Super Group’s FY2023 sees €199.7m drop in profit despite record revenue
Super Group attributed the drop in profit before tax to non-cash charges of €64.6m. €28.6m of that total came from the January 2023 acquisition of online sports betting and igaming business Digital Gaming Corporation (DGC), which allowed Super Group to enter the US at the start of the year.
The company also highlighted that €42.1m of the drop in profit was down to changes in fair value of option liability and an impairment of goodwill. Super Group also pointed to the 2022 figure’s inclusion of €246.8m in non-cash gains relating to the fair value of warrant and earnout liabilities and related foreign exchange movements.
Operational EBITDA was down from €208.5m in 2022 to €197.3m in 2023. Meanwhile, unrestricted cash was also €12.9m lower at €241.9m, which Super Group again assigned to the DGC acquisition.
Boosted by record revenues
Super Group produced 2023 revenues of €1.4bn, its highest ever annual total. Record Q4 revenues led the way for the Betway operator.
The 2023 revenue total exceeded Super Group’s guidance of €1.35bn, increasing 11% year-on-year from €1.3bn in 2022. Monthly average customers rose 43% from 2.8 million to 4 million.
Neil Menashe, Super Group chief executive, revealed the business is setting its sights on double-digit top-line growth in 2024.
“We have made tremendous strides in 2023 and are delighted to have achieved an all-time revenue record of €1.4 billion, enabling us to comfortably surpass our guidance for the year,” Menashe stated.
“We set record breaking totals for revenue, customer numbers and deposits cementing our position as a growing, cash generative and geographically diverse online sports betting and igaming operator.”
Chief financial officer Alinda van Wyk added: “To have surpassed our guidance, in the face of multiple headwinds, is indicative of our laser focus on realising cost efficiencies and investing in growth where we can see a clear return.”
Q4 loss for Super Group
Super Group generated €359.9m during Q4, its highest ever in a quarter. It was also a 9% increase on the €329.1m figure from the same quarter last year. Monthly average customers increased by 38% to 4.7 million for Q4.
However, despite the revenue records, Super Group recorded a €44.9m loss before tax during Q4. This was compared to a profit of €21.1m during Q4 2022. Again, Super Group attributed the loss to costs arising from the DGC acquisition.
Meanwhile, operational EBITDA for Q4 stood at €36.2m. This was 14.4% down on Q4 2022’s number operational EBITDA of €42.3m. However, excluding the US, operational EBITDA for Q4 was €54m, up 29% year-on-year.
Igaming success offsets headwinds
As well as Betway, Super Group also owns online casino operator Spin. The company pointed to its online casino offering as a key driver of revenue for the group.
Super Group’s chief executive lauded the company’s igaming sector, which he said allowed it to overcome a challenging start to the year and sportsbook volatility.
Online casino accounted for 85% of Super Group’s net revenue in Q4 2023, up by 12% on Q4 2022. Online sports betting made up 15% of the company’s net revenue, down from 27% in Q4 2022.
Super Group put the 22% ex-US rise in online casino revenue to €289m down to growth in Africa and Canada, while the 39% decrease in sports betting revenue to €52m was blamed on customer-friendly sports results during October. The closure of the Indian market was deemed to have had a negative impact on both.
In terms of net revenue, Spin was responsible for 45% of Super Group’s Q4 net revenue to Betway’s 55%. This was a 1% change from Q4 2022’s ratio of Spin’s 46% and Betway’s 54%.
Super Group yet to make its mark in the US
After entering the US thanks to its DGC acquisition, Super Group is yet to turn a profit in the country.
The business’ 2023 operational EBITDA of €197.3m was hampered by a US loss of €57.4m, with operational EBITDA ex-US standing at €254.7m for the year.
Despite the loss in the US, Van Wyk kept an optimistic outlook on Super Group’s achievements there, saying: “In the US, the operational EBITDA loss was less than expected for the year and we are actively evaluating all of our options.”
In February 2023, Super Group reached an agreement to sell the non-core B2B division of DGC to Games Global.
The future for Super Group
In its report, Super Group outlined four key strategic objectives it will look to meet in the future. These are to continue making a profit, further invest into future growth, optimise the company’s global footprint and effectively manage its capital structure.
In terms of 2024 guidance excluding the US, Super Group is aiming to increase total revenue by 10%, reaching €1.6bn for the year. The business hopes to raise net revenue by 12%.
The company is eyeing adjusted EBITDA of €280m, with an adjusted EBITDA margin of 18%. It expects to do this by heavily investing into marketing, while also optimising its costs and technology.
For the US, the company is currently assessing a range of options. Quite what this means remains to be seen, although Super Group says that its 2024 adjusted EBITDA loss in the country is not expected to exceed 2023’s figure of €57.4m.