Super Group (SGHC) Ltd (SGHC) 2026 Q3 法說會逐字稿

Hello, and welcome to Super Group third quarter 2026 earnings webcast and conference call. Please note that this call is being recorded. (Operator Instructions)

Thank you. I'd now like to hand the call over to Nkem Ojougboh, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today to discuss Super Group's results for the third quarter 2026. During this call, Super Group may make comments of a forward-looking nature that is subject to risks, uncertainties and other factors discussed further in its SEC filings, which 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 measures are in addition to, not a substitute for measures of financial performance prepared in the quarters of GAAP.

Reconciliations to the most comparable GAAP measures are included in the press release issued yesterday and available on the Investor Relations page of 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'll open the call for questions.

And now, I'd like to turn the call over to Neal.

Thank you, Ing, and good morning, everyone. Super Group continues to deliver. After a record second quarter, Q3 was a softer sports quarter with favorable outcomes for our sports customers, but casino once again offset that volatility. Record casino wages increased 11% year-over-year and 14% ex the US, providing predictable revenue that absorbs a softer sports quarter and supports ongoing growth.

Customer activity reflected its typical summer seasonality across European football. As the major leagues return, engagement rebounded quickly, reaching 6.2 million active customers in the month of September.

The start of the new football season also marked the launch of our Manchester United partnership. This agreement supplements Betway's exclusive partnership portfolio with the world's top football clubs and Man U strongly resonates with our African customers.

In Africa, revenue grew 17% year-over-year to $262 million and adjusted EBITDA was up 23% to $88 million with a robust EBITDA margin of 54%. Sports wages grew 6% year-over-year, while casino wages were up 21% over the same period.

Sports results were uneven during the quarter. A customer-friendly outcome in August and September outweighed solid margins in July. Despite this volatility, year-to-date sports margin remains within our expected range. Importantly, we believe that volatility is transient, but structural improvements driven by improved pricing and trading and a resilient par-play mix endure.

Our Africa growth pipeline continues to develop. In Mozambique, we expect recent changes in online casino regulation to materially improve the commercial attractiveness of this market for us, which will further support our future growth prospects. We have successfully secured new casino licenses in Nigeria, Tanzania, and Zambia and both sports betting and casino licenses in Rwanda. Continue to actively pursue further opportunities.

In Namibia, delayed upcoming changes to the local regulatory regime mean we now expect to launch in 2027 contingent on local policy adoption.

Supercoin's establishment continues as we build a digital payment platform with utility extending beyond gaming. Foundations are in place, customers have access to our wallet and the coin is now live on South Africa's three largest exchanges.

The next phase is focused on payments and expanded utility with additional wallet functionality expected to roll out this quarter and a full public launch planned for early 2027. We are also excited for the expansion of Supercoin beyond South Africa's borders. International revenue grew 5% year-over-year, ex the US grew 9% to $344 million, while adjusted EBITDA grew 24% to $93 million.

Margin expanded more than 400 basis points despite higher taxes in the UK. We believe this performance highlights our disciplined marketing and leaner cost base at work. In Europe, revenue grew 6%, led by the UK, up 13%. In North America, revenue grew 10%, excluding the US, while Canada, ex-Ontario and Alberta delivered 15% revenue growth, supported by strong casino performance.

In Alberta, customers are adjusting to the newly regulated market. Our migration successfully completed in early October and we remain confident in the long-term opportunity in Alberta. Rest of world revenue increased 5% with New Zealand resilient at 3% during a mandatory marketing hiatus ahead of next year's regulation.

During a recent casino license auction, we secured three of the 15 available licenses. This positions us favorably in advance of expected regulated market launch in 2027 when marketing efforts can resume. Supergroup's commitment to product advancements continues to set us apart. The advantages of owning or controlling our tech stack facilitate faster innovation and greater control over our roadmaps.

We continue to enhance our sportsbooks and casino offerings, adding new features and improvements that we believe raise the standards across our product suite.

With that, I'll turn it over to Alinda.

