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Super Group lowers full-year guidance amid macroeconomic pressure in Q2

| By Robert Fletcher
Super Group has reduced its full-year revenue and earnings guidance after general economic uncertainty in the first half of the year, but said its underlying business is healthy and it remains optimistic over its future growth potential.

The operator, which counts Betway and Spin among its brands, said it continued to feel the impact of the normalisation of entertainment spending patterns during the post-pandemic period, as well as the headwind effects of general economic uncertainty on discretionary spending. 

Betway warned this would likely be the case for the remainder of the year and has issued updated guidance to reflect this.

Revenue for the full-year is now expected to reach between €1.15bn (£972.7m/$1.19bn), down from the initial guidance of €1.40bn, issued with its 2021 results. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to range from $200.0m to €215.0m, down from the earlier estimate of €345.0m. 

However, speaking in an earnings call, Super Group chief executive Neal Menashe said year-on-year results for the first two quarters of 2022 do not properly reflect its “treatment” over the last 12 months and the business remains in a strong position. 

“Ongoing regulatory change post-Covid normalisation will ultimately benefit Super Group because we have an efficient cost structure and over 20 years’ track record of trading profitably through thick and thin,” Menashe said. “Importantly, our control over marketing, our products, and our operating costs gives us a number of levers to optimise them.

“We believe that online gaming businesses are resilient, but they are not immune to macroeconomic pressures. What Super Group has is a global footprint and a competitive cost structure that we intend to keep and improve. 

“We are experiencing these pressures, but our underlying business is healthy, and we continue and will continue to grow over time.”

Revenue was down from €355.2m in Q2 of 2021 to €320.8m. Online casino was the main source of revenue, generating €204.3m in the quarter, ahead of sports betting on €110.6m and brand licensing with €5.8m.

Betway was the more successful of the two core brands with €178.7m in revenue, ahead of Spin with €142.1m. 

In terms of geographical performance, North America revenue reached €142.1m, with Asia-Pacific revenue at €77.4m, Africa and the Middle East on €63.6m, Europe at €30.5m, and South and Latin America €7.2m. North America revenue is likely to expand further in the coming quarter following recent approval in Ontario in Canada

Direct and marketing costs were reduced 3.4% to €225.7m while general and administration expenses were relatively level year-on-year, with depreciation and amortisation costs also down. 

The group also noted a €219.3m positive impact in change in fair value of earnout liability, as well as a €64.0m positive change in fair value of warrant liability. As a result, despite the fall in revenue, this pushed pre-tax profit up 354.0% year-on-year to €304.2m.

Super Group paid €5.6m in tax and reported €3.5m worth of negative foreign currency translation, meaning it ended the quarter with a net profit of €295.1m, a 374.4% rise on 2021.

Looking at the first half, revenue in the six months to 30 June was 1.8% lower year-on-year at €655.3m. Online casino was by far the main source of revenue, generating €408.2m, over €220.2m from sports betting and €25.7m from brand licensing.

Direct and marketing costs were 4.1% higher at €466.4m, but general and administration expenses were down 8.3% and depreciation and amortisation costs fell 25.7%.

Looking at other costs, Super Group reported €194.9m in positive impact in change in fair value of earnout liability and €34.6m in positive change in fair value of warrant liability. However, this was partially offset by €125.3m in share-based payment expense and €24.0m in foreign exchange on the revaluation of warrants and earnouts.

However, pre-tax profit was still up 38.2% to €149.9, while after accounting for €14.6m in tax payments and €2.4m in negative foreign currency translation, Super Group was left with a net profit of €133.0m, up 30.0% year-on-year.

“Our balance sheet remains strong, our business fundamentals are sound, and we’ll stay focused on long-term opportunities around the world,” Menashe said.

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