SGHC Limited

NYSE:SGHC

Earnings Call Transcript 2021-Q4

[Operator]

Greetings and welcome to the Super Group Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lisa Kampf, Head of Investor Relations for Super Group. Thank you. You may begin.

[Lisa Kampf, Head of Investor Relations]

Good morning, everyone. I am Lisa Kampf and I am delighted to have recently joined Super Group as the Head of Investor Relations. I am based in New York and I look forward to engaging with many of you virtually and in person in the coming days.

Joining me today to discuss Super Group’s results are Neal Menashe, Chief Executive Officer; Richard Hasson, President and Chief Operating Officer and Alinda Van Wyk, Chief Financial Officer. Also with us today during the Q&A session is Spencer McNally, Group Head of Data and Analytics.

By now, everyone should have access to the company’s full year earnings press release issued earlier this morning. The press release is available on the Investor Relations page of Super Group’s website at investors.sghc.com. During this call and in our earnings press release, we will be making or have made comments of a forward-looking nature. These forward-looking statements includes statements related to Super Group’s anticipated financial performance and operating results, market opportunity and business strategy and plans.

These statements are neither promises nor guarantees and are based on management’s current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. The company assumes no obligation to update these statements after today’s call except as required by law. Please refer to today’s press release and the company’s filings with the SEC including the Risk Factors section in the company’s report on Form 20-F filed on February 2, 2022 and in the annual report on Form 20-F for the year ended December 31, 2021 to be filed with the SEC later this month for the detailed discussion of the risk that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Additionally, on today’s call, we may refer to certain non-GAAP financial measures. These financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. The reconciliation of historical non-GAAP financial measures to the most comparable GAAP figures are included in the press release issued earlier today and available on the Investor Relations page of Super Group’s website.

As a result of uncertainty regarding and the potential variability of reconciling items, we have not reconciled our expectations as to adjusted EBITDA. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to our results computed in accordance to GAAP.

Also note that we have posted a supplemental presentation to the Investor Relations section of our company website along with the earnings release, the link to this webcast and filings with the SEC.

And now I would like to turn the call over to Neal.

[Neal Menashe, Chief Executive Officer]

Thanks, Lisa. It’s great to have you on board. Good morning, everyone and thank you for joining us today on our first earnings call as a public company. I am Neal Menashe and I’ve been with the business in various leadership positions for over two decades and have been the Chief Executive Officer of Super Group since declared incorporated as our Group Holding Company in 2020.

As you know, Super Group’s stock became trading under the ticker SGHC on the New York Stock Exchange in January 2022. We are excited and humbled to have this amazing opportunity and afford to this new chapter. I would like to thank our existing investors and our new shareholders as we embark on the very exciting journey.

Most importantly, I want to thank our team at Super Group for their relentless dedication and commitment through such a challenging environment over the last two years and also for their fantastic effort that have contributed to Super Group becoming a publicly traded company. Our team truly understands the core mission of delivery, first-class safe and responsible gaming entertainments to our customers.

We are excited to communicate with you on a quarterly basis as we continue to discuss our current business initiatives and developments towards our long-term goal. In our press release issued earlier today, Super Group announced tremendous results across all of our key financial metrics exceeding our outlook on both net gaming revenue and adjusted EBITDA.

Net gaming revenue or NGR at a constant currency was $1.53 billion for 2021, exceeding our forecast of $1.5 billion. Adjusted EBITDA at constant currency was $368 million, better than our forecast of $350 million. Moving actual exchange rates during 2021, this translates to $1.48 billion of NGR and $358 million of adjusted EBITDA.

Given that this is our first earnings call as a public company, I will spend a few minutes providing some background on who we are, our mission and what we believe makes us different. I’ll then hand over to Richard, our President and COO to explain the progress we have made as we continue to grow in the existing market into new markets and how we plan to continue gaining traction in the large and growing worldwide market of online gaming and sports betting. After that, Alinda, our CFO will discuss our financial performance over the past year.

Super Group is the parent company for two leading global online sports betting and gaming businesses. Firstly Betway, which is our premier global online sports betting brand and then Spin, which is our multi-brand casino offering. Our sports betting and online gaming offerings are underpinned by scalable technology enabling fast and effective entry into new markets, while proprietary marketing and data analytics engines empower us to provide a unique customized, safe and responsible gaming experience.

