Operating subsidiary of Super Group’s brands Betway and Spin, Super Group Limited (SGHC), released its first quarter 2022 financial results impacted by industry and economic headwinds.
SEAH Merger Impact
SGHC registered for the three months ended March 31, 2022, a loss after tax of €163.2 million ($174.3 million), as compared to a profit of €38.6 million ($41.2 million) in the first three months of 2021, despite the increase of 7% in Q1 2022 revenue to €334.5 million ($357.2 million), €311.8 million ($333 million) in Q1 2021.
“The results for the first quarter of 2022 reflected revenue growth and strong cash generation but were challenged on a period over period comparative basis due to industry and economic headwinds and costs related to our business combination and listing as a public company in January.”Alinda van Wyk, CFO, Super Group
Super Group outlined that the bottom line was impacted by one-time costs related to the merger with Sports Entertainment Acquisition Corp (SEAH) of €21.4 million ($22.9 million) in transaction costs and share listing expenses of €126.3 million ($134.9 million), as well as €29.4 million ($31.4 million) for a fair value adjustment of warrant liabilities, and €24.4 million ($26 million) for a fair value adjustment of earn out liabilities, in total €180.1 million ($192.3 million) of non-cash costs and adjustments.
Consequently, Q1 2022 EBITDA decreased to a negative €138.2 million ($147.6 million) as compared to a positive €64.1 million ($68.5 million) in the first quarter of 2021.
Excluding transaction costs, share listing expense, changes in valuations of warrants and earn-out liabilities, gains on derivative contracts and bargain purchases, adjusted EBITDA, was €61.5 million ($65.7 million), up 14% to €54 million ($57.7 million) in Q1 2021.
Increase in Monthly Average Customers and Cash
Monthly average customers in Q1 2022 increased by 8.3% to 2.6 million from 2.4 million in Q1 2021 despite the tough comparable period in which the business benefited from restrictions on land-based gaming establishments.
“Despite tough period over period comparisons, Super Group experienced revenue growth and a period over period 39% increase in cash and cash equivalents.”Alinda van Wyk, CFO, Super Group
At €272.7 million ($291.2 million), cash and cash equivalents at the end of Q1 2022 decreased by 7% from €293.8 million ($313.8 million) at the end of Q4 2021 due to redeeming of shares in connection with the SEAH merger, which was partly offset by cash released from the SPAC’s trust account upon closing. Year-over-year, the cash and cash equivalents balance increased by 40%.
The quarterly earnings report did not impress investors who dumped SGHC stock and forced its share price down 18% on the day. Since its listing on the NYSE in January, Super Group share price is down more than 26% and more than 40% from the high registered in April.