Super Group (SGHC) Limited (SGHC) Q1 2026 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Super Group First Quarter 2026 Earnings Webcast and Conference Call. [Operator Instructions] I'd now like to turn the call over to Nkem Ojougboh, Head of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining us today to discuss Super Group's results for the first quarter 2026. During this call, Super Group may make comments of a forward-looking nature that are subject to risks, uncertainties and other factors discussed further in its SEC filings that could cause the actual results to differ materially from 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 yesterday and available on the Investor Relations page on our website. We recommend that investors refer to the supplementary presentation posted to 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 up for questions. And now I'd like to turn the call over to Neal.

Thank you, Ink, and good morning, everyone. The first quarter of 2026 marked a record-breaking start for Super Group. We delivered all-time high quarterly revenue and unprecedented monthly active customers. Deposits and wager also reached peak levels, extending our Q4 momentum. These results reflect the strength of our strategy, our brand and our people. As our business evolves, so does our reporting. We are introducing a new reporting structure consisting of 2 segments: Africa and international. Africa includes all revenue generated across the African continent while international includes all revenue generated outside of Africa. This new approach highlights the distinct operating models across our 4 regions. providing shareholders with deeper insight into each unit's drivers and growth potential. The executives responsible for these segments remain unchanged. Africa delivered an excellent Q1. Revenue for the quarter grew 53% year-over-year with adjusted EBITDA up 21% to $98 million. Sports & Casino wages were up 33% and 36%, respectively, year-over-year. Botswana continues to perform well. I recently spent time on the ground with our team in Nigeria, and the actions we are taking there will strengthen our growth profile as we ramp up execution. The phased rollout of our Super Coin consumer wallet began in mid-April with a soft beta launch for our Bestway South Africa customers. Our goal is simple: expand utility and gradually increase customer engagement across our ecosystem. We will reach a key milestone late in the quarter with additional listings on OVEC and Vela, two of the largest exchanges in South Africa. These listings significantly enhance liquidity and accessibility and provide a solid foundation for broader adoption as we optimize engagement and unit economics. For the International segment, revenue was up 9% with adjusted EBITDA growing 26% to $73 million. European revenue growth of 18% year-over-year was strongly driven by a 29% increase in the U.K., where we are capturing market share, thanks to record customer acquisition off the back of continued product improvement and a successful [indiscernible] festival. We remain encouraged by Ireland's growth of 13% with local regulation expected in the second half of this year. In North America, Canada, ex Ontario delivered 16% revenue growth supported by retention and product enhancements. Despite an increasingly competitive environment, Ontario achieved a post-regulation record for new customers. Alberta up 22% year-over-year remains on track for local regulation in July with a safe and regimented brand rollout. Overall, North America, excluding the U.S. grew 15%. Rest of World saw revenue growth of 8%, with New Zealand growing 6% year-over-year, which is particularly encouraging after last quarter's 5% decline. We remain disciplined while we await the anticipated local regulations framework. Overall, our sports business continues to enjoy strong margins. We are fortifying our sports trading and risk management capabilities ahead of the World Cup. This quarter, we implemented targeted changes to materially improve margin resilience within our promotional mechanics, pricing and payout structures. These measures proved their value in February, which was a particularly challenging month for sports due to customer-friendly outcomes. Meanwhile, our casino business remains the super reliable, steady and constant engine of Super Group. We don't take this for grant. We continue to innovate extend and improve in numerous and meaningful ways. We have made it easier for our customers to discover content. We are personalizing their experiences, and we are stepping up gamification and engagement. The result is targeted product and incentive management that delivers strong retention and responsible, consistent and profitable customer behavior. Net effect a business where 80% of our revenue is driven by predictable, high-quality and super persistent annuity revenue streams that offer shareholders unwavering reliability and confidence. With that, I'll turn it over to Alinda.