We believe that we have a number of advantages and differentiated over our competitors and I am pleased to be going to highlight some of the most significant ones. First, Betway is the only sports book brand that we promote and we do so in a consistent manner worldwide. We have marketing and sponsorship arrangements with more than 70 sports teams, events, leagues and franchises worldwide.

And our single brand mean that we are able to optimize marketing ROI rather less efficiencies of a multiple brand. Campaigns targeted one country generates revenue for us worldwide and the cost of even a single country campaign can be amortized across the entire globe. This compares with some of our competitors who only trade in a few markets and therefore can’t amortize to the extent or generate worldwide revenue that we can.

For others, that multiple brands which may dilute the effectiveness of their spend in the big traditional media channels with sports betting with entertainment.

Secondly, while there are many markets in which large-scale traditional brand marketing is possible for sports, that’s really is a case for online casinos reinstates a wide range of brand is required for strategy with a greater weight towards online marketing depending well established and our best portfolio of online casino brand gives us extra shelf space over single brand competitors and the ability to suitably serve at different vectors of those markets.

Thirdly, we own or control and the long-term contracts for more of the key components of our pick stack with the exception of temporary, third-party clicks for regulatory purposes in select new markets. Even then, we aim to convert this to one of our existing technology option at the earliest possible time with the ultimate goal of owning or controlling all key aspects of a front end and back end for all of our casino and sports products.

Critically, we do always own or control all of the competitive advantage technology related to data and analytics and all of the key components required for interacting of customers in real time. And then many other things this mean that we are able to launch into more markets more quickly, adapt more quickly to the changing needs of existing markets and in particular that we can move more quickly and effectively that backs our products to the complexities of a world in which regulation and customer needs are changing all the time.

Our fourth major competitive advantage relates to data and analytics and in particularly how we use proprietary model in the system, plus massive amounts of granular data that – our customers in real time, enhance those interactions at them in real time in order to customize and optimize the individual experiences of our products safely, responsibly and profitably, again, all in real time.

I want to emphasize that these are well calibrated proven commercial models, not black spots or actual AI algorithms that no one understands and which could randomly got hay way at any time. Our models are all proprietary. We’ve shown that we can predict individual customer possibility with remarkable accuracy and to give them with our proprietary interaction system, we are therefore able to offer our products to customers profitably and responsibly, all in real time.

That’s a quick summary of what makes us different. I hope that you have found this useful. I’ll now pass it over to Richard to provide more details on the global market opportunity for Super Group, as well as current business initiatives and development. Richard?

[Richard Hasson, President and Chief Operating Officer]

Thank you, Neal. It is great to be on our first earnings call as a public company and I first want to thank all our partners, shareholders, employees and investors for joining us on this journey. 2021 was a great year for Super Group during which we continued to execute on our global strategy, both in existing and new markets.

In 2021, Betway and Spin launched licenses in nine new markets around the world. Betway launched in France, Tanzania and Germany. Spin, in Mexico and the Betway brand was launched by our soon to be acquired partner DGC in Colorado, Indiana, Iowa, Pennsylvania, and New Jersey.

As we’ve previously discussed in some detail, those US markets are not yet using the Betway global technology and we are of course aiming to change that in the not too distant future. But we are happy to say that in 2022, DGC has recently gone live in Arizona on the Betway global technology platform and that launch is also notable as DGC’s first table gaming deal.

We are fortunate at Super Group to be operating in a large and growing market and we still see a lot of headroom. Globally, the OSP and gaming market is expected to exceed $120 billion by 2025. Our gross gaming revenue or GGR for 2021 was around $1.8 billion, which means we have lots of opportunity to grow both in the U.S. and elsewhere.

Besides the market launches already mentioned, we are obviously also looking at other commercial opportunities for growth. We’ve already given a lot of detail about the planned DGC acquisition and that’s still on track for closing in the latter part of H2.

Canada is currently our biggest market and obviously the regulatory environment there is key. Currently, only Ontario is in the process of regulating and we are busy doing what we need to in order to comply with the requirements for that market. The relevant applications have been lodged with the Ontario regulator within the required timeframes as we are going through the process.

In the meanwhile, we continue operating in Ontario with the knowledge of the regulator. Ultimately, we are bullish on the effects of the regulation in the Ontario market that could we expect that the pie will grow in the medium to long-term and we are coming at it with a significant head start over most of the competition. We also expect this regulation to open up additional marketing opportunities in Ontario and bring with it some cost efficiencies to offset the gaming duties.

