All right, thank you and good morning. Really excited to have you all here at our conference. Thanks so much for joining us, and really excited to have Super Group here. Super Group is, as many of you know, one of the leaders in the global gaming space, both in iGaming and online sports betting. So we're very excited to have Neal Menashe, who is the Super Group CEO. Neal, thanks so much for joining us, and we also have Linda in the audience as well. So thank you, Linda. I just wanted to kind of start off and say, you know, thanks for coming to our event, and just maybe spend a minute for those who might not be-
Mm
... very familiar, to give an overview of your business and talk about some of the key recent developments.
Okay So hi, thanks for having us. It's really great to be here. So we, Super Group, we are all online gaming. We, we're made up of two parts: Betway, which is our sportsbook, and which has got iGaming in it, and then Spin, which is our casinos. We listed on the New York Stock Exchange in January 2022 through a SPAC, and it's been two years. Time does go quickly. And we've learned how to navigate this listed world. We came from a private company, so the private company is now we're expecting this year to do over EUR 1.5 billion of revenue. And we split our business into two: the U.S. side and the ex-U.S. side.
The ex-U.S.. side is where we make all our money, so that we've just raised our guidance on that to be in excess of EUR 300 million of profit, and then expect to lose probably another $20 million or $30 million in the U.S.. But really, we're all about casino. I think today we make up 80% of our revenue comes from casino. And I think for people to understand this, when you're in the iGaming world, is a casino customer who plays at a fully, let's say, JackpotCity, which is one of our brands, casino, is fundamentally a different customer to someone who plays at the casino in Betway, which is our sportsbook. They're not the same person, so they're different genres. So we try and cater for both, and we've really stuck to doing sports and casino. We don't do poker.
We don't do all these other things. We are fully into this and have become what we consider one of the best in the world at doing that. And I think being specialized and customizing your product per country we operate in is what defines us.
Well, last week you just reported really strong-
Mm
future results. I think it could be a good basis to discuss-
Mm
some of the business, and then we can go into greater detail.
Yeah
-from there. Can you talk a little bit about... You mentioned casino. That was really the, the-
Mm
-driver of the strong revenue growth in the quarter. What markets or product changes have you made that have been driving some of that momentum-
Yeah
and sort of how do you expect that to evolve as?
Okay
we go into the back half of the year?
Okay. So basically, the way to look at our business is that we've got North America, which is Canada and Ontario, makes up about a 1/3, Africa makes up a 1/3, and then Europe and New Zealand makes up the other 1/3. That's kind of the way to look at it. And what we've done is honing in each country, the product and what we do in the product, and then what the marketing relative to that product offering. So when we go into a market, you'd have your Spin brands, which is JackpotCity, et cetera, there, and then you've got Betway. And when the two come together, you are trying to get to all those customers in the market and offer them what they want. And every market is different.
Someone in an African market expects a different tailored offering to someone in the U.K. or to someone in Ontario, and all the languages, if you're in Spain, for example. So it's literally brick by brick, building each of those markets. The hard part is, you can't offer the greatest software in every market, and I think that's what we've learned. So some of the markets that we used to be in, which is Belgium, et cetera, those markets are too hard to do profitability in order to get that customer right. So from our point of view, it's all about being able to customize the market and customize the product. And then our biggest expense is marketing. And I tell people, you know, our business, we spend about 25%, 26% of our net gaming revenue on marketing.
I think some of our competitors are 18, 20, 22. Probably we spend a bit more because we believe what we're getting in return, long-term, is increasing our revenue, which it is. But there's, it's all about how we become flexible on that marketing. We spend EUR 400 million a year, and it's how you become efficient for every dollar, every euro spent or dollar spent. And the truth is, that's another whole area where I think we can do more to, to be able to become more, more, more effective.
We're definitely gonna follow up on your marketing strategy-
Mm
... and some of the partnerships you have in a little later in the discussion. But just going back to some of the key, the recent announcements.
Mm.
As part of the quarterly results, you also recently made the decision to exit the U.S.-
Mm
... sports betting market.
Mm.
Can you just share a little bit about what went into that decision? Why now is the right time to do that?
All right. When we started looking at the U.S., obviously, you had DraftKings, FanDuel, and all the best. We've never really seen a market anywhere in the world where two players make up 90% of that market, and that's the sports betting side. So the complication in the sports betting is to get a share of voice is quite complicated, and people don't normally, or customers don't normally leave a sportsbook if they've got a good service. Casino is different. Remember, the casino business, you're one click away. If I feel unlucky, I feel lucky, I'll come... It sounds mad, but that's how it is. It's all about the genre. So in the casino business, we think that we can compete better.