Thank you, Neal. Quarter 1, 2026 mark an outstanding start to the year for Super Group, and I couldn't be more pleased to share these results. We have delivered a record total revenue of $612 million, up 18% year-over-year, while adjusted EBITDA grew 36% to $152 million. Our margin expanded to 25% compared with 22% in the prior year period, driven by strong acquisition and retention strategies, average monthly active customers reached a record $6.4 million, up 18% year-over-year, with March setting a new monthly high of 6.5 million customers. [indiscernible] increased 23% for sports and 20% for casino compared to last year. Disciplined cost management, controlled marketing spend and strong operating leverage are clearly reflected in our results. With continued focus on AI-driven efficiencies and high return markets, we are well positioned to pursue sustainable long-term growth. Our balance sheet remains really strong, supported by high-quality earnings and measured capital allocation. We ended the quarter with $422 million in cash. This represents a 20% increase year-over-year despite returning $152 million to shareholders. including the special dividend paid in February. Our free cash flow conversion of 75% remained strong, reinforcing the confidence that we showed when we recently increased our minimum quarterly dividend target to $0.05 per share. Building on the strong momentum of quarter 1, we are entering the rest of the year with confidence. Quarter 2 is tracking positively with growth opportunities ahead bolstered by action packed World Cup calendar. Our focus on marketing and operational efficiencies remains unchanged. As a result, we are reaffirming our full year 2026 guidance with total revenue expected to reach at least $2.55 billion and adjusted EBITDA to be more than $680 million. I will now hand back to Neal for closing remarks.

Thank you, Alinda. This quarter underscores the effectiveness of Super Group's strategy and discipline. We are building momentum across regions. bolstering margin resilience and enhancing our product and customer experience. With a strong start to the year, strengthening our casino business and attractive global sporting calendar ahead and a strengthened leadership team focused on execution and efficiencies, Super Group is well positioned for the remainder of 2026 and beyond. Operator, please open the call up for questions.

[Operator Instructions] Your first question comes from the line of Michael Hickey from Stone X.

Neal, Alinda and Ink, congratulations, guys, on a great 1Q. Two questions from us. Neal, just and Alinda. On your 1Q performance here, obviously, a strong beat versus expectations. And the MoW growth was exceptional, plus 18%, I think you had a record of $6.5 million in March. So I guess how are you thinking about the decision here, Alinda, Neal to reaffirm your guidance versus raising for the full year at this stage.

Okay. So our guidelines, as you know, was for revenue greater than $2.55 billion. And very importantly, EBITDA greater than $680 million. So we are confident about those numbers when we told them to you in February. Now after Q1, we remain confident that this isn't the first time that we've outperformed Mike we've never increased guidance at this stage of the year. It's just not something we do so early on in the year. We obviously are focused, as you know, on executing and delivering growth, and we're not finessing projections and guidance. It's really the simple.

And just to add to that, I think it's important also to note, we're just not in that beat and raise [indiscernible] game, as you all know, -- we are tracking ahead of our expectations, and we're very encouraged by what we're seeing in the momentum, but we're only 25% into the year.

Next question for you guys, just on the World Cup. You gave some great data here in your deck. It looks like 80% -- 88-plus percent of your revenue generated from World Cup participating markets and 73% of your GGR from football. So obviously, it looks like World Cup here is shaping up to be a significant catalyst you guys Q2, Q3. So how should we think about the potential uplift to both player activity and revenue during the tournament period. And then the follow-up, how should we think about the timing and scale of the cross-sell of these incremental players to casino which, of course, would make this World Cup catalyst durable?

All right. So I mean, listen, I have this data point that basically, and I found a lot about this, that 40% of the countries we operate in are participating in the World Cup, and that represents almost 88% of our 2025 revenue. So what we will get is we're super confident about the engagement of our customers in these markets. We've obviously got strong product stability enhancements we've done ahead of the tournament, and we're focusing on the scale and the customer experience. a bit different this World Cup to the 2022 World Cup. The 2022 World Cup was [indiscernible] was in the winter months, it was late in November and December. and at 64 matches because they're more teams in this year, it's now of June and July, 104 matches. So literally 63% more matches with more engagement. So for us, it's all about it's giving us the content for our customers. And the first half of the competition because there are 48 teams, there might be in our business, it's all about the favorite drawing or losing. So hopefully, let's see how the first half goes. But obviously, as they get into the knockout stages, which will be at the beginning of July, we will see what happens there. But it's about engagement in the sports and then the cross-sell into our casinos. And the cross-sell norm is like 60% to 70% into casino, nice.

Your next question comes from the line of Ryan Sigdahl from Craig-Hallum.

I want to pick just 1 follow-up on the guidance. Are you willing to comment on trends you've seen in April and May I get the reason to reiterate this early in the year, but curious if you've seen any deceleration in the business or any trends or anything to really give you concern?

