Super Group (SGHC) 6 Nov 24 2024 Q3 Earnings call transcript

In Super Group's Q3 earnings call, the company showcased a strong performance, with total revenues excluding the U.S. reaching an all-time high of EUR 395 million, a 13% year-over-year growth. The adjusted EBITDA also saw a significant increase of 52% year-over-year, reaching EUR 95 million. Neal Menashe, the CEO, highlighted the company's strategic focus on optimizing operational and marketing efficiencies, which is reflected in a 24% margin for the second quarter in a row.

Super Group's casino business, which represents 83% of overall net revenue, is experiencing remarkable growth. The company's strategic expansion into key markets, particularly in Africa, has proven successful, with the continent providing the largest portion of Super Group's revenue for the second quarter running. Africa, with its vast population and increasing internet penetration, presents a significant growth opportunity for Super Group. The company's strong competitive moat, established over a decade of operation, and its focus on local marketing expertise and stakeholder relationships, position it well to capitalize on this market's potential.

Focus on Africa and Strategic Expansion

Super Group's strategic focus on Africa is evident in its operational footprint, which spans seven locally regulated markets, and its market-leading positions in five of these markets. The company's optimistic outlook for Africa's future growth, with a population expected to reach 2.5 billion by 2050, reinforces its commitment to expanding its presence in the continent. The company's pipeline of new markets to be viable in the next 12 months further underscores its strategic expansion plans.

Financial Health and Capital Returns Policy

Super Group's financial health is robust, with a cash position of EUR 297 million and no debt. The company is exploring ways to return cash to shareholders, including a regular dividend of 0.025 per quarter, planned for the first quarter of 2025. Additionally, the company is considering a special dividend before the end of the year, subject to performance and market conditions.

Challenges in the U.S. Market

Despite the strong performance in key markets, Super Group faced challenges in the U.S., particularly in its sportsbook operation, which was shut down. However, the company's strategic assessment of its iGaming business in New Jersey and Pennsylvania indicates a focus on profitability rather than revenue growth. The company's cautious approach to the U.S. market underscores its commitment to sustainable growth and profitability, reflecting a prudent business strategy.

Looking Ahead

Super Group's strategic focus on key markets, particularly Africa, and its commitment to optimizing operational and marketing efficiencies, position the company well for future growth. The company's robust financial position and capital returns policy further reinforce its long-term growth prospects. Super Group's strategic expansion into Africa, its market leadership in key markets, and its focus on profitability rather than revenue growth, underscore its commitment to sustainable growth and shareholder value creation.