So net, net, we think that this market still has some solid potential upside for us in terms of both revenues and profits. On the marketing front, our team had building 2021 bringing in more than 30 new brand partnerships for Betway. As of today, the total portfolio now stands at an excess of 70 active partnerships in 17 different countries spread across all the major international sports including soccer, basketball, tennis, e-sports and golf.

Our reach is far and wide. We’ve got seven different e-sports deals. We have 11 tennis deals in eight different countries and in the English family, our Betway brand is visible in every state in at least once a season in many stadiums for almost every game and overall in – of all games.

In the NBA, we’ve got deals with The Bulls, The Warriors, The Mavs, the Cavs, The Clippers, The 76ers, the Heat, The Bucks and The Timberwolves. Plus there is also ice hockey, horse racing, cricket, rugby and motor sports. There is a long list of partnerships and sponsorships that are continuously reinforcing the Betway brand around the world helping to support all of our other marketing activity and thereby the growth of the business.

And of course, we actively monitor other major sports properties around the world for what we see as attractive and potentially profitable entry points. In terms of customer numbers, we had a very good year. On the back of continued strong customer acquisition, and equally good retention, H2 finished with an average monthly active customer count in excess of $2.7 million. That average is around 45% up on the prior year same period and around the 150% higher than the same period in 2019.

For the full year, those percentages were around 74% as compared to 2020 and around 160% better than 2019. We are obviously very proud of the strong customer growth, but we are remindful of the possibility that at least some of that growth would have come from the secular shift to online that was frozen by the COVID pandemic.

We are certainly aiming for continued strong growth in customer numbers in 2022 and beyond, but equally, we want to keep expectations realistic in this regard. Our guidance for 2022 which Alinda will discuss shortly, assumes growth in our customer base at a lower rate than 2021. In terms of customer value without going into too much detail, we are satisfied that 2021 better as expected.

In our mature continuing markets, customer values remain broadly consistent with prior years with the exception of the UK, where as expected regulatory and other changes to structure the market resulting in continued reductions in average deposits and NGR per customer. In some of our faster growing markets, we are pleased to see customer values holding up nicely despite the continued growth with moderate improvements in some cases.

In other cases, we saw moderate reductions in monthly values, which is usually what you would expect from markets that have been growing fast and are not yet mature. Overall, average customer values were down against 2020 continuing its trend that has been evident for a couple of years at least. Again, this is to be expected as a result of our market mix shifting over time due to faster growth in developing markets, the average customer values are naturally lower than the mature markets.

So in sum, 2021 is a bit large as expected and overall we saw a pleasing trend towards a more diversified mass market business that continues to line up nicely with the aim of providing first class, safe, secure and responsible gaming to all of our customers around the world.

With that, I will turn it over to Alinda to review our financials. Alinda?

[Alinda Van Wyk, Chief Financial Officer]

Thank you, Richard. I am especially delighted to present you with Super Group’s financial results on our first earnings call, because 2021 was a good year for us continuing our star growth in previous years with excellent year-on-year increases in all the headline key metrics including net gross revenue, revenue, adjusted EBITDA and the other.

Despite industry meetings in second quarter and some markets with regulatory challenges, we were able to achieve our key financial goals. Before I get into the details, I want to highlight that we are reporting in Euro and not US dollars. We’ve made the decision to do so because currently, we do not have any meaningful part of our business played in dollars, at least that until we acquire DGC, sometime in the latter half of this year, so reporting in US dollars will just introduces and with the currency fluctuation into our results and in particular makes prior year comparisons much more difficult.

The numbers we are presenting are pro forma consolidated numbers as a sum total of all our group irrespective of the timing of the company’s organizations which occurred during both 2020 and 2021. The numbers presented are adjusted EBITDA, which is the EBITDA number adjusted for transaction expenses relating to developing, and payment of goodwill and deduction of some non-recurring expenses.

As I now turn to our financial results. Net gaming revenue for the two years increased by 29% year-on-year to €1.26 billion, which reflects good growth in market categorized as business as usual and where we are able to appropriately offer and market our products in 2021 as we did in 2020 and before. For markets where that was not the case, including some which closed during the year, such as Netherlands or in Germany, where regulations tightened significantly, we estimate that net gaming revenue was negatively impacted by around €40 million to €45 million compared with how those markets had performed in 2020.