So, what we decided to do is we can't see a path to profitability in the U.S. for sports, but we're gonna try casino. We're gonna try Pennsylvania and New Jersey, 'cause that's where we've got licenses. The same way we've got our brands in the U.K., where there's lots of competition, Spain, Ontario, New Zealand, et cetera. Southern Africa, we think we can do it, but there has to be, and Linda's in the audience, and we say, "Well, there has to be a path to profitability," otherwise, my CFO starts getting very upset. So we have to, have to, have to get a path to profitability. So to give you an example, Belgium, Spain, and Buenos Aires, we had the software there, but there's so many changes that are needed that you can never become profitable.
To do this, we decided, let's rather stop those markets. So the U.S. sportsbook is exactly the same, and go into the markets that we are. You know, in a month, we made, like, EUR 130 million-EUR 140 million of revenue. We've got plenty revenue. We can grow it more, but become better in the markets we are. But to try and do every market is just impossible, so the U.S. is no different than-
...And the last question on that, in relation to the decision-
Mm.
How should we expect the financial contribution, both back half of this year and going forward from the iGaming presence that remains in the U.S.?
Mm.
And then in terms of the investments that you previously had earmarked to continue to grow in the U.S., should we expect that to all flow through to the bottom line? Do you plan to redeploy that in some other areas?
So, and what we said is, we've written off all our sports books and stuff, and now, and now we have to get out of the long-term contracts that we've, we've got with the casino operators. So we said that we're writing off EUR 45 million, we thought EUR 45 million of cost. We think it'll be a lot less than that now that we've gone into negotiations. But for the U.S. side, we expect to lose EUR 20 million for this, for the next six months, and then after that is, let's see how we do in January, February. We've hit them certain watermarks that they have to set their net gaming revenue, but then the rest of the world is, is growing really well. So, you know, we, we lost India a year ago, so when you compare, we - the comparables have got...
I think this year we grew, like, 10% or 12%. Without India, we actually, the rest of the world grew 20%. But you must understand, this business is all about operating leverage. So every EUR 1 million of extra net win we get, a month over EUR 95 million, call it, is at 60% margin. So that's why you'll see our margins can go up. It's about how we keep growing those other markets, and how you grow them is more marketing efficiency, better product, and cost analysis. We've been streamlining our costs across the world.
Okay, very helpful.
Mm.
So, I wanted to shift into talking a little bit about the market-
Mm-hmm
...and about, some of the macro considerations-
Yeah
-that you face, and let's just maybe start with your growth expectations for the global gaming market.
Mm
-and maybe, you know, how they might differ between casino and-
Mm
-sports betting.
Yeah. So, so obviously gaming's growing. The issue you got in gaming is regulation. I think no regulation's a problem, too much regulation's a problem, and that's... You've seen it. So the U.K. was a prime example. I think they're over-regulated, so what happened is, you get what's called a black market, where the customer just goes to someone who's unregulated or black, and then they can spend as much money. In the U.K., they set limits. I think they've dialed back those limits, which is good. But then you've got Germany, for example, which we were quite big in Germany, but now their deposit limits are across customers, across all sports betting and casino. It's mad. But you go to the black market, you can spend as much as you want. So they're not enforcing the black, you know, enforcing regulation on the black market.
So that's an issue, but I think over time, they're learning that the state or the country gets its taxes, and I think you've seen that in the U.S. as well. But over time, what we have to do, there's still people love to spend money online, and especially on casino. You know, 'cause casino's all about life-changing winnings. Sports is literally about, they believe that they've got an edge, that they know the players in their teams, whether it's football, NFL, NHL, whatever it is, basketball, whatever, that they can have an edge. And we always see there's growth. We've been growing year on year, even with the setbacks of some of these markets, so we consider to think to be in the double-digit growth area. But the operating leverage is what key.
You know, as I said, if we can keep growing that, then what happens is you bring 50%-60% down after paying your taxes. That's how, in some months, we can get close on EUR 40 million profit. So, that's what we've been doing.
When you look—I mean, you mentioned, you know, the black market.
Mm.
When you look globally, is the pendulum swinging towards more black market, or is the share kind of slowly shifting towards regulated? And-
Yeah
... the related question-
Mm
like, are there markets out there where the pendulum is swinging towards regulated, where you feel excited for-
Yes
certain groups of those?