All right. So this quarter started off great. Obviously, in February, remember, quarter 1 had a big loss in February on 1 day when all the favorites basically he's on and our customers want. So -- but we haven't seen any deceleration. Remember, our guidance is greater than $680 million. So we are confident about that. And I remember our business is 80% casino stable, consistent, and we are annuity income on top of that every single day.

Second question, just the U.K. tax effect went in effect recently here. What are you seeing in the market from your competitors? What have you done from a marketing promotion, et cetera, standpoint? And really nice quarter results and momentum, it seems like in that business despite that. But just curious for kind of an industry and company update there?

Yes. Thank you for the question. We called out around 6% pre mitigation of 2025. EBITDA [indiscernible], it's around the $30 million hit. However, we are starting to pull multiple levers in order to mitigate that, as we said, we've obviously done -- even with the April numbers already in effect. We haven't seen that massive impact because of operating leverage and the way we manage our marketing. So we feel in a confident position to see this through.

And also, we did call out that I would say it only kicked in on 1 April, so only last a couple of weeks and 5 weeks in, that the marketing rates will start coming down when everyone starts doing their numbers. they have to get used to vet new world of taxes. And we -- and obviously, we have to be efficient. And that part of our 2 segments being international and Africa and bringing international together has effectively given us this operating leverage.

Your next question comes from the line of Bernie McTernan from Needham & Company.

First, I just wanted to ask about the new breakdown in terms of EBITDA. I greatly appreciate you being able to see Africa versus international. Alinda, can you just talk about the margin opportunity in Africa? Any maybe any thoughts on incremental margins just as the as the region continues to grow, how we should expect margins to scale with it? And then I have a follow-up.

Thanks for the question, Bernie. It's -- I'm glad to be able to share that transparency to the market to see what it brings us to super the difference between Africa and international. So it's not so heavily weighted. The expectation probably was that is very heavily weighted towards Africa. Saying that, that gives us the ability to have really strong possibility to still have that margin expansion. And we always do it in kind of strategies. One is our return on investment, how we make sure we -- the marketing that we spend in that jurisdiction is very localized. It's despite for that customer, and we see strong returns on it. And then secondly, our product mix is getting that product really fit for purpose for that local market, getting the pricing right. That really, really helps us with the expansion of not just in South Africa, but the Rest of Africa, the margin.

Yes. And then I can add, we've got huge cross-pollination between the international side of the business and the African side. And I think we've really, in the last 6 months, have scaled that up from the core centers, same software to the risk and fraud to all of that. So we really are seeing super efficient and costs coming through there. And also in Africa, we've been pushing on different sports, et soccer, quicker tellers, et cetera. So it's all coming together. And we've also mentioned our trading. We really getting stuck into the training of all the [indiscernible].

Understood. And then in the slide deck, it references Nigeria ramp-up underway to strengthen growth profile. What would success look like this year in Nigeria for you guys?

I think that Nigeria is an interesting one. We've been on the ground there. It's super interesting. I think what we have seen in the African continent and maybe led by Nigeria is that the country as a whole is doing much better. The free flow of the currencies improving. So we have to listen, double, triple our business side there at least rice. So as you know, it's the largest population in Africa, it's a growing TAM, and we're getting our product right, and again, we can build or buy across the west and and we can do both. So that's really top of our mind.

Your next question comes from the line of Jed Kelly from Oppenheimer.

Another great quarter. Just on the margin cadence between the 2 segments. How should we be thinking about that, particularly in the international margins? I know you have -- you've got the U.K. taxes and then you're launching Cape Canada. -- in July. So can you just give us a sense how we should be thinking about that? And then with Africa, should we expect revenue to grow faster than EBITDA over the medium term?

Great questions. First of all, on the international side, how we look at international is the continued customer momentum. So we -- our assumptions in the guide is definitely on organic growth assumption. There's no aggressive persistency assumptions made in there. But we're also making sure that we remain that -- have that marketing discipline of around 22%. And then if we have a thin to Africa, that 22% of marketing as a guide towards the spend of revenue, it's much lower in Africa because of the jurisdiction and the localization of marketing. So that gives that ability for the EBITDA just to the EBITDA margin to grow as strong as the revenue market targets that we set for Africa. But the interesting thing here is that it's a very equal business. You have -- even though you have probably most of the scale of the growth of the customer base out of Africa, the revenue and the market -- the revenue and the EBITDA margin growth is very similar.