I am particularly pleased that we are able to offset these negative impacts and still deliver strong mix gaming revenue growth for the year. Adjusted EBITDA for the full year grew at 41% to €302 million for 2021. This was helped in part by some operating leverage and economies of scale in general administrative costs which are generally fixed and increased by only 16% compared to 2020.

This is a very good result given that net gaming revenue grew as mentioned by 29%. As expected, direct expenses, which are largely variable and marketing costs, which are mixed or variable and fixed were broadly in line with net gaming revenue.

Cash generated from operating activities increased from €156 million in 2020 to €229 million in 2021. That’s a growth rate of 47% and reflect the continued high rate of profitability. Free cash flow grew in line from €183 million in 2020 to €249 million in 2021. Free cash flow as a percentage of adjusted EBITDA was therefore 82% in 2021, a small reduction from 84% in 2020 due to the increases in tax and capital expenditure.

Following from that, cash and cash equivalents more than doubled from €139 million at the start of the year to €294 million at the end of the year, again reflecting the strong cash generating abilities of the business and thanks to a debt free balance sheet.

As for the fourth quarter on a standalone basis, net gaming revenue for the quarter came in 15% higher at €320 million in comparison to the same period last year despite a very challenging October in sports for the entire industry and helped by some sports margin recovery in November.

Fourth quarter adjusted EBITDA was €69 million, down 2% from the previous year driven by increase in brand marketing expenditure, which was predominantly USA focused.

Regarding our guidance for 2022, we see no reason which could change what has previously been provided. Of course, it’s so early in the year and our outlook could change, but for now we are comfortable confirming our prior guidance which is detailed in the presentation posted to our website. If you don’t recognize those numbers, it’s because we’ve previously provided our forecast in US dollars and those figures are in the euro equivalent values using the exchange rate at the time we originally announced the guidance in line with what I’ve mentioned, we are now stating our guidance in euro to align the reporting of our financials going forward.

Finally, I am very proud of how we’ve managed to get through our first yearend earnings both in terms of the results and profits. The requirements of public markets are obviously new to many members of our team. So I am presenting for the hard work and congratulating on getting everything done to such a high standard.

Thank you very much. I will now hand back to Neal for his closing remarks.

[Neal Menashe, Chief Executive Officer]

Thank you, Alinda. Super Group has had an extraordinary year. Everybody listening to this call know how much time bandwidth and resources, the process of becoming a public company can be. The listing process on the New York Stock Exchange took up all of 2021 with most of our senior executives and many members of our operational management.

And despite that extraordinary focus, our team delivered record levels of new and returning customers, record revenues and record profits with strong in all of these metrics. With the listing and 2021 behind us, we are looking forward to this year and beyond as we continue to enter new markets and grow existing ones with our Betway and Spin brands.

We are confident that we can drive this business onwards into the online gaming betting that we know it will become and we hope that all of you are as excited for the future as we are.

With that, we open the call to questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from the line of Stephen Grambling with Goldman Sachs. Please proceed with your question.

[Stephen Grambling, Goldman Sachs]

Hey. Thanks for taking the question. I guess, maybe the first one just on the regulatory changes in Canada. It seems like folks who started to launch there. Curious how that progression has compared to your own expectations and how you are thinking about that market?

[Richard Hasson, President and Chief Operating Officer]

Hi, Stephen. Richard here. So, we are currently going through the process as we mentioned, or active conversations with the Ontario regulator. Very comfortable with where we are in the process. Very comfortable with the timing and confident in completing that application process with the regulator. And for now, as we mentioned, we continue operating in Ontario with the knowledge of the regulator.

[Stephen Grambling, Goldman Sachs]

And I guess, from a competitive standpoint is it been surprising as you’ve seen any kind of changes in advertising promotions et cetera as some of the peers have started to ramp up there?

[Richard Hasson, President and Chief Operating Officer]

Yes, I think it’s still relatively early days. Obviously, and the earlier this month and they are obviously new operators in the market that I think it’s too early to make a call on that.

[Stephen Grambling, Goldman Sachs]

And then maybe a question on guidance, recognizing that you reiterated the guidance for the year. Curious I mean, it’s been a while or if you like I should say that there has been a number of external events that have happened over the past couple of months. So I am wondering if you could just walk through any kind of big puts and takes as you see it that are maybe offsetting each other as we think about the guidance? And then, any color you can provide on kind of the cadence of the year, so that we can make sure that we are not off size in any given period? Thanks.

