Good morning. And welcome to Super Group’s Second Quarter of 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Following management’s prepared remarks, we will open the call for Q&A. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the call over to Lisa Kampf, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. And thank you for joining us today to discuss Super Group’s results for the second quarter of 2023. During this call, we may make comments of a forward-looking nature that are subject to risks, uncertainties and other factors discussed further in our SEC filings that could cause our actual results to differ materially from our 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 earlier today and available on the Investor Relations page of Super Group’s website. In addition, we will speak to our financial results and metrics for Q2 2023 in two parts, highlighting our profitable and cash generative global business separately from our investment into the U.S. This aligns with the annual guidance we have provided for 2023 and is consistent with both how we view our business internally and how we report going forward. We recommend that investors refer to our supplementary presentation posted to our website. On this call, I am joined by Neal Menashe, Chief Executive Officer; and Alinda Van Wyk, Chief Financial Officer. During the Q&A session, we will also be joined by Richard Hasson, President and Chief Operating Officer. And now I would like to turn the call over to Neal.

Thank you, Lisa. Good morning, everyone, and thank you for joining us. Today, we are delighted to report a strong set of financial results for quarter two 2023. Total revenue for the quarter ex-U.S. was €374 million, an increase of 16% year-on-year. Ex-U.S. operational EBITDA grew even more strongly to €83 million, a 54% increase year-on-year. Separately, for the U.S., our net EBITDA investment for the quarter was €13 million. We experienced continued growth of our customer base with strong momentum continuing on from where quarter one left off. April was really good, with a new monthly record of 3.9 million active customers in the month. For the quarter, we achieved a new record of 3.7 million average active customers per month, compared to 2.7 million in the prior year quarter, a 40% increase. Our strategy of investing into markets where we see the greatest return is reflected in our strong quarterly results. We achieved EBITDA margins of at least 20% in three of the last four months up to June with the EBITDA margin for the second quarter averaging a solid 22%. Our quarterly results further demonstrate the market-by-market economies of scale that we are achieving. I want to reiterate that operating leverage is at the core of our business model, which when combined with additional cost synergies is ultimately the key to sustaining an EBITDA margin of greater than 20% over the longer term. As a business, we remain committed to investing for the long-term. Standstill [ph] to this strategy is our marketing spend, which was 22% of net revenue for the quarter. While this is slightly lower than last quarter, it does not reflect any change in our marketing strategy, but rather some specific market factors in the quarter that we do not expect to prevent us…

Thank you, Neal. I will now take you through our financial results for the quarter where we have materially exceeded our performance compared to last year and the first quarter of 2023. Excluding U.S. results, total revenue for the quarter was an all-time record of €374 million. Net revenue, which doesn’t include brand license fees strengthened to €364 million, a 15% increase from last year. Looking at our results by segment. Sports book revenue increased by €33 million in the second quarter, growing 50%, while casino net revenue increased by €15 million or 7%. Net revenue growth in both sports book and casino is consistent with prior period and was driven by record growth in Africa markets, robust revenue expansion in our European markets, led by the U.K. and Spain, an increase in revenue in Canada outside of Ontario and this growth was partially offset by a decline in APAC regions, lower revenue in Ontario due to the ongoing transition to regulated market and the devaluation of certain currencies against the euro. Moving on to customers. We saw substantial growth in both the sports book and the casino segment, driven largely by consistent investment in new customer acquisition and strong retention strategies. Customer numbers increased by 40% year-on-year for the sports book and 59% for casino. Despite the quieter seasonal sporting calendar, customers remained active and we experienced positive momentum from continued improvement in our overall customer experience. Thanks to ongoing rollouts of new gaming content and further enhancements to our gaming platforms. Looking at the bottomline for the quarter. We achieved operational EBITDA of €83 million for the ex-U.S. business. This is an increase of 54% year-on-year. EBITDA margin came in strong for the quarter at 22%. As Neal alluded to earlier, we remain laser-focused on overall margin improvement…

Thanks, Alinda. Super Group has delivered an outstanding quarter, demonstrating the benefits of our business model. Revenue growth, combined with operating leverage and continued focus on costs, delivered an EBITDA margin of 22%. This was a quarter to be proud of and we’re happy to say our positive momentum continues with July closing ahead of the previous year. We are excited about our performance for the quarter and our prospects for the remainder of the year. We’ve raised our operational EBITDA guidance and are committed to delivering long-term growth for our shareholders. I’ll now turn the call over to the Operator to open the call up for questions. Operator?

Thank you. [Operator Instructions] The first question comes from Bernie McTernan with Needham & Company. Please go ahead.

Great. Thank you very much for taking the questions. Maybe just to start in the U.S., I’d love just to hear some of the success that you’re seeing in acquiring players and what types of players, if any states are doing better? Just any kind of early indication that you can provide in terms of how the U.S. opportunity is flying out on the topline?

Hi, Bernie. Richard here. So just on the U.S., I think, as you know, we are currently live with nine states there, four of the states on the Betway Global Technology and the other five we have the plan in place for that migration. High level without going to state-by-state detail, we are seeing some very encouraging numbers on the new technology, and the plan there is, like, I say, once we have all the technology in place to begin ramping up the marketing across the states.

Understood. Okay. And so maybe on that point, you mentioned good progress and discussion with Apricot, but these discussions have been going on for a while. So any like major sticking points or timeframes we should be thinking about a potential deal being...

We’re hoping by the quarter three, by quarter four, beginning of quarter four, we are all done. It is quite complicated with the IP and everything is to make sure that everything is in place, but it’s on track and it’s been a big process to do, but we are getting there and we are very excited as well to bring -- to own the IP of this technology.

Great. And maybe just lastly for me, any additional information you can provide on Sport.cc and why you think it could be helpful in customer acquisition?