Thank you, Neal. Total revenue for the third quarter was up 10% year-over-year, reaching $611 million. Adjusted EBITDA grew 8% to $165 million, ending the quarter with a margin of 27%. We grew average monthly active customers by 9% year-over-year, reaching $6 million this quarter. Wagering momentum remained strong with total wagering up 11% for casino and 4% for sports.

Customer-friendly sports results brought our sports margin down to 12.1% this quarter, well below our trailing 24-month average of 13.7%. This impacted revenue by approximately $40 million and adjusted EBITDA by around $25 million.

Importantly, our year-to-date sports margin stands at 13.8%, keeping us comfortably within our target structural range.

Our financial performance is built on a disciplined approach. We concentrate marketing spend in our highest return markets, while continuously refining our trading, payments and technology operations. At the same time, we keep a firm grip on costs. Navigating higher gaining taxes without losing sight of our strategic investment priorities.

Turning to guidance, we need to account for the impact of quarter three sports results. With that in mind, we are revising our full year 2026 guidance with total revenue between $2.525 billion and $2.575 billion. Adjusted EBITDA revised to be between $700 million and $720 million, assuming fourth quarter sports margin remains within our normal range.

Sports results are outside of our control, but sports waging remains robust and our business remains strong. Quarter four is off to a great start. Casino continues to grow and our sports margin for October was the highest it's been all year.

Our balance sheet remains strong. We ended this quarter with $602 million in cash, up 30% year-over-year, with a year-to-date free cash flow conversion of 70%. Over the last 12 months, we have returned approximately $223 million to our shareholders, including around $25 million in dividends this quarter. We will further address our capital allocation priorities.

With that, I will now hand back to Neal.

Thank you, Alinda. Just nine months into the year, our EBITDA has already almost surpassed full-year 2025, which itself was a record year for Super Group. We entered the fourth quarter with strong momentum. The football season is in full swing. Casino is performing. We maintain a robust product pipeline and our operating model is increasingly efficient.

Our earnings convert to cash at a high rate and we have a strong balance sheet, a combination that gives us real flexibility. Our framework is really straightforward. First, we invest in the business and in organic growth, including new markets because that is where we see the best returns.

Second, we pursue external growth selectively and only where returns clear a high hurdle. Third, we return excess cash to shareholders. Our regular dividend remains a foundation of that and we intend to grow it over time.

Today, we're taking the next step under this framework. Our Board has authorized the $150 million share repurchase program. We will execute it with discipline and while we are not committed to a pace or a price, we will keep a strong balance sheet throughout so we can move quickly when the right opportunity arises.

We are really well positioned and confident in the direction of the business and expect to finish 2026 strongly carrying momentum into 2027.

Operator, please can you open the call up for questions?

(Operator Instructions) Jordan Bender, Citizens.

Hey, everyone. Good morning and thanks for the question. To start on guidance.

If I judge for the sport outcomes in the quarter and I see where the midpoint went to, it still implies that there might be maybe a delta between that number and the midpoint of guidance. So can you maybe just talk about how you're getting to the revenue number that you guys laid out? And as I look to iCasino growth, it did decelerate 11% in the third quarter from 15% in the second and 20% in the first. So are you seeing any softening around kind of that high gaming customer?

So firstly, obviously, our new guide reflects the impact from the customer-friendly sports outcomes in Q3 and obviously preserves the EBITDA upside from the original guide, right? What is key is our underlying business remains strong, casino, customer engagement, year-to-date sports margin remains within our structural range. And one thing from our side and then to add on after is that if you recall from our September 2025 Investor Day, we are way ahead of our targets.

Yes, and just to conclude that, we're definitely not seeing a slowdown in the iGaming business at all, it's just to allow for the Q3 sports margin that had an impact and we're still within the guide midway through the guide that we previously communicated.

Perfect. Thank you. And then to follow-up, you touched on the share repurchase program there for a minute, and you kind of made comments around you'll be more opportunistic around using that. But if you kind of think about excess capital and returning capital to shareholders, can you just kind of talk through your rankings around utilizing cash through dividends, through buybacks, investing in the business, kind of what's your new priority list with the repurchase program now out there?

Our priorities are unchanged, as previously also communicated, discipline first, that we remain flexible and with that amount of cash gives us that flexibility. First, we always invest in the business for organic growth with a clear path to return. Second, we consider external growth opportunities, but really always at the right price and that will really supplement our business.