And I could just add, and this is probably a point on Alberta. It's very different Alberta regulation to Ontario. Ontario was what we call the big bang approach. You had to move all your existing customers over onto the new software on day 1 before you could even market the new software. In Alberta, you can market to the new software first and have a period of 3 months or so to be able to move your existing customers over. so that for us is a massive, massive difference. We try for that in Ontario, but it didn't happen at the time, but now it can happen in our bid.

And just as a quick follow-up. How should we view World Cup net win margins relative to your historical net win margins?

You've got to hope that the smaller seems like Haiti, et cetera, just draw with the bigger teams. In the early rounds. Like the early rounds might be a little bit here, but it doesn't matter because remember, it's all about if they win on those games, what happens on the next games and most importantly, what happens in our casino. So let's see. I think it's going to be interesting. We've never had this many teams. But I think on the plus side, you've got engagement with so many games. It's like 63% more gains matches that's actually unbelievable. So I think audience and what we're going to have in our ecosystem should be really, really, really good.

And on the cross sell of 60% that you called I think that's the big benefit as well.

Your next question comes from the line of Clark Lammin from BTIG.

And maybe I can start with a little bit of a follow-up on Jed's last question. I think in the past, your sportsbook margins have basically peaked at sort of an 18% to 19% cash level, maybe a little bit higher. But I guess what I'm wondering is, after you sort of fortified the sports trading and I think pricing, I'm paraphrasing, I guess, from the language in the presentation. But what I'm curious is are book-friendly months potentially going to produce higher structural sports margins now on a go-forward basis. Quick follow-up question would be on the leadership team comments that you guys put in the release. Sorry, if you've already elaborated on this in the release or in the presentation, but if not, could you give us an update on sort of where you've made hires and where you believe you're sort of strengthening the overall business now?

All right. Okay. So firstly, on the sports margin, we obviously put out there that that's the average of the 2 sports books, international and Africa. But yes, as we fortified our pricing and the promotions we give in the sports book, we would think in months where favorites are not willing or destroying that we are seeing increased margin. That's absolutely that for us. But our trailing 24-month average is almost at like 13% -- 13.1%. And that means Africa is higher and then international is a bit lower, but we've seen increases in international. When it comes to our leadership team, listen for me and Alinda and actually all of us, even our Board -- it's all about having the right people in the right seats and then you will create the super team. So we've appointed Kirsty Ross as our Chief Operating Officer. I mean she was our Chief of Staff, that has operations officer, I think we are seeing huge, huge efficiencies. And then we hire adjusted stock being our external counsel and helped us to deliver the business to where it is today. We've finally taken him in half and he is our head of commercial and M&A -- so -- and of course, as you know, we've got a [indiscernible] as our CTO. So we really have a great team at the C-suite level of Super Group. But then when you go into the rest of our companies, we are absolutely got great people there. And with the international and Africa being these 2 segments, we bolstering all of us. But in order to grow and keep growing, it's about our people, it's about our platforms, it's about the tech that we're going to use, and we need the best of the best to help us make these decisions, and that's what we have done up until now and we'll back into the next level.

Neal, if I could just follow up quickly. If the goal of, I guess, some of that hiring activity to continue driving your corporate costs and the sort of corporate EBITDA that you've now itemized for us down? Or maybe it's something different. I guess I'm just curious what you're driving at.

Both. I think it's definitely always to centralize the cost, not to go to so many third parties. Remember, our legal piece or -- can be a lot base f you do M&A and other things. But with AI, et cetera, it's to definitely bring it down and be able to do much more volume based on our current cost base. So it's everything, but again, we've got to make the right decisions and we have to make them with the best information we have and for that, I need the best people around that.

Your next question comes from the line of Chad Beynon from Macquarie.

Wanted to start with these are super coin adoption rate kind of where this is, how it compares to your expectations? I know that you said in the slide deck, you have plans to roll it out further in the back half, but I just wanted to test your temperature on how this is going thus far.

Okay. So remember, we did call out. We said it's going to take adoption. It's going to take time. And -- so obviously, we've done a beta now in South Africa. So it's gone quite well in terms of our beta, but it's only a beta. We are obviously getting the utility of the coin in there. But what we have to do is it's going to be a slow process to get them adopted, but for us it's not only about the super coin. It's also about the processing fees. Remember, to remind everyone in Africa or single biggest after taxes expense are these processing fees. and especially on the sports book, where they're depositing and cashing out, redepositing in this in and out of the same money costs a lot of money. So that ecosystem, we are getting right. And we're just going to be patient with the [indiscernible]. In other markets, we obviously will bring it there once we've seen how it works in South Africa and there's different legislations. Obviously, we all have the legislation in other 7 markets in Africa, and we hope to bring it there as soon as we get this part right in South Africa. That's very encouraging. It's selling new. It's new for the consumer. It's -- let's see we got. But something that was new a year ago is now normal now. So that's kind of what we based it on.