[Alinda Van Wyk, Chief Financial Officer]

Hi, Alinda here. Yes, as previously cited and noted in the call, we still feel very comfortable that our guidance as outset in the previous presentations is still relevant and within our reach. We have just adjusted it for the time being back to Europe – euros, as the US dollar conversion obviously creates expectations that we can’t control due to the fluctuations. We have data pool, looking through the year, we have adjusted our repo cost according to regulatory happenings in, for example, Netherlands and Germany, project for that and the expectation of Ontario. But we feel comfortable that we are on track of what we’ve previously provided.

[Stephen Grambling, Goldman Sachs]

Great. Thanks so much.

[Operator]

Thank you. Our next question comes from the line of Jud Kelly with Oppenheimer & Company. Please proceed with your question.

[Jud Kelly, Oppenheimer & Company]

Hey, great. Thanks for taking my questions. Just going back to Canada, can you discuss your Canadian i-gaming customer? Like do they have a lot of overlap with the sports betters or you think that the amount that the new sports betting companies coming in are not real – I guess, your – I guess your i-gaming customers, are they both just i-gaming or do they bet sports as well? Just trying to get a sense of your i-gaming customer profile.

[Neal Menashe, Chief Executive Officer]

Okay. I’ll take that. It’s Neal here. So, generally, we’ve seen across the world and we were seeing – and I talk about this a lot, is that the specific i-gaming customer casino compared to the sports is very different. A person who played at Betway sports book who then goes and played in the casinos that Betway offers is a fundamentally different customer who plays on our Spin brand. They are not perfect. And that’s why we have both of them in our offering. So, when you – basically you look at our business you’ve got Betway and Spin and together they make about 50% - 50-50 the revenue or Betway is slightly more. But overall the casino revenue comes in over 70%. But it’s different customers in Betway as they are in Spin and that’s why we have the dual offering wherever we can across the globe and it’s very important they are not same.

[Jud Kelly, Oppenheimer & Company]

Got it. And would you say your Canada i-gaming customer, I guess your Canadian customers, is this that spread out relative to the population of each provinces like Ontario seven percentage versus British Columbia?

[Neal Menashe, Chief Executive Officer]

It doesn’t actually front end doesn’t go according to the population. So it’s even less than the population. So that’s why with Canada regulating about province – we got province-by-province. So that will be obviously the first province of Ontario to have regulated.

[Jud Kelly, Oppenheimer & Company]

Got it. And then, just I guess, back on guidance, I guess, you had your 1Q numbers. Could you give us a sense on how we should expect quarterly revenue? Did the trend should be similar seasonality to last year?

[Neal Menashe, Chief Executive Officer]

I mean, generally, - I mean, I’ll start and Alinda can then add, but generally it does seasonality, but remember casino breeds up into sports. Sports use can have a bad halt in one month because of a sports event and different countries will have different halts. So, it’s yet quarter-by-quarter but it’s more to when I look at the half year revenues et cetera as you’ve previously got a lot in last year in October was the terrible month, but in November and December they’ve obviously started to close back and this happened that was all in the same quarter where you had exceptional bad halt in the one quarter, it can enroll into the next quarter. And then… but COVID obviously, two years ago we had sports restrictions et cetera then obviously that we’ve now ramped out of that. So that most – all sports events are now open as usual.

[Jud Kelly, Oppenheimer & Company]

And then, just one last one from me. When you look at the world cup this year, how much is that a benefit to your 2022 outlook?

[Neal Menashe, Chief Executive Officer]

Given that the world cup is towards the latter end of the year and so from our policy, yes that’s in there, but it may, but it’s still slow. So we’ve got some of it in there, but then we’ve got lots of other competition definitely all the time. So this business is all sports events whether it’s an EPL, the NBA, the IPL, e-sports, et cetera. So for sports we tried the range across the globe and next wave of this one brand of Betway. So we are open for every sports based across the globe with our customers in all the 25 different jurisdictions that we operated and growing. And that’s key. Where obviously with casino, it’s more about the random number generating and happens into the casino which will all be opened with [Indiscernible]

[Jud Kelly, Oppenheimer & Company]

Thank you.

[Operator]

Thank you. [Operator Instructions] Our next question comes from the line of Bernie McTernan with Needham & Company. Please proceed with your question.

[Bernie McTernan, Needham & Company]

Great. Thanks for taking the questions. Just sticking on Canada, I was just thinking if there is anything – I know there is a lot to talk about competition, but what are you guys doing from a customer retention standpoint to make sure that you can retain your own customers in light of this new competition? Are there any changes in strategy that you are doing now relative to six to twelve months ago?