And thirdly, if we then have excess cash, we are really focus on giving back to our shareholders in the form of special dividends, quarterly dividends, or buybacks. So it would be in that priority.

Clark Lampen, BTIG.

Thanks for taking the question. I have two, if I may. The first is sort of a minor clarification, I guess, on Jordan's question around guidance. Neal and Melinda, I hear you guys call this out, but a few of your peers have mentioned unfavorable October sports results as part of their Q3 and sort of Q4 framework. Is there anything notable that you guys have seen thus far in the quarter that's sort of worth calling out?

And then, the second question that I have is related to 2027. Neal, in your prepared remarks, I think I found that at least five market launches where the operating backdrop and I guess the sort of regulatory regime has been favorable and sort of opens the door to entry.

Could you give us -- I think we have a decent handle on the organic growth trajectory. Could you give us a feel for the markets that are in focus near term for 2027 launch that could be contributors. Thanks very much.

So first of all, let's start with October. October was a great month for sports. So overall, the months all, as Alinda mentioned, are highest margins this year. I think it's important to everyone to understand we've got a large African parlay business, right? Obviously, together with our more traditional international books, makes us quite unique when you compare us to our listed operators. In practice, that means we can see days when a loss in Africa is all set by a profit for international or vice versa.

So, you can't always extrapolate other operators' results on us. That's the first thing, right? And when it comes to market launches, obviously, I mentioned in Libya that we were hoping to do Q4, but obviously, they're regularly changing a bit, so we are all apparent that we're ready to go operationally, and now it's just about waiting for them to issue the new license. So, as soon as we get the new license, we can go. So, we're hoping in 2027.

We mention other ones like the Rwanda, where we've managed to get casino and sports licenses. There we have to work on the tax framework to see what's happening. They're all out of market, if you go from the bottom of Africa, Zimbabwe, et cetera, are all starting to come. And also importantly, we've also got Mozambique, which I did mention, they've changed, finally changed the casino tax regime there, which means that we can actually no longer have to withhold tax on casino winnings, which means we can now compare favorably with the other operators.

And then finally, just on the international side, you notice it's finally taken years and years for New Zealand, we finally have 63 out of 15 licenses there. So we're really excited about that and that should be coming in probably mid-2027.

And lastly, just one more point I'd add, Germany, we finally have got these online slots. So hopefully, let's see, we should be going out there soon, that's the work in itself and let's see how that market thing performs.

Is Nigeria still part of your roadmap for 2027? Or has there been anything that's sort of changed that maybe has delayed that as a priority or opportunity?

Yes, no, that's an interesting market where we've been sitting in the early innings, but obviously we're happy with our progress, the team on the ground is doing well, and we're just really happy where we are. Remember, we went online first in that market, so we still got more local products and payments to put in there, but improved technology, product, team and bench strength, we are geared up really well for that market.

Mike Hickey, Benchmark.

Hey, Neal, Alinda. Thanks for taking my questions, guys. Good morning or afternoon. Just on '27, obviously, you have a lot of momentum here in your business. I'm just curious if you could kind of rank maybe in terms of growth, where you're most confident, Neal or Alinda? And then also curious how you think about the World Cup as the growth comparable next year?

I think most of the upside was on adding new players, but sort of how you think about that? And then some of the events, Neal, I'm less familiar with men's cricket and I think Rugby World Cups are next year. You've got the Africa Cup again and then Women's Soccer World Cups, just curious if those will be big catalysts for you or not.

Thank you, Mike, for your question. Keeping in mind that we don't want to share too much about 2027 yet. We remain within that strategy to be the best operating efficient machine we can be to expand, have that further margin expansion. But our growth opportunities is very diversified, like Neal just went through the Africa and international strategy for organic growth.

And then if we go back to our capital allocation, we really take a bit of that money that we have to reinvest back on our business. So our marketing ratios, we keep within the range. 21% and 22% for 2027 also to show the commitment to grow those markets.

But the real success is in the efficiencies of the business, and that's why we continuously caught on call to see this margin expansion.