I think the pendulum has come. I think they're more regulated than black. I think the crypto casinos are a whole another realm all by themselves, 'cause maybe they're not caught up in the Forex, in, like, the currency, so they think that they're immune to having regulation, which I think over time, will come. But I think overall, the world's accepted regulated and accepted online gaming. I know that two decades ago when we started, 2,000 odd, people say that no one's ever gonna bet online. You know, this was from all the big land-based guys, and we knew them all. Now the world has changed. I say it today, "Can you imagine banking, not banking online?" That sounds absurd, right?
So I just think it's how the regulation marries to each other, and that can the countries take a fair share of the tax, but not so much tax to actually force everyone, the customers to go find it elsewhere?
On regulatory developments, you've got to be really nimble as a business to navigate a really-
Mm
... complex-
Mm
global matrix of
Yeah
regulations and regulatory changes.
Mm.
And you've done so with a lot of skill over the last few years. So maybe just talk about what are the key regulatory agenda items that are on your mind today? You know, what are the things that you have to navigate-
Mm
... here over the next year or two?
Okay. So there's two sides to the regulation. There's the compliance side and what the software has to do, and then there's the tax side, right? So on the compliance side, your software has to do certain hurdles. I think we've been doing it for so long, from the U.K., et cetera, even the U.S., you have to adapt and change. You need certain things in different markets. And so that we've learned how to do, and your business, you know, when you started these businesses, you didn't have compliance teams, didn't have AML teams. Now you've got huge teams, but they have to be part of the business process, and it should be how you do business as opposed not to do business.
Secondly, it's dealing with the regulators, and I think if you're listed, they feel far more comfortable because they can see your numbers, they can see your results, they can see you exist. When you're a private business, you don't have to file accounts anywhere. They feel that you—who owns you? What are you? Who are you? And I think what the real issue is, these new tax regimes that are coming, tax from the countries and tax from the regulators, and then tax from a worldwide tax basis. So, we've learnt how to govern that. We've got huge tax teams, huge legal teams, but they have to be business-minded and business-focused, and that's what we keep trying-...
Trying to get right in our business, because if you don't get it right, you can be bringing them in the front door, and the compliance team can just lock every customer out, you know? Because you haven't done some checks. How do you automate those checks? How do you get the stuff? How do you have all the safer gambling? And that's all got to be embedded in the software and come in at different times in each country.
The software is really important. That's another topic that we want to get to.
Mm.
Earlier you mentioned your brand strategy, a single global-
Mm
... sports brand and then multiple-
Mm
online casino. Can you just talk a little bit about why that works for you, the different markets you operate in?
Yeah
... and sort of which channels you see-
Yeah
... the most efficient acquisition?
So, what we did is when we took Betway, which is our sports brand, we decided to have one sports brand across the world. So that meant that we could go and market with sponsorships, et cetera. So we do lots of the big soccer football teams in the U.K.. I think the U.K. Premiership, we cover most of them, Arsenal and Man City and West Ham and all the top teams, we sponsor. So we decided to do that at a global level and then locally sponsor teams to get the Betway brand, and that's worked extremely well. But what I say is, we don't take the global budget for Betway and spend 80%-90% on sponsorships. We spend a decent amount on sponsorship, but we've still got to have everything activate with everything else.
So we found one brand there has worked really well, but the casino, as I said before, our biggest brand is JackpotCity, and that we globally spend on, but we also spend locally. But then we've got about another five or six other brands. Probably got like 30 brands, but five or six make up the majority of what we do, and it's all about this return on marketing. And it isn't like, oh, you're just going to stick your brand on TV and now it works. It's not about that. Everyone, you know, the average person is spending 30 minutes a week watching TV, but they might be on YouTube, the PPC, TikTok, Instagram. All of these new methods are where we have to then add to our branding to get the best returns.
Mm-hmm. And you talked about earlier, you know, you navigate the competitive environments in all these different countries around the world.
Mm.
Maybe just talk a little bit about how the U.S., obviously, you mentioned-
Mm
... is highly competitive on the sports side. How do some of the other markets differ that you operate in? Is that-- How do you sort of decide-
Yeah
... on which markets to enter-
Yeah
... and sort of, are there different customer acquisition tactics?
Mm
... that work in different regions?
I think that the rest of the world is more reasonable than the U.S. I think you've never seen spending like this, but not one company spending or two, like you've got five or six who are just spending on massive. It's like the massive land grab. But the point is, unless you keep the customers, once you've paid for them, they're gone, right? The rest of the world is more the same. But we did see the U.K. when it first regulated, people went mad on PPC. I'll give you an example. In the U.K., I think it was GBP 50 a click, not a customer, a click you'd have to pay, because that's how competitive. But then, how long can you keep paying GBP 50 a click for if you're not getting the customers, right? So eventually, the economics become correct, and it works itself out.