Sure. So it’s a business which we’ve known for a long time. It’s effectively a business that’s going to help us enhance our content, our sporting content specifically. It’s not in any way a change in strategy of, obviously, what we’re doing, but another way of how we can look to improve the customer experience and the customer offering.

Got it. Thank you both.

The next question comes from Michael Graham with Canaccord. Please go ahead.

Hi. Good morning. Could you just talk a little bit about what markets are driving the biggest user growth? I know you just talked about the U.S., but is there anything you have done differently over recent quarters that you think you can attribute the acceleration of user growth, too? And then I just wanted to ask for a little more color around the decision to leave the revenue guidance unchanged, but raise the profitability outlook and maybe just highlight what went into that decision?

Okay. So I’ll talk about the countries. Effectively, North America, remember, the ex-U.S. business, North America is predominantly Canada, right, and that we’ve seen with material growth. And that I would say is, even after the devaluation of the Canadian dollar to the euro compared to a year ago. In Ontario, we’re in line with our expectations. That’s going well. And as we said, Africa, seeing good user growth across with all record numbers. Europe as well, especially Spain and the U.K. Germany is still a bit difficult only because of the transition to the new regulatory regime there and all the controls and systems you have to put in place and we still do not have casino offering in Germany. And Netherlands, we are still waiting on our license application there. So for us, it’s across the world, we’re seeing stuff. Our biggest impact, which Alinda then come to with the revenue is just the currency movement. So we have to bear that in mind, because on constant currency, these markets are doing really well.

Yeah. Thanks, Michael. Just to reiterate what Neal just said. So our operational EBITDA, we definitely see the impact of the improved operating leverage coming -- dropping straight to the bottomline and that’s why we feel comfortable to rise that guidance. But like, Neal, alluded to on the revenue side, we’re just a bit more conservative due to mainly two reasons, the currency effect, we are growing in countries that does see this effect, as well as the like part of the year, we obviously is, back on the sporting calendar, we’ve got sporting events and we just make sure that we take into consideration the volatility of the sports book margins and that’s why we’re not raising the revenue guidance.

Okay. Perfect. Thanks a lot.

[Operator Instructions] The next question comes from Jed Kelly with Oppenheimer. Please go ahead.

Hey. Great. Thanks for taking my question. Just looking at your North America revenue, particularly in iGaming, it increased sequentially. So can you just talk about some of the stabilized trends you’re seeing in that area? And then just circling back to the U.S., I know you get this question all the time. But given some of the recent competitive dynamics that’s going on another larger player entering the space or a larger brand. Can you just talk about how you’re thinking about that market strategically and have any of your profitability targets that you gave out at the beginning of the year have they changed? Thank you.

Okay. So I’ll do the North America. So I think across the globe, not only in North America, we have been focusing on our casino iGaming offerings and the promotions around that and all the targeted marketing digital campaigns we’re doing and our retention techniques in those markets and I see we are bearing fruit there. I mean the fruits would have been even better if we hadn’t had devaluation of these currencies. So we’re excited about that. We’ve got obviously our Jackpot City Casino, which is our major brand and that’s being launched across the globe as well. So we’re seeing big economies there. Same way we’ve got the one Betway brand. We’ve also got that. And we’re just working, as I said, this business is all about step-by-step, it’s customer-by-customer and we keep enhancing and that’s why the investments in tech and everything goes towards this total ecosystem, whether it’s a sports customer, or I mean, a sports customer or iGaming customer. So we’ve been really been working a lot on that to get that right.

Hi, Jed. So just touching on the U.S. then. Yeah, not your points about another operator entering the market, and for us, it doesn’t really affect our strategy. That remains the same for us. It’s a big market. It’s obviously a competitive market, but competition is what we see all over the world and for us it remains a very attractive opportunity, applying that same toolkit as we have to the rest of the world, applying that on a state-by-state basis to the U.S. And like anywhere else, while we have a multiyear plan is not necessarily a multiyear commitment right now and we’ll continue assessing everything on an ROI driven basis as we progress on a day-by-day basis.

Yeah. And then I can just add something that having a casino -- the casino within our sports book is also resonating and adding to the attractiveness of our offerings across the globe as well. So all of that together is coming -- the working well and we’re pushing it on all these offerings across all the countries that we operate in and taking that into the U.S. is obviously a key part of our strategy.

Thank you. And just a follow-up, just on the back half revenue guidance. Just around the conservatism, is that being driven more by sort of some -- the FX or comping last year’s World Cup. Can you just touch on some of the critical factors around the conservative back half relative to the 2Q growth? Thank you.

Yeah. Yeah. Thanks. It is -- it might be on the back of the -- there is some relevance of the sporting calendar towards the end of last year, and then remember, in quarter one in February, we had this worst sports margin ever, unprecedented we’ve never seen before. So I think based on just the risk around that. But I don’t think you understand that, because we’ve got so much currencies involved in our offering across the world, this multinational company, especially currencies out of Africa, some North America regions. But it really had an impact this year on our growth. So if you track these countries on the local currencies, the growth has been exceptional, even more than what we’re seeing. But when you then have to obviously state it in euros, which is our reporting currency, we do see the impact and we just want to make sure we feel comfortable around that with our guidance.

Great. And then are you just exposed to any of the -- some of the geopolitical risks coming out of Africa recently? And that’s my final question.

Yeah. Listen, our view is we -- in lots of countries across Africa, lots of countries in Europe. So that’s just the business, right? So we’ve always been there. So actually we’ve got new countries, et cetera. So it’s -- yeah, it’s no different. Europe is the same.

Right.

But that’s the business model is to be efficient in as many of these countries as you can to basically spread your wings across, that’s first priority.

Thank you.

Thank you, ladies and gentlemen. This concludes our question-and-answer session and thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.