And I' ll add, obviously the World Cup did help us in June and July, but remember it was the wrong time zone. So it doesn't have that effect on our international customers and our African customers because the times were wrong. But yes, you've got all from the World Cups, rugby, et cetera, coming this year, they all just add extra content to our ecosystem.

So we're excited about that. And again, we also talk about capital allocation. We talk about inorganic growth. Obviously, we're always looking for inorganic growth, but the price has to be right and when we find the right one, we. We will definitely execute on it.

So for us, we've got all these levers to pull. But most importantly is, again, what we have achieved this year especially is the cross-pollination of international and Africa together. We are one business. But anything we see that works well, we can use that in each of the markets we are in. And it's all about being local in each of the markets and then with this overall tech track that supports.

This is a quick follow-up. Neal, thank you for that color. The friendly outcomes, not unusual in your business. I think we had a big one last fourth quarter, '25 tied to the Africa Cup. And of course, post that, we saw really strong recycling activity from your players. It sounds like October has been strong.

I'm just curious how much of that you think is the recycling of the sports winnings from 3Q into your sports and casino business and that recycling activity has been sort of normal or if you think maybe given the amount of parlay exposure and the size of the winnings that we could have more duration in that recycling cycle?

So listen, we run different sports books, right, especially international is very different to Africa, right. So international looks obviously like other operators when you compare us, but obviously our Africa parlay is quite unique because what it does is parlays are sometimes 10 or more legs with small stakes but they can get large wins. So even when the big winners come, they keep placing small bets relative to what they want.

So the money comes back in Africa over a much longer period. So that is why we occasionally see bigger swings in our peers and it'll take us a little bit more time to get it. And of course, they may go and recycle into casino.

But overall, we always manage over time to floor it back. It just takes slightly longer in Africa, right? But I suppose that is the brilliance of the African model and why the structural hold retention and margins are so much higher than our international side.

Brandt Montour, Barclays.

Hi, everybody. Thanks for taking the question. Sorry if I missed this topic earlier on. Can you guys just talk a little bit about some of the news over the quarter about proposed South African gambling tax. What's the latest there? How are you thinking about a potential earnings impact if something like that was to come to pass?

So as a reminder, this is a reminder one, there's currently a 6.5% provincial tax in South Africa and a 15% VAT which goes to the state. So this probably comes in at just under 20% of GGR. Treasury had put some discussion paper out a while ago, we're putting an additional 20% tax on GGR on top of all of it, but remember, it's not a concrete proposal yet.

There's currently lots more industry consultation and any update on this is obviously expected in the February 2027 budget. But importantly, a proposal is not law and the new national tax would require legislative, provincial and Presidential approval. And the numbers are out there, so you won't be able to struggle to work out what the impact will be from us, but this increase won't be immaterial, but our business obviously is strong and we've been navigating this for three decades, but there's quite a road to go on there between the provincial and the state.

Thanks for that. And then just a quick follow-up, in terms of Kenya in '27, can you just give us an update on that market and your thoughts around a potential timing and any other developments for that market over the last few months?

So basically, Kenya, I mean, it's funny, before we listed, we were in Kenya and then they increased the taxes and we actually end up giving our license back. But now what's happened has become the cheapest regulatory regime in Africa tax-wise. Now we have to go through all the process again and reapply. So we've reapplied and we're hoping in 2027 to be able to turn it on again. So I suppose that's just the lesson in rather just keeping all the licenses we acquire over time.

And also Supercoin is also going to be getting the Kenyan shilling stablecoin, we're happy to get there as well on that. But really when it comes to all of these markets, Kenya, Rwanda, etc., we're patient before we launch. We understand the regulatory and tax environment, capital controls, product finding the right local people and everything must work together. And when it works together, that's when we start executing our marketing machine.

Ryan Sigdahl, Craig-Hallum.

I want to start with Alberta, providence, you guys -- Province, excuse me, you guys took a more phased regulated launch here in October. But can you talk through kind of key takeaways from that transition for you guys and then what you're seeing in that market?

