third Quarter 2022 Adjusted EBITDA of €56.1 million
• Cash and cash equivalents was €266.0 million at September 30, 2022
• 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 third quarter 2022 financial results for its operating subsidiary, SGHC Limited.

Neal Menashe, CEO of Super Group, commented: “Super Group’s online-only business model and ongoing focus on improved customer experience through enhanced global technology platforms continues to ensure optimal customer engagement and value. Together with effective investment in our brands and efficient allocation of our capital, this provides us with a sound path for long-term growth.”

Alinda van Wyk, CFO of Super Group stated, “Super Group remains financially strong and we continue to optimize our global footprint and operate more efficiently to leverage our scale. We remain focused on investing into technology and marketing, as well as other opportunities that will provide us with long-term growth and profitability.”

Financial Highlights

• Revenue decreased by 2% to €307.8 million for third quarter of 2022 from €312.6 million over the same period in the prior year primarily as a result of a decline in online casino net revenue and brand license fee income, partially offset by an increase in sports betting net revenue.

• Profit after tax for the third quarter of 2022 was €34.9 million compared to a profit of €50.5 million in the same period of the prior year.

• EBITDA, a non-GAAP measure, was €60.9 million in the third quarter of 2022 compared to €75.9 million in the same period for the prior year.

• Adjusted EBITDA, which excludes transaction fees, share listing expense, changes in valuations of warrants and earnout liabilities and associated foreign exchange movements, gains on derivative contracts, recognition of fair value option, bargain purchases and RSU expenses, decreased 26% to €56.1 million compared to €75.9 million in the same period from the prior year.

• Monthly Average Customers for the quarter increased 7% to 2.7 million during the third quarter of 2022 from 2.5 million in the third quarter of 2021, excluding customers of Jumpman Gaming which was acquired on September 1, 2022.

• Cash and cash equivalents was €266.0 million as of September 30, 2022 and €293.8 million as of December 31, 2021. This net reduction in cash for the 9 months to September 30, 2022 is comprised as follows:
  • Inflows from operations amounting to €135.0 million;
  • Offset by outflows from investing activities of €70.5 million mainly attributable to an increase in restricted cash of €69.5 expenditure on tangible and intangible assets of €23.8 million offset by loan settlements of €18.9 million;
  • Cash used in financing activities of €96.2 million primarily due a cash outflows for share repurchases of €222.3 million offset by an inflow or shares issued of €172.1 million; and
  • A gain of €3.9 million as a result of foreign currency fluctuations on foreign cash balances held over this period.

Net Revenue by Geographical Region for the Three Months Ended September 30:
		Betway		Spin		Total
		2022		2022		2022
		€ '000s		€ '000s		€ '000s
Africa and Middle East		69,693		413		70,106
Asia-Pacific		41,929		26,559		68,488
Europe		29,125		9,298		38,423
North America		24,412		98,629		123,041
South/Latin America		3,653		4,110		7,763
		168,812		139,009		307,821
		%		%		%
Africa and Middle East		41%		0%		23%
Asia-Pacific		25%		19%		22%
Europe		17%		7%		12%
North America		15%		71%		40%
South/Latin America		2%		3%		3%

		Betway		Spin		Total
		2021		2021		2021
		€ '000s		€ '000s		€ '000s
Africa and Middle East		55,212		8,414		63,626
Asia-Pacific		48,037		27,044		75,081
Europe		27,286		4,896		32,182
North America		26,736		106,037		132,773
South/Latin America		4,139		4,796		8,935
		161,410		151,187		312,597
		%		%		%
Africa and Middle East		34%		6%		20%
Asia-Pacific		30%		18%		24%
Europe		17%		3%		10%
North America		16%		70%		43%
South/Latin America		3%		3%		3%

Net Revenue by Geographical Region for the Nine Months Ended September 30:
		Betway		Spin		Total
		2022		2022		2022
		€ '000s		€ '000s		€ '000s
Africa and Middle East		195,259		1,966		197,225
Asia-Pacific		147,340		77,179		224,519
Europe		87,833		13,809		101,642
North America		91,442		324,131		415,573
South/Latin America		12,613		11,543		24,156
		534,487		428,628		963,115
		%		%		%
Africa and Middle East		37%		0%		20%
Asia-Pacific		28%		18%		23%
Europe		16%		3%		11%
North America		17%		76%		43%
South/Latin America		2%		3%		3%