That's great. And then with respect to the M&A environment, obviously, strong Q1, you're tracking at least ahead of expectations for the year, $400-plus million of cash on the balance sheet. How are you thinking about M&A opportunities given your position of strength?

Thanks for the question. We still -- as we've always been highly selective on what we pursue. We don't need M&A to hit our plan. Our plan is based on consistent organic growth. That will be just an added bonus if the right opportunity comes along and at the right price. And it's supposed to be a bolt on to improve our business overall if we pull the trigger on something. We also look at vertical opportunities such as improving technology product or maybe marketing efficiencies, but in the long run, there's always something on the table that we're assessing and we've got the right balance sheet for him. So I will just remain disciplined until the right opportunity at the right price comes.

And I always say to Alinda, we always say to each other we're not overpaying for stuff. If it make sense, we'll do it. And I think as we've got a facility, I think you've seen lots of our competitors have had a fire over the last 5 or 10 years, and when you lay in with debt after that, these businesses have to perform. So we still got 75% free cash flow because that's what we do. So if we find the right one, we'll do it, but we are not overpaying and that's not how we've operated up until now.

Your next question comes from the line of Matt Weber from Canaccord Genuity.

Congrats on a strong quarter. I just wanted to ask if there's any update you could share on the [indiscernible] transaction and just maybe broadly how that transaction is framed your key product initiatives for the balance of the year? And then relatedly, could you just give an AI, the topic de jour every earnings call. Could you maybe just touch on what you were doing there in that space?

Okay. So the Apricot, we finally closed the transaction at the end of February. We've got all the IP. So the sports book finally is owned by us. So we're very happy about it. We've done the process of moving all the development resources that support the sportsbook, they're now becoming part of our team. backed over 100 people or even more to move over to Super Group, be part of our structures, how we work, what we do. So we're really starting to see overall realized cost savings will obviously come over time. But for us, it's about the product, that's near our product teams here, the teams altogether. And I think we've seen that with the global best way Sportsbook, we've improved speed, flexibility, efficiencies, so there's lots to come there. We really are pushing, pushing hard. And since we've exited the U.S., I've got these teams not having to worry about the 8 states in the U.S. we can worry about all the markets that we're currently in.

And then just on your follow-up question on AI. I think it's front of mind for everyone. It's definitely at the moment for us to -- for risk controlled, management. There are definitely some elements being used in development and allowing us to be more efficient and more faster and deploying certain parts of our development in our businesses. it's definitely starting to have a big impact even on my world in finance and how we reconcile and look at accounts and disclosures. So it's definitely -- all in all, enhancing efficiencies, but we have to be disciplined. We are working carefully alone, our [indiscernible] is taking lead on making sure there's a custodian that behind the boundaries around this so that we are disciplined around it, but a major impact. I think the only thing we know is that it's changing fast.

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

This is [indiscernible] on for Jordan Bender. We just want to ask about Europe. What drove the outperformance there? And do you expect this to continue throughout the year?

Yes. So I think Europe, again, as we exit the country that we did and see a path to profitability, U.S. being one, Belgium, Italy, et cetera. We focus on the U.K., Spain, Ireland. And so if you take the U.K. as an example, as we're dropping more product enhancements, the brand is well known. We are seeing the stickiness of our customers, our marketing being really driving record acquisitions because finally, the [indiscernible] product enough or competing head on with our major competitors there. same with Spain. We've got focus to Casino. We've got a new stuff happening there, Ireland as well. So it's all about the front office being the product and our brilliant back office coming together. And then in Africa, we have got a brilliant product and we've got a back office and we're improving the back office to make it as good as the international side. And if we get all of those 2 wells working, that's when you see in the bottom. And that's where you see our retention rates, et cetera, going -- increasing.

And there are no further questions. I will now turn the call back over to Neal Menashe for closing remarks.

So thank you, everyone, for joining today's call. We are really proud of our teams across the globe and their super performance this quarter. We are very encouraged by the momentum we have built earlier in the year, and we will speak to you again soon. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.