As Super Group closes the books on its financial year 2023, the company faces a paradox of soaring revenues juxtaposed with a significant dip in profits. The multi-national betting and gaming conglomerate reported an all-time high annual revenue of €1.4 billion, eclipsing the forecasted €1.35 billion and marking an 11% increase from the previous year’s €1.3 billion. These numbers were strengthened by an exceptional fourth quarter performance, with revenues hitting the highest-ever quarterly figures at €359.9 million, a 9% hike from last year’s fourth quarter. An impressive growth in monthly average customers from 2.8 million to 4 million underlined the company’s robust market expansion.
However, the celebration of this revenue milestone is somewhat subdued by the significant €199.7 million drop in profit before tax. A closer look behind the numbers reveals non-cash charges amounting to €64.6 million as the primary culprit. This includes a sizeable €28.6 million stemming from the pivotal January 2023 acquisition of Digital Gaming Corporation (DGC), a strategic move that allowed Super Group to plant its flag in the burgeoning US online sports betting and iGaming market.
Further breaking down the profit reduction, changes in fair value of option liability and an impairment of goodwill accounted for an additional €42.1 million. Contextualizing the decline, the figures are positioned against a backdrop of 2022’s profit numbers, which were buoyed by €246.8 million in non-cash gains related to warrant and earnout liabilities and advantageous foreign exchange movements.
Operational EBITDA faced a downward adjustment from €208.5 million in the previous year to €197.3 million, and unrestricted cash decreased by €12.9 million to settle at €241.9 million by the year’s end – again significantly impacted by the costly DGC acquisition. Added to this, Super Group reported a €44.9 million loss before tax during the fourth quarter, starkly contrasting the €21.1 million profit in the same period the prior year.
Despite these financial headwinds, Super Group’s executives project an air of optimism and strategic focus. Neil Menashe, the firm’s chief executive, touted the achievements of 2023, especially the records set in terms of revenue, customer numbers, and deposits. “We set record breaking totals […] cementing our position as a growing, cash generative and geographically diverse online sports betting and iGaming operator,” he confidently remarked.
Alinda van Wyk, Chief Financial Officer, reaffirmed the company’s direction, highlighting its commitment to efficiency and growth-oriented investments. These statements converge with the company’s robust fourth quarter operational EBITDA that, while witnessing a 14.4% year-on-year decline to €36.2m, exhibited a 29% increase to €54m when US figures were excluded.
Notably, online casino operations stand out as a significant revenue driver for the group, accounting for 85% of net revenue in the final quarter of 2023. In contrast, online sports betting’s slice of the pie shrank from 27% to 15%. This pivot in revenue composition aligns with the fluctuating fortunes in different markets, including growth in Africa and Canada for casino and a decrease in sports betting revenue, credited to ‘customer-friendly’ results and market closure in India.
The trajectory moving forward entails strategic planning where Super Group has set forth ambitious objectives – profitability, growth investment, optimizing global footprint, and managing capital structure. Excluding US operations, the company eyes a 10% total revenue increase and a 12% rise in net revenue for 2024. To ensure these targets are met, the company plans substantial marketing investments and tech optimizations, with an estimated adjusted EBITDA of €280 million.
While the US operation has yet to turn a profit, signs are hopeful as operational EBITDA loss was below expectations, prompting the company to “actively evaluate all of our options,” as stated by van Wyk. The recent divestment of DGC’s B2B division to Games Global showcases this strategic recalibration. And although specific plans for US operations in 2024 remain veiled, Super Group is firm in its belief that adjusted EBITDA losses will not widen beyond 2023’s €57.4 million.
In summary, Super Group’s financial year 2023 paints a picture of a company at the intersection of transformative growth and financial recalibrations – an era of record revenues shadowed by strategic expenses setting the stage for future conquests in the global iGaming and betting landscape.