		Betway		Spin		Total
		2021		2021		2021
		€ '000s		€ '000s		€ '000s
Africa and Middle East		147,168		25,099		172,267
Asia-Pacific		146,973		70,294		217,267
Europe		100,069		17,464		117,533
North America		97,068		350,848		447,916
South/Latin America		11,658		12,966		24,624
		502,936		476,671		979,607
		%		%		%
Africa and Middle East		29%		5%		18%
Asia-Pacific		29%		15%		22%
Europe		20%		4%		12%
North America		20%		73%		45%
South/Latin America		2%		3%		3%

Net Revenue by Product for the Three Months Ended September 30:
		Betway		Spin		Total
		2022		2022		2022
		€ '000s		€ '000s		€ '000s
Online casino1		57,770		138,822		196,592
Sports betting1		104,635		-		104,635
Brand licensing2		5,439		-		5,439
Other3		968		187		1,155
Total Group revenue		168,812		139,009		307,821

		Betway		Spin		Total
		2021		2021		2021
		€ '000s		€ '000s		€ '000s
Online casino1		53,709		150,689		204,398
Sports betting1		90,889		498		91,387
Brand licensing2		16,614		-		16,614
Other3		198		-		198
Total Group revenue		161,410		151,187		312,597

Net Revenue by Product for the Nine Months Ended September 30:
		Betway		Spin		Total
		2022		2022		2022
		€ '000s		€ '000s		€ '000s
Online casino1		177,364		428,060		605,424
Sports betting1		324,412		381		324,793
Brand licensing2		31,096		-		31,096
Other3		1,615		187		1,802
Total Group revenue		534,487		428,628		963,115

		Betway		Spin		Total
		2021		2021		2021
		€ '000s		€ '000s		€ '000s
Online casino1		172,476		476,131		648,607
Sports betting1		278,421		540		278,961
Brand licensing2		51,446		-		51,446
Other3		593		-		593
Total Group revenue		502,936		476,671		979,607

¹Sports 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 rebates received from external processors.

Reorganization Timeline

Over the last three years, the business conducted a restructuring by combining existing, stand-alone companies into the newly formed Super Group.

SGHC Limited was formed on July 6, 2020.

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

• January 11, 2021 - Raging River Trading was deemed to have been acquired.
• April 9, 2021 - Webhost, Partner Media and Buffalo Partners were acquired.
• April 14, 2021 - DigiProc Consolidated was acquired.
• April 16, 2021 – Digiprocessing (Mauritius) 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.

Since the reorganization, the following transaction has taken place:

• September 1, 2022 – acquired a majority ownership interest in Jumpman Gaming. 

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, fair value adjustments on warrant liabilities and earnout liabilities and associated foreign exchange movements, recognition of fair value of option and the expense for the award of restricted stock units.

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:
		For the three months ended September 30						For the nine months ended September 30
		2022			2021			2022			2021
		€ '000s			€ '000s			€ '000s			€ '000s
Profit for the period		34,877			50,473			170,216			152,956
Income tax expense		10,639			4,346			25,221			10,357
Finance income		(587	)		(333	)		(1,252	)		(1,021	)
Finance expense		276			286			939			6,041
Depreciation and amortization expense		15,742			21,091			46,907			62,986
EBITDA		60,947			75,863			242,031			231,319
Transaction fees		-			-			21,612			-
Gain on derivative contracts		(2,435	)		-			(4,147	)		-
Gain on bargain purchase		-			-			-			(10,661	)
Share listing expense		-			-			126,252			-
Foreign exchange on revaluation of warrants and earnouts		5,714			-			29,743			-
Change in fair value of warrant liability		870			-			(33,744	)		-
Change in fair value of earnout liability		2,722			-			(192,214	)		-
Recognition of fair value of option1		(21,983	)		-			(21,983	)		-
RSU expense		10,308			-			13,683			-
Adjusted EBITDA		56,143			75,863			181,233			220,658

¹ The recognition of the fair value of the option relates to the exercising of the option to acquire Verno Holdings, the ultimate holding company of Jumpman Gaming, on September 1, 2022. The valuation of the business as required in terms of IFRS3 is provisional at the time of this press release and is subject to change once finalized.

Webcast Details

The Company will host a webcast at 8:30 a.m. ET today to discuss the third 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 3Q 2022 Earnings Review presentation posted on Investor Relations section of www.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, growth and profitability expected growth of Super Group’s customer base, expansion into new markets.

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 proposed acquisitions and the integration of the acquired businesses; and (xxviii) 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.

