Super Group has stated that it is splitting its 2023 guidance between the US and the rest of the world as it views multiple US markets as an “attractive upside investment opportunity funded by the ample cash flow” following the acquisition of Digital Gaming Corporation.
Commenting on the company’s earnings call following its fourth quarter and full-year update, CFO Alinda Van Wyk noted she expects 2023 to be a year of slight improvements in revenue for non-US operations due to the macro environment, but strong growth in terms of operational EBITDA.
As for US operations, Van Wyk stated that “DGC is at a very different stage of development to the rest of Super Group business”, with net revenue expected to remain minimal while also taking on a significant operational EBITDA loss.
Super Group 2023 guidance
Excluding its US business, Super Group expects its revenue for 2023 to be €1.35bn, a single-digit improvement on 2022’s figures.
Van Wyk noted that the company is projecting “stronger growth” in operational EBITDA of €220m due to “a combination of modest top-line growth and better cost control”.
As for net revenue, the CFO adds that it is expected to grow by approximately 5 per cent, “taking into account the continued uncertainty in the macro environment” having an impact on customers and the local currencies of various markets. Brand license revenue is expected to average €2.3m for the month.
Marketing is expected to come in at 25 per cent of net revenue, reflecting “continued investment into all channels of marketing, including brand”, while operating costs are anticipated to be €8m lower than in 2022.
This is due to cost efficiencies of €18m compared to the previous year being identified, “part offset by Jumpman being included for the full year” as opposed to just for four months of 2022, alongside additional investment in selected markets that are “expected to deliver strong revenue growth”.
Best return US investment
As for US operations, Van Wyk noted that following the completion of its DGC acquisition in January, it recognised that the igaming firm is “very much at early stages of its development” and that some states it is operational in have yet to migrate over to the Betway technology.
Once this is done, investment into those markets will begin, but only if it brings the “best return on investment”.
The CFO stated that net revenue for DGC in 2023 is “expected to remain minimal”, but an around “€70m loss for the year on operating EBITDA” is predicted, breaking even “within the next five years” without investment from rest of the world operations.
“Super Group remains financially strong and we continue to run our business profitably while investing in technology and marketing to support future growth,” Van Wyk said.
When asked about the investment in the US and the €70m in losses which is expected to occur, President and COO Richard Hasson added that they won’t be pushing for a larger footprint and will instead focus on logical states to enter.
“Investment will be assessed on an ongoing basis in terms of finding which states are commercially feasible, and given the sooner way, we’re not going to be going off to stage just for the sake of having a large footprint,” stated Hasson.
“We’re going to be looking to have the brands lie in the states that make sense, and ultimately applying the same toolkit of which the technology is a very key part applying that across the country.”