I think the world, with the taxes, et cetera, you know, you're, you're really seeing some of the competitors here, especially saying in the high tax jurisdictions, they, they want to do surcharges. It's too high. You know, we always warn, if the taxes are too high, everyone loses, right? But every market is different, and, over time is you have to get... That's with the product, with the marketing. You know, it's the same marketing, but it's how you market, where you market, and then, and then what you do in the product. Also, the biggest issue, I think, in marketing is giving away this free money. You know, when we first started-
Sign-up bonus.
Yeah. So when you give out these sign-on bonuses, it all sounds great, but eventually, you're just creating customers who are just looking for the bonuses, right? And, and then what happens, it affects your economics. You know, it affects the holds in the casino. It affects the holds in the sportsbook. They have radical effects. So I keep telling people, "Stop looking at how many customers you've got in the system." I can bring you millions of customers into the system if I'm giving them all $50 free or $100 free. It's how many are purchasing afterwards, and what are the repeat purchases, and how do you retain them? And, and that's what becomes complicated, is every customer has its own journey, and every customer has to go through it.
So if you add on all these countries and the languages and the regulation, it becomes super complicated. So maybe you have to just do less countries to be better off.
Okay. So we mentioned software earlier. Earlier this year-
Mm
... you took control of your global technology stack.
Mm.
So can you describe that process? Tell us how that was structured?
Mm-hmm.
You know, the related question is, obviously, the key benefit is to get control of your product development.
Mm. Yeah.
Maybe talk about your product development roadmap.
Yeah.
Are there any exciting things you wanna, you know, preview with us?
Yeah. So when we started, we used a company long time ago, 25 years ago, that did our player account management system. So we still use that company, and we built all our systems on top of it. So when we got into sports, we tried using a third party. In those days, OpenBet. Didn't work. We bought it in-house with this company. We've now bought the sports, the whole sports product we have now bought, the package of the sports product. And then really it was an investment that if it does better, then they get a, they get a share, and then we get a share. But ultimately, we're gonna bring their teams and our teams together. In Africa, which is a continent that we probably in the top one or two operators in, that one, we own the product from beginning to end.
Because what happened is, we couldn't do Africa with the existing product, because you can't do all these markets and that market, so we decided to build it from the bottom up. So we've got that product, but what our current, current, sports product does, will give all the feeds and all the traders and all the pricing to the African market. So we've got good synergy there, and really what we have to do is try and bring our product teams with the PAM teams and the sports teams together, because then we own the product from beginning to end. So we almost getting there, we're almost there, but it's, there's been lots of duplication along the way. But I say that when you go into lots of countries, there's always gonna be duplication. Now we've got to get that cost efficiency right.
But the question is what they develop, and I think in the past, I mean, you sit in a product team, the country manager wants every feature the world can give you, but when you give them the features, the numbers don't move. It's not only about the features, it's maybe the top five features are the best to do and but then the marketing has to go. So we've learnt that it's not all about features. You can have the greatest product with the greatest features, but then if you've got bad retention, bad everything else, we give away too much bonus money, the business model-
Yeah
... model doesn't work.
I mean, that was, you sort of started answering my next question-
Mm
... which is, like, one of the coolest things about operating so globally is like every market has idiosyncrasies-
Yep.
and you've got to sort of bring this complicated matrix of-
Mm.
of product offerings
Mm.
to each market. Just maybe talk about the process or the structure that you have in place to make that happen effectively.
So it's very important. Like, for example, I can't live in London and think I'm going to know what someone in Ghana or South Africa wants in a product. So we've got teams, local teams, in each market, and they have to eat, sleep, and breathe that market, and we do that. So it's the same for the U.S.., it's the same for Canada, et cetera. We have to have teams that are eating, sleeping, and breathing it. And then, it's how you then disseminate what the product's needed in each market and the marketing. So maybe 'cause marketing works in one way in one market, in the U.K., doesn't mean it works the same way in Spain. So we've got teams that do it, but globally, we have overall oversight over it.
We have overall like a chief marketing officer will oversee all the marketing, but that's EUR 400 million. But then the individual teams, and then you've got brand sponsorship that's worldwide, and you've got local ads. So it's quite a complex matrix, but I think we've learned how to do it. Are we super efficient at it? I think we're probably like a six out of 10, seven out of 10. Can we get to 10 out of 10? Absolutely. Got to get rid of some of the egos to begin with, but we're getting there. But, it's all about the country manager, and can they deliver, and what do they need? And you've got to hear them, but they don't need everything, and then you can give them what they need. And that's why you have to be on it.