Sure. So obviously, we've done a good job or the team have done a good job transitioning our customers to the newly regulated market, which obviously happened in October. The customers are adjusting obviously to the new changes in the product environment, such as the removal of autoplay features. We're keeping a close eye on it. We're making improvements every day, every week.

The marketing machine is going to start resuming its rollout. We move all our customers across onto the new regulated platform. And overall, we expect it to be a more rational competitive environment than what we found in Ontario. So let's see how it goes and we are well placed there.

On users, monthly active users, I appreciate slide 10 with the monthly cadence. I think that's helpful from a seasonality standpoint to show 6.2 million in September. Are you willing to say what it was in October, at least directionally if it was higher.

And then kind of break out, you had some tax changes in a couple of smaller African countries, Malawi, et cetera. But just kind of piecemeal the low-value customer churn with kind of some higher value additions, et cetera, the put stakes within that model number.

So first of all, what you are seeing is summer seasonality. So remember, the 6 million customers is almost up 9% on last year. We've got persistency of our cohorts continues to be as strong as ever. We keep layering the cake.

And I suppose the key driver has always been in this business for the last 2.5 decades is the super persistence annuity profitable revenue per customer. So we're not chasing these unprofitable customers simply to maximize our MAC.

Just to add a bit more color there, we closed September at 6.2 million customers. So remember, we report on the average for the quarter. And as we alluded to, October is off to a great start.

Jed Kelly, Oppenheimer.

Just looking at your customer acquisition efficiency, if I kind of look at like where your guidance is going to shake out, how you're performing, it looks like marketing is going to be flat down this year. Just can you talk about how sustainable that is and what's driving that and how we should think about your customer acquisition?

So I'll start there. One of the important drivers of our business has been, besides the operating efficiencies, is our marketing efficiencies. So it's a big number we are spending every year and we found some areas where we can be more efficient and for us is do we have enough in our marketing budget in order to compete and we absolutely do. There are over $500 million or even more, we absolutely do, so now the question is finding even more homes.

So, I mean, some of our competitors are less than 15%, some are less than 18%, so around 20% to 21%, 22%, we are more than happy with how those returns are coming and how those cohorts are playing back overtime time.

And our focus is always to optimize marketing spend and to move it to areas where we see the returns. I think as well that it can't be just a percentage all the time. You have to look at the monetary value because the revenue keeps on growing.

But we've also always been a business about acquiring customers with organic approach and with the funds that we generate to invest it back in our business.

Great. And then just on the buyback, can you talk about sort of implementing a buyback versus measuring the float on your shares and how you kind of try to thread that needle with buyback in your current float?

So let's just recap, the board did approve $150 million buyback and they wanted the buyback to be meaningful, but still we need to remain disciplined. So this is the first try for us and with this it gives us the ability to still be opportunistic in other areas with using this cash like Neal alluded to organic investments and M&A.

We can always revisit the size with the Board at any point in time and if the circumstances materially change. But keep in mind our regular dividend remains the foundation of our shareholders returns. In the last 12 months, we've returned more than $220 million to the shareholders, and that's quite impressive.

Matt Weber, Canaccord Genuity.

I just want to ask about New Zealand. I believe you previously said that you expected regulation to have little effect on profitability in that market. Now that you know the auction price and have the right to apply for the three licenses, does that assessment still hold? And then are you able to comment on how much of your current New Zealand casino revenue comes from brands that you expect to take forward?

So, let's start here. We've already operated in New Zealand for over two decades. And in the last year or two, we haven't been able to market there, right, because there are certain marketing restrictions. So when they came out with these 15 licenses, we decided to get 3. So our top 3 brands can now go live and continue there.

And just to remind everyone, it's an eight-year license that costs about $1 million a year. But all the other taxes of that market, we already paid. So first is we try. Transition them into the new software and we can go and start marketing as we used to.

So actually, we're really excited about it because we've been in no man's land now. We weren't allowed to market and yet we still preserved our revenue there, which is how strong our brand presence is there. And now I think about it's only been 15 licenses and of which we are over 15% of it, so about 20%, so we think there's lots of opportunity there.

And maybe just to add to keep in mind that we've already been paying taxes in New Zealand for the last couple of years, so we won't have that impact on EBITDA, but we can now also turn on marketing, which we haven't been able to do, so which will have a favorable impact on the growth.