[Spencer McNally, Group Head of Data and Analytics]

Hi, it’s Spencer, Bernie. From a general point of view, our belief in our methodology is strong. We take a customer-by-customer view on every single individual using a very, very poor range of metrics across the significant range of timeframe. We are evaluating that data in close to real time. We are responding to that in close to real time and we are offering the customer in a responsible way what we think is the appropriate products and at the appropriate values and so on and so forth for them. And we don’t think that anything changes just because we now may see more competitors or we may see slightly different regulations. A lot of us think that in the regulations that things that we were doing already and again on your path to Ontario, where anything is changing. So, I don’t know that we see the need to change the game plan. It works around the world in regulated jurisdictions everywhere. Ontario is joining this, doesn’t change very much from our point of view.

[Bernie McTernan, Needham & Company]

And so, I guess the point being that the new competition isn’t throwing off your actuarial payables or whatever it may be in terms of what the impact is on your customers?

[Spencer McNally, Group Head of Data and Analytics]

Look I am saying that because the – about insurance companies in next few months. And then I said actuary is a guide, looks out the back window and says which way to go. The truth is that, it’s a little early to tell whether anything is going to change and I mean, my favorite saying is that when we are thinking about what cost is secondly wrong, it’s just a question of how wrong they are going to be. But we are comfortable that we are not seeing anything at this stage that is particularly theory. We are really not seeing anything at all scary the land particularly . So, no, I guess, I would say, we don’t see the game changes. We have got a strategy that’s worked for many years. And all the fine borders continue to work and we are going to fiercely prove it as we’ve done.

[Neal Menashe, Chief Executive Officer]

And then, I mean, this is Neal again. I’ll just add in, you’ve seen in the New York with the huge bonus money and the tech from bonus money, we’ve always been very careful with our bonus strategy. And we will continue to do that. And it’s not, you can bring them in the front door, but if those strategies are all wrong, you can’t keep changing the odds of the game by giving free bonuses that the bet cost you more than actually that lost some value of the customers. So we had this our hold two decades and this is no different. We’ve learned over the last two decades from regulation from one market to another. So Ontario is no different and remember only one province in Canada.

[Bernie McTernan, Needham & Company]

Understood. And then, when you finally do gain regulatory approval in Canada, will there be any blackout period from when you get approval to when you launch where you have to kind of seize operations as – whether it’d be a couple of days or whatever it maybe, where you would not operate anymore?

[Neal Menashe, Chief Executive Officer]

No, no, no. Not. The business is – and you build in from the dot com into the regulated world, which has happened in other countries with an exception.

[Bernie McTernan, Needham & Company]

Understood. Okay, and then maybe just lastly as a follow-up to Stephen’s question just any impact on the Russia Ukraine that’s implied in the guide or any way to think about the potential impact?

[Neal Menashe, Chief Executive Officer]

Okay, so, firstly – I’ll take that. Firstly, for Ukraine, our thoughts are to everyone there. We’ve got no exposure there. We’ve got no developers there in Ukraine. No business in Ukraine and funny enough when it comes to Russia to Google basically no business in Russia. So we’ve had no impact from there, but obviously it’s critical situation there, what’s going on there.

[Bernie McTernan, Needham & Company]

Agreed. Great. Well thanks taking all the questions. Appreciated.

[Operator]

Thank you. Our next question comes from the line of Michael Graham with Canaccord Genuity. Please proceed with your question.

[Michael Graham, Canaccord Genuity]

Thank you and thanks for all the new information. Congrats on giving all those numbers out. I just had two questions. The first one is maybe talk about the long-term growth, relative growth that you expect to see across the business between online casino and sports betting. Just wondering sort of where you see those growth rates evolve into? And then, I also want to just ask about how you are feeling about the balance sheet? It looks like you ended up with just under €300 on the = cash on the balance sheet. So just wondering, how you are thinking about liquidity and sort of the balance sheet going forward? Thanks.

[Alinda Van Wyk, Chief Financial Officer]

Thank you, Michael. Alinda here. So, the cash on the balance sheet is well noted. It’s more than doubled. There is obviously now being looked at certain opportunities for investment purposes going forward. That’s under discussion with management, but furthermore, we are also looking at a potential dividend policy, but that is very early days. But we remain as a strong cash flow generated business. On your question on long-term guidance, there is so much going on in the world at the moment. As a business, we have decided that we look – we are going to internally look really at the numbers half way through the year. As you’ve noted, well, it took a lot of us to get there, the first 2021 year end growth results out in such a short time which is new to us for a listed entity. With the guidance we will rework it through the course of the half year mark and then maybe put out something during the full or the later part of the year on what 2023 will look like. I don’t think we project three four years. We will look at some trend, but it’s impossible to make that as accurate due to what’s happening in the world.