Super Group (SGHC) Limited Consolidated Statements of Profit or Loss and Other Comprehensive Income for the periods ended September 30, 2022 and September 30, 2021
		Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
		€ '000s			€ '000s			€ '000s			€ '000s
Revenue		307,821			312,597			963,115			979,607
Direct and marketing expenses		(226,921	)		(204,708	)		(693,338	)		(652,860	)
General and administrative expenses		(36,918	)		(33,034	)		(109,373	)		(112,094	)
Other Operating Income		1,853			1,008			7,146			6,005
Transaction fees		-			-			(21,612	)		-
Depreciation and amortization expense		(15,742	)		(21,091	)		(46,907	)		(62,986	)
Profit from operations		30,093			54,772			99,031			157,672
Finance income		587			333			1,252			1,021
Finance expense		(276	)		(286	)		(939	)		(6,041	)
Gain on derivative contracts		2,435			-			4,147			-
Foreign exchange on revaluation of warrants and earnouts		(5,714	)		-			(29,743	)		-
Share listing expense		-			-			(126,252	)		-
Change in fair value of warrant liability		(870	)		-			33,744			-
Change in fair value of earnout liability		(2,722	)		-			192,214			-
Recognition of fair value of option		21,983			-			21,983			-
Gain on bargain purchase		-			-			-			10,661
Profit before taxation		45,516			54,819			195,437			163,313
Income tax expense		(10,639	)		(4,346	)		(25,221	)		(10,357	)
Profit for the period		34,877			50,473			170,216			152,956
Profit for the period attributable to:
Non-controlling interest		243			-			243			-
Owners of the parent		34,634			50,473			169,973			152,956
		34,877			50,473			170,216			152,956
Other comprehensive loss Items that may be reclassified subsequently to profit or loss		-			-			-			-
Foreign currency translation		(1,784	)		(2,091	)		(4,159	)		(2,262	)
Other comprehensive (loss)/income for the period		(1,784	)		(2,091	)		(4,159	)		(2,262	)
Total comprehensive income for the period attributable to owners of the parent		33,093			48,382			166,057			150,694
Weighted average shares outstanding, basic and diluted		490,197,468			483,715,048			489,580,095			468,281,267
Earnings per share, basic and diluted		0.07			0.10			0.35			0.33

Super Group (SGHC) Limited Consolidated Statements of Financial Position As of September 30, 2022, and December 31, 2021
		September 30,			December 31,
		2022			2021
		€ '000s			€ '000s
Non‐current assets
Goodwill and intangible assets		242,760			197,977
Property, plant and equipment		14,403			12,498
Right-of-use assets		12,167			14,541
Deferred tax assets		27,939			24,108
Regulatory deposits		10,198			8,594
Loans receivable		11,045			25,516
Financial asset		1,687			1,686
		320,199			284,920
Current assets
Trade and other receivables		147,365			169,252
Income tax receivables		33,923			35,806
Restricted cash		136,813			60,296
Cash and cash equivalents		265,955			293,798
		584,056			559,152
TOTAL ASSETS		904,255			844,072
LIABILITIES
Non‐current liabilities
Lease liabilities		10,692			10,896
Deferred tax liability		7,521			9,248
Interest-bearing loans and borrowings		-			764
		18,213			20,908
Current liabilities
Warrant Liability		19,379			-
Earnout Liability		81,143			-
Lease liabilities		3,091			5,353
Deferred consideration		-			13,200
Interest-bearing loans and borrowings		1,217			3,008
Trade and other payables		163,416			147,353
Customer liabilities		55,457			51,959
Provisions		48,682			47,715
Income tax payables		49,833			40,524
		422,218			309,112
TOTAL LIABILITIES		440,431			330,020
EQUITY
Issued capital		273,435			269,338
Foreign exchange reserve		(6,253	)		(2,094	)
Non-Controlling Interest		17,562			-
Earnout reserve		(249,955	)		-
Accumulated profit		429,035			246,808
		463,824			514,052
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		904,255			844,072

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221121005550/en/

Investors:

investors@sghc.com

Media:

media@sghc.com

Source: Super Group

FAQ

What were Super Group's Q3 2022 earnings?

Super Group reported Q3 2022 revenue of €307.8 million and profit after tax of €34.9 million.

How did Super Group's Adjusted EBITDA perform in Q3 2022?

Adjusted EBITDA for Q3 2022 was €56.1 million, a 26% decrease compared to €75.9 million in Q3 2021.

What is the cash position of Super Group as of September 30, 2022?

As of September 30, 2022, Super Group had cash and cash equivalents of €266.0 million.

How many Monthly Average Customers did Super Group have in Q3 2022?

Super Group had 2.7 million Monthly Average Customers in Q3 2022, up 7% from 2.5 million in Q3 2021.