And again, you know, if you want to hit your numbers in a country, every day, you've got to see your daily report, see the number. You're not gonna get your revenue if every day you're not you aren't hitting. You want to get $3 million a month, you've got to get 100 a day. It's not complicated, but every day you have to make sure it's doing it, and those are the kind of things we have to instill in them.
Specifically on Africa-
Mm.
It's come up a few times.
Mm.
What's the opportunity there? Like, how developed is the market-
Yeah.
- for you in terms of-
Okay, so it's actually a bit strange because Africa is the one market that you can only operate there under regulation. So it's fully regulated, right? But the product, the regulation on the product isn't as complicated as the rest of the world's regulation, but you have to be regulated in each market. I mean, the opportunity there is everyone's got a mobile phone. It's like, remember, they missed computers. So the issue is there is out of Africa, we've got millions of people, but the bets are smaller. So you've got smaller bets, but millions of people betting, so it's a different business, but ultimately, it's a long-term, long-term business. You do have currency risk there, but you have... Listen, you have currency risk everywhere.
But there you do, but because we're in so many markets there, it's improving that some are working better than others, but the brand resonates there, and then the opportunity is just massive. Because they don't go to the shop, they don't want to do their sports betting, they'd rather come online. And the payment mechanism are all through the telcos, so it's fundamentally different. So in order to get the telcos on board, you have to be regulated. It's just making sure, again, that they don't go overtax, overregulate, because then the market doesn't work. But it's a massive opportunity.
Listen, we were very big in India, which is similar, except in India, they didn't regulate, and they just increased these deposit taxes, almost like GST, but they made it on deposits in the casino, which is absurd because the casino only makes, or the sportsbook only makes money on net win. So the metrics came out, so we had to leave, so we hope for that market to regulate. But Africa at least is fully regulating, so that's good.
Okay, just a few minutes remaining here. If anyone in the audience has any questions, feel free to raise your hand. But one thing I wanted to ask about, you recently reiterated your full-year revenue guidance, about 10% of growth, ex-U.S.. What could drive upside relative to expectations in the back half of this year? And then going forward over the next few years, how do you think about the growth rate for the business overall?
So I think that we've got lots of cost efficiencies. Obviously, we've got lots of redundancy costs that we've made, and like high, thinking quarter two, we made EUR 3.3 million of redundancy costs that were in the numbers. So those will all come through. We've—Listen, I think since we listed, we're down 1,000 people. That's a lot, from 4,100 to 3,100, and our numbers have never been better. I think we have to see how the casino side of the business goes in the U.S., but I think in all the other markets that we've talked about, every country, there's opportunity. You know, we don't make up 95% of any market. I wish we did, but we don't. So the upside is really there.
And remember, if you're in the U.K., every GBP 1 million extra of revenue is GBP 600,000 to the bottom line. That's how you have to see it. So, so the opportunity is to get our margins well over 20%. So I think in quarter two, our margin came, EBITDA margin came in at 24%. Take out redundancies, 26%. So can we get to those numbers over time? Yes, if we get more efficient. Remember, we haven't even talked about the efficiencies in the call center and the risk, and all our risk systems with AI, et cetera. That's all coming. So we're fully on getting every dollar spent working, but I think the marketing is where the big efficiency is.
Think about it: If we spend $450 million a year on marketing, and we're 10% or 15% inefficient, that's $75 million a year of more efficiencies. So should we maybe be, be coming down on marketing? Maybe, but all, or if we get the 450 working properly for us, it'll give us more. So we've got, I say, ammo in the tank. It's just about what we... How we control the people who control those budgets-
Mm-hmm, and then-
And hold them to account.
In terms of other factors that could drive, you know, upside over the next few years, think about Alberta as one province in Canada that may be regulating. Think about increasing in-play adoption in certain markets.
Oh, of course.
What are some of the big, big themes that you think?
Yeah, that there's big progressive-style games that we got on the slots that people like. There's lots of that, and there's lots of other nuances in the market, new products, quicker payment mechanisms, et cetera. All of that's coming on board, and then what we do with our customers, right? How we tailor the journey for them. If they like slots, what slots, what they like in sports, et cetera. So there's lots of that. One of our big things is the accumulator bet, you know? So, you know, 10 bets at a time, seven bets. So can we have jackpots?