[Michael Graham, Canaccord Genuity]

Okay. That’s very helpful. Thank you.

[Operator]

Thank you. Our next question comes from the line of Mike Hickey with The Benchmark Company. Please proceed with your question.

[Mike Hickey, The Benchmark Company]

Hey, Neal, Richard, Alinda, Lisa, good morning guys. Congratulations on your success. Just a couple questions from me. On Canada, hot topic here. Just curious if you could break out your revenue and profit contribution from Canada. And then specifically now that at least Ontario is moving to a regulated market. What is assumed impact net on your guidance from that region now thinking about taxes and marketing expense, everything that’s going to sort of change now that you are regulated and operating in the grey market? And I have a follow-up. Thanks.

[Richard Hasson, President and Chief Operating Officer]

Hi, Mike. Excuse me. Hi, Mike. Richard here, I’ll start with the first question and hand over to you for the second. In terms of the country break down, we don’t provide that specifically of those details, but I will refer you to the presentation where you see some similar charts from previous where we have split out the 2021 revenue by geography. And you’ll know that the majority of that number made up of the Americas is Canada, of course also in the East Central and South America and that’s also is context that’s - of the Americas excludes Digital Gaming Corporation, because that’s not yet part of the Super Group.

[Mike Hickey, The Benchmark Company]

And the question is… yes, go ahead, Alinda.

[Alinda Van Wyk, Chief Financial Officer]

Yes, sorry. You are picking around the impacts on EBITDA especially around Ontario. Two things is happening with our business. I mean, we’ve made notes on operating leverage as the more we grow there, we understand our business. We are getting efficiencies, especially in our variable costs and that goes over into Ontario as well. But remember, even though you might have tax paid, you have much more efficiencies in for example, your cost of processing funds in the country and actually on average, your marketing becomes competitive and like expense of service and good returns for becoming fully regulated in a jurisdiction, because it does brings some other efficiencies, good reduction in costs.

[Neal Menashe, Chief Executive Officer]

And then, I’ll just add in here, this is Neal, is that remember this is any one province in Canada. It’s not the whole country regulating as one, which is quite differentially take Germany and some other markets. So, for us, there is lots of opportunity within in Canada and again, we’ve got Betway and Spin and we pull a lot of opportunity across the globe. So at the same way we would look at the provinces – each province in Canada as a new market or new existing market. You would look at DGC each state as a market and that’s how we look at it across the globe and it’s about being localizing each of these markets than having the products localizing and being the most efficient it can be in each of these countries across the globe. And that’s been our business model and that’s why we’ve got 4,000 people and we’ve got teams who run – and teams are confident, went around the countries and this case, DGC’s case the states and then Canada, obviously the province of Ontario and in the race with the dot com. But this has been our business for the last two decades is following those areas as markets have become regulated.

[Richard Hasson, President and Chief Operating Officer]

In the very short term it’s really hard to call exactly what’s going to happen. Our experience in the past is that these markets grow in size once they become regulated and between the operational and cost efficiencies that Alinda referred to and then, your overall bottom-line benefits that’s taking sort of a medium term onward skew. In the very, very short-term, it’s remained to be seen. It’s very, very early what’s happening. We’ve been quietly confident, but it’s too early to tell exactly what’s going to happen in the very short-term.

[Mike Hickey, The Benchmark Company]

Okay. Thanks. Just to confirm that the Canadian piece of your 2022 guide that’s business as usual, I mean, just – and do we run the risk here that you – when you change that to adapt to as now as regulated. So it’s not the same scenario that when Richard gave guidance, there is a risk that you have to lower numbers in the near term, given taxes and marketing and everything else that’s part of being a regulated market?

[Alinda Van Wyk, Chief Financial Officer]

Just to reiterate, we did look off to regulation become imminent. We did re-adjust the guidance and we still feel comfortable with the adjustment as effective I go 2022, we would reach the target as said previously.

[Neal Menashe, Chief Executive Officer]

That we took into account all the taxes in picture coming into just the province of on.

