Executive Summary / Key Takeaways

• Super Group (NYSE:SGHC) is executing a strategic pivot towards focused, profitable growth in core international markets, underscored by its recent exit from the U.S. iGaming market to reallocate capital to higher-return opportunities.
• The company's proprietary technology platform, enhanced by AI and strategic acquisitions, provides a significant competitive advantage, driving operational efficiencies, faster product rollouts, and superior customer engagement, particularly in high-growth regions like Africa.
• Strong financial performance in Q2 2025 saw record revenue of $579 million and adjusted EBITDA of $157 million, with a robust 27% margin, demonstrating substantial operating leverage and effective cost management.
• Super Group has significantly raised its full-year 2025 guidance, now expecting group adjusted EBITDA between $550 million and $560 million and group revenue between $2.125 billion and $2.200 billion, reflecting confidence in its refined strategy and core market momentum.
• With a strong balance sheet, consistent free cash flow, and a disciplined capital allocation strategy, including increased dividends and potential M&A, Super Group is well-positioned for sustainable long-term value creation.

The Strategic Reorientation: A Global Gaming Powerhouse Refines Its Focus

Super Group (NYSE:SGHC) stands as a prominent global online sports betting and gaming operator, leveraging its flagship brands, Betway and Spin, across a diverse international footprint. The company's journey, marked by over a decade of operational experience in Africa and its NYSE listing over three years ago, has culminated in a decisive strategic reorientation. This shift prioritizes profitable growth in core international markets, moving away from a broad, less focused approach. The recent, albeit difficult, decision to exit the U.S. iGaming market exemplifies this commitment to capital discipline and long-term profitability, allowing for the reallocation of resources to more favorable jurisdictions.

The online gaming industry is characterized by rapid technological advancements, evolving regulatory landscapes, and intense competition. Super Group's strategy is to thrive within this dynamic environment by focusing on operational efficiency, product innovation, and deep localization. This approach is particularly critical in emerging markets where digital adoption rates are accelerating and regulatory frameworks are maturing. The company's ability to adapt and optimize its operations in response to these trends is central to its investment thesis.

Technological Prowess: Fueling Efficiency and Engagement

At the heart of Super Group's competitive advantage is its proprietary technology platform, a critical differentiator in the fast-paced online gaming sector. This robust, end-to-end software infrastructure, particularly prevalent in its African operations, enables rapid deployment of new features and ensures operational flexibility. The company's commitment to innovation is further underscored by the recent appointment of its first Group Chief Technology Officer, signaling a concerted effort to drive synergies and efficiencies across all platforms.

Super Group's technological edge translates into tangible benefits for its business. The strategic implementation of artificial intelligence (AI) is enhancing marketing effectiveness and improving product and process efficiencies. This allows the company to manage increasing customer volumes without a proportional increase in staff, leading to significant cost savings in areas like CRM, risk management, and processing fees. Innovations such as the "Bet Builder" parlay product and "Bet Influencer" in Africa are designed to improve sportsbook margins, aiming to achieve levels closer to 20%. The ongoing rollout of the "Jackpot City" casino brand into new markets, facilitated by this scalable technology, taps into different customer segments and creates new revenue streams. Furthermore, Super Group is actively exploring opportunities in the crypto space, particularly in Africa, to address banking challenges and reduce payment processing costs, which could directly enhance profitability. This continuous investment in technology not only strengthens Super Group's competitive moat but also directly contributes to its expanding margins and long-term growth strategy.

Africa: A Decade of Dominance and Unmatched Growth

Super Group's deep-rooted presence in Africa, spanning over a decade, is a cornerstone of its global strategy and a significant growth engine. The continent, home to 13 of the world's 20 fastest-growing economies and a rapidly expanding, mobile-first population, presents unparalleled opportunities. Super Group has cultivated a strong competitive moat in Africa, holding podium positions in seven of the eight markets it operates in. This success is attributed to a dedicated local team, effective branding (especially Betway's resonance through football sponsorships), and localized marketing expertise.