Thank you. That's helpful color. And then maybe if I can just on the United Kingdom, it seems like another quarter of solid growth and share gains there. Just how durable do you see those share gains over the course of 2027? And do you expect any material impact from the new duty on most for sports bets, most remote sports bets when it takes effect next April?

So, the UK is still good for us. Remember, I think we still under index there. All our competitors now have also increased rates in the shops as well for the slot machines. So, I think that everyone's reeling into how they can make this market work. For us, it's worked. We're efficient. We combine our businesses there, so we really see operating efficiency and over time, the marketing rates are coming down.

And remember key, a lot of our sponsorships comes from English Premier League. So we're really visible there, improving our product there. So for us, we have navigated that really well. And we've got a disciplined marketing team and obviously leaner cost base. All of that leads to be able to take those extra taxes into account.

Chad Beynon, Macquarie.

Given that you're not as focused on the US OSB and icasino market, how are you thinking about potential prediction market opportunities here stateside or in other markets as well?

So listen, for us, it's already when we exited the US, we really focused on Canada and our international market and in Africa. And in most of our markets, all of them, most of that, basically, prediction markets are gambling. They all have to be regulated and pay the local taxes. So the truth is we don't have a predictions product. We are focused purely on our sportsbook and our online casinos, which is what we booked over the last year. And that's where we are able to literally compete head on with them all of our competitors.

And then, Alinda, you kind of touched on this in terms of sponsorship and marketing, but I just wanted to ask directly on the Man U sponsorship. So you talked about MAU's increasing in the last couple of months against that average, but notwithstanding the current teams results, which will hopefully and most likely improve as we get through the season, how are you measuring success with that sponsorship at this point?

Yes, the partnership started with the new seasons as we with the new season of this quarter and we are seeing positive engagement from our customers, particularly in Africa. I think last quarter, we called out that in Africa alone, there's more than a quarter of -- 250 million fans in Africa alone, so the engagement is just a big bet for us in Africa. And importantly, this is a long-term investment in our brand and the strength that supports the sustainable customer growth. So across all our key markets, and this is exactly what this exclusivity brings us with these partnerships.

Thank you very much.

And then I'll just add in here that, obviously the results on the pitch do not change the value of Man City's part of It's not an exclusive deal, right? Probably it's more favorable for sports before we win Man United draws or loses. But otherwise, yes.

Bernie McTernan, Needham.

Can you Neal, I don't think I've heard you mention Germany before. Can you just detail that opportunity and maybe what's changing there and why now?

I've done it probably over the last four years in Germany and basically Germany moved to a regulated regime and they forced us to have separate wallets for casino and sports. But when we built our software, it was always built with one wallet. So it's taken up about a time to eventually get there to be able to separate the wallet and now finally we can operate with casino separately on a separate wallet.

So let's see how it goes. The regulatory regime there is still very tough because they've got deposit limits, et cetera. But because we had done the sportsbook and done all the work, we might have done this little extra work to get to decouple the two wallets. So let's see how that goes.

And then just a follow-up on guidance philosophy, now that we're or that there could be a couple of potential new markets coming next year, should we expect you to start the year with any of those launches in the guidance or is it just going to be kind of steady state and that would be incremental if they did come to fruition?

I mean, we will communicate in detail the drivers of our guidance in 2027 when we come out with guidance, but the key drivers will remain the same as what we've in 2026, what we know at that point in time we will guide for. It will be strictly organic growth.

There will be no aggressive persistency assumptions and we will remain we talked a lot about this marketing discipline. So anything over about 19%, 20%, we will see as investment back into the business. And we will assume our sports margin will be within our expenses range, which is always a tricky one. We will include, however, anything that we already have launched in 2026, such as Alberta, which will have new tax regime, et cetera, that will be in the guide.

Understood. Thank you both.

Thank you. I'd now like to hand the call back to Neal for closing remarks.

Okay. Thank you, everyone, for joining today's call. We are really proud of the team's execution, and we remain focused on delivering against our strategy. We look forward to speaking to you all again soon.

Thank you for attending today's call. You may now disconnect.