[Richard Hasson, President and Chief Operating Officer]

Is there any unknown unit is exactly how the regulations are going to be interpreted by the regulator? But I think that’s going to take a while to play out and on the phase of what you are seeing there, there is nothing particularly unusual. There is not, we’ve seen other markets regulates with the deposit levels explicitly that’s simplified by the regulator or very onerous marketing condition. None of that’s happening in Ontario. So, on the phase of what the regulations are reading like, we are not seeing a huge change in operating conditions.

[Mike Hickey, The Benchmark Company]

Okay. Great. Thanks guys. Second question from me, on the US, can you just sort of talk through the playbook there once you finish your acquisition, sort of how you are thinking about the financial impact and the sort of updated thoughts on the acquisition and how you think about bringing in players and sort of overcoming not having a database like some of your peers do? Thanks guys.

[Spencer McNally, Group Head of Data and Analytics]

Hi, Mike. So, as Neal said, when we look at any new market data new US state through a new country, we look at it on the individual market basis and we will try the same toolkit as we have to all other markets to each of these jurisdictions. Where we stand today, DGC is live in six states with at par, with market access in up to 12. And once DGC becomes part of Super Group, those will be treated as all – every other market within the Super Group has treated. So it will be the power of what brand, the underlying use of data and analytics to understand the customers and of course having the localized teams in each and every state in this case that are obsessing about the local detail and understanding the customers on an individual basis in each of these markets. So, it’s taking what we’ve learnt in the last 20 plus years is taking in what we’ve implied to all other markets throughout the world and in this case applying it to each of those states as we do to other countries around the world.

[Mike Hickey, The Benchmark Company]

Thank you.

[Operator]

Thank you. Our final question comes from the line of Stephen Grambling with Goldman Sachs. Please proceed with your question.

[Stephen Grambling, Goldman Sachs]

Hey. Thanks for sneaking back in. One other on just the guidance and assumptions there. On the branding fee that you get from, I guess, it’s a combination of Thailand, China and the US. How do we think about the visibility on that and what will drive that year-over-year and how that strategy? Thank you.

[Richard Hasson, President and Chief Operating Officer]

Hi again, Stephen. So, on the brand fee that’s a fee that we earn for other businesses making use of our brand. Obviously the strength of our brand globally is obvious. And the brands itself what I think about is not looked as an isolation. So it was part of our thinking around the total amount spent and invested into the brand across the world. So, when we look at what’s today the portfolio of over 70 partnerships as – for the brand we will consider in those conversations and in those investment decisions, we will consider what we expect to earn as a brand fee from those partners. So, adjustments in the brand, the potential adjustments will be considered in the branding decisions and ultimately brand, when we look at the brand relative to our revenue, the brand will be a part of the marketing investments. Obviously, alongside the other forms of marketing and in summary that brand is looked at in conjunction with all other marketing decisions related. It’s not looked as an isolation.

[Neal Menashe, Chief Executive Officer]

So, I will just add in, if you pull, it could because there is one sports brand. We can have marketing at a brand level that depicts us global marketing. But that we don’t take all the money of marketing and just spend it on brand. Brand is one portion of Betway patches and that’s very important. So, the brand fee becomes – comes into that, but we – because we’ve got global reach, we’ve got enough volume in all our marketing to get whatever the level. But it’s not just distributing, it’s not just built on brand. It’s built on brand in one part and then you’ve got all the other marketing plus the localized marketing that access on and that’s very important.

[Stephen Grambling, Goldman Sachs]

But just to clarify, so that’s not on a percentage of GGR generated by those operating partners such that’s kind of like a year-to-year adjustment that’s made based on the earning that you have?

[Neal Menashe, Chief Executive Officer]

Yes.

[Alinda Van Wyk, Chief Financial Officer]

Yes.

[Stephen Grambling, Goldman Sachs]

It’s further rests in there.

[Neal Menashe, Chief Executive Officer]

Yes it’s an average.

[Stephen Grambling, Goldman Sachs]

And so, you generally think about is being bridged even then or that’s an EBITDA contributing segment?

[Neal Menashe, Chief Executive Officer]

Yes, so we just take some income from that will help us save, help go towards the brand same we have across the globe. Just in accounting terms you have to kind of separate with this when you discuss.

[Stephen Grambling, Goldman Sachs]

Got it. Okay. Thank you.

[Operator]

Thank you. Ladies and gentlemen, this concludes our question and answer session and does concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.