The financial impact of this focus is evident. In Q2 2025, Africa's revenue surged by an impressive 59% year-over-year. Specific highlights include Ghana's revenue growth of 63% year-over-year and South Africa's 31% increase. Botswana, a market launched in February, saw its contribution to Africa's revenue increase tenfold to 4.5% in Q2 2025, demonstrating the success of the company's high-ROI market entry strategy. Crucially, the incremental margins in Africa are significantly higher than the global average, meaning that additional revenue generated in these markets translates into "super, super, super profitable" bottom-line growth. While Nigeria remains an underperforming market, it is receiving strategic attention for product localization and payment method enhancements.

Strategic Expansion Beyond Africa: Europe and Canada

Beyond its African stronghold, Super Group is demonstrating robust performance and strategic focus in other key international markets. Europe's revenue in Q2 2025 surged 53% year-over-year, with the U.K. leading the charge with an 83% increase. This growth was supported by regulatory clarity, enhanced product offerings, and effective marketing for both Betway and Spin brands. Spain and Ireland also contributed to this solid performance. While Germany presented a headwind due to tighter regulatory restrictions, Super Group successfully grew its EBITDA in the region through rigorous cost management, showcasing operational resilience.

In North America (excluding the U.S.), revenue grew 23% year-over-year in Q2 2025. Canada, excluding Ontario, saw a 22% increase, driven by higher deposits and strong customer retention. Ontario, despite elevated marketing spend from competitors, delivered 5% year-over-year growth, a result of improved digital marketing and customer engagement. The company is applying lessons learned from the Ontario launch to its preparations for potential local regulations in Alberta, expected in the latter half of 2026.

Disciplined Execution: Financial Performance and Capital Allocation

Super Group's strategic reorientation and operational efficiencies are yielding tangible financial results, evident in its record-breaking performance. In Q2 2025, the company achieved its highest-ever quarterly total revenue of $579 million, a 30% increase year-over-year. Adjusted EBITDA reached an all-time high of $157 million, representing a remarkable 78% year-over-year growth, with a robust margin of approximately 27%.

This demonstrates significant operating leverage at scale, allowing Super Group to capture greater margin on incremental revenue. The exceptional quarter was fueled by strong sports outcomes, smarter pricing, and the continued success of its Bet Builder product, alongside robust casino acquisition and retention. Total sports wagering increased 15% year-over-year to $958 million, with the Sportsbook margin improving from 12.6% in Q2 2024 to 13.9% in Q2 2025. Casino wagers also saw substantial growth, up 24% year-over-year. The company achieved a record 5.5 million average unique monthly active customers, a 21% increase year-over-year.

Super Group maintains a strong balance sheet, ending Q2 2025 with $393 million in unrestricted cash and no debt. This robust financial position supports its disciplined capital allocation strategy. The company declared a regular cash dividend of $0.04 per share in June, contributing to $166 million returned to shareholders over the last 12 months. This consistent free cash flow generation and commitment to shareholder returns highlight the company's financial health and operational effectiveness.

The U.S. Pivot: A Strategic Reallocation for Profitability

Super Group's journey in the U.S. market has been a testament to its evolving capital discipline. Initially pursuing both sports betting and iGaming, the company transitioned to an iGaming-only strategy. The U.S. iGaming business showed improving EBITDA, with a $10 million loss in Q1 2025, further improving to a $5 million loss in Q2 2025. However, on July 8, 2025, Super Group announced its intention to exit the U.S. iGaming market, including Digital Gaming Corporation.

This "difficult but necessary" decision was driven by changing market dynamics, including recent tax increases in New Jersey, which impacted the path to profitability. Management concluded that the opportunity cost of supporting its product in the U.S. to reach breakeven was better deployed in other profitable markets. The exit is expected to incur a one-time restructuring cash cost of approximately $50 million, with a non-cash impairment adjustment of $63.9 million and provisions for onerous contracts of around $22.6 million reported in Q2 2025. However, the company anticipates significant cost savings of approximately $60 million in the second half of 2025 and ongoing in 2026 from this strategic move. This reallocation of resources will allow the company to focus its product development teams on profitable markets like Canada, the U.K., Germany, Spain, Ireland, and Mexico.

Competitive Standing and Market Positioning

Super Group operates in a highly competitive global online gaming market, facing rivals such as Flutter Entertainment (FLUT), Entain (ENT), and DraftKings (DKNG). While these competitors often boast larger scale and more aggressive R&D investments, Super Group differentiates itself through operational efficiency, global adaptability, and established brand loyalty in niche markets. Its streamlined digital-only model, particularly in Africa, can lead to lower operating costs compared to competitors with broader omnichannel approaches.

In Africa, Super Group holds a distinct advantage. Its decade-long presence and podium positions in key markets are a significant moat, as major global players like Flutter Entertainment and DraftKings have largely focused on other regions, such as Brazil or the U.S. This allows Super Group to leverage its local expertise, strong brand resonance, and tailored product offerings to capture market share effectively. The company's proprietary technology, which emphasizes localization and payment processing expertise, acts as a barrier to entry for new competitors.

However, Super Group faces vulnerabilities, including potential technological gaps compared to the rapid innovation cycles of some larger rivals and market concentration risks in certain regions. The company's strategic response involves continuous investment in its tech stack, including AI, to enhance user experience and operational efficiency, thereby mitigating these disadvantages. Its disciplined approach to market entry, as seen in its decision not to pursue a license in Brazil due to product readiness concerns, further highlights its focus on sustainable, profitable competition.

Outlook and Investment Thesis: A Clear Path to Profitable Growth

Super Group's strategic pivot and robust Q2 2025 performance have led to a significant uplift in its full-year 2025 guidance. The company now projects group revenue to be between $2.125 billion and $2.200 billion, a notable increase from prior expectations. Group adjusted EBITDA is anticipated to reach between $550 million and $560 million, also a substantial raise from previous guidance. This guidance includes an expected U.S. adjusted EBITDA loss of approximately $25 million, with the final closure of the U.S. business anticipated in early Q4 2025. For markets outside the United States, Super Group expects revenue between $2.085 billion and $2.160 billion, with Adjusted EBITDA between $575 million and $585 million.

Management attributes this positive outlook to the "focused cultivation of our markets," strong sports results, optimized pricing, and consistent engagement in casino operations across its core international markets. The company expects continued margin expansion, with a long-term target of 22% to 24% during 2025. Future upside drivers include a full calendar of global sporting events, enhanced trading and pricing, increased traction from its Bet Builder product, calculated marketing efficiencies, and further strength in its casino offerings. The ongoing investments in technology platforms, particularly in South Africa and Nigeria, and the rollout of Jackpot City in new markets, are expected to position Super Group for long-term success.

Conclusion

Super Group's journey reflects a compelling narrative of strategic refinement and disciplined execution. By shedding its U.S. iGaming operations, the company has underscored its commitment to profitable growth, reallocating capital and resources to high-return international markets where its competitive advantages are most pronounced. The robust financial performance in Q2 2025, marked by record revenues and EBITDA, demonstrates the efficacy of this focused strategy and the inherent operating leverage within its business model.

The company's proprietary technology, enhanced by AI and strategic product rollouts, serves as a powerful engine for efficiency and customer engagement, particularly in the rapidly expanding African market where Super Group enjoys a significant head start and strong brand resonance. With a strong balance sheet, consistent free cash flow, and a clear roadmap for continued margin expansion, Super Group is well-positioned to capitalize on global opportunities. While regulatory shifts and competitive pressures remain ongoing considerations, the company's strategic clarity, technological leadership, and disciplined capital allocation present a compelling investment thesis for discerning investors seeking sustainable growth in the dynamic